December 10, 1992

 

FACTS:


You are the Executive Director of the Martha's Vineyard Land
Bank Commission and you seek an opinion concerning the activities
of real estate brokers who also serve as Land Bank Commissioners or
town advisory board members. In 1990 you requested an opinion from
this Commission concerning whether G.L.c. 268A applied to the Land
Bank Commission and, if the conflict law did apply, you asked us to
address various situations under the law. In response to your
request the Commission issued EC-COI-90-2 which concluded that the
Land Bank Commission was an independent municipal entity for
purposes of G.L. c. 268A. In light of recent developments in the
case law and Commission precedent we now are re-evaluating some of
our conclusions in EC-COI-90-2 within the context of your recent
opinion request.

The Martha's Vineyard Land Bank (Land Bank) was established by
Chapter 736 of the Acts of 1985 "for the purpose of acquiring and
holding and managing land and interest in land." s. 2. The land
interests identified in the statute are: "land to protect future
and existing well sites, aquifers and recharge areas; agricultural
lands; forest lands; fresh and saltwater marshes and other
wetlands; ocean and pond frontage, beaches, dunes, and adjoining
backlands; land to protect scenic vistas; land for nature or
wildlife preserves; easements for trails and publicly owned land;
land for passive recreational use." s. 5. According to the enabling
legislation, the Land Bank is a public instrumentality and the Land
Bank's exercise of its statutory powers is deemed to be "the
performance of an essential governmental function." s. 2.

The Land Bank is administered by a seven member Commission
composed of a member from each of the towns of Martha's Vineyard
and the state Secretary of Environmental Affairs or her designee.
s. 3. Each of the member towns elects one member to the Commission.
The Commission has authority to acquire interests in land, exercise
eminent domain powers, accept gifts of funds to further the Land
Bank's purposes, incur debt, collect statutory fees and issue bonds
and notes. s. 4. If authorized by a two-thirds town meeting vote,
the Commission may, when incurring debt or securing an issue of
bonds and notes, pledge the full faith and credit of each of the
towns which comprise the Land Bank. s. 4. Each town is authorized
to appropriate money for the Land Bank fund and to provide funds to
repay bonds and notes. s. 4A.

The majority of the Land Bank's funding is derived from a 2%
statutory fee based on the purchase price of any real estate
property transfer in each of the member towns.[1] s. 10. The
statutory fee is the responsibility of the purchaser of real
property. The fee is required to be paid to the Land Bank
Commission and the purchaser is also required to provide a copy of
the deed and an affidavit attesting to the purchase price or to the
facts concerning why the transfer is exempt from the fee. s. 11.
Upon receipt, the Land Bank Commission staff reviews the filing and
will execute a certificate. The Dukes County Register of Deeds is
prohibited from recording, registering, or accepting for recording
any deed (except a mortgage deed) relating to a real property
transfer which has not received a certificate from the Land Bank.
s. 10. A list of land transfers, the value of the transaction and
any exemptions is reviewed by the Land Bank Commission at its
weekly meeting. The Commissioners may question the applicability cf
an exemption in a particular case or the validity of an affidavit
but they do not review the sales agreements between the parties.

The Land Bank Commission has the authority to assess fines and
penalties for failing to pay the fee and may hold hearings on the
imposition of a fee, fine or penalty. The Land Bank Commission may
institute court proceedings to collect fees and penalties and may
file or register a lien in favor of the Land Bank against any of
the purchaser's property for the amount of the statutory fee,
including interest and penalties. s. s. 13, 14.

Other funding sources include appropriations by the member
towns, appropriations by the county, private contributions, and
proceeds from the sale of property by the Land Bank. Fifty percent
of the revenues collected

Page 473

remain in the Land Bank fund and are directly administered by the
Land Bank Commission. The remaining revenues are placed in
individual town accounts, according to a proportional formula, but
the accounts are administered for the benefit of the Land Bank and
title to the funds remains with the Commission until such time as
the Commission dissolves. s. 8A.

Upon dissolution of the Land Bank, any of its land interests
will be transferred to the town in which the land is located and
placed under the management of the local conservation commission
for continued protection. Any remaining funds will revert to the
towns to be held in trust for the management and preservation of
conservation land.

Chapter 736 of the Acts of 1985 also created town advisory
boards in each member town, which assist the Land Bank Commission
in administering the Land Bank. Each town's advisory board includes
a representative appointed by each local conservation commission,
planning board, board of assessors, board of health, park and
recreation committee, board of selectmen and water commission. s.
1. Under c. 736, each advisory board exercises advisory duties, as
well as binding veto powers over the Land Bank Commission regarding
land located in said town. For example, each land acquisition by
the Commission must be approved by the town advisory board in the
town where the land is located, and any disposition of the Land
Bank's interest or change in the use of the land must also be
approved by the advisory board of the town in which the land is
located and by the Secretary of Environmental Affairs. ss. 3, 6. A
majority of the advisory boards are required to approve the Land
Bank Commission's budget.
 


QUESTIONS:

1. May a town advisory board member or a Land Bank
Commissioner engage in outside employment as a real estate broker
in land transactions which are subject to the statutory 2% fee?

2. May town advisory board members or Land Bank Commissioners
serve as real estate brokers in land transactions in which the Land
Bank is seeking to purchase the property?

3. May town advisory board members and Land Bank Commissioners
participate in board discussions concerning lands which the Land
Bank is seeking to acquire if they believe they will market the
property as real estate brokers?
 


ANSWERS:


1. Yes.

2. A Land Bank Commissioner may not act as the real estate
broker in a transaction where the Land Bank is a purchaser. A town
advisory board member may not act as the real estate broker in a
transaction involving the Land Bank unless he has received special
municipal employee designation and is able to comply with an
exemption under s. 17 and s. 20.

3. Land Bank Commissioners may not participate. An advisory
board member may not participate unless he receives a written
determination from his appointing authority pursuant to G.L. c.
268A, s. 19(b)(1).
 


DISCUSSION:

The Land Bank Commission As A "Municipal Agency"


In November, 1990 the Commission issued EC-COI-90-2, which
concluded that the Land Bank Commission is an independent municipal
entity for purposes of G.L. c. 268A. Since that time, the
Massachusetts Appeals Court affirmed a Commission decision that
members of a regional school committee are municipal employees
under G.L. c. 268A. In doing so the Court concluded that a regional
school district is an instrumentality of each municipal member
under G.L. c. 268A, s. 1(f). McMann v. State Ethics Commission, 32
Mass. App. Ct. 421, 428 (1992). In reaching this conclusion the
Court considered the ordinary and approved use of the word
"instrumentality" in the statute; the formation, operation and
purpose of a regional school district; and the purpose of G.L. c.
268A. Id. at 425-428. The Court found that the municipalities use
the school district as a means to fulfill their statutory
obligation to provide education and that the municipalities played
a substantial role in the creation of the district and the
district's financial matters. Id. at 427.

This Commission has expressly followed the Appeals Court's
reasoning in considering whether a regional entity is a municipal
agency within the meaning of G.L. c. 268A, s.1(f). EC-COI-92-26;
92-27
. The Commission no longer considers regional municipal
entities to be

Page 474

"independent" municipal entities.[2] See EC-COI-92-26; 92-27;
92-15.
Rather, the Commission will consider whether such entities
are instrumentalities of each municipal member based on the
ordinary and approved usage of the statutory language, the purpose
of G.L. c. 268A and the form, operation and purpose of the regional
entity.

Based on this precedent, we reaffirm our conclusion that the
Land Bank Commission is a municipal agency within the meaning of
G.L. c. 268A, s. 1(f) but we no longer will consider the Land Bank
Commission to be an "independent municipal entity." The Land Bank
Commission is an instrumentality of each of the member
municipalities. We conclude that the member municipalities play a
significant role in the substantive work of the Land Bank
Commission and control (through approval) the Land Bank's budget.
The Land Bank Commission serves the traditional role of the
municipality in preserving and conserving land, particularly for
purposes of future water supply protection and recreational use. By
joining together as members of the Land Bank, the municipalities
recognize the mutual land interests they share in protecting the
coastline and preserving open space. Thus, as an instrumentality of
each member municipality, the Land Bank Commission is analogous to
any local board in the municipality. Further, for the reasons
stated in EC-COI-90-2 we reaffirm our conclusion that the Land Bank
Commission shares more attributes with the municipal level of
government than with other levels of government.


1. Land Bank Commissioners And Town Advisory Board Members Serving As Real Estate Agents In Land Transactions Subject To The Statutory Fee.


G.L. c. 268A, s. 17(a) prohibits a municipal employee from
receiving compensation[3] from anyone, other than the municipality,
in connection with a particular matter[4] in which the municipality
is a party or has a direct and substantial interest. Members of the
Land Bank Commission and town advisory boards are municipal
employees under the conflict of interest law. G.L. c. 268A, s.
1(g). The determination that a fee is owed or that an exemption
applies is a particular matter in which the Land Bank and each
municipality has a direct and substantial interest.[5] See Attorney
General Conflict Opinion No. 28
(Commonwealth has direct and
substantial interest in collection of taxes for revenue purposes).

At issue is whether the real estate broker's commission is "in
connection with" this determination. In past opinions we have
recognized that not all work performed concerning a government
matter is "in connection with" the matter. See EC-COI-92-1; 90-13
(work performed incidental to the permit); 87-31, n.7. In the
sections of G.L. c. 268A pertaining to former public employees the
Commission has identified certain factors to apply in deciding
whether a former public employee's private compensation is "in
connection with" a particular matter in which he had participated
as a public employee. We have considered the effect the proposed
work would have on the government matter and whether the private
work is "integrally related" to the government matter because
they involve the "same parties, the same litigation, the same issues or
the same controversy." EC-COI-92-17. See, e.g., EC-COI-91-1; 89-7;
86-23
.

We conclude that any compensation received by the real estate
broker from a private land transaction is not "in connection with"
the Land Bank Commission's determination. Although the broker's
commission, similar to the statutory fee, is traditionally based
upon the selling price, the commission is for services rendered in
making the sale and is the obligation of the seller. The Land Bank
has no authority or oversight of private land transactions on the
Martha's Vineyard (unless the Land Bank is a party to the
transaction) other than to collect the fee. See EC-COI-90-13
(Commonwealth will have direct and substantial interest where
agency exercises substantial oversight or regulatory authority of
an activity); 85-46 (Registry of Deeds has no substantial interest
in filing of deed beyond ministerial filing). As a general rule, a
municipality will not have the requisite interest as the real
estate contract and the broker's contract are between private
parties and concern a private parcel of property. Cf. EC-COI-86-23.

If the broker's commission is solely for services rendered in
negotiating the sale, the broker will not be receiving compensation
in connection with a matter in which the Land Bank or a
municipality has a direct and substantial interest. Our conclusion
would be different if the broker received compensation for
preparation of the affidavit or other papers to be reviewed by the
Land Bank.

Accordingly, Land Bank Commissioners and advisory board
members may conduct a private real estate practice and receive
broker's fees from transactions in which seller and purchaser are
private parties. To the

Page 475

extent that EC-COI-90-2 reaches a different conclusion, the
Commission now declines to follow that aspect of EC-COI-90-2.


2. Town Advisory Members And Land Bank Commissioners Participating As Real Estate Agents In Transactions For Land Which the Land Bank Seeks To Acquire


Land Bank Commissioners


A Land Bank Commissioner may not act as a real estate broker
in a transaction in which the Land Bank is the purchaser under G.L.
c. 268A, s. 17(c). Section 17(c) prohibits a municipal employee
from acting as the agent or attorney for anyone, other than the
municipality, in connection with a matter in which the municipality
is a party or has a direct and substantial interest. Here, the Land
Bank Commissioner, as the real estate broker for the seller, will
be acting as the seller's agent in dealings with the Land Bank in
a matter in which the Land Bank is a party.[6]

If the Land Bank is the seller of the property, a Land Bank
Commissioner may represent the Land Bank as the broker and receive
a commission if he is a special municipal employee[7] and receives
an exemption under s. 20(d). Generally, G.L. c. 268A, s. 20
prohibits a municipal employee from having a financial interest,
directly or indirectly, in a contract made by a municipal agency,
in which the municipality is an interested party. An agreement for
the purchase, sale or disposition of a piece of property is a
contract for s. 20 purposes. EC-COI-84-51. A Land Bank Commissioner
will have a financial interest in a purchase and sale agreement
between a property owner and the Land Bank Commission if he
receives a brokerage fee based on the selling price. EC-COI-90-2.
Each municipality would be an interested party to the transaction
as the Land Bank is an instrumentality of each of its members.
Therefore, Land Bank Commissioners must seek the s. 20(d)
exemption[8] from the boards of selectmen of all of the member
towns and file a disclosure with the Town Clerk in all of the
member towns. EC-COI-92-27.[9]


Town Advisory Board Members


A town advisory board member will be prohibited by s. 17(c)
from representing the seller in a transaction with the Land Bank,
unless the advisory board on which he serves has been granted
special municipal employee designation. G.L. c. 268A, s. 1(n). The
s. 17 prohibitions apply to special municipal employees only in
connection with particular matters in which the municipal employee
has participated, or matters which are or within one year have been
the subject of his official responsibility, or (if the employee
serves more than 60 days in a calendar year) which is pending in
the agency in which he is serving.

If the advisory board has received special municipal employee
designation by the municipality's Board of Selectmen, a board
member may act as the real estate broker for the seller provided
that the transaction does not involve land which is subject to
review by the board on which the member sits. Each advisory board
is required to review purchases by the Land Bank in its town, so
these matters are within the board member's official responsibility
or are matters in which he will participate as a board member.
Consequently, he may not act as the broker in land transactions in
which the Land Bank is the purchaser of land and which will be
reviewed by the board on which he serves.

Additionally, the advisory board member will be required to
seek an exemption under G.L. c. 268A, s. 20 as he will have a
financial interest in a contract made by a municipal agency, in
which the municipality is an interested party. Therefore, the town
advisory board members may not receive compensation from a sale of
land to the Land Bank, unless an exemption applies.[10]

If the town advisory board members receive special municipal
employee designation, members of the Boards may participate as real
estate brokers in a sale involving the Land Bank as they will be
eligible for an exemption under s. 20(d). Town advisory board
members must seek the exemption from their local board of
selectmen. In conclusion, if the Land Bank is the purchaser of the
property, an advisory board member may act as the broker if he is
a special municipal employee, the land is not located in the town
in which he serves and he receives an exemption under s. 20(d). If
the Land Bank is the seller of property, an advisory board member,
similar to the Land Bank Commissioner may represent the Land Bank
in the transaction if he is a special municipal employee and
receives a s. 20(d) exemption.

To the extent that EC-COI-90-2 reaches a different conclusion
concerning transactions in which a Land Bank


Page 476

Commissioner or advisory board member is the broker and the Land
Bank is a party, we now decline to follow EC-COI-90-2.


3. Town Advisory Board Members And Land Bank Commissioners
Officially Participating In Discussions Regarding Property They May
Market As Real Estate Agents


Under G.L. c. 268A, s. 19, a Land Bank Commissioner or
advisory board member must abstain in matters, such as a
determination to purchase land, if he or a business organization in
which he is serving as an officer, director, trustee, partner, or
employee has a reasonably foreseeable financial interest. In re
Burgess
, 1992 SEC 570 (Planning Board member violated s. 19 by
participating in matters concerning land which he knew or should
have known that his employer, a real estate firm, would be
marketing). We note that associates in a real estate firm are
ordinarily considered to be "employees" for purposes of s. 19. See
In re Burgess, 1992 SEC n.8; EC-COI-89-30; 83-34. If a Land Bank
Commissioner knows, or if it is reasonably foreseeable, that he
will market any land under discussion for acquisition by the Land
Bank, he must abstain from such discussions.[11] Also, a
Commissioner must abstain from participating in any review and
determination of fees and exemptions pertaining to a property
transaction if he or his firm played a role in the sale and will
collect a commission from the sale.

Advisory board members may obtain an exemption under s.
19(b)(1) which would permit them to participate in a matter,
notwithstanding the conflict of interest. An advisory board member
may participate in a particular matter involving his financial
interest or his firm's financial interest if, prior to
participating, he (1) advises his appointing official of the nature
and circumstances of the particular matter; (2) makes a full
written disclosure to his appointing authority of the financial
interest; and (3) receives a written determination in advance from
his appointing authority that the financial interest is not so
substantial as to be deemed likely to affect the integrity of his
services to the Town. This determination may vary depending on the
facts and, absent an exemption, an advisory board member must
abstain from matters in which he or a real estate firm with which
he is associated has a reasonably foreseeable financial interest.
As elected officials, Land Bank Commissioners are not eligible for
this exemption and will be required to abstain in all matters in
which they have, or a business organization in which they are a
partner, trustee, director, officer or employee has, a financial
interest.

Finally, G.L. c. 268A, s. 23(c) prohibits a municipal employee
from accepting employment or engaging in any business or
professional activity which will require him to disclose
confidential information[12] which he has gained by reason of his
official position and from improperly disclosing such material or
using such information to further his private interests. This
section will prohibit a Land Bank Commissioner or advisory board
member from using data developed during executive session board
meetings to further his private real estate business. See
EC-COI-82-17
(photographer employed by state agency may not
privately sell reprints of photographs taken as part of his state
duties where the negatives are not generally available to the
public or catalogued in a manner which permits public access).[13]


Comparison With EC-COI-90-2


In light of recent developments in the case law and Commission
precedent, this opinion changes the analysis of EC-COI-90-2 as
follows. For purposes of G.L. c. 268A jurisdiction the Land Bank
Commission is a municipal agency and is an instrumentality of each
of the member municipalities. Land Bank Commissioners may receive
"special municipal employee" designation from the Board of
Selectmen of all member municipalities.

Land Bank Commissioners may also accept outside employment as
private real estate brokers but Land Bank Commissioners may not
receive compensation or act as the broker in connection with a land
transaction in which the Land Bank is the purchaser. An advisory
board member may not receive compensation as a broker in connection
with a sale to the Land Bank, unless he is a special municipal
employee, the land is not located in the town in which he serves
and he receives an exemption under s. 20(d). If the Land Bank is
the seller of the property, a Land Bank Commissioner or an advisory
board member may represent the Land Bank as the broker and receive
a commission if they are special municipal employees and receive an
exemption under s. 20(d).

Land Bank Commissioners who also hold other local municipal
positions may participate in their official capacity as Land Bank
Commissioners in a matter in which their municipality has a
financial interest because they are serving the municipality in
each capacity.

Page 477

Similarly, Land Bank Commissioners who also serve as town
advisory board members may participate in their official capacity
as advisory board members in a matter in which the Land Bank has a
financial interest.

-----------------------------------

*Pursuant to G.L. c. 268B, s. 3(g), the requesting person has
consented to the publication of this opinion with identifying
information.

[1] Certain land interests are exempt. St. 1985, c. 736, s.
12.

[2] See McMann, supra., at 428, n. 5 (questioning the
statutory basis for municipal entities as "independent" municipal
entities). Also, note that the definition of "state agency"
includes "any independent state authority, district, commission,
instrumentality or agency. . ." (emphasis added), whereas the
definition of municipal agency does not include the word
"independent". G.L. c. 268A, s. 1(f) and (p).

[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).

[5] Each member municipality has an interest in the revenues
received by the Land Bank as the amount will affect each
municipality's contribution to the fund, any debt in which the full
faith and credit of the municipalities has been pledged, and the
extent to which the Land Bank, as an instrumentality of each member
town, may fulfill its land acquisition mandate.

[6] We note that, even if the position of Land Bank
Commissioner is designated as a "special municipal employee", (as
discussed below) s. 17 will prohibit a Commissioner from serving as
the seller's broker because the sale is a matter within his
official responsibility as a Land Bank Commissioner and is pending
in the agency in which he is serving.

[7] In order for Land Bank Commissioners to receive this
designation, they must be so designated by the boards of selectmen
of all member municipalities. EC-COI-92-27.

[8] Section 20(d) permits a special municipal employee to have
a financial interest in a contract with the municipality, involving
the board on which he serves, if he files a full disclosure with
the town clerk and receives the approval of the Board of Selectmen.

[9] This advice is limited to an application of G.L. c. 268A
and is not intended to comment on the appropriateness of a policy
permitting Land Bank Commissioners to act as paid real estate
brokers for the Land Bank. We note that if the Land Bank
Commissioners designate a member to act as a broker, G.L. c. 268A,
s. 19 will prohibit the designated Land Bank Commissioners from
participating in the designating decision. Further, the other Land
Bank Commissioners will be required to comply with G.L. c. 268A,
ss. 23(b)(2) and 23(b)(3), when making the decision. These
Commissioners will be required to make a full written disclosure
under s. 23(b)(3).

[10] If a real estate firm in which the advisory board member
or Land Bank Commissioner is affiliated receives a commission from
such a sale, the firm should segregate its fees from any
compensation paid to the municipal employee. EC-COI-89-5.

[11] In a related issue under s. 19, we note that a Land Bank
Commissioner who is also a local municipal employee may participate
in matters in which his municipality has a financial interest.
EC-COI-92-26. In this situation, the employee is considered to be
serving two municipal agencies and, in each capacity, is acting on
behalf of the municipality. We now decline to follow our opinion in
EC-COI-90-2 where we stated that a Land Bank Commissioner who is
also a local municipal employee may not participate in matters
affecting his town because we no longer consider the Land Bank to
be an independent municipal entity.

[12] These materials are defined as "materials or data within
the exemptions to the definition of public records as defined by
[G.L. c. 4, s.7]."

Page 478

[13] The questions that you have asked are generic in nature.
We recommend that Land Bank Commissioners and advisory board
members seek further guidance regarding specific fact situations
and conflict issues about themselves that arise in the future.

Page 478

 

End Of Decision