| Date: | 11/24/1981 |
|---|---|
| Organization: | State Ethics Commission |
A member of a state agency board who is also a city official may not participate in board matters in which the city has a direct interest. The Board member may participate in matters where the City’s interest is not financial or is shared broadly with other municipalities.
You are a member of the Board of an independent state agency (ABC) and are also the head of an agency for a City (the City). The ABC is an independent "body politic and corporate" and is charged with operation and management of facilities placed under its jurisdiction by the General Court. (Description of the facilities deleted). Included in the ABC's grant of powers is the authorization to "investigate the necessity for additional facilities in the (City) and in the metropolitan area surrounding the (City). The ABC consists of seven members, all of whom are appointed by the Governor to staggered terms. Four members are required for a quorum and the affirmative vote of four members is necessary for any action to be taken. The makers of the ABC serve without compensation but are reimbursed for all necessary travel and other expenses incurred in the discharge of official duties Your full-time employment is with the City. In that capacity, you manage a certain agency the City. You are appointed by the Mayor and your position is funded from general appropriations of the City.
You ask what restrictions the conflict of interest law, G.L. c. 268A, places upon your participation in matters at the ABC which involve of affect the City. You have presented several specific situations (discussed below) for the Commission's considerations. You ask whether, as a member of the ABC Board, you may participate in:
In rendering this opinion, the Commission has relied upon the facts as you have stated them and has not made any independent investigation of those facts. ABC is a state agency as that term is defined in s.1(p) of c. 268A. As a member of the ABC Board, you are a state employee for purposes of the conflict of interest law. See, s.1(q). Since you serve without compensation, you are considered a "special state employee" as that term is defined in s.1(o)(1). While generally the law applies less restrictively to the activities of special state employees, the Commission's responses to your questions do not turn on your status as a "special". Section 6 of c. 268A prohibits a state employee, as yourself, from participating in a particular matter in which, among others, he or "a business organization in which he is serving as an employee" has a financial interest. If such a matter comes before a state employee, he must "advise the official responsible for appointment to his position and the State Ethics Commission of the nature and circumstances of the particular matter and make full disclosure of such financial interest." The appointing official then must do one of three things. Be must either "(1) assign the particular matter to another employee; or (2) assume responsibility for the particular matter; or (3) make a written determination that the interest is not so substantial as to be deemed likely to affect the integrity of the services which the commonwealth may expect from the employee, in which case it shall not be a violation for the employee to participate in the particular matter. Copies of such written determination shall be forwarded to the state employee and filed with the State Ethics Commission by the person who made the determination."
A municipality, as the City will be considered a business organization for purpose. of s.6. See, Attorney General Conflict Opinion No. 613; EC-COI-81-62, EC-COI-81-56. Thus, the prohibition of s.6 will apply and the disclosure requirements triggered whenever you are called upon to act as a member of the ABC Board on any particular matter[2] in which the City has a financial interest. It is obvious from your opinion request that many matters come before you involving or affecting the City. The issue is whether the City will be considered to have a financial interest in these matters. The Supreme Judicial Court has noted that c. 268A "is deficient in not containing a definition of 'financial interest'". Moskow v. Boston Redevelopment Authority, 349 Mass. 553, 567 (1965). That Court has also noted that "interests shared with a substantial segment of the public [are not] to be treated as 'financial interests'". Graham v. McGrail, 370 Mass. 133, 139 (1976). The Commission has opined that "[i]nterests which [a] city shares with a substantial segment of the other counties and towns in [a] county are not 'financial interests' within the meaning of the law." EC-COI-81-62. Thus, for the prohibition for s.6 to apply, the particular matter must affect the City financially and uniquely; that is, in a way that it does not affect the other cities and towns in the area. As you recognize in your letter, the disposition of property by sale, lease or otherwise from the ABC to the City, or vice versa, would be a particular matter in which the City obviously would have a financial interest. The City would also have a financial interest in a mutual aide fire assistance agreement. Typically, such an agreement would provide that the ABC and City would come to each other's assistance to fight fires on their respective property. Where the ABC comes to the City's aid, City's resources are saved. In the converse situation, City resources are expended. The existence of such an agreement can affect the cost of insurance borne by the City. Similarly, the City would have an obvious financial interest in the decision by the ABC to help pay for repairs to a City bridge.[3] Presumably, a contribution by the ABC would mean a reduction of the amount to be spent by the City. Accordingly, in these three situations, you could not participate in the matter and would have to comply with the disclosure requirements of s.6 whenever such matters came before the members of the ABC Board. On the other hand, a decision by the ABC to eliminate or restrict access to its property may well be a matter in which the City has a great interest, but where that interest may not be deemed "financial" in nature. For example, you describe an agreement between the ABC and a community group representing residents of an area in the City. (Details of agreement omitted) While conceivably such a decision could affect the City financially generally, it will not and the prohibition of s.6 will not apply.
Questions 6 through 11 (listed above) and to some extent question 3, all relate directly or indirectly to the so-called "in lieu of tax" payments from the ABC to the City. The enabling legislation which created the ABC exempted it from having to pay any taxes or assessments on any of its facilities or on the income derived from those facilities. The law was subsequently amended to authorize and direct the ABC "to enter into agreements with certain cities and towns whereby the ABC will make to each such city and town annual payments in lieu of taxes." Pursuant to this legislative directive, the ABC and the City executed an agreement in 1978, providing for the payment of a specified amount (base amount) for calendar year 1979[4] The agreement then went on to specify that payments for fiscal years commencing 1980 shall be the base amount adjusted in accordance with "the Composite Index for the fiscal year which immediately precedes that succeeding initial term fiscal year (e.g., the fiscal 1979 Composite Index shall be used in adjusting the base to yield the annual payment to be made in respect of fiscal 1980)." The Composite Index is arrived at by adding the percentage change in the National Consumer Price Index to the percentage change in a certain factor of ABC's operation. The first four questions you ask (6 through 9) related to the "in lieu of tax" payments, are rather straightforward. The fixing of the amounts to be paid is clearly a matter in which the City would have a financial interest. You could not participate in discussions with respect to the fixing of those amounts and would have to comply with the disclosure requirements of s.6. However, you may participate in the approval of the ABC's overall budget, even though it may include expenditures for such "in lieu of tax" payments. As noted by the Supreme Judicial Court in Graham v. McGrail, supra, at 140, "[o]nce an item has been approved by a majority vote of a qualified quorum, it may be included in a consolidated vote on part or all of the budget, and a member who withdrew from the separate consideration may participate in the consolidated vote, unless there is reconsideration of the item separately considered." See, EC-COI-79-91.
You may also participate in the arrangements by the ABC to recover from tenants and users of its facilities amounts which will be applied to the "in lieu of tax" payments to the City. The City would have a financial interest only in the amount of the payment itself and not in the manner in which that amount is recovered by the ABC from its tenants and users.[5] However, you may not participate in the approval of leases of ABC property where the prospective tenant will be subject to taxation directly by the City. A state law provides that certain lands, under the authority of ABC shall, if leased for business purposes, be taxed by [t]he City ... in the same manner as the lands and buildings thereon would be taxed to such lessees if they were the owners of the fee ...." Since the City would ultimately realize revenues over and above the amount paid in lieu of taxes if the decision is made to lease any of these lands" for business purposes," you would have a financial interest in their being leased and in their being leased for business purposes. Accordingly, you would have to comply with the disclosure requirements of s.6 whenever a decision with respect to the leasing of these lands came before the members of the ABC Board. Any determination as to whether you may participate in agreements concerning the subject matter of question 3, the award of contracts for the construction of new facilities (question 10), or the approval of leases or other agreements for such newly constructed facilities (question 11), must be made on a case by case basis. The City will often have a great interest in such matters, but in any given case, that interest may not be financial in nature or may not be different than the interest shared by all cities and towns in the area. It will be crucial in each instance to determine whether the agreement or contract or lease will have the effect of changing ABC's "in-lieu-of-tax" payments. It will not always be easy to draw the line and we realize that such questions will come up continually. You may want, at first, to seek advisory opinions each time such a matter arises until a body of precedents has been established for your guidance, and thereafter to seek an opinion only when a close case arises.
In question 12, you ask whether you may participate in the adoption of rules and regulations concerning coordination with the regulatory policies of the City. You cite an example. The Supreme Judicial Court has noted that the "legislature has clearly indicated its intention to exclude from the statute some determinations of general policy, and such an exclusion seems essential if the statute is to be workable." Graham v. McGrail, supra, at 139; Compare, EC-COI-81-34. The example that you cite appears to be such a determination of general policy. In any event, it is a matter in which the City may well have an interest but where that interest would not be deemed financial.
Two matters remain. You question whether financial interests held by the CRA, in view of its "statutory autonomy," would be considered financial interests of the City for purposes of s.6. The Commission concludes that they are. The CRA is a municipal agency as that term is defined in s.1(f). See, Attorney General Conflict Opinion No. 25; Compare, EC-COI-80-81, EC-COI-81-13, EC-COI-81-26. See also, G.L. c. 121B, s.4. The financial interests of the CRA would be imputed to the City itself.[6]
Finally, you ask whether you may vote to adopt the minutes of ABC Board meetings which refer to matter in which you did not participate because of a conflict of interest. The Commission concludes that you may. The adoption of the minutes would be a different "particular matter" than the original votes recorded in those minutes. The City would not have a financial interest in the adoption of the ABC Board's minutes.
As noted above, whenever a matter comes before the members of the ABC Board in which you would otherwise be required to participate but in which the City has a financial interest, you must make the disclosure required by s.6 to your appointing official (in your case, the Governor) and to the State Ethics Commission. Ordinarily, the appointing official has three options open to him or her. Be may "(1) assign the particular matter to another employee; or (2) assume responsibility for the particular matter; or (3) make a written determination that the interest is not so substantial as to be deemed likely to affect the integrity of the services which the commonwealth may expect from the employee, in which case it shall not be a violation for the employee to participate in the particular matter." These provisions take the matter out of the hands of the individual employee and places it in the hands of the head of an agency or the head of a department who can then make a judgment about what should happen. Presumably, he is in a position to balance the administrative needs of the agency, the alternatives available, the character of the employee, and the significance of the financial interests involved. That the statute sets out three options does not mean that they will be available in any given situation. For instance, in the case of elected officials who do not have an appointing official, none of the options are available. See, EC-COI-79-64, EC-COI-79-86. Similarly, they would not apply in your situation. The ABC, by statute, is "not ... subject to the supervision or regulation or of any department, commission, board, bureau or agency of the Commonwealth except to the extent and in the manner provided in its enabling statute. The members constitute a collegial body, the affirmative vote of four members [of which] shall be necessary for any action. In these circumstances, s.6 requires that you make the appropriate disclosure to your appointing official (the Governor) and the State Ethics Commission and that you then do not participate in the matter. Your appointing official has no further role to play. Compare, EC-COI-80-29. The particular matter in question must then be resolved by the remaining members of the ABC Board without your participation or the participation of anyone in your place.
The advice outlined above concentrates on the application of s.6 to the questions you have presented.[7] You, of course, remain subject to the other provisions of c. 268A as they apply to special state employees (s.s.4 and 7) and to the standards of conduct set out in s.23. However, given the fact that one of the powers expressly granted the ABC is to "investigate the necessity for additional facilities in the [City] and in the metropolitan area surrounding the [City] and given the fact that the statute does speak to the qualifications of its member but does not exclude employees of the City, s.23 will not require your disqualification where the City's interest is non-financial in nature. Compare, EC-COI-81-56, 81-41, 80-111, 30-115.[8]
End Of Decision
