Opinion  EC-COI-89-13

Date: 05/10/1989
Organization: State Ethics Commission

A member of a municipal authority may retain her investment as well as a limited partner status is a project that is pending before her municipal authority, provided that her investment is less than 1% of the entire project and she abides by the rules of sections 19 and 20. 

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You are about to be sworn in as a member of the Boston Redevelopment Authority (BRA), which is currently considering a Kingston Bedford-Essex/Parcel 18 parcel to parcel linkage project (Project). You are currently the managing general partner and $1000 investor in Campana Development Limited Partnership (Campana), a limited partnership which owns 7500 shares of Class A stock or 1.4% in Ruggles Bedford Associates (Ruggles). Ruggles is a joint venturer in Columbia Plaza Metropolitan Structures in the Project. You state that your stock ownership in Campana will give you less than 1% of the share in the entire project. Although you are eligible to be compensated by the limited partners for your services as managing general partner, no such payments have been made to you.[1]

Upon becoming a BRA member, you intend to resign from your managing general partner position and to limit your role in the Project to a passive investor and limited partner. You intend to retain your $1000 investment in Campana.


Does G. L. c. 268A permit you to retain your investment and limited partnership with Campana while serving on the BRA?


Yes, subject to the limitations set forth below


As a BRA member, you will be considered a municipal employee and a special municipal employee for the purposes of G.L. c. 268A. See, G.L. c. 121B, s.7.

1. limitations on your official BRA activities

Under G.L. c. 268A, s.19, you must abstain from participating[2] as a BRA member in any contract, decision or other particular matter[3] in which either you or your partners has a foreseeable financial interest. Despite the comparatively small financial interest which you have in the Project, you must abstain from any BRA discussions or votes relating to matters arising out of the Project. EC-COI-84-96. By abstaining from participation in Project-related matters, you will also avoid creating any appearance of undue favoritism. G.L. c. 268A, s.23(b)(3). We would also add that your BRA appointing authority may grant you written permission to
participate in Project-related matters under the conditions of G.L. c. 268A, s.19(b)(1). Unless and until those conditions have been satisfied, however, you must continue to abstain from participation in these matters.

2. limitations On your private activities

Under G.L. c. 268A, s.20, a municipal employee may not have a financial interest in a contract made by a municipal agency, unless an exemption applies. While you would have a financial interest in any BRA contract relating to the Project, your financial interest of $1000 is less than 1% of the ownership interests under the
Contract. See, EC-COI-83-147. Accordingly, s.20 will not prohibit your retention of your investment with Campana.

Aside from s.20, you are also subject to s.17. Under this section you may not receive compensation[4] from Campana or act as agent for Campana in connection with any contract or other matter within the official responsibility of the BRA. Because you will not be providing services for Campana in connection with the Project
once you become a BRA member, your potential receipt of investment income from Campana does not constitute compensation under s.17. You may receive compensation from Campana for services which you performed prior to your becoming a BRA member, as long as the value of these services is ascertained and liquidated within a reasonable period of time. EC-COI-87-29.

3. limitations on the Activities of your Partners

As long as you retain your limited partnership with Campana, other Campana limited and general partners will be subject to G.L.c. 268A, s.18(d). Specifically, your partners may not act as agent or attorney for any non-City party in connection with any particular matter which is within your official responsibility as a BRA member. While the scope of your partners' prospective activities is as yet undetermined, your partners can avoid violating this section by arranging to have the partnership represented by an independent agent or attorney who is not a partner in connection with any matter within your official BRA responsibility. We would add that s.18(d) restricts only the representational activities of G.L. c. 268A, s.17(a) (receipt of compensation and/or representational activity prohibited for municipal employee.) Buss, The Massachusetts Conflict of Interest Law: An Analysis 45 B.U. L. Rev. 299,345.

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

[1] You are currently negotiating for a specific liquidated amount for the compensation attributable to your prior services as managing general partner.

[2] "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.

[3] "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.

[4] "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).

End Of Decision

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