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1190 W <br />BEST BEST & KRIEGER 3 <br />ATTORNEYS AT LAW <br />Memorandum <br />To: <br />PUBLIC AGENCY CLIENTS <br />From: <br />BEST BEST & KRIEGER LLP <br />Date: <br />MAY 29, 2014 <br />Re: <br />FPPC CHANGES REAL PROPERTY MATERIALITY RULES <br />Last month, the Fair Political Practices Commission ("FPPC") repealed <br />Regulation 18704.2 and amended Regulation 18705.2 thereby adopting new rules for <br />evaluating whether a public official's financial interest in real property' rises to a <br />disqualifying conflict of interestZ Effective May 31, 2014, public officials can no longer <br />rely on the old 500 foot property rule and the related "one -penny" rule when determining <br />whether a property interest owned by a public official results in a disqualifying conflict of <br />interest. <br />What was the old rule? <br />Previously, public officials determined whether they had a disqualifying real <br />property interest by conducting a two part analysis. <br />First, was the property interest in question either "directly" or "indirectly" <br />involved in a pending decision before the agency? <br />• Second, did the property interest reach a certain materiality threshold? <br />'rhe Political Reform Act ("Act") does not prevent officials from owning or acquiring financial interests that may <br />conflict with their official duties, nor does the mere possession of such interests require officials to resign from <br />office. An official has an "interest in real property" when the official, or his or her spouse or dependent children, <br />has a direct or indirect equity, option, or leasehold interest of $2,000 or more in a parcel of property (e.g., <br />ownership, mortgages, deeds of trusts, options to buy, or joint tenancies) located in, or within two miles of, the <br />geographical jurisdiction of the official's agency (e.g., within two miles of city boundaries for city officials), (Gov. <br />Code §§ 82033, 82035.) <br />z In 2013, the FPPC began a process of reviewing and overhauling several of its regulations, including the eight -step <br />conflict of interest analysis. Last year, the FPPC presented a new organizational structure which simplifies and <br />consolidates this analysis into a new four -step process. For a number of years, this eight -step analysis had been the <br />method for determining whether an official could make, participate in making, or influence a governmental decision <br />that involved his or her real property interest. <br />This product provided under the Public Policy & Ethics Group Program <br />09879.00000\8808268.2 <br />