Texas Attorney General Opinion: JC-547 Page: 3 of 5
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The Honorable Jim Solis - Page 3
By contrast, article 5190.6 makes clear that an industrial development corporation is not a
part of a city's government. The executive director is appointed by the board of directors of the
corporation, and is not under the control of the city. However fictional in practice the wall of
separation between a city and its industrial development corporation, the legislature has erected that
wall, and it is the legislature or the courts, and not this office, that must penetrate the wall of
separation. We recognize the potential for abuse inherent in the appointment of, as a corporation's
executive director, the mayor of the city that creates the corporation. Nevertheless, we conclude that,
under existing law, "self-employment" incompatibility is not a bar to a board member's service as
executive director of the corporation.
We must also consider the prohibition of article XVI, section 40 of the Texas Constitution,
which bars a public officer from holding "more than one civil office of emolument." TEX. CONST.
art. XVI, 40. As we have noted, an industrial development corporation, by statute, has none of the
"attributes of sovereignty," and that, as a result, under the test of Aldine, supra, a member of the
board does not hold a "public office." It clearly follows then that a mere employee of the board does
not hold a public office. Thus, even though the mayor holds a public office, he does not contravene
article XVI, section 40 by holding the position of executive director of an industrial development
corporation, because the latter position does not constitute a "public office." A mayor's service as
executive director of his city's industrial development corporation may, however, implicate the
conflict of interest provisions applicable to local public officials under chapter 171 of the Local
Chapter 171 defines a "business entity" as "a sole proprietorship, partnership, firm,
corporation, holding company, joint-stock company, receivership, trust, or any other entity
recognized by law." TEX. Loc. GOV'T CODE ANN. 171.001(2) (Vernon 1999). Section 171.002(1)
of the Local Government Code, which provides that "a person has a substantial interest in a business
entity if... he 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," id.
171.002(a)(1), is not applicable to an industrial development corporation, because an industrial
development corporation is, by statute, "a nonmember, nonstock corporation." TEX. REV. CIV. STAT.
ANN. art. 5190.6, 5 (Vernon Supp. 2002). Section 171.002(2) provides, however, that "a person
has a substantial interest in a business entity if... funds received by the person from the business
entity exceed 10 percent of the person's gross income for the previous year." TEX. Loc. GOV'T CODE
ANN. 171.002(a)(2) (Vernon 1999). You indicate that, as executive director of the Crystal City
Industrial Development Corporation, the mayor will receive a salary. See Request Letter, supra note
1. Thus, if the income the mayor receives as an executive director of the industrial development
corporation exceeds ten percent of his total gross income for the previous year, he is deemed to have
"a substantial interest in" the industrial development corporation.
Section 171.001 of the Local Government Code defines a "local public official" to include
"a member of the governing body... of any... municipality." TEX. Loc. GOV'T CODE ANN.
171.001(1) (Vernon Supp. 2002). Thus, the mayor of whom you inquire is a "local public
official." Section 171.004 requires a local public official who has a "substantial interest" in a
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Texas. Attorney-General's Office. Texas Attorney General Opinion: JC-547, text, 2002; (texashistory.unt.edu/ark:/67531/metapth274857/m1/3/: accessed December 16, 2018), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting UNT Libraries Government Documents Department.