Date post: | 13-Dec-2015 |
Category: |
Documents |
Upload: | angelina-lester |
View: | 220 times |
Download: | 3 times |
C.A.S.H. Workshop:Planning for 2016 Local Bond SuccessGregory M. Bergman
10880 Wilshire Blvd., Suite 900 • Los Angeles, CA 90024 • (310) 470-6110
17762 Cowan, Suite 200 • Irvine, CA 92614 • (949) 494-1393
Legal Requirements for School Bonds and What Public Agencies Can and Cannot Do
This portion of the presentation will focus on what can and cannot be done with public funds. Gov’t Code Sec. 1090 Form 700
Gov’t Code Section 1090. Contracts, sales, and purchases made in official capacity.
(a) Members of the … district … shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. Nor shall … district … officers or employees be purchasers at any sale or vendors at any purchase made by them in their official capacity. [Emphasis added.]
(b) An individual shall not aid or abet a … district … officer or employee in violating subdivision (a).
“District” in Section 1090 includes a school district. In Davis v. Fresno Unified School District
(2015) 237 Cal.App.4th 261, 302, a taxpayer challenged a non-competitive lease-leaseback contract awarded to a contractor for the construction of a middle school. The appellate court found conflict of interest cause of action proper since the contractor, as a consultant to the district, participated in the contract in which he became financially interested. The court upheld the cause of action under Section 1090 and common law theories.
Common Law “Conflict of Interest” Rule v. Section 1090
Section 1090:
Codifies common law “conflict of interest” rule that barred “public officials from being personally financially interested in contracts they formed in their official capacities.” “‘If a public official is pulled in one direction by his financial interest and in another direction by his official duties, his judgment cannot and should not be trusted, even if he attempts impartiality.’” Lexin v. Superior Court (2010) 47 Cal.4th 1050, 1072-1073.
Common Law “Conflict of Interest” Rule v. Sec. 1090
Section 1090:
Does not fully overlap with common law “conflict of interest” rule.
“[T]he common law rule encompassed both financial and non-financial interests that could result in divided loyalty. [Cite omitted.]” Davis, supra, at 301-302.
Section 1090’s Goals The overriding principle is that a “person
cannot effectively serve two masters at one time.” Davis, supra, at 298.
The goals of Section 1090 are to:
• Eliminate temptation;
• Avoid appearance of impropriety; and
• Assure public of official’s undivided and uncompromised allegiance.
(Id.)
Also, to ensure transparency.
Stigall v. City of Taft (1962) 58 Cal.2d 565, 571 California Supreme Court broadly construed
“made contract” and found proper a conflict of interest cause of action under 1090:
• A former city council member in charge of the building committee, which supervised drawings of plans and specs for a civic center, had a financial interest in a plumbing company, who was sub-bid in the contract awarded to a general contractor.
Relief under Section 1090 Tainted contract is void; Disgorgement of public funds paid;
• Without restoring benefits received.
Finnegan v. Schrader (2001) 91 Cal.App.4th 572, 583.
Remove official from position or bar official from future service; and
Prison.
Forbidden Financial Interests under Section 1090
“’[F]orbidden interests extend to expectations of benefit by express or implied agreements and may be inferred from the circumstances.’ [Citation].” Hub City Solid Waste Services, Inc. v. City of Compton (2010) 186 Cal.App.4th 1114,1127
Cognizable financial interest in the contract. Lexin, supra, at 1074.
Profit from contract, including a bribe in return for influencing the public entity. Eden Township Healthcare Dist. v. Sutter Health (2011) 202 Cal.App.4th 208, 225
Practice Tips for Section 1090
Do not plan to fit within a statutory exception, plan to rely on California Fair Political Practices Commission (“FPPC”) advice, or rely on there being no case with your specific facts. Section 1090 generally is given an expansive interpretation when a violation is alleged, so avoid “serving two masters.” Take all necessary action to avoid even the appearance of impropriety.
Form 700
FPPC issues Form 700.
It is available online and in Excel format at www.fppc.ca.gov.
There is a reference pamphlet, which is very detailed as to who, when, and why Form 700 must be filed with the FPPC.
Form 700 is a public document.
Prior to Completing Form 700
If you are filing pursuant to a conflict of interest code (“code filers”):
Obtain from the agency your disclosure categories, which are based on the interests you must report; and
Determine your deadline if filing Form 700 under city or county conflict of interest codes.
Gatto Legislation – AB 10
In September 2015, the Assembly passed the so-called Gatto legislation, AB 10.
The stated intention is to modernize Form 700 for the first time in decades to advance transparency.
The changes include disclosure of the elected official’s business partners, what business does, when recused from voting due to conflict, and new, higher limits.
New as of 2015 – Form 700
For 2015 and 2016, the gift limit increased
from $440 to $460 from a single source.
Note that the FPPC has a gift tracking app for
mobile devices.
FPPC’s Form 700 Pamphlet Who has to file
Filing deadlines
Where to file
How to file
Non-reportable interests
Wet signature under penalty of perjury
Gift prohibition and disqualification rules
Types of Form 700 Statements
1. Assuming Office Statement
2. Annual Statement
3. Leaving Office Statement
4. Candidate Statement
5. Amendments
Statement of Economic Interests – Form 700’s composition Cover page including signature block
Schedule A-1 (e.g., stocks)
Schedule A-2 (e.g., business entities)
Schedule B (rental property)
Schedule C (non-governmental salaries)
Schedule D (gifts from businesses)
Schedule E (travel payments from third parties)
Questions & Answers in the Form 700 PamphletThe pamphlet contains 4 pages of common questions and answers. Here are a few of them:
1. If you change agencies during the year, you will need to file a Leaving Office Statement and an Assuming Office Statement.
2. If you co-sign a home loan for one of your children, it is not reportable as long as you do not receive rent or use for business.
3. If you receive a reportable business gift of 2 concert tickets for $100 each but end up letting a friend use them instead, it is still reportable.
Case Study: People v. Thrasher
People v. Thrasher (2009) 176 Cal.App.4th 1302:
In this case, a member of a planning commission stood trial for perjury and 3 misdemeanors under the Political Reform Act in connection with a failure to report a $17,500 note to a partnership as a loan on his Form 700. While the appellate court ruled in favor of the defendant, it is important to note the magnitude of the risk and possible consequences of filing Form 700 improperly.
Case Study: Sanchez v. County of San Bernardino
Sanchez v. County of San Bernardino (2009) 176 Cal.App.4th 516:
The published portion of this decision related to a breach of contract cause of action brought by a high-ranking employee of San Bernardino County after she resigned. She negotiated a labor contract MOU with an association and then had a romantic physical relationship with the president of that association. The facts showed that she received gifts – like diamond earrings and thousands in cash – from the association president but did not report them on Form 700. This case shows that failure to file a complete Form 700 can arise in unexpected ways and lead to unflattering reports in the media.
“Vulnerable to Pressure”
Form 700 is very detailed and requires great care to complete properly. When your question is not covered by the pamphlet’s questions & answers section or its schedule-specific instructions, you may ask for an advice letter from the FPPC. But keep in mind the example of the County of San Bernardino case where the employee who resigned had an advice letter in her favor. Perhaps the better approach is to err on the side of reporting if that gift, business interest, salary, loan, paid travel, etc., would make you vulnerable to pressure.
THANK YOU!
Gregory M. Bergman, Esq.Bergman Dacey Goldsmith
10880 Wilshire Blvd., Suite 900 Los Angeles, CA 90024 (310) 470-611017762 Cowan, Suite 200 Irvine, CA 92614 (949) 494-1393