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City of San Antonio, Texas

Ethics Advisory Opinion No. 2010-04
May 25, 2010
Issued By: City Attorney’s Office

I.  Issue

May a firm in which a member of a more-than-advisory board owns less than 10% interest subcontract on a contract with the city?

II. Inquiry

A member of a more-than-advisory board holds a minority ownership interest in a firm that is interested in seeking a subcontract on a city contract.   The member has inquired whether his firm would be prohibited from seeking that subcontract because of his position with the city.

In short, the “prohibited-interests-in-contracts” provision of the City Charter would not bar the member’s firm from contracting with the city or from subcontracting or partnering with other firms on contracts with the city because because his current ownership interest in the firm is less than 10%.  

III. The Ethics Code

A. The Prohibited Contracts Provision of City Charter and Ethics Code

Section 141 of the City Charter prohibits city officers and higher-level city staff members from having an interest in a contract with the city.  Section 141 states:

“No officer or employee of the City shall have a financial interest, direct or indirect, in any contract with the City, or shall be financially interested, directly or indirectly, in the sale to the City of any land, materials, supplies, or service, except on behalf of the City as an officer or employee.  Any willful violation of this Section shall constitute malfeasance in office, and any officer or employee guilty thereof shall thereby forfeit his office or position.  Any violation of this Section, with the knowledge, expressed or implied, of the person or corporation contracting with the Council shall render the contract involved voidable by the City Manager or the Council.”  

Section 2-52 of the Ethics Code restates and interprets this prohibition as well.  The Ethics Code establishes that a member of a city board that is more-than-advisory in nature is an “officer” for purposes of the prohibited contracts provision.   This individual is a member of a more-than-advisory city board, and therefore, is a city officer subject to this restriction.     Section 2-52 further states that an officer is presumed to have a prohibited interest in a city contract if the officer, the officer’s immediate family members or the businesses in which they hold a 10% or greater ownership interest are parties to the contract or subcontract with the city.   

The member has advised that his ownership interest in the firm seeking selection on the subcontract is significantly less than 10%.   Given this, the “prohibited-interests-in contracts” provisions of the City Charter and the Ethics Code would not prohibit the member’s firm from contracting with the city or from having partnerships with other firms that contract with the city.   As a city official, however, the conflicts-of-interest provisions of the Ethics Code would apply.

B.  Conflicts of Interests Provisions

The Ethics Code has two “conflicts-of-interest” provisions applicable to all city officials and employees. First, a city official cannot take any official action that is likely to affect the economic interests of the:

  1. official;
  2. the official’s family within the 2nd degree, and members of the official’s household;
  3. businesses in which the official or his or her family members hold an ownership interest;
  4. employers of the official or the official’s family members;
  5. business entities or non-profit organizations for which the official serves in an executive or decision-making capacity;
  6. individuals or businesses with whom the official is engaged in business or employment negotiations; and
  7. any outside client of the official

Ethics Code, Section 2-43.  Should a matter that could affect the financial interests of any of these individuals or entities come before the member’s board, the Ethics Code requires that he recuse himself from voting or any other participation in the matter. 

The second conflict-of-interest provision states that a city official cannot use his or her position with the city to unfairly advance or impede private interests or to secure for any person any form of special consideration, treatment, exemption or advantage beyond that which is lawfully available to other persons.  Ethics Code, Section 2-44.    This provision requires officials and employees to render decisions based on the merits and not on personal considerations or relationships.  In the event a matter came before the member’s board that might relate to business interests of his firm, Section 2-44 might also require recusal, even if no specific financial interest is at stake.

C. Conclusion

Because the more-than-advisory board member’s ownership interest in his firm is less than 10%, the “prohibited-interests-in-contracts” provision would not bar the firm from contracting with the city or from subcontracting or partnering with other firms on contracts with the city.    The conflicts-of-interest provisions however, would apply.