Interest of Officer in Municipal Contracts Prohibited

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  6. Interest of Officer in Municipal Contracts Prohibited

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  1. No person holding office under any municipal corporation shall, during the time for which such person was elected or appointed, be capable of contracting with such corporation for the performance of any work that is to be paid for out of the treasury. Nor shall such person be capable of holding or having any other direct interest in such a contract. “Direct interest” means any contract with any business in which the official is the sole proprietor, a partner, or the person having the controlling interest. “Controlling interest” includes the individual with the ownership or control of the largest number of outstanding shares owned by any single individual or corporation.
  2. No officer in a municipality shall be indirectly interested in any contract to which the municipality is a party unless the officer publicly acknowledges such officer's interest. “Indirectly interested” means any contract in which the officer is interested but not directly so, but includes contracts where the officer is directly interested but is the sole supplier of goods or services in a municipality.
    1. Any member of a local governing body of a municipality who is also an employee of the same municipality may vote on matters in which such member has a conflict of interest if the member informs the governing body immediately prior to the vote as follows:

      “Because I am an employee of (name of governmental unit), I have a conflict of interest in the proposal about to be voted. However, I declare that my argument and my vote answer only to my conscience and to my obligation to my constituents and the citizens this body represents.”

    2. In the event a member of a local governing body of a municipality has a conflict of interest in a matter to be voted upon by the body, the member may abstain for cause by announcing such to the presiding officer. Any member of a local governing body of a municipality who abstains from voting for cause on any issue coming to a vote before the body shall not be counted for the purpose of determining a majority vote.
    3. The vote of any person having a conflict of interest who does not inform the governing body of such conflict as provided in subdivision (c)(1) shall be void if challenged in a timely manner. As used in this subdivision (c)(3), “timely manner” means during the same meeting at which the vote was cast and prior to the transaction of any further business by the body.
    4. Nothing in this subsection (c) alters, amends, or otherwise affects § 12-4-101(a). In the event of any conflict between this subsection (c) and § 12-4-101(a), § 12-4-101(a) shall prevail.
    5. The legislative body of any metropolitan form of government or charter form of government may opt out of this subsection (c) by resolution.

Code 1858, § 1398 (deriv. Acts 1857-1858, ch. 7, § 1); Shan., § 1995; Code 1932, § 3497; T.C.A. (orig. ed.), § 6-626; Acts 1983, ch. 388, §§ 2, 6; 1985, ch. 236, § 1; 1986, ch. 765, §§ 1-3; 2016, ch. 1072, § 4.

Amendments. The 2016 amendment, in (c), substituted “municipality” for “county or a municipality” throughout, substituted “the same municipality” for “such county or municipality” in the introductory language, rewrote the first sentence in (4) which read: “Nothing in this subsection (c) shall be construed as altering, amending or otherwise affecting §12-4-101(a).”; and added (5).

Effective Dates. Acts 2016, ch. 1072, § 6. May 20, 2016.

Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal Corporations, § 71.

Law Reviews.

Local Government Law — 1954 Tennessee Survey, 7 Vand. L. Rev. 881 (1954).

Attorney General Opinions. Dual membership on city council and hospital board, OAG 98-004, 1998 Tenn. AG LEXIS 4 (1/5/98).

Utility board employee serving as mayor or city council member, OAG 98-0130, 1998 Tenn. AG LEXIS 129 (7/27/98).

Under T.C.A. §6-54-107(a), a city judge is prohibited from contracting with the city for the performance of work to be paid for out of the treasury, and this prohibition includes acting as the city attorney, either as an independent contractor or as an employee of the city, OAG 02-106, 2002 Tenn. AG LEXIS 111 (10/01/02).


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