Attorney General Determines City Worker Has Conflict Of Interest

In its March 6, 2002 Opinion No. 01-601, the California Attorney General opined that a city staff member could not participate in a development project where the staff member’s spouse was employed by a firm selected to provide “outreach services” to the developer of the project.

The City of Pasadena (City) requested one of its staff members to participate in the negotiation and drafting of a development agreement for a particular project. The firm City had selected to provide “outreach services” to the developer for the project, however, employed the staff member’s spouse. The spouse had no ownership interest in the firm, he would not have worked on the project, and, because his firm worked on a fixed, yearly retainer agreement, his income would in no way have been affected by the outcome of the development agreement or the project. City requested an opinion from the Attorney General as whether the staff member could participate in negotiating and drafting the terms of the development agreement. The Attorney General concluded that the staff member could not.

The Attorney General based its opinion on Government Code Section 1090, which states that “city officers or employees 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.” Broadly interpreting section 1090, the Attorney General determined that the statute barred participation by the staff member in negotiations, reasoning, planning, and other preliminary activities, prior to execution of City’s contract with the staff member’s spouse’s firm.

Recognizing that City staff member would have no direct financial interest in the agreement, the Attorney General, instead, focused on the interests of the spouse. In its analysis, the Attorney General acknowledged: (1) that the spouse was not the developer or an employee of the developer; (2) that he had no ownership interest in the firm for which he worked; (3) that his income and the firm’s income would not be affected by the development agreement; and (4) that he would not be working on City’s project. Despite these considerations, the Code provides that “the financial interest of one spouse will be attributed to the other spouse for purposes of section 1090.” Accordingly, the Attorney General opined, because the spouse had, in the past, and might still, in the future, provide services on behalf of the firm to the same developer on other projects, the staff member’s general interest in “the financial success of the spouse’s firm and his continued employment and compensation” constituted prohibited a “financial interest” within the meaning of Government Code section 1090.