June 13, 1990
Robert D. Winston
City Attorney
City of Mt. Shasta
P.O. Box 263
Mt. Shasta, CA 96067
Re:Your Request for Informal Assistance
Our File No. I-90-230
Dear Mr. Winston:
This is in response to your letter requesting assistance on behalf of Mt. Shasta Planning Commissioner John Guill concerning his responsibilities under the conflict-of-interest provisions of the Political Reform Act (the "Act"). Since your request does not concern a specific decision, but is instead a request for general guidance concerning the planning commissioner's responsibilities, we are treating your request as one for informal assistance.
QUESTION
May Planning Commissioner Guill participate in planning commission decisions concerning clients represented by the commissioner's employer, Stevens and Associates?
CONCLUSION
Planning Commissioner Guill may participate in decisions concerning applicants represented by the planning commissioner's employer, Stevens and Associates provided the decisions will not have a material financial effect on Stevens and Associates or Mr. Stevens personally.
FACTS
Planning Commissioner Guill is an employee of Stevens and Associates, an architectural firm that does business in the City of Mt. Shasta. Once the firm has completed architectural plans for their clients, many of the clients appear before the planning commission seeking approval of building plans. Neither Stevens and Associates, nor the planning commissioner's compensation is contingent on the approval of the plan by the planning commission. However, frequently, the owner of Stevens and Associates represents the firm's clients before the planning commission and Planning Commissioner Guill.
ANALYSIS
Section 87100 prohibits any public official, whether appointed or elected, from making, participating in making, or otherwise using his official position to influence a governmental decision in which the official has a financial interest. A "public official" is defined in Section 82048 to include every member, officer, employee or consultant of a state or local government agency, including members of planning commissions.
Section 87103 specifies that an official has a financial interest in a decision if it is reasonably foreseeable that the decision will have a material financial effect, distinguishable from the effect on the public generally, on the official or a member of his or her immediate family or on:
(c) Any source of income, other than gifts and other than loans by a commercial lending institution in the regular course of business on terms available to the public without regard to official status, aggregating two hundred fifty dollars ($250) or more in value provided to, received by or promised to the public official within 12 months prior to the time when the decision is made.
(d) Any business entity in which the public official is a director, officer, partner, trustee, employee, or holds any position of management.
Section 87103(c) and (d).
Consequently, Stevens and Associates is an economic interest because the firm employs Commissioner Guill and because Stevens and Associates has presumably been a source of income to the planning commissioner of over $250 in the last 12 months. Thus, the planning commissioner is required to disqualify himself from planning commission decisions where it is reasonably foreseeable that the decision will have a material financial effect on Stevens and Associates, distinguishable from the effect on the public generally.
Whether the financial consequences of a decision are reasonably foreseeable at the time a governmental decision is made depends on the facts of each particular case. An effect is considered reasonably foreseeable if there is a substantial likelihood that it will occur. Certainty is not required. However, if an effect is only a mere possibility, it is not reasonably foreseeable. (In re Thorner (1975) 1 FPPC Ops. 198, copy enclosed.)
The Commission has adopted differing guidelines to determine whether an effect is material, depending on the specific circumstances of each decision. For example, where a source of income is directly before the planning commission as an applicant or the subject of the decision, Regulation 18702.1(a)(1) (copy enclosed) provides that the effect of the decision on a source of income is deemed material and disqualification is required. (Combs Advice Letter, No. A-89-177, copy enclosed.)
A source of income is directly before the planning commission when the source initiates the proceeding by filing an application, claim, appeal, or similar request, or is a named party in, or the subject of, the proceeding. A person or business entity is the subject of a proceeding if a decision involves the issuance, renewal, approval, denial or revocation of any license, permit, or other entitlement to, or contract with, the subject person or business entity. (Regulation 18702.1(b).)
According to your facts the owner of Stevens and Associates will come before the planning commission in his representative capacity in conjunction with the projects of the firm's clients. In analyzing a similar situation we concluded that where a source of income appears before a planning commission in a representative capacity, as an agent of an unrelated business entity, and the property subject to the decision is the property of the unrelated business entity, the source of income is not appearing directly before the planning commission. (Gill Advice Letter, No. A-85-252, copy enclosed.) Thus, so long as the owner of Stevens and Associates did not initiate the proceeding by filing an application, claim, appeal, or similar request, or is a named party in, or the subject of, the proceeding we conclude that Stevens and Associates is not directly involved and consequently, automatic disqualification would not be required.
However, even where a source of income is not directly before the planning commission, the commissioner must still disqualify himself where Stevens and Associates or it's owner will be indirectly materially affected. Whether an effect on a business entity is material is determined by examining the magnitude of the foreseeable financial effect on the source of income pursuant to Regulation 18702.2 (copy enclosed). Regulation 18702.2 provides that whether the indirect effect on a business entity is material depends on the financial size of the business entity. For a relatively small business entity, the indirect effect of a decision is material where:
(1) The decision will result in an increase or decrease in the gross revenues for a fiscal year of $10,000 or more; or
(2) The decision will result in the business entity incurring or avoiding additional expenses or reducing or eliminating existing expenses for a fiscal year in the amount of $2,500 or more; or
(3) The decision will result in the increase or decrease in the value of assets or liabilities of $10,000 or more.
Where a source of income is a person and not directly before the city council, as in the case of Mr. Stevens, Regulation 18702.6 provides:
The effect of a decision is material as to an individual who is a source of income or gifts to an official if any of the following applies:
(a) The decision will affect the individual's income, investments, or other tangible or intangible assets or liabilities (other than real property) by $1,000 or more; or
(b) The decision will affect the individual's real property interest in a manner that is considered material under Section 18702.3 or Section 18702.4.
Thus, absent facts indicating a foreseeable financial impact on Stevens and Associates or Mr. Stevens personally as a result of the decision, we would conclude that Planning Commissioner Guill may participate in the decisions concerning applicants represented by Mr. Stevens.
If you have any further questions regarding this matter, please feel free to contact me at (916) 322-5901.
Sincerely,
Scott Hallabrin
Acting General Counsel
By:John W. Wallace
Counsel, Legal Division
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Enclosures