                                      TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                           OFFICE OF THE ATTORNEY GENERAL
                                                     State of California

                                                  DANIEL E. LUNGREN
                                                     Attorney General
                                         ______________________________________

                                        OPINION            :
                                                           :       No. 98-1001
                                       of                  :
                                                           :       November 25, 1998
                             DANIEL E. LUNGREN             :
                                Attorney General           :
                                                           :
                              GREGORY L. GONOT             :
                             Deputy Attorney General       :
                                                           :
                    ______________________________________________________________________

                       THE HONORABLE STEVEN R. SANDERS, COUNTY COUNSEL, COUNTY OF SAN
         BENITO, has requested an opinion on the following question:

                          May a county board of supervisors enter into an agreement with the subdividers of a parcel
         of property that would require the installation of a larger storm drain system than necessary for the particular
         subdivision, with the county reimbursing the subdividers for the additional cost, if a member of the board of
         supervisors has an ownership interest in the parcel?


                                                          CONCLUSION

                          A county board of supervisors may enter into an agreement with the subdividers of a parcel
         of property that would require the installation of a larger storm drain system than necessary for the particular
         subdivision, with the county reimbursing the subdividers for the additional cost, even though a member of the
         board of supervisors has an ownership interest in the parcel.


                                                            ANALYSIS

                          Government code section 1090 Footnote No. 1 prohibits public officers and employees from
         being financially interested in contracts made by them in their official capacities, or by boards or bodies of
         which they are members. Section 1090 states in part:

                           "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."

         If a conflict of interest exists under section 1090, not only is the official prohibited from contracting, but the

1 of 4
                                                          ,       y                p                          g,
         board or body on which he serves may not enter into the contract either. (67 Ops.Cal.Atty.Gen. 369, 375
         (1984).) Abstention by the affected official does not avoid the proscription of section 1090. (See, e.g., City of
         Imperial Beach v. Bailey (1980) 103 Cal.App.3d 191, 195; Fraser-Yamor Agency, Inc. v. County of Del
         Norte (1977) 68 Cal.App.3d 201, 211-212.)

                           The question presented for resolution concerns whether a county board of supervisors may
         enter into a contract with one of its members notwithstanding the fact that the member has a financial interest
         in the contract. The agreement, executed under the terms of section 66485 and an implementing county
         ordinance, would require the subdividers of a parcel of property, including the supervisor as one of the
         owners, to construct larger drainage capacity improvements than would be necessary for the particular
         subdivision, with the county reimbursing the subdividers for the additional cost. These improvements would
         benefit the subsequent development of property adjacent to the subdivision. Would the agreement be
         prohibited under section 1090 due to the "self dealing" aspect of the transaction? We conclude that the
         agreement would not be prohibited because of the "subdividing lands" exemption from the prohibition
         contained in section 1091.1.

                           The Subdivision Map Act (§§ 66410-66499.37; "Act") allows a city or county, as a
         condition of granting subdivision map approval, to require a subdivider to construct public improvements,
         such as streets and sewers, or donate land or money for public facilities that will be needed due to the
         subdivision and future use of the property. Not only may a subdivider be required to construct improvements
         benefitting the proposed subdivision, he may also be required to install improvements benefitting property
         not within the proposed subdivision. (71 Ops.Cal.Atty.Gen. 163, 163-164 (1988).) Section 66485 states:

                          "There may be imposed by local ordinance a requirement that improvements installed
               by the subdivider for the benefit of the subdivision shall contain supplemental size, capacity,
               number, or length for the benefit of property not within the subdivision, and that those
               improvements be dedicated to the public. Supplemental length may include minimum sized
               offsite sewer lines necessary to reach a sewer outlet in existence at that time."

         Section 66486 further provides:

                           "In the event of the installation of improvements required by an ordinance adopted
               pursuant to Section 66485, the local agency shall enter into an agreement with the subdivider to
               reimburse the subdivider for that portion of the cost of those improvements, including an amount
               attributable to interest, in excess of the construction required for the subdivision."

                          Thus, if a city or county requires the supplemental capacity improvements referred to in
         section 66485, it must enter into an agreement to reimburse the subdivider for the costs attributable to that
         portion of the improvements needed for property outside the subdivision. As regards the source of the funds
         for the reimbursement of the subdivider, section 66487 states:

                        "In order to pay the costs as required by the reimbursement agreement, the local
               agency may:

                          "(a) Collect from other persons, including public agencies, using such improvements
               for the benefit of real property not within the subdivision, a reasonable charge for such use.

                           "(b) Contribute to the subdivider that part of the cost of the improvements that is
               attributable to the benefit of real property outside the subdivision and levy a charge upon the real
               property benefitted to reimburse itself for such cost, together with interest thereon, if any, paid to
               the subdivider.

                           "(c) Establish and maintain local benefit districts for the levy and collection of such

2 of 4
                           (c) Establish and maintain local benefit districts for the levy and collection of such
               charges or costs from the property benefitted."

                          In examining whether section 1090 would be applicable to the contract in question, we first
         note that exceptions to the prohibition have been made for certain "remote interests" (§ 1091) and
         "non-interests" (§ 1091.5). (See Citizen Advocates, Inc. v. Board of Supervisors (1983) 146 Cal.App.3d 171,
         178-179; Fraser-Yamor Agency, Inc. v. Del Norte County, supra, 68 Cal.App.3d at 217-218; 80
         Ops.Cal.Atty.Gen. 335, 337 (1997).) In addition, a "rule of necessity" has been applied in particular
         circumstances to permit the making of a contract that would otherwise be proscribed. (See 80
         Ops.Cal.Atty.Gen., supra, at 337; 73 Ops.Cal.Atty.Gen. 191, 195 (1990); 69 Ops.Cal.Atty.Gen. 102, 107-112
         (1986); 65 Ops.Cal.Atty.Gen. 305, 308-311 (1982).) Lastly, there are two specialized exemptions (§§ 1091.1,
         1091.2) not covered by sections 1091 or 1091.5.

                         Here, the statute governing our analysis is section 1091.1, which provides as follows:

                           "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."

         Applying this statutory language, we find that the agreement in question arises directly from the subdivision
         approval process itself. If a local ordinance imposes the requirement authorized by section 66485 and the
         local agency determines that the supplemental capacity is needed to benefit property not within the
         subdivision, the subdivider must provide the supplemental capacity as a condition for obtaining approval of
         the subdivision map. Under the agreement, the subdivider must be reimbursed for the expense of constructing
         the supplemental capacity for the benefit of later subdivisions and uses of adjacent property. Footnote No. 2

                          While subdivision approval may be said to be a "benefit" received by the subdivider, the
         Legislature has determined that such benefit should not bar a public official "from subdividing lands owned
         by him" (§ 1091.1) pursuant to the Act's requirements and local ordinances adopted thereunder. Even if the
         reimbursement could be viewed as a benefit, neither the subdivider nor the local agency has any choice in the
         matter; once the local agency orders the supplemental capacity, it is required by law to provide for
         reimbursement through an agreement.

                          In this regard, we find that the mandated reimbursement procedure here may be compared to
         the eminent domain procedure outlined in Santa Clara Valley Water Dist. v. Gross (1988) 200 Cal.App.3d
         1363. In Gross, the court concluded that participation in a statutorily mandated process in connection with
         the sale of property through eminent domain did not constitute the making of a contract for purposes of
         section 1090. The court stated:

                           ". . . . Section 1090 is a broadly drafted conflict-of-interest statute. It expresses a
               general policy that public officers and employees are to refrain from entering into transactions
               which will conflict with the performance of their official duties. (City of Carmel-by-the-Sea v.
               Young (1970) 2 Cal.3d 259, 270.) . . . . Government Code section 1090 is directed at dishonest
               conduct and at ' " 'conduct that tempts dishonor' " ' (Thomson v. Call (1985) 38 Cal.3d 633, 648);
               it has no force in the context of a condemnation action where the sale of property is
               accomplished by operation of law and each side is ordinarily represented by counsel.

3 of 4
                       p         y p                                               y   p            y

                            "......................................................

                            ". . . . In our view compliance with section 1250.410 is no more likely to create an
                appearance of impropriety than participation in mandatory settlement conferences. 'The
                Legislature [in section 1250.410] did not direct the parties to "apprise" each other or
                "communicate" with each other about an offer or demand.' (City of San Leandro v. Highsmith,
                supra, 123 Cal.App.3d 146, 155.) Rather it is directed that each file with the court, and serve
                upon the other, a formal offer and demand, as an absolute prerequisite to an award of attorney's
                fees. This procedure is not the equivalent of negotiations between the parties and consequently
                does not run afoul of section 1090." (Id., at pp. 1369-1370.)

                          Similarly, here, the supplemental capacity reimbursement procedure for subdivisions is
         mandated by statute. The reimbursement amount is dictated by the costs of construction; it is not subject to
         negotiation so as to cause an appearance of impropriety. The supervisor in question may only recover his
         actual costs--no more, no less--in being required to benefit property located outside the subdivision.

                           As the reimbursement procedure set forth in sections 66485-66489 arises directly from the
         subdivision process specified in section 1091.1, is mandated by statute, and does not involve negotiations
         that would cause an appearance of impropriety, we conclude that a county board of supervisors may enter
         into an agreement with the subdividers of a parcel of property that would require the installation of a larger
         storm drain system than necessary for the particular subdivision, with the county reimbursing the subdividers
         for the additional cost, even though a member of the board of supervisors has an ownership interest in the
         parcel. Footnote No. 3 Of course, pursuant to the proviso contained in section 1091.1, the supervisor would be
         required to fully disclose the nature of his interest in the land to be subdivided and may not cast his vote on
         any matter pertaining to the subdivision, including the reimbursement agreement.

                                                                  *****

         Footnote No. 1
         All undesignated section references hereafter are to the Government Code.
         Footnote No. 2
         Section 1091.1 contemplates that the subdivision process may involve an actual contract between the public body and one
         of its members since it states that the "member of such board or commission shall not cast his vote upon any matter or
         contract concerning said subdivision . . . ." (Italics added.)
         Footnote No. 3
         In light of the conclusion reached, it is unnecessary to determine whether the agreement would also avoid the proscription
         of section 1090 under the "rule of necessity" due to the county's need for the supplemental drainage capacity.




4 of 4
