QUESTION
Do the conflict-of-interest provisions of the Act prohibit a city councilmember who owns many parcels of property within the city boundaries from voting on issues that may affect the councilmember’s properties?
CONCLUSION
The conflict-of-interest provisions of the Act prohibit a public official from participating in any decision where it is reasonably foreseeable that the decision will have
a material financial effect, distinguishable from the effect on the public generally, on the official’s financial interests. Whether a specific decision meets this test must be evaluated on a case-by-case basis.
FACTS
A newly appointed member of the Portola city council owns many parcels of property within the city boundaries. The councilmember’s properties are primarily rental units scattered throughout the city. You have advised the councilmember that he should abstain from voting on certain issues due to a conflict of interest. You are particularly concerned about prospective decisions such as sewer and water charges for services including utilities and garbage service, and road improvements that could result in improvements to the councilmember’s properties, or may affect the councilmember’s expenditures and/or income related to his properties.
When
we spoke by phone, you told me that the councilmember owns over 30 rental properties. These properties are older buildings that the councilmember “fixes up” in order to rent. You also indicated that the City of Portola is relatively small, with approximately 2,000 residents. You did not provide me with facts related to any specific issue or specific vote that will be considered by the council in the future.
ANALYSIS
Because you have not provided detailed information on a specific prospective decision before the councilmember, we can only provide you with the general rules.
Section 87100 prohibits public officials from making,
participating in making, or using their official position to influence a governmental decision in which they know or have reason to know they have a financial interest. An official has a financial interest in a decision within the meaning of section 87100 if it is reasonably foreseeable that the decision will have a material financial effect, distinguishable from its effect on the public generally, on the official or on a member of the official’s immediate family, as set forth in section 87103(a) - (d). Regulation 18702 sets forth the guidelines for determining when the effect of a decision on an official’s economic interest will be material. Regulation 18703 outlines the “public generally” exception. Enclosed is a copy of sections 87100 and 87103(a)-(d), 18702 and 18703 for your review.
Whether the financial consequences of a decision are reasonably foreseeable at the time the governmental decision is made depends on the facts of each particular case. (Eiser Advice Letter, No. A-95-081.) Under regulation 18702.1, improvements such as the ones you have mentioned are deemed to directly involve a public official’s real property interests where the official’s property is located within the area being improved. While public officials can sometimes vote when they are disqualified under the “public generally” exception, where a public official owns numerous properties, the exception is not likely to apply. This is because the effect on a public official with numerous properties will not affect the public official in the same manner as other property owners. Only property owners with similar sized interests in property will be affected in the same manner as the public official. It is unlikely that the number of such persons will meet the “public generally” test in regulation 18703. (As examples, see Rundlett Advice Letter, No. I-96-249; Germino Advice Letter, No. A-95-325, copies enclosed.)
Should a public official have a specific prospective question relative to the official’s conduct, he or she or his or her authorized representative can seek written assistance in the future.
For
your information, I also enclose a copy of the Commission’s “Guide to the Political Reform Act of 1974.” The guide addresses the questions and concerns raised in your letter and should be a helpful resource for you in your duties as an advisor.
If you have any other questions regarding this matter, please contact me at (916) 322-5660.
Sincerely,
Steven G. Churchwell
General Counsel
By: Deborah Maddux-Allison
Staff Counsel,
Legal Division
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Enclosures