The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 6860 July 19, 1995 INCOMPATIBILITY: Simultaneously serving as a member of the governing board of a teacher housing project and the housing director of the project 1978 PA 566, the incompatible public offices act, does not prohibit the dual holding of the positions of member of the governing board of the Galien Teachers Housing Project and housing director for the project since these positions are not public positions subject to 1978 PA 566. Honorable Harry Gast State Senator The Capitol Lansing, Michigan You have asked two questions regarding potential incompatibility of public office under the incompatible public offices act, 1978 PA 566, MCL 15.181 et seq; MSA 15.1120(121) et seq. The situation that prompted your request involves a person who is a member of a local board of education, a member of the governing board of a teacher housing project, and the housing director of the project. You first ask whether 1978 PA 566 prohibits this person from simultaneously serving as a member of the housing project's governing board and as housing director. You then ask whether the person in question could remain on the board of education and continue to work as housing director if he resigns his seat on the housing project governing board. According to the information provided by your office and by the Galien Superintendent, several members of the alien Board of Education created a non-profit corporation, called the Galien Teachers Housing Project, in 1962. The purpose of this housing project, as set forth in the articles of incorporation, is as follows: To acquire, hold and transfer property, both real and personal, for housing of teachers and employees under contract to Galien Township School District in order to furnish such teachers and employees housing during their association with said School District. To do all things necessary to effectuate its purpose of making available to said teachers and employees living accommodations for reasonable consideration thereby creating a situation whereby such personnel is more easily attracted thus assuring said School District with adequate and competent teaching personnel. The facts surrounding the creation of the project are somewhat unclear. Apparently, the Galien Board of Education members have always constituted the governing board of the housing project under an informal understanding. The composition of the housing project board is not set forth in the articles of incorporation or in any other formal manner. The Galien Township School District address is listed with the Michigan Department of Commerce as the mailing address and registered office of the housing project. Nonetheless, the two boards are considered separate entities. The meetings of the housing project board are held separately from those of the school board, and the two boards keep separate financial records. The property on which the project is located is owned in the name of the Galien Teachers Housing Project, not in the name of the board of education. The superintendent indicates that the project was initially financed through a private donation and a commercial loan taken in the name of the housing project. The housing project is now financially self-sufficient, funding itself entirely through rent. The housing project has never received school district or other public funds. The governing board of the housing project routinely donates any excess income to the school district for use in special projects. The property owned by the project is not considered tax exempt as are most school district properties. (1) While teachers have first priority for any available apartments in the housing project, non-teachers may also lease an apartment. The housing director of the project was recently elected to the board of education, and, consequently, has become a member of the housing board's governing body. The position of housing director is subordinate to the housing project governing board. Thus, there is some concern that the positions of housing project governing board member and housing director are incompatible. The Legislature addressed incompatibility of public offices in 1978 PA 566. Section 1(b) of that statute defines incompatible offices as follows: "Incompatible offices means public offices held by a public official which, when the official is performing the duties of any of the public offices held by the official, results in any of the following with respect to those offices held: (i) The subordination of 1 public office to another. (ii) The supervision of 1 public office by another. (iii) A breach of duty of public office. [Emphasis added.] Section 2 of 1978 PA 566 states that "[e]xcept as provided in section 3, a public officer or public employee shall not hold 2 or more incompatible offices at the same time." (Emphasis added.) Thus, 1978 PA 566 only prohibits the dual holding of public positions. It does not apply to holding private positions. Accordingly, we must determine whether members of the housing project board are public officers, and whether employees of the project are public employees. Section 1 of 1978 PA 566 defines public employee and public officer as follows: (d) "Public employee" means an employee of this state, an employee of a city, village, township, or county of this state, or an employee of a department, board, agency, institution, commission, authority, division, council, college, university, school district, intermediate school district, special district, or other public entity of this state or of a city, village, township, or county in this state, but does not include a person whose employment results from election or appointment. (e) "Public officer" means a person who is elected or appointed to any of the following: (i) An office established by the state constitution of 1963. (ii) A public office of a city, village, township, or county in this state. (iii) A department, board, agency, institution, commission, authority, division, council, college, university, school district, intermediate school district, special district, or other public entity of this state or a city, village, township, or county in this state. Only if the housing project board members and the project employees are officers or employees of the school district or another public entity will they be public officers and public employees as defined in 1978 PA 566. Thus, we must determine if the housing project is a public entity, either by virtue of being part of the school district or being a separate public entity. The fact that the housing project is a non-profit corporation does not preclude a determination that it is a public entity. OAG 1975-1976, No 5047, pp 495, 497, 500 (June 11, 1976), concluded that nonprofit economic development corporations are public agencies organized for a public purpose, and thus subject to the principle of incompatibility of public office. The basis for this conclusion was the relationship between the municipality and the economic development corporation dictated by the Economic Development Corporations Act, 1974 PA 338, MCL 125.1601 et seq; MSA 5.3520(1) et seq. As explained on pages 497-498 of the opinion: The EDC act also indicates that the municipality approves three or more persons to form a nonprofit corporation "for the municipality," that the corporation is deemed an instrumentality of the municipality for residential relocation and that the municipality may take private property by condemnation for "transfer" to the corporation. The EDC act gives the municipality control. The appointment and removal of the board members rest with the municipality. The EDC must work with the planning agency of the municipality and must obtain the approval of the governing body of the municipality on a project plan after notice and public hearing. The legislative intent in the enactment of the EDC act, where authority already exists for the incorporation of nonprofit corporations, appears to be for the purpose of permitting the state and municipalities to carry on the purposes granted (found by the statute to be public purposes and functions) through the vehicle of a nonprofit corporation. [Footnotes omitted.] Unlike economic development corporations, no statute specifically allows school districts or other public entities to create and/or control nonprofit corporations for the purpose of operating low-cost housing projects. The powers and duties of the housing project board are not defined, either directly or impliedly, through legislative authority other than the general laws applicable to nonprofit corporations. Thus, the reasoning employed in OAG, 1975-1976, No 5047, is inapplicable here. The school district did have authority to provide homes for teachers under section 871 of the School Code of 1955, 1955 PA 269, which was in effect at the time of the housing project's creation in 1962. (2) Section 871 read as follows: The school tax electors of any school district, at any annual or special district meeting or election, shall have power to vote such a tax as they shall deem sufficient to purchase or lease a site or sites, and to build, hire or purchase a home for the use of the superintendent of schools, the teachers, or both, employed in the district, and to vote a tax necessary to furnish said home or homes. And any school district may, by a majority vote of the school tax electors of said district voting thereon at an annual or special meeting or election called for that purpose, borrow money and issue bonds of the district therefor, to pay for the erection of such home or homes for the use of teachers or superintendent, or both, to pay for the furnishing of the same, and to buy a site or sites for such home. Thus, the Galien Board of Education did have authority in 1962 to purchase land and build and furnish homes for teachers, either using public funds or borrowing money in the school district's name. This is not, however, what the Galien Board of Education did. Rather, members of the board of education created a separate corporation to hold property for the housing project, and funded the project entirely with private monies and a loan taken out in the name of the corporation, not in the name of the school district. Moreover, unlike the scenario contemplated by section 871 of the School Code of 1955, in which teachers would apparently receive free housing, the inhabitants of the housing project apartments must pay rent. In addition, the apartments are not reserved solely for the use of teachers. Finally, the housing project does not have the tax exempt status conferred on most school district properties. Thus, the housing project clearly was not created under section 871 of the School Code of 1955. Given these facts, it is clear that the housing project is neither part of the school district nor a separate public entity. Admittedly, the project does further a public purpose, in that it is intended to draw teachers to the school district. See, 2 OAG, 1957-1958, No 3336, p 290 (November 7, 1958). This fact, however, does not outweigh all other factors, which indicate that the project is a private corporation which happens to have been created by and which is currently run by persons who happen to be public officials. Therefore, members of the governing board of the housing project are not public officers under section 1(e) of 1978 PA 566, even though they are public officers when acting as members of the board of education. Similarly, the housing director is not a public employee as defined in section 1(d) of 1978 PA 566. Since the positions of member of the governing board of the housing project and housing director for the housing project are not public positions, 1978 PA 566 does not prohibit the dual holding of these positions. Of course, to the extent that the housing project board perceives a conflict of interest in the fact that one board member is also an employee of the project, the board is free to deal with this situation in any manner allowed by the Nonprofit Corporation Act, 1982 PA 162, MCL 450.2101 et seq; MSA 21.197(101) et seq. It is my opinion, therefore, in answer to your first question, that 1978 PA 566, the incompatible public offices act, does not prohibit the dual holding of the positions of member of the governing board of the Galien Teachers Housing Project and housing director for the project since these positions are not public positions subject to 1978 PA 566. In light of my answer to your first question, it is unnecessary to address your second question. Frank J. Kelley Attorney General (1)
The property of a school district is exempt from taxation, provisions of other acts to the contrary notwithstanding, except that property owned by the school district that is used for private purposes for more than 2 years is not exempt from taxation as long as the private use continues beyond the 2-year period.
(2)
The School Code of 1976, 1976 PA 451, supra, which superseded the School Code of 1955 and which is currently in effect, contains a similar provision at section 1186.