OPINION NUMBER - 162

ADOPTED - 1995/09/08

SUBJECT - Conflicts of Interests/Community Redevelopment Authorities.

REQUESTED BY: Daniel L. Lindstrom of the Community Redevelopment Authority for the City of Kearney.

QUESTION: 1) Are members of the board of a community redevelopment authority public officials as defined in 49-1443? 2) Are members of the board of a community redevelopment authority required to comply with the provisions of 49-14,103.01?

CONCLUSION

As to question #1, yes. As to question #2, no.

FACTS

The Community Redevelopment Law was first enacted in 1951. Since then it has been amended by the Legislature from time to time, but the law has remained substantially the same. A community redevelopment authority is a legislatively prescribed method by which cities and villages can deal with areas "which have deteriorated and become substandard and blighted because of the unsafe, insanitary, or overcrowded condition of the dwellings therein, or because of inadequate planning of the area or excessive land coverage by the buildings thereon, or the lack of proper light and air and open space . . ." See 18-2102 R.R.S., 1943. It is the function of a community redevelopment authority to put together a plan for the prevention and spread of urban blight and to compel the repair or rehabilitation of deteriorating structures. A community redevelopment authority may also compel the clearance of deteriorating structures and plan for the redevelopment of the land.

Typically, a city council or village board establishes a community redevelopment authority by ordinance. The members of the community redevelopment authority board are appointed by the mayor or the village board chairman. In cities having a city manager form of government, the appointments are made by the city manager. The appointments are then approved by the city council or the village board.

The Community Redevelopment Law includes two provisions of particular interest. Section 18-2102.01(4) states:

No member or employee of any authority established under the provisions of this section shall have any interest directly or indirectly in any contract for property, materials, or services to be required by such authority.

Section 18-2106 states:

No member or employee of an authority shall voluntarily acquire any interest, direct or indirect, in any redevelopment project or in any property included or planned by the authority to be included in any such project, or in any contract or proposed contract in connection with such project. Where the acquisition is not voluntary, such member or employee shall immediately disclose such interest in writing to the authority and such disclosure shall be entered upon the minutes of the authority. If any member or employee of an authority presently owns or controls or owned or controlled within the preceding two years an interest, direct or indirect, in any property included or planned by the authority to be included in any redevelopment project, he shall immediately disclose such interest in writing to the authority and such disclosure shall be entered upon the minutes of the authority. Upon such disclosure such member or employee of an authority shall not participate in any action by the authority affecting such property.

ANALYSIS

Section 49-1443 defines the term public official as "an official in the executive branch, an official in the Legislative branch, or an elected or appointed official in the judicial branch of state government or a political subdivision thereof; any elected or appointed member of a school board; an elected or appointed member of a governing body of a state institution of higher education."

Section 18-2107 defines a community redevelopment authority as "a body corporate and politic, exercising public and essential governmental functions and having all the powers necessary or convenient to carry out and effectuate the purposes and provisions of the Community Redevelopment Law . . ." Given this definition it is clear that a community redevelopment authority is either a part of a political subdivision or a political subdivision in its own right such that in either case the members of its board are appointed officials of a political subdivision. That is, they are public officials as defined in 49-1443.

Section 49-14,103.01 applies to a public official of certain specified political subdivisions when the public official has an interest in a contract with the political subdivision. By its own terms, 49-14,103.01 applies to "a) a member of the board of directors of a natural resources district, b) a member of any board or commission of any county, school district, city, or village which spends and administers its own funds . . ., c) any elected county, school district, educational service unit, city or village official, and d) a member of any board of directors or trustees of a district hospital . . . or a county hospital . . ."

If a community redevelopment authority is a part of the creating city or village, then it could be a board of a city or village which administers its own funds. Consequently, members of a community redevelopment board would be subject to the provisions of 49-14,103.01. However, if a community redevelopment authority is a political subdivision separate from the creating city or village, its board members would not be subject to 49-14,103.01 since it would not fall into any of the above noted categories. A difficulty in making this determination is that a community redevelopment authority has some of the characteristics of an agency or department of a city or village and it has some of the characteristics of a separate political subdivision.

The Commission has the authority to interpret provisions of the Nebraska Political Accountability and Disclosure Act and the provisions of the Campaign Finance Limitation Act. It has the authority to consider other provisions of state law. When the meaning of a provision of state law other than the Nebraska Political Accountability and Disclosure Act or the Campaign Finance Limitation Act is plain on its face, the Commission can state that meaning within the context of a formal advisory opinion. If the meaning of a statute outside of the provisions of these two Acts is not plain on its face, the Commission must look to an authoritative source for an interpretation or appropriate rule of statutory construction. Authoritative sources include court decisions and attorney general's opinions.

In Attorney General's Opinion #95056 dated July 12, 1995 certain provisions of the Community Redevelopment Law were considered, including 18-2107. The opinion states: "Based on these express statutory provisions we conclude that the authorities are political subdivisions and that a city council or village board of trustees is the governing body of an authority." It is noted elsewhere in the opinion that the reference to the city council or village board being the governing body of the authority is for the purposes of the Nebraska Budget Act.

We adopt the position of the attorney general that a community redevelopment authority is a separate political subdivision. Consequently, the provisions of 49-14,103.01 do not apply to members of the board of a community redevelopment authority.

Having determined that members of the board of a community redevelopment authority are public officials, who are not subject to 49-14,103.01, but who are subject to conflict of interest provisions in the Community Redevelopment Law, there are remaining matters which require consideration.

Certain of the conflicts provisions of the Nebraska Political Accountability and Disclosure Act apply to all public official and all public employees. For example, the provisions of 49-14,101(2) prohibit public officials or public employees from soliciting or accepting anything of value based upon an understanding that their official actions would be influenced thereby. Section 49-14,101(3) prohibits a public official or public employee from using confidential information received through holding of a public office or otherwise using his or her public office for personal financial gain or that of a business association or an immediate family member. Section 49-14,101(4) prohibits a public official or public employee from using personnel, resources, property or funds under his or her official care and control for personal financial gain or for non-governmental purposes. There is no apparent inconsistency between these provisions and the conflicts provisions found in the Community Redevelopment Law. However, other provisions of the Act need also to be considered.

Section 49-14,102 is part of the original Nebraska Political Accountability and Disclosure Act enacted in 1976. It generally provides that no public official or public employee, a member of that individual's immediate family, or business with which the individual is associated shall enter into a contract valued at $2,000 or more, in any one year, with a governmental body unless the contract is awarded through an open and public process which includes prior public notice. Section 49-14,103 provides that a contract entered into in violation of 49-14,102 is voidable.

A member of the board of a community redevelopment association currently finds himself or herself in a situation in which there are three potentially applicable statutes pertaining to a board member's interest in a contract with the board. They are 18-2102.01(4), 18-2106, and 49-14,102. It is necessary to reconcile these three statutes. For this purpose, we turn to a rule of statutory construction frequently used by the Nebraska Supreme Court. The rule is used when statutes are in pari materia. That is, when they address the same subject. "All statutes relating to the same subject are considered as parts of a homogeneous system and later statutes are considered as supplementary to preceding enactments. Statutes relating to the same subject, although enacted at different times, are in pari materia and should be construed together." Matzke v. City of Seward, 193 Neb 211, 226 N.W.2d 340 (1975) and Northwest High School District No. 82 v. Hessel, 210 Neb 219, 313 N.W.2d 656 (1981).

Section 18-2102.01(4) is a blanket prohibition against a member of a board of a community redevelopment authority having an interest in any contract with the authority. Section 18-2103 prohibits a member of a community redevelopment board from having an interest in any contract involving a redevelopment project except for the involuntary acquisition of an interest. The statute then goes on to prescribe a course of conduct. Section 49-14,102 prohibits a public official from having an interest in a contract either personally, through a business association, or through an immediate family member unless certain prerequisites are met. Clearly these statutes address the same subject and therefore must be considered jointly.

Reading 18-2102.01 and 18-2106 together, it appears that a member of a redevelopment authority board, as an individual, may not have an interest in a contract with the board except that he may have an interest which is not voluntary in a redevelopment project, property included within a redevelopment project, or a contract connected with a redevelopment project. The term redevelopment project is defined in 18-2103(12). If a member has an involuntary interest in a redevelopment project, property involved in a redevelopment project, or a contract connected with a redevelopment project the member is required to disclose that fact in writing and abstain from participating further in the matter.

In accordance with the provisions of 49-14,102 a member of a community redevelopment authority board may not have an interest in a contract with the board either personally, through an immediate family member, or through a business association unless certain prerequisites are followed.

Section 49-14,102 was enacted subsequent to the enactment of the Community Redevelopment Law and must be viewed as supplementary to 18-2102.01 and 18-2106. Accordingly, it is our opinion that the Community Redevelopment Law conflict of interest provisions apply to a community redevelopment authority board member when he or she has an interest in a contract or redevelopment project in his or her individual capacity. The provisions of 49-14,102 apply to a member of a community redevelopment authority board who has an interest in a contract with the board through a business association or an immediate family member. The term business is defined in 49-1407. The term business association is defined in 49-1408. The term immediate family member is defined in 49-1425.

If 49-14,102 is applicable, the board member should consider abstaining from participating or voting on the matter. The Commission stated in Advisory Opinion #69 and Advisory Opinion #120 that voting in a situation which results in financial gain is a violation of 49-14,101(3) where only the minimum number of favorable votes are cast for the action to be taken. The provisions of 49-14,101(3) apply whenever a community redevelopment authority board member is in a position to take official action or make an official decision which results in financial gain to the board member, a member of his or her immediate family, or a business with which he or she is associated.

SUMMARY

Members of a community redevelopment authority are public officials as defined in 49-1443. A community redevelopment authority is a separate political subdivision and its board members are not subject to the provisions of 49-14,103.01. Sections 18-2102.01(4), 18-2106, and 49-14,102 are in pari materia and should be construed together.