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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. 5819 November 25, 1980 CITIES: Attorney for CONFLICT OF INTEREST: City attorney also serving as attorney for economic development corporation of the same city ECONOMIC DEVELOPMENT CORPORATIONS: Attorney for A city attorney may not serve as general counsel for the economic development corporation incorporated for the same city. Robert L. Forsythe, Esq. City Attorney City of Norton Shores 500 National Lumberman's Bank Building Box 417 Muskegon, Michigan 49443 You have requested my opinion whether a conflict of interest exists where a city attorney serves as counsel for an economic development corporation of the same city. The economic development corporations act, 1974 PA 338, Sec. 21, MCLA 125.1621; MSA 5.3520(21), authorizes an economic development corporation to commence an action against a municipality and, conversely, authorizes the municipality to file an action against the corporation: 'A municipality may commence an action for an injunction, or any other appropriate remedy at law, against a corporation which has not substantially complied with the time limits established in its approved project plan, reasonable delays caused by unforeseen difficulties excepted, or which has failed to substantially perform its obligations. The corporation may commence an action for an injunction, mandamus, or any other appropriate remedy at law, against a municipality for failure to render a final decision on a project plan within 6 months after the date on which the plan was first submitted to the governing body for approval. . . .' In circumstances where litigation may be considered or initiated by the corporation or the municipality as authorized by 1974 PA 338, Sec. 21, supra, a city attorney who also serves as counsel for the economic development corporation would be placed in a position of unavoidable conflict of interest. Further, a city attorney may be called upon to advise the governing body of the city with respect to certifying approval of the designation of an economic development project area pursuant to 1974 PA 338, supra, Sec. 8(1). The city attorney may also be called upon to advise the governing body of the city with respect to approving the acquisition of property or incurring of obligations by an economic development corporation. 1974 PA 338, Sec. 8(2), supra. A conflict of interest is further posed where a city attorney who acts as counsel for an economic development corporation assists in the preparation of the corporation's project plan (see 1974 PA 338, Sec. 8(4)(a)-(o)), where the city attorney may be called upon by the governing body of the city for legal assistance in reviewing the project plan pursuant to 1974 PA 338, supra, Sec. 10(2): '(2) The governing body of the municipality for which the corporation is incorporated, after a public hearing on the project plan with notice of the hearing given in accordance with section 17 shall determine whether the project plan constitutes a public purpose. If it determines that the project plan constitutes a public purpose, it shall then approve or reject the plan, or approve it with modification, based on the following considerations: (a) The findings and recommendations of the local public agency. (b) The findings and recommendations of the project citizens advisory council. (c) That the plan meets the requirements set forth in section 8. (d) The persons who will be active in the management of the project for not less than 1 year after the approval of the project plan have sufficient ability and experience to manage the plan properly. (e) The proposed method of financing the project is feasible and the corporation has the ability to arrange the financing. (f) The project is reasonable and necessary to carry out this act.' Thus, to the extent that the interests of the municipality do not, or may not, coincide with the interests of the economic development corporation, the attorney for the municipality who also serves as counsel for the economic development corporation would be in conflict of interest. In a letter opinion dated July 23, 1968, addressed to the Alpena County Prosecuting Attorney, appended to OAG, 1967-1968, No 4658, p 317, 322-323 (October 31, 1968) it was concluded that simultaneous occupancy of the offices of city attorney and county supervisor was incompatible: 'In general, the duties of a city attorney are to act as legal advisor to the city council and to represent the city in all legal proceedings. As legal advisor to the city council, the city attorney would be charged with the duty of taking an active role in the negotiation, preparation and execution of any contract to which the city was a party. Pursuing such activities he would be acting as the agent of the city council. [Citations omitted.] 'Accordingly, if the same person were to hold both the office of city attorney and county supervisor, he would be subject to the same potential conflict of duties which this office held to be a basis for finding the offices of city councilman and county supervisor to be incompatible. Therefore, it is my opinion that the offices of city attorney and county supervisor are similarly incompatible.' Applying the reasoning of the above-captioned letter opinion to the situation at hand, it is apparent that under 1974 PA 338, supra, a city attorney who simultaneously serves as counsel for the city's economic development corporation will be placed in conflict of interest. '[W]hile the actual conflict of duties may arise but infrequently, it is the existence of the power, not the remoteness of its exercise, that is controlling.' Attorney General ex rel Moreland v Common Council of Detroit, 112 Mich 145; 70 NW 450 (1897); OAG, 1979-1980, No 5626, p 537 (January 16, 1980) (at p 5); OAG, No 4658, supra. (1) I am not unmindful of formal opinion C-214 (January 14, 1977) of the Committee on Professional and Judicial Ethics of the State Bar of Michigan. However, to the extent that such opinion is applicable to the situation at hand, it does not address the inherent and intrinsic statutory conflict of interest under 1974 PA 338, supra, where a city attorney simultaneously serves as counsel for an economic development corporation of the same city. It is, therefore, my opinion that a conflict of interest exists where a city attorney acts as legal counsel for an economic development corporation incorporated for the same city. Frank J. Kelley Attorney General (1)
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