Conflict of Interest Law Restricts City Boards and Commissions

By Gene Williams
Lookout Staff

June 23, 2011 – The City Council called for a strict ban Tuesday prohibiting board and commission members from entering into business contracts with the City, although the councilmembers were given little choice in the matter.

The policy clampdown came at the request of City Attorney Marsha Moutrie, who cited a state conflict-of-interest law – Government Code Section 1090 -- that imposes criminal sanctions on violators, regardless of their intent.

Implications of the policy could have far reaching consequences in Santa Monica, where numerous board and commission members have professional lives that often intersect with City business in a variety of ways.

Critics of the law say Santa Monica will lose some of its best public servants, whose experience and expertise are necessary to guide informed decision making.

The prospect troubled councilmembers as well, including Mayor Richard Bloom, who called the 1090 law “a trap for the unwary.”

“There are people who come and apply to be on boards and commissions who aren’t thinking about what kinds of interests might trigger [the law]” Bloom said.

Moutrie apologized for the situation, explaining that although her office is trained in the law, other City departments which administer a variety of applications are not.

Although Moutrie declined to talk to the council about specific instances and individuals who might be affected, it appears that sudden attention to the statute stems from a contract application filed recently by former Planning Commissioner Gwynne Pugh.

Pugh wanted to be considered for work developing zoning plans under the City’s 2010 Land Use and Circulation (LUCE) update. Upon review, the city attorney’s office determined that the contract would be a violation of the 1090 code.

The City gave Pugh a choice: either withdraw the application or step down from the commission. Pugh decided to step down.

Specifically, the 1090 code states that “city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any board or commission they serve on.”

It is not a question of whether the City should administer the law, only how to implement it, Moutrie said.

There are exceptions to the rule, she said, but they are few and far between and would have to be discerned on a “case by case” basis.

“It isn’t as easy as here’s the five rules for how 1090 works,” Moutrie said.

Not all conflict of interest cases come under the 1090 law.

In many cases, when a board or commission considers business that could benefit one of its members, that member simply excuses himself from the proceedings.

Such is the procedure in cases covered under the Political Reform Act (PRA). But the 1090 rule is more stringent and applies specifically to government contracts.

Under 1090, it is not enough for officials to recuse themselves. Any official who stands to benefit from a contract that comes before their jurisdictional body is in violation – whether they are at the meeting or not.

It doesn’t matter if the board or commission doesn’t actually award the contract. As long as the board or commission participates in the process, none of its members can have a financial interest.

The law extends to include spouses but not, in most cases, business employees.

The City will administer the law by making sure no new City contracts go to board and commission members – and that no City contract holders go on boards and commissions.

Letters will go out informing current and prospective City officials of the restrictions.

In the meantime, to deal with the problem of City officers with existing contracts, the City will make sure that no business related to their contracts will come before the board or commission upon which they serve.

“That will take a little work on our part,” Moutrie said.

For example, it seems certain that anything related to the Virginia Park Library project cannot come before the Planning Commission. One of its members, Hank Koning, is the library’s principal architect.

On Tuesday, former planning commissioner Pugh – who is also an architect – said he has no regrets about his time on the commission, but worries that the strict policy will have an adverse effect on City government.

“I think it is important to make sure that there are people with experience on these boards,” Pugh said. “I think expertise is incredibly necessary, and the City would be impoverished without that expertise.”

Pugh said he thought that the idea that someone benefits professionally from serving on a commission is something of a misconception. More people want to hire him now that he is not a commissioner than when he was, he said.