Ethics
Advisory Opinion No. 68
September
17, 2002
Issued
By: City Attorney’s Office
Issue:
May a former Director of the
Company
(SALDC) sell a business to a buyer who seeks financing
for
the purchase from SALDC?
I. Factual Background
San
Antonio Local Development Company (SALDC) is a corporation created by the City
to package and service Small Business Administration loans. Its objective is to
promote the economic development of the City by providing financial assistance
to small businesses. A board of eleven (11) directors governs SALDC. An
individual who formerly served as a Director of SALDC owns a small business
that she would like to sell. The potential buyer anticipates applying for a loan
to fund the purchase through SALDC. The former director asks whether the San
Antonio Code of Ethics would preclude her from selling her business under this
proposed financing arrangement.
II. Applicable Authority – Prohibited
Interest in Contracts
Part
C of the Ethics Code[1] governs
the conduct of former City officials and employees. Section 4[2] addresses
a former employee or official’s interest in discretionary contracts:
Within one (1)
year of the termination of official duties, a former city officer or employee
shall neither have a financial interest, direct or indirect, in any
discretionary contract with the City[.]
Section 4(c)[3] defines
a "contract" as any discretionary contract other than a contract for
the personal services of the former city official or employee. It also defines
a "city officer" to include the Mayor or member of City Council, a
Municipal judge or magistrate or a member of any board of commission which is
more than advisory in nature.
SALDC
is more than an advisory board. It is an agency that makes decisions regarding
how City funds are distributed. Therefore, the former SALDC board member is a
"City officer" for purposes of Part C[4] of
the Ethics Code. Because of this status, she is prohibited from having any
financial interest, direct or indirect, in any discretionary contract with the
City for one year after leaving City service.
According
to the inquiry, the former director hopes to sell the business to a buyer who
intends to obtain financing through SALDC. Since the buyer would be borrowing
funds from SALDC funds to make the purchase, the former director would be the
recipient of City money. This gives the former director a financial interest in
this proposed financing contract.
As
a former city official as the term is used in Part C[5],the
former director cannot acquire a financial interest in a contract with the City
for one year after leaving office. Accordingly, the former board member may not
accept payment for the property in question if the buyer obtains the financing
through SALDC within one year after terminating her service with the City.
____________________
Andrew Martin
City Attorney