State Revises Conflict-of-Interest Rules: Fair Political Practices Commission Overhaul Comes as Scan

New conflict-of-interest rules promulgated by the Fair Political Practices Commission went into effect in February, and many changes affect public officials who make land use decisions. The rule changes come at a time when land use scandals appear to be at a new peak, with one staff planner pleading guilty to soliciting bribes and the planning director in another city facing a trial on bribery charges (see sidebar). Leaders of the FPPC say the new regulations (California Code of Regulations 18700 - 18708) and an accompanying eight-step test for determining conflicts of interest make rules clearer for government officials and the public. "If nothing else, the revisions to the rules allowed us to explain what the rules really were because there was a lot of misinformation out there," FPPC Chairwoman Karen Getman said. The FPPC revised the longtime "300-foot rule," and modified other regulations to allow small-time landlords to make rent-control decisions. The agency also attempted to clear up when a public official with a conflict of interest must participate. But some observers question whether the changes, two years in the making, will have much impact. "It's not a significant change," said Matthew Jacobs, a Sacramento attorney with Downey, Brand, Seymour and Rohwer and a former federal prosecutor. "It's kind of tweaking at the perimeters, but the fundamental rules are still the same. There is only so much that can be done within a regulatory structure that is existing." Getman said the new regulations are not an attempt to go after the truly bad actors because they are usually busted for violating the Penal Code. Still, she said, the revisions should make conflicts clearer in cases where a public official makes a decision that helps himself. "There are more of those out there than you care to see," she said. The FPPC hopes to prevent public officials from even getting in that position. Jacobs, who prosecuted the Operation Rezone sting in the Fresno area during the 1990s, said that the FPPC's rules, in fact, do affect criminal cases. Prosecutors will not bring a case until they have evidence of bribery or a quid pro quo, but they often use violations of state conflict-of-interest requirements in the actual prosecution, he said. The voter-approved Political Reform Act of 1974 created the FPPC. The Act addresses a variety of state and local government officials not just those in the land use field. The FPPC often gets more attention for its oversight of campaign contribution reporting. But state regulators spend a great deal of time dealing with land use conflicts of interest because there are so many gray areas. Land use decisions are seldom a simple yes or no, unlike the awarding of a contract. "The land use decisions caused the most trouble," Getman said of earlier rules. "More people were disqualified and felt they were unjustly disqualified. A lot of the advisors had trouble interpreting the rules." The new eight-step, conflict of interest test is intended to make things easier for advisors and public officials. The eight-step test begins with who is bound by the conflict rules, moves through potential conflicts and economic interests, and addresses various exceptions. Adoption of the eight-step test is part of making the system more accessible to everyone, FPPC officials said. Agency members are also accepting speaking engagements, publishing articles and working with the League of California Cities to spread the word. A $500,000 grant has funded a new publications unit, and the agency is urging public officials to use a free advice line, 1 (866) ASK-FPPC. Under the old 300-foot rule, decision-makers were presumed to have a conflict of interest if they owned property within 300 feet of a proposed project, and they had to abstain from the matter. If they owned property 300 to 2,500 feet from the project, a conflict existed if there was a $10,000 effect on the fair market value of their property. The new rules extend the presumption of a conflict to owners of property within 500 feet. But beyond that point, proof of a material conflict is needed. The FPPC made the change because the old rules for the middle zone of 300 to 2,500 feet were impossible to enforce, Getman said. Five-hundred feet is also a new standard for determining conflicts for public officials who are leaseholders. Previous rules involved complicated criteria for determining whether a leaseholder would be affected by a land use decision. The new rules presume a conflict of interest within 500 feet, although the conflict can be rebutted by proof, said John Wallace, FPPC senior counsel. Officials hope that a 500-foot threshold for both property owners and leaseholders will make rules easier to understand. The FPPC also cleared up rules regarding landlords who vote on rent control issues. Now, anyone who owns three or fewer rental units can participate. Owners of more units can participate in some instances. "We had rent control boards where, basically, all the landlords were disqualified and only tenants got to make the decisions," Wallace explained. The revisions should allow more people to participate. The rules also have new definitions for determining a "material" financial effect on a business in which a decision-maker owns stock. The FPPC continues to wrestle with how to determine the "reasonably foreseeable effects" of a decision on a public officials' financial interests. The FPPC is accepting comments on the new rules and plans to revisit the regulations at the end of the year. Contacts: Karen Getman and John Wallace, Fair Political Practices Commission, (916) 322-5660. Matthew Jacobs, Downey, Brand, Seymour and Rohwer, (916) 441-0131. FPPC website: www.fppc.ca.gov