BWH C.S.H.B. 998 75(R)BILL ANALYSIS COUNTY AFFAIRS C.S.H.B. 998 By: Hunter 4-10-97 Committee Report (Substituted) BACKGROUND Chapter 171, Local Government Code, relates to the regulation of conflicts of interest of officers of municipalities, counties, and certain other local governments. It sets up the definitions and guidelines for local public officials who have substantial interest in a business entity. One of the definitions in Section 171.002 of a person who has "substantial interest in a business entity" is that they own 10% or more of the voting stock or shares or own either 10% or more or $5,000 or more of the fair market value of the business entity. This bill attempts to change the dollar amount that can be owned of the fair market value. Although 10% is indeed a significant percentage and therefore a "substantial interest" in a business entity, a $5000 investment may or may not be significant since it may very well be merely a fraction of a percent of the fair market value of that business entity. Therefore, HB 998 changes the amount that a local official can own of a business entity, from $5,000 to $25,000, before they would be considered to have a "substantial interest" and thus be restricted in their involvement in any local decisions regarding that entity. PURPOSE This bill changes the definition listed for a "substantial interest in a business entity" to be a person owning 10% or more of the fair market value of the business entity. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 171.002, Local Government Code by striking the definition of having "substantial interest in a business entity" as owning $5,000 or more of the fair market value of the business entity. SECTION 2. States that a change to this law does not affect a violation that occurred before the effective date of the Act. SECTION 3. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute strikes the provision in the original which stated "substantial interest" included owning $25,000 of the fair market value of the business entity.