January 16, 1992

 

FACTS:



You are currently a city councillor. You wish to accept a
simultaneous salaried position as director of a community action
agency (ABC).

ABC is a non-profit corporation and a "community action
agency" as that term is used in 42 U.S.C. s. 9902(1) and G.L. c.
23B, s. 24. A group of private individuals organized ABC in
response to the federal Economic Opportunity Act of 1964. ABC's
by-laws state as its purpose, in part, "to work toward the
reduction of poverty and the causes and effects thereof by making
the city as well as other public institutions and organizations
aware of the needs and interests of low-income people." ABC
receives most of its funding from the state and federal
governments, and small amounts from the city and from private
sources. The city sometimes contracts with ABC using part of the
city's allocation from the federal Community Development Block
Grant (CDBG) program, as well as other federal, state, or city
funds.

Your proposed position is funded solely by the federal
Department of Energy, with funds passed through only the state
government. The position is not funded at all from city funds, nor
from state or federal funds over which the city exercises any
discretionary control.



QUESTION:


Does G.L. c. 268A allow you to serve as both a city councillor
and an ABC employee?



ANSWER:



Yes, subject to the following limitations.



DISCUSSION:


As a city councillor, you are a "municipal employee." G.L. c.
268A, s. 1(g). Your request raises the following issues under the
conflict of interest law.

Threshold question: is ABC a "municipal agency"?

Whether ABC is a "municipal agency" will significantly affect
our analysis. We must therefore decide that issue first.

Our statute defines a "municipal agency" as "any department or
office of a city or town government and any council, division,
board, bureau, commission, institution, tribunal or other
instrumentality thereof or thereunder." G.L. c. 268A, s. 1(f). To
construe this definition (and the substantially identical ones of
"county agency" and "state agency"), particularly the use of the
word "instrumentality,"we have generally examined four factors:

1. the means by which the entity was created (e.g.,
legislative or administrative action);

2. the entity's performance of some essentially governmental
function;

3. whether the entity receives or expends public funds; and

4. the extent of control and supervision exercised by
government officials or agencies over the entity. See
EC-COI-91-12: 88-2: 85-22: 8465
.

Here, the second and third factors are certainly present to a
considerable extent: ABC performs some governmental functions, and
its budget depends almost entirely on government funds. But one or
both of these statements are equally true of many other private,
nonprofit organizations, including several we have previously
determined not to be government agencies. See, e.g., EC-COI-88-19
(non-profit cable television public-access corporation, which
received funds under city contract, not a "municipal agency");
EC-COI-87-28 (advisory neighborhood council not "municipal
agency"); EC-COI-86-5 (state agency's informal advisory committee
not a "state agency"); EC-COI-85-78 (non-profit "health systems
agency" established under federal statute, which performed state
health planning functions and received state funding, not a "state
agency").

We turn, then, to the first and fourth factors. As to
the means of its creation, ABC was established by private
citizens as (in the words of its present by-laws) "a private
non-profit corporation." See EC-COI-90-7 (unless government agency
creates entity to further its own purposes, purely private
instrument generally does not establish government agency). It does
receive federal and state grants, and to that extent federal
and state statutes prescribe certain minimum standards, largely in
terms of board composition as discussed below, that such
community action agencies" must meet. 42 U.S.C.

Page 366

ss. 9902(1) (defining "eligible entity" for federal Community
Services Block Grant [CSBG] program funds to include a community
action agency), 9904(c)(3) (regulating board composition of grant
recipients); G.L. c. 23B, s. 24 (defining "community action
agency," prescribing board structure, and authorizing state
contracts and grants under federal CSBG program). These grants and
contracts place ABC in the same category of "at most a vendor
corporation with respect to the state" as the health systems agency
we concluded was not a "state agency" in EC-COI-85-78.

The history of community action agencies further supports this
conclusion. "Community action programs," as they were then known,
resulted from sections 201 to 211 of the federal Economic
Opportunity Act of 1964, Pub. L. 88-452, 78 Stat. 508, which first
authorized federal grants to them. That Act's language[1] and
legislative history[2] make clear Congress's intent to funnel most
of these federal "anti-poverty" funds directly to organizations of
low-income people rather than to municipal governments. In this
respect, too, community action agencies are most similar to the
health systems agencies that federal law required to be private,
non-profit corporations. EC-COI-85-78, at 1, 3. They are unlike,
for example, community development corporations established under
a state statute. See EC-COI-85-66 (such a CDC established at
instance of city government is a "municipal agency").

Our fourth factor, control and supervision, is decisive here.
The above federal and state statutes, and ABC's own by-laws,
explicitly require that no more than one-third of the members of
its Board of Directors be city officials or their designees. The
remainder must be representatives of low-income neighborhoods or of
private organizations including business, labor, and social service
groups, and there is no suggestion here that these nonmunicipal
representatives are in any way under the control, supervision, or
influence of city officials. In this respect, ABC is similar to the
non-profit holding company established by a state institution,
which we recently concluded was not a "state agency" because "state
affiliated directors may comprise one-third or less of the total
number of voting directors." EC-COI-91-12, at 5 (emphasis original;
footnote omitted). ABC thus differs from such government
"instrumentalities" as a government agency's retirement fund
( EC-COI-90-7 ), a state college's financial support foundation
( EC-COI-90-3 ), a support corporation for a city redevelopment
authority ( EC-COI-88-24 ), and the regional employment boards
entirely selected by municipal officials under federal law
( EC-COI-89-20; 83-74 ), all of which we found were controlled by the
"parent" agency.

We conclude that ABC is not a "municipal agency." We therefore
proceed to analyze your situation as if it were any other business
organization.


Section 17


Section 17 of c. 268A prohibits a municipal employee from
acting as an agent or attorney for, or receiving compensation[3]
from, anyone other than the city or a municipal agency in
connection with any particular matter[4] in which the city is a
party or has a direct and substantial interest.

This section generally prohibits you from representing or
personally appearing on behalf of a private third party (including
ABC) before any municipal agency. "Personally appearing" includes
any contact (telephone, letter, appearances) with the intent to
influence. EC-COI-97-27. Thus, you may not contact on behalf of ABC
any office of city government, not only the city council. For
example, you could not lobby the mayor to increase the allocation
of CDBG funds to ABC.

Section 17 also prohibits you from receiving compensation from
ABC in relation to particular matters in which the city has a
direct and substantial interest. This means that you may not be
involved as a salaried ABC employee in such activities as the
obtaining of city building permits and the approval of completed
weatherization work by city inspectors. You may not supervise or
approve the work of other ABC employees to the extent that they are
engaged in these activities. However, s. 17 will not prevent your
receiving a salary from ABC for your work on the weatherization
program that is not related to these city permits and inspections,
including your general management and supervision of the program,
since we have previously decided that not all work done pursuant to
such permits is "in relation to" the permit. EC-COI-90-13; 87-31.


Section 19


In relevant part, s. 19 of c. 268A prohibits a municipal
employee from participating[5] in any particular matter in which
he, or a business organization in which he is serving as an
employee, has a direct or a reasonably foreseeable financial
interest. The financial interest may

Page 367

be of any size, and may be a positive or a negative interest. In
addition, this section prohibits participating in matters which
affect competitors' financial interests.

This section would prohibit you from, among other things,
participating in any way in city decisions about funds for which
ABC might be eligible. For example, you could not vote on or
otherwise participate in any decision about a budget line item that
explicitly or implicitly appropriated funds for ABC; you should
leave the room before discussion of any such line item begins.
Graham v. McGrail, 370 Mass. 133, 138, 140 (1976). You could,
however, vote on and participate in decisions about the budget as
a whole. Id. at 140. The same analysis would apply to any city
decisions about allocating funds. For example, you could not
participate in any decision about whether to allocate a CDBG
low-income housing grant to ABC or to one of its competitors for
such funds.

You are also prohibited from acting, as a city councillor, on
any other matter in which you or ABC have a direct or reasonably
foreseeable financial interest, such as a zoning change affecting
property abutting ABC's property.


Section 20


Section 20 of c. 268A prohibits a municipal employee from
having a direct or indirect financial interest in a contract made
by a municipal agency of the same city, unless an exemption
applies. Some of ABC's funding arrangements with the city
constitute "contracts" with a municipal agency, since they require
ABC to perform certain obligations in return for the funds. EC-
COI-88-1; 87-40. However, you will have no financial interest in
these contracts if, as you state, your ABC compensation will derive
entirely from sources other than the city and over which the city
exercises no control. EC-COI-88-1; 87-4. Under these conditions, s.
20 would not prevent you from accepting this position with ABC.

Section 20 would also prohibit you from, for example,
contracting with other city agencies to provide any type of
services for a fee. Nothing in your request raises any other issue
under this section at this time.


Section 23


Section 23 contains other provisions which apply to you as a
municipal employee. First, s. 23(b)(2) prohibits you from using or
attempting to use your city councillor position to secure for
yourself or others unwarranted privileges of substantial value ($50
or more) which are not available to others similarly situated. For
example, you may not use public resources, time, facilities,
personnel or equipment, to benefit ABC. This section also requires
that a municipal employee use objective criteria when deciding
matters before him, and must keep independent any private
relationship.

Furthermore, s. 23(c) prohibits disclosure or use of
confidential information (i.e., information which is not accessible
through a public records request) to benefit yourself or others,
including ABC. For example, this section would prohibit your use of
materials developed on city time to benefit ABC if those materials
could not be used by others in the same manner (i.e., through a
public records request).

-----------------------------------
[1] See ss. 201, 202(a), 205(d) of the Act.

[2] The principal congressional committee report asserts that
"community action program" grants are "based on the belief that
local citizens know and understand their communities best and that
they will be the ones to seize the initiative and provide
sustained, vigorous leadership." H. Rep. No. 1458, 88th Cong., 2d
Sess., reprinted in U.S. Code Cong. & Ad. News 2900, 2909.

[3] "Compensation," any money, thing of value or economic
benefit conferred on or received by any person in return for
services rendered or to be rendered by himself or another. G.L. c.
268A, s.1(a).

[4] "Particular matter," any judicial or other proceeding,
application, submission, request for a ruling or other
determination, contract, claim, controversy, charge, accusation,
arrest, decision, determination, finding, but excluding enactment
of general legislation by the general court and petitions of
cities, towns, counties and districts for special laws related to
their governmental organizations, powers, duties, finances and
property.

G.L. c. 268A, s. 1(k).
Page 368

[5] "Participate," participate in agency action or in a
particular matter personally and substantially as a state,
county or municipal employee, through approval, disapproval,
decision, recommendation, the rendering of advice, investigation or
otherwise. G.L. c. 268A, s. 1(j).

Page 368

 

End Of Decision