Amended in Senate April 6, 2015

Senate Bill No. 704

Introduced by Senator Bates

February 27, 2015

An act to amend Section 1091.5 of the Government Code, relating to public officers.

LEGISLATIVE COUNSEL’S DIGEST

SB 704, as amended, Bates. Public officers and employees: conflict of interest.

begin delete

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.

end delete

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.

begin delete

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.

end delete

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.

begin delete

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.

end delete begin delete

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

end delete

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

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

SECTION 1.  

Section 1091.5 of the Government Code is
amended to read:

1091.5.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(15) That of 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.

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

begin delete

SEC. 2.  

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 delete