SB 704, as introduced, Bates. Public officers and employees: conflict of interest.
The Political Reform Act of 1974 establishes the Fair Political Practices Commission as the agency responsible for enforcing the act. The act authorizes the Commission to issue an opinion or advice to a person with respect to that person’s duties under the act, as specified. The act authorizes the Commission to seek and impose administrative and civil penalties against persons who violate the act, as prescribed.
Existing law prohibits Members of the Legislature, state, county, district, judicial district, and city officers or employees from being financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. 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. Existing law makes a willful violation of this prohibition a crime.
Existing law also makes a person who violates the prohibition against being financially interested in a contract, or who causes another person to violate the prohibition, subject to administrative and civil fines, as specified. Existing law authorizes the Commission to enforce these violations by bringing an administrative or civil action against a person who is subject to the prohibition, as specified, upon written authorization from the district attorney of the county in which the alleged violation occurred. Existing law authorizes a person who is subject to those prohibitions to request an opinion or advice from the Commission with respect to those prohibitions, as specified.
This bill would establish an additional situation in which an official is not financially interested in a contract as applied to an owner or partner of a firm serving on an advisory board or commission to the contracting agency if the owner or partner recuses himself or herself from all participation in reviewing a project that results from a contract between the firm and the contracting agency.
The Political Reform Act of 1974, an initiative measure, provides that the Legislature may amend the act to further the act’s purposes upon a 2⁄3 vote of each house and compliance with specified procedural requirements.
This bill would declare that it furthers the purposes of the act.
Vote: 2⁄3. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 1091.5 of the Government Code is
2amended to read:
(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
P3 1department or agency of this state or an adjoining state, any county
2or city of this state or an adjoining state, or any public corporation
3or special, judicial, or other public district of this state or an
4adjoining state unless the subject matter of the contract is the
5property in which the officer or employee has the interest as
6landlord or tenant in which event his or her interest shall be deemed
7a remote interest within the meaning of, and subject to, the
8provisions of Section 1091.
9(5) That of a tenant in a public housing authority created
10pursuant to Part 2 (commencing with Section 34200) of Division
1124 of the Health and Safety Code in which he or she serves as a
12member of the board of commissioners of the authority or of a
13community development commission created pursuant to Part 1.7
14(commencing with Section 34100) of Division 24 of the Health
15and Safety Code.
16(6) That of a spouse of an officer or employee of a public agency
17in his or her spouse’s employment or officeholding if his or her
18spouse’s employment or officeholding has existed for at least one
19year prior to his or her election or appointment.
20(7) That of a nonsalaried member of a nonprofit corporation,
21provided that this interest is disclosed to the body or board at the
22time of the first consideration of the contract, and provided further
23
that this interest is noted in its official records.
24(8) That of a noncompensated officer of a nonprofit, tax-exempt
25corporation, which, as one of its primary purposes, supports the
26functions of the body or board or to which the body or board has
27a legal obligation to give particular consideration, and provided
28further that this interest is noted in its official records.
29For purposes of this paragraph, an officer is “noncompensated”
30even though he or she receives reimbursement from the nonprofit,
31tax-exempt corporation for necessary travel and other actual
32expenses incurred in performing the duties of his or her office.
33(9) That of a person receiving salary, per diem, or reimbursement
34for expenses from a government entity, unless the contract directly
35involves the department of the government entity that employs the
36officer or employee,
provided that the interest is disclosed to the
37body or board at the time of consideration of the contract, and
38provided further that the interest is noted in its official record.
39(10) That of an attorney of the contracting party or that of an
40owner, officer, employee, or agent of a firm which renders, or has
P4 1rendered, service to the contracting party in the capacity of
2stockbroker, insurance agent, insurance broker, real estate agent,
3or real estate broker, if these individuals have not received and
4will not receive remuneration, consideration, or a commission as
5a result of the contract and if these individuals have an ownership
6interest of less than 10 percent in the law practice or firm, stock
7brokerage firm, insurance firm, or real estate firm.
8(11) Except as provided in subdivision (b), that of an officer or
9employee of, or a person having less than a 10-percent ownership
10
interest in, a bank, bank holding company, or savings and loan
11association with which a party to the contract has a relationship
12of borrower, depositor, debtor, or creditor.
13(12) That of (A) a bona fide nonprofit, tax-exempt corporation
14having among its primary purposes the conservation, preservation,
15or restoration of park and natural lands or historical resources for
16public benefit, which corporation enters into an agreement with a
17public agency to provide services related to park and natural lands
18or historical resources and which services are found by the public
19agency, prior to entering into the agreement or as part of the
20agreement, to be necessary to the public interest to plan for,
21acquire, protect, conserve, improve, or restore park and natural
22lands or historical resources for public purposes and (B) any officer,
23director, or employee acting pursuant to the agreement on behalf
24of the nonprofit corporation. For purposes of this
paragraph,
25“agreement” includes contracts and grants, and “park,” “natural
26lands,” and “historical resources” shall have the meanings set forth
27in subdivisions (d), (g), and (i) of Section 5902 of the Public
28Resources Code. Services to be provided to the public agency may
29include those studies and related services, acquisitions of property
30and property interests, and any activities related to those studies
31and acquisitions necessary for the conservation, preservation,
32improvement, or restoration of park and natural lands or historical
33resources.
34(13) That of an officer, employee, or member of the Board of
35Directors of the California Housing Finance Agency with respect
36to a loan product or programs if the officer, employee, or member
37participated in the planning, discussions, development, or approval
38of the loan product or program and both of the following two
39conditions exist:
P5 1(A) The loan product or program is or may be originated by any
2lender approved by the agency.
3(B) The loan product or program is generally available to
4qualifying borrowers on terms and conditions that are substantially
5the same for all qualifying borrowers at the time the loan is made.
6(14) That of a party to a contract for public services entered into
7by a special district that requires a person to be a landowner or a
8representative of a landowner to serve on the board of which the
9officer or employee is a member, on the same terms and conditions
10as if he or she were not a member of the body or board. For
11purposes of this paragraph, “public services” includes the powers
12and purposes generally provided pursuant to provisions of the
13Water Code relating to irrigation districts, California water districts,
14water storage districts, or reclamation districts.
15(15) That of an owner or partner of a firm serving on an
16advisory board or commission to the contracting agency if the
17owner or partner recuses himself or herself from all participation
18in reviewing a project that results from a contract between the
19firm and the contracting agency.
20(b) An officer or employee shall not be deemed to be interested
21in a contract made pursuant to competitive bidding under a
22procedure established by law if his or her sole interest is that of
23an officer, director, or employee of a bank or savings and loan
24association with which a party to the contract has the relationship
25of borrower or depositor, debtor or creditor.
The Legislature finds and declares that this bill furthers
27the purposes of the Political Reform Act of 1974 within the
28meaning of subdivision (a) of Section 81012 of the Government
29Code.
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