BILL ANALYSIS Ó
SB 704
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Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 704
(Gaines) - As Amended July 8, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill provides the following additional exceptions to the
state's conflict of interest statute:
SB 704
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1)Allows a governmental entity to enter into a contract with a
firm-when an owner or partner of the firm serves as an
appointed member of an unelected board or commission to the
governmental entity-if the owner or partner recuses himself or
herself from providing any advice to the contracting agency
regarding the contract between the firm and the contracting
agency.
2)Allows a governmental board or body to enter into a contract
with a firm that employs a member of the board or body, if the
firm is a consulting engineering or architectural firm and the
employee is a planner, or if the firm is a consulting planning
firm and the employee is an engineer, geologist, architect, or
planner.
FISCAL EFFECT:
Potential but likely minor increase in state costs to the extent
anyone is sentenced to state prison for violation of the bill's
provisions. (The penalty for violation of the conflict of
interest provisions is a fine of not more than $1,000, or by
imprisonment in the state prison, and by permanent
disqualification from holding any office in this state.)
COMMENTS:
1)Background. Section 1090 of the Government Code generally
prohibits a public official or employee from making a contract
in his or her official capacity in which he or she has a
financial interest. In addition, a public body or board is
prohibited from making a contract in which any member of the
body or board has a financial interest, even if that member
does not participate in the making of the contract. This
prohibition, contained in Section 1090, dates back to the
SB 704
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second session of the California Legislature (Chapter
136/Statutes of 1851).
State law recognizes two categories of exceptions to Section
1090. One category is "remote interests". Where a government
official has a "remote interest" in a contract, 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 the review and approval of the contract.
State law lists 16 situations that qualify as "remote
interests." While the willful failure of an officer to
disclose a remote interest in a contract would subject that
officer to the conflict of interest penalties, the contract
itself is not subject to cancelation due to the violation
unless the contracting party had knowledge of the fact of the
remote interest of the officer at the time the contract was
executed.
2)Purpose. To the extent that design review boards, planning
commissions, and similar bodies are composed of architects and
other professionals who have expertise that may be relevant to
the work of those boards and commissions, the broad
construction of Section 1090 can create conflicts that limit
the ability of those boards and commissions to perform their
intended functions. In recognition of that fact, state law
was previously amended to provide that the interest of an
engineer, geologist, or architect employed by a consulting
engineering or architectural firm is a "remote interest" under
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Section 1090, provided that the employee of the consulting
firm does not serve in a primary management capacity, and is
not an officer or director of the firm. This bill, sponsored
by the American Institute of Architects, California Council,
expands that remote interest such that it also applies to
planners and to those employed by consulting planning firms.
Additionally, this bill creates a new "remote interest" under
Section 1090, providing that the interest of an owner or
partner of a firm serving as an appointed member of an
unelected board or commission of the contracting agency is a
remote interest if the owner or partner recuses himself or
herself from providing any advice to the contracting agency
regarding the contract between the firm and the contracting
agency and from all participation in reviewing a project that
results from that contract.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081