Can county agencies and employees stay at a hotel owned by one of the county commissioners without putting that commissioner at risk of criminal liability for self-dealing?

Plain-English summary

The AG considered a county commissioner's ownership of a hotel used for activities paid with county funds. The answer turned on whether the Board of County Commissioners was involved in making or approving the arrangement. If county staff arranged the hotel use without any Board involvement or approval, the office believed N.C.G.S. §14-234 did not apply to that stated scenario.

If the Board voted to hold an activity at the hotel and pay with county funds, the AG said the statute "may present a problem", even if the commissioner who owned the hotel did not participate. The opinion says Board involvement "in any way, directly or indirectly" could matter. It notes two statutory exceptions but says this commissioner did not meet either one. Because §14-234 was a criminal statute, the AG expressly left a definitive answer to the responsible district attorney.

The opinion does not advise officials to move a Board decision to staff merely to avoid the statute, and it does not conclude that every Board-involved booking is a proven violation.

Currency note

This opinion applies the version of §14-234 discussed in 1996 to two stated scenarios. Check the current statute and the actual decision process before assessing a new contract.

Background and statutory framework

The AG cited Lexington Insulation Co. v. Davidson County for the statute's purpose of preventing public officials from profiting through contracts with their own public bodies. The office's interpretation required public-body involvement in making or approving the transaction. The opinion distinguishes no Board involvement from a Board vote, while warning that indirect involvement may also matter. It mentions ownership and small-county exceptions but finds they do not apply to the commissioner in the request.

Common questions

Does a Board vote avoid the issue if the owner-commissioner abstains?

Not necessarily. The AG said §14-234 may present a problem when the Board makes the decision, even without that commissioner's participation. The opinion does not make a definitive criminal-liability finding.

Does a booking made by county staff always avoid §14-234?

The opinion's no-problem answer assumes the Board is not involved in any way in making or approving the arrangement. It does not endorse shifting a decision that properly belongs to the Board merely to avoid the statute.

Who could give a definitive answer about a criminal violation?

The AG said only the appropriate district attorney responsible for prosecutions could do that.

Source

• Landing page: https://ncdoj.gov/opinions/use-by-county-agencies-and-employees-of-a-hotel-owned-by-a-member/

Citations

• N.C.G.S. §14-234 (public-official contracts)
• Lexington Insulation Co. v. Davidson County, 243 N.C. 252 (1955)

Original opinion text

(1) There is no Board of Commissioner involvement in planning the meeting or other activity from which the hotel space is used and which is paid for by county funds;

(2) The Board of County Commissioners vote, with or without Commissioner A's involvement, to hold a meeting or other county activity at the hotel and to pay for such meeting or other activity with county funds.

For reasons which follow, so long as the Board of County Commissioners is not involved in the making or approving of any contract or agreement to use the hotel, N.C.G.S. §14-234 does not present a problem. If the Board of County Commissioners is involved in any way, directly or indirectly, in making the decision to hold the meeting at the hotel owned by Commissioner A even though Commissioner A does not participate in the decision, N.C.G.S. §14-234 may present a problem.

As you know, the purpose of N.C.G.S. §14-234 is to remove from public officials the temptation to take advantage of their official positions to "feather their own nests," by letting to themselves or to firms or corporations in which they are interested contracts for services, materials, supplies, or the like. See, Lexington Insulation Co. v. Davidson County, 243 N.C. 252 (1955). Our office, in interpreting the statute, has consistently opined that in order for the statute to apply the public body must be directly or indirectly involved in the making of a contract or agreement, or the approval of a contract or agreement to use the company or business which is owned by the member of the public body. If the public body is not involved in the transaction in any way, nor in the approval of the transaction, our office believes that N.C.G.S. §14-234 is inapplicable. Therefore, where there is no Board of Commissioner involvement in planning the meeting or other activity for which the hotel space is used and which is paid for by county funds, it is our opinion that N.C.G.S. §14-234 is not applicable.

On the other hand, where the Board of County Commissioners vote, with or without Commissioner's A involvement, to hold a meeting or other county activity at the hotel and to pay for such meeting or other activity with county funds, we believe that N.C.G.S. §14-234 may present a problem. Subsection (a) of the statute makes it a misdemeanor for a public official to "make any contract for his own benefit . . . or be in any manner concerned or interested in making such contract, or in the profits thereof . . . ." Moreover, the statute specifically exempts from its coverage a situation where the public official owns 10% or less of the business or entity doing business with the public body or where the transaction is located in a county that has no city having a population of more than 7,500, and the public official-owner does not participate in the deliberation or vote of the public body. Therefore, it is clear that the General Assembly recognized that there would only be certain instances where the business owned by the public official could in fact do business with the public body. See, N.C.G.S. §14-234 (c1) and (d1). Since Commissioner A does not fall within any of the exceptions, N.C.G.S. §14-234 may apply.

We have been careful to say that the statute "may apply." We do so because this is a criminal statute, and only the appropriate district attorney responsible for prosecuting criminal violations can give a definitive answer to this question.

Should you require anything further, please advise.

Andrew A. Vanore, Jr.
Chief Deputy Attorney General