Opinion 92-3


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

 
CONFLICTS OF INTEREST -- Engineering Services (consulting engineer as creditor of planning board chairman) -- Interest in Contract (contracts of creditors)
PUBLIC OFFICERS AND EMPLOYEES -- Ethics (consulting engineer as creditor of planning board chairman)
ZONING AND PLANNING -- Planning Boards (consulting engineer as creditor of planning board chairman)

GENERAL MUNICIPAL LAW, §§800[2],[3], 801: A planning board chairman who borrows money from the board's consulting engineer has a prohibited interest in the engineer's contracts with the town if the loan is determined to be a direct or indirect pecuniary benefit accruing to the chairman as a result of the contracts. To avoid the appearance of impropriety, the chairman should not participate in the discussion or vote on matters affecting the engineer or undertake to approve the engineer's vouchers, as long as the loan is outstanding.

You ask whether the chairman of a town planning board has a conflict of interest prohibited by General Municipal Law, article 18 under the following circumstances. You state that the chairman has borrowed money from the planning board's consulting engineer and has not yet repaid the loan. You also state that the chairman approves vouchers submitted by the engineer for services rendered to the planning board.

General Municipal Law, article 18 (§800 et seq.) contains provisions of law relative to conflicts of interest of municipal officers and employees (see General Municipal Law, §800[4],[5]). A municipal officer or employee has an "interest" in any contract with the municipality if he or she receives a direct or indirect pecuniary or material benefit as the result of the contract (General Municipal Law, §800[3]), and is also deemed to have an interest in the contracts of certain business entities (General Municipal law, §800[3][b]-[d]). For this purpose, a "contract" includes any express or implied claim, account or demand against or agreement with a municipality (see General Municipal Law, §800[2]). An interest in a contract is prohibited if the officer or employee, individually or as a member of a board, has the power or duty to: (a) negotiate, prepare, authorize or approve the contract, or authorize or approve payments thereunder; (b) audit bills or claims under the contract; or (c) appoint an officer or employee who has any such duties (General Municipal Law, §801), and if none of the exceptions contained in article 18 are applicable (see General Municipal Law, §802).

Based on the foregoing provisions, a voucher submitted by the consulting engineer is a "contract" because it is a "claim" against the town (see General Municipal Law, §800[2]). The planning board chairman is not deemed to have an interest in the contracts of his or her creditors (cf. General Municipal Law, §800[3][b]-[d]). The chairman, however, would have an interest in the engineer's contracts with the town if the loan is determined to be a direct or indirect pecuniary benefit accruing to the chairman as a result of the engineer's contracts (see General Municipal Law, §800[3]). This is a question of fact to be determined initially at the local level. If the chairman does have an interest, that interest would be prohibited because the chairman has the power to approve claims submitted by the engineer and none of the exceptions in article 18 appear applicable (see General Municipal Law, §§801, 802).

In addition to prohibiting certain interests in contracts, article 18 contains another prohibition which may be relevant here. General Municipal Law, §805-a(1)(a) prohibits a municipal officer or employee from directly or indirectly, soliciting any gift, or accepting or receiving any gift having a value of $75 or more, in the form of, inter alia, a loan, under circumstances in which it could be reasonably inferred that the gift was intended or reasonably expected to influence him in the performance of official duties or was intended as a reward for official action. In addition to any other penalty provided by law, a person who knowingly and intentionally violates this provision may be fined, suspended or removed from office or employment in the manner provided by law (General Municipal Law, §805-a(2); but cf., People v Moore, 85 Misc 2d 4, 377 NYS2d 1005, holding the prohibition on accepting or receiving gifts unconstitutionally vague as a basis for criminal prosecution). Whether the loan constitutes a gift under circumstances which are within the prohibition of section 805-a is a question of fact to be determined in the first instance by the town. To avoid any possible inference of an illegal gift, however, the planning board chairman should consider repaying the loan as expeditiously as possible.

The town's code of ethics should also be examined to determine whether it contains any pertinent provisions. General Municipal Law, §806(1) requires every town to have a code of ethics setting forth for the guidance of its officers and employees the standards of conduct reasonably expected of them. A code of ethics may regulate or prescribe conduct which is not expressly prohibited by article 18, and may provide for the prohibition of conduct (id.). Therefore, we believe that a town's code of ethics may regulate the ability of town officers and employees to borrow money from individuals or entities that contract with the town.

Finally, we note that the courts of this State have held public officials to a high standard of conduct and, on occasion, have negated certain actions, which, although not violating the literal provisions of article 18 of the General Municipal Law or a municipality's code of ethics, violate the spirit and the intent of these enactments, are inconsistent with public policy, or suggest self interest, partiality or economic impropriety (see, e.g. Zagoreos v Conklin, 109 AD2d 281, 491 NYS2d 358; Matter of Tuxedo Conservation Taxpayers Ass'n v Town Board of the Town of Tuxedo, 69 AD2d 320, 418 NYS2d 638; Conrad v Hinman, 122 Misc 2d 531, 471 NYS2d 521; see also Cahn v Planning Board of the Town of Gardiner, 157 AD2d 252, 557 NYS2d 488). Based on these considerations, to avoid the appearance of impropriety, the planning board chairman should not participate in the discussion or vote on matters affecting the consulting engineer or undertake a review of the engineer's vouchers, while the chairman's loan from the engineer is outstanding. If only the chairman may approve the engineer's vouchers, we believe it is incumbent upon the chairman to repay the loan in question.

February 11, 1992
Michael G. Walsh, Esq., Town Attorney
Town of Southampton