February 5, 1988 

r 

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 San Marcos approve an abandonment of certain streets 

and alleys bounded on all sides by the university. The 

request for abandonment was formally reviewed 

planning 

by the city 

commission, which recommended to 

council that the request 

the city 

be granted. The city council 

approved the abandonment. The university acquired ownership of the abandoned city easements, paying fair market 

value for them. &g Local Gov't Code 9272.001 (former 

article 5421c-12, V.T.C.S.; provides for the sale or lease 

of real property by a political 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 from the university in 

excess of 10% of his gross income for the 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 be prohibited by article 

988b, V.T.C.S., from voting to grant or deny 

the abandonment request? 

p. 4121 
Honorable Hugh Parmer - Page 2 (JM-852) 

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 

It was also repealed 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. If a 

different result would be reached under former article 

988b, V.T.C.S., we will make note of it. 

Section 171.004 of the Local Government Code, as 

amended by House Bill No. 1948 of the 70th Session of the 

Legislature, provides that a local public official commits 

an offense if he violates the following provision: 

(a) If a local public official or a 

person related to that official in the first 

degree by either affinity or consanguinity 

has a substantial interest in a business 

entity or in real 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 

in the matter if: 

participation 

(1) in the case of a substantial interest 

in a business entity the action on the matter 

will have a special economic effect on the 

business entity that is distinguishable from 

the effect on the public; or 

-. 

p. 4122 
Honorable Hugh Parmer - Page 3 (JR-852) 

(2) in the case of a-substantial interest 

in real property, it is reasonably forseeable 

that an action on the matter will have a 

special economic effect on the value of the 

property, distinguishable from its effect on 

the public. (Emphasis added.) 

Local Gov't Code §171.004(a). 

Members of the San Marcos City Council are local 

public officials within this provision. Local Gov't Code 

§171.001(1). The spouse of a public official is a person 

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 only when a member of a local governmental body or 

his relative has a substantial interest in a "business 

entity" which will be affected by a decision of the 

governmental body. Thus, section 171.004 of the Local 

Government Code will not apply to this transaction unless 

Southwest Texas State is a "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 which may engage in activities 

such as providing goods, services or financing, which are 

directed at making money for the owners or beneficiaries 

of the entity. Southwest Texas State University is an 

institution of higher education under the management and 

control of the Board of Regents, Texas State University 

system. Educ. Code 596.41. It is not any of the business 

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, if taken out of context, appears to be 

broad enough to include a state university, since the 

university is an VVentity8V recognized by Education Code 

provisions. However, the definition of "business entity" 

in section 171.001(2) should be construed according to the 

rule of ejusdem generis. Where general words follow 

p. 4123 
Honorable Hugh Parmer - Page 4 (JM-852) 

7 

specific words in a statutory enumeration, the general 

words are construed to include only items similar in 

nature to those items enumerated by 

specific words. Farmers' 

the prevailing - 

8 Mechanics' 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 (4th Ed.). 

other entity recognized by law" 

Thus, we believe that "any 

should be read to refer to 

private entities organized in a 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, in contrast to the 

business entities identified in section 171.001(2) of the 

Local Government Code, is a public 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 fees collected 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 is publicly funded and 

its use of its funding is strictly 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 is not 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, in contrast to the limit included 

in the definition of "business entity" in the statute on 

financial disclosure requirements for public officers. 

V.T.C.S. art. 6252-933, §2(11). The 

consider the maxim 

opinion did not 

"ejusdem generis," but it would have 

reached the same result had it done so. 

corporation is 

A nonprofit 

a private entity, which operates in a 

p. 4124 
Honorable Hugh Parmer - Page 5 (JM-852) 

statutorily authorized form of organization. See Texas 

Non-Profit Corporation Act, V.T.C.S. art. 1396-1.01 & 

seer. Although a nonprofit corporation may not distribute 

income to its members, directors, or officers, it may pay 

compensation for services rendered. Id. Thus, the 

employees of a nonprofit corporation may stand to gain 

from the corporation's transactions. Unlike a state 

supported educational institution, a nonprofit corporation 

is a private entity which may carry out purposes similar 

to the purposes of some of the business entities named in 

section 171.001(2) of the Local Government Code. 

In answer to your question, we conclude that a San 

Marcos city council member who worked for Southwest Texas 

State University or whose spouse worked for the university 

would not be prohibited by former article 988b, V.T.C.S., 

as recodified, from voting to grant or deny the request 

for abandonment. The university is not a business entity 

within the statute. There are, however, other statutes 

relevant to potential conflicts of interest involving 

public officers and public employees, and these may apply 

in a particular case. See. e.a Penal Code 039.01 

'(official misconduct): 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 

as chapter 171 of the Local Government Code, 

does not apply to a vote on a matter involving 

Southwest Texas State University by a member 

of the San Marcos city council who is employed 

by the university or 'who has a substantial 

interest in the university through his 

spouse's employment there. Southwest Texas 

State University is not a ltbusiness entity" as 

defined in chapter 171.001(2) of the Local 

Government Code. 

Very truly yo , J A h 

JIM MATTOX 

Attorney General of Texas 

MARY WLLHR 

First Assistant Attorney General 

p. 4125 
Honorable Hugh Parmer - Page 6 UM-852) 

LOU MCCRRARY 

Executive Assistant Attorney General 

JUDGE ZOLLIE STEAKLEY 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Susan L. Garrison 

Assistant Attorney General 

p. 4126