Do a city attorney and city administrator have to recuse themselves from a deal that affects their own nearby property?

Plain-English summary

The City of Conroe was working out a deal with a landowner: the owner would donate part of a closed golf course to the city for parkland, and in return the city would grant an exception from its tree-preservation ordinance on the land the owner kept and consent to that land joining a municipal utility district for a single-family-home development. The city attorney and the city administrator negotiated the agreement on the city's behalf. The complication was that each of them owns a home next to the property, the administrator's next to the part being donated and the attorney's next to the part being developed. Residents pointed out the deal could have a special effect on the value of those homes, so the Montgomery County Attorney asked the AG, on the city's behalf, whether the two officials were subject to the conflict-of-interest rules in chapter 171 of the Local Government Code for this matter.

Chapter 171 preempts the common law of conflict of interest for local public officials. Its key provision, section 171.004, requires a local public official who has a substantial interest in real property to file an affidavit and abstain before a vote or decision on a matter when it is reasonably foreseeable the action will have a special economic effect on the property's value, distinguishable from its effect on the public. The statute defines "local public official" to include officers who exercise responsibilities beyond the merely advisory. Owning a home can be a substantial interest, since the statute counts an ownership interest worth $2,500 or more.

The AG did not have to reach the harder question of whether the city attorney and city administrator qualify as "local public officials," because the duty in section 171.004 only attaches to an official who actually votes on or makes a decision in the matter. Prior AG opinions had applied this same logic, finding officials with private business dealings were not covered when they did not vote on or decide the relevant government action. According to the facts the mayor provided, neither the city attorney nor the city administrator had the authority to vote on or decide whether the city would accept the proposed agreement; that decision rested with the city council, which had not voted. Taking those facts as true, the AG concluded the two officials were not subject to section 171.004's disclosure and abstention requirements with respect to the proposed agreement as described.

Currency note

This opinion was issued in 2019. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant for those who asked

The City of Conroe and its officials: At the time of the opinion, the AG read chapter 171 not to impose its disclosure-and-abstention duty on the city attorney and city administrator for this agreement, because the facts showed they did not vote on or decide whether the city would accept it.

City council members and other officials who do vote: The opinion is a reminder that section 171.004's duty attaches to the official who participates in the vote or decision. The AG's analysis turned on who held decision authority, not on who negotiated the deal.

Residents who raised the conflict concern: The opinion explained that, even assuming the officials had a substantial interest in their adjacent homes, the conflict-of-interest statute did not reach them here because they lacked the power to vote on or decide the matter.

Common questions

Does negotiating a city deal that affects your own property create a chapter 171 conflict?
The AG concluded not by itself. Section 171.004's duty applies to an official who votes on or decides the matter. Because the city attorney and city administrator did not have that authority over the agreement, the statute did not apply to them for it.

Does owning a nearby home count as a "substantial interest"?
The AG noted it can. The statute treats an equitable or legal ownership interest in real property worth $2,500 or more as a substantial interest. But that alone did not trigger section 171.004 here.

Why didn't the AG decide whether they were "local public officials"?
The AG explained it did not need to, because section 171.004 only applies to an official who participates in the vote or decision, and these officials did not, so the result was the same regardless of that classification.

Who did have the decision authority?
The AG noted the proposed agreement would go to the city council, which had not voted on it. The facts the mayor described indicated the city attorney and city administrator did not possess authority to vote on or decide the city's acceptance.

Background and statutory framework

Chapter 171 of the Local Government Code preempts the common law of conflict of interest as applied to local public officials (Tex. Loc. Gov't Code § 171.007(a)). A local public official who knowingly violates section 171.004 commits an offense (§ 171.003(a)(1)), and section 171.003 also covers acting as a surety in certain situations (§ 171.003(a)(2), (3)). Section 171.004(a)(2) requires an official with a substantial interest in real property to file an affidavit and abstain before a vote or decision when it is reasonably foreseeable the action will have a special economic effect on the property's value distinguishable from its effect on the public. The statute defines a "local public official" as an officer who exercises responsibilities beyond those that are advisory (§ 171.001(1)), and a home can be a substantial interest because an ownership interest worth $2,500 or more qualifies (§ 171.002(b)).

The AG declined to decide whether the city attorney and city administrator met the "local public official" definition, because section 171.004 applies only to an official who participates in a vote or decision that will result in a special economic effect. The AG cited prior opinions evaluating conflicts case by case and holding officials were not covered when they did not vote on or decide the relevant action (Tex. Att'y Gen. Op. Nos. GA-0337 (2005); GA-0510 (2007) (constable's towing business); JM-450 (1986) (deputy sheriff's repair contract); JM-310 (1985) (county clerk's title company)), while noting that an official whose decision is treated as final must comply even where another body has concurrent authority (Tex. Att'y Gen. Op. No. KP-0105 (2016)). Because the mayor's facts indicated the two officials lacked authority to vote on or decide the city's acceptance of the agreement, the AG concluded they were not subject to section 171.004 for that agreement.

Citations

Statutory provisions:

• Tex. Loc. Gov't Code § 171.001(1); § 171.002(b); § 171.003(a)(1); § 171.003(a)(2), (3); § 171.004; § 171.004(a); § 171.004(a)(2); § 171.007(a)

Attorney General opinions:

• Tex. Att'y Gen. Op. No. GA-0337 (2005)
• Tex. Att'y Gen. Op. No. GA-0510 (2007)
• Tex. Att'y Gen. Op. No. JM-450 (1986)
• Tex. Att'y Gen. Op. No. JM-310 (1985)
• Tex. Att'y Gen. Op. No. KP-0105 (2016)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/ken-paxton/kp-0244
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2019/kp0244.pdf

Original opinion text

KEN PAXTON
ATTORNEY GENERAL OF TEXAS

March 7, 2019

The Honorable J.D. Lambright Opinion No. KP-0244
Montgomery County Attorney
501 North Thompson, Suite 300 Re: Whether the city attorney and city
Conroe, Texas 77301 administrator are local public officials subject
to chapter 171 of the Local Government Code
(RQ-0249-KP)

Dear Mr. Lambright:

    You ask on behalf of the City of Conroe (the "City") whether the city attorney and city

administrator are local public officials subject to chapter 171 of the Local Government Code with
respect to a particular matter. [1] You inform us that the city attorney and the city administrator
negotiated a proposed agreement on behalf of the City whereby a landowner would donate a
portion of a defunct golf course property to the City for park and open space purposes. Request
Letter at 1. The proposed agreement would require the City to grant an exception from its tree
preservation ordinance for the property retained by the landowner and consent to the property's
inclusion in a municipal utility district in accord with the owner's planned development of the
remaining property for single family homes. Id. You tell us that the city attorney and the city
administrator each own a home adjacent to the property. Id. at 1-2. [2] You state that the city
attorney presented the proposed agreement at a public workshop but that the city council has not
voted on the proposal. Id. at 2. The City's question arises out of "public comments or suggestions
that the terms of the proposed agreement, if approved by the City, may have a special economic
effect on the value of the properties" that the city administrator and the city attorney own. Id.

    Chapter 171 of the Local Government Code "preempts the common law of conflict of

interests as applied to local public officials." TEX. LOC. GOV'T CODE § 171.007(a). A local public
official who knowingly violates section 171.004 commits an offense. Id. § 171.003(a)(1). [3] Section
171.004 prohibits a "local public official" from participating in a "vote or decision" involving
property in which the official has a substantial interest:

             (a) If a local public official has a substantial interest ... in real
             property, the official shall file, before a vote or decision on any
             matter involving ... the real property, an affidavit stating the nature
             and extent of the interest and shall abstain from further participation
             in the matter if:

                 (2) in the case of a substantial interest in real property, it is
                 reasonably foreseeable that an action on the matter will have a
                 special economic effect on the value of the property,
                 distinguishable from its effect on the public.

Id. § 171.004(a)(2). Chapter 171 defines a "local public official" as "a member of the governing
body or another officer, whether elected, appointed, paid, or unpaid, of any ... municipality ...
who exercises responsibilities beyond those that are advisory in nature." Id. § 171.001(1)
(emphasis added). Thus, as applicable here, an individual may be subject to the conflict of interest
provisions of section 171.004 if the individual (1) has a substantial interest in real property that
may be involved in municipal action; (2) is a local public official of the municipality as that term
is statutorily defined; and (3) votes or makes a decision on a matter that will have a special
economic effect on the value of the individual's property. Id. §§ 171.001(1), .004.

    Home ownership may constitute a "substantial interest in real property" under the statute.

See id. § 171.002(b) ("A person has a substantial interest in real property if the interest is an
equitable or legal ownership with a fair market value of $2,500 or more."). However, we need not
decide whether the city administrator or the city attorney meets the definition of a local public
official because they do not vote or make a decision on a matter that will have a special economic
effect on the value of their respective property. "[P]otential conflicts of interest are evaluated on
a case by case basis as they relate to particular governmental actions." Tex. Att'y Gen. Op. No.
GA-0337 (2005) at 4. This office has determined that "section 171.004 applies only to a local
official who may participate in a vote or decision of the governmental entity 'that will result in a
special economic effect" on the official's business or the value of the official's real property. Tex.
Att'y Gen. Op. No. GA-0510 (2007) at 2 (determining that a constable is a local public official but
need not comply with disclosure and abstention requirement with respect to his towing business);
see also Tex. Att'y Gen. Op. Nos. JM-450 (1986) at 1 (determining that the predecessor statute
did not apply to a deputy sheriff's auto repair contract with the county because the deputy does not
vote on or decide county business), JM-310 (1985) at 3-4 (determining that a county clerk may
own a title company doing business with the county because the clerk does not vote or decide
county contracts). The facts as described by the mayor suggest that the city administrator and the
city attorney do not possess the authority to vote or make a decision on the City's acceptance of
the proposed agreement. Mayor's Letter at 3. [4] Taking these facts as true, the city administrator
and the city attorney are not subject to the requirements of section 171.004 of the Local
Government Code with respect to the proposed agreement as described.

                                 SUMMARY

                  Section 171.004 of the Local Government Code prohibits a
          "local public official" from participating in a vote or decision
          involving property in which the official has a substantial interest
          when it is reasonably foreseeable that an action on the matter will
          have a special economic effect on the value of the property. Because
          the city attorney and a city administrator at issue do not possess
          authority to vote or make a decision on a proposed agreement as
          described, they are not subject to the requirements of section
          171.004 of the Local Government Code with respect to that
          agreement.

                                        Very truly yours,

                                        KEN PAXTON
                                        Attorney General of Texas

JEFFREY C. MATEER
First Assistant Attorney General

BRANTLEY STARR
Deputy First Assistant Attorney General

RYAN L. BANGERT
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

WILLIAM A. HILL
Assistant Attorney General, Opinion Committee

[1] See Letter from Honorable J.D. Lambright, Montgomery Cty. Att'y, to Honorable Ken Paxton, Tex. Att'y Gen. at 1 (Sept. 7, 2018) ("Request Letter") and attached Letter from Honorable Toby Powell, Mayor, Conroe, Tex., to Honorable J.D. Lambright (Aug. 27, 2018) ("Mayor's Letter"), https://www2.texasattorneygeneral.gov/opinion/requests-for-opinions-rqs.

[2] You state that the city administrator's home is adjacent to the property to be donated to the City and the city attorney's home is adjacent to the property to be retained for development. Request Letter at 1-2.

[3] Section 171.003 also makes it an offense for a local public official to knowingly act as surety "for a business entity that has work, business, or a contract with the governmental entity" or as surety "on any official bond required of an officer of the governmental entity." TEX. LOC. GOV'T CODE § 171.003(a)(2), (3).

[4] But see Tex. Att'y Gen. Op. No. KP-0105 (2016) at 2-4 (determining that members of a planning and zoning commission whose decisions are treated as final must comply with section 171.004 even though the city council has concurrent authority).