July 1997
No. 23Insufficient Description Of Conflict Of Interest Voids Adoption Of Resolution Of Necessity A California court of appeal recently invalidated the adoption of a resolution of necessity by a redevelopment agency because two members of the agency board who had conflicts of interest failed to describe in sufficient detail the nature of those conflicts. (Kunec v. Brea Redevelopment Agency 97 D.A.R. 6969.)
The Brea Redevelopment Agency was governed by the five elected councilmembers of the City of Brea. The Agency held a hearing to consider adoption of a resolution of necessity to acquire property by eminent domain. Two councilmembers declared conflicts of interest necessitating their abstention from voting on the resolution of necessity. The minutes of the meeting disclosed only that one member owned property within three hundred feet of the perimeter of the project and that the other had business interests in the area.
Because the eminent domain law requires that a resolution of necessity be adopted by a two-thirds vote (four votes of a five member board) the Agency invoked the "rule of necessity" described in the Political Reform Act to gain four voting members necessary to adopt the resolution. The City Clerk tossed a coin leading to the determination that one of the two conflicted members would vote and the other would abstain. By a 4-0 vote, the Agency adopted the resolution to authorize the condemnation.
The Political Reform Act contains the "rule of necessity" which permits a conflicted public official to participate in the making of a governmental decision to the extent his participation is legally required for the action to be made. (Gov. Code, § 87100.) The FPPC regulation implementing the rule obligates the conflicted public official to describe "with particularity" the nature of the financial interest creating the conflict before participating in the decision making and to state the reason why there is no alternative source of decision making authority other than to permit the conflicted official to participate. (Cal. Code Regs., tit. 2, § 18701.)
Applying these rules, the court held that the perfunctory description of the conflicts of interest of the two Agency members was insufficient to satisfy the FPPC regulation requirement of "particularity". Secondly, the court held that the Agency's action was invalid because the minutes did not explain why the Agency board was the only collective body able to reach the decision to adopt the resolution of necessity. On this latter point, the court hinted that, in a future case, it may consider arguments that the Agency could delegate the adoption of the resolution of necessity to a redevelopment commission, or that the Agency could replace a conflicted member of the Agency board with an elector from within the jurisdiction, pursuant to Health and Safety Code sections 33200, 33201 and 33202.
The important message of this case is that, before a legislative body may invoke the "rule of necessity" to permit a public official with a conflict to participate in decision making, the nature of the conflict of interest must be explained in detail in the minutes of the body, and there must be an explanation in the minutes as to why the legislative body is the only collective body able to reach the decision that is before it.
Should you have any questions regarding this case, please contact Tom Riggs or Jerry Behrens in our Fresno office (209-431-5600), or any of our other offices.As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.
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