BILL ANALYSIS Ó
AB 527
Page 1
Date of Hearing: May 11, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 527 (Roger Hernandez) - As Amended: April 14, 2011
Policy Committee: Local
GovernmentVote:5-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill prohibits state, county, district, judicial district
and city officers or employees from authorizing the expenditure
of public funds, regardless of whether a contract is made in
furtherance of the expenditure, if any member of the body or
board is financially interested in the person or entity that
receives the expenditure. Specifically, this bill:
1)Requires an officer who discloses his or her interest in a
contract involving the body or board in order for their
interest to be deemed remote, but disclose that interest at a
public meeting and requires counsel or another legal advisor
of the body or board to identify a statutory basis for
classifying the interest as remote at a public meeting.
2)Prohibits any body or board of a city or county, including,
but not limited to a planning commission, from approving any
project, plan, permit or conveyance of land in which any
member of that body is financially interested unless the
interest is disclosed and the financially interested member
abstains from voting.
3)Requires any project, plan, permit or conveyance approved in
violation of these provisions to be void.
4)Requires a member of a body or board that is financially
interested in the approval of a project, plan, permit or
conveyance of land and votes to approve the project, plan,
permit or conveyance of land, to be punished with a fine of
not more than $1,000 or by imprisonment in state prison, and
to be forever disqualified from holding any office in this
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state.
FISCAL EFFECT
Unknown, likely negligible, nonreimbursable local law
enforcement costs.
COMMENTS
1)Purpose. According to the author, AB 527 helps restore the
public's faith in government by ensuring those who are given
decision-making powers do so in an ethical way. The author
points to recent examples of where local governments approved
the expenditure of public funds to persons or entities that
had financially interested relationships with members of the
legislative bodies of the local government or its employees.
The author singles out the corruption charges of the City of
Bell's City Manager Robert Rizzo, whose partner in a
horse-racing venture was eventually awarded $10.4 million in
business contracts from the city. And, in Whittier,
Councilmember Bob Henderson was investigated in 2010 for
violating state conflict-of-interest laws when he voted to
approve the city's lease with Matrix Oil Company so that they
could drill into oil fields after Mr. Henderson received
royalties from the company for the mineral rights to his
house.
Mr. Rizzo's case of misappropriation was eventually dismissed,
and Mr. Henderson was cleared of violating
conflict-of-interest laws because current law did not prohibit
their actions. The author says AB 527 would remedy these
situations, especially at a time when the public's approval
rating for elected officials is at an all-time low.
2)Background. Under existing law, conflict of interest
provisions generally prohibit a government official, in his or
her official capacity, from participating in the making of any
contract in which the official has a financial interest. At
the same time, however, existing law provides a number of
exemptions to this general rule where the member's interest is
deemed sufficiently "remote" and is properly disclosed and
noted in the official record. These exemptions generally
reflect the fact that officials who serve on various public
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entities may occasionally have associations with private
entities with whom the public entity may wish to contract.
Rather than impose a complete ban on such contracts - which
might severely limit the public agencies contracting options -
existing law attempts to create safeguards that will eliminate
any potential conflicts of interest.
3)Possible amendments. AB 527 prohibits any officer or employee
of a state, county, district, judicial district, or city from
authorizing the expenditure of public funds, even if there is
a contract for the expenditure, if any member of the body or
board of the state, county, district, judicial district, city
is financially interested in the person or entity receiving
the money. This places staff in the position of being subject
to prison time, a fine of not more than $1,000, and a lifetime
banishment from holding public office all because a member of
that employee's board was financially interested in the
contract and never declared his or her financial interest.
The author has stated that he wants to amend the bill to
ensure the penalties would only apply to the office or
employee with the financial interest.
A portion of the bill appears to duplicate the political
reform act. The author has said that he wants to amend the
bill to eliminate section 3 of the bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081