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 February 8, 1996.

Issue lA. May a municipality loan state grant funds to a non-profit corporation which in turn will loan the state grant funds to a for-profit partnership that the non-profit corporation controls to improve and/or construct a multi-family housing facility when the executive director of the non-profit corporation is also the executive director of the municipality's housing authority?

Issue lB. May a corporation that is a public body corporate and politic loan funds to a for-profit corporation to improve and/or construct a multi-family housing facility in a municipality when the for-profit partnership's general partner is a corporation whose president is the executive director of the municipal housing authority established by the municipality where the multi-family housing facility is located?

Issue 2. May a corporation that is a public body corporate and politic loan funds to a for-profit partnership to construct a multi-family housing facility in a municipality when the for-profit partnership's general partner is a corporation whose president is a county supervisor for the county in which the municipality is located?

Issue 3. May a corporation that is a public body corporate and politic loan funds to a for-profit partnership to construct a multi-family housing facility in a municipality when the for-profit partnership's general partner is a corporation whose president is the executive director of a municipal housing authority established by a municipality other than the one in which the multi-family housing facility is to be constructed?

Issue 4. May the executive director of the municipality's housing authority, acting on behalf of the non-profit corporation he or she also serves as executive director, be the property manager of any of the multi-family housing facilities addressed in the above Issues?

    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 governmental entities are not addressed by this opinion.

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)(i)(ii)(v), (h), (k)(i)(ii), (1) 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 non-profit corporation or other such entity, association or organization receiving public funds.

(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.

(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; 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).

(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.

(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. #1

Code Section 25-4-105(1), (2), (3)(a)(d), (4)(b)(g) 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.

(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.

(d) Perform any service for any compensation during his term of office or employment by which he attempts to influence a decision of the authority of the governmental entity of which he is a member.

(4) Notwithstanding the provisions of subsection (3) of this section, a public servant or his relative:

(b) May be a contractor or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which he is a member, officer, employee or agent where such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

(g) May contract with the Mississippi Veteran's Home Purchase Board, Mississippi Housing Finance Corporation, or any other state loan program, for the purpose of securing a loan; however, public servants shall not receive favored treatment.

(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.

    Pertinent facts and circumstances in the form of the requestor's  letter dated January 4, 1996, absent identifying data, are attached hereto and considered part of this opinion. The additional documentation referred to in the requestor's letter because of its volume is not attached hereto, but may be reviewed, absent identifying data, in the Commission's office.

    The requestor is advised that this opinion will no longer be in effect should the facts and circumstances change or in any way be contrary to those presented in the attached letter.

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

    Issue lA. As long as he or she is executive director of the municipality's housing authority, the non-profit corporation which the executive director also serves is prohibited by Code Section 25-4-105(3)(a), cited above, from entering into the loan contract with the municipality if he or she now or at any time in the future has a material financial interest in the non-profit corporation as defined in the above cited Code Section 25-4-103(k)(ii).

    Although this Commission has opined that a municipality's housing authority and governing board are two separate governmental authorities of the municipality, the exception set forth in Code Section 25-4-105(4)(1,), cited above, does not apply in this circumstance as neither of the two situations outlined in that section exist.

    Should the executive director of the municipality's housing authority not be an officer nor be involved in any other way with the non-profit corporation, then the prohibition set forth in Code Section 25-4-105(3)(a) would not be applicable.

Issue lB. It would not as such be a violation of the conflict of interest laws for the executive director of a municipal housing authority to be president of a corporation that is the general partner in a for-profit partnership which is receiving a loan from the public body corporation to construct a multi-family housing facility in the municipality where he or she serves as the executive director of the housing authority. This is based on the above cited Code Section 25-4-105(4)(g).

    However, the loan of the grant funds from the general partner corporation to its for-profit partnership is a subcontract to the loan contract addressed above in Issue lA. Therefore, if the public body corporation is making its loan contingent on or in anticipation of the subcontract loan from the general partner corporation to the for-profit partnership, it should be aware that the subcontract loan, like the original loan contract, could be now or in the future in violation of Code Section 25-4-105(3)(a).

    Notwithstanding the above, the requestor should be keenly aware of the following situations in regard to both Issue lA and Issue lB.

    If the executive director of the housing authority was a member of the public body corporation, the loan to the for-profit partnership would result in he or she being in violation of the above cited Constitutional Section 109 and Code Section 25-4-105(2).

    Furthermore, the executive director of the housing authority could be in violation of Code Section 25-4-105(1) and (3)(d), cited above, should he or she, either individually or through the housing authority or its municipality, use his or her official position to cause any action that sanctions, approves or funds, in whole or in part, the improvement and/or construction of the multi-family housing facility that results in a pecuniary benefit to the executive director, the non-profit corporation, the for-profit corporation and/or the for-profit partnership.

    The executive director's violating Code Section 25-4-105(1) because of a pecuniary benefit to the non-profit corporation, the for-profit corporation and/or the for-profit partnership requires that they be businesses with which the executive director is associated as defined in the above cited Code Section 25-4-103(d).

    In addition, the executive director's use of any non-public information obtained through his or her official position with the housing authority that could result in a pecuniary benefit for the executive director, the non-profit corporation, the for-profit corporation or the for-profit partnership would be in violation of the above cited Code Section 25-4-105(5).

    The issue presented by the requestor also must be viewed as it relates 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 circumstances presented in Issue lA and Issue lB have the potential of creating suspicion among the public and reflecting unfavorably upon the public body corporation and the municipality.

    Issue 2. The Commission formally adopts Advisory Opinion No. 95-152-E as its response to Issue 2, and by attachment incorporates it into this opinion.

    Issue 3. The Commission formally adopts Advisory Opinion No. 95-151-E as its response to Issue 3, and by attachment incorporates it into this opinion.

    Issue 4. It is not as such a violation of the conflict of interest laws for the executive director of the municipality's housing authority, on behalf of the non-profit corporation, to serve as the property manager of any of the multi-family housing facilities addressed in the above Issues so long as none of the potential violations addressed in those issues do not occur.

    Furthermore, should the municipality's housing authority remain the property manager, the executive director would be in violation of Code Section 25-4-105(1) should he or she act in such a way as to cause a pecuniary benefit to be obtained by the for-profit partnership/owner of the multi-family housing facility located in the municipality of the housing authority. An example would be the approval by the housing authority of some type of rent subsidy to occupants of the multi-family housing facility.

    Throughout this opinion the Commission used the assumption that the for-profit partnership is a business with which the executive director is associated as defined in Code Section 25-4-103(d).
 
 
 

Ronald E. Crowe Executive Director