HonorableMarcus D. Taylor OpinionNo. JM-1187

Criminal DistrictAttorney Wood County Re: Eligibility of a realtor P. 0. Box 689 to serve on the board of dirQuitman, Texas 75783 ectors of an appraisaldistrict (RQ-1880)
Dear Mr. Taylor:
YOU ask about the following situation involving a member of the board of directors of an appraisaldistrict:

The appraisaldistrict signed an earnest money contractwith an individualto purchase z;;;zn property to house the appraisal

. The realtor for the seller **iS** a member of the appraisaldistrict board of directors. That board **member** has abstained from all votes concerning thismatter.
You ask whether the real estate transaction in question would contravene section 6.036 of the Tax Code,1 the common lawdoctrine of incompatibility, or the common law rules relating to conflicts of interest. The common law doctrine of incompatibility is inapplicableto the situationyou describe since it applies to incompatibility of two or more publicpositions. See Attorney General Opinions JM-133, JM-129 (1984). The board member's work as a realtor is in a private capacity,not a public capacity. Section 6.036 of the Tax Code governs conflicts of interest involvingappraisal districtboardmembers. That

1. Although your request letter refers to section 6.03 of the Tax Code,we assumeyou are asking about section 6.036 of the Tax Code, which deals with conflicts of interest.

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sectionprohibits an appraisaldistrict from entering into a contractwith a member of the board of directors of an appraisaldistrict. Whether the real estate transactionyou describeviolates section 6.036 depends on whether the board member himself has entered into a contractual relationship with the board. Your description of the transaction in question suggests that the boardmember has a contractual relationship only with the seller, not with the board. If that is the case, there is no violation of section 6.036. If,however, the board member acted as an agent for the board as well as the seller, the transaction would be in violation of section 6.036 and the board member's abstention would not cure theviolation. See uenerallv Janes v. P Co;-, ;Z?itS.W.2d733, 740 (Tex.App. - Houston [lst DisE.7

ref*d n.r.e.) genekallypaid by seller, (real estate commission is andbroker is generally recognized as seller's agent); &illiu Camnbeu 480 S.W.2d 250 (Tex.Civ. App. - Houston ;14% Dist.] '1972writ n.r.e.) (brokermay act forboth buyer a;d seller withref'd fuli knowledge and consent of both principals); Chamberlain v. North Cent. Inv. Corm% Amarillo 1968, : 432 S.W.Zd 581 (Tex. Civ.App. -

writ ref d n.r.e.) (dealingwith relationship between vendor and members ofmultiple listing service). Chapter 171 of the Local Government Code governs conflicts of interest involving local officials.2 It makes it an offense'for a localpublic official to participate in a vote or decision on a matter involvinga business entity in which the local public official has a substantial interest if it is reasonably foreseeablethat an action on the matter would confer an economicbenefit to the business entity involved. Local Gov't Code S 171.003(a)(l). A board member of an appraisaldistrict is a "localpublic official" forpurposes of chapter 171. & 5 171.001(l); Attorney General Opinion JM-1060 (1989). A personhas a "substantial interest" in a business entity ifhe owns "10percent **or** more of the voting stock or shares of the business entity" or owns either 10percent or more or $5,000 or more of the

2. Chapter 171preempts the common law of conflicts of interest as applied to local public officials. Local Gov't Code 5 171.007(a);see also Attorney General Opinion JW-424 (1986). Also, a member of the board of an appraisal districtmust complywith both chapter 171 of the Local Government Code and section 6.036 of the Tax Code. m Tax Code 5 6.036(f) (section6.036does not limit application of any other law).

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or owns either 10percent or more or $5,000 or more of the fairmarket value of the business entity or if "funds receivedby the person from the business entity exceed 10 percent of the person's gross income for the previous year." Local Gov't Code s 171.002(a)(l). You have not provided sufficient information forus to knowwhether the board member in questionhas a substantial interest in a business entity that is involved in a real estate transaction with the board. If the board member does have such an interest, the board member must comply with section 171.004, which provides: (a)If a local public official has a

substantial interest in a business entity or in real property, the official shall file, before a vote or decision on any matter involvingthe business entity or the real property, an affidavit stating the nature and extent of the interestand shall abstain from furtherparticipation in thematter if: (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 (2) in the case of a substantial interest in real property, it is reasonably foreseeable that an action on the matter will have a special economic effect on the value of the prope*y, distinguishable from its effect on the public. (b)The affidavitmust be filedwith the officialrecord keeper of the governmental entity. (c)If a localpublic official is required to file and does file an affidavit under Subsection (a),the official is not required to abstain from furtherparticipation in the matter requiringthe affidavit if a majority of the members of the governmentalentity of which the official is a member is composed of persons who are likewiserequired to file and

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who do file affidavits of similar interests on the same official action.
See also j& 55 171.006 (effect of violation), 171.005 (separate vote required on matter in which member of governingbody has substantial interest). We note that Attorney General Opinion JM-379 (1985) indicated that t~pa*icipationl~

in amatter includeddeliberationwith the board about the matter.
Because chapter 171 of the Local Government Code preempts the common law of conflicts of interestas applied to localpublic officials,we need not considerwhether the common law would nrohibit the transaction in cuestion. Local Gov't Code §-171.007(a): see also Attorney- General Opinion JM-424 (1986).
SUMMARY

Whether chapter 171 of the Local Government Code or section 6.036 of the Tax Code prohibits a member of the board of directors of an appraisal district from acting as a real estate agent for a vendor who sells real property to the appraisal district depends on the facts of the specific transaction. Very truly yo

J f*

A;, JIM MATTOX Attorney General of Texas
MARYEEJXER FirstAssistantAttorney General
IOU MCCREARY ExecutiveAssistantAttorney General
JUDGE ZOLLIE STEAKLEY SpecialAssistantAttorney General
RENEA HICKS SpecialAssistantAttorney General
RICK GILPIN Chairman,Opinion Committee Preparedby SarahWoelk Assistant Attorney General

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