City Redevelopment Agency May Enter Into A Contract With A Corporation Run By A Board Member’s Son, But That Member Must Abstain From Any Action Relating To The Contract

In Opinion 07-807, the California Attorney General opined on whether a city redevelopment agency could enter into a loan agreement with a corporation run solely by the adult son of one of the agency’s board members when the board member and her son shared the same rented apartment.

The Attorney General determined that because the son is an adult, and not a dependent of the board member, no California law prohibits the agency from entering into an agreement with his corporation. However, the Attorney General added that common law doctrine requires, in order to avoid the possible appearance of conflict or impropriety, the board member to abstain from any action pertaining to the contract.

Attorney General Opinion

This question required an analysis of two statutes dealing with conflicts of interest, as well as common law doctrine against conflicts of interests.

The Attorney General first analyzed Government Code Section 1090. It stipulates that public officers “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.” Here, the court said, the familial relationship between parent and adult child did not result in the board member being “financially interested” in the awarding of the contract because the parent and child were both self-supporting. Neither law nor judicial precedent has concluded that a familial relationship between a parent and adult child by itself creates a financial conflict of interest. Similarly, the sharing of the same rented apartment did not create the type of financial intent under which Section 1090 would apply.

The Attorney General then moved to the Political Reform Act of 1974 (“Act”), which prohibits public officials from participating in governmental decisions in which they or their “immediate family” have a financial interest. The term “immediate family” includes only the official’s spouse and dependent children, and not a grown child who is no longer the official’s dependent, the Attorney General concluded. Nor does the act link an official’s financial interests to those of an individual, other than a spouse or dependent child, with whom the official shares a residence. As such, the Act did not trigger any prohibition of this contract.

Finally, the Attorney General reviewed common law doctrine, which “prohibits public officials from placing themselves in a position where their private, personal interests may conflict with their official duties.” Even without a financial interest in the contract within the meaning of Section 1090 or the Act, it is impossible to state that the board member would have no personal interest in whether her son’s business transactions were successful. At the very least, an appearance of impropriety or conflict could arise if the member participated in negotiating and voting on an agreement that could provide financial benefit to her son, the Attorney General said.

Consequently, the Attorney General concluded, while no law prohibits the board from entering into a contract with the son of one of its members, the member must abstain from any official action with regard to the agreement and make no attempt to influence the discussions, negotiations, or vote concerning it.


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