                 TO BE PUBLISHED IN THE OFFICIAL REPORTS

                     OFFICE OF THE ATTORNEY GENERAL
                               State of California

                                   BILL LOCKYER
                                   Attorney General



                                           :
                OPINION                    :                 No. 99-304
                                           :
                    of                     :                July 15, 1999
                                           :
            BILL LOCKYER                   :
            Attorney General               :
                                           :
         CLAYTON P. ROCHE                  :
         Deputy Attorney General           :
                                           :




              THE HONORABLE JAMES K. HAHN, CITY PROSECUTOR, CITY
OF LOS ANGELES, has requested an opinion on the following question:

            May a project area committee provide advice to a redevelopment agency if
several committee members own property within the project area?


                                   CONCLUSION

             A project area committee may provide advice to a redevelopment agency even
though several committee members own property within the project area.




                                          1                                     99-304
                                                         ANALYSIS

               In 1997, a city’s community redevelopment agency amended its redevelopment
plan for a part of the city. The agency is considering a proposal to develop a 42-acre site
within the project area. A 25-member project area committee (“PAC”) has been formed to
provide advice on policy matters relating to the proposed development. The question
presented for resolution is whether the PAC may give its advice to the agency if several of
the PAC members own property within the project area. We conclude that the potential
conflicts of interest do not preclude the PAC from advising the agency.

              The Legislature has adopted a comprehensive statutory scheme, the
Community Redevelopment Law (Health & Saf. Code, §§ 33000-33855; “Law”),1 “[t]o
protect and promote the sound development and redevelopment of blighted areas and the
general welfare of the inhabitants of communities in which they exist . . .” (§ 33037, subd.
(a)). Under provisions of the Law, there is “in each community a public body, corporate and
politic, known as the redevelopment agency of the community.” (§ 33100.)

                 A PAC is formed under the terms of section 33385:

              “(a) The legislative body of a city or county shall call upon the
       residents and existing community organizations in a redevelopment project
       area to form a project area committee . . .

                 “. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

             “(b) The legislative body shall, by resolution, adopt a procedure
       pursuant to this section for the formation of the project area committee. The
       procedure shall include, but not be limited to, all of the following:

                 “. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

              “(c) The project area committee shall only include, when applicable,
       elected representatives of residential owner occupants, residential tenants,
       business owners, and existing organizations within the project area. Each
       group shall be adequately represented. Each organization represented
       pursuant to this subdivision shall appoint one of its members to the project

       1
           All references to the Health and Safety Code prior to footnote 2 are by section number only.

                                                                  2                                                                 99-304
      area committee. No project area committee member may be appointed by the
      legislative body or the redevelopment agency or any member of either body.
      The members of the committee shall serve without compensation.

             “(d)(1) The election of a representative project area committee shall be
      held in each project area within 100 days after the project area is selected.
      The legislative body shall adopt, after a duly noticed public hearing,
      communitywide procedures for filing for election, publicizing an election,
      holding an election, and for reviewing disputed elections, filling vacated seats,
      and other matters related to the electoral process. These procedures shall
      prohibit crossover voting between categories of residential owner occupants,
      residential tenants, and business owners to ensure, for example, that a business
      cannot vote for a tenant representative. However, if the legislative body
      determines that the method of selection of community organizations shall
      include election pursuant to subdivision (b), the legislative body shall
      determine the appropriate electorate and may authorize crossover voting in the
      election of community organizations.

             “. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .”

The duties of a PAC are set forth in section 33386:

              “The redevelopment agency through its staff, consultants, and agency
      members shall, upon the direction of and approval of the legislative body
      consult with, and obtain the advice of, the project area committee concerning
      those policy matters which deal with the planning and provision of residential
      facilities or replacement housing for those to be displaced by project activities.
      The agency shall also consult with the committee on other policy matters
      which affect the residents of the project area. . . .”

In addition, the Law provides that all redevelopment plans and amendments to such plans
must be submitted to a PAC, if one exists within the project area, and the PAC “may, if it
chooses, prepare a report and recommendation for submission to the legislative body.”
(§§ 33347.5, 33385.5; North Hollywood Project Area Com. v. City of Los Angeles (1998)
61 Cal.App.4th 719, 724, fn. 4.) If the PAC opposes adoption of a plan or proposed
amendment, the legislative body may adopt the plan or amendment only by a two-thirds vote
of its entire membership. (§§ 33366, 33385.5.)

            Accordingly, a PAC advises a redevelopment agency in the preparation of a
redevelopment plan or amendment (Lippman v. City of Los Angeles (1991) 234 Cal.App.3d

                                                             3                                                                 99-304
1630, 1632-1633, 1635-1636) and “concerning those policy matters which deal with the
planning and provision of residential facilities or replacement housing” and “other policy
matters which affect the residents of the project area . . .” (§ 33386). To perform its duties,
a PAC is allocated “funds or equivalent resources for a committee office, equipment and
supplies, legal counsel, and adequate staff . . . .” (§ 33388, subd. (a).) In North Hollywood
Project Area Com. v. City of Los Angeles, supra, 61 Cal.App.4th at 724, the court concluded
that a PAC “operates in an advisory capacity and lacks independent decisionmaking
authority in the redevelopment process.” (Fn. omitted.)

               In the circumstances presented, several PAC members own property in the
project area, as required to meet the statutory qualifications for them to be PAC members.
(§ 33385, subd. (c).) Some of these owners may eventually sell their properties to the
agency or developer or enter into their own development agreements with the agency.
Undeniably, they have their own personal, financial interests to protect and enhance when
the PAC advises the agency concerning “policy matters which deal with the planning and
provision of residential facilities or replacement housing” and “other policy matters which
affect the residents of the project area . . . .” (§ 33386.) Other PAC members will, of
course, have a different perspective to balance the views of the PAC members who are
property owners.

            The statutory prohibition we must consider here is Government Code section
      2
1090, which provides 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.”

Section 1090 is concerned with financial interests, other than remote or minimal interests,3
that would prevent officials from exercising absolute loyalty and undivided allegiance in
furthering the best interests of their public agencies. (See Stigall v. City of Taft (1962) 58
Cal.2d 565, 569.) When a contract is to be executed by the governing body of a public
entity and a member of the body has a proscribed interest, the prohibition cannot be avoided
by having the interested member abstain; the entire governing body is precluded from
entering into the contract. (Thomson v. Call (1985) 38 Cal.3d 633, 649-650; Stigall v. City


          2
              All references to the Government Code hereafter are by section number only.
          3
          Provisions relating to “remote interests” (§ 1091) and “non-interests” (§ 1091.5) are not germane
to the contractual matters we deal with here.

                                                       4                                           99-304
of Taft, supra, 58 Cal.2d at 569; City of Imperial Beach v. Bailey (1980) 103 Cal.App.3d
191, 195; 70 Ops.Cal.Atty.Gen. 45, 48 (1987); 69 Ops.Cal.Atty.Gen. 102, 104 (1986).) A
contract which violates section 1090 is void. (Thomson v. Call, supra, 38 Cal.3d at 646.)

               Significantly, the prohibition of section 1090 is not restricted to the specific
officer or board that “makes” the contract. The prohibition covers consultants and advisers
who are involved in the preliminary planning for the contract, including discussions,
negotiations, reasoning, or the drawing of plans and specifications for the contract. (See
Stigall v. City of Taft, supra, 58 Cal.2d at 569-571; People v. Sobel (1974) 40 Cal.App.3d
1046, 1052; Millbrae Assn. for Residential Survival v. City of Millbrae (1968) 262
Cal.App.2d 222, 236-237; Schaefer v. Berinstein (1956) 140 Cal.App.2d 278, 291- 292.)

               Hence, the issue to be resolved here is whether a redevelopment agency may
enter into a development agreement4 with a developer after it has received advice from a
PAC, some of whose members own property in the project area. One alternative would be
to preclude the PAC from performing its statutory duties so that the agency may execute the
development agreement. Another alternative would have the interested members of the PAC
not participate in the preparation or presentation of the advice. We believe that neither
alternative is necessary and that both the redevelopment agency and the PAC may perform
their statutory duties without violating the prohibition of section 1090.

               First, we have never extended the proscription against making a contract by
a board with a financially interested member to the situation of an advisory committee with
a financially interested member. No case has so extended the prohibition of section 1090.
Rather, an advisory committee may perform its responsibilities as long as the interested
member abstains and does not participate in the giving of advice. (Cal. Atty. Gen., Indexed
Letter No. IL 72-143 (Aug. 16, 1992); see Conflicts of Interest (Cal. Dept. of Justice, pamp.
1998), p. 48.) We reaffirm our prior determination concerning advisory committees in
general. They are treated differently from boards responsible for executing the actual
contracts under the governing statutes and policy reasons for the prohibition. Abstention by
the interested member is allowed for the one, but not for the other.

               However, here, we have a different set of circumstances with respect to a PAC.
In effect, the Legislature has designated persons who have financial interests in a
redevelopment project area to be advisers to the redevelopment agency concerning policy
matters that would affect the advisers as property owners. However, the PAC’s advice is
limited to (1) adoption of a redevelopment plan, (2) amendment of a redevelopment plan,

       4
          A development agreement is the type of contract that would ordinarily come under the terms of
section 1090. (See Thomson v. Call, supra, 38 Cal.3d 633.)

                                                  5                                            99-304
(3) policy matters that deal with the planning and provision of residential facilities or
replacement housing, and (4) other policy matters that affect the residents of the project area.
To apply the general prohibition of section 1090 in such circumstances or to require the
financially interested PAC members to abstain would undermine the Legislature’s express
determination that property owners in the project area are to render advice as members of
the PAC. The redevelopment agency and legislative body will receive the PAC’s advice,
knowing that some PAC members will have personal, financial interests to protect and
promote. That is the process envisioned and sanctioned by the Legislature.

              Somewhat analogous to the present situation are statutes in which the
Legislature has allowed public officials to act in spite of particular conflicts of interest that
might arise. (See, e.g., Ed. Code, § 35239; Health & Saf. Code, §§ 1441.5, 32111, 33130.)
These special statutes control the more general prohibition of section 1090. (51
Ops.Cal.Atty.Gen. 30, 30-31 (1968).)

               Also somewhat analogous would be situations in which a conflict of loyalties
would normally preclude a person from serving as an officer of two different public agencies
under the incompatible offices doctrine, but the Legislature has determined that such specific
conflicts are acceptable. (See American Canyon Fire Protection Dist. v. County of Napa
(1983) 141 Cal.App.3d 100; McLain v. County of Alameda (1962) 209 Cal.App.2d 73; 81
Ops.Cal.Atty.Gen. 51, 53 (1998); 78 Ops.Cal.Atty.Gen. 352, 353 (1995); 66
Ops.Cal.Atty.Gen. 293, 301 (1983); 63 Ops.Cal.Atty.Gen. 748, 750 (1980).)

               Here, the potential “conflict” is not only considered allowable by the
Legislature, it is required by the Legislature to give the PAC’s advice a broad perspective.
Without one or more interest groups involved in the policy determinations, the
comprehensive balance of the PAC’s advice would be reduced thereby. To conclude that
a PAC could not give advice because some of its members must own property in the project
area would render meaningless the statutory scheme under which PACs are formed; we
cannot presume the Legislature engaged in an idle act when it enacted Health and Safety
Code section 33385. (See California Teachers Assn. v. Governing Bd. of Rialto Unified
School Dist. (1997) 14 Cal.4th 627, 633-634.) The specific provisions of the latter statute
govern the more general provisions of section 1090. (See Code Civ. Proc., § 1859; Woods
v. Young (1991) 53 Cal.3d 315, 325.)

              We conclude that a PAC may provide advice to a redevelopment agency where
several PAC members own property within the project area. By statute, the advice is limited
to (1) adoption of a redevelopment plan, (2) amendment of a redevelopment plan, (3) policy
matters that deal with the planning and provision of residential facilities or replacement
housing, and (4) other policy matters that affect the residents of the project area.

                                           *****


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