Imagine the San Antonio city council is set to vote on a new zoning regulation that is anticipated to raise the property value of small businesses along the River Walk. Ray Smith is a city councilman who is considering voting in favor of the new regulation. While neither he nor his wife owns a small business on the River Walk, their son-in-law recently inherited a store that would be impacted by the new regulation.
Even though the councilman himself will not benefit financially from the decision, his son-in-law's business poses a conflict of interest. This is a fictitious example of how a public official can have a conflict of interest regarding a business entity or real property by the first degree of affinity.
As an elected or appointed public official, you should be able to quickly identify if you have a conflict of interest to avoid facing penalties of fines and incarceration.
What is a conflict of interest?
Before you discuss, decide or vote on a matter involving a business entity or real property, you should determine whether:
- You have a substantial interest in the entity or property AND
- Your participation would result in a personal economic benefit
Substantial interest is determined by analyzing your stock, ownership, income and close relatives' interests in business entities and real properties. A special economic benefit would exist if you or your close relative would personally reap financial benefits and the benefits are "distinguishable from its general effect on the public."
Close relatives can be of the first, second or third degree of consanguinity (blood) and first or second degree of affinity (marriage).
If both conditions are met, you have a conflict of interest in the matter.
What should you do if there is a conflict of interest?
You must follow the appropriate steps after identifying a conflict of interest to avoid being penalized. The proper steps include:
- Filing an affidavit with the city secretary describing the interest
- Abstaining from participating, deciding or voting on the matter
If you are unsure if there is a conflict of interest, you can review the Local Government Code Chapters 171 and 176 or consult with a local municipal law attorney.