Amended in Assembly March 15, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2823

Introduced by Assembly Member Gatto

February 19, 2016

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

LEGISLATIVE COUNSEL’S DIGEST

AB 2823, as amended, Gatto. Political Reform Act of 1974: economic interest disclosure.

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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, or a source of income aggregating $500 or more in value within 12 months before the time when the decision is made.

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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.

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This bill would increase the thresholds at which a public official has a disqualifying financial interest in a source 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.

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This 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.

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

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

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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.

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

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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.

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

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This bill would make a technical, nonsubstantive change to that provision.

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Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

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 82033 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

82033.  

“Interest in real property” includes any leasehold,
beneficial or ownership begin delete interest end delete begin insert interest, end insert 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 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,
begin delete indirectly end delete begin insert indirectly, end insert or beneficially, a 10-percent interest or greater.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 82034 of the end insert begin insert Government Code end insert begin insert is amended to
read: end insert

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, 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 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 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, begin delete any end delete begin insert an end insert
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. Sec. 80a-1 et seq.) end insert
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 begin delete any end delete begin insert a end insert 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, begin delete subsidiary end delete begin insert subsidiary, end insert or otherwise
related business entity” shall be specifically defined by regulations
of the commission.

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begin insert SEC. 3. end insert   

end insert

begin insert Section 87103 of the end insert begin insert Government Code end insert begin insert is amended to
read: end insert

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 end delete begin insert one thousand end insert dollars begin delete ($500) end delete begin insert ($1,000) end insert 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 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 begin delete any end delete begin insert a end insert 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 SECTION 1. end delete
begin insert SEC. 4. end insert   

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
begin delete contain: end delete begin insert contain all of the following: end insert

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

(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.

begin delete

(c)

end delete

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

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 begin delete investment 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 investment: 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 fifty thousand dollars ($50,000).

end insert begin insert

(3) Greater than fifty thousand dollars ($50,000) but not greater
than one hundred thousand dollars ($100,000).

end insert begin insert

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

end insert begin insert

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

end insert begin insert

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

end insert begin insert

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

end insert begin insert

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

end insert begin delete

(e)

end delete

begin insert (d) 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.

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(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 that the filer utilizes exclusively as the personal
residence of the filer.

end delete

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begin insert SEC. 5. end insert   

end insert

begin insert Section 87206.5 is added to the end insert begin insert Government Code end insert begin insert , to
read: end insert

begin insert

begin insert 87206.5. end insert   

(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
one hundred thousand dollars ($100,000).

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

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

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

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

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

(G) 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.

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begin insert SEC. 6. end insert   

end insert

begin insert Section 87207 of the end insert begin insert Government Code end insert begin insert is amended to
read: end insert

87207.  

(a)  begin delete If 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
begin delete contain, except as provided in subdivision (b): end delete begin insert contain all of the
following: end insert

(1) The name and address of each source of income aggregating
begin delete five hundred end delete begin insert one thousand end insert dollars begin delete ($500) end delete begin insert ($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.

(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 fifty thousand dollars ($50,000).

end insert begin insert

(C) Greater than fifty thousand dollars ($50,000) but not greater
than one hundred thousand dollars ($100,000).

end insert begin insert

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

end insert begin insert

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

end insert begin insert

(F) 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, and the travel destination for purposes of a gift
that is a travel payment, advance, or reimbursement.

(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)  begin delete If end delete begin insert When end insert 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:

(1) The name, address, and a general 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)  begin delete If end delete begin insert When end insert 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 begin delete schedule end delete begin insert schedule, end insert
which shall be included in the filer’s statement of economic
begin delete interest. end delete begin insert interests. end insert 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.

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begin insert SEC. 7. end insert   

end insert begin 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.

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begin insert SEC. 8. end insert   

end insert begin 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.

end insert