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Item 7ACity of Southlake, Texas MEMORANDUM May 31, 2006 TO: Shana Yelverton, City Manager FROM: Kevin Hugman, Director of Human Resources SUBJECT: Ordinance No. 635 -A, 2nd reading, amending Chapter 2, Article VI, Code of Ethics and Conduct, of the Southlake City Code to comply with provisions of Chapter 171 and Chapter 176 of the Texas Local Government Code, including provisions for filing Conflict Disclosure Statements, and providing for adoption of an Employee Business Code of Conduct. Action Requested: City Council consider approving Ordinance No. 635 -A, amending the Southlake City Code, Chapter 2, Article VI, Code of Ethics and Conduct. Background Information: House Bill 914, enacted by the Texas Legislature in May 2005 became effective this year. The statute is codified as Chapter 176 of the Texas Local Government Code and requires, among other things, that local government officers file a conflicts disclosure statement where there may be a business relationship and/or affiliation between the local government officer and persons who do business with the City. Chapter 176 does not affect an elected official's right to vote on a contract under these circumstances. An elected official's participation in discussions or vote on such a business relationship is governed by Texas Local Government Code, Chapter 171 regarding "conflicts of interest" and was incorporated into the existing Southlake Code of Ethics and Conduct adopted in 1995. Chapter 176 provides for conflicts disclosure statements to be filed by "local government officers," which includes the chief executive officer of the City. There are also provisions that allow the local government entity to extend the requirements of the statute to all or a group of employees of the City. At its March 21, 2006 City Council meeting, the Council directed staff to bring forward an amendment to the Code of Ethics and Conduct to incorporate the . provisions of HB 914, to make the provisions applicable to all employees, and to incorporate an Employee Business Code of Conduct. Ordinance No. 635 -A amends the Southlake City Code, Chapter 2, Article VI Code of Ethics and Conduct as follows: • updates the Code of Ethics and Conduct to reflect changes in Local Government Code Chapter 171 -- i.e., change in definition of "substantial interest" to reflect current dollar amount of $15,000; • incorporates Chapter 176 requirements and ensures the provisions of both Chapter 176 and 171 axe met; Shana Yelverton, City Manager May 31, 2006 Page 2 • reduces some repetitiveness in the code -- i.e., added Section (A)(1)(3) and then deleted Section (A)(3). • adds Section 2 -268 requiring the City Manager to prepare and bring to City Council for adoption by resolution, an Employee Business Code of Conduct, to be incorporated into the City's Personnel Policies. The Employee Business Code of Conduct will be considered by City Council with the second reading of Ordinance No. 635 -A. It will be brought forward as a resolution in the same manner as previous Employee Personnel Policies. Financial Considerations: None. Citizen Input/ Board Review: City Council passes Ordinance No. 635 -A on First Reading at its May 16, 2006 meeting. Legal Review: The City Attorney has reviewed the associated documents. Alternatives: Changes to the proposed amendments as desired. Supporting Documents: • Ordinance No. 635 -A, redline • Ordinance No. 635 -A, clean version Staff Recommendation: City Council approve Ordinance No. 635 -A, amending the Southlake City Code, Chapter 2, Article VI, Code of Ethics and Conduct. Staff Contact: Kevin Hugman, Director of Human Resources Ordinance No. 635 -A REDLINE COPY ORDINANCE NO. 635 -A AN ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS AMENDING CHAPTER 2, ARTICLE VI, CODE OF ETHICS AND CONDUCT OF THE SOUTHLAKE CITY CODE TO AMEND SECTION 2 -261, DEFINITIONS; SECTION 2 -264 STANDARDS OF CONDUCT; 2 -265 DISCLOSURE OF INTEREST AND 2 -266 ENFORCEMENT TO COMPLY WITH CHAPTERS 171 AND 176 OF THE TEXAS LOCAL GOVERNMENT CODE; ADDING SECTION 2 -268 TO REQUIRE THE ADOPTION OF AN EMPLOYEE BUSINESS CODE OF CONDUCT; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDIANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR PUBLICATION IN PAMPHLET FORM; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Southlake, Texas is a home rule city acting under its charter adopted by the electorate pursuant to Article XI, Section 5 of the Texas Constitution and Chapter 9 of the Local Government Code; and WHEREAS, the City Council of the City of Southlake adopted a Code of Ethics and Conduct applicable to the conduct of officers, employees and board members while acting in their official capacities in representing the City of Southlake which is codified as Chapter 2, Article VI of the Southlake City Code; and WHEREAS, the City Council of the City of Southlake desires to amend Chapter 2, Article VI of the Southlake City Code to reflect changes in Chapter 171 of the Local Government Code and to incorporate the provisions of Chapter 176 of the Local Government Code, requiring disclosure of certain relationships with local government officers, and to require the adoption of an Employee Business Code of Conduct. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE,TEXAS: 1 SECTION 1. That Chapter 2, Article VI, Section 2 -261 of the Southlake City Code is hereby amended as follows: Sec. 2 -261 DEFINITIONS For the purposes of this code of ethics and conduct the following words and phrases shall have the meanings ascribed to them by this section. Advisory board shall mean a board, commission or committee of the city that functions only in an advisory or study capacity. Business entity shall mean a sole proprietorship, partnership, firm, corporation, association, holding company, joint-stock company, receivership, trust, or any other entity recognized by law. Employee shall mean any person employed by the city, including those individuals on a part-time basis, but such term shall not be extended to apply to any independent contractor. Family member shall mean a person related to another person within the first degree b consanguinity or affinily as described b y Subcha ter .B Chapter 573 Government Code. Knowingly. A person acts knowingly, or with knowledge, with respect to the nature of his or her conduct or to circumstances surrounding his or her conduct when he is aware of the nature of his or her conduct or that the circumstances exist. A person acts knowing, or with knowledge, with respect to a result of his or her conduct when he is aware that his or her conduct is reasonably certain to cause the result. Officer shall mean any member of the City Council, the Planning and Zoning Commission, the Board of Adjustment, the Building Board of Appeals and any member of a board, commission or committee established by ordinance, charter or state law that has final approval authority over any application, permit, license or other City approvals; provided, no member of an advisory board shall be deemed an officer of the city. Substantial interest A. A person has a substantial interest in a business entity if: (1) The interest is ownership of ten (10) percent or more of the voting stock or shares of the business entity or ownership of either ten (10) percent or more or fie "usand dollars . fifteen thousand dollars ($15,000.00) or more of the fair market value of the business entity (see Section 171 ,002, Texas Local Government Code); or (2) Funds received by the person from the business entity exceed ten (10) percent of the person's gross income for the previous year (see Section. 171 ,002, Texas Local Government Code); or (3) The person holds a position of member of the board of directors or other governing board of the business entity; or (4) The person serves as an elected officer of the business entity; or (5) The person is an employee of the business entity; or (6) The person is a creditor, debtor or guarantor of the business entity in the amount of five thousand dollars ($5,000.00) or more; or (7) Property of the person has been pledged to the business entity or is subject to a lien in favor of the business entity in the amount five thousand dollars ($5,000.00) or more. B. A person does not have a substantial interest in a business entity if: (1) The person holds a position as a member of the board of directors or other governing board of a business entity; and (2) The person has been designated by the City Council to serve on such board; and (3) The person receives no remuneration, either directly or indirectly, for his or her service on such board; and (4) The primary nature of the business entity is either charitable, nonprofit or governmental. C. A person has a substantial interest in real property if the interest is an equitable or legal ownership interest with a fair market value of two thousand five hundred dollars ($2,500.00) or more (see Section 171.002, Texas Local Government Code). D. A person has a substantial interest under this ordinance if the person's Family Member a substantial interest under this ordinance (see Section 171.002, Texas Local Government Code). NMMFM - - ky- kill SECTION - 42. That Chapter 2, Article VI, Section 2 -264 of the Southlake City Code is hereby amended as follows: Sec. 2 -264 STANDARDS OF CONDUCT A. No city officer, employee or advisory board member, or their spouses, shall knowingly: 4 (1) Accept or solicit any gift, favor, service or thing of value from any person, group or business entity includin a romise of future em 10 ent that might reasonably tend to influence him in the discharge of his or her official duties or that the officer, employee or advisory board member knows or should know is being offered_ with the intent to influence the officer's or employee's official conduct. This prohibition shall not apply to: (a) An occasional non - pecuniary gift, insignificant in value; or (b) An award publicly presented in recognition of public service; or (c) Any gift which would have been offered or given to him –the officer em to ee or advisga board member or his or herspouse if he /she were not a city officer, employee or advisory board member _or . —r �, (d) Ay travel and related expenses to attend ceremonial functions, provided that such acceptance and attendance have been approved by the Ci Council prior to the occurrence of the ceremonial function. (2) Grant in the discharge of his or her official duties any improper favor, service or thing of value to any person, group or business entity; rrea fiAwe emplayment, ef s4fieiepA eeenemie value that it might reasenably tend to Ta l��t��IYYR' ✓lrV�_J�vJ1�2Y J_�!i:fl nlil�YY[�l"I��r�riia�J ii�ii�J �a��iv�rrhf��• mss. Y r (^ Knowingly disclose any confidential information gained by reason of the position of the officer, employee or advisory board member concerning #ie property, operations, policies or affairs of the city, or use such confidential information to advance any personal interest, financial or otherwise, of such officer, employee or advisory board member, or others. This subparagraph 4 shall not preclude disclosure of such confidential information in connection with any investigation or proceeding regarding whether there has been a violation of the standards of conduct set forth in this code. f5) Use one's position or office of employment or city facilities, personnel, equipment or supplies to secure special privileges or exemptions for himself or others or for the private gain of the city officer, employee, advisory board member or his or her spouse. (6MI Engage in any exchange, purchase or sale of property, goods or services with the city, except: (a) Rendering services to the city as an officer, employee or advisory board member; (b) Paying taxes, fines, utility service or filing fees; (c) Executing and performing any developer's agreement or plat in compliance with laws and regulations applicable to any person; provided, however, that if any city ordinance, rule or regulation allows any discretion by the appropriate officers or employees of the city in the interpretation or enforcement of such ordinance, rule or regulation, any such discretion shall be exercised in favor of the city in connection with any such developer's agreement or plat; (d) Advisory board members who are not otherwise officers or employees of the city, may engage in any exchange, purchase or We of property, goods or services with the city, or enter into a contract with the city, provided that the board on which they are a member has no advisory function or cognizance, direct or indirect, present or prospective, with respect to the transaction in which such advisory board member engages or proposes to engage- (-7)M Hold himself out as representing the city in any capacity other than that for which he was appointed, elected or hired. (S)Q Engage in or accept private employment or render a service when such employment or service is incompatible with the proper discharge of his or her official duties or would tend to impair his or her independent judgment in the performance of his or her official duties. (#)M Make or permit the unauthorized use of city owned vehicles, equipment, materials or property. 404(9) Grant any special consideration, treatment or advantage to any citizen beyond that which is available to every other citizen. " LQ After termination of service or employment with the city, appear before any board or commission of the city in relation to any case, proceeding or application in which he or she personally participated or which was under his or her active consideration, during the period of his or her service or employment. (-1 11 Transact any business in his or her official capacity with the city with a business entity in which he/she has a substantial interest. " 12 )Engage in any dishonest or criminal act or any other conduct prejudicial to the government of the city or that reflects discredit upon the government of the city. "} 1( 3) Knowingly perform or refuse to perform any act in order to deliberately thwart the execution of city ordinances, rules or regulations or the achievement of official city programs. B. No member of the City Council, sal -arie advisory board member or city employee shall knowingly represent, directly or indirectly, any person, group or business entity: (1) Before the City Council or any department, agency, board or commission of the city; (2) In any action or proceeding against the interests of the city or in any litigation in which the city or any department, agency, board or commission thereof is a party; or (3) In any action or proceeding in the municipal courts of the city which was instituted by a city officer or employee in the course of his or her official duties, or a criminal proceeding in which any city officer or employee is a material witness for the prosecution. F.M."!s MM M � V V -- P C. The restrictions in this section do not prohibit the following: (1) A city employee, e — officer or advisory board member membe of a e board of smmrAission(other than City Council), or his or her spouse, appearing before the City Council or a city department, agency, board or commission to represent himself or herself in a matter affecting his or her property; provided, however, that no such person, or his or her spouse, shall appear before the board or commission: of which he or she is a member; or (2) A city employee or officer of an employee organization appearing before the City Council or a city department, agency, board or commission to address employment matters. BD. The restrictions in this section do not apply to business associates of officers, employees or advisory board members, but only personally to the officers, employees and advisory board members themselves. SECTION 3. That Chapter 2, Article VI, Section 2 -265 of the Southlake City Code is hereby amended as follows: Sec. 2 -265 DISCLOSURE OF INTEREST A. If any city officer, employee or advisory board member has a substantial interest in a business entity or real property involved in any decision pending before such officer, employee, or advisory board member, or the body of which he or she is a member, such officer, employee, or advisory board member shall disclose such interest as provided in paragraph CD below and shall not, except as provided in paragraph B below, discuss the substance of the matter at any time with any other member of the board of which he is a member or any other body which will vote on or otherwise participate in the consideration of the matter. 10 B. If any of the following interests or relationships are involved in any decision pending before any city officer, employee, or advisory board member, or the body of which he is a member, such officer, employee, or advisory board member must disclose such interest or relationship as provided in paragraph DE and. in the case of an interest described in Section B.(6), as provided in pU a Ma ph 1J below, but he shall be permitted to vote on and participate in the consideration of such matter: (1) A decision concerning a bank or other financial institution from which the officer, employee, or advisory board member has a home mortgage, automobile loan, or other installment loan, if the loan is not currently in default, was originally for a term of more than 2 years and cannot be accelerated except for failure to make payments according to the terms thereof; (2) A decision concerning a bank or other financial institution in which the officer, employee, or advisory board member holds a savings account, checking account or certificate of deposit and which is fully insured by the U.S. government or an agency thereof; (3) A decision concerning a business entity with which the officer, employee, or advisory board member has a retail or credit card account; (4) A decision concerning the approval of substitution of collateral by a city depository bank; (S) A decision concerning real property in which the officer, employee or advisory board member has a substantial interest if it is not reasonably foreseeable that such decision would have a special economic effect on the value of the property, 11 distinguishable from the effect on the public (see Section 171.004, Texas Local Government Code). 6 A relationship between a ct officer advisory board member or em to ee and a person who has contracted with the City or is considering doing-business with the City, if the city officer, advisory board member, employee, or family member of the city officer, advisory board member or employee has received one or more gifts from a person who has contracted with the City or is considering business with the City and the gift s) have an aggLegate value of more than 250 in the twelve (12) month period preceding the date the person becomes aware of a contract with the City or that the City is considering doing business with the erson. This shall not qpply to gifts of food lodging, lodgigg, transportation or entertainment accepted as a guest. C. If the following relationships exists between any city officer, advisM board member, employee or family member of a city officer, advisory board member or ermloyee. such officer, advisory board member or gmployee_must disclose such interest as provided in Para ranh E below and shall not, in accordance with Paragraph A, discuss the substance of the matter at any time with any other member of the board of which he or she is a member or any other body which will vote on or otherwise participate in the consideration of the matter. een sideratien e fsu,,h ma #er. A relationship shall exist if : city officer, advisory board member, employee, or family member of the city officer, advisory board member or employee receives taxable income from a person who contracts with the Qy or is 12 considering, doing business with the City eepqgaet. for the sale or purchase of propeqy goods or services with the City. eensidepine-deke-business Y, the City and the gift(s) hwe an ai� value ef tuer-�- lb-gii. in the twelve (12) menAh perjed i9r date the eersen bo awaf of ea ft1fac4 v�4� the City or that the G D. A city officer, employee or advisory board member shall disclose the existence of any substantial interest in a business entity or real property involved in any decision pending before such officer, employee or advisory board member, or the body of which he is a member. To comply with this paragraph, a city officer or advisory board member shall, prior to any discussion or determination of the matter, either file and affidavit of disclosure as required by Section 171.004 of the Texas Local Government Code or, if not so required, shall publicly disclose in the official records of the body or of the city secretary the nature of the interest. To comply with this paragraph, a city employee shall notify his or her superior in writing of the nature of any substantial interest he may have in a business entity or real property which would be affected by an exercise of discretionary 13 authority by the city employee and such superior shall assign the matter to another employee. E A city officer, advisory board member or gmployee shall disclose a relationship that exists between the officer, advisojy board member, employee or family member of the officer, advisory board member or employee with a person contracting or seeking to contract with the Cily by filing a conflicts disclosure statement with the City SecretW as required b Section 176.003 of the Texas Local Government Code. The disclosure statement form is available from the City Secretary or by visiting www.ethics.state.tx.us /whatsnew /conflict _ forms. This disclosure shall be filed not later than S :00p.m. on the seventh business da, after the date on which the officer, advisory_ board member or employee becomes aware of the existence of a relationship_ as defined in Section 4 ara a hs B(6) and C. SECTION 4. That Chapter 2, Article V1, Section 2 -266 of the Southlake City Code is hereby amended as follows: Sec. 2 -266 ENFORCEMENT A. The City Council shall have the primary responsibility for the enforcement of this code. The City Council may direct the city attorney to investigate orprosec any apparent violation of the code or it may employ or appoint any qualified attorney to investigate or prosecute any violation or series of violations of this code by one or more persons. At the direction of the City Council, the city attorney shall have the power to investigate any 14 complaint, and to tape any action on behalf of the city where such action is appropriate. B. Any person who believes that a violation of any portion of the code has occurred may file a complaint with the City Council who may then proceed as provided in paragraph A above. However, nothing in this code shall be construed to prevent complainants from instituting direct legal action through the appropriate judicial authority. SECTION 5. That Chapter 2, Article VT of the Southlake City Code is hereby amended as follows to add Section 2 -268 as follows: The Council hereby directs the City Mana eg xo prepare and bring before the Council for adoption by resolution, an Employee Business Code of Conduct to be included in the City Personnel Manual which shall incorporate the provisions of this Code of Ethics and Conduct and proscribe conduct in accordance with adokted Southlake_Values. SECTION 26. DISTRIBUTION OF CODE OF ETHICS AND CONDUCT The city secretary shall cause a copy of this code of ethics and conduct to be distributed to every officer, employee and advisory board member of the city within thirty (30) days after enactment of this code. Each officer, employee and advisory board member thereafter elected, hired or appointed shall be furnished a copy before entering upon the duties of his or her office or employment and shall sign a 15 written statement acknowledging receipt of the copy. A copy of the ordinance shall be flunished to each officer, employee and advisory board member each year. SECTION_ 37. This ordinance shall be cumulative of all provisions of ordinances of the City of SouthIake, Texas, except where the provisions of this ordinance are in direct conflict with the provisions of such ordinances, in which event the conflicting provisions of such ordinances are hereby repealed. SECTION _48. It is hereby declared to be the intention of the City Council that the phrases, clauses, sentences, paragraphs and sections of this ordinance are severable, and if any phrase, clause, sentence, paragraph or section of this ordinance shall be declared unconstitutional by the valid judgment or decree of any court of competent jurisdiction, such unconstitutionality shall not affect any of the remaining phrases, clauses, sentences, paragraphs and sections of this ordinance, since the same would have been enacted by the City Council without the incorporation in this ordinance of any such unconstitutional phrase, clause, sentence, paragraph or section. SECTION 59. The City Secretary of the City of Southlake is hereby authorized to publish this ordinance in book or pamphlet form for general distribution among the public, and the operative provisions of this ordinance as so published shall be admissible in evidence in all courts without further proof than the production thereof. 16 SECTION_410. This ordinance shall be in full force and effect froze and after its passage and publication as required by lave, and it is so ordained. 17 PASSED AND APPROVED ON FIRST READING ON THIS DAY OF 200649% MAYOR ATTEST: CITY SECRETARY PASSED AND APPROVED ON SECOND READING ON THIS DAY OF 2006 MAYOR ATTEST: CITY SECRETARY APPROVED AS TO FORM AND LEGALITY: City Attorney I Date: I ADOPTED: EFFECTIVE: 18 Ordinance No. 635 -A CLEAN COPY ORDINANCE NO. 635 -A AN ORDINANCE OF THE CITY OF SOUTHLAKE, TEXAS AMENDING CHAPTER 2, ARTICLE VI, CODE OF ETHICS AND CONDUCT OF THE SOUTHLAKE CITY CODE TO AMEND SECTION 2 -261, DEFINITIONS; SECTION 2 -264 STANDARDS OF CONDUCT; 2 -265 DISCLOSURE OF INTEREST AND 2 -266 ENFORCEMENT TO COMPLY WITH CHAPTERS 171 AND 176 OF THE TEXAS LOCAL GOVERNMENT CODE; ADDING SECTION 2 -268 TO REQUIRE THE ADOPTION OF AN EMPLOYEE BUSINESS CODE OF CONDUCT; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE OF ALL ORDIANCES; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR PUBLICATION IN PAMPHLET FORM; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Southlake, Texas is a home rule city acting under its charter adopted by the electorate pursuant to Article XI, Section 5 of the Texas Constitution and Chapter 9 of the Local Government Code; and WHEREAS, the City Council of the City of Southlake adopted a Code of Ethics and Conduct applicable to the conduct of officers, employees and board members while acting in their official capacities in representing the City of Southlake which is codified as Chapter 2, Article VI of the Southlake City Code; and WHEREAS, the City Council of the City of Southlake desires to amend Chapter 2, Article VI of the Southlake City Code to reflect changes in Chapter 171 of the Local Government Code and to incorporate the provisions of Chapter 176 of the Local Government Code, requiring disclosure of certain relationships with local government officers, and to require the adoption of an Employee Business Code of Conduct. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS: SECTION 1. That Chapter 2, Article VI, Section 2 -261 of the Southlake City Code is hereby amended as follows: Sec. 2 -261 DEFINITIONS For the purposes of this code of ethics and conduct the following words and phrases shall have the meanings ascribed to them by this section. Advisory board shall mean a board, commission or committee of the city that functions only in an advisory or study capacity. Business entity shall mean a sole proprietorship, partnership, firm, corporation, association, holding company, joint stock company, receivership, trust, or any other entity recognized by law. Employee shall mean any person employed by the city, including those individuals on a part-time basis, but such term shall not be extended to apply to any independent contractor. Family member shall mean a person related to another person within the first degree by consanguinity or affinity, as described by Subchapter B, Chapter 573, Government Code. Knowingly. A person acts knowingly, or with knowledge, with respect to the nature of his or her conduct or to circumstances surrounding his or her conduct when he is aware of the nature of his or her conduct or that the circumstances exist. A person acts knowing, or with knowledge, with respect to a result of his or her conduct when he is aware that his or her conduct is reasonably certain to cause the result. Officer shall mean any member of the City Council, the Planning and Zoning Commission, the Board of Adjustment, the Building Board of Appeals and any member of a board, cornmission or committee established by ordinance, charter or state law that has final approval authority over any 2 application, permit, license or other City approvals; provided, no member of an advisory board shall be deemed an officer of the city. Substantial interest A. A person has a substantial interest in a business entity if- (1) The interest is ownership of ten (10) percent or more of the voting stock or shares of the business entity or ownership of either ten (10) percent or more or fifteen thousand dollars ($15,000.00) or more of the fair market value of the business entity (see Section 171.002, Texas Local Government Code); or (2) Funds received by the person from the business entity exceed ten (10) percent of the person's gross income for the previous year (see Section 171.002, Texas Local Government Code); or (3) The person holds a position of member of the board of directors or other governing board of the business entity; or (4) The person serves as an elected officer of the business entity; or (5) The person is an employee of the business entity; or (6) The person is a creditor, debtor or guarantor of the business entity in the amount of five thousand dollars ($5,000.00) or more; or (7) Property of the person has been pledged to the business entity or is subject to a lien in favor of the business entity in the amount five thousand dollars ($5,000.00) or more. B. A person does not have a substantial interest in a business entity if (1) The person holds a position as a member of the board of directors or other governing board of a business entity; and 3 (2) The person has been designated by the City Council to serve on such board; and (3) The person receives no remuneration, either directly or indirectly, for his or her service on such board; and (4) The primary nature of the business entity is either charitable, nonprofit or governmental. C. A person has a substantial interest in real property if the interest is an equitable or legal ownership interest with a fair market value of two thousand five hundred dollars ($2,500.00) or more (see Section 171.002, Texas Local Government Code), D. A person has a substantial interest under this ordinance if the person's Family Member has a substantial interest under this ordinance (see Section 171.002, Texas Local Government Code). SECTION 2. That Chapter 2, Article V1, Section 2 -264 of the Southlake City Code is hereby amended as follows: See. 2 -264 STANDARDS OF CONDUCT A. No city officer, employee or advisory board member, or their spouses, shall knowingly: (1) Accept or solicit any gift, favor, service or thing of value from any person, group or business entity, including a promise of future employment, that might reasonably tend to influence him in the discharge of his or her official duties or that the officer, employee or advisory board member knows or should know is being offered with the intent to influence the officer's or employee's official conduct. This prohibition shall not apply to: (a) An occasional non - pecuniary gift, insignificant in value; or 4 (b) An award publicly presented in recognition of public service; or (c) Any gift which would have been offered or given to the officer employee or advisory board member or his or her spouse if he /she were not a city officer, employee or advisory board member; or. (d) Any travel and related expenses to attend ceremonial functions, provided that such acceptance and attendance have been approved by the City Council prior to the occurrence of the ceremonial function. (2) Grant in the discharge of his or her official duties any improper favor, service or thing of value to any person, group or business entity; (3) Knowingly disclose any confidential information gained by reason of the position of the officer, employee or advisory board member concerning property, operations, policies or affairs of the city, or use such confidential information to advance any personal interest, financial or otherwise, of such officer, employee or advisory board member, or others. This subparagraph 4 shall not preclude disclosure of such confidential information in connection with any investigation or proceeding regarding whether there has been a violation of the standards of conduct set forth in this code. (4) Use one's position or office of employment or city facilities, personnel, equipment or supplies to secure special privileges or exemptions for himself or others or for the private gain of the city officer, employee, advisory board member or his or her spouse. (5) Engage in any exchange, purchase or sale of property, goods or services with the city, except: 5 (a) Rendering services to the city as an officer, employee or advisory board member; (b) Paying taxes, fines, utility service or filing fees; (c) Executing and performing any developer's agreement or plat in compliance with laws and regulations applicable to any person; provided, however, that if any city ordinance, rule or regulation allows any discretion by the appropriate officers or employees of the city in the interpretation or enforcement of such ordinance, rule or regulation, any such discretion shall be exercised in favor of the city in connection with any such developer's agreement or plat; (d) Advisory board members who are not otherwise officers or employees of the city, may engage in any exchange, purchase or sale of property, goods or services with the city, or enter into a contract with the city, provided that the board on which they are a member has no advisory function or cognizance, direct or indirect, present or prospective, with respect to the transaction in which such advisory board member engages or proposes to engage. (b) Hold himself/herself out as representing the city in any capacity other than that for which he was appointed, elected or hired. (7) Engage in or accept private employment or render a service when such employment or service is incompatible with the proper discharge of his or her official duties or would tend to impair his or her independent judgment in the performance of his or her official duties. 6 (8) Make or permit the unauthorized use of city owned vehicles, equipment, materials or property. (9) Grant any special consideration, treatment or advantage to any citizen beyond that which is available to every other citizen. (10) After termination of service or employment with the city, appear before any board or commission of the city in relation to any case, proceeding or application in which he or she personally participated or which was under his or her active consideration, during the period of his or her service or employment. (11) Transact any business in his or her official capacity with the city with a business entity in which he /she has a substantial interest. (12) Engage in any dishonest or criminal act or any other conduct prejudicial to the government of the city or that reflects discredit upon the government of the city. (13) Knowingly perform or refuse to perform any act in order to deliberately thwart the execution of city ordinances, rules or regulations or the achievement of official city programs. B. No member of the City Council, advisory board member or city employee shall knowingly represent, directly or indirectly, any person, group or business entity: (1) Before the City Council or any department, agency, board or commission of the city; (2) In any action or proceeding against the interests of the city or in any litigation in which the city or any department, agency, board or commission thereof is a party; or 7 (3) In any action or proceeding in the municipal courts of the city which was instituted by a city officer or employee in the course of his or her official duties, or a criminal proceeding in which any city officer or employee is a material witness for the prosecution. C. The restrictions in this section do not prohibit the following: (1) A city employee, officer or advisory board member (other than City Council), or his or her spouse, appearing before the City Council or a city department, agency, board or commission to represent himself or herself in a matter affecting his or her property; provided, however, that no such person, or his or her spouse, shall appear before the board or commission of which he or she is a member; or (2) A city employee or officer of an employee organization appearing before the City Council or a city department, agency, board or commission to address employment matters. D. The restrictions in this section do not apply to business associates of officers, employees or advisory board members, but only personally to the officers, employees and advisory board members themselves. SECTION 3. That Chapter 2, Article VI, Section 2 -265 of the Southlake City Code is hereby amended as follows: Sec. 2 -265 DISCLOSURE OF INTEREST A. If any city officer, employee or advisory board member has a substantial interest in a business entity or real property involved in any decision pending before such officer, employee, or advisory board member, or the body of which he or she is a member, such officer, employee, or advisory board member shall disclose such interest as provided in 8 paragraph D below and shall not, except as provided in paragraph B below, discuss the substance of the matter at any time with any other member of the board of which he is a member or any other body which will vote on or otherwise participate in the consideration of the matter. B. If any of the following interests or relationships are involved in any decision pending before any city officer, employee, or advisory board member, or the body of which he is a member, such officer, employee, or advisory board member must disclose such interest or relationship as provided in paragraph D and, in the case of an interest described in Section B.(6), as provided in paragraph E below, but he shall be permitted to vote on and participate in the consideration of such matter: (1) A decision concerning a bank or other financial institution from which the officer, employee, or advisory board member has a home mortgage, automobile loan, or other installment loan, if the loan is not currently in default, was originally for a term of more than 2 years and cannot be accelerated except for failure to make payments according to the terms thereof; (2) A decision concerning a bank or other financial institution in which the officer, employee, or advisory board member holds a savings account, checking account or certificate of deposit and which is fully insured by the U.S. government or an agency thereof, (3) A decision concerning a business entity with which the officer, employee, or advisory board member has a retail or credit card account; (4) A decision concerning the approval of substitution of collateral by a city depository bank; 9 (5) A decision concerning real property in which the officer, employee or advisory board member has a substantial interest if it is not reasonably foreseeable that such decision would have a special economic effect on the value of the property, distinguishable from the effect on the public (see Section 171.004, Texas Local Government Code). (6) A relationship between a city officer, advisory board member or employee and a person who has contracted with the City or is considering doing business with the City, if the city officer, advisory board member, employee, or family member of the city officer, advisory board member or employee has received one or more gifts from a person who has contracted with the City or is considering doing business with the City and the gift(s) have an aggregate value of more than $250 in the twelve (12) month period preceding the date the person becomes aware of a contract with the City or that the City is considering doing business with the person. This shall not apply to gifts of food, lodging, transportation or entertainment accepted as a guest. C. If the following relationship exists between any city officer, advisory board member, employee or family member of a city officer, advisory board member or employee, such officer, advisory board member or employee must disclose such interest as provided in paragraph E below and shall not, in accordance with Paragraph A, discuss the substance of the matter at any time with any other member of the board of which he or she is a member or any other body which will vote on or otherwise participate in the consideration of the matter. A relationship shall exist if the city officer, advisory board member, employee, or family member of the city officer, advisory board member or employee receives taxable 10 income from a person who contracts with the City or is considering doing business with the City for the sale or purchase of property, goods or services with the City. D. A city officer, employee or advisory board member shall disclose the existence of any substantial interest in a business entity or real property involved in any decision pending before such officer, employee or advisory board member, or the body of which he is a member. To comply with this paragraph, a city officer or advisory board member shall, prior to any discussion or determination of the matter, either file an affidavit of disclosure as required by Section 171.004 of the Texas Local Government Code or, if not so required, shall publicly disclose in the official records of the body or of the city secretary the nature of the interest. To comply with this paragraph, a city employee shall notify his or her superior in writing of the nature of any substantial interest he may have in a business entity or real property which would be affected by an exercise of discretionary authority by the city employee and such superior shall assign the matter to another employee. E. A city officer, advisory board member or employee shall disclose a relationship that exists between the officer, advisory board member, employee or family member of the officer, advisory board member or employee with a person contracting or seeking to contract with the City by filing a conflicts disclosure statement with the City Secretary as required by Section 176.003 of the Texas Local Government Code. The disclosure statement form is available from the City Secretary or by visiting www. ethics .state.tx.us /whatsnew /conflict forms This disclosure shall be filed not later than 5:00p.m. on the seventh business day after the date on which the officer, advisory board member or employee becomes aware of the existence of a relationship as defined in Section 4, paragraphs B(6) and C. SECTION 4. That Chapter 2, Article VI, Section 2 -266 of the Southlake City Code is hereby amended as follows: Sec. 2 -265 ENFORCEMENT A. The City Council shall have the primary responsibility for the enforcement of this code. The City Council may direct the city attorney to investigate any apparent violation of the code or it may employ or appoint any qualified attorney to investigate any violation or series of violations of this code by one or more persons. At the direction of the City Council, the city attorney shall have the power to investigate any complaint, and to take any action on behalf of the city where such action is appropriate. B. Any person who believes that a violation of any portion of the code has occurred may file a complaint with the City Council who may then proceed as provided in paragraph A above. However, nothing in this code shall be construed to prevent complainants from instituting direct legal action through the appropriate judicial authority. SECTION 5. That Chapter 2, Article VI of the Southlake City Code is hereby amended as follows to add Section 2 -268 as follows: The Council hereby directs the City Manager to prepare and bring before the Council for adoption by resolution, an Employee Business Code of Conduct to be included in the City Personnel Manual which shall incorporate the provisions of this Code of Ethics and Conduct and proscribe conduct in accordance with adopted Southlake Values. 12 SECTION 6. DISTRIBUTION OF CODE OF ETHICS AND CONDUCT The city secretary shall cause a copy of this code of ethics and conduct to be distributed to every officer, employee and advisory board member of the city within thirty (30) days after enactment of this code. Each officer, employee and advisory board member thereafter elected, hired or appointed shall be furnished a copy before entering upon the duties of his or her office or employment and shall sign a written statement acknowledging receipt of the copy. A copy of the ordinance shall be furnished to each officer, employee and advisory board member each year. SECTION 7. This ordinance shall be cumulative of all provisions of ordinances of the City of Southlake, Texas, except where the provisions of this ordinance are in direct conflict with the provisions of such ordinances, in which event the conflicting provisions of such ordinances are hereby repealed. SECTION 8. It is hereby declared to be the intention of the City Council that the phrases, clauses, sentences, paragraphs and sections of this ordinance are severable, and if any phrase, clause, sentence, paragraph or section of this ordinance shall be declared unconstitutional by the valid judgment or decree of any court of competent jurisdiction, such unconstitutionality shall not affect any of the remaining phrases, clauses, sentences, paragraphs and sections of this ordinance, since the same would have been enacted by the City Council without the incorporation in this ordinance of any such unconstitutional phrase, clause, sentence, paragraph or section. SECTION 9. The City Secretary of the City of Southlake is hereby authorized to publish this ordinance in book or pamphlet form for general distribution among the public, and the operative provisions of this ordinance 13 as so published shall be admissible in evidence in all courts without further proof than the production thereof. SECTION 10. This ordinance shall be in full force and effect from and after its passage and publication as required by law, and it is so ordained. PASSED AND APPROVED ON FIRST READING ON THIS DAY OF 2006 MAYOR ATTEST: CITY SECRETARY PASSED AND APPROVED ON SECOND READING ON THIS DAY OF 2006. MAYOR ATTEST: CITY SECRETARY APPROVED AS TO FORM AND LEGALITY: City Attomey Date: ADOPTED: EFFECTIVE: 14