ADVISORY OPINION NO. 06-087-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.

(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.

(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.

(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.

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 City Attorney for the City. I would like to request an opinion from your office on the following situation:

In May of 2005, the City Manager, and the City Manager’s spouse, hired a contractor to install some shutters on their home, and paid him approximately $7,000. Then, on May 23, 2006, they again hired him to repair the hurricane damage to their home, with a cap of $340,118.24. The contract was based on an estimate prepared by the Contractor in November 2005 and submitted by the City Manager and the spouse in order to substantiate both their insurance claim settlement and SBA loan application. Three legal teams scrutinized this estimate, including a legal team from an Insurance Company, as well as two legal teams from SBA. The estimate was accepted by all. All incremental receipts and status of progress are reviewed by the SBA prior to additional funds being released.

The spouse has done all of the financial negotiation and signatory commitment for home repair, with some minimal stylistic preferences input from the City Manager.

The following facts form the basis for my request of an opinion. City Hall was damaged by Hurricane Katrina. The City is planning on making some permanent changes to City Hall, but it was clear that temporary measures needed to be taken to protect the building from the elements. One of the City Council members consulted with the City Manager and urged her to consult with contractors for this job. Around May of 2006, the City Manager, on behalf of the City, contracted with the same contractor with whom she and her husband had contracted personally for repair of City Hall. She got an estimate from the Contractor for the temporary repairs and the permanent repairs, and she got estimates from a second contractor. The contractor she used was 40% less than the second contractor, so she chose the Contractor.

My question is whether there is any ethical conflict in the above situation, in other words, is there an ethical violation for the City Manager to use the same contractor both personally and professionally? Under what circumstances would the use of a contractor by the City Manager both for the City and for her personally cause a conflict? Any help would be most appreciated.

III. ANALYSIS

Section 25-4-105(1) prohibits a public servant from using his or her position in government to obtain pecuniary benefit for any “business with which he [or she] is associated.” See Section 25-4-103(d), above. Section 25-4-105(3)(a) prohibits a public servant of the city from holding a “material financial interest” in a business which is a contractor, subcontractor or vendor to the city. See Section 25-4-103(k), above. Normally one obtains an interest in a business by receiving some sort of payments from the business or acquiring some ownership in the business, not by paying money to the business in exchange for services rendered or goods provided. Thus, a city manager contracting with a contractor for home repairs, by itself, does not give the city manager a material financial interest in the contractor’s business or make it a business with which the city manager is associated. Therefore, no violation of Section 25-4-105(1) or (3)(a) should arise under the facts provided herein.

MISSISSIPPI ETHICS COMMISSION


BY: Tom Hood, Executive Director and
Chief Counsel