February 1, 2002
This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on February 1, 2002, basing its approval solely on the facts and circumstances stated herein.
May a former board member of an economic development partnership established by local and private legislation as a not-for-profit corporation to carry-out economic development for the county and city with tax revenues be employed by the partnership within one year of the end of his term as a board member of the partnership?
State law restricts the Mississippi Ethics Commission to interpreting and issuing opinions on Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890. Therefore, this opinion does not address the Mississippi laws outside the Commission’s jurisdiction nor the governmental entity’s internal rules and regulations.
The pertinent conflict of interest laws to be considered here are:
Constitutional Section 109 states:
“No public officer or member of the legislature shall be interested, directly or indirectly, in any contract with the state, or any district, county, city, or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member, during the term for which he shall have been chosen, or within one year after the expiration of such term.”
Code Section 25-4-103(c),
(f)(i)(ii), (g)(i)(ii)(iii)(iv)(v), (h), (o) and (p)(i)(ii)(iii) states:
“(c) “Business” means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company, self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a nonprofit corporation or other such entity, association or organization receiving public funds.(f) “Contract” means:
(i) Any agreement to which the government is a party; or
(ii) Any agreement on behalf of the government which involves the payment of public funds.
(g) “Governmental” means the state and all political entities thereof, both collectively and separately, including but not limited to:
(i) Counties;
(ii) Municipalities;
(iii) All school districts;
(iv) All courts; and
(v) Any department, agency, board, commission, institution, instrumentality, or legislative or administrative body of the state, counties or municipalities created by statute, ordinance or executive order including all units that expend public funds.
(h) “Governmental entity” means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.
(o) “Public funds” means money belonging to the government.
(p) “Public servant” means:
(i) Any elected or appointed official of the government;
(ii) Any officer, director, commissioner, supervisor, chief, head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or
(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government.”
Code Section 25-4-105(2)
states:
“(2) No public servant shall be interested, directly or indirectly, during the term for which he shall have been chosen, or within one (1) year after the expiration of such term, in any contract with the state, or any district, county, city or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member.”
Pertinent facts and circumstances provided by the requestor, absent
identifying data, are set forth as follows and considered a part of this
opinion. The local and private legislation referred below is not attached
hereto as it includes identifying data.
I am the former Mayor of the City having served as Mayor through June of 2001. During my term in office the Mississippi Legislature enacted a local and private Bill that creates the County Economic Partnership (“Partnership”). The Partnership was established pursuant to the local and private Bill and was organized under the laws of the State as a not-for-profit corporation Partnership pursuant to the local and private Bill. The purpose of the Partnership is for promoting economic development and tourism in the County. The local and private Bill provides that the Board of Directors shall be composed of members appointed by the County Board of Supervisors, members appointed by the City Aldermen and also certain named offices, including the Mayor of the City. I served as a member of the Board of Directors until July of 2001, as the Mayor of the City.
While the Bill provides that the Partnership organize as a not-for-profit corporation, the Bill also requires that the Partnership follow certain laws that apply to public entities, including, but not limited to, the open meetings law and the public purchasing laws with respect to the expenditure of funds derived from public sources; however, funds raised from private sources are not subject to the public purchasing laws.
The Bill provides that upon a resolution of the Board of Supervisors a 2% sales tax can be imposed on lodging and restaurant operations in the County and that the funds raised from the additional 2% sales tax go to the Partnership in support of its operations and activities pursuant to the Bill. For your review, a copy of the Bill is attached hereto.
The question presented is, given the facts may I be employed by the Partnership at this time? And secondly, is there a time that I may be employed by the Partnership, which would not violate the ethics laws of the State?
Based solely on the facts and circumstances presented by the requestor, the Commission’s opinion is as follows.
The multifarious nature of the Partnership makes this a more complicated opinion than it would be if it were addressing a governmental entity such as the state, or any district, county, municipality or political subdivision thereof.
Therefore, it is necessary to establish the status of the Partnership and the requestor, as a former member of the Partnership’s board, under the Ethics in Government laws before proceeding to answer the requestor’s specific question.
First, it is necessary to understand that the Partnership is both “governmental” and “business” for purposes of the Ethics in Government laws.
Specifically, we must look at the definition of “governmental” set forth in Code Section 25-4-103(g)(v), cited above, and the definition of “business” set forth in Code Section 25-4-103(c), cited above.
Code Section 25-4-103(g)(v) provides that “governmental” includes “any department, agency, board, commission, institution, instrumentality, or legislative or administrative body of the state, counties or municipalities created by statute, ordinance or executive order including all units that expend public funds.” [Emphasis added to bold text]
In reviewing the local and private legislation that established the Partnership, it is clear to this Commission that the Partnership is governmental in nature in that it is an instrumentality and an administrative body of the county and city created by statute that expends public funds.[1]
Code Section 25-4-103(c) provides that a “business” is “any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company, self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a nonprofit corporation or other such entity, association or organization receiving public funds.” [Emphasis added to bold text]
Again, a review of the local and private legislation reveals the Partnership is to be organized under the general laws of this state as a not-for-profit corporation qualified as tax exempt and chartered for the purpose of combining the economic development of the county. Also, the local and private legislation establishes a tax on the gross proceeds of sales from room rentals for each hotel and motel in the county to fund the Partnership. These tax proceeds are clearly public funds.
Also, the members of the Partnership’s board are clearly “public servants” for purposes of the Ethics in Government laws.
Code Section 25-4-103(p) defines a “public servant” as (ii) any officer, director, commissioner, supervisor, chief, head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds or (iii) any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government. [Emphasis added to bold text]
Therefore, the requestor was a “public servant” as a member of the Partnership’s board and is thereby subject to the Ethics in Government laws.
Upon determining that the requestor was a public servant as a Partnership board member and that the Partnership is at once both “governmental” and “business,” the appropriate application of the Ethics in Government laws to the requestor’s circumstance must be made.
The applicable provision in the Ethics in Government laws that prohibit contract interests of a former governmental board member is the above cited Code Section 25-4-105(2). [Emphasis added to bold text]
Code Section 25-4-105(2) provides that no public servant “shall be interested, directly or indirectly, during the term for which he shall have been chosen, or within one (1) year after the expiration of such term, in any contract with the state, or any district, county, city or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member.”
Specifically, Code Section 25-4-105(2) applies to board members of certain governmental entities that have the authority to make laws or pass orders to authorize contracts.
The circumstance presented by the requestor clearly reports that the Partnership’s board of which he was a member is considering passing an order to enter into an employment contract with the requestor within one year of his leaving the Partnership’s board. Clearly, the requestor has an interest in his own employment contract.
Also, it is the Commission’s opinion that the Partnership is an agency and/or entity of both the county and the city and therefore is within the meaning of the state, or any district, county, city or town thereof, as intended by Code Section 25-4-105(2). [Emphasis added to bold text]
In reaching this finding, the Commission gave great weight and importance to the Mississippi Supreme Court’s statements in Frazier v. State, 504 So. 2d 675, (Miss. 1987), regarding the interpretation guidelines it used in determining the proper application of the prohibitions imposed by Constitutional Section 109, cited above, of which its wording and that of Code Section 25-4-105(2) are almost identical.
The Court said, “[o]ur purpose in construing Section 109 is to ‘ascertain and give effect to the intent of those who adopted it’ ... and while ‘its words must be the sole boundary [of its meaning]’, ... ‘ascertained from the plain meaning of the words and terms used within it’ ... we should likewise ‘look to the circumstances under which the provision was ordained, the objects ..., the evils to be avoided or cured, and thereby arrive at the reasonable meaning ...”
It is clear to this Commission that a circumstance that Code Section 25-4-105(2) was passed to avoid was a member of a governmental board having an interest during his term or within one year of his term ending in a contract, including an employment contract, authorized by an order of the governmental board of which he is or was a member.
As stated above, the Partnership board is governmental for purposes of the Ethics in Government laws. The requestor’s employment contract will occur within one year of his term ending and will clearly be authorized by an order of the Partnership board of which he was a member.
Therefore, Code Section 25-4-105(2) will prohibit the requestor’s employment with the Partnership within one full year from the date his term ended as a member of the Partnership board. In other words, the requestor could not be employed by the Partnership until August 1, 2002 if his term of office as a board member of the Partnership ended on July 31, 2001.
Scott Rankin
Executive Director
Five members of its board are appointed by the board of supervisors;
Three members of its board are appointed by the board of aldermen;
The president of the board of supervisors, the mayor, the superintendent of education and the area community college president are members of its board;
Travel reimbursements and expenses are controlled by §25-3-41, MCA;
The board shall comply with the Open Meetings Law;
The board must present its annual audit to the board of supervisors, the board of aldermen and the State Auditor;
The board members must take and subscribe to the oath of office required by §268, Mississippi Constitution of 1890;
The Partnership’s expenditure of its public funds are subject to the state purchasing laws; and
The Partnership’s annual budget must be approved by the board of supervisors and the board of aldermen.