Amended in Senate June 1, 2015

Senate BillNo. 330


Introduced by Senator Mendoza

February 23, 2015


An act to amend, repeal, and add Section 1091.5 of, and to add Section 1091.7 to, the Government Code, relating to public officers.

LEGISLATIVE COUNSEL’S DIGEST

SB 330, as amended, Mendoza. Public officers: contracts: financial interest.

(1) Existing law prohibits Members of the Legislature, and state, county, district, judicial district, and city officers or employees from being financially interested in a contract, as specified, made by them in their official capacity or by any body or board of which they are members, subject to specified exceptions.

This bill would, on and after January 1, 2017,begin delete and notwithstanding any other law,end delete expand these prohibitions to deem that a publicbegin delete officerend deletebegin insert officer, as specified,end insert who is an elected member of any state or local body, board, or commission has a prohibited financial interest in a contract pursuant to these provisions, if that public officer’s spouse, child, parent, sibling, or the spouse of the child, parent, or sibling has a financial interest in any contract made by that public officer in his or her official capacity, or by any body, board, or commission of which that public officer is a member.

(2) Existing law imposes a criminal penalty for every officer or person who willfully violates the prohibitions against making or being financially interested in contracts, as specified.

By expanding these prohibitions, this bill would create a new crime, and thus, 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.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

P2    1

SECTION 1.  

Section 1091.5 of the Government Code is
2amended to read:

3

1091.5.  

(a) An officer or employee shall not be deemed to be
4interested in a contract if his or her interest is any of the following:

5(1) The ownership of less than 3 percent of the shares of a
6corporation for profit, provided that the total annual income to him
7or her from dividends, including the value of stock dividends, from
8the corporation does not exceed 5 percent of his or her total annual
9income, and any other payments made to him or her by the
10corporation do not exceed 5 percent of his or her total annual
11income.

12(2) That of an officer in being reimbursed for his or her actual
13and necessary expenses incurred in the performance of official
14duties.

15(3) That of a recipient of public services generally provided by
16the public body or board of which he or she is a member, on the
17same terms and conditions as if he or she were not a member of
18the body or board.

19(4) That of a landlord or tenant of the contracting party if the
20contracting party is the federal government or any federal
21department or agency, this state or an adjoining state, any
22department or agency of this state or an adjoining state, any county
23or city of this state or an adjoining state, or any public corporation
24or special, judicial, or other public district of this state or an
25adjoining state unless the subject matter of the contract is the
26property in which the officer or employee has the interest as
27landlord or tenant in which event his or her interest shall be deemed
28a remote interest within the meaning of, and subject to, the
29provisions of Section 1091.

P3    1(5) That of a tenant in a public housing authority created
2pursuant to Part 2 (commencing with Section 34200) of Division
324 of the Health and Safety Code in which he or she serves as a
4member of the board of commissioners of the authority or of a
5community development commission created pursuant to Part 1.7
6(commencing with Section 34100) of Division 24 of the Health
7and Safety Code.

8(6) That of a spouse of an officer or employee of a public agency
9in his or her spouse’s employment or officeholding if his or her
10spouse’s employment or officeholding has existed for at least one
11year prior to his or her election or appointment.

12(7) That of a nonsalaried member of a nonprofit corporation,
13provided that this interest is disclosed to the body or board at the
14time of the first consideration of the contract, and provided further
15 that this interest is noted in its official records.

16(8) That of a noncompensated officer of a nonprofit, tax-exempt
17corporation, which, as one of its primary purposes, supports the
18functions of the body or board or to which the body or board has
19a legal obligation to give particular consideration, and provided
20further that this interest is noted in its official records.

21For purposes of this paragraph, an officer is “noncompensated”
22even though he or she receives reimbursement from the nonprofit,
23tax-exempt corporation for necessary travel and other actual
24expenses incurred in performing the duties of his or her office.

25(9) That of a person receiving salary, per diem, or reimbursement
26for expenses from a government entity, unless the contract directly
27involves the department of the government entity that employs the
28officer or employee, provided that the interest is disclosed to the
29body or board at the time of consideration of the contract, and
30provided further that the interest is noted in its official record.

31(10) That of an attorney of the contracting party or that of an
32owner, officer, employee, or agent of a firm which renders, or has
33rendered, service to the contracting party in the capacity of
34stockbroker, insurance agent, insurance broker, real estate agent,
35or real estate broker, if these individuals have not received and
36will not receive remuneration, consideration, or a commission as
37a result of the contract and if these individuals have an ownership
38interest of less than 10 percent in the law practice or firm, stock
39brokerage firm, insurance firm, or real estate firm.

P4    1(11) Except as provided in subdivision (b), that of an officer or
2employee of, or a person having less than a 10-percent ownership
3 interest in, a bank, bank holding company, or savings and loan
4association with which a party to the contract has a relationship
5of borrower, depositor, debtor, or creditor.

6(12) That of (A) a bona fide nonprofit, tax-exempt corporation
7having among its primary purposes the conservation, preservation,
8or restoration of park and natural lands or historical resources for
9public benefit, which corporation enters into an agreement with a
10public agency to provide services related to park and natural lands
11or historical resources and which services are found by the public
12agency, prior to entering into the agreement or as part of the
13agreement, to be necessary to the public interest to plan for,
14acquire, protect, conserve, improve, or restore park and natural
15lands or historical resources for public purposes and (B) any officer,
16director, or employee acting pursuant to the agreement on behalf
17of the nonprofit corporation. For purposes of this paragraph,
18“agreement” includes contracts and grants, and “park,” “natural
19lands,” and “historical resources” shall have the meanings set forth
20in subdivisions (d), (g), and (i) of Section 5902 of the Public
21Resources Code. Services to be provided to the public agency may
22include those studies and related services, acquisitions of property
23and property interests, and any activities related to those studies
24and acquisitions necessary for the conservation, preservation,
25improvement, or restoration of park and natural lands or historical
26resources.

27(13) That of an officer, employee, or member of the Board of
28Directors of the California Housing Finance Agency with respect
29to a loan product or programs if the officer, employee, or member
30participated in the planning, discussions, development, or approval
31of the loan product or program and both of the following two
32conditions exist:

33(A) The loan product or program is or may be originated by any
34lender approved by the agency.

35(B) The loan product or program is generally available to
36qualifying borrowers on terms and conditions that are substantially
37the same for all qualifying borrowers at the time the loan is made.

38(14) That of a party to a contract for public services entered into
39by a special district that requires a person to be a landowner or a
40representative of a landowner to serve on the board of which the
P5    1officer or employee is a member, on the same terms and conditions
2as if he or she were not a member of the body or board. For
3purposes of this paragraph, “public services” includes the powers
4and purposes generally provided pursuant to provisions of the
5Water Code relating to irrigation districts, California water districts,
6water storage districts, or reclamation districts.

7(b) An officer or employee shall not be deemed to be interested
8in a contract made pursuant to competitive bidding under a
9procedure established by law if his or her sole interest is that of
10an officer, director, or employee of a bank or savings and loan
11association with which a party to the contract has the relationship
12of borrower or depositor, debtor or creditor.

13(c) This section shall be repealed on January 1, 2017.

14

SEC. 2.  

Section 1091.5 is added to the Government Code, to
15read:

16

1091.5.  

(a) An officer or employee shall not be deemed to be
17interested in a contract if his or her interest is any of the following:

18(1) The ownership of less than 3 percent of the shares of a
19corporation for profit, provided that the total annual income to him
20or her from dividends, including the value of stock dividends, from
21the corporation does not exceed 5 percent of his or her total annual
22income, and any other payments made to him or her by the
23corporation do not exceed 5 percent of his or her total annual
24income.

25(2) That of an officer in being reimbursed for his or her actual
26and necessary expenses incurred in the performance of official
27duties.

28(3) That of a recipient of public services generally provided by
29the public body or board of which he or she is a member, on the
30same terms and conditions as if he or she were not a member of
31the body or board.

32(4) That of a landlord or tenant of the contracting party if the
33contracting party is the federal government or any federal
34department or agency, this state or an adjoining state, any
35department or agency of this state or an adjoining state, any county
36or city of this state or an adjoining state, or any public corporation
37or special, judicial, or other public district of this state or an
38adjoining state unless the subject matter of the contract is the
39property in which the officer or employee has the interest as
40landlord or tenant in which event his or her interest shall be deemed
P6    1a remote interest within the meaning of, and subject to, the
2provisions of Section 1091.

3(5) That of a tenant in a public housing authority created
4pursuant to Part 2 (commencing with Section 34200) of Division
524 of the Health and Safety Code in which he or she serves as a
6member of the board of commissioners of the authority or of a
7community development commission created pursuant to Part 1.7
8(commencing with Section 34100) of Division 24 of the Health
9and Safety Code.

10(6) Except as provided in Section 1091.7, that of a spouse of an
11officer or employee of a public agency in his or her spouse’s
12employment or officeholding if his or her spouse’s employment
13or officeholding has existed for at least one year prior to his or her
14election or appointment.

15(7) That of a nonsalaried member of a nonprofit corporation,
16provided that this interest is disclosed to the body or board at the
17time of the first consideration of the contract, and provided further
18that this interest is noted in its official records.

19(8) That of a noncompensated officer of a nonprofit, tax-exempt
20corporation, which, as one of its primary purposes, supports the
21functions of the body or board or to which the body or board has
22a legal obligation to give particular consideration, and provided
23further that this interest is noted in its official records.

24For purposes of this paragraph, an officer is “noncompensated”
25even though he or she receives reimbursement from the nonprofit,
26tax-exempt corporation for necessary travel and other actual
27expenses incurred in performing the duties of his or her office.

28(9) That of a person receiving salary, per diem, or reimbursement
29for expenses from a government entity, unless the contract directly
30involves the department of the government entity that employs the
31officer or employee, provided that the interest is disclosed to the
32body or board at the time of consideration of the contract, and
33provided further that the interest is noted in its official record.

34(10) That of an attorney of the contracting party or that of an
35owner, officer, employee, or agent of a firm which renders, or has
36rendered, service to the contracting party in the capacity of
37stockbroker, insurance agent, insurance broker, real estate agent,
38or real estate broker, if these individuals have not received and
39will not receive remuneration, consideration, or a commission as
40a result of the contract and if these individuals have an ownership
P7    1interest of less than 10 percent in the law practice or firm, stock
2brokerage firm, insurance firm, or real estate firm.

3(11) Except as provided in subdivision (b), that of an officer or
4employee of, or a person having less than a 10-percent ownership
5interest in, a bank, bank holding company, or savings and loan
6association with which a party to the contract has a relationship
7of borrower, depositor, debtor, or creditor.

8(12) That of (A) a bona fide nonprofit, tax-exempt corporation
9having among its primary purposes the conservation, preservation,
10or restoration of park and natural lands or historical resources for
11public benefit, which corporation enters into an agreement with a
12public agency to provide services related to park and natural lands
13or historical resources and which services are found by the public
14agency, prior to entering into the agreement or as part of the
15agreement, to be necessary to the public interest to plan for,
16acquire, protect, conserve, improve, or restore park and natural
17lands or historical resources for public purposes and (B) any officer,
18director, or employee acting pursuant to the agreement on behalf
19of the nonprofit corporation. For purposes of this paragraph,
20“agreement” includes contracts and grants, and “park,” “natural
21lands,” and “historical resources” shall have the meanings set forth
22in subdivisions (d), (g), and (i) of Section 5902 of the Public
23Resources Code. Services to be provided to the public agency may
24include those studies and related services, acquisitions of property
25and property interests, and any activities related to those studies
26and acquisitions necessary for the conservation, preservation,
27improvement, or restoration of park and natural lands or historical
28resources.

29(13) That of an officer, employee, or member of the Board of
30Directors of the California Housing Finance Agency with respect
31to a loan product or programs if the officer, employee, or member
32participated in the planning, discussions, development, or approval
33of the loan product or program and both of the following two
34conditions exist:

35(A) The loan product or program is or may be originated by any
36lender approved by the agency.

37(B) The loan product or program is generally available to
38qualifying borrowers on terms and conditions that are substantially
39the same for all qualifying borrowers at the time the loan is made.

P8    1(14) That of a party to a contract for public services entered into
2by a special district that requires a person to be a landowner or a
3representative of a landowner to serve on the board of which the
4officer or employee is a member, on the same terms and conditions
5as if he or she were not a member of the body or board. For
6purposes of this paragraph, “public services” includes the powers
7and purposes generally provided pursuant to provisions of the
8Water Code relating to irrigation districts, California water districts,
9water storage districts, or reclamation districts.

10(b) An officer or employee shall not be deemed to be interested
11in a contract made pursuant to competitive bidding under a
12procedure established by law if his or her sole interest is that of
13an officer, director, or employee of a bank or savings and loan
14association with which a party to the contract has the relationship
15of borrower or depositor, debtor or creditor.

16(c) This section shall become operative on January 1, 2017.

17

SEC. 3.  

Section 1091.7 is added to the Government Code, to
18read:

19

1091.7.  

(a) begin deleteNotwithstanding any other law, end deletebegin insertSubject to the
20provisions of this article, end insert
a public officer who is an elected member
21of any state or local body, board, or commission shall be deemed
22to have a financial interest in a contract pursuant to this article, if
23that public officer’s spouse, child, parent, sibling, or the spouse
24of the child, parent, or sibling has a financial interest in any contract
25made by that public officer in his or her official capacity, or by
26any body, board, or commission of which that public officer is a
27member.

28(b) (1) The determination of a financial interest with respect to
29any person described in this section shall be made according to
30the same standards as those set forth in this article with respect to
31the public officer, as applicable.

32(2) For purposes of determining a financial interest pursuant to
33this section, an individual lobbying on behalf of a contracting party
34shall be construed to be an agent of that contracting party.

begin insert

35(c) For purposes of this section, only a member of the governing
36entity deemed to have a financial interest pursuant to subdivision
37(a) shall be subject to the prohibition and enforcement of this
38article.

end insert
begin delete

39(c)

end delete

40begin insert(d)end insert This section shall become operative on January 1, 2017.

P9    1

SEC. 4.  

No reimbursement is required by this act pursuant to
2Section 6 of Article XIII B of the California Constitution because
3the only costs that may be incurred by a local agency or school
4district will be incurred because this act creates a new crime or
5infraction, eliminates a crime or infraction, or changes the penalty
6for a crime or infraction, within the meaning of Section 17556 of
7the Government Code, or changes the definition of a crime within
8the meaning of Section 6 of Article XIII B of the California
9Constitution.



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