SECTIONS 1090-1099 - California Statutes

GOVERNMENT CODE

SECTION 1090-1099

1090. Members of the Legislature, state, county, district, judicial
district, and city officers or employees 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. Nor shall state,
county, district, judicial district, and city officers or employees
be purchasers at any sale or vendors at any purchase made by them in
their official capacity.
As used in this article, "district" means any agency of the state
formed pursuant to general law or special act, for the local
performance of governmental or proprietary functions within limited
boundaries.

1090.1. No officer or employee of the State nor any Member of the
Legislature shall accept any commission for the placement of
insurance on behalf of the State.

1091. (a) An officer shall not be deemed to be interested in a
contract entered into by a body or board of which the officer is a
member within the meaning of this article if the officer has only a
remote interest in the contract and if the fact of that interest is
disclosed to the body or board of which the officer is a member and
noted in its official records, and thereafter the body or board
authorizes, approves, or ratifies the contract in good faith by a
vote of its membership sufficient for the purpose without counting
the vote or votes of the officer or member with the remote interest.
(b) As used in this article, "remote interest" means any of the
following:
(1) That of an officer or employee of a nonprofit entity exempt
from taxation pursuant to Section 501(c)(3) of the Internal Revenue
Code (26 U.S.C. Sec. 501(c)(3)) or a nonprofit corporation, except as
provided in paragraph (8) of subdivision (a) of Section 1091.5.
(2) That of an employee or agent of the contracting party, if the
contracting party has 10 or more other employees and if the officer
was an employee or agent of that contracting party for at least three
years prior to the officer initially accepting his or her office and
the officer owns less than 3 percent of the shares of stock of the
contracting party; and the employee or agent is not an officer or
director of the contracting party and did not directly participate in
formulating the bid of the contracting party.
For purposes of this paragraph, time of employment with the
contracting party by the officer shall be counted in computing the
three-year period specified in this paragraph even though the
contracting party has been converted from one form of business
organization to a different form of business organization within
three years of the initial taking of office by the officer. Time of
employment in that case shall be counted only if, after the transfer
or change in organization, the real or ultimate ownership of the
contracting party is the same or substantially similar to that which
existed before the transfer or change in organization. For purposes
of this paragraph, stockholders, bondholders, partners, or other
persons holding an interest in the contracting party are regarded as
having the "real or ultimate ownership" of the contracting party.
(3) That of an employee or agent of the contracting party, if all
of the following conditions are met:
(A) The agency of which the person is an officer is a local public
agency located in a county with a population of less than 4,000,000.
(B) The contract is competitively bid and is not for personal
services.
(C) The employee or agent is not in a primary management capacity
with the contracting party, is not an officer or director of the
contracting party, and holds no ownership interest in the contracting
party.
(D) The contracting party has 10 or more other employees.
(E) The employee or agent did not directly participate in
formulating the bid of the contracting party.
(F) The contracting party is the lowest responsible bidder.
(4) That of a parent in the earnings of his or her minor child for
personal services.
(5) That of a landlord or tenant of the contracting party.
(6) That of an attorney of the contracting party or that of an
owner, officer, employee, or agent of a firm that renders, or has
rendered, service to the contracting party in the capacity of
stockbroker, insurance agent, insurance broker, real estate agent, or
real estate broker, if these individuals have not received and will
not receive remuneration, consideration, or a commission as a result
of the contract and if these individuals have an ownership interest
of 10 percent or more in the law practice or firm, stock brokerage
firm, insurance firm, or real estate firm.
(7) That of a member of a nonprofit corporation formed under the
Food and Agricultural Code or a nonprofit corporation formed under
the Corporations Code for the sole purpose of engaging in the
merchandising of agricultural products or the supplying of water.
(8) That of a supplier of goods or services when those goods or
services have been supplied to the contracting party by the officer
for at least five years prior to his or her election or appointment
to office.
(9) That of a person subject to the provisions of Section 1090 in
any contract or agreement entered into pursuant to the provisions of
the California Land Conservation Act of 1965.
(10) Except as provided in subdivision (b) of Section 1091.5, that
of a director of, or a person having an ownership interest of, 10
percent or more in a bank, bank holding company, or savings and loan
association with which a party to the contract has a relationship of
borrower or depositor, debtor or creditor.
(11) That of an engineer, geologist, or architect employed by a
consulting engineering or architectural firm. This paragraph applies
only to an employee of a consulting firm who does not serve in a
primary management capacity, and does not apply to an officer or
director of a consulting firm.
(12) That of an elected officer otherwise subject to Section 1090,
in any housing assistance payment contract entered into pursuant to
Section 8 of the United States Housing Act of 1937 (42 U.S.C. Sec.
1437f) as amended, provided that the housing assistance payment
contract was in existence before Section 1090 became applicable to
the officer and will be renewed or extended only as to the existing
tenant, or, in a jurisdiction in which the rental vacancy rate is
less than 5 percent, as to new tenants in a unit previously under a
Section 8 contract. This section applies to any person who became a
public official on or after November 1, 1986.
(13) That of a person receiving salary, per diem, or reimbursement
for expenses from a government entity.
(14) That of a person owning less than 3 percent of the shares of
a contracting party that is a for-profit corporation, provided that
the ownership of the shares derived from the person's employment with
that corporation.
(15) That of a party to litigation involving the body or board of
which the officer is a member in connection with an agreement in
which all of the following apply:
(A) The agreement is entered into as part of a settlement of
litigation in which the body or board is represented by legal
counsel.
(B) After a review of the merits of the agreement and other
relevant facts and circumstances, a court of competent jurisdiction
finds that the agreement serves the public interest.
(C) The interested member has recused himself or herself from all
participation, direct or indirect, in the making of the agreement on
behalf of the body or board.
(16) That of a person who is an officer or employee of an
investor-owned utility that is regulated by the Public Utilities
Commission with respect to a contract between the investor-owned
utility and a state, county, district, judicial district, or city
body or board of which the person is a member, if the contract
requires the investor-owned utility to provide energy efficiency
rebates or other type of program to encourage energy efficiency that
benefits the public when all of the following apply:
(A) The contract is funded by utility consumers pursuant to
regulations of the Public Utilities Commission.
(B) The contract provides no individual benefit to the person that
is not also provided to the public, and the investor-owned utility
receives no direct financial profit from the contract.
(C) The person has recused himself or herself from all
participation in making the contract on behalf of the state, county,
district, judicial district, or city body or board of which he or she
is a member.
(D) The contract implements a program authorized by the Public
Utilities Commission.
(c) This section is not applicable to any officer interested in a
contract who influences or attempts to influence another member of
the body or board of which he or she is a member to enter into the
contract.
(d) The willful failure of an officer to disclose the fact of his
or her interest in a contract pursuant to this section is punishable
as provided in Section 1097. That violation does not void the
contract unless the contracting party had knowledge of the fact of
the remote interest of the officer at the time the contract was
executed.

1091.1. The prohibition against an interest in contracts provided
by this article or any other provision of law shall not be deemed to
prohibit any public officer or member of any public board or
commission from subdividing lands owned by him or in which he has an
interest and which subdivision of lands is effected under the
provisions of Division 2 (commencing with Section 66410) of Title 7
of the Government Code or any local ordinance concerning
subdivisions; provided, that (a) said officer or member of such board
or commission shall first fully disclose the nature of his interest
in any such lands to the legislative body having jurisdiction over
the subdivision thereof, and (b) said officer or member of such board
or commission shall not cast his vote upon any matter or contract
concerning said subdivision in any manner whatever.

1091.2. Section 1090 shall not apply to any contract or grant made
by local workforce investment boards created pursuant to the federal
Workforce Investment Act of 1998 except where both of the following
conditions are met:
(a) The contract or grant directly relates to services to be
provided by any member of a local workforce investment board or the
entity the member represents or financially benefits the member or
the entity he or she represents.
(b) The member fails to recuse himself or herself from making,
participating in making, or in any way attempting to use his or her
official position to influence a decision on the grant or grants.

1091.3. Section 1090 shall not apply to any contract or grant made
by a county children and families commission created pursuant to the
California Children and Families Act of 1998 (Division 108
(commencing with Section 130100) of the Health and Safety Code),
except where both of the following conditions are met:
(a) The contract or grant directly relates to services to be
provided by any member of a county children and families commission
or the entity the member represents or financially benefits the
member or the entity he or she represents.
(b) The member fails to recuse himself or herself from making,
participating in making, or in any way attempting to use his or her
official position to influence a decision on the grant or grants.

1091.4. (a) As used in Section 1091, "remote interest" also
includes a person who has a financial interest in a contract, if all
of the following conditions are met:
(1) The agency of which the person is a board member is a special
district serving a population of less than 5,000 that is a landowner
voter district, as defined in Section 56050, that does not distribute
water for any domestic use.
(2) The contract is for either of the following:
(A) The maintenance or repair of the district's property or
facilities provided that the need for maintenance or repair services
has been widely advertised. The contract will result in materially
less expense to the district than the expense that would have
resulted under reasonably available alternatives and review of those
alternatives is documented in records available for public
inspection.
(B) The acquisition of property that the governing board of the
district has determined is necessary for the district to carry out
its functions at a price not exceeding the value of the property, as
determined in a record available for public inspection by an
appraiser who is a member of a recognized organization of appraisers.
(3) The person did not participate in the formulation of the
contract on behalf of the district.
(4) At a public meeting, the governing body of the district, after
review of written documentation, determines that the property
acquisition or maintenance and repair services cannot otherwise be
obtained at a reasonable price and that the contract is in the best
interests of the district, and adopts a resolution stating why the
contract is necessary and in the best interests of the district.
(b) If a party to any proceeding challenges any fact or matter
required by paragraph (2), (3), or (4) of subdivision (a) to qualify
as a remote interest under subdivision (a), the district shall bear
the burden of proving this fact or matter.

1091.5. (a) An officer or employee shall not be deemed to be
interested in a contract if his or her interest is any of the
following:
(1) The ownership of less than 3 percent of the shares of a
corporation for profit, provided that the total annual income to him
or her from dividends, including the value of stock dividends, from
the corporation does not exceed 5 percent of his or her total annual
income, and any other payments made to him or her by the corporation
do not exceed 5 percent of his or her total annual income.
(2) That of an officer in being reimbursed for his or her actual
and necessary expenses incurred in the performance of official
duties.
(3) That of a recipient of public services generally provided by
the public body or board of which he or she is a member, on the same
terms and conditions as if he or she were not a member of the body or
board.
(4) That of a landlord or tenant of the contracting party if the
contracting party is the federal government or any federal department
or agency, this state or an adjoining state, any department or
agency of this state or an adjoining state, any county or city of
this state or an adjoining state, or any public corporation or
special, judicial, or other public district of this state or an
adjoining state unless the subject matter of the contract is the
property in which the officer or employee has the interest as
landlord or tenant in which event his or her interest shall be deemed
a remote interest within the meaning of, and subject to, the
provisions of Section 1091.
(5) That of a tenant in a public housing authority created
pursuant to Part 2 (commencing with Section 34200) of Division 24 of
the Health and Safety Code in which he or she serves as a member of
the board of commissioners of the authority or of a community
development commission created pursuant to Part 1.7 (commencing with
Section 34100) of Division 24 of the Health and Safety Code.
(6) That of a spouse of an officer or employee of a public agency
in his or her spouse's employment or officeholding if his or her
spouse's employment or officeholding has existed for at least one
year prior to his or her election or appointment.
(7) That of a nonsalaried member of a nonprofit corporation,
provided that this interest is disclosed to the body or board at the
time of the first consideration of the contract, and provided further
that this interest is noted in its official records.
(8) That of a noncompensated officer of a nonprofit, tax-exempt
corporation, which, as one of its primary purposes, supports the
functions of the body or board or to which the body or board has a
legal obligation to give particular consideration, and provided
further that this interest is noted in its official records.
For purposes of this paragraph, an officer is "noncompensated"
even though he or she receives reimbursement from the nonprofit,
tax-exempt corporation for necessary travel and other actual expenses
incurred in performing the duties of his or her office.
(9) That of a person receiving salary, per diem, or reimbursement
for expenses from a government entity, unless the contract directly
involves the department of the government entity that employs the
officer or employee, provided that the interest is disclosed to the
body or board at the time of consideration of the contract, and
provided further that the interest is noted in its official record.
(10) That of an attorney of the contracting party or that of an
owner, officer, employee, or agent of a firm which renders, or has
rendered, service to the contracting party in the capacity of
stockbroker, insurance agent, insurance broker, real estate agent, or
real estate broker, if these individuals have not received and will
not receive remuneration, consideration, or a commission as a result
of the contract and if these individuals have an ownership interest
of less than 10 percent in the law practice or firm, stock brokerage
firm, insurance firm, or real estate firm.
(11) Except as provided in subdivision (b), that of an officer or
employee of, or a person having less than a 10-percent ownership
interest in, a bank, bank holding company, or savings and loan
association with which a party to the contract has a relationship of
borrower, depositor, debtor, or creditor.
(12) That of (A) a bona fide nonprofit, tax-exempt corporation
having among its primary purposes the conservation, preservation, or
restoration of park and natural lands or historical resources for
public benefit, which corporation enters into an agreement with a
public agency to provide services related to park and natural lands
or historical resources and which services are found by the public
agency, prior to entering into the agreement or as part of the
agreement, to be necessary to the public interest to plan for,
acquire, protect, conserve, improve, or restore park and natural
lands or historical resources for public purposes and (B) any
officer, director, or employee acting pursuant to the agreement on
behalf of the nonprofit corporation. For purposes of this paragraph,
"agreement" includes contracts and grants, and "park," "natural
lands," and "historical resources" shall have the meanings set forth
in subdivisions (d), (g), and (i) of Section 5902 of the Public
Resources Code. Services to be provided to the public agency may
include those studies and related services, acquisitions of property
and property interests, and any activities related to those studies
and acquisitions necessary for the conservation, preservation,
improvement, or restoration of park and natural lands or historical
resources.
(13) That of an officer, employee, or member of the Board of
Directors of the California Housing Finance Agency with respect to a
loan product or programs if the officer, employee, or member
participated in the planning, discussions, development, or approval
of the loan product or program and both of the following two
conditions exist:
(A) The loan product or program is or may be originated by any
lender approved by the agency.
(B) The loan product or program is generally available to
qualifying borrowers on terms and conditions that are substantially
the same for all qualifying borrowers at the time the loan is made.
(b) An officer or employee shall not be deemed to be interested in
a contract made pursuant to competitive bidding under a procedure
established by law if his or her sole interest is that of an officer,
director, or employee of a bank or savings and loan association with
which a party to the contract has the relationship of borrower or
depositor, debtor or creditor.

1091.6. An officer who is also a member of the governing body of an
organization that has an interest in, or to which the public agency
may transfer an interest in, property that the public agency may
acquire by eminent domain shall not vote on any matter affecting that
organization.

1092. (a) Every contract made in violation of any of the provisions
of Section 1090 may be avoided at the instance of any party except
the officer interested therein. No such contract may be avoided
because of the interest of an officer therein unless the contract is
made in the official capacity of the officer, or by a board or body
of which he or she is a member.
(b) An action under this section shall be commenced within four
years after the plaintiff has discovered, or in the exercise of
reasonable care should have discovered, a violation described in
subdivision (a).

1092.5. Notwithstanding Section 1092, no lease or purchase of, or
encumbrance on, real property may be avoided, under the terms of
Section 1092, in derogation of the interest of a good faith lessee,
purchaser, or encumbrancer where the lessee, purchaser, or
encumbrancer paid value and acquired the interest without actual
knowledge of a violation of any of the provisions of Section 1090.

1093. The State Treasurer and Controller, county and city officers,
and their deputies and clerks shall not purchase or sell, or in any
manner receive for their own or any other person's use or benefit any
State, county or city warrants, scrip, orders, demands, claims, or
other evidences of indebtedness against the State, or any county or
city thereof. This section does not apply to evidences of
indebtedness issued to or held by such an officer, deputy or clerk
for services rendered by them, nor to evidences of the funded
indebtedness of the State, county, or city.

1094. Every officer whose duty it is to audit and allow the
accounts of other state, county, or city officers shall, before
allowing such accounts, require each of such officers to make and
file with him an affidavit or certificate under penalty of perjury
that he has not violated any of the provisions of this article, and
any individual who wilfully makes and subscribes such certificate to
an account which he knows to be false as to any material matter shall
be guilty of a felony and upon conviction thereof shall be subject
to the penalties prescribed for perjury by the Penal Code of this
State.

1095. Officers charged with the disbursement of public moneys shall
not pay any warrant or other evidence of indebtedness against the
State, county, or city when it has been purchased, sold, received, or
transferred contrary to any of the provisions of this article.

1096. Upon the officer charged with the disbursement of public
moneys being informed by affidavit that any officer, whose account is
about to be settled, audited, or paid by him, has violated any of
the provisions of this article, the disbursing officer shall suspend
such settlement or payment, and cause the district attorney to
prosecute the officer for such violation. If judgment is rendered for
the defendant upon such prosecution, the disbursing officer may
proceed to settle, audit, or pay the account as if no affidavit had
been filed.

1097. Every officer or person prohibited by the laws of this state
from making or being interested in contracts, or from becoming a
vendor or purchaser at sales, or from purchasing script, or other
evidences of indebtedness, including any member of the governing
board of a school district, who willfully violates any of the
provisions of such laws, is punishable by a fine of not more than one
thousand dollars ($1,000), or by imprisonment in the state prison,
and is forever disqualified from holding any office in this state.

1098. (a) Any current public officer or employee who willfully and
knowingly discloses for pecuniary gain, to any other person,
confidential information acquired by him or her in the course of his
or her official duties, or uses any such information for the purpose
of pecuniary gain, is guilty of a misdemeanor.
(b) As used in this section:
(1) "Confidential information" means information to which all of
the following apply:
(A) At the time of the use or disclosure of the information, the
information is not a public record subject to disclosure under the
Public Records Act.
(B) At the time of the use or disclosure of the information, the
disclosure is prohibited by (i) a statute, regulation, or rule which
applies to the agency in which the officer or employee serves; (ii)
the statement of incompatible activities adopted pursuant to Section
19990 by the agency in which the officer or employee serves; or (iii)
a provision in a document similar to a statement of incompatible
activities if the agency in which the officer or employee serves is a
local agency.
(C) The use or disclosure of the information will have, or could
reasonably be expected to have, a material financial effect on any
investment or interest in real property which the officer or
employee, or any person who provides pecuniary gain to the officer or
employee in return for the information, has at the time of the use
or disclosure of the information or acquires within 90 days following
the use or disclosure of the information.
(2) For purposes of paragraph (1):
(A) "Interest in real property" has the definition prescribed by
Section 82033.
(B) "Investment" has the definition prescribed by Section 82034.
(C) "Material financial effect" has the definition prescribed by
Sections 18702 and 18702.2 of Title 2 of the California
Administrative Code, as those sections read on September 1, 1987.
(3) "Pecuniary gain" does not include salary or other similar
compensation from the officer's or the employee's agency.
(c) This section shall not apply to any disclosure made to any law
enforcement agency, nor to any disclosure made pursuant to Sections
10542 and 10543.
(d) This section is not intended to supersede, amend, or add to
subdivision (b) of Section 8920 regarding prohibited conduct of
Members of the Legislature.

1099. (a) A public officer, including, but not limited to, an
appointed or elected member of a governmental board, commission,
committee, or other body, shall not simultaneously hold two public
offices that are incompatible. Offices are incompatible when any of
the following circumstances are present, unless simultaneous holding
of the particular offices is compelled or expressly authorized by
law:
(1) Either of the offices may audit, overrule, remove members of,
dismiss employees of, or exercise supervisory powers over the other
office or body.
(2) Based on the powers and jurisdiction of the offices, there is
a possibility of a significant clash of duties or loyalties between
the offices.
(3) Public policy considerations make it improper for one person
to hold both offices.
(b) When two public offices are incompatible, a public officer
shall be deemed to have forfeited the first office upon acceding to
the second. This provision is enforceable pursuant to Section 803 of
the Code of Civil Procedure.
(c) This section does not apply to a position of employment,
including a civil service position.
(d) This section shall not apply to a governmental body that has
only advisory powers.
(e) For purposes of paragraph (1) of subdivision (a), a member of
a multimember body holds an office that may audit, overrule, remove
members of, dismiss employees of, or exercise supervisory powers over
another office when the body has any of these powers over the other
office or over a multimember body that includes that other office.
(f) This section codifies the common law rule prohibiting an
individual from holding incompatible public offices.