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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. 6619 April 25, 1989 CONFLICT OF INTEREST: Legislator contracting with private company funded with loan from Michigan State Housing Development Authority A legislator who operates an advertising and public relations firm may contract to provide service to a development company constructing a housing project which is funded in whole or in part by a loan from the Michigan State Housing Development Authority. Honorable Michael J. Bennane State Representative The Capitol Lansing, MI 48909 You have requested my opinion on whether it is permissible for a legislator who operates an advertising and public relations firm to contract to provide services to a development company constructing a housing project which is funded in whole or in part by a loan from the Michigan State Housing Development Authority (MSHDA). Const 1963, art 4, Sec. 10, provides: "No member of the legislature nor any state officer shall be interested directly or indirectly in any contract with the state or any political subdivision thereof which shall cause a substantial conflict of interest. The legislature shall further implement this provision by appropriate legislation." The Legislature implemented Const 1963, art 4, Sec. 10, by enacting MCL 15.301 et seq; MSA 4.1700(21) et seq. MCL 15.302; MSA 4.1700(22), provides: "No member of the legislature, herein referred to as a 'legislator', nor any state officer shall be interested directly or indirectly in any contract with the state or any political subdivision thereof which shall cause a substantial conflict of interest." MCL 15.304; MSA 4.1700(24), provides in pertinent part: "The word 'interested' as used in section 2 refers to a pecuniary interest if there is a conflict of interest on the part of a legislator or state officer in respect to a contract with the state or a political subdivision thereof, in order to come within the prohibitions of this act, his personal interest must be of such substance as to induce action on his part in promoting the contract for his own personal benefit." This section also specifies several situations in which there is deemed to be no substantial conflict of interest; however, none appears to specifically address the question which you raise. Although no Michigan case has defined the phrase "substantial conflict of interest," the court in County of Nevada v MacMillen, 11 Cal 3rd 662; 522 P2d 1345 (1974), defined a "substantial" conflict as one which could undermine the goal of assuring an independent, impartial, and honest government by providing an economic incentive for deciding a particular official matter without regard to its merits, or with regard to its effect upon the official's pocketbook. In OAG, 1989-1990, No. ____, p ____ (March 17, 1989) it was concluded that a legislator would not be in a substantial conflict of interest if the legislator applied for and obtained a mortgage loan from MSHDA. That conclusion is based on the fact that a legislator, as part of the legislative branch of state government, has no duty to act and does not act on behalf of MSHDA in the granting of a mortgage loan. See also Letter Opinion of the Attorney General (Rep. Teola P. Hunter, March 25, 1986), which concluded that a legislator who operates a day care services business under an assumed name would not be in a substantial conflict of interest if the legislator negotiated and contracted with the Department of Social Services for the provision of day care services. Unlike these two situations, in the matter about which you ask, the legislator is not a party to any contract with the state. Rather, the legislator has contracted to provide services to a company which has a contract with the State. In this respect, the legislator is even further insulated and removed from any potential conflict of interest. Based on the foregoing, it is my opinion that a legislator who operates an advertising and public relations firm may contract to provide services to a development company constructing a housing project which is funded in whole or in part by a loan from the Michigan State Housing Development Authority. Frank J. Kelley Attorney General
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