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INKC <br />BEST BEST & KmEGEm <br />ATTORNEYS AT LAW <br />A. Real Property Ownership Interests <br />A public official was "directly involved"a if the property in which the official had the <br />interest was the subject of the decision that was before the official's agency or if the <br />official's property was located within a 500-foot radius of the subject property. In these <br />situations, a material financial effect was presumed unless the decision resulted in a no <br />financial effect (i.e. no violation of the "one -penny" rule) on the official's property. <br />However, when a decision affects property beyond the 500-foot radius of the official's <br />property, the official's interest is deemed to be only "indirectly" involved in the decision <br />and presumed to produce no material effect. This presumption could be overturned if it <br />was shown that the official's property was to be materially affected,4 Given the cost and <br />expertise required for this type of analysis, this presumption was usually not challenged. <br />When it was challenged, it was not clear what level of evidence was necessary to <br />demonstrate that the one -penny rule had been violated. <br />B. Leasehold Interests <br />When a public official's leasehold interest was directly involved in the <br />governmental decision, it was presumed the decision would have a material financial <br />effect upon the official's interest. However, this presumption could be rebutted by proof <br />that it was not reasonably foreseeable that the decision would have an effect on any of <br />the various listed factors affecting the value of the leasehold interest.5 <br />Meanwhile, a public official's leasehold interest that was indirectly involved in a <br />governmental decision was presumed not to be material. However, again this <br />presumption could be rebutted. <br />What are the new rules? <br />• The overall structure of Regulation 18705.2 has been reorganized: <br />' Examples of situations in which a public official could be considered directly involved included decisions about <br />zoning, annexation, sale, lease, actual or permitted use of, or taxes or fees imposed on the property in which the <br />official had an interest, (Reg. § 18704.2(a).) This rule also applied to the construction of or improvements to public <br />facilities such as water, sewer or streets, that could result in the official's property receiving new or substantially <br />improved services, <br />4 Factors leading to such a rebuttal include, among others, circumstances where the decision affects: (1) the <br />development potential of the property; (2) use of the property; and (3) character of the neighborhood. <br />s Factors considered were: (1) the termination date of the lease; (2) the amount of rent paid; (3) value of the tenant's <br />right to sublease; (4) allowable use or current use of the property; or (5) use or enjoyment of the property. <br />' Factors considered were: (1) the legally allowable use where the tenant had the right to sublease; (2) actual use of <br />the real property; (3) the use or enjoyment of the property; (4) a change of rent by more than 5 percent in a 12-month <br />period; or (5) the termination date of the lease, <br />-2- <br />This product provided under the Public policy & Ethics Group Program <br />09879.00000\8808268.2 <br />