Contracts and Conflicts of Interest
Generally, a public officer authorized to make a sale, lease, or contract in an official capacity must not have a personal financial interest in that sale, lease, or contract, or personally benefit financially from it. See Minn. Stat. § 471.87. A “public officer” includes at least those public officers that approve contracts, which is usually:
- City council members;
- Town supervisors and town board members;
- County officials; and
- School board members.
For the complete scope of who is included in this prohibition, consult with your legal counsel.
Under an exception to the general rule, a governing body, by unanimous vote, may contract for goods or services with an interested public officer if the contract is one for which competitive bids are not required by law. Minn. Stat. § 471.88, subds. 1 and 5.
To use this broad exception, however, the governing body and the interested officer must follow the procedures set forth in Minn. Stat. § 471.89. First, the governing body must authorize the contract in advance of its performance by adopting a resolution setting out the essential facts and determining that the contract price is as low as or lower than the price at which the commodity or services could be obtained elsewhere. Second, before claims are paid on the contract, the interested officer must file with the clerk of the governing body an affidavit providing, among other things, an itemization of the commodity or services furnished, the interest of the officer in the contract, and a statement that to the best of the officer's knowledge and belief the contract price is as low as, or lower than, the price at which the commodity or services could be obtained from other sources. Minn. Stat. § 471.89 also describes the steps that must be taken in an emergency, when the contract cannot be authorized in advance.
Date this Avoiding Pitfall was most recently published: 06/17/2022