Amended in Assembly March 15, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2823


Introduced by Assembly Member Gatto

February 19, 2016


An act to amendbegin delete Section 87206 ofend deletebegin 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.

begin insert

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.

end insert

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.

begin insert

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.

end insert
begin insert

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.

end insert
begin insert

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

end insert
begin insert

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

end insert
begin insert

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.

end insert
begin insert

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

end insert
begin insert

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 23 vote of each house and compliance with specified procedural requirements.

end insert
begin insert

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

end insert
begin delete

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

end delete

Vote: begin deletemajority end deletebegin insert23end insert. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: begin deleteno end deletebegin insertyesend insert.

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

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 82033 of the end insertbegin insertGovernment Codeend insertbegin insert is
2amended to read:end insert

3

82033.  

“Interest in real property” includes any leasehold,
4beneficial or ownershipbegin delete interestend deletebegin insert interest,end insert or an option to acquire
5such an interest in real property located in the jurisdiction owned
6directly,begin delete indirectlyend deletebegin insert indirectly,end insert or beneficially by the public official,
P3    1or other filer, or his or her immediate family if the fair market
2value of the interest isbegin delete twoend deletebegin insert tenend insert thousand dollarsbegin delete ($2,000)end deletebegin insert ($10,000)end insert
3 or more. Interests in real property of an individual includes a pro
4rata share of interests in real property of any business entity or
5trust in which the individual or immediate family owns, directly,
6begin delete indirectlyend deletebegin insert indirectly,end insert or beneficially, a 10-percent interest or greater.

7begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 82034 of the end insertbegin insertGovernment Codeend insertbegin insert is amended to
8read:end insert

9

82034.  

“Investment” means any financial interestbegin delete inend deletebegin insert in,end insert or
10security issuedbegin delete byend deletebegin insert by,end insert a business entity, including, but not limited
11to, common stock, preferred stock, rights, warrants, options, debt
12instruments, and any partnership or other ownership interest owned
13directly, indirectly, or beneficially by the public official, or other
14filer, or his or her immediate family, if the business entity or any
15parent, subsidiary, or otherwise related business entity has an
16interest in real property in the jurisdiction, or does business or
17plans to do business in the jurisdiction, or has done business within
18the jurisdiction at any time during the two yearsbegin delete prior toend deletebegin insert beforeend insert
19 the time any statement or other action is required under this title.
20An asset shall not be deemed an investment unless its fair market
21value equals or exceedsbegin delete twoend deletebegin insert fiveend insert thousand dollarsbegin delete ($2,000).end delete
22begin insert ($5,000).end insert The term “investment” does not include a time or demand
23deposit in a financial institution, shares in a credit union,begin delete anyend deletebegin insert anend insert
24 insurance policy, interest in a diversified mutual fund registered
25with the Securities and Exchange Commission under the
26Investment Company Act of 1940begin insert (15 U.S.C. Sec. 80a-1 et seq.)end insert
27 or in a common trust fund created pursuant to Sectionbegin delete 1564end deletebegin insert 1585end insert
28 of the Financial Code, interest in a government defined-benefit
29pension plan, orbegin delete anyend deletebegin insert aend insert bond or other debt instrument issued by any
30government or government agency. Investments of an individual
31includes a pro rata share of investments of any business entity,
32mutual fund, or trust in which the individual or immediate family
33owns, directly, indirectly, or beneficially, a 10-percent interest or
34greater. The term “parent,begin delete subsidiaryend deletebegin insert subsidiary,end insert or otherwise
35related business entity” shall be specifically defined by regulations
36of the commission.

37begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 87103 of the end insertbegin insertGovernment Codeend insertbegin insert is amended to
38read:end insert

39

87103.  

A public official has a financial interest in a decision
40within the meaning of Section 87100 if it is reasonably foreseeable
P4    1that the decision will have a material financial effect,
2distinguishable from its effect on the public generally, on the
3official, a member of his or her immediate family, or on any of
4the following:

5(a) Any business entity in which the public official has a direct
6or indirect investment worthbegin delete twoend deletebegin insert fiveend insert thousand dollarsbegin delete ($2,000)end delete
7begin insert ($5,000)end insert or more.

8(b) Any real property in which the public official has a direct
9or indirect interest worthbegin delete twoend deletebegin insert tenend insert thousand dollarsbegin delete ($2,000)end delete
10begin insert ($10,000)end insert or more.

11(c) Any source of income, except gifts or loans by a commercial
12lending institution made in the regular course of business on terms
13available to the public without regard to official status, aggregating
14begin delete five hundredend deletebegin insert one thousandend insert dollarsbegin delete ($500)end deletebegin insert ($1,000)end insert or more in value
15providedbegin delete orend deletebegin insert to,end insert promised to,begin insert orend insert receivedbegin delete by,end deletebegin insert byend insert the public official
16within 12 monthsbegin delete prior toend deletebegin insert beforeend insert the time when the decision is
17made.

18(d) Any business entity in which the public official is a director,
19officer, partner, trustee, employee, or holdsbegin delete anyend deletebegin insert aend insert position of
20management.

21(e) Any donor of, or any intermediary or agent for a donor of,
22a gift or gifts aggregating two hundred fifty dollars ($250) or more
23in value provided to, received by, or promised to the public official
24within 12 monthsbegin delete prior toend deletebegin insert beforeend insert the time when the decision is
25made. The amount of the value of gifts specified by this subdivision
26shall be adjusted biennially by the commission to equal the same
27amount determined by the commission pursuant to subdivision (f)
28of Section 89503.

29For purposes of this section, indirect investment or interest means
30any investment or interest owned by the spouse or dependent child
31of a public official, by an agent on behalf of a public official, or
32by a business entity or trust in which the official, the official’s
33agents, spouse, and dependent children own directly, indirectly,
34or beneficially a 10-percent interest or greater.

35

begin deleteSECTION 1.end delete
36begin insertSEC. 4.end insert  

Section 87206 of the Government Code is amended
37to read:

38

87206.  

If an investmentbegin delete or an interest in real propertyend delete is
39required to be disclosed under this article, the statement shall
40begin delete contain:end deletebegin insert contain all of the following:end insert

P5    1(a) A statement of the nature of thebegin delete investment or interest.end delete
2begin insert investment.end insert

3(b) begin insert(1)end insertbegin insertend insert The name of the business entity in which each
4investment is held, and a general description of the business activity
5in which the business entity is engaged.

begin delete

6(c)

end delete

7begin insert(2)end insert The address or other precise location of the real property.

begin delete

8(d)

end delete

9begin insert(c)end insert A statementbegin delete whetherend deletebegin insert indicating which of the following
10representsend insert
the fair market value of the begin delete investment or interest in
11real property equals or exceeds two thousand dollars ($2,000) but
12does not exceed ten thousand dollars ($10,000), whether it exceeds
13ten thousand dollars ($10,000) but does not exceed one hundred
14thousand dollars ($100,000), whether it exceeds one hundred
15thousand dollars ($100,000) but does not exceed one million dollars
16($1,000,000), or whether it exceeds one million dollars
17($1,000,000).end delete
begin insert investment:end insert

begin insert

18(1) At least five thousand dollars ($5,000) but not greater than
19ten thousand dollars ($10,000).

end insert
begin insert

20(2) Greater than ten thousand dollars ($10,000) but not greater
21than fifty thousand dollars ($50,000).

end insert
begin insert

22(3) Greater than fifty thousand dollars ($50,000) but not greater
23than one hundred thousand dollars ($100,000).

end insert
begin insert

24(4) Greater than one hundred thousand dollars ($100,000) but
25not greater than two hundred fifty thousand dollars ($250,000).

end insert
begin insert

26(5) Greater than two hundred fifty thousand dollars ($250,000)
27but not greater than five hundred thousand dollars ($500,000).

end insert
begin insert

28(6) Greater than five hundred thousand dollars ($500,000) but
29not greater than one million dollars ($1,000,000).

end insert
begin insert

30(7) Greater than one million dollars ($1,000,000) but not greater
31than two million dollars ($2,000,000).

end insert
begin insert

32(8) Greater than two million dollars ($2,000,000).

end insert
begin delete

33(e)

end delete

34begin insert(d)end insert In the case of a statement filed underbegin delete Sectionsend deletebegin insert Sectionend insert 87203
35or 87204, if the investmentbegin delete or interest in real propertyend delete was partially
36or wholly acquired or disposed of during the period covered by
37the statement, the date of acquisition or disposal.

begin delete

38(f) For purposes of disclosure under this article, “interest in real
39property” does not include the principal residence of the filer or
P6    1any other property that the filer utilizes exclusively as the personal
2residence of the filer.

end delete
3begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 87206.5 is added to the end insertbegin insertGovernment Codeend insertbegin insert, to
4read:end insert

begin insert
5

begin insert87206.5.end insert  

(a) If an interest in real property is required to be
6disclosed under this article, the statement shall contain all of the
7following:

8(1) A statement of the nature of the interest.

9(2) The address or other precise location of the real property.

10(3) A statement indicating which of the following represents the
11fair market value of the interest in real property:

12(A) At least ten thousand dollars ($10,000) but not greater than
13one hundred thousand dollars ($100,000).

14(B) Greater than one hundred thousand dollars ($100,000) but
15not greater than two hundred fifty thousand dollars ($250,000).

16(C) Greater than two hundred fifty thousand dollars ($250,000)
17but not greater than five hundred thousand dollars ($500,000).

18(D) Greater than five hundred thousand dollars ($500,000) but
19not greater than seven hundred fifty thousand dollars ($750,000).

20(E) Greater than seven hundred fifty thousand dollars
21($750,000) but not greater than one million dollars ($1,000,000).

22(F) Greater than one million dollars ($1,000,000) but not
23greater than two million dollars ($2,000,000).

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

25(4) In the case of a statement filed under Section 87203 or
2687204, if the interest in real property was partially or wholly
27acquired or disposed of during the period covered by the statement,
28the date of acquisition or disposal.

29(b) For purposes of disclosure under this article, “interest in
30real property” does not include the principal residence of the filer
31or any other property that the filer uses exclusively as the personal
32residence of the filer.

end insert
33begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 87207 of the end insertbegin insertGovernment Codeend insertbegin insert is amended to
34read:end insert

35

87207.  

(a) begin deleteIf end deletebegin insertExcept as provided in subdivision (b), if end insertincome
36is required to be reported under this article, the statement shall
37begin delete contain, except as provided in subdivision (b):end deletebegin insert contain all of the
38following:end insert

39(1) The name and address of each source of income aggregating
40begin delete five hundredend deletebegin insert one thousandend insert dollarsbegin delete ($500)end deletebegin insert ($1,000)end insert or more in
P7    1value, or fifty dollars ($50) or more in value if the income was a
2gift, and a general description of the business activity, if any, of
3each source.

4(2) A statementbegin delete whetherend deletebegin insert indicating which of the following
5representsend insert
the aggregate value of income from each source, or in
6the case of a loan, the highest amount owed to eachbegin delete source, was
7at least five hundred dollars ($500) but did not exceed one thousand
8dollars ($1,000), whether it was in excess of one thousand dollars
9($1,000) but was not greater than ten thousand dollars ($10,000),
10whether it was greater than ten thousand dollars ($10,000) but not
11greater than one hundred thousand dollars ($100,000), or whether
12it was greater than one hundred thousand dollars ($100,000).end delete

13begin insert source:end insert

begin insert

14(A) At least one thousand dollars ($1,000) but not greater than
15ten thousand dollars ($10,000).

end insert
begin insert

16(B) Greater than ten thousand dollars ($10,000) but not greater
17than fifty thousand dollars ($50,000).

end insert
begin insert

18(C) Greater than fifty thousand dollars ($50,000) but not greater
19than one hundred thousand dollars ($100,000).

end insert
begin insert

20(D) Greater than one hundred thousand dollars ($100,000) but
21not greater than two hundred fifty thousand dollars ($250,000).

end insert
begin insert

22(E) Greater than two hundred fifty thousand dollars ($250,000)
23but not greater than five hundred thousand dollars ($500,000).

end insert
begin insert

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

end insert

25(3) A description of the consideration, if any, for which the
26income was received.

27(4) In the case of a gift, the amount and the date on which the
28gift was received, and the travel destination for purposes of a gift
29that is a travel payment, advance, or reimbursement.

30(5) In the case of a loan, the annual interest rate, the security,
31if any, given for the loan, and the term of the loan.

32(b) begin deleteIf end deletebegin insertWhen end insertthe filer’s pro rata share of income to a business
33entity, including income to a sole proprietorship, is required to be
34reported under this article, the statement shall contain:

35(1) The name, address, and a general description of the business
36activity of the business entity.

37(2) The name of every person from whom the business entity
38received payments if the filer’s pro rata share of gross receipts
39from that person was equal to or greater than ten thousand dollars
40($10,000) during a calendar year.

P8    1(c) begin deleteIf end deletebegin insertWhen end inserta payment, including an advance or reimbursement,
2for travel is required to be reported pursuant to this section, it may
3be reported on a separate travel reimbursementbegin delete scheduleend deletebegin insert schedule,end insert
4 which shall be included in the filer’s statement of economic
5begin delete interest.end deletebegin insert interests.end insert A filer who chooses not to use the travel schedule
6shall disclose payments for travel as a gift, unless it is clear from
7all surrounding circumstances that the services provided were
8equal to or greater in value than the payments for the travel, in
9which case the travel may be reported as income.

10begin insert

begin insertSEC. 7.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
11Section 6 of Article XIII B of the California Constitution because
12the only costs that may be incurred by a local agency or school
13district will be incurred because this act creates a new crime or
14infraction, eliminates a crime or infraction, or changes the penalty
15for a crime or infraction, within the meaning of Section 17556 of
16the Government Code, or changes the definition of a crime within
17the meaning of Section 6 of Article XIII B of the California
18Constitution.

end insert
19begin insert

begin insertSEC. 8.end insert  

end insert
begin insert

The Legislature finds and declares that this bill furthers
20the purposes of the Political Reform Act of 1974 within the meaning
21of subdivision (a) of Section 81012 of the Government Code.

end insert


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