February 5, 1988



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r Honorable Hugh Parmer Opinion NO. (JM-852)

Chairman Committee on Inter- Re: Applicability of former governmental Relations article 988b, V.T.C.S., to Texas State Senate transactions between a city P. 0. Box 12068 council and a state univerAustin, Texas 78711 sity or school district which employs city council members (RQ-1197)

Dear Senator Parmer:

You request advice on the application of article 988b,V.T.C.S., to local public officials who are also employed by a state university. You inform us that Southwest Texas State University requested that the city of SanMarcos approve an abandonment ofcertain streets and alleys bounded onall sides by theuniversity. The request forabandonment was formally reviewed planning by the city

commission, which recommended to council that the request the city begranted. The city council approved the abandonment. Theuniversity acquired ownership of the abandoned city easements, paying fairmarket value for them. &g Local Gov't Code 9272.001 (former article 5421c-12, V.T.C.S.; provides forthe sale or lease of real property by apolitical subdivision).

You inform us that the San Marcos city council consists of six members. At present, four city council members either work for Southwest Texas State University

or are married to university employees. Each of these university employees receives funds fromthe university in
excess of 10%ofhis gross income forthe previous year.

You ask the following question:

Would a city council member who worked for Southwest Texas State University or whose spouse worked for Southwest Texas State University beprohibited by article 988b,V.T.C.S., fromvoting togrant ordeny the abandonment request?

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Article 988b,V.T.C.S., was amended by three bills adopted by the 70th session of the legislature. See Acts 1987, 70th Leg., chs. 323, 362, 659. and recodified as Itwas also repealed chapter 171 of the Local Government Code. Acts 1987, 70th Leg., ch. 149, of article 988b, 549(l). The repeal V.T.C.S., by the Local Government Code does not affect its amendment by the same legislature that enacted the code. Gov't Code 5311.031(c). The amendments
are given effect as part of the code provision that reenacted article 98833,V.T.C.S. &

The abandonment of streets and alleys was approved by the city council before the three amendments to article 988b,V.T.C.S., became effective. See aenerally S.B. No. 1131,Acts 1987, 70th Leg., ch. 323 (amendments to article 988b,V.T.C.S., effective Sept. 1, 1987); H.B. No. 1948, Acts 1987, 70th Leg., ch. 362 (amendments to article 98833, V.T.C.S., effective Sept. 1, 1987);Acts 1987, ch. 659 (amendment 70th Leg., stating when board members of higher education authority are subject to article 98813,V.T.C.S., effective June 18, 1987). Since you indicate that you are concerned about future transactions between the the university, we Will apply article 98813, city and V.T.C.S., as amended and recodified to the situation you raise. Ifa different result would be reached under former article 988b,V.T.C.S., wewillmake note of it.

Section 171.004 of the Local Government Code, as amended byHouse BillNo. 1948of the 70th Session of the Legislature, provides that a local public official commits

an offense ifheviolates the following provision:

(a) If a local public official or a person related to that official inthe first degree by either affinity or consanguinity has a substantial interest in a business entity or inreal property, the local official, before a public vote or decision on any matter involving the business entity or the real property, shall file an affidavit stating the nature and extent of the interest and shall abstain from further inthematter if: participation

(1) inthe case of a substantial interest inabusiness entity the action on thematter will have a special economic effect on the business entity that isdistinguishable from the effect on thepublic; or -.

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(2) inthe case of a-substantial interest inreal property, it isreasonably forseeable that an action on the matter will have a special economic effect on thevalue of the property, distinguishable from itseffect on the public. (Emphasis added.)

Local Gov't Code §171.004(a).

Members of the SanMarcos City Council are local public officials within this provision. Local Gov't Code §171.001(1). The spouse ofapublic official isaperson related to that official within the first degree of affinity. Attorney General Opinion V-785 (1949)
. However, section 171.004 of the Local Government Code applies onlywhen amember of a local governmental body or his relative has a substantial interest ina "business entity" which will be affected bya decision of the governmental body. Thus, section 171.004 of the Local Government Codewill not apply to this transaction unless Southwest Texas State isa "business entity."

Section 171.001 of the Local Government Code includes the following definition:

(2) 'Business ,entity' means a sole proprietorship, partnership, firm, corporation, holding company, joint-stock company, receivership, trust, or anv ther entitv recoanized bv la W. (Emphasis aided.)

Local Gov't Code §171.001(2).

The definition specifically names several types of private business entities whichmay engage inactivities such asproviding goods, services or financing, which are directed atmaking money forthe owners orbeneficiaries of the entity. Southwest Texas State University is an institution ofhigher education under the management and control of the Board of Regents, Texas State University system. Educ. Code 596.41. It isnot anyof thebusiness entities specifically named in section 171.001(2).

The definition of business entity also includes the generalized phrase "or any other entity recognized by law.* This phrase, iftaken out ofcontext, appears tobe broad enough to include a state university, since the university is an VVentity8Vrecognized by Education Code provisions. However, thedefinition of "business entity" in section 171.001(2) should be construed according to the rule of ejusdem generis. Where general words follow

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specific words ina statutory enumeration, the general words are construed to include only items similar in nature to those items enumerated by specific words. Farmers' the prevailing - 8Mechanics' National Bank v. Hanks, 137 S.W. 1120 (Tex.1911);Bx carte Muckenfuss, 107 S.W. 1131, 1132 (Tex. Crim. App. 1908); Bmnlovers' Casualtv Co. v. Stewart Abstract Co., 17 S.W.2d 781 (Tex. Comm'n App. 1929, judgmt adopted): Sutherland, Statutorv Construction 947.17 (4thEd.). other entity recognized by law" Thus, we believe that "any should be read to refer to private entities organized ina form authorized or recognized by the legislature to carry out purposes similar to the purposes of the entities listed in section 171.001(2) of the Local Government Code.

Southwest Texas State University, incontrast to the business entities identified in section 171.001(2) of the Local Government Code, isapublic institution established by legislative action and governed by public officers exercising delegated legislative authority. See, e.a Educ. Code 5595.01, 95.21, 95.27-95.36, 96.41. Th;? university's financing consists primarily of constitutionally appropriated funds, funds the legislature, appropriated by

and feescollected from students legislative authorization. pursuant to Tex. Const. art. VII, 517: Educ. Code §§95~.26, 95.28. Its primary purpose is to provide higher education to persons who qualify for admission. Educ. Code §§61.003, 96.41. Southwest Texas State University does not carry out the commercial purposes of the entities specifically identified in section 171.001(2). The university ispublicly funded and itsuse

### ofits funding isstrictly controlled by statute. The general language of section 171.001(2) of the Local Government Code should not be construed to include a public institution of education like Southwest Texas State University. Accordingly, "business entity" the university isnot a under that provision.

We note that Attorney General Opinion JM-424 (1986) concluded that a nonprofit corporation was a business entity within article 98833,V.T.C.S. This opinion relied
on the general language of the definition, on the specific inclusion of "corporationt' in the definition, and the absence of language limiting "business entities" to profit-making entities, incontrast to the limit included inthe definition of "business entity" inthe statute on financial disclosure requirements for public officers. V.T.C.S. art. 6252-933, §2(11). The consider themaxim opinion did not "ejusdem generis," but itwould have reached the same result had it done so. corporation is A nonprofit
a private entity, which operates in a

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statutorily authorized formof organization. See Texas Non-Profit Corporation Act, V.T.C.S. art. 1396-1.01 &
seer. Although anonprofit corporation may not distribute income to itsmembers, directors, or officers, itmay pay compensation for services rendered. Id. Thus, the employees of anonprofit corporation may stand to gain from the corporation's transactions. Unlike a state supported educational institution, anonprofit corporation isaprivate entity which may carry out purposes similar to the purposes of some of thebusiness entities named in section 171.001(2) of the Local Government Code.

Inanswer to your question, we conclude that a San Marcos city council member whoworked for Southwest Texas State University orwhose spouseworked for theuniversity would notbeprohibited by former article 988b,V.T.C.S.,
as recodified, from voting togrant ordeny the request forabandonment. Theuniversity isnot abusiness entity within the statute. There are, however, other statutes relevant to potential conflicts of interest involving public officers andpublic employees, and these may apply ina particular case. See. e.a Penal Code 039.01 '(officialmisconduct): V.T.C.S. **art: ‘** **6252-9b, §8(c)**  (state employee should not accept other employment which would interfere with independence of judgment in performing his official duties).

SUMMARY

Former article 988b,V.T.C.S., recodified
aschapter 171of the Local Government Code, does not apply to avote on amatter involving Southwest Texas State University by a member of the SanMarcos city council who isemployed by the university or 'whohas a substantial interest in the university through his spouse's employment there. Southwest Texas State University isnot a ltbusinessentity" as defined in chapter 171.001(2) of the Local Government Code.

Very truly yo , 

# J h

A
JIM MATTOX Attorney General ofTexas

MARY WLLHR First Assistant Attorney General

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LOUMCCRRARY 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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