Amended in Assembly April 7, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 10

Introduced by Assembly Member Gatto

December 1, 2014

An act to amend Sections begin insert 82015, end insert 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 amended, Gatto. Political Reform Act of 1974: begin insert behested payments and end insert economic interest disclosures.

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(1) The Political Reform Act of 1974 requires elected officers, candidates, and committees to file semiannual campaign statements that include, among other things, the total amount of contributions received during the period covered by the campaign statement and the total cumulative amount of contributions received. The act provides that contributions include a payment made at the behest of a candidate unless full and adequate consideration is received from the candidate or it is clear from the surrounding circumstances that the payment was made for purposes unrelated to his or her candidacy for elective office. The act provides that a payment made principally for legislative, governmental, or charitable purposes is presumed to be made for purposes unrelated to a candidate’s candidacy for elective office and is neither a gift nor a contribution. The act requires a payment of this type made at the behest of a candidate who is an elected officer to be reported within 30 days following the date on which the payment or payments equal or exceed $5,000 in the aggregate from the same source in the same calendar year in which the payments are made.

end insert begin insert

This bill would also require candidates who are required to file campaign statements, and elected officers for one year after they leave elective office, to report within 30 days following the date on which a behested payment or payments are made for legislative, governmental, or charitable purposes that equal or exceed $5,000 in the aggregate from the same source in the same calendar year in which the payments are made.

end insert begin delete

The

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begin insert (2) end insert begin insert   end insert begin insert The end insert 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.

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The

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begin insert (3) end insert begin insert   end insert begin insert The end insert 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.

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The

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begin insert (4) end insert begin insert   end insert begin insert The end insert 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:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 82015 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

82015.  

(a) “Contribution” means a payment, a forgiveness of
a loan, a payment of a loan by a third party, or an enforceable
promise to make a payment except to the extent that full and
adequate consideration is received, unless it is clear from the
surrounding circumstances that it is not made for political purposes.

(b) (1) A payment made at the behest of a committee, as defined
in subdivision (a) of Section 82013, is a contribution to the
committee unless full and adequate consideration is received from
the committee for making the payment.

(2) A payment made at the behest of a candidate is a contribution
to the candidate unless the criteria in either subparagraph (A) or
(B) are satisfied:

(A) Full and adequate consideration is received from the
candidate.

(B) It is clear from the surrounding circumstances that the
payment was made for purposes unrelated to his or her candidacy
for elective office. The following types of payments are presumed
to be for purposes unrelated to a candidate’s candidacy for elective
office:

(i) A payment made principally for personal purposes, in which
case it may be considered a gift under begin delete the provisions of end delete Section
82028. Payments that are otherwise subject to the limits of Section
86203 are presumed to be principally for personal purposes.

(ii) A payment made by a state, local, or federal governmental
agency or by a nonprofit organization that is exempt from taxation
under Section 501(c)(3) of the Internal Revenue Code.

(iii) A payment not covered by clause (i), made principally for
legislative, governmental, or charitable purposes, in which case it
is neither a gift nor a contribution. However, payments of this type
that are made at the behest of begin insert a candidate who is required to file
a campaign statement, end insert a candidate who is an elected begin delete officer end delete begin insert officer,
or an elected officer for one year after he or she leaves elective
office, end insert shall be reported within 30 days following the date on which
the payment or payments equal or exceed five thousand dollars
($5,000) in the aggregate from the same source in the same
calendar year in which they are made. The report shall be begin delete filed by
the elected officer end delete begin insert filed, for a candidate who is required to file a
campaign statement, with the end insert begin insert officials and agencies he or she is
required to file his or her campaign statement, for an elected
officer, end insert with the elected officer’s begin delete agency and end delete begin insert agency, and for an
elected officer for the one year after he or she has left elective
office, with the agency the elected officer was required to file the
statement when he or she was an elected officer. The report end insert shall
be a public record subject to inspection and copying pursuant to
begin delete subdivision (a) of end delete Section 81008. The report shall contain the
following information: name of payor, address of payor, amount
of the payment, date or dates the payment or payments were made,
the name and address of the payee, a brief description of the goods
or services provided or purchased, if any, and a description of the
specific purpose or event for which the payment or payments were
made. Once the five-thousand-dollar ($5,000) aggregate threshold
from a single source has been reached for a calendar year, all
payments for the calendar year made by that source shall be
disclosed within 30 days after the date the threshold was reached
or the payment was made, whichever occurs later. Within 30 days
after receipt of the report, state agencies shall forward a copy of
these reports to the Commission, and local agencies shall forward
a copy of these reports to the officer with whom begin insert candidates for,
and end insert elected officers begin delete of end delete begin insert of, end insert that agency file their campaign
statements.

(C) For purposes of subparagraph (B), a payment is made for
purposes related to a candidate’s candidacy for elective office if
all or a portion of the payment is used for election-related activities.
For purposes of this subparagraph, “election-related activities”
shall include, but are not limited to, the following:

(i) Communications that contain express advocacy of the
nomination or election of the candidate or the defeat of his or her
opponent.

(ii) Communications that contain reference to the candidate’s
candidacy for elective office, the candidate’s election campaign,
or the candidate’s or his or her opponent’s qualifications for
elective office.

(iii) Solicitation of contributions to the candidate or to third
persons for use in support of the candidate or in opposition to his
or her opponent.

(iv) Arranging, coordinating, developing, writing, distributing,
preparing, or planning of any communication or activity described
in clause (i), (ii), or (iii).

(v) Recruiting or coordinating campaign activities of campaign
volunteers on behalf of the candidate.

(vi) Preparing campaign budgets.

(vii) Preparing campaign finance disclosure statements.

(viii) Communications directed to voters or potential voters as
part of activities encouraging or assisting persons to vote if the
communication contains express advocacy of the nomination or
election of the candidate or the defeat of his or her opponent.

(D) A contribution made at the behest of a candidate for a
different candidate or to a committee not controlled by the
behesting candidate is not a contribution to the behesting candidate.

(3) A payment made at the behest of a member of the Public
Utilities Commission, made principally for legislative,
governmental, or charitable purposes, is not a contribution.
However, payments of this type shall be reported within 30 days
following the date on which the payment or payments equal or
exceed five thousand dollars ($5,000) in the aggregate from the
same source in the same calendar year in which they are made.
The report shall be filed by the member with the Public Utilities
Commission and shall be a public record subject to inspection and
copying pursuant to begin delete subdivision (a) of end delete Section 81008. The report
shall contain the following information: name of payor, address
of payor, amount of the payment, date or dates the payment or
payments were made, the name and address of the payee, a brief
description of the goods or services provided or purchased, if any,
and a description of the specific purpose or event for which the
payment or payments were made. Once the five-thousand-dollar
($5,000) aggregate threshold from a single source has been reached
for a calendar year, all payments for the calendar year made by
that source shall be disclosed within 30 days after the date the
threshold was reached or the payment was made, whichever occurs
later. Within 30 days after receipt of the report, the Public Utilities
Commission shall forward a copy of these reports to the Fair
Political Practices Commission.

(c) “Contribution” includes the purchase of tickets for events
such as dinners, luncheons, rallies, and similar fundraising events;
the candidate’s own money or property used on behalf of his or
her candidacy, other than personal funds of the candidate used to
pay either a filing fee for a declaration of candidacy or a candidate
statement prepared pursuant to Section 13307 of the Elections
Code; the granting of discounts or rebates not extended to the
public generally or the granting of discounts or rebates by television
and radio stations and newspapers not extended on an equal basis
to all candidates for the same office; the payment of compensation
by any person for the personal services or expenses of any other
person if the services are rendered or expenses incurred on behalf
of a candidate or committee without payment of full and adequate
consideration.

(d) “Contribution” further includes any transfer of anything of
value received by a committee from another committee, unless
full and adequate consideration is received.

(e) “Contribution” does not include amounts received pursuant
to an enforceable promise to the extent those amounts have been
previously reported as a contribution. However, the fact that those
amounts have been received shall be indicated in the appropriate
campaign statement.

(f) (1) Except as provided in paragraph (2) or (3), “contribution”
does not include a payment made by an occupant of a home or
office for costs related to any meeting or fundraising event held
in the occupant’s home or office if the costs for the meeting or
fundraising event are five hundred dollars ($500) or less.

(2) “Contribution” includes a payment made by a lobbyist or a
cohabitant of a lobbyist for costs related to a fundraising event
held at the home of the lobbyist, including the value of the use of
the home as a fundraising event venue. A payment described in
this paragraph shall be attributable to the lobbyist for purposes of
Section 85702.

(3) “Contribution” includes a payment made by a lobbying firm
for costs related to a fundraising event held at the office of the
lobbying firm, including the value of the use of the office as a
fundraising event venue.

(g) Notwithstanding the foregoing definition of “contribution,”
the term does not include volunteer personal services or payments
made by any individual for his or her own travel expenses if the
payments are made voluntarily without any understanding or
agreement that they shall be, directly or indirectly, repaid to him
or her.

(h) “Contribution” further includes the payment of public
moneys by a state or local governmental agency for a
communication to the public that satisfies both of the following:

(1) The communication expressly advocates the election or
defeat of a clearly identified candidate or the qualification, passage,
or defeat of a clearly identified measure, or, taken as a whole and
in context, unambiguously urges a particular result in an election.

(2) The communication is made at the behest of the affected
candidate or committee.

(i) “Contribution” further includes a payment made by a person
to a multipurpose organization as defined and described in Section
84222.

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

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 ten thousand dollars ($10,000) 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.

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

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 five thousand dollars ($5,000). 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 begin insert (15
U.S.C. 80a-1 et seq.) end insert or in a common trust fund created pursuant
to Section 1585 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 begin delete commission. end delete begin insert Commission. end insert

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

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 five thousand dollars ($5,000) or
more.

(b) Any real property in which the public official has a direct
or indirect interest worth ten thousand dollars ($10,000) 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
one thousand dollars ($1,000) or more in value provided or
promised to, received by, the public official within 12 months begin delete prior
to end delete begin insert before end insert 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 begin delete prior to end delete begin insert before end insert 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.

begin delete SEC. 4. end delete
begin insert SEC. 5. end insert   

Section 87206 of the Government Code is amended
to read:

87206.  

If an investment is required to be disclosed under this
article, the statement shall contain all of the following:

(a) A statement of the nature of the investment.

(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 delete However, if the filer has a financial
interest in the business entity pursuant to subdivision (d) of Section
87103, end delete begin insert If a filer is required to report on his or her statement of
economic interests a business entity investment in which the filer
is a director, officer, partner, or trustee, end insert 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.

(c) A statement indicating which of the following represents
the fair market value of the begin delete investment: end delete begin insert investment: end insert

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

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

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

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

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

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

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

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

begin delete SEC. 5. end delete
begin insert SEC. 6. end insert   

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 begin delete utilizes end delete begin insert uses end insert exclusively as the
personal residence of the filer.

begin delete SEC. 6. end delete
begin insert SEC. 7. end insert   

Section 87207 of the Government Code is amended
to read:

87207.  

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

(1) The name and address of each source of income aggregating
one thousand dollars ($1,000) 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 delete 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 delete

(2) A statement indicating which of the following represents
the aggregate value of income from each source, or in the case of
a loan, the highest amount owed to each source:

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

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

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

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

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

(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 the following:

(1) The name, address, and a thorough and detailed description
of the business activity of the business begin delete entity. end delete begin insert entity based on
criteria established by the Commission. end insert

(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 begin delete which end delete begin insert ,
which end insert 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.

begin delete SEC. 7. end delete
begin insert SEC. 8. end insert   

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.

begin delete SEC. 8. end delete
begin insert SEC. 9. end insert   

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.

begin delete SEC. 9. end delete
begin insert SEC. 10. end insert   

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.