Court Opinion

ID: 4130617
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:06:27.687337+00
Date Added: 2024-06-11T14:34:16.712756
License: Public Domain

February   5, 1988

    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 univer-
    Austin, 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 by the city
    planning  commission, which     recommended   to   the city
    council that the request be granted.       The city council
    approved the abandonment.   The university   acquired owner-
    ship 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:
r             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
r          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. It was also repealed
and recodified  as chapter 171 of the Local Government
Code. Acts 1987, 70th Leg., ch. 149, 549(l). The repeal
of article 988b, 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, 70th Leg.,
ch. 659 (amendment 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 city and
the university, we Will  apply article 98813, 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 public
       official, before a 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 participation
       in the matter 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

                   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, corpora-
       tion, holding company, joint-stock   company,
       receivership, trust, or anv      ther entitv
       recoanized bv laW.   (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         the prevailing         -
specific words. Farmers'   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' Casu-
altv Co. v. Stewart Abstract Co., 17 S.W.2d 781       (Tex.
Comm'n App. 1929, judgmt adopted): Sutherland,   Statutorv
Construction 947.17 (4th Ed.). Thus, we believe that "any
other entity recognized by law" should be read to refer to
private entities organized in a form authorized or recog-
nized 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 constitution-
ally appropriated     funds,    funds appropriated    by    the
legislature, and fees collected from students pursuant to
legislative authorization.      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,   the university   is not a
"business entity" 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 opinion did not
consider the maxim   "ejusdem generis,"   but it would have
reached the same result had it done so.         A nonprofit
corporation is 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.

                                   J h
                                    Very truly yo     ,

                                         A
                                    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