Could a company managed by a Lyman town council member buy town property after the member recused?

Plain-English summary

Lyman asked whether it could sell town property to a company managed by one of its council members after the member disclosed the interest and recused. The Attorney General identified a potential conflict of interest under the state ethics law because the member was associated with a business that stood to benefit from the sale. It said the member should make a written disclosure to the council's presiding officer and be excluded from votes, deliberations, and other action on the sale. The presiding officer should place the disclosure and disqualification in the minutes.

The opinion observed that the request described those steps as already underway and said the town appeared to be following the cited conflict procedure. It did not give a final clearance for the sale or decide whether a public request for proposals changed the ethics analysis. The Attorney General pointed to the State Ethics Commission's primary authority over the ethics law and suggested seeking its guidance.

What this means for you

Lyman council members and town officials

For the transaction described, the opinion treated the council member's management of the buyer as a potential conflict. Its analysis centered on written disclosure, recording the matter in the minutes, and removing the member from decisions and attempts to influence the sale.

Businesses dealing with a town

The opinion did not determine that a competitive proposal process alone resolved the ethics issue. It described the town's recusal steps and reserved a fuller compliance assessment for the State Ethics Commission.

Common questions

Could the council member vote on the town's sale to the company he managed?

The Attorney General said no. The member's association with the prospective buyer created a potential conflict, so the member should be excused from votes, deliberations, and other action on the sale.

Was a verbal disclosure and voluntary recusal enough?

The opinion described a written statement of the conflict furnished to the presiding officer, who would put it and the disqualification in the minutes and require the member's recusal.

Did the Attorney General approve the property sale itself?

No. The opinion addressed the conflict procedure and said the town appeared to be taking the described steps. It referred further ethics compliance questions to the State Ethics Commission.

Did asking for competing purchase proposals eliminate the potential conflict?

The request proposed a public request for proposals, but the opinion did not treat that process as removing the member's conflict. Its answer focused on disclosure and nonparticipation.

Background and legal framework

The town attorney described a company managed by a Lyman council member seeking to purchase town land. The ethics statute barred officials from using office to obtain an economic interest and from participating in a decision affecting an associated business's interest. The Attorney General classified a town council member as a public official, applied the disclosure and recusal provision for that category, and noted that the provision for public members cited in the request was not the applicable subsection. It left the State Ethics Commission to assess broader compliance.

Citations and references

• S.C. Code section 8-13-700 (use of office and conflict disclosure).
• S.C. Code section 8-13-100 (definitions of public official and economic interest).

Official title

Opinion addressing the purchase of a property from a town when a town council member serves as the manager for the company.

Requester

Requested by Mr. C. Daniel Atkinson, Esquire, attorney for the Town of Lyman.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/opinion-addressing-the-purchase-of-a-property-from-a-town-when-a-town-council-member-serves-as-the-manager-for-the-company/
• Original PDF: https://www.scag.gov/media/egmpgcnm/03145376.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

ALAN WILSON
ATTORNEY GENERAL

October 28, 2022

C. Daniel Atkinson, Esq.

127 Dunbar Street

Suite 200

Spartanburg, South Carolina 29306

Dear Mr. Atkinson:

We understand you represent the Town of Lyman (the “Town”) and wish to request an Attorney General’s opinion as to whether a company managed by a member of the Town’s council may purchase real property from the Town. You provided the following information:

The Town of Lyman has been approached to sell real property. A Member of the Lyman Town Council manages a company, and the company is interested in purchasing the real property. The Council Member has disclosed the financial interest and has voluntarily recused from the Town’s consideration the sale of the real property.

Based on this information, you request an opinion

as to whether there is any conflict issue in selling the real property to the company managed by the Council Member provided that (i) the financial interest is disclosed pursuant to S.C. Code Sections 8-13-700(B)(1) and (B)(5), (ii) such statement is published in the Town Council’s minutes, and (iii) the Town issues a public request for proposals to allow third-party competitive offers for the real property.

Law/Analysis

In your letter, you refer to section 8-13-700 of the South Carolina Code (2019), which is contained in the Ethics Reform Act. This provision prohibits a public official’s use of his or her official position or office for financial gain and requires disclosure of potential conflicts of interest. This provision provides in relevant part:

(A) No public official, public member, or public employee may knowingly use his official office, membership, or employment to obtain an economic interest for himself, a family member, an individual with whom he is associated, or a business with which he is associated. This prohibition does not extend to the

RERBERT.C. DENNIS BUILBING » Post OFFICE BON 11549 9 Conummia, SC 29211-1549 0 “Ti

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incidental use of public materials, personnel, or equipment, subject to or available for a public official’s, public member’s, or public employee’s use that does not result in additional public expense.

(B) No public official, public member, or public employee may make, participate in making, or in any way attempt to use his office, membership, or employment to influence a governmental decision in which he, a family member, an individual with whom he is associated, or a business with which he is associated has an economic interest. A public official, public member, or public employee who, in the discharge of his official responsibilities, is required to take an action or make a decision which affects an economic interest of himself, a family member, an individual with whom he is associated, or a business with which he is associated shall:

(1) prepare a written statement describing the matter requiring action or decisions and the nature of his potential conflict of interest with respect to the action or decision;

(4) if he is a public official, other than a member of the General Assembly, he shall furnish a copy of the statement to the presiding officer of the governing body of an agency, commission, board, or of a county, municipality, or a political subdivision thereof, on which he serves, who shall cause the statement to be printed in the minutes and require that the member be excused from any votes, deliberations, and other actions on the matter on which the potential conflict of interest exists and shall cause the disqualification and the reasons for it to be noted in the minutes;

S.C. Code Ann. § 8-13-700.!

Pursuant to section 8-13-100(27) of the South Carolina Code (2019), a “public official” is “an elected or appointed official of the State, a county, a municipality, or a political subdivision thereof, including candidates for the office.” Town council members are elected municipal officials. Therefore, section 8-13-700 is applicable to members of the Lyman Town Council. Furthermore, section 8-13-100(11) defines “economic interest” as “an interest distinct from that of the general public in a purchase, sale, lease, contract, option, or other transaction or arrangement

' Your letter references section 8-13-700(B)(5), which is similar to section 8-13-700(B)(4), but applies to public members as opposed to public officials. We find a member of a town council is a public official rather than public member. See S.C. Code Ann. § 8-13-100(26) & (27). Therefore, we omitted reference to section 8-13-700(B)(5).

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involving property or services in which a public official, public member, or public employee may gain an economic benefit of fifty dollars or more.” As such, a Council Member is prohibited from knowingly using his or her office to facilitate the purchase of property for a company he or she is associated with.

You have not alleged that the member is knowingly using his or her office to obtain an economic interest, but rather are concerned that his or her association with a business that seeks to purchase property from the Town creates a potential conflict of interest. As you mentioned in your letter, section 8-13-700(B) requires public officials to disclosure potential conflicts of interest and recuse themselves from taking action on matters in which they may have a conflict of interest. As such, we advise that the Council Member should refrain from making decisions related to the sale of the Town’s property to his company and from influencing such a decision. Furthermore, section 8- 13-700(B) requires the Council Member to prepare a written statement disclosing the nature of his or her potential conflict of interest and furnish it to the appropriate presiding officer for the Lyman Town Council. The presiding officer shall then cause the statement to be included in the minutes and require the Council Member to recuse themselves on any votes, deliberations, or other actions regarding the sale of the property. Id. Your letter indicates these steps are being taken with regard to the Council Member in question. Therefore, we believe the town is following the requirements of section 8-7-700. Nonetheless, we note the State Ethics Commission has primary jurisdiction over the State’s ethics laws. S.C. Code Ann. §§ 8-13-100 et seq. (2019 & Supp. 2022). As such, we encourage you to seek guidance from the State Ethics Commission regarding compliance with section 8-13-700 and any other applicable ethics laws. See Op. Att’y Gen., 2014 WL 2120886 n.2 (S.C.A.G, May 5, 2014) (“[T]he question of whether 8-13-700 even applies to the scenario . . . is a factual question to be determined by the Ethics Commission.”).

Conclusion

Section 8-13-700 of the South Carolina Code, found in the South Carolina Ethics Reform Act, prohibits public officials, including members of town councils, from knowingly using their office to obtain an economic interest. This provision also requires public officials to disclose any potential conflicts of interest. S.C. Code Ann. § 8-13-700(B). In your letter, you describe a situation in which a Council Member manages a company that seeks to purchase property from the Town. We believe this situation creates a potential conflict of interest due to the Council Member’s association with the business that has an economic interest in purchasing the property. Therefore, in accordance with section 8-13-700(B), we advise the Council Member to prepare a written statement describing the potential conflict of interest and give it to the officer who presides over the Town Council. Id. The presiding officer should then include the statement in the minutes and require the member to recuse himself or herself from voting, deliberating, or taking any other action with regard to the sale of the property. Id.

According to your letter, the Council Member appears to be complying with these requirements. However, because the Legislature gave the South Carolina Ethics Commission jurisdiction to interpret and issue opinions regarding the Ethics Reform Act, we suggest you seek guidance from

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the South Carolina Ethics Commission regarding compliance with section 8-13-700 as well as any other provisions contained in the Ethics Reform Act.

Sincerely,

Assistant Attorney General

REVIEWED AND APPROVED BY:

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Solicitor General