Amended in Assembly July 7, 2015

Amended in Senate June 1, 2015

Senate BillNo. 330


Introduced by Senator Mendoza

February 23, 2015


An act to amend, repeal, and add Sectionbegin delete 1091.5end deletebegin delete of, and to add Section 1091.7 to,end deletebegin insert 1091 ofend insert 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.begin insert Existing law identifies certain remote interests that are not subject to this prohibition and other situations in which an official is not deemed to be financially interested in a contract, including, among others, that of a parent in the earnings of his or her minor child for personal services. Existing law makes a willful violation of this prohibition a crime. end insert

This bill would, on and after January 1, 2017, begin deleteexpand these prohibitions to deem that a public officer, as specified, 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 memberend deletebegin insert instead include within the definition of remote interests that of end insertbegin inserta public officer who is an elected member of any state or local body, board, or commission, 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 memberend insert.

(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    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 1091 of the end insertbegin insertGovernment Codeend insertbegin insert is amended
2to read:end insert

3

1091.  

(a) An officer shall not be deemed to be interested in a
4contract entered into by a body or board of which the officer is a
5member within the meaning of this article if the officer has only
6a remote interest in the contract and if the fact of that interest is
7disclosed to the body or board of which the officer is a member
8and noted in its official records, and thereafter the body or board
9authorizes, approves, or ratifies the contract in good faith by a vote
10of its membership sufficient for the purpose without counting the
11vote or votes of the officer or member with the remote interest.

12(b) As used in this article, “remote interest” means any of the
13following:

14(1) That of an officer or employee of a nonprofit entity exempt
15from taxation pursuant to Section 501(c)(3) of the Internal Revenue
16Code (26 U.S.C. Sec. 501(c)(3)), pursuant to Section 501(c)(5) of
17the Internal Revenue Code (26 U.S.C. Sec. 501(c)(5)), or a
P3    1nonprofit corporation, except as provided in paragraph (8) of
2subdivision (a) of Section 1091.5.

3(2) That of an employee or agent of the contracting party, if the
4contracting party has 10 or more other employees and if the officer
5was an employee or agent of that contracting party for at least three
6years prior to the officer initially accepting his or her office and
7the officer owns less than 3 percent of the shares of stock of the
8contracting party; and the employee or agent is not an officer or
9director of the contracting party and did not directly participate in
10formulating the bid of the contracting party.

11For purposes of this paragraph, time of employment with the
12contracting party by the officer shall be counted in computing the
13three-year period specified in this paragraph even though the
14contracting party has been converted from one form of business
15organization to a different form of business organization within
16three years of the initial taking of office by the officer. Time of
17employment in that case shall be counted only if, after the transfer
18or change in organization, the real or ultimate ownership of the
19contracting party is the same or substantially similar to that which
20existed before the transfer or change in organization. For purposes
21of this paragraph, stockholders, bondholders, partners, or other
22persons holding an interest in the contracting party are regarded
23as having the “real or ultimate ownership” of the contracting party.

24(3) That of an employee or agent of the contracting party, if all
25of the following conditions are met:

26(A) The agency of which the person is an officer is a local public
27agency located in a county with a population of less than 4,000,000.

28(B) The contract is competitively bid and is not for personal
29services.

30(C) The employee or agent is not in a primary management
31capacity with the contracting party, is not an officer or director of
32the contracting party, and holds no ownership interest in the
33contracting party.

34(D) The contracting party has 10 or more other employees.

35(E) The employee or agent did not directly participate in
36formulating the bid of the contracting party.

37(F) The contracting party is the lowest responsible bidder.

38(4) That of a parent in the earnings of his or her minor child for
39personal services.

40(5) That of a landlord or tenant of the contracting party.

P4    1(6) That of an attorney of the contracting party or that of an
2owner, officer, employee, or agent of a firm that renders, or has
3rendered, service to the contracting party in the capacity of
4stockbroker, insurance agent, insurance broker, real estate agent,
5or real estate broker, if these individuals have not received and
6will not receive remuneration, consideration, or a commission as
7a result of the contract and if these individuals have an ownership
8interest of 10 percent or more in the law practice or firm, stock
9brokerage firm, insurance firm, or real estate firm.

10(7) That of a member of a nonprofit corporation formed under
11the Food and Agricultural Code or a nonprofit corporation formed
12under the Corporations Code for the sole purpose of engaging in
13the merchandising of agricultural products or the supplying of
14water.

15(8) That of a supplier of goods or services when those goods or
16services have been supplied to the contracting party by the officer
17for at least five years prior to his or her election or appointment
18to office.

19(9) That of a person subject to the provisions of Section 1090
20in any contract or agreement entered into pursuant to the provisions
21of the California Land Conservation Act of 1965.

22(10) Except as provided in subdivision (b) of Section 1091.5,
23that of a director of, or a person having an ownership interest of,
2410 percent or more in a bank, bank holding company, or savings
25and loan association with which a party to the contract has a
26relationship of borrower or depositor, debtor or creditor.

27(11) That of an engineer, geologist, or architect employed by a
28consulting engineering or architectural firm. This paragraph applies
29only to an employee of a consulting firm who does not serve in a
30primary management capacity, and does not apply to an officer or
31director of a consulting firm.

32(12) That of an elected officer otherwise subject to Section 1090,
33in any housing assistance payment contract entered into pursuant
34to Section 8 of the United States Housing Act of 1937 (42 U.S.C.
35Sec. 1437f) as amended, provided that the housing assistance
36payment contract was in existence before Section 1090 became
37applicable to the officer and will be renewed or extended only as
38to the existing tenant, or, in a jurisdiction in which the rental
39vacancy rate is less than 5 percent, as to new tenants in a unit
P5    1previously under a Section 8 contract. This section applies to any
2person who became a public official on or after November 1, 1986.

3(13) That of a person receiving salary, per diem, or
4reimbursement for expenses from a government entity.

5(14) That of a person owning less than 3 percent of the shares
6of a contracting party that is a for-profit corporation, provided that
7the ownership of the shares derived from the person’s employment
8with that corporation.

9(15) That of a party to litigation involving the body or board of
10which the officer is a member in connection with an agreement in
11which all of the following apply:

12(A) The agreement is entered into as part of a settlement of
13litigation in which the body or board is represented by legal
14counsel.

15(B) After a review of the merits of the agreement and other
16relevant facts and circumstances, a court of competent jurisdiction
17finds that the agreement serves the public interest.

18(C) The interested member has recused himself or herself from
19all participation, direct or indirect, in the making of the agreement
20on behalf of the body or board.

21(16) That of a person who is an officer or employee of an
22investor-owned utility that is regulated by the Public Utilities
23Commission with respect to a contract between the investor-owned
24utility and a state, county, district, judicial district, or city body or
25board of which the person is a member, if the contract requires the
26investor-owned utility to provide energy efficiency rebates or other
27type of program to encourage energy efficiency that benefits the
28public when all of the following apply:

29(A) The contract is funded by utility consumers pursuant to
30regulations of the Public Utilities Commission.

31(B) The contract provides no individual benefit to the person
32that is not also provided to the public, and the investor-owned
33utility receives no direct financial profit from the contract.

34(C) The person has recused himself or herself from all
35participation in making the contract on behalf of the state, county,
36district, judicial district, or city body or board of which he or she
37is a member.

38(D) The contract implements a program authorized by the Public
39Utilities Commission.

P6    1(c) This section is not applicable to any officer interested in a
2contract who influences or attempts to influence another member
3of the body or board of which he or she is a member to enter into
4the contract.

5(d) The willful failure of an officer to disclose the fact of his or
6her interest in a contract pursuant to this section is punishable as
7provided in Section 1097. That violation does not void the contract
8unless the contracting party had knowledge of the fact of the remote
9interest of the officer at the time the contract was executed.

begin insert

10(e) This section shall be repealed on January 1, 2017.

end insert
11begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 1091 is added to the end insertbegin insertGovernment Codeend insertbegin insert, to
12read:end insert

13begin insert

begin insert1091.end insert  

end insert
begin insert

(a) An officer shall not be deemed to be interested in a
14contract entered into by a body or board of which the officer is a
15member within the meaning of this article if the officer has only a
16remote interest in the contract and if the fact of that interest is
17disclosed to the body or board of which the officer is a member
18and noted in its official records, and thereafter the body or board
19authorizes, approves, or ratifies the contract in good faith by a
20vote of its membership sufficient for the purpose without counting
21the vote or votes of the officer or member with the remote interest.

end insert
begin insert

22(b) As used in this article, “remote interest” means any of the
23following:

end insert
begin insert

24(1) That of an officer or employee of a nonprofit entity exempt
25from taxation pursuant to Section 501(c)(3) of the Internal Revenue
26Code (26 U.S.C. Sec. 501(c)(3)), pursuant to Section 501(c)(5) of
27the Internal Revenue Code (26 U.S.C. Sec. 501(c)(5)), or a
28nonprofit corporation, except as provided in paragraph (8) of
29subdivision (a) of Section 1091.5.

end insert
begin insert

30(2) That of an employee or agent of the contracting party, if the
31contracting party has 10 or more other employees and if the officer
32was an employee or agent of that contracting party for at least
33three years prior to the officer initially accepting his or her office
34and the officer owns less than 3 percent of the shares of stock of
35the contracting party; and the employee or agent is not an officer
36 or director of the contracting party and did not directly participate
37in formulating the bid of the contracting party.

end insert
begin insert

38For purposes of this paragraph, time of employment with the
39contracting party by the officer shall be counted in computing the
40three-year period specified in this paragraph even though the
P7    1contracting party has been converted from one form of business
2organization to a different form of business organization within
3three years of the initial taking of office by the officer. Time of
4employment in that case shall be counted only if, after the transfer
5or change in organization, the real or ultimate ownership of the
6contracting party is the same or substantially similar to that which
7existed before the transfer or change in organization. For purposes
8of this paragraph, stockholders, bondholders, partners, or other
9persons holding an interest in the contracting party are regarded
10as having the “real or ultimate ownership” of the contracting
11party.

end insert
begin insert

12(3) That of an employee or agent of the contracting party, if all
13of the following conditions are met:

end insert
begin insert

14(A) The agency of which the person is an officer is a local public
15agency located in a county with a population of less than
164,000,000.

end insert
begin insert

17(B) The contract is competitively bid and is not for personal
18services.

end insert
begin insert

19(C) The employee or agent is not in a primary management
20capacity with the contracting party, is not an officer or director
21of the contracting party, and holds no ownership interest in the
22contracting party.

end insert
begin insert

23(D) The contracting party has 10 or more other employees.

end insert
begin insert

24(E) The employee or agent did not directly participate in
25 formulating the bid of the contracting party.

end insert
begin insert

26(F) The contracting party is the lowest responsible bidder.

end insert
begin insert

27(4) That of a public officer who is an elected member of any
28state or local body, board, or commission, if that public officer’s
29spouse, child, parent, sibling, or the spouse of the child, parent,
30or sibling, has a financial interest in any contract made by that
31public officer in his or her official capacity, or by any body, board,
32or commission of which that public officer is a member.

end insert
begin insert

33(5) That of a landlord or tenant of the contracting party.

end insert
begin insert

34(6) That of an attorney of the contracting party or that of an
35owner, officer, employee, or agent of a firm that 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
P8    1interest of 10 percent or more in the law practice or firm, stock
2brokerage firm, insurance firm, or real estate firm.

end insert
begin insert

3(7) That of a member of a nonprofit corporation formed under
4the Food and Agricultural Code or a nonprofit corporation formed
5under the Corporations Code for the sole purpose of engaging in
6the merchandising of agricultural products or the supplying of
7water.

end insert
begin insert

8(8) That of a supplier of goods or services when those goods or
9services have been supplied to the contracting party by the officer
10for at least five years prior to his or her election or appointment
11to office.

end insert
begin insert

12(9) That of a person subject to the provisions of Section 1090
13in any contract or agreement entered into pursuant to the
14provisions of the California Land Conservation Act of 1965.

end insert
begin insert

15(10) Except as provided in subdivision (b) of Section 1091.5,
16that of a director of, or a person having an ownership interest of,
1710 percent or more in a bank, bank holding company, or savings
18and loan association with which a party to the contract has a
19relationship of borrower or depositor, debtor or creditor.

end insert
begin insert

20(11) That of an engineer, geologist, or architect employed by a
21consulting engineering or architectural firm. This paragraph
22applies only to an employee of a consulting firm who does not
23serve in a primary management capacity, and does not apply to
24an officer or director of a consulting firm.

end insert
begin insert

25(12) That of an elected officer otherwise subject to Section 1090,
26in any housing assistance payment contract entered into pursuant
27to Section 8 of the United States Housing Act of 1937 (42 U.S.C.
28Sec. 1437f) as amended, provided that the housing assistance
29payment contract was in existence before Section 1090 became
30applicable to the officer and will be renewed or extended only as
31to the existing tenant, or, in a jurisdiction in which the rental
32vacancy rate is less than 5 percent, as to new tenants in a unit
33previously under a Section 8 contract. This section applies to any
34person who became a public official on or after November 1, 1986.

end insert
begin insert

35(13) That of a person receiving salary, per diem, or
36reimbursement for expenses from a government entity.

end insert
begin insert

37(14) That of a person owning less than 3 percent of the shares
38of a contracting party that is a for-profit corporation, provided
39that the ownership of the shares derived from the person’s
40employment with that corporation.

end insert
begin insert

P9    1(15) That of a party to litigation involving the body or board of
2which the officer is a member in connection with an agreement in
3which all of the following apply:

end insert
begin insert

4(A) The agreement is entered into as part of a settlement of
5litigation in which the body or board is represented by legal
6counsel.

end insert
begin insert

7(B) After a review of the merits of the agreement and other
8relevant facts and circumstances, a court of competent jurisdiction
9finds that the agreement serves the public interest.

end insert
begin insert

10(C) The interested member has recused himself or herself from
11all participation, direct or indirect, in the making of the agreement
12on behalf of the body or board.

end insert
begin insert

13(16) That of a person who is an officer or employee of an
14investor-owned utility that is regulated by the Public Utilities
15Commission with respect to a contract between the investor-owned
16utility and a state, county, district, judicial district, or city body
17or board of which the person is a member, if the contract requires
18the investor-owned utility to provide energy efficiency rebates or
19other type of program to encourage energy efficiency that benefits
20the public when all of the following apply:

end insert
begin insert

21(A) The contract is funded by utility consumers pursuant to
22regulations of the Public Utilities Commission.

end insert
begin insert

23(B) The contract provides no individual benefit to the person
24that is not also provided to the public, and the investor-owned
25utility receives no direct financial profit from the contract.

end insert
begin insert

26(C) The person has recused himself or herself from all
27participation in making the contract on behalf of the state, county,
28district, judicial district, or city body or board of which he or she
29is a member.

end insert
begin insert

30(D) The contract implements a program authorized by the Public
31Utilities Commission.

end insert
begin insert

32(c) This section is not applicable to any officer interested in a
33contract who influences or attempts to influence another member
34of the body or board of which he or she is a member to enter into
35the contract.

end insert
begin insert

36(d) The willful failure of an officer to disclose the fact of his or
37her interest in a contract pursuant to this section is punishable as
38provided in Section 1097. That violation does not void the contract
39unless the contracting party had knowledge of the fact of the remote
40interest of the officer at the time the contract was executed.

end insert
begin insert

P10   1(e) This section shall become operative on January 1, 2017.

end insert
2begin insert

begin insertSEC. 3.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
3Section 6 of Article XIII B of the California Constitution because
4the only costs that may be incurred by a local agency or school
5district will be incurred because this act creates a new crime or
6infraction, eliminates a crime or infraction, or changes the penalty
7for a crime or infraction, within the meaning of Section 17556 of
8the Government Code, or changes the definition of a crime within
9the meaning of Section 6 of Article XIII B of the California
10Constitution.

end insert
begin delete
11

SECTION 1.  

Section 1091.5 of the Government Code is
12amended to read:

13

1091.5.  

(a) An officer or employee shall not be deemed to be
14interested in a contract if his or her interest is any of the following:

15(1) The ownership of less than 3 percent of the shares of a
16corporation for profit, provided that the total annual income to him
17or her from dividends, including the value of stock dividends, from
18the corporation does not exceed 5 percent of his or her total annual
19income, and any other payments made to him or her by the
20corporation do not exceed 5 percent of his or her total annual
21income.

22(2) That of an officer in being reimbursed for his or her actual
23and necessary expenses incurred in the performance of official
24duties.

25(3) That of a recipient of public services generally provided by
26the public body or board of which he or she is a member, on the
27same terms and conditions as if he or she were not a member of
28the body or board.

29(4) That of a landlord or tenant of the contracting party if the
30contracting party is the federal government or any federal
31department or agency, this state or an adjoining state, any
32department or agency of this state or an adjoining state, any county
33or city of this state or an adjoining state, or any public corporation
34or special, judicial, or other public district of this state or an
35adjoining state unless the subject matter of the contract is the
36property in which the officer or employee has the interest as
37landlord or tenant in which event his or her interest shall be deemed
38a remote interest within the meaning of, and subject to, the
39provisions of Section 1091.

P11   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.

P12   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
37 the 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
P13   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
P14   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
P15   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.

P16   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) Subject to the provisions of this article, a public
20officer who is an elected member of any state or local body, board,
21or commission shall be deemed to have a financial interest in a
22contract pursuant to this article, if that public officer’s spouse,
23child, parent, sibling, or the spouse of the child, parent, or sibling
24has a financial interest in any contract made by that public officer
25in his or her official capacity, or by any body, board, or commission
26of which that public officer is a member.

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

31(2) For purposes of determining a financial interest pursuant to
32this section, an individual lobbying on behalf of a contracting party
33shall be construed to be an agent of that contracting party.

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

38(d) This section shall become operative on January 1, 2017.

39

SEC. 4.  

No reimbursement is required by this act pursuant to
40Section 6 of Article XIII B of the California Constitution because
P17   1the only costs that may be incurred by a local agency or school
2district will be incurred because this act creates a new crime or
3infraction, eliminates a crime or infraction, or changes the penalty
4for a crime or infraction, within the meaning of Section 17556 of
5the Government Code, or changes the definition of a crime within
6the meaning of Section 6 of Article XIII B of the California
7Constitution.

end delete


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