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.