GC 1090 IMPLICATIONS FOR STAFF MADE CONTRACTS WHERE A COUNCIL OR BOARD MEMBER HAS A FINANCIAL INTRSEST IN THE CONTRACT

Home Browse Search

BEST BEST & KRIEGER ATTORNEYS AT LAW CITY P7 Memorandum CLF To: PUBLIC AGENCY CLIENTS From: PUBLIC POLICY & ETHICS GROUP, BEST BEST & KRIEGER LLP Date: DECEMBER 18, 2015 Re: GC § 1090 IMPLICATIONS FOR STAFF MADE CONTRACTS WHERE A COUNCIL OR BOARD MEMBER HAS A FINANCIAL INTEREST IN THE CONTRACT Government Code section 1090 is the powerful and far reaching conflict of interest statute which prohibits public officials, employees and certain consultants from having a financial interest in any contract made by them in their official capacity or by any board of which they are members. It is this final clause which distinguishes section 1090 from other conflict of interest statutes, like the Political Reform Act, which focus exclusively on the official or employee, individually. Section 1090 prohibits an entire council or board from making a contract if any member has a "financial interest' in the contract, and this prohibition is not resolved even though the official with the "financial interest' does not have any part in the making of the contract or the decision to approve or ratify the contract. (Fraser-Yamor Agency, Inc. v. County of Del Norte (1977) 68 Ca1.App.3d 201, 211-212.) If one member of a board or council has a "financial interest," the city or agency cannot enter into the contract. As a practical matter, many municipalities and agencies commonly delegate the authority to make contracts to a city manager, superintendent, chief administrative officer or other staff member. In these circumstances, the council or board and its members may have no knowledge of a contract entered into by the delegated staff member, although the council or board is ultimately responsible for the contract. The question that this circumstance raises is: May a staff member, delegated to make contracts on behalf of a council or board, make a contract in which a council or board member has a "financial interest' without the knowledge of the council, board or that member, without violating the prohibition of Government Code section 1090? Answer: Generally, no. Where a council or board delegates the contract -making responsibility and remains responsible for the contract, the fact that the contract is "made" by a staff member with or without knowledge of the council, board or member with a "financial interest," the contract is prohibited by section 1090. -I- This product provided under the Public Policy & Ethics Group Program 93939.0020E\22360005.2