California Attorney General Considers Questions Involving City Council Contracts Where One Council Member Has An Affiliation With The Organization With Which The Council Plans To Contract


Opinion No. 06-806
The Subdivision Map Act generally requires that, where a landowner proposes to subdivide property, he or she must prepare a tentative map and a final map. A city or county may approve a tentative map that is subject to certain conditions. If a landowner has not yet completed the public improvements that were required as a part of the conditional approval, “the city or county may nonetheless approve the final map by requiring the landowner to enter into a ‘subdivision improvement agreement’ whereby the landowner agrees to complete the improvements at his or her own expense or provide sufficient security to ensure their completion.” The city or county may also require the landowner to install improvements that may be larger than what will be necessary for the subdivision and such improvements may benefit property outside the proposed subdivision. “In such circumstances, the city or county must enter into a ‘reimbursement agreement’ under which the landowner is reimbursed for the costs attributable to that portion of the improvements not needed by the proposed subdivision.”

A city council member became employed by a landowner who regularly subdivides property within the city’s boundaries. The council member’s salary is not based “upon work on a particular subdivision or upon the result of any particular subdivision’s approval or disapproval.” The question presented to the Attorney General was whether the city council may execute subdivision improvement and reimbursement agreements with the landowner who employs the city council member.

Opinion No. 06-507
A city council planned to make a contribution of city funds to a chamber of commerce, a registered nonprofit corporation, on which a city council member serves as president and by which his spouse is employed. The question before the Attorney General was whether the city council may contribute to the chamber of commerce under these circumstances.


Government Code section 1090 provides, in part, the following: “Members of the Legislature, state, county, district, judicial district, and 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.” According to the Attorney General, section 1090 “is concerned with financial interests, other than remote or minimal interests, that prevent public officials from exercising absolute loyalty and undivided allegiance in furthering the best interests of their agencies.” If section 1090 is applicable to one member of a public body or board, the entire board or body is prohibited from entering into the contract. However, the Legislature has provided certain exemptions from section 1090, and the Attorney General concluded that both situations at issue here fell within such an exemption.

Opinion No. 06-806
The Attorney General noted that it had previously determined that subdivision improvement and reimbursement agreements that are “executed during the subdivision map approval process constitute ‘contracts’ for purposes of section 1090.” However, the Attorney General noted that not all financial interests are covered by section 1090 and that section 1091.1 provides that an exemption from section 1090’s prohibitions is applicable here. Section 1091.1 provides that a public officer or member of a public board or commission is not prohibited from subdividing land owned by him or in which he has an interest as long as the officer or board member fully discloses the nature of his interest and does not cast a vote upon any matter or contract involving the subdivision of the land.

The Attorney General opined that the exemption contained in section 1091.1 should extend where the public officer is an employee of the subdivider. The Attorney General
concluded that “a city may enter into a subdivision agreement and a reimbursement agreement with a landowner who is the employer of a member of the city council, where each agreement is related to public improvements that are required by the [Subdivision Map Act] and the city’s subdivision ordinances, provided that the city council member discloses his interest in the subdivision and abstains from voting on any matter concerning the subdivision.”

Opinion No 06-507
The Attorney General found that a donation of city funds by the city council to the chamber of commerce would constitute a contract within the meaning of section 1090. Absent some exemption from the rule contained in section 1090, “a contract made by a city council would be void where a council member had a conflicting financial interest, even if the financially interested member did not participate in any of the steps involved in making the contract.”

The Legislature, however, “has defined certain financial interests as ‘remote interests’ (§ 1091), and has deemed others to be ‘noninterests’ (§ 1091.5), both of which escape the absolute proscription of section 1090.” The Attorney General found that the particular interests of the council member and his spouse are remote interests because the interests fall within the exception contained in section 1091, subdivision (b)(1) for an officer or employee of a nonprofit entity or corporation which is exempt from taxation under certain provisions of the Internal Revenue Code.

The Attorney General concluded “a city council may donate public funds to a chamber of commerce, operating as a nonprofit corporation, even though a council member is the president of the chamber and his spouse is an employee of the chamber, provided that the council member discloses his financial interest in the donation to the city council, the interest is noted in the city council’s official records, and the council member does not participate in the making of the donation.”

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