Opinion No. (2006)

BILL LOCKYER Attorney General DANIEL G. STONE Deputy Attorney General THE HONORABLE JEFF DENHAM, MEMBER OF THE STATE SENATE, has requested an opinion on the following question: May a city council modify a lease agreement with a private company if a member of the city council is a regional manager of the company? CONCLUSION A city council may modify a lease agreement with a private company if a member of the city council is a regional manager of the company, provided that the company has at least 10 other employees and that the interested council member has been employed by the company for more than three years prior to joining the city council, is not an officer or director of the company, and abstains from any involvement in modifying the agreement. ANALYSIS We are informed that an investor-owned water company provides water services to a city, its residents, and businesses. Since 1985, the company has leased water mains, pumping and storage facilities, and service pipes from the city. The lease has been renewed since 1995 without modification, but the city is now considering whether to change various terms of the lease. In November 2004, a regional manager and shareholder of the…