November 11, 2010
Re: Industrial Development Board, County Mayor’s membership
Dear City Recorder,
You have asked MTAS if the recently elected County Mayor can continue to serve as a
member of the Industrial Development Board. The answer appears to be yes, if the IDB is a City
IDB, as opposed to a joint city/county endeavor.
Municipal and county industrial development boards in Tennessee are governed by the
Industrial Development Corporations Act, found at Tennessee Code Annotated § 7-53-101
through 311. Section 7-53-301 of the Act contains the description of the powers of the board of
directors, and the provisions controlling membership of the boards. This section of the law
contains the following limitation on the membership of the board: “No director shall be an
officer or employee of the municipality.” The definition of the word “municipality” as used in
the Industrial Development Corporations Act includes “any county or incorporated city or town
in this state with respect to which a corporation may be organized and in which it is
contemplated the corporation will function.” T.C.A. § 7-53-101(8). As such, no elected official
or employee of the city may serve on the board of directors of an industrial development
corporation. Likewise, no official of a county may serve on an IDB formed by that county.
It is my understanding that the IDB is a city-only board, and was not formed with
participation by the County. If that is true, then the County Mayor may continue to serve on the
IDB. If the County participated in forming the IDB, however, then the County Mayor may not
continue to serve as director of the IDB.
It does not appear that the conflicts of interest laws will apply to this situation, as
members of the IDB do not receive salaries. The directors may not be paid for their service on
the board, but may be reimbursed for expenses incurred in the performance of their duties.
T.C.A. § 7-53-301. That being the case, in my opinion there is no conflict or potential pecuniary
interest which the County Mayor would have to announce before any vote affecting the IDB.
However, I defer to the County Attorney or CTAS on that issue.
I hope this information is helpful. Please let me know if you need further assistance in
this matter.
Sincerely,
Melissa A. Ashburn
Legal Consultant