Court Opinion

ID: 4122338
Source: CourtListenerOpinion
Date Created: 2017-02-01 18:08:07.113134+00
Date Added: 2024-06-11T14:37:15.111136
License: Public Domain

CONTRACTS: OFFICERS l'NTEREST: CITY: Oflicer and employee of nonprofit
corporation that provides public access cable television services in connection with city franchise
and contract is not disqualified from serving as mayor or council meinber, but must abstain nom
participating in city actions involving franchise Op. Atty. Gen. 90a-1, July 12, 1973 superceded.
Minn. Stat. §§ 238.15 and 471.87 (1996).

90e
(Cr. Ref. 90a-l)

August 25, 1997

Maren Swanson

City Attorney

City of Northiield

105 East Fif’th Street
PO Box 240
Northfield, MN 55057

Dear Ms. Swanson:
From the information provided to us in your letters to the office of the Attomey General,

we have ascertained the following:
FACTS

The City of Northiield (“Northtield”) granted a nonexclusive cable
television franchise to NorCorn Video, Inc. (“NorCom”). Ordinance 444,
Ordinance Summary, dated November 21, 1983 (now codified at Northiield
Ordinance § 1520:00, et s_e_q.) (“Franchise”). 'I'he ordinance required NorCom to
provide public access channel(s) for use by the public and pay 5 percent of its
gross revenues to Northtield as a franchise fee.

ln 1985, Northfield and NorCom amended the franchise agreement to
relieve NorCom of its obligation to provide local origination and public access
staff, equipment, and associated commitments and to impose instead an obligation
to pay to Northfield an annual grant for support of local origination and public
access television activities Cable Communications Offering, Amendment
Agreement No. 1, City ofNorthfield, dated May I, 1985 (“Amendment
Agreement”). Northfield delegated the duties to administer/operate the use and
maintenance of certain local origination/public access equipment and to operate

Maren Swanson
August 25, 1997

Page 2

the public access channels to NTV 26, a nonprofit corporation of the State of
Minnesota. Agreernent for the Delegation of Public Accesstocal Origination
Cable Communications Functions, dated April 9, 1985 (“Delegation Agreernent”).

The Delegation Agreement also provided that N"I'V 26 would receive from
Northfield 75 percent of the cable franchise fee collected by Northfleld, plus the
amount of the grant Northiield received under the amended cable franchise
agreement with NorCom. More or less funds would be allocated annually upon
request ofNTV 26. NTV 26 has never requested an adjustment and Northfleld
has always paid according to the terms of the Delegation Agreement.

'l`he amended Franchise and Delegation Agreement are still in effect and
have not been renegotiated or reconsidered The Franchise and the Delegation
Agreernent were not publicly bid, but were awarded upon request for proposals

Northiield’s present mayor was an incorporator of NTV 26. He is
currently one of its directors and as its primary empioyce, lie is responsible for
NTV 26’s operation He receives an annual salary of $25,000 from the
corporation.

The service area of NTV 26 comprises the City of Northtield the City of
Dundas, and some neighboring townships.

Du.ring the period 1990 to 1994, the present mayor ofNorthiield served as
a city council member. Then in 1994, he was elected to his present office of
mayor.

You ask substantially the following questions:
QUESTION ONE

Is the mayor ofNorthiield prohibited from serving as mayor because he is
an employee, incorporator and director of Northtield’s public access cable
television provider?

OPINION
We answer your question in the negative.

As a general proposition, circtunstances involving a public official‘s personal interest in

official contracts are addressed by Minn. Stat. § 471.87 which provides:

Maren Swanson
August 25, 1997
Page 3

Except as authorized in section 471 .88, a public officer who is authorized to take
part in any manner in making any sale, lease or contract in official capacity shall
not voluntarily have a personal financial interest in that sale, lease, or contract or
personally benefit financially therefrom. Every public officer who violates this
provision is guilty of a gross misdemeanor.

According to the facts .. certained, the mayor who is also a member of the council has a direct
financial interest in NTV 26 by virtue of his position as a director and primary employee who
receives an annual salary.l NTV 26 has a contract with Northlield which has been in place since
1985. Delegation Agreement. The contract funds NTV 26 with cable franchise fees and
additional grant funds received by Northfield from its &anchisee, NorCom. Amendment
Agreernent, paragraph 2; Delegation Agreement, paragraph 2. The Amendment Agreernent with
NorCorn may be renegotiated every three years with respect to fees paid. Amendment
Agreement, paragraph 2. ”Ihe Delegation Agreernent with NTV 26 may be amended annually to
change the amount of the funds allocated to NTV 26. Delegation Agreernent, paragraph 2. In
both cases, Northfield, as the f`ranchiser and contractor, respectively, would be the entity
renegotiating the fee structures through its council. Thus it appears that the mayor has a direct
financial interest in one contract, (the Delegation Agreement) and an indirect interest in a second
contract (the Franchise Agreement) both of which are made and amended by the council of
which he is a member. Thus, if we consider only section 471 .87, the mayor would be in
violation of that section and subject to the penalties provided turless one of the exceptions
contained in section 471.88 applied.

However, we must also consider other relevant legislation which pertains more
specifically to potential conflict of interest situations related to cable television franchises Minn.

Stat. § 23 8.15 (1996) provides:

 

1 It is assumed that the mayor receives no financial benefit 1 11 his position as incorporator,

since NTV 26 is a Minnesota nonprofit 501(c)(3) corporation

Maren Swanson
August 25, 1997
Page 4

Members of any elected body granting fcable communications] franchises and
employees of any franchising body who would be directly involved in the
granting or administration of franchises for cable communications and who are
employed by or knowingly have any financial interest in any cable
communications company, bidding on such franchise, or the cable
communications company granted the franchise, or their subsidiaries, major
equipment or program supplier shall abstain from participation in the franchising
of a cable communications company or the administration of such hanchise.

This plain language appears to contemplate that some members of elected bodies granting or
administering franchises will have a financial interest in cable communications companies
granted a “franchise” or in its subsidiaries In contrast to the broad prohibitory terms of
section 471.87 discussed above, however, section 238.15 addresses the conflict by prohibiting
the interested member from any participation in the granting or administration of the franchise
In that respect, section 238.15 presents a situation similar to that described in Op. Atty.
Gen. 90, June 9, 1994, wherein we concluded that a Housing and Redevelopment Authority
(“HRA”) commissioner could enter contracts with the Housing and Redevelopment Authority, if
the notice and non-participation requirements of Minn. Stat. § 469.009 (1996) governing
potential conflicts of interest involving HRA commissioners were observed. Although
section 238. 15 does not contain a notice provision, it does implicitly permit an elected official to
retain his or her financial interest in a cable communications company granted a franchise or in
its subsidiaries if he or she abstains from participation in the franchising of the company or the
administration of such franchise.
Our analysis in Atty. Gen. Op. 90, June 9, 1994, we believe applies to this situation as
well. ln that opinion we concluded that the “special” statutory provisions relating to HRA
commissioners’ contractual interests prevailed over the more general prohibition contained in

section 1'-1»71.8'7.2 For similar reasons we believe that the non-participation provisions of Minn.

 

1 Minn. stat § 645.26, subd. 1 (1996) provides
When a general provision in a law is in conflict with a special provision in the
same or another law. the two shall be construed, if possible, so that effect may be

Maren Swanson
August 25, 1997
Page 5

Stat. § 238.15 apply to members of an elected body having a personal financial interest in any
cable communication company or its subsidiary which bid on a contract or which is a party to a
contract that is being administered by the elected body. ln the June 9, 1994 opinion we also

noted that

Another arguable approach to the same result may beto observe that, by
virtue of the language contained in Section 469.009, a commissioner who knows,
or has reason to know of a personal conflict of` interest in an I-IRA project is
simply not “authorized to take part” officially in making contracts associated with
that project, and is thus not technically within the prohibition of Section 471 .87.

Likewise in this case, the mandate in section 238.15 that elected members of a h'anchising body
abstain &om participation in franchise granting or operation actions would indicate that the
official is not authorized to take part in franchising decisions in his or her official capacity.
While there may be arguments to the contrary, we believe that the Delegatjon Agreement
at issue is covered by section 238.15. Minn. Stat. § 238.02, subd. 5 (1996) defines “n'anchise” to
mt n “any authorization granted by a municipality in the form of a fi'anchise, privilege, permit,
license or other municipal authorization to construct, operate, maintain, or manage a cable
communications system in any municipality.” Additionally, Minn. Stat. § 238.081, subd. 9
(1996) permits a franchising authority to franchise a nonprofit owned system, while Minn. Stat.
§ 238.081, subd. 4(3)(iv) (1996) includes in its listing of areas to be covered in the franchise “the
number of channels and services to be made available for access cable broadcasting.” Thus, in
light of the broad definition of “&anchise," the fact that public access is part of cable service

covered by chapter 238 nd that a franchising authority may grant a franchise to a nonprofit

 

given to both. lf the conflict between the two provisions be irreconcilable, the
special provision shall prevail and shall be construed as an exception to the
general provision, unless the general provision shall be enacted at a later session
and it shall be the manifest intention of the legislature that such general provision
shall prevail.

Maren Swanson
August 25, 1997
Page 6

corporation, the Delegation Agreement does appear to be covered by the cable communication
laws including section 23 8.1 5.

Therefore, we conclude that the mayor in these circumstances would not be affected by
the conflict of interest provision of section 471 .87, but would be governed by the requirements of
section 23 8.15, requiring him to abstain from participation in the franchising of the cable
communications company or the administration of that franchise

ln reaching this conclusion we have considered Op. Atty. Gen. 90a-1, July 12, 1973,
where we stated that a person may not serve on a village council while a franchise agreement is
in effect when the person had a financial interest in the fi‘anchisee company, without first
divesting himself of his interest. That opinion addressed Minn. Stat § 412.311 (1971) which

provided in part:

Except as provided in sections 471 .87 to 471.89, no member of the village council
shall be directly interested in any contract made by the council.3

It did not directly address section 471 .87 or section 471.88 except to note in a footnote that none
of the exceptions were applicable Neitlier did that opinion address section 238.15.

Section 238.15 was enacted during the 1973 legislative session md did not become effective
until August l, 1973, after the opinion was issued. Therefore, since no exceptions to the conflict
of interest rule existed at that time for franchises, that opinion must be read in its historic context

and is superseded to the extent inconsistent with this opinion.

 

3 Section 412.311 is applicable only to statutory cities.

Maren Swanson
August 25, 1997
Page 7

In light of our conclusion here it is not necessary to address your remaining questions

concerning measures which might be taken by the mayor or council to avoid further violations of

Minn. Stat. § 471.87.

Sincerely,

HUBERT H. HUMPHREY IlI
Attorriey General

KENNETH E. RASCHKE, IR.
Assistant At'torney General

AG:30404 vI