### THE ATTORNEY GENERAL OF TEXAS

Honorable John T.Montford Opinion No. JM-1065 Chairman State Affairs Committee Re: Whether the Lubbock Power Texas State Senate and Light Company may contract P. 0. Box 12068 with the Texas Tech Research Austin, Texas 78711 Foundation if aLubbock city councilman ischairman of the foundation board ofdirectors (RQ-1676)

Dear Senator Montford:

You request an opinion about possible conflicts of interest involving aproposed contract between the city of Lubbock, acting through Lubbock Power and Light, and the Texas Tech University andHealth Sciences Center Research Foundation, a nonprofit corporation which is closely associated with Texas Tech University. Amember of the Lubbock City Council serves as chairman of the board of directors of theTexas Tech Research Foundation. YOU wish toknow how the laws ondual office holding, dual agency, and conflict of interest for state andmunicipal officers affect this individual's participation inthe contracting process.
Article XVI, section 40,-of the Texas Constitution prevents oneperson fromholding or exercising "atthe same time, more than one civil office of emolument.11 It is well established that a city council member isa civil officer of emolument within thisprovision ifhe receives compensation forhis service. See. e.a Tillev v. Roaers, 405 S.W.2d 220 (Tex.Civ. APP. - Beaukont 1966, writ ref'd n.r.e.): Attorney General Opinion MW-39 (1979):LetterAdvisory No. 154 (1978). Article XVI, section 40,will not apply inthis
case unless the chairman of the foundation board also holds
or exercises a civil office of emolument.

The Lubbock city attorney's office has submitted a brief discussing the status of the foundation's directors and a copy of the by-laws of Texas Tech University and Health Sciences Center Research Foundation. The by-laws

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identify the foundation asanonprofit corporation organized to support research projects and associated educational undertakings at the university and health sciences center and to seek and obtain contracts, grants, and gifts for the advancement of such research, aswell as similar and related purposes set out inarticles I and II of the by-laws. According to article IV, the elevenmembers of the board of directors serve three-year terms. Seven are appointed by the Board of Regents of Texas TechUniversity, and the remaining fourmembers are appointed by the Board of City Development of Lubbock. Several ex-officio non-voting members aredrawn from theuniversity administration.

Article V of the foundation by-laws provides that the directors elect the chairman, who is the chief executive officer of the foundation. He or his designee is responsible for negotiating service contracts with other agencies. Contracts and agreements with other agencies must be approved and executed byboth the chairman or his designee and the executive director. The executive director isappointed by theboard of regents upon the recommendation of the foundation andmay bedismissed by the regents. is custodian of the funds and the financial records of t:z foundation. See aenerallv V.T.C.S. art. 1396-2.23B (audit
or financial report required of nonprofit corporations assisting state agencies). Article Xof theby-laws grants the board of regents final approval of amendments to the foundation's by-laws.

Inaddressing your question about dual office holding,
wemust determine whether the chairman of the board of directors is acivil officer of emolument within article XVI, section 40, of the Texas Constitution. Wewill not address any other legal issues raised by the relationship between theuniversity and the foundation. See aenerallv Attorney General Opinion H-1309 (1978). Our answer will be based on the by-laws which have been submitted to us and will notundertake the investigation orresolution of fact questions.

The definition ofpublic officer also applies to a civil officer within article XVI, section 40, of the constitution. Attorney General Opinion MW-415 (1981). A public officer is an individual upon whom a "sovereign function of the government is conferred," tobe exercised for thebenefit of the public laraelv independent of the control of others. Aldine Inden. School Dist, v. Standley, 280 S.W.2d 578, 583 (Tex. 1955).

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No sovereign function of the government is conferred upon the chairman of the foundation board ofdirectors. He does not exercise governmental authority over the university bydelegation from the legislature or by the board of regents from its statutory authority to manage and operate Texas State Technical Institute. See Educ. Code 5 135.24. His authority derives from and isexercised onbehalf of the nonprofit corporation, a private entity. See aenerally Attorney General Opinions JM-852 (1988) (nonprofit corporation distinguished from a state-supported institution of higher education): JM-782 (1987) (employee of a nonprofit corporation which provides transportation services isnot an employee of a state agency orpolitical subdivision). The by-laws give the board of regents control over the executive director of the foundation andveto power over amendments to the by-laws, but donot authorize the regents to control the chairman of theboard. Nor has the chairman any authority togovern the university. Accordingly, he isnot a public officer, a public employee, or a civil officer within article XVI, section 40,of the Texas Constitution. This provision of the constitution does notprevent amember of the Lubbock City Council from serving as chairman of the Texas Tech Research Foundation board ofdirectors.

Inview ofourdecision that the chairman of the board ofdirectors of the foundation isnot apublic officer or employee, we need not consider the conflict of interest doctrines that apply to state officials. See, e.a., Attorney General Opinions JM-852 (1988) (contract between city council anduniversity which employs city council members): JM-817 (1987) (contractbetween state university and firm in which regent has a financial interest).

You finally inquire about conflict of interest provisions applicable to municipal officials. The city attorney's brief discusses the conflict of interest provisions of the Lubbock City Charter; We will not, however, interpret these provisions. See Attorney General Opinion JM-846 (1988).
Chapter 171 ofthe Local Government Code applies to conflicts of interest of "localpublic officials," including members of thegoverning body ofacity. Local Gov't Code 5 171.001(1). Under the conditions described in chapter 171, a local public official isbarred fromparticipation in
avote or decision involving abusiness entity inwhich he has a substantial interest. Id. 5 171.003. A "business entity" includes anonprofit corporation. Attorney General Opinions JM-852 (1988):JM-424 (1986). Aperson who owns a

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specified percentage ofvoting stock or acertain amount of the fairmarket value of abusiness entity has a substantial interest in it, as does onewho receives funds from it in
excess of 10percent ofhis gross income for the previous year. Local Gov't Code § 171.002 as amended byActs 1987, 70th Leg., ch. 362, 52,at 1799.)I

Amemorandum from the Lubbock city attorney's office states that the foundation's directors do not receive compensation, but they are reimbursed for some expenses and receive token gifts, including commemorative awards such as plagues. These gifts have never exceeded $200per board member, per year. The brief from the city of Lubbock concludes that the city council member does not have a substantial financial interest in the foundation, since it ishighly unlikely that $200 ingifts would amount to 10 percent ofhis gross income. Inthe absence of contrary facts,wewill assume that the city council member's receipt of $200per year from the foundation does not constitute a substantial interest in it. Accordingly, chapter 171of the Local Government Code does not apply tohis participation in votes or decisions of the Lubbock City Council on the proposed agreement with the Texas Tech Research Foundation. Hemay participate in those proceedings. See Attorney General Opinion JM-424 (1986) (policy against dual agency does notprohibit contracts authorized under former article 988b,V.T.C.S., recodified as chapter 171 of the Local Government Code).

SUMMARY

The chairman of theboard ofdirectors of the Texas TechUniversity andHealth Sciences Center Research Foundation, a nonprofit corporation closely associated with Texas Tech University, does not occupy or exercise
a civil office of emolument within article

1. Former article 98823,V.T.C.S., was recodified as chapter 171of the Local Government Code by the 70th session of the legislature. Acts 1987, 70th Leg., ch. 149. The
same session of the legislature adopted amendments to former article 988b,V.T.C.S., without reference to the legislature's repeal and recodification of that provision. The amendments arepreserved andgiven effect as part of the code provision. Gov't Code 5 311.031(c).

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XVI, section 40, of theTexas Constitution. This constitutional provision does notbar a city councilman of the city of Lubbock from serving as chairman of the foundation's board ofdirectors.

Ifthe city councilman does not have a substantial interest in the Texas Tech Research Foundation asdefined by chapter 171 of the Local Government Code, that statute does notbar him fromparticipating in votes and decisions of the city council concerning agreements between the city and the foundation.

Very truly yo r , 

# Ld!!h.Jk

.

JIM MATTOX Attorney General ofTexas

MARY KELLER First Assistant Attorney General

LGUMCCRRARY Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY Special Assistant Attorney General

RICK GILPIN Chairman, Opinion Committee
Prepared by Susan L.Garrison Assistant Attorney General

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