Local Government Code Synopsis

Chapter 171 and Chapter 176 of the Local Government Code establish the conflicts of interest and disclosure requirements for Council members. Below is the Town of Trophy Club's interpretation of Local Government Codes 171 and 176 dealing with Conflicts of Interest.

VOTING and PARTICIPATING IN ISSUES

Chapter 171 governs conflicts of interest when an issue is going to be considered by Council and a Council member has a substantial interest in a business entity or real property affected by the vote. A substantial interest is defined by Section 171.002 of the Local Government Code as follows:

(1)    The person owns 10 percent or more of the voting stock or shares of the business entity or owns 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.

(3)    A person has a substantial interest in real property if the interest is equitable or legal ownership with a fair market value of $2,500 or more.

(4)    A public official has a conflict of interest if the official’s spouse, parent, child, step-child, father or mother-in-law or son or daughter-in-law have substantial interest as defined above.

Section 171.004 of the Local government Code requires a public official with a substantial interest in a business entity or real property to file an affidavit stating the nature and extent of the interest and abstain from further participation in the matter. 

REQUIRED CONFLICTS DISCLOSURE STATEMENTS

Chapter 176 of the Local Government Code requires local government officials to disclose certain relationships with vendors who conduct business with the local government. Chapter 176 defines a vendor as a person who enters or seeks to enter into a contract with a local government entity. Texas Correctional Industries are the only state agencies considered vendors. 

A local government officer shall file a conflicts disclosure statement if 

(1)    The vendor enters into a contract with the local government entity or the local government entity is considering entering into a contract with the vendor; and

(2)    The vendor has an employment or business relationship with the local government officer or a family member of the local government officer. For purposes of this subsection, a family member includes spouse, parent, child, stepchild, father or mother-in-law, or son or daughter-in-law; and

(3)    The local government official or a family member received taxable income, other than investment income, that exceeds $2,500 during the 12 month period preceding the date the officer becomes aware that:

(a)    A contract with the vendor has been executed; or

(b)    The local government entity is considering entering into a contract with the vendor

A local government shall also file a conflicts disclosure statement if: 

The vendor has given the local government officer or family member of the officer ( use the same definition of a family member as used in (2) above) a gift or gifts that have an aggregate value of more than $100 during the 12- month period preceding the date the officer becomes aware that

(a)    A contract between the local government entity and vendor has been executed; or

(b)    The local government entity is considering entering into a contract with the vendor.

A local government officer shall also file a conflicts disclosure statement if:

               The vendor has a family relationship with the local government officer. For this subsection, a family relationship includes mother, father, son, daughter, brother, sister, grandmother, grandfather, grandson, granddaughter, great-grandfather, great-grandmother, aunt, uncle, nephew, niece, great-grandson, great-granddaughter, spouse, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepchild, sister-in-law, brother-in-law, spouse’s grandmother, spouse’s grandfather, spouse’s granddaughter, and spouse’s grandson.

Section 176 of the Local Government Code uses two terms for family. The terms are ‘Family member” and “Family relationship”. Each term is defined in Section 176.001 of the Local Government Code. I have included the applicable family definitions in the sections to which they apply.