California Legislature—2015–16 Regular Session

Assembly Bill No. 10

Introduced by Assembly Member Gatto

December 1, 2014

An act to amend Sections 82033, 82034, 87103, 87206, and 87207 of, and to add Sections 87206.5 and 87211 to, the Government Code, relating to the Political Reform Act of 1974.

LEGISLATIVE COUNSEL’S DIGEST

AB 10, as introduced, Gatto. Political Reform Act of 1974: economic interest disclosures.

The Political Reform Act of 1974 prohibits a public official at any level of state or local government from making, participating in making, or in any way attempting to use his or her official position to influence a governmental decision in which the public official knows or has reason to know that he or she has a financial interest. A public official has a financial interest in a governmental decision if it is reasonably foreseeable that the decision will have a material financial effect, distinguishable from its effect on the public generally, on a business entity in which the public official has a direct or indirect investment worth $2,000 or more, real property in which the public official has a direct or indirect interest worth $2,000 or more, and sources of income aggregating $500 or more in value within 12 months prior to the time when the decision is made.

The Political Reform Act of 1974 requires persons holding specified public offices to file disclosures of investments, real property interests, and income within specified periods of assuming or leaving office, and annually while holding the office. The act requires the disclosures to include a statement indicating, within a specified value range, the fair market value of investments or interests in real property and the aggregate value of income received from a source.

This bill would increase the thresholds at which a public official has a disqualifying financial interest in sources of income from $500 to $1,000, in investments in business entities from $2,000 to $5,000, and in interests in real property from $2,000 to $10,000.

The bill would make conforming adjustments to the thresholds at which income, investments, and interests in real property must be disclosed on a public official’s statement of economic interests. The bill would also revise the dollar amounts associated with the value ranges for reporting the value of economic interests.

This bill would require certain public officials to disclose information on the official’s statement of economic interests relating to governmental decisions for which the public official had a disqualifying financial interest, as specified.

Existing law makes a knowing or willful violation of the act a misdemeanor and subjects offenders to criminal penalties.

By creating additional crimes, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The Political Reform Act of 1974, an initiative measure, provides that the Legislature may amend the act to further the act’s purposes upon a 2⁄3 vote of each house and compliance with specified procedural requirements.

This bill would declare that it furthers the purposes of the act.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 82033 of the Government Code is
amended to read:

82033.  

“Interest in real property” includes any leasehold,
beneficial or ownership interest or an option to acquire such an
interest in real property located in the jurisdiction owned directly,
indirectly or beneficially by the public official, or other filer, or
his or her immediate family if the fair market value of the interest
is begin delete two end delete begin insert ten end insert thousand dollars begin delete ($2,000) end delete begin insert ($10,000) end insert or more. Interests
in real property of an individual includes a pro rata share of
interests in real property of any business entity or trust in which
the individual or immediate family owns, directly, indirectly or
beneficially, a 10-percent interest or greater.

SEC. 2.  

Section 82034 of the Government Code is amended
to read:

82034.  

“Investment” means any financial interest in or security
issued by a business entity, including, but not limited to, common
stock, preferred stock, rights, warrants, options, debt instruments,
and any partnership or other ownership interest owned directly,
indirectly, or beneficially by the public official, or other filer, or
his or her immediate family, if the business entity or any parent,
subsidiary, or otherwise related business entity has an interest in
real property in the jurisdiction, or does business or plans to do
business in the jurisdiction, or has done business within the
jurisdiction at any time during the two years prior to the time any
statement or other action is required under this title. An asset shall
not be deemed an investment unless its fair market value equals
or exceeds begin delete two end delete begin insert five end insert thousand dollars begin delete ($2,000) end delete begin insert ($5,000) end insert . The term
“investment” does not include a time or demand deposit in a
financial institution, shares in a credit union, any insurance policy,
interest in a diversified mutual fund registered with the Securities
and Exchange Commission under the Investment Company Act
of 1940 or in a common trust fund created pursuant to Section
begin delete 1564 end delete begin insert 1585 end insert of the Financial Code, interest in a government
defined-benefit pension plan, or any bond or other debt instrument
issued by any government or government agency. Investments of
an individual includes a pro rata share of investments of any
business entity, mutual fund, or trust in which the individual or
immediate family owns, directly, indirectly, or beneficially, a
10-percent interest or greater. The term “parent, subsidiary or
otherwise related business entity” shall be specifically defined by
regulations of the commission.

SEC. 3.  

Section 87103 of the Government Code is amended
to read:

87103.  

A public official has a financial interest in a decision
within the meaning of Section 87100 if it is reasonably foreseeable
that the decision will have a material financial effect,
distinguishable from its effect on the public generally, on the
official, a member of his or her immediate family, or on any of
the following:

(a) Any business entity in which the public official has a direct
or indirect investment worth begin delete two end delete begin insert five end insert thousand dollars begin delete ($2,000) end delete
begin insert ($5,000) end insert or more.

(b) Any real property in which the public official has a direct
or indirect interest worth begin delete two end delete begin insert ten end insert thousand dollars begin delete ($2,000) end delete
begin insert ($10,000) end insert or more.

(c) Any source of income, except gifts or loans by a commercial
lending institution made in the regular course of business on terms
available to the public without regard to official status, aggregating
begin delete five hundred dollars ($500) end delete begin insert one thousand dollars ($1,000) end insert or more
in value provided or promised to, received by, the public official
within 12 months prior to the time when the decision is made.

(d) Any business entity in which the public official is a director,
officer, partner, trustee, employee, or holds any position of
management.

(e) Any donor of, or any intermediary or agent for a donor of,
a gift or gifts aggregating two hundred fifty dollars ($250) or more
in value provided to, received by, or promised to the public official
within 12 months prior to the time when the decision is made. The
amount of the value of gifts specified by this subdivision shall be
adjusted biennially by the commission to equal the same amount
determined by the commission pursuant to subdivision (f) of
Section 89503.

For purposes of this section, indirect investment or interest means
any investment or interest owned by the spouse or dependent child
of a public official, by an agent on behalf of a public official, or
by a business entity or trust in which the official, the official’s
agents, spouse, and dependent children own directly, indirectly,
or beneficially a 10-percent interest or greater.

SEC. 4.  

Section 87206 of the Government Code is amended
to read:

87206.  

If an investment begin delete or an interest in real property end delete is
required to be disclosed under this article, the statement shall
contain begin insert all of the following end insert :

(a) A statement of the nature of the investment begin delete or interest end delete .

(b) The name of the business entity in which each investment
is held, and a general description of the business activity in which
the business entity is engaged. begin insert However, if the filer has a financial
interest in the business entity pursuant to subdivision (d) of Section
87103, the filer shall provide a thorough and detailed description
of the business entity’s activities and disclose the names of all
business partners who share a financial interest in the business
entity, based on criteria established by the Commission. end insert

begin delete

(c) The address or other precise location of the real property.

end delete begin delete

(d)

end delete

begin insert (c) end insert  A statement begin delete whether end delete begin insert indicating which of the following
represents end insert the fair market value of the investment begin delete or interest in
real property equals or exceeds two thousand dollars ($2,000) but
does not exceed ten thousand dollars ($10,000), whether it exceeds
ten thousand dollars ($10,000) but does not exceed one hundred
thousand dollars ($100,000), whether it exceeds one hundred
thousand dollars ($100,000) but does not exceed one million dollars
($1,000,000), or whether it exceeds one million dollars
($1,000,000). end delete begin insert : end insert

begin insert

(1) At least five thousand dollars ($5,000) but not greater than
ten thousand dollars ($10,000).

end insert begin insert

(2) Greater than ten thousand dollars ($10,000) but not greater
than one hundred thousand dollars ($100,000).

end insert begin insert

(3) Greater than one hundred thousand dollars ($100,000) but
not greater than two hundred fifty thousand dollars ($250,000).

end insert begin insert

(4) Greater than two hundred fifty thousand dollars ($250,000)
but not greater than five hundred thousand dollars ($500,000).

end insert begin insert

(5) Greater than five hundred thousand dollars ($500,000) but
not greater than one million dollars ($1,000,000).

end insert begin insert

(6) Greater than one million dollars ($1,000,000) but not greater
than two million dollars ($2,000,000).

end insert begin insert

(7) Greater than two million dollars ($2,000,000).

end insert

begin insert (d) end insert begin insert   end insert In the case of a statement filed under begin delete Sections end delete begin insert Section end insert 87203
or 87204, if the investment begin delete or interest in real property end delete was partially
or wholly acquired or disposed of during the period covered by
the statement, the date of acquisition or disposal.

begin delete

(f) For purposes of disclosure under this article, “interest in real
property” does not include the principal residence of the filer or
any other property which the filer utilizes exclusively as the
personal residence of the filer.

end delete

SEC. 5.  

Section 87206.5 is added to the Government Code, to
read:

87206.5.  

(a) If an interest in real property is required to be
disclosed under this article, the statement shall contain all of the
following:

(1) A statement of the nature of the interest.

(2) The address or other precise location of the real property.

(3) A statement indicating which of the following represents
the fair market value of the interest in real property:

(A) At least ten thousand dollars ($10,000) but not greater than
two hundred fifty thousand dollars ($250,000).

(B) Greater than two hundred fifty thousand dollars ($250,000)
but not greater than five hundred thousand dollars ($500,000).

(C) Greater than five hundred thousand dollars ($500,000) but
not greater than seven hundred fifty thousand dollars ($750,000).

(D) Greater than seven hundred fifty thousand dollars ($750,000)
but not greater than one million dollars ($1,000,000).

(E) Greater than one million dollars ($1,000,000) but not greater
than two million dollars ($2,000,000).

(F) Greater than two million dollars ($2,000,000).

(4) In the case of a statement filed under Section 87203 or
87204, if the interest in real property was partially or wholly
acquired or disposed of during the period covered by the statement,
the date of acquisition or disposal.

(b) For purposes of disclosure under this article, “interest in real
property” does not include the principal residence of the filer or
any other property that the filer utilizes exclusively as the personal
residence of the filer.

SEC. 6.  

Section 87207 of the Government Code is amended
to read:

87207.  

(a)  begin delete When end delete begin insert Except as provided in subdivision (b), if end insert
income is required to be reported under this article, the statement
shall contain begin delete , except as provided in subdivision (b) end delete begin insert all of the
following end insert :

(1) The name and address of each source of income aggregating
begin delete five hundred dollars ($500) end delete begin insert one thousand dollars ($1,000) end insert or more
in value, or fifty dollars ($50) or more in value if the income was
a gift, and a general description of the business activity, if any, of
each source. begin insert However, if the source of income is a business entity
in which the filer has a financial interest pursuant to subdivision
(d) of Section 87103, the filer shall provide a thorough and detailed
description of the business entity’s activities, based on criteria
established by the Commission. end insert

(2) A statement begin delete whether end delete begin insert indicating which of the following
represents end insert the aggregate value of income from each source, or in
the case of a loan, the highest amount owed to each begin delete source, was
at least five hundred dollars ($500) but did not exceed one thousand
dollars ($1,000), whether it was in excess of one thousand dollars
($1,000) but was not greater than ten thousand dollars ($10,000),
whether it was greater than ten thousand dollars ($10,000) but not
greater than one hundred thousand dollars ($100,000), or whether
it was greater than one hundred thousand dollars ($100,000). end delete
begin insert source: end insert

begin insert

(A) At least one thousand dollars ($1,000) but not greater than
ten thousand dollars ($10,000).

end insert begin insert

(B) Greater than ten thousand dollars ($10,000) but not greater
than one hundred thousand dollars ($100,000).

end insert begin insert

(C) Greater than one hundred thousand dollars ($100,000) but
not greater than two hundred fifty thousand dollars ($250,000).

end insert begin insert

(D) Greater than two hundred fifty thousand dollars ($250,000)
but not greater than five hundred thousand dollars ($500,000).

end insert begin insert

(E) Greater than five hundred thousand dollars ($500,000).

end insert

(3) A description of the consideration, if any, for which the
income was received.

(4) In the case of a gift, the amount and the date on which the
gift was received.

(5) In the case of a loan, the annual interest rate, the security,
if any, given for the loan, and the term of the loan.

(b) When the filer’s pro rata share of income to a business entity,
including income to a sole proprietorship, is required to be reported
under this article, the statement shall contain begin insert the following end insert :

(1) The name, address, and a begin delete general end delete begin insert thorough and detailed end insert
description of the business activity of the business entity.

(2) The name of every person from whom the business entity
received payments if the filer’s pro rata share of gross receipts
from that person was equal to or greater than ten thousand dollars
($10,000) during a calendar year.

(c) When a payment, including an advance or reimbursement,
for travel is required to be reported pursuant to this section, it may
be reported on a separate travel reimbursement schedule which
shall be included in the filer’s statement of economic interest. A
filer who chooses not to use the travel schedule shall disclose
payments for travel as a gift, unless it is clear from all surrounding
circumstances that the services provided were equal to or greater
in value than the payments for the travel, in which case the travel
may be reported as income.

SEC. 7.  

Section 87211 is added to the Government Code, to
read:

87211.  

(a) A public official who holds an office specified in
Section 87200 shall disclose on his or her statement of economic
interests each governmental decision for which a financial interest
resulted in the public official’s disqualification from making,
participating in making, or in any way attempting to use his or her
official position to influence that governmental decision pursuant
to Section 87100 or, for a Member of the Legislature, Section
87102.5. The disclosure shall identify the governmental decision,
the date that the governmental decision was made or considered,
the financial interest that created the conflict of interests, and any
other relevant information that the Commission deems appropriate.

(b) The disclosures required by this section are in addition to
any other required disclosures, including, but not limited to, the
requirements of Section 87105.

SEC. 8.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

SEC. 9.  

The Legislature finds and declares that this bill furthers
the purposes of the Political Reform Act of 1974 within the
meaning of subdivision (a) of Section 81012 of the Government
Code.