Request By:
Mr. Buddy R. Salyer
City Attorney
Morehead, Kentucky 40351
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Walter C. Herdman, Assistant Deputy Attorney General
This is in response to your letter of February 25, in which you relate that some fifteen years prior to 1978 Mr. John Holbrook contracted with the Morehead Utility Board, which operates under the Little TVA Act, to provide towel and linen service. During this time he had no connection with the city; however, in 1978 he became a member of the city council and on January 1, 1982, he became Mayor of the City of Morehead. Before the beginning of both terms he had requested an opinion from you concerning the validity of his contracting with this board, and your response was to the effect that there existed no conflict of interest. Nevertheless, he has now requested that you seek an opinion from this office relative to the following question:
"May the mayor or a city councilman of a city enter into a contract for services with a city utility board where the board is created and operates under the T.V.A. Act, KRS 96.550 et seq. ?"
To begin with, cities of the fourth class, to which Morehead belongs, are governed by KRS 61.270 with respect to the involvement of city officers in contracts with the city, thereby creating possible conflicts of interest. This statute in effect prohibits city officers from being directly or indirectly interested in any contract with the city and declares such contracts void. However, the city utility board, established under the Little TVA Act, KRS 96.550 et seq. , is an independent agency pursuant to KRS 96.740, which declares it to be a body politic, a corporate agency with the power to contract, be contracted with, sue and be sued, in and by its corporate name. This board is therefore independent of the city and, as a matter of fact, board members have been held not to be city officers in the case of
Kereiakes v. Graham, Ky., 458 S.W.2d 162 (1970). It is similar in makeup to the utility commission authorized by KRS 96.530, which we have also declared to be independent of the city, and as a consequence contracts executed by city commissioners with the utility board would not be in violation of KRS 61.260, which is similar to KRS 61.270. See OAG 75-165, copy attached. Incidentally, in construing KRS 96.530, the Court has declared that utility employees were not city employees in the case of
Bruner v. City of Owensboro, Ky., 522 S.W.2d 441 (1975).
Under the circumstances, and in view of the fact that the utility board is an independent public body with the right to execute contracts independent of the city, we are of the opinion that the contracts executed between Mr. Holbrook and the utility board are legal and not in violation of the conflict of interest statute. It is true that as mayor he has the power to appoint members of the board under the terms of KRS 96.740. However, we do not believe this authority would affect the validity of the referred to contractual agreements entered into between him and the board during his tenure as mayor in violation of KRS 61.270.