ADVISORY OPINION NO. 06-080-E

November 3, 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.

(d) “Business with which he is associated” means any business of which a public servant or his relative is an officer, director, owner, partner, employee or is a holder of more than ten percent (10%) of the fair market value or from which he or his relative derives more than One Thousand Dollars ($1,000.00) in annual income or over which such public servant or his relative exercises control.

(g) “Government” 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.

(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 publicservant 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.

I am currently the Executive Director of a City Housing Authority. I am writing to ask your opinion regarding a potential conflict of interest situation brought up in the course of the Housing Authority business.

We are in the process of purchasing land as part of our plan to rebuild our affordable housing, which as you know is desperately needed, as we lost most or all of our housing stock in the hurricane affected counties. A very attractive parcel which runs adjacent to the Housing Authority property has recently come to our attention, at a more than competitive price. The location is perfect, however the land is currently owned by a member of the City Council. Were it not for this potential conflict of interest, we would have no hesitation purchasing this parcel when funds become available, according to our HUD Regulations and Guidelines. Under the circumstances, and wishing to avoid even the appearance of impropriety, I thought it best to write to you for advice.

III. ANALYSIS

Pursuant to Section 25-4-105(3)(a), Miss. Code of 1972, no public servant may be a contractor, subcontractor or vendor to the “governmental entity” he or she serves. See also Section 25-4-103(h), above, for definition of “governmental entity.” A member of the city council is a public servant of the city. One who sells land to the government is either a contractor, subcontractor or vendor to the government, depending on the circumstances of the transaction. Therefore, a public servant of a city may not sell real property to any “authority” of city government, except under some very limited exceptions codified in Section 25-4-105(4). See also Section 25-4-103(a), above, for definition of “authority.”

Heretofore, this Commission has consistently held that a housing authority activated by a municipality or county, pursuant to Section 43-33-5, Miss. Code of 1972, is an authority, or component unit, of the municipality or county. See Ops. Miss. Ethics Commn. No. 87-039-E, 94-110-E, 95-093-E, 96-034-E, 98-051-E, 98-122-E, 01-048-E, 01-088-E, 02-038-E, 04-016-E and 05-047-E. After a detailed examination of the relevant authorities, the Commission hereby modifies that conclusion and determines that a housing authority created pursuant to Section 43-33-1, Miss. Code of 1972, et seq., is an independent governmental entity.

Section 25-4-103(h), Miss. Code of 1972, defines a governmental entity as “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.” (emphasis added) Section 43-33-11 constitutes a housing authority as “a public body corporate and politic, exercising public and essential governmental functions.” Section 43-33-3 declares “that the providing of safe and sanitary dwelling accommodations for persons of low income are public uses and purposes for which public money may be spent and private property acquired and are governmental functions of state concern.” (emphasis added) Housing authorities are empowered by law to sue and be sued, to execute contracts, to exercise the power of eminent domain, to borrow money from the federal government and to issue bonds. Sections 43-33-11, 19, 23 and 35. Furthermore, bonds issued by a housing authority do not obligate the municipality or county which activated the authority. Section 43-33-23.

There are only two instances when a municipality or county takes action which directly affects the composition of the housing authority. First, the local government must activate the housing authority. Second, the governing authority (board of aldermen, city council or board of supervisors) must appoint commissioners of the housing authority. Once appointed, those commissioners are public officers who exercise governmental powers independently of the appointing authority and cannot be removed by the appointing authority. Municipal governing authorities also appoint members of municipal separate school district boards and approve the tax levy of the school district. Yet the school district is considered a governmental entity separate from the municipality. A housing authority should be given the same status, as it is clearly a separate political subdivision authorized by law to exercise a part of the sovereign power of the state. Therefore, Section 25-4-105(3)(a) will not prohibit a municipal housing authority from purchasing real property from a public servant of a separate governmental entity, such as a city council member.

Nevertheless, a city council member may not use his position in government to influence the sale of real property to the housing authority. Section 25-4-105(1), Miss. Code of 1972, prohibits a public servant from using his position to obtain pecuniary benefit for himself, his parent, spouse, child or a business with which he is associated. See definitions in Section 25-4-103, above. For example, the city council member may not suggest any quid pro quo arrangement in connection with the land transaction, such as any threat or inducement regarding an appointment to the housing authority commission.

MISSISSIPPI ETHICS COMMISSION

BY: Tom Hood, Executive Director and
Chief Counsel