CHAPTER 171. REGULATION OF CONFLICTS OF INTEREST OF OFFICERS OF MUNICIPALITIES, COUNTIES, AND CERTAIN OTHER LOCAL GOVERNMENTS - Texas Statutes

LOCAL GOVERNMENT CODE

TITLE 5. MATTERS AFFECTING PUBLIC OFFICERS AND EMPLOYEES

SUBTITLE C. MATTERS AFFECTING PUBLIC OFFICERS AND EMPLOYEES OF

MORE THAN ONE TYPE OF LOCAL GOVERNMENT

CHAPTER 171. REGULATION OF CONFLICTS OF INTEREST OF OFFICERS OF

MUNICIPALITIES, COUNTIES, AND CERTAIN OTHER LOCAL GOVERNMENTS

Sec. 171.001. DEFINITIONS. In this chapter:

(1) "Local public official" means a member of the governing body

or another officer, whether elected, appointed, paid, or unpaid,

of any district (including a school district), county,

municipality, precinct, central appraisal district, transit

authority or district, or other local governmental entity who

exercises responsibilities beyond those that are advisory in

nature.

(2) "Business entity" means a sole proprietorship, partnership,

firm, corporation, holding company, joint-stock company,

receivership, trust, or any other entity recognized by law.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Sec. 171.002. SUBSTANTIAL INTEREST IN BUSINESS ENTITY. (a) For

purposes of this chapter, a person has a substantial interest in

a business entity if:

(1) the person owns 10 percent or more of the voting stock or

shares of the business entity or owns either 10 percent or more

or $15,000 or more of the fair market value of the business

entity; or

(2) funds received by the person from the business entity exceed

10 percent of the person's gross income for the previous year.

(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.

(c) A local public official is considered to have a substantial

interest under this section if a person related to the official

in the first degree by consanguinity or affinity, as determined

under Chapter 573, Government Code, has a substantial interest

under this section.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 40(a), eff. Aug. 28,

1989; Acts 1991, 72nd Leg., ch. 561, Sec. 37, eff. Aug. 26, 1991;

Acts 1995, 74th Leg., ch. 76, Sec. 5.95(27), eff. Sept. 1, 1995;

Acts 1997, 75th Leg., ch. 849, Sec. 1, eff. Sept. 1, 1997.

Sec. 171.0025. APPLICATION OF CHAPTER TO MEMBER OF HIGHER

EDUCATION AUTHORITY. This chapter does not apply to a board

member of a higher education authority created under Chapter 53,

Education Code, unless a vote, act, or other participation by the

board member in the affairs of the higher education authority

would provide a financial benefit to a financial institution,

school, college, or university that is:

(1) a source of income to the board member; or

(2) a business entity in which the board member has an interest

distinguishable from a financial benefit available to any other

similar financial institution or other school, college, or

university whose students are eligible for a student loan

available under Chapter 53, Education Code.

Added by Acts 1989, 71st Leg., ch. 1, Sec. 41(a), eff. Aug. 28,

1989.

Sec. 171.003. PROHIBITED ACTS; PENALTY. (a) A local public

official commits an offense if the official knowingly:

(1) violates Section 171.004;

(2) acts as surety for a business entity that has work,

business, or a contract with the governmental entity; or

(3) acts as surety on any official bond required of an officer

of the governmental entity.

(b) An offense under this section is a Class A misdemeanor.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 40(a), eff. Aug. 28,

1989.

Sec. 171.004. AFFIDAVIT AND ABSTENTION FROM VOTING REQUIRED.

(a) If a local public official has a substantial interest in a

business entity or in real property, the official shall file,

before a vote or decision on any matter involving the business

entity or the real property, an affidavit stating the nature and

extent of the interest and shall abstain from further

participation in the matter if:

(1) in the case of a substantial interest in a business entity

the action on the matter will have a special economic effect on

the business entity that is distinguishable from the effect on

the public; or

(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.

(b) The affidavit must be filed with the official record keeper

of the governmental entity.

(c) If a local public official is required to file and does file

an affidavit under Subsection (a), the official is not required

to abstain from further participation in the matter requiring the

affidavit if a majority of the members of the governmental entity

of which the official is a member is composed of persons who are

likewise required to file and who do file affidavits of similar

interests on the same official action.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 40(a), eff. Aug. 28,

1989.

Sec. 171.005. VOTING ON BUDGET. (a) The governing body of a

governmental entity shall take a separate vote on any budget item

specifically dedicated to a contract with a business entity in

which a member of the governing body has a substantial interest.

(b) Except as provided by Section 171.004(c), the affected

member may not participate in that separate vote. The member may

vote on a final budget if:

(1) the member has complied with this chapter; and

(2) the matter in which the member is concerned has been

resolved.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Renumbered from Sec. 171.006 and amended by Acts 1989, 71st Leg.,

ch. 1, Sec. 40(a), eff. Aug. 28, 1989.

Sec. 171.006. EFFECT OF VIOLATION OF CHAPTER. The finding by a

court of a violation under this chapter does not render an action

of the governing body voidable unless the measure that was the

subject of an action involving a conflict of interest would not

have passed the governing body without the vote of the person who

violated the chapter.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Renumbered from Sec. 171.008 by Acts 1989, 71st Leg., ch. 1, Sec.

40(a), eff. Aug. 28, 1989.

Sec. 171.007. COMMON LAW PREEMPTED; CUMULATIVE OF MUNICIPAL

PROVISIONS. (a) This chapter preempts the common law of

conflict of interests as applied to local public officials.

(b) This chapter is cumulative of municipal charter provisions

and municipal ordinances defining and prohibiting conflicts of

interests.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 40(a), eff. Aug. 28,

1989.

Sec. 171.009. SERVICE ON BOARD OF CORPORATION FOR NO

COMPENSATION. It shall be lawful for a local public official to

serve as a member of the board of directors of private, nonprofit

corporations when such officials receive no compensation or other

remuneration from the nonprofit corporation or other nonprofit

entity.

Added by Acts 1989, 71st Leg., ch. 475, Sec. 2, eff. Aug. 28,

1989.

Sec. 171.010. PRACTICE OF LAW. (a) For purposes of this

chapter, a county judge or county commissioner engaged in the

private practice of law has a substantial interest in a business

entity if the official has entered a court appearance or signed

court pleadings in a matter relating to that business entity.

(b) A county judge or county commissioner that has a substantial

interest in a business entity as described by Subsection (a) must

comply with this chapter.

(c) A judge of a constitutional county court may not enter a

court appearance or sign court pleadings as an attorney in any

matter before:

(1) the court over which the judge presides; or

(2) any court in this state over which the judge's court

exercises appellate jurisdiction.

(d) Upon compliance with this chapter, a county judge or

commissioner may practice law in the courts located in the county

where the county judge or commissioner serves.

Added by Acts 2003, 78th Leg., ch. 227, Sec. 21, eff. Sept. 1,

2003; Acts 2003, 78th Leg., ch. 1206, Sec. 3, eff. June 20, 2003.