This Advisory Opinion concerns the following issues as formulated from facts and/or circumstances furnished by a requestor. The opinion is based solely on the facts and circumstances as stated below and was approved by the Commission on August 25, 1995.

May a municipality lease real property to a non-profit corporation or an unincorporated organization for the purpose of operating a youth center when:

1. the non-profit corporation or unincorporated organization's board of directors has members who are the spouses of two of the municipality's aldermen;

2. the non-profit corporation or unincorporated organization has members, although not board of directors' members, who are the spouses of certain of the municipality's aldermen; or

3. the non-profit corporation or unincorporated organization is supported by a church which has certain of the aldermen and their spouses as members?

    The Mississippi Ethics Commission is restricted 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, Mississippi laws outside the jurisdiction of the Commission and internal rules and regulations of the local governmental entity are not addressed by this opinion.

    Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion. The referenced supporting documentation because of its volume is not attached but is available for review, absent identifying data, in the Commission's office.

I, the Mayor of the Town, am hereby requesting a written opinion from the Ethics Commission on an issue before the Town Board.

I pose these questions -

1- Can the town lease real property owned by the town to a proposed non-profit corporation with a proposed board of directors which would include the wives of two aldermen?

2- Can the town lease real property owned by the town to a non-profit corporation which would not include the wives of any aldermen of the Town?

3- Can the town lease real property to a non-profit corporation or organization to which the wives of aldermen belong, but are not members of the board of directors?

4- Can the town lease real property to a non-profit corporation or organization supported by a church of which the aldermen and their wives might be a member?

5- Can a board member whose wife is on the proposed board of directors of a non profit corporation vote on granting a lease to the organization?

Facts for consideration -

1- Approximately four years ago the schools were closed and the property donated to the town by the county school board.

2- A group has come forward desiring to lease the property for educational, building self-esteem, religious training, and recreational purposes for the children of the town.

3- The group submitted their proposal first under one name and then a different name on the second proposal.

4- After discussion with the board attorney as to the requirements of the town for considering a lease the second proposal was brought forward. The second proposal included the names of the wives of two of the aldermen on their proposed board of directors.

5- This is a proposed group desiring to lease the property for the purposes described in their proposal. They will be funded by their suggestions in the proposal. The group has not been officially formed and will not until all things have been worked out for a lease.

6- The board has only voted to continue discussion with the group to see if a lease can be achieved.

7- The group may have an entirely different board of directors if and when a lease is agreed upon.

8- The wives of aldermen and others in the community will probably donate their time to assist the organization in achieving its goals both now and in the future.

Enclosed you will find supporting documents for the events that have transpired to this time.

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 25-4-101 states:

"The legislature declares that elective and public office and employment is a public trust and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment or position, is a violation of that trust. Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments."

Code Section 25-4-103(c), (d), (f)(i)(ii), (g)(ii), (h), (i), (m), (o), (p)(i)(i)(iii) and (q) 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 non-profit corporation or other such entity, association or organization receiving public funds.

(d) 'Business with which he is associated' means any business or 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.

(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:

(ii) Municipalities.

(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.

(1) '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.

(m) 'Person' means any individual, firm, business, corporation, association, partnership, union or other legal entity, and where appropriate a governmental entity.

(o) 'Public funds' means money from 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.

(q) 'Relative' means the spouse, child or parent. Code Section 25-4-105(1), (2) and (5) states:

"(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.

(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.

(5) No person may intentionally use or disclose information gained in the course of or by reason of his official position or employment as a public servant in any way that could result in pecuniary benefit for himself, any relative, or any other person, if the information has not been communicated to the public or is not public information."

    Based solely on the facts and circumstances provided by the requestor, the Commission's opinion is as follows.

    The municipality's leasing of real property to a non-profit corporation or an unincorporated organization which has the spouses of two of the municipality's aldermen serving as compensated board of directors' members is prohibited by the above cited Constitutional Section 109 and Code Section 25-4-105(2).

    Likewise, the municipality's leasing of real property to a non-profit corporation or an unincorporated organization which has as its compensated members, employees or agents the spouses of certain of the municipality's aldermen is prohibited by Constitutional Section 109 and Code Section 25-4-105(2).

    If an alderman's spouse is an uncompensated board member of an unincorporated organization, the alderman must recuse himself or herself from the vote authorizing the lease to avoid violating the above cited Code Section 25-4-105(1). This finding is based on the organization being a "business" and the alderman's spouse being a director thereby making the unincorporated organization a "business with which he is associated."

    The Ethics in Government law definitions of "business" and "business with which he is associated" are found respectively in Code Section 25-4-103(c) and (d), set forth above.

    However, Code Section 25-4-105(1) does not prohibit an alderman from voting to authorize a lease between the municipality and a non-profit corporation which the alderman's spouse serves as an uncompensated board member, member, employee or agent unless the non-profit corporation is receiving public funds. A non-profit corporation must receive public funds for it to be a "business" under the Ethics in Government definition.

    In regard to the non-profit corporation or unincorporated organization being supported by a church of which an alderman and the alderman's spouse are members, the Commission offers the following guidance.

    The Commission has consistently held that Constitutional Section 109 and Code Section 25-4-105(2) prohibit a public servant from having conflicting fiduciary interests in a contract authorized by the board of which the public servant is a member.

    Therefore, an alderman has conflicting fiduciary interests should he be part of the governing body of the church and if the church's financial support of the non-profit corporation or unincorporated organization is contingent upon the lease being entered into with the municipality.

    The requestor is cautioned to advise the aldermen that a recusal or an abstention will not prevent a violation of Constitutional Section 109 or Code Section 25-4-105(2). Even without the aldermen's vote, the authorization by the municipal board nonetheless results in a contract, in this case the lease, in which the aldermen have prohibited interests.

    Code Section 25-4-105(1) prohibits public servants from using their official positions to obtain a pecuniary benefit for themselves, a relative or a business with which they are associated.

    In order to avoid using their official positions to obtain a pecuniary benefit for any business with which they are associated, public servants must totally and completely recuse themselves from subject matters providing the pecuniary interests. An abstention is a vote with the majority of the governing entity's board and therefore does not qualify as a recusal.

    A total and complete recusal requires that the public servant not only avoid debating, discussing, or taking action on the subject matter during the official meeting, but also avoid discussing the subject matter with other board members, staff or any other person prior to and after the official meeting. This includes casual comments, as well as detailed discussions, made in person, by telephone or by any other means.

    Also in order to properly recuse oneself from a matter, the public servant must leave the room or area where such discussions, considerations and/or actions take place. The minutes of the governing entity's board should state the public servant left the meeting by showing him or her absent for that matter.

    The requestor is cautioned to advise the aldermen to be keenly aware of the above cited Code Section 25-4-105(5).

    Code Section 25-4-105(5) prohibits the intentional use or disclosure of non-public information gained by reason of one's official position that could result in a pecuniary benefit for the public servant, a relative or any other person. "Person" in this instance includes a non-profit corporation, unincorporated organization or church.

    The issues presented by the requestor must be viewed as they relate to Code Section 25-4-101, set forth above. This code section sets the tone for the conflict of interest laws as it is the Legislature's "Declaration of Public Policy." This public policy can be summarized as any circumstance having the potential of creating suspicion among the public and reflecting unfavorably upon the state or local government should be closely reviewed by public servants with the intent to reduce or eliminate any suspicion on the part of the public which detracts from the public's trust in state or local government.

    Clearly, the relationships addressed in the above issues have the potential of creating suspicion among the public and reflecting unfavorably upon the municipality.

    Notwithstanding the above, the conflict of interest laws do not prohibit a municipality from leasing real property to a non-profit corporation or an unincorporated organization which is not in any way affiliated or associated with the municipality's aldermen and/or the aldermen's spouses.
 
 
 
 
 

Ronald E. Crowe Executive Director