BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |SB 704 |Hearing |4/29/15 |
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|Author: |Gaines |Tax Levy: |No |
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|Version: |4/22/15 |Fiscal: |Yes |
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|Consultant|Lewis |
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PUBLIC OFFICERS AND EMPLOYEES: CONFLICTS OF INTERESTS
Adds a new exception to the list of "remote interests" that are
exempt from statutory conflict of interest prohibitions.
Background and Existing Law
Section 1090 of the Government Code (referred to simply as
"Section 1090") prohibits state and local officials from making,
influencing, or voting on public contracts in which they have a
prohibited financial interest. A contract that violates Section
1090 is void, even if it is fair and the interested official did
not intend to receive a personal benefit. Willful violators can
also face criminal penalties ranging from fines to prison time,
plus a lifetime ban on holding public office.
State law recognizes two categories of exceptions to Section
1090: "remote interests," and so-called "non-interests." State
law lists 14 types of financial interests that the Legislature
has determined, should not be subject to Section 1090 at all
commonly referred to as "non-interests." Examples of
"non-interests" include: an ownership interest of less than 3%
of a corporation; interest in a spouse's employment, if the
spouse has held the same job for at least one year before the
official took office; or that of a public official being
reimbursed for his or her actual expenses related to the
performance of official government duties.
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By contrast, where a government official has a "remote
interest," he or she must take three steps before the body on
which he or she sits may vote on that contract. First, the
official must disclose the interest to the government body.
Second, the interest must be noted in the government body's
official records. Finally, the official with the "remote
interest" must abstain from participating in making the
contract. State law lists 16 situations that qualify as "remote
interests," including that of an engineer, geologist, or
architect employed by an engineering or architectural consulting
firm.
Architects and engineers often serve on various local government
advisory bodies-including architectural review boards, art
commissions and design review boards-for the purpose of
providing technical advice to local elected officials. These
boards advise city councils and other officials on matters such
as:
Promoting orderly development;
Encouraging desirable land use and improvements; and
Aesthetic, health, and safety factors of relevance to
the community.
Under existing law, a partner or owner of an architectural or
engineering firm may not serve on such a review board and
simultaneously enter into a contract with the government entity
which the board advises. Attorney General's opinions have
indicated that the interest of a partner or owner of an
architectural or engineering firm in a public contract is a
prohibited financial interest under Section 1090, and not a
"remote interest." Therefore, the owner or partner of an
architectural or engineering firm cannot avoid liability under
Section 1090 by abstaining from voting or recusing him or
herself.
Some California architects now seek to establish an additional
"remote interest" exception to Section 1090, so that owners or
partners of architectural or engineering firms who serve on
review boards to contracting agencies can recuse themselves in
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the event of a conflict of interest, instead of resigning.
Proposed Law
Senate Bill 704 adds the interest of an owner or partner of a
firm who serves on an advisory board or commission to a
contracting agency to the list of "remote interest" exceptions
to Government Code Section 1090.
State Revenue Impact
No estimate.
Comments
1.Purpose of this bill. Section 1090 of the Government Code
prohibits a government body from approving a public contract
with an owner or partner of a firm who serves on a board or
commission that advises the government body. These boards and
commissions and the communities they serve, benefit when
architects and other professionals volunteer their time and
expertise. SB 704 would allow and encourage more architects,
engineers and other professionals to serve their communities
as volunteers on appointed boards and commissions, such as
design review boards and planning commissions.
2.Let's be clear. SB 704 does not define what constitutes an
"advisory board or commission." Cities around the state may
have commissions and boards with varying degrees of power and
responsibility. Some bodies offer only nonbinding suggestions,
while the recommendations of some boards and commissions are
treated as final. According to Attorney General's opinions,
courts have construed the "making" of a contract broadly, to
include contract-related negotiations, discussions, reasoning,
and planning. The Committee may wish to consider amending SB
704 to clarify the definition of "advisory board or
commission" and to clarify that elected officials and anyone
with the ability to make, influence, or vote on public
contracts are not exempt from Section 1090.
3.Remotely close. SB 704 amends 1091.5 of the Government Code,
which relates to so-called "non-interests" under Section 1090.
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However, the bill proposes creating another situation in
which an interested party could overcome the 1090 prohibition,
by recusing himself or herself from all participation in a
public contract. State law classifies such scenarios as
"remote interests." Therefore, the Committee may wish to
consider amending SB 704 to place its language in the statute
that deals with "remote interests."
Support and Opposition
(4/23/15) Support : American Institute of Architects, California
Council.
Opposition : Unknown.
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