Amended in Senate July 14, 2015

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 82015, 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: behested payments and economic interest disclosures.

(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.

This bill would also require begin delete candidates who are required to file campaign statements, and elected officers end delete begin insert a Member of the Legislature or a person elected to a statewide elective office, end insert for one year after begin delete they leave end delete begin insert he or she leaves end insert 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. begin insert The bill would only require a Member of the Legislature or a person elected to a statewide elective office to report the behested payment or payments, as described above, if the behested payment or payments would financially benefit the former officerholder or his or her immediate family, the former officeholder’s end insert begin insert employer or the employer of a member of his or her immediate family, or an entity with whom the former officeholder or a member of his or her immediate family is negotiating employment. end insert

(2) 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 begin delete prior to end delete begin insert before end insert 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.

begin delete The end delete begin insert This end insert 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.

(3) 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.

(4) 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 82015 of the Government Code is
amended to read:

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 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)  begin insert (I) end insert begin insert   end insert 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 a candidate begin delete who is required to
file a campaign statement, a candidate who is an elected officer,
or an elected officer for one year after he or she leaves elective
office, end delete begin insert who is an elected officer 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, for a candidate who is required to file a
campaign statement, with the officials and agencies he or she is
required to file his or her campaign statement, for an elected officer, end delete
begin insert filed end insert with the elected officer’s begin delete 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. end delete begin insert agency. end insert The report shall be a
public record subject to inspection and copying pursuant to 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
begin delete Commission, end delete begin insert commission, end insert and local agencies shall forward a copy
of these reports to the officer with whom begin delete candidates for, and end delete elected
officers begin delete of, end delete begin insert of end insert that agency file their campaign statements.

begin insert

(II) A Member of the Legislature or a person elected to a
statewide elective office, as defined in Section 82053, shall report
behested payments of the type described in subclause (I) for one
year after he or she leaves the Legislature or the statewide elective
office. The report shall be made in accordance with the
requirements of subclause (I). A Member of the Legislature or a
person elected to a statewide elective office shall only report a
payment pursuant to this subclause if the payment would financially
benefit the former officeholder or a member of his or her immediate
family, the former officeholder’s employer or the employer of a
member of his or her immediate family, or an entity with whom
the former officeholder or a member of his or her immediate family
is negotiating employment.

end insert

(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 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 begin delete any end delete begin insert an end insert 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.

SEC. 2.  

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,
begin delete indirectly end delete begin insert indirectly, end insert 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, begin delete indirectly end delete begin insert indirectly, end insert or
beneficially, a 10-percent interest or greater.

SEC. 3.  

Section 82034 of the Government Code is amended
to read:

82034.  

“Investment” means any financial interest begin delete in end delete begin insert in, end insert or
security issued begin delete by end delete begin insert by, end insert 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, begin delete or end delete does business or
plans to do business in the jurisdiction, or has done business within
the jurisdiction at any time during the two years begin delete prior to end delete begin insert before end insert
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 (15 U.S.C. begin insert Sec. end insert 80a-1 et seq.) 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 begin delete any end delete begin insert a end insert 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,
begin delete subsidiary end delete begin insert subsidiary, end insert or otherwise related business entity” shall
be specifically defined by regulations of the begin delete Commission. end delete
begin insert commission. end insert

SEC. 4.  

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 begin delete or end delete begin insert to, end insert
promised to, begin insert or end insert received begin delete by, end delete begin insert by end insert the public official within 12 months
before 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 before 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. 5.  

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)  begin insert (1) end insert begin insert   end insert 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. 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, begin insert except as provided in paragraph (2), 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 begin delete Commission. end delete begin insert commission. end insert

begin insert

(2) A filer is not required to provide a thorough and detailed
description of the business entity’s activities and is not required
to disclose the names of all business partners who share a financial
interest in the business entity if the business entity is publicly
traded.

end insert

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

(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.

SEC. 6.  

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 uses exclusively as the personal
residence of the filer.

SEC. 7.  

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.

(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)  begin insert (A) end insert begin insert   end insert The name, address, begin delete and end delete begin insert and, except as provided in
subparagraph (B), end insert a thorough and detailed description of the
business activity of the business entity based on criteria established
by the begin delete Commission. end delete begin insert commission. end insert

begin insert

(B) A filer is not required to provide a thorough and detailed
description of the business activity of the business entity if the
business entity is publicly traded.

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, 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. 8.  

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 begin delete Commission end delete begin insert commission end insert 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. 9.  

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. 10.  

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.