ADVISORY OPINION NO. 06-027-E

May 12, 2006

The Mississippi Ethics Commission issued this opinion on the date shown above in accordance with Section 25-4-17(i), Mississippi Code of 1972, as reflected upon its minutes of even date. The Commission is empowered to interpret and opine only upon Article IV, Section 109, Mississippi Constitution of 1890, and Article 3, Chapter 4, Title 25, Mississippi Code of 1972. This opinion does not interpret or offer indemnity from liability for any other laws, rules or regulations. The Commission based this opinion solely on the facts and circumstances provided by the requestor as restated herein. The indemnity provided under Section 25-4-17(i) is limited to the individual who requested this opinion and to the accuracy and completeness of these facts.

I. LAW

The pertinent Ethics in Government Laws to be considered here are as follows, to wit:

Section 25-4-103, Miss. Code of 1972.

(a) “Authority” means any component unit of a governmental entity.

(b) “Benefit” means any gain or advantage to the beneficiary, including any gain or advantage to a third person pursuant to the desire or consent of the beneficiary.

(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.

(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.

(k) “Material financial interest” means a personal and pecuniary interest, direct or indirect, accruing to a public servant or spouse, either individually or in combination with each other. Notwithstanding the foregoing, the following shall not be deemed to be a material financial interest with respect to a business with which a public servant may be associated:

(i) Ownership of any interest of less than ten percent (10%) in a business where the aggregate annual net income to the public servant therefrom is less than One Thousand Dollars ($1,000.00);

(ii) Ownership of any interest of less than two percent (2%) in a business where the aggregate annual net income to the public servant therefrom is less than Five Thousand Dollars ($5,000.00);

(iii) The income as an employee of a relative if neither the public servant or relative is an officer, director or partner in the business and any ownership interest would not be deemed material pursuant to subparagraph (i) or (ii) herein; or

(iv) The income of the spouse of a public servant when such spouse is a contractor, subcontractor or vendor with the governmental entity that employs the public servant and the public servant exercises no control, direct or indirect, over the contract between the spouse and such governmental entity.

(l) “Pecuniary benefit” means benefit in the form of money, property, commercial interests or anything else the primary significance of which is economic gain. Expenses associated with social occasions afforded public servants shall not be deemed a pecuniary benefit.

(n) “Property” means all real or personal property.

(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.

(q) “Relative” means the spouse, child or parent.

Section 25-4-105, Miss. Code of 1972.

(1) No public servant shall use his official position to obtain pecuniary benefit for himself other than that compensation provided for by law, or to obtain pecuniary benefit for any relative or any business with which he is associated.

(3) No public servant shall:

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent.

II. FACTS

Facts provided by the requestor are set forth below, with identifying information redacted, and are considered a part of this opinion.

The Redevelopment Authority is the urban renewal agency of the City, created pursuant to Section 43-35-33 of the Mississippi Code of 1972. The Authority is vested with the “urban renewal project powers” of the City as the result of action by the governing body of the City pursuant to Section 43-35-31 of the Mississippi Code of 1972. The Authority is governed by a five (5) member Board of Commissioners, appointed for staggered terms of five (5) years each in the manner provided in Section 43-35-33 of the Mississippi Code of 1972. Thus, the Authority is a governmental entity separate from the City. In any event, the Redevelopment Authority is clearly not the same authority (within the meaning of Subsections 25-4-105(4)(b), (c) and (d) of the Mississippi Code of 1972, as amended) of
a governmental entity as the City.

The Authority is currently carrying out an urban renewal project designated “Redevelopment Project” (the “Urban Renewal Project”) in an area (the “Urban Renewal Area”) described in the urban renewal plan for the Urban Renewal Project. The Urban Renewal Plan was approved by the governing body of the City in 2003.

The City Attorney is an employee of the City.

As City Attorney for the City, the City Attorney was involved in actions by the City organizing the Authority and empowering the Authority to exercise “urban renewal project powers.” The City Attorney was also involved in the City’s approval of the Urban Renewal Plan an in all agreements between the Authority and the City. The Authority is represented by outside counsel. The City Attorney does not represent, and has never represented, the Authority. The City Attorney does, however, attend most meetings of the Authority.

In 2004 the Authority purchases a significant parcel of property in the Urban Renewal Area from the County School District. Proceeds of one or more grants received by the City and an Urban Renewal Note issued by the Authority were used for such purchase. The City agreed to contribute to the Authority funds sufficient to pay debt service on such Urban Renewal Note.

From time to time the Commissioners of the Authority have discussed the desirability of acquiring additional property in the Urban Renewal Area. To date, the Authority has not acquired any additional property.

If a favorable opinion is rendered in response to this request, the Authority intends to consider acquisition of a parcel of property located in the Urban Renewal Area which is owned by an estate of which the spouse of the City Attorney is executrix and primary beneficiary. (Note. At the time of approval of the Urban Renewal Plan, there was full disclosure of such ownership.) If the Authority acquires such property, the purchase price will be appraised value, as established by two or more appraisers approved by the Authority and the seller. Prior to conveyance of such property by such estate, approval of the County Chancery Court would be necessary. The City attorney has no ownership or other personal economic interest in such property. Obviously, each parcel of property which the Authority determines to acquire is available only from a single source.

The possible acquisition of such property has been discussed at only one meeting of the Board of Commissioners of the Authority. At that meeting, the Board authorized and approved this request for an opinion. The City Attorney absented himself from the meeting during all discussions relating to the potential acquisition. The City Attorney will not advise the Authority or be involved in any manner in the Authority’s decision as to whether to acquire such property.

If the Authority proceeds with acquisition of the property, prior to such acquisition the Authority and the City will enter into one or more agreements pursuant to which the City will agree to either provide funds to the Authority to be used for such acquisition (from a grant or other sources) or will agree to pay debt service on obligations issued by the Authority to finance the purchase. Under no circumstances will the City Attorney exert influence or control over any decision by the City to enter into any such agreement. It would be preferable for the City Attorney to assist the City with technical aspects of any such agreements.

The City Attorney has not been involved in seeking grants, proceeds of which may be used to fund acquisition of the Property. The City Attorney may be involved in reviewing agreements between the City and the United States (or applicable agency) relating to such grants.

Request for Opinion

We would appreciate an opinion as to whether, based upon the facts set forth above, the Authority’s purchase of property from the spouse of the City Attorney is permitted under the conflict of interest laws set forth in Article 3, Chapter 4, Title 25, Mississippi Code of 1972. We would also appreciate your opinion as to whether, if the Authority can acquire such property, the City Attorney can provide assistance to the City in connection with agreements between the City and the Authority referred to above.

III. ANALYSIS

Pursuant to Section 25-4-105(1), Miss. Code of 1972, the city attorney may not use his official position to obtain pecuniary benefit for himself or his wife, a “relative” as defined in Section 25-4-103(q). Specifically, the city attorney may not take any action in his official capacity which would affect the purchase of the property in question, including any assistance provided to the city in connection with this proposed purchase. To comply with this restriction, the city attorney must continue to recuse himself from this transaction.

A total and complete recusal requires that the public servant not only avoid debating, discussing or taking action on the subject matter during official meetings or deliberations, but also avoid discussing the subject matter with staff or any other person. This includes casual comments, as well as detailed discussions, made in person, by telephone or by any other means. Furthermore, the minutes of any meeting the public servant might attend should state the he left the room before the matter came before the public body and did not return until after the matter was concluded.

Section 25-4-105(3)(a), Miss. Code of 1972, prohibits a public servant of a city from being a contractor, subcontractor or vendor to the city and from holding a “material financial interest” in a business which is a contractor, subcontractor or vendor to the city. One who sells real property to a governmental entity is usually a “contractor” or “vendor” to the government for purposes of that subsection. However, the city attorney does not have a material financial interest in the estate. The definition of material financial interest found in Section 25-4-103(k)(iv) excludes “[t]he income of the spouse of a public servant when such spouse is a contractor, subcontractor or vendor with the governmental entity that employs the public servant and the public servant exercises no control, direct or indirect, over the contract between the spouse and such governmental entity.” Therefore, no violation of Section 25-4-105(3)(a) should occur if the authority purchases the real property in question.

MISSISSIPPI ETHICS COMMISSION



BY: Tom Hood, Executive Director and
Chief Counsel