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Opinion

Opinion EC-COI-95-8

Date: 06/06/1995
Organization: State Ethics Commission

A state employee is advised that, under the provisions of G.L. c. 268A, §7(a), he may dispose of his financial interest in a state contract by placing all of the stock in the affected company in an irrevocable trust for the benefit of his wife, as long as he does not retain any reversionary interest at any time. 

Facts

You are a member of a municipal Housing Board of Commissioners ("Housing Board"), appointed by the Governor. Your appointment was not subject to confirmation by the City Council. The Governor does not publicize gubernatorial appointee vacancies on local housing authorities in a newspaper or other periodical of general circulation. As a Commissioner, you are paid an annual stipend which does not exceed $1,800. 

You are contemplating seeking election to the City Council. If elected, you would receive an annual 

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salary of approximately $7,500. You state that the City Council does vote to confirm the four Housing Authority Commissioners other than yourself.[1]

Question

Does G.L. c. 268A permit you to hold your compensated position as a member of the Housing Authority Board of Commissioners if you are elected to the City Council?

Answer

No, unless you forego the $1,800 stipend for serving on the Housing Board.

Discussion

As a member of the Housing Board, you are a special municipal employee[2] for purposes of the conflict law. See G.L. c. 121B, s.7. If you are elected as a City Councilor, you will be a regular municipal employee in that position. 

Section 20 of the conflict law prohibits a municipal employee from having a direct or indirect financial interest in a contract made by the same municipality. The term "contract" in s.20 includes any type or arrangement between two or more parties under which one undertakes certain obligations in consideration of the promises made by the other. Thus, we have previously concluded that the term "contract" includes employment arrangements, EC-COI- 84-91; In Re Doherty (1982); Quinn v. State Ethics Commission, 401 Mass. 210 (1987), and that s.20 prohibits multiple office holding in the same city or town, unless an exemption applies. See EC-COI- 90-2; Commission Advisory No. 7: Multiple Office Holding at the Local Level. 

Since our decision in EC-COI-82-46, we have recognized that because an elected position is not contractual in nature, an elected official's compensation is not received pursuant to a "contract". Therefore, s.20 does not prohibit you from holding your Housing Board position and also receiving compensation as a City Councilor. However, we must examine whether there is an exemption which permits a City Councilor to receive compensation as an appointed Housing Board member.

1. Section 20(b) exemption

As noted above, if you are elected as a City Councilor, you will be a regular municipal employee. You will have a prohibited financial interest in your compensated position as a Housing Board member, unless an exemption from s.20 applies. Section 20(b) contains the only exemption generally available to regular municipal employees. In order to qualify for that exemption, you must be able to meet all of the following conditions:

1. The second job must be with a completely independent agency, department or board. As a City Councilor you may not participate in or have official responsibility for any of the activities of the second agency, and the first agency must not regulate activities of the second agency; 

2. the position is publicly advertised; 

3. you file a statement disclosing the second job with the city or town clerk; 

4. the second job will be performed outside of the normal working hours of the first position; 

5. the services performed in the second job are not part of your duties in the first job; 

6. you are not compensated in the second position for more than 500 hours per year;[3] 

7. the head of the second agency, department or board, certifies that no employee of that agency is available to do this work as part of their regular duties; and 

8. the city or town council, board of aldermen, or board of selectmen give their approval of this exemption from s.20.

We note that you will not fulfill the second s.20(b) requirement, namely, that your position as a Housing Board member was "publicly advertised."[4] 

Section 20(b) requires that the second contract be "made after public notice or where applicable, through competitive bidding." The term "public notice" is not defined in the conflict law. However, we have previously interpreted this term to require advertisement of the position "in a newspaper of general circulation." EC-COI-87-24. The public notice requirement is not satisfied where the selection process has been "based primarily on word-of-mouth." EC-COI-83-95; 85-7 (Governor's word-of-mouth request for candidates to sit on seven member board did not satisfy "public notice" requirement in s.7(b), the state counterpart to s.20(b)). Moreover, we have declined to waive the public notice requirement "upon a theory that public advertising would be impractical or not effective." EC-COI-87-24 ("It is not for the 

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Commission to waive the public notice requirement or broaden its scope by interpretation. Any such change in law or policy must emanate from the General Court."). The vacancy on the Housing Board which you filled was not publicly advertised. Thus, you will not qualify for the s.20(b) exemption.

2. The Housing Authority Exemption

Section 20 also contains a so-called housing authority exemption. Specifically, the seventh paragraph of s.20 provides in relevant part:

This section shall not prohibit an employee of a housing authority in a municipality from holding any elective office, other than the office of mayor, in such municipality nor in any way prohibit such employee from performing the duties of or receiving the compensation provided for such office; provided, however, that such elected officer shall not, except as otherwise expressly provided, receive compensation for more than one office or position held in a municipality, but shall have the right to choose which compensation he shall receive; provided further that no such elected official may vote or act on any matter which is within the purview of the housing authority by which he is employed; and provided further that no such elected official shall be eligible for appointment to any such additional position while he is still serving in such elective office or for six months thereafter.

Here, we are asked to consider whether the seventh paragraph, which makes reference to an "employee" of a housing authority, also applies to a "member" of such authority. Based on the express language used and the discernible legislative history of this paragraph, we conclude that it does not. 

In determining the scope of the housing authority exemption, we look first to the language used. Massachusetts Community College Council MTA/NEA v. Labor Relations Comm'n, 402 Mass. 352, 354 (1988). By its express terms, the exemption applies to an "employee" of a housing authority. We note that under Chapter 121B, a housing authority "shall be managed, controlled and governed by five members." G.L. c. 121B, s.5. The office of member is created "by a statute enacted by the Legislature in accordance with the broad power entrusted to the General Court to name and settle officers, Constitution, Part II, c. 1, s.1, art. 4, and the Legislature can determine qualifications for members of a housing authority, provide for their appointment or election, define their duties, fix their tenure, and designate the causes for and method to be followed in their removal." Collins v. Selectmen of Brookline, 325 Mass. 562, 91 N.E. 2d 747, 749 (1950). Under G.L. c. 121B, s.6, a member may be removed from office "because of inefficiency, neglect of duty or misconduct in office." A housing authority may employ an executive director and "such other officers, agents and employees as it deems necessary or proper," and may delegate to "one or more of its members, agents or employees such powers and duties as it deems necessary and proper for the carrying out of an action determined upon by it." G.L. c. 121B, s.7. Each member of a housing authority, "and any person who performs professional services for such an authority on a part- time, intermittent or consultant basis ... shall be considered a special municipal employee" for purposes of the conflict law. Id. Read together, these sections draw a clear distinction between members of a housing authority on the one hand, and housing authority employees on the other. That is, the terms are neither synonymous nor are they readily interchangeable. 

Moreover, our examination of the evolution of the housing authority exemption further supports our conclusion that the exemption applies to employees but does not apply to members of a housing authority. The housing authority exemption was inserted by St. 1987, c. 374, s.2, approved October 5, 1987. That statute was enacted less than four months after our decision and order in In re Paul T. Hickson, 1987 SEC 296 (decided June 25, 1987). There we found that Hickson, an elected city councilor in the City of Westfield, had violated s.20 by also serving as a compensated maintenance worker for the Westfield Housing Authority. We imposed a fine for that violation in part because we found the facts of Hickson to be nearly identical to those in In re Kenneth R. Strong, 1984 SEC 195.  What is now the housing authority exemption was originally proposed in House No. 4294 as an amendment to Chapter 39 of the General Laws. House No. 4294 contained a broad exemption which provided that "any elected municipal employee may serve as a paid employee of a local housing authority." The General Court rejected that language, and in House No. 5896, amended s.20 by inserting language taken verbatim from similar provisions in s.20 regarding the application of the s.20 restriction to town councilors and boards of selectmen. The exemption contained in House No. 5896 applied to "an employee of a housing authority." Based on our review of its evolution, we conclude that the intent of the housing authority exemption was twofold. First, the exemption was crafted to address concerns raised by the Hickson and Strong decisions which applied to housing 

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authority employees. Second, the exemption was intended to incorporate the restrictions applicable to members of boards of selectmen and town councilors relative to holding additional positions in a municipality. However, we discern no legislative intent to extend the scope of the exemption to include housing authority members. 

Accordingly, we conclude that because you do not qualify for the s.20(b) or the housing authority exemption, s.20 of the conflict law will prohibit you from being a City Councilor and also receiving compensation as a member of the Housing Board. However, you may serve in both positions if, within 30 days of your receipt of this opinion, you notify the Housing Authority that you will forego the $1,800 stipend received for serving on the Housing Board.

[1] The subject of this opinion has had other positions in state government, including a management position within the agency that he now oversees. 

[2] This opinion request was submitted shortly after he learned of ABC's subcontract. 

[3] "State employee," a person performing services for or holding an office, position, employment, or membership in a state agency, whether by election, appointment, contract of hire or engagement, whether serving with or without compensation, on a full, regular, part-time, intermittent or consultant basis, including members of the general court and executive council. No construction contractor nor any of their personnel shall be deemed to be a state employee or special state employee under the provisions of paragraph (o) or this paragraph as a result of participation in the engineering and environmental analysis for major construction projects either as a consultant or part of a consultant group for the commonwealth. Such contractor or personnel may be awarded construction contracts by the commonwealth and may continue with outstanding construction contracts with the commonwealth during the period of such participation; provided, that no such contractor or personnel shall directly or indirectly bid on or be awarded a contract for any construction project if they have participated in the engineering or environmental analysis thereof. G.L. c. 268A, s.1(q). 

[4] Section 7 does not apply "if such financial interest consists of ownership of less than one percent of the stock of a corporation." 

[5] The s.7(b) exemption is the only exemption generally available to regular state employees. Among other things, the s.7(b) exemption requires that the state employee "not participate in or have official responsibility for any of the activities of the contracting agency." 

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