Existing law provides for code enforcement officers employed by cities and counties who have enforcement authority for health, safety, and welfare requirements. Existing law also provides for county and city health officers to enforce orders and ordinances of the governing body of the county or city, or state statutes pertaining to public health.

This bill would prohibit a local official, as defined, who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection, as defined, unless the person is the owner of the property or business, is the agent or representative of the owner, is a person who has, or operates under, a specified existing contract with the local government who has been directed by a local official to perform services at the property or business, or is a contractor or consultant, or a designated representative of a contractor or consultant, that is on a publicly available list of qualified bidders that may provide inspection, abatement, or remediation services to, and receive compensation for those services from, the local government, as specified. The bill would additionally prohibit a person who has entered into a contract with a local government for inspection, abatement, or remediation services, who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance without the presence of a local official from soliciting or receiving compensation from the owner to remediate any potential violations of a state statute or regulation or local ordinance found in the course of the inspection, as specified.

The bill would include findings that this bill addresses a matter of statewide concern rather than a municipal affair.

Existing law provides for code enforcement officers employed by cities and counties who have enforcement authority for health, safety, and welfare requirements. Existing law also provides for county and city health officers to enforce orders and ordinances of the governing body of the county or city, or state statutes pertaining to public health.

This bill would prohibit a local official, as defined, who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection, as defined, unless the person is the owner of the property or business, is the agent or representative of the owner, is a person who has, or operates under, a specified existing contract with the local government who has been directed by a local official to perform services at the property or business, or is a contractor or consultant, or a designated representative of a contractor or consultant, that is on a publicly available list of qualified bidders that may provide inspection, abatement, or remediation services to, and receive compensation for those services from, the local government, as specified. The bill would additionally prohibit a person who has entered into a contract with a local government for inspection, abatement, or remediation services, who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance without the presence of a local official from soliciting or receiving compensation from the owner to remediate any potential violations of a state statute or regulation or local ordinance found in the course of the inspection, as specified.

The bill would include findings that this bill addresses a matter of statewide concern rather than a municipal affair.

Existing law provides for code enforcement officers employed by cities and counties who have enforcement authority for health, safety, and welfare requirements. Existing law also provides for county and city health officers to enforce orders and ordinances of the governing body of the county or city, or state statutes pertaining to public health.

This bill would prohibit a local official, as defined, who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection, as defined, unless the person is the owner of the property or business, is the agent or representative of the owner, has an is a person who has, or operates under, a specified existing contract, contract with the local government who has been directed by a local official to perform services at the property or business, or is a contractor or consultant, or a designated representative of a contractor or consultant, that is on a publicly available list of qualified bidders that may provide inspection, abatement, or remediation services to, and receive compensation for those services from, the local government, as specified. The bill would additionally prohibit a person who has entered into a contract with a local government for inspection, abatement, or remediation services, who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance without the presence of a local official from soliciting or receiving compensation from the owner to remediate any potential violations of a state statute or regulation or local ordinance found in the course of the inspection, as specified.

The bill would include findings that this bill addresses a matter of statewide concern rather than a municipal affair.

Existing law provides for code enforcement officers employed by cities and counties who have enforcement authority for health, safety, and welfare requirements. Existing law also provides for county and city health officers to enforce orders and ordinances of the governing body of the county or city, or state statutes pertaining to public health.

This bill would prohibit a local official, as defined, who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection, as defined, unless the person is the owner of the property or business, is the agent or representative of the owner, or has an existing contract, or is a contractor or consultant, or a designated representative of a contractor or consultant, that is on a publicly available list of qualified bidders that may provide inspection, abatement, or remediation services to, and receive compensation for those services from, the local government, as specified. The bill would additionally prohibit a person who has entered into a contract with a local government for inspection, abatement, or remediation services, who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance without the presence of a local official from soliciting or receiving compensation from the owner to remediate any potential violations of a state statute or regulation or local ordinance found in the course of the inspection, as specified.

The bill would include findings that this bill addresses a matter of statewide concern rather than a municipal affair.

Existing law provides for code enforcement officers employed by cities and counties who have enforcement authority for health, safety, and welfare requirements. Existing law also provides for county and city health officers to enforce orders and ordinances of the governing body of the county or city, or state statutes pertaining to public health.

This bill would prohibit a code enforcement officer or local health officer of a city, county, or city and county from being accompanied by a financially interested individual, as defined, when inspecting a commercial building or commercial property or activity at that building or property. local official, as defined, who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection, as defined, unless the person is the owner of the property or business, is the agent or representative of the owner, or has an existing contract, as specified.

The bill would include findings that this bill addresses a matter of statewide concern rather than a municipal affair.

Existing law provides for code enforcement officers employed by cities and counties who have enforcement authority for health, safety, and welfare requirements. Existing law also provides for county and city health officers to enforce orders and ordinances of the governing body of the county or city, or state statutes pertaining to public health.

This bill would prohibit a code enforcement officer or local health officer of a city, county, or city and county from being accompanied by a financially interested individual, as defined, when inspecting a commercial building or commercial property or activity at that building or property.

The bill would include findings that this bill addresses a matter of statewide concern rather than a municipal affair.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2485

Author:(Chau)

As Amended Ver:June 26, 2018

Majority vote

Original Committee Reference: L. GOV.

SUMMARY: Prohibits local inspection officials from being accompanied by financially interested persons during inspections of commercial properties or businesses.

The Senate amendments:

1. Clarify that a person who has, or operates under, an existing contract with the local government of the local official to provide inspection, abatement, legal, or remediation services and has been directed by a local official to perform services at that particular inspected property or business may accompany a local inspection official.
2. Make technical and clarifying changes.

AS PASSED BY THE ASSEMBLY, this bill:

1. Prohibited a local official who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection, unless the person is any one of the following:
   1. The owner of the property or business;
   2. The agent or representative of the owner of the property or business;
   3. A person who has an existing contract with the local government of the local official to provide inspection, abatement, or remediation services for that particular inspected property or business; or,
   4. A contractor or consultant, or designated agent of that contractor or consultant, that is on a publicly available list of qualified bidders that may provide inspection, abatement, or remediation services to, and receive compensation for those services from, the local government. Such a person who accompanies a local official shall not solicit or receive compensation from the owner to remediate any potential violations of a state statute or regulation or local ordinance found in the course of inspection.
2. Prohibited, except as provided in 3), below, a person who has entered into a contract with a local government for inspection, abatement, or remediation services, who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance without the presence of a local official from soliciting or receiving compensation from the owner to remediate any potential violations of a state statute or regulation or local ordinance found in the course of the inspection.
3. Provided that 1) and 2), above, do not apply to an inspection conducted after the local official or the local official's designee has provided notice in writing to the owner of the property or business identifying specific violations of state statute or regulation or local ordinance existing upon the property and the specific actions required to correct those violations.
4. Provided that this bill does not affect the ability of a local government to recover the costs of any abatement or remediation performed by or pursuant to the authority of the local government in accordance with applicable law.
5. Provided the following definitions:
   1. "Agent or representative" may include, but is not limited to, a licensed contractor that is performing work on, or has completed work on, the commercial property or business that is the subject of the inspection;
   2. "Local government" means a city, including a charter city, county, or city and county;
   3. "Local official" means a code enforcement officer of a city, county, or a city and county, a county health officer, a city health officer, or the designated agent of those health officers, as specified; and,
   4. "Person with a potential financial interest in the outcome of the inspection" is any of the following:
      1. A person who offers to remediate for compensation potential violations of a state statute or regulation or local ordinance found in the course of an inspection by a local official; or,
      2. A person who offers to provide or provides compensation to a local official in exchange for recommending the remediation services of a specific person, providing the contact information for those services to the owner or agent of the owner of the premises or business inspected, or providing the name of the owner of the property or business or agent or representative of the owner to the person who offers the remediation services.
6. Found and declared that this bill addresses a matter of statewide concern, rather than a municipal affair as that term is used in the California Constitution, Article XI, Section 5.

FISCAL EFFECT: None

COMMENTS:

1. Bill Summary. This bill prohibits a local official who inspects a commercial property or a business for compliance with state law or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection. Exceptions to this prohibition include:
   1. The owner of the property or business or his or her representative;
   2. A person who has, or operates under, an existing contract with the local government of the local official to provide inspection, abatement, legal, or remediation services and has been directed by a local official to perform services at that particular inspected property or business; or,
   3. A contractor or consultant or designated agent that is on a list of qualified bidders that may provide inspection, abatement, or remediation services for the local government. These individuals who accompany a local official are prohibited from soliciting or receiving compensation from the owner to remediate any potential violations found in the course of the inspection.

The bill further prohibits a person who is under contract with a local government for inspection, abatement, or remediation services and inspects a commercial property or business without a local official from soliciting or receiving compensation from the owner to remediate any potential violations found during inspection.

This bill does not apply to an inspection conducted after a local official or designee has provided written notice to a property owner identifying specific violations and the specific actions required to correct those violations. This bill also protects a local government's ability to recover abatement or remediation costs it incurs in accordance with applicable law.

This bill applies to counties and cities, including charter cities. Local officials subject to the provisions of this bill include code enforcement officers, county health officers, and city health officers.

This bill is sponsored by the author.

1. Author's Statement. According to the author, "Businesses typically go through code enforcement inspections to make sure they are safe, habitable, and healthy places for the public. A local government code enforcement officer, or health officer, will inspect a business and issue citations for anything that is not up to proper safety levels. The business must then fix any cited issues in order to receive a permit to operate.

"In December of 2017, a newspaper publication reported on a possible case of inappropriate behavior by a code enforcement officer and independent contractor. The article detailed an anonymous tip submitted by the owner of an auto body factory who applied for a permit with a city to renovate his business. When the time came for an inspection of the property, the code enforcement officer was accompanied by a third party independent contractor who operates a design and construction business.

"Prior to the inspection, the business owner previously had an architect design the plans for the renovation consistent with the city's codes. However, the code enforcement officer cited a number of issues with the business and the architectural plan and required the business owner to fix them. After the inspection was complete and the code enforcement officer left the business, the owner was approached by the contractor who stayed behind and offered to redesign and construct the project for $30,000. The business owner was quoted $10,000 by the initial architect.

"The business owner ultimately paid $30,000 to the contractor, who accompanied the code enforcement officer, out of fear that not doing so would result in delays to having the permit approved. The business owner suspected being the subject of a scheme whereby the contractor and/or code enforcement officer would benefit financially from the inspection. AB 2485 limits situations that would allow local government code enforcement officers or health officers from being accompanied by a third party independent contractor to only those where the individual is only there to provide professional expertise and will not financially benefit from remedying any of the issues found during the inspection."

1. Background. Code enforcement is the prevention, detection, investigation and enforcement of violations of statutes or ordinances regulating public health, safety, and welfare, public works, business activities and consumer protection, building standards, land-use, or municipal affairs.

A code enforcement officer is any person who is not a peace officer and who is employed by any governmental subdivision, public or quasi-public corporation, public agency, public service corporation, any town, city, county, or municipal corporation, whether incorporated or chartered, who has enforcement authority for health, safety, and welfare requirements, whose duties include enforcement of any statute, rule, regulation, or standard, and who is authorized to issue citations, or file formal complaints.

A code enforcement officer also includes any person who is employed by the Department of Housing and Community Development who has enforcement authority for health, safety, and welfare requirements pursuant to the Employee Housing Act, the State Housing Law, the Manufactured Housing Act of 1980, the Mobilehome Parks Act, and the Special Occupancy Parks Act.

A county health officer enforces and observes in the unincorporated territory of a county orders and ordinances of the board of supervisors pertaining to public health and sanitary matters, orders of the local health department, and statutes relating to public health. A city health officer exercises similar functions for cities.

1. Arguments in Support. Rural County Representatives of California, in support, state, "Previously, AB 2485 broadly prohibited code enforcement officers who have enforcement authority in health, safety, and welfare from being accompanied by a 'financially interested individual' when inspecting a commercial building or commercial property or activity at the building or property. The recent amendments to AB 2485 focus this prohibition more narrowly on those circumstances creating an unacceptable risk of conflicts of interest or confusion of roles. Consequently, AB 2485 no longer poses a negative impact on enforcement of health and safety regulations in rural areas and statewide."
2. Arguments in Opposition. None on file.

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958 FN: 0003735

 THIRD READING  

Bill No: AB 2485

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/20/18

AYES: McGuire, Nguyen, Beall, Hernandez, Hertzberg, Lara, Moorlach

ASSEMBLY FLOOR: 74-0, 5/29/18 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill prohibits local inspection officials from being accompanied by financially interested persons during inspections of commercial properties or businesses.

ANALYSIS:

Existing law:

1. Allows cities to make and enforce all local, police, sanitary and other regulations not in conflict with state law.
2. Requires the building department of every city or county to enforce within its jurisdiction all the provisions published in the State Building Standards Code, State Housing Law, and the other rules and regulations promulgated pursuant to the State Housing Law pertaining to the erection, construction, reconstruction, movement, enlargement, conversion, alteration, repair, removal, demolition, or arrangement of apartment houses, hotels, or dwellings.
3. Makes it a misdemeanor for every executive or ministerial officer, employee, or appointee of the State of California, or any county or city therein, or any political subdivision thereof, to knowingly ask, receive, or agree to receive any emolument, gratuity, or reward, or any promise thereof excepting such as may be authorized by law for doing an official act.

This bill:

1. Prohibits a local official who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection, unless the person is any one of the following:
   1. The owner of the property or business;
   2. The agent or representative of the owner of the property or business;
   3. A person who has, or operates under, an existing contract with the local government of the local official to provide inspection, abatement, legal, or remediation services and has been directed by a local official to perform services at that particular inspected property or business; or,
   4. A contractor or consultant, or designated agent of that contractor or consultant, that is on a publicly available list of qualified bidders that may provide inspection, abatement, or remediation services to, and receive compensation for those services from, the local government. Such a person who accompanies a local official shall not solicit or receive compensation from the owner to remediate any potential violations of a state statute or regulation or local ordinance found in the course of inspection.
2. Prohibits, except as provided in 3) below, a person who has entered into a contract with a local government for inspection, abatement, or remediation services, who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance without the presence of a local official from soliciting or receiving compensation from the owner to remediate any potential violations of a state statute or regulation or local ordinance found in the course of the inspection.
3. Provides that 1) and 2) above do not apply to an inspection conducted after the local official or the local official's designee has provided notice in writing to the owner of the property or business identifying specific violations of state statute or regulation or local ordinance existing upon the property and the specific actions required to correct those violations.
4. Provides that this bill does not affect the ability of a local government to recover the costs of any abatement or remediation performed by or pursuant to the authority of the local government in accordance with applicable law.
5. Provides the following definitions:
   1. "Agent or representative" may include, but is not limited to, a licensed contractor that is performing work on, or has completed work on, the commercial property or business that is the subject of the inspection;
   2. "Local government" means a city, including a charter city, county, or city and county;
   3. "Local official" means a code enforcement officer of a city, county, or a city and county, a county health officer, a city health officer, or the designated agent of those health officers, as specified; and,
   4. "Person with a potential financial interest in the outcome of the inspection" is any of the following:
      1. A person who makes an offer to physically remediate for compensation potential violations of a state statute or regulation or local ordinance found in the course of an inspection by a local official; or,
      2. A person who offers to provide or provides compensation to a local official in exchange for recommending the remediation services of a specific person, providing the contact information for those services to the owner or agent of the owner of the premises or business inspected, or providing the name of the owner of the property or business or agent or representative of the owner to the person who offers the remediation services.
6. Finds and declares that this bill addresses a matter of statewide concern, rather than a municipal affair as that term is used in the California Constitution, Article XI, Section 5.

Background

Code enforcement officers. Code enforcement is the prevention, detection, investigation, and enforcement of violations of statutes or ordinances regulating public health, safety, and welfare, public works, business activities and consumer protection, building standards, land-use, or municipal affairs.

State law tasks local officials with enforcing the state’s building codes and housing laws. Various types of local officials carry out these duties, including code enforcement officers, local health officials, building officials, and fire prevention officers.

State law defines a code enforcement officer to be any person who is not a peace officer, but (1) is employed by any local government and has enforcement authority for health, safety, and welfare requirements; (2) whose duties include enforcement of any statute, rule, regulation, or standard; and (3) is authorized to issue citations, or file formal complaints. A code enforcement officer also includes any person who is employed by the Department of Housing and Community Development who has enforcement authority for health, safety, and welfare requirements pursuant to the Employee Housing Act, the State Housing Law, the Manufactured Housing Act of 1980, the Mobilehome Parks Act, and the Special Occupancy Parks Act.

A county health officer enforces county orders and ordinances of the board of supervisors pertaining to public health and sanitary matters, orders of the local health department, and statutes relating to public health. A city health officer exercises similar functions for cities.

Code enforcement officers are sometimes accompanied by contractors or other third parties when doing inspections. These third parties are not necessarily agents of the owner or the city directly, but instead may offer services to fix violations identified. Concerned about the potential for undue influence, the author wants the Legislature to tighten the circumstances under which this arrangement can occur.

Comments

1. Purpose of this bill. According to the author, “AB 2485 arose from a situation in my district where the owner of an auto body shop underwent a business permit inspection during which the code enforcement officer was accompanied by a 3rd party contractor. After the officer cited a number of issues and left, the 3rd party contractor stayed behind and offered to fix all the issues for $30,000. The business owner was previously quoted to pay only $10,000 by his initial architect. Fearing delays in the permit approval, the owner went with the 3rd party contractor but suspected being the victim of an improper scheme. AB 2485 would prohibit a local government code enforcement officer, or health officer, from being accompanied by a person with a potential financial interest in the outcome of the inspection, when inspecting a commercial property or business for compliance with a statute, regulation, or local ordinance and limit 3rd party independent contractor participation in a code enforcement inspection to individuals who have a legitimate reason to attend the inspection.”
2. Who’s to blame? AB 2485 arises from an unfortunate situation where a contractor attempted to extort a business owner into paying an exorbitant amount to fix alleged violations. Accordingly, the problem was directly tied to the conduct of the contractor, not necessarily the local official. There is some further concern that there was potentially a kickback arrangement between the contractor and the local official. Such an arrangement is likely already illegal under the Penal Code, which makes it a misdemeanor for local officials to accept emoluments or other compensation for performing official acts, except where authorized by law. Furthermore, a contractor who solicits business through such an arrangement would likely be punishable under the Unfair Business Practices Act. AB 2485 prohibits specific arrangements from occurring, but it is not clear that adding new provisions to law that prohibit already illegal behavior will solve the problem, and focusing on the behavior of the local official, as opposed to the contractor, may not necessarily be the right emphasis. In addition, it is unclear how AB 2485 would be enforced; AB 2485 does not include any penalties for violations of its specific provisions.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 6/27/18)

California Association of Code Enforcement Officers

California Manufacturers & Technology Association

Rural County Representatives of California

OPPOSITION: (Verified 6/27/18)

California Building Officials

ASSEMBLY FLOOR: 74-0, 5/29/18

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Friedman, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Rendon

NO VOTE RECORDED: Cooper, Frazier, Quirk, Wood

Prepared by:

6/27/18 16:27:25

**** END ****

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2017 - 2018 Regular

Code enforcement: financially interested parties

Prohibits local inspection officials from being accompanied by financially interested persons during inspections of commercial properties or businesses.

Background

The California Constitution allows a city or county to "make and enforce within its limits, all local, police, sanitary and other ordinances and regulations not in conflict with general laws." It is from this fundamental power that local governments derive their authority to enact ordinances to protect the public health, safety and welfare. Local governments use this authority to regulate building safety and abate nuisances.

State law defines a nuisance as anything that is injurious to health, indecent or offensive to the senses, obstructs the free use of property, or unlawfully obstructs free passage. In addition to civil and criminal enforcement mechanisms, counties and cities can adopt ordinances that establish local procedures for abating nuisances (AB 2593, Veysey, 1965).

Code enforcement officers. Code enforcement is the prevention, detection, investigation, and enforcement of violations of statutes or ordinances regulating public health, safety, and welfare, public works, business activities and consumer protection, building standards, land-use, or municipal affairs.

State law tasks local officials with enforcing the state’s building codes and housing laws. Various types of local officials carry out these duties, including code enforcement officers, local health officials, building officials, and fire prevention officers.

State law defines a code enforcement officer to be any person who is not a peace officer, but (1) is employed by any local government and has enforcement authority for health, safety, and welfare requirements; (2) whose duties include enforcement of any statute, rule, regulation, or standard; and (3) is authorized to issue citations, or file formal complaints. A code enforcement officer also includes any person who is employed by the Department of Housing and Community Development who has enforcement authority for health, safety, and welfare requirements pursuant to the Employee Housing Act, the State Housing Law, the Manufactured Housing Act of 1980, the Mobilehome Parks Act, and the Special Occupancy Parks Act.

A county health officer enforces county orders and ordinances of the board of supervisors pertaining to public health and sanitary matters, orders of the local health department, and statutes relating to public health. A city health officer exercises similar functions for cities.

Code enforcement officers are sometimes accompanied by contractors or other 3^rd parties when doing inspections. These 3^rd parties are not necessarily agents of the owner or the city directly, but instead may offer services to fix violations identified. Concerned about the potential for undue influence, the author wants the Legislature to tighten the circumstances under which this arrangement can occur.

Proposed Law

Assembly Bill 2485 prohibits a local official who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection, unless the person is any one of the following:

• The owner of the property or business;
• The agent or representative of the owner of the property or business;
• A person who has an existing contract with the local government to provide inspection, abatement, or remediation services for that particular inspected property or business; or
• A contractor or consultant, or designated agent of that contractor or consultant, that is on a publicly available list of qualified bidders that may provide inspection, abatement, or remediation services to, and receive compensation for those services from, the local government.

AB 2485 prohibits a contractor or consultant who accompanies a local official as allowed under the bill from soliciting or receiving compensation from the owner to remediate any potential violations of a state statute or regulation or local ordinance found in the course of inspection. The bill also prohibits a person who inspects a commercial property or business for code compliance pursuant to a contract with a local agency from soliciting or receiving compensation from the owner to remediate any potential violations.

AB 2485 provides that its prohibitions on local officials being accompanied by a person with a financial interest do not apply to an inspection conducted after the local official or the local official's designee has given notice to the business or property owner identifying specific violations existing upon the property and the specific actions required to correct those violations.

AB 2485 provides that the bill does not affect the ability of a local government to recover the costs of any abatement or remediation action taken by, or on behalf of, the local agency.

AB 2485 applies to all cities and counties, including charter cities, and defines its terms, including:

• “Agent or representative” to include a licensed contractor that is performing work on, or has completed work on, the commercial property or business that is the subject of the inspection;
• “Local official” to mean a code enforcement officer, a county health officer, a city health officer, or the designated agent of those health officers; and
• “Person with a potential financial interest in the outcome of the inspection” to mean either a person who offers to remediate for compensation potential violations of a state statute or regulation or local ordinance found in the course of an inspection by a local official; or a person who offers to provide or provides compensation to a local official in exchange for recommending the remediation services of a specific person, providing the contact information for those services to the owner or agent of the owner of the premises or business inspected, or providing the name of the owner of the property or business or agent or representative of the owner to the person who offers the remediation services.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “AB 2485 arose from a situation in my district where the owner of an auto body shop underwent a business permit inspection during which the code enforcement officer was accompanied by a 3rd party contractor. After the officer cited a number of issues and left, the 3rd party contractor stayed behind and offered to fix all the issues for $30,000. The business owner was previously quoted to pay only $10,000 by his initial architect. Fearing delays in the permit approval, the owner went with the 3rd party contractor but suspected being the victim of an improper scheme. AB 2485 would prohibit a local government code enforcement officer, or health officer, from being accompanied by a person with a potential financial interest in the outcome of the inspection, when inspecting a commercial property or business for compliance with a statute, regulation, or local ordinance and limit 3rd party independent contractor participation in a code enforcement inspection to individuals who have a legitimate reason to attend the inspection.”

2. Who’s to blame? AB 2485 arises from an unfortunate situation where a contractor attempted to extort a business owner into paying an exorbitant amount to fix alleged violations. Accordingly, the problem was directly tied to the conduct of the contractor, not necessarily the local official. There is some further concern that there was potentially a kickback arrangement between the contractor and the local official. Such an arrangement is likely already illegal under the Penal Code, which makes it a misdemeanor for local officials to accept emoluments or other compensation for performing official acts, except where authorized by law. Furthermore, a contractor who solicits business through such an arrangement would likely be punishable under the Unfair Business Practices Act. AB 2485 prohibits specific arrangements from occurring, but it is not clear that adding new provisions to law that prohibit already illegal behavior will solve the problem, and focusing on the behavior of the local official, as opposed to the contractor, may not necessarily be the right emphasis. In addition, it is unclear how AB 2485 would be enforced; AB 2485 does not include any penalties for violations of its specific provisions.

3. Law of unintended consequences. Many cities use contractors to perform various municipal functions, including to provide legal services, building permitting, building inspection, fire protection, and policing. Some of these contracts are with neighboring local governments, such as in the case of fire or police services, while other contracts are with private entities. There are 70 “contract cities” in California that are particularly reliant on outside contractors for a large share of their services. AB 2485 prohibits financially interested parties from accompanying local officials on inspections, but excludes contractors for inspection, remediation, or abatement services that (1) have an existing contract for providing services at a specific location, or (2) are on a list of qualified bidders for services. But not all cities that use contractors maintain such a list, and contracts for such services are not typically tied to a specific location but more generally for services on demand. Finally, some cities contract for legal services, and that contracted legal counsel may accompany a local official to a property as part of an enforcement effort. To avoid prohibiting legitimate practices, the Committee may wish to consider amending AB 2485 to:

• Allow contractors that have an existing contract with the city to accompany local officials, regardless of whether that contract is tied to a particular property; and
• Add legal services as an allowable contractor who may accompany a local official.

4. Charter city. The California Constitution allows cities that adopt charters to control their own “municipal affairs.” In all other matters, charter cities must follow the general, statewide laws. Because the Constitution doesn't define "municipal affairs," the courts determine whether a topic is a municipal affair or whether it's an issue of statewide concern. AB 2485 says that its statutory provisions apply to charter cities. To support this assertion, the bill includes a legislative finding that its provisions are a matter of statewide concern, but fails to provide supporting rationale. The Committee may wish to consider amending AB 2485 to provide a justification for asserting that the bill is a matter of statewide concern.

Assembly Actions

Assembly Local Government Committee: 9-0

Assembly Floor: 74-0

Support and Opposition

(6/16/18)

Support: California Manufacturers and Technology Association; Rural County Representatives of California.

Opposition: California Building Officials.

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2485

Author:(Chau)

As Amended Ver:May 25, 2018

Majority vote

SUMMARY: Prohibits local inspection officials from being accompanied by financially interested persons during inspections of commercial properties or businesses. Specifically, this bill:

1. Prohibits a local official who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection, unless the person is any one of the following:
   1. The owner of the property or business;
   2. The agent or representative of the owner of the property or business;
   3. A person who has an existing contract with the local government of the local official to provide inspection, abatement, or remediation services for that particular inspected property or business; or,
   4. A contractor or consultant, or designated agent of that contractor or consultant, that is on a publicly available list of qualified bidders that may provide inspection, abatement, or remediation services to, and receive compensation for those services from, the local government. Such a person who accompanies a local official shall not solicit or receive compensation from the owner to remediate any potential violations of a state statute or regulation or local ordinance found in the course of inspection.
2. Prohibits, except as provided in 3), below, a person who has entered into a contract with a local government for inspection, abatement, or remediation services, who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance without the presence of a local official from soliciting or receiving compensation from the owner to remediate any potential violations of a state statute or regulation or local ordinance found in the course of the inspection.
3. Provides that 1) and 2), above, do not apply to an inspection conducted after the local official or the local official's designee has provided notice in writing to the owner of the property or business identifying specific violations of state statute or regulation or local ordinance existing upon the property and the specific actions required to correct those violations.
4. Provides that this bill does not affect the ability of a local government to recover the costs of any abatement or remediation performed by or pursuant to the authority of the local government in accordance with applicable law.
5. Provides the following definitions:
   1. "Agent or representative" may include, but is not limited to, a licensed contractor that is performing work on, or has completed work on, the commercial property or business that is the subject of the inspection;
   2. "Local government" means a city, including a charter city, county, or city and county;
   3. "Local official" means a code enforcement officer of a city, county, or a city and county, a county health officer, a city health officer, or the designated agent of those health officers, as specified; and,
   4. "Person with a potential financial interest in the outcome of the inspection" is any of the following:
      1. A person who offers to remediate for compensation potential violations of a state statute or regulation or local ordinance found in the course of an inspection by a local official; or,
      2. A person who offers to provide or provides compensation to a local official in exchange for recommending the remediation services of a specific person, providing the contact information for those services to the owner or agent of the owner of the premises or business inspected, or providing the name of the owner of the property or business or agent or representative of the owner to the person who offers the remediation services.
6. Finds and declares that this bill addresses a matter of statewide concern, rather than a municipal affair as that term is used in the California Constitution, Article XI, Section 5.

FISCAL EFFECT: None

COMMENTS:

1. Bill Summary. This bill prohibits a local official who inspects a commercial property or a business for compliance with state law or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection. Exceptions to this prohibition include:
   1. The owner of the property or business or his or her representative;
   2. A person with an existing contract with the inspector's local agency to provide inspection, abatement, or remediation services for that particular inspected property or business; or,
   3. A contractor or consultant or designated agent that is on a list of qualified bidders that may provide inspection, abatement, or remediation services for the local government. These individuals who accompany a local official are prohibited from soliciting or receiving compensation from the owner to remediate any potential violations found in the course of the inspection.

The bill further prohibits a person who is under contract with a local government for inspection, abatement, or remediation services and inspects a commercial property or business without a local official from soliciting or receiving compensation from the owner to remediate any potential violations found during inspection.

This bill does not apply to an inspection conducted after a local official or designee has provided written notice to a property owner identifying specific violations and the specific actions required to correct those violations. This bill also protects a local government's ability to recover abatement or remediation costs it incurs in accordance with applicable law.

This bill applies to counties and cities, including charter cities. Local officials subject to the provisions of this bill include code enforcement officers, county health officers, and city health officers.

This bill is sponsored by the author.

1. Author's Statement. According to the author, "Businesses typically go through code enforcement inspections to make sure they are safe, habitable, and healthy places for the public. A local government code enforcement officer, or health officer, will inspect a business and issue citations for anything that is not up to proper safety levels. The business must then fix any cited issues in order to receive a permit to operate.

"In December of 2017, a newspaper publication reported on a possible case of inappropriate behavior by a code enforcement officer and independent contractor. The article detailed an anonymous tip submitted by the owner of an auto body factory who applied for a permit with a city to renovate his business. When the time came for an inspection of the property, the code enforcement officer was accompanied by a third party independent contractor who operates a design and construction business.

"Prior to the inspection, the business owner previously had an architect design the plans for the renovation consistent with the city's codes. However, the code enforcement officer cited a number of issues with the business and the architectural plan and required the business owner to fix them. After the inspection was complete and the code enforcement officer left the business, the owner was approached by the contractor who stayed behind and offered to redesign and construct the project for $30,000. The business owner was quoted $10,000 by the initial architect.

"The business owner ultimately paid $30,000 to the contractor, who accompanied the code enforcement officer, out of fear that not doing so would result in delays to having the permit approved. The business owner suspected being the subject of a scheme whereby the contractor and/or code enforcement officer would benefit financially from the inspection. AB 2485 limits situations that would allow local government code enforcement officers or health officers from being accompanied by a third party independent contractor to only those where the individual is only there to provide professional expertise and will not financially benefit from remedying any of the issues found during the inspection."

1. Background. Code enforcement is the prevention, detection, investigation and enforcement of violations of statutes or ordinances regulating public health, safety, and welfare, public works, business activities and consumer protection, building standards, land-use, or municipal affairs.

A code enforcement officer is any person who is not a peace officer and who is employed by any governmental subdivision, public or quasi-public corporation, public agency, public service corporation, any town, city, county, or municipal corporation, whether incorporated or chartered, who has enforcement authority for health, safety, and welfare requirements, whose duties include enforcement of any statute, rule, regulation, or standard, and who is authorized to issue citations, or file formal complaints.

A code enforcement officer also includes any person who is employed by the Department of Housing and Community Development who has enforcement authority for health, safety, and welfare requirements pursuant to the Employee Housing Act, the State Housing Law, the Manufactured Housing Act of 1980, the Mobilehome Parks Act, and the Special Occupancy Parks Act.

A county health officer enforces and observes in the unincorporated territory of a county orders and ordinances of the board of supervisors pertaining to public health and sanitary matters, orders of the local health department, and statutes relating to public health. A city health officer exercises similar functions for cities.

1. Arguments in Support. Rural County Representatives of California, in support, state, "Previously, AB 2485 broadly prohibited code enforcement officers who have enforcement authority in health, safety, and welfare from being accompanied by a 'financially interested individual' when inspecting a commercial building or commercial property or activity at the building or property. The recent amendments to AB 2485 focus this prohibition more narrowly on those circumstances creating an unacceptable risk of conflicts of interest or confusion of roles. Consequently, AB 2485 no longer poses a negative impact on enforcement of health and safety regulations in rural areas and statewide."
2. Arguments in Opposition. The California Building Officials (CALBO), in opposition, state, "As agents of local government, building officials often refer to subject matter experts when providing inspections. Although CALBO understands the intent of the bill, we believe violators to be few and far between. 'Financially interested parties,' such as contractors, can be a resource, and can provide valuable insight into inspection and construction particulars. Limiting their access and communication with building officials during an inspection can be harmful to the client and the overall inspection process."

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958 FN: 0003258

ASSEMBLY THIRD READING

ATR Bill Id:AB 2485

Author:(Chau)

As Amended Ver:April 16, 2018

Majority vote

SUMMARY: Prohibits local inspection officials from being accompanied by financially interested persons during inspections of commercial properties or businesses. Specifically, this bill:

1. Prohibits a local official who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection, unless the person is any one of the following:
   1. The owner of the property or business;
   2. The agent or representative of the owner of the property or business; or,
   3. A person who has an existing contract with the local government of the local official to provide inspection, abatement, or remediation services for that particular inspected property or business.
2. Provides the following definitions:
   1. "Agent or representative" may include, but is not limited to, a licensed contractor that is performing work on, or has completed work on, the commercial property or business that is the subject of the inspection;
   2. "Local official" means a code enforcement officer of a city, county, or a city and county, a county health officer, a city health officer, or the designated agent of those health officers, as specified; and,
   3. "Person with a potential financial interest in the outcome of the inspection" is any of the following:
      1. A person who offers to remediate for compensation potential violations of a state statute or regulation or local ordinance found in the course of an inspection by a local official; or,
      2. A person who offers to provide or provides compensation to a local official in exchange for recommending the remediation services of a specific person, providing the contact information for those services to the owner or agent of the owner of the premises or business inspected, or providing the name of the owner of the property or business or agent or representative of the owner to the person who offers the remediation services.
3. Finds and declares that this bill addresses a matter of statewide concern, rather than a municipal affair as that term is used in the California Constitution, Article XI, Section 5.

FISCAL EFFECT: None

COMMENTS:

1. Bill Summary. This bill prohibits a local official who inspects a commercial property or a business for compliance with state law or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection. Exceptions to this prohibition include the owner of the property or business or his or her representative, or a person with an existing contract with the inspector's local agency to provide inspection, abatement, or remediation services for that particular inspected property or business. Local officials subject to the provisions of this bill include code enforcement officers, county health officers, and city health officers.

This bill is sponsored by the author.

1. Author's Statement. According to the author, "Businesses typically go through code enforcement inspections to make sure they are safe, habitable, and healthy places for the public. A local government code enforcement officer, or health officer, will inspect a business and issue citations for anything that is not up to proper safety levels. The business must then fix any cited issues in order to receive a permit to operate.

"In December of 2017, a newspaper publication reported on a possible case of inappropriate behavior by a code enforcement officer and independent contractor. The article detailed an anonymous tip submitted by the owner of an auto body factory who applied for a permit with a city to renovate his business. When the time came for an inspection of the property, the code enforcement officer was accompanied by a third party independent contractor who operates a design and construction business.

"Prior to the inspection, the business owner previously had an architect design the plans for the renovation consistent with the city's codes. However, the code enforcement officer cited a number of issues with the business and the architectural plan and required the business owner to fix them. After the inspection was complete and the code enforcement officer left the business, the owner was approached by the contractor who stayed behind and offered to redesign and construct the project for $30,000. The business owner was quoted $10,000 by the initial architect.

"The business owner ultimately paid $30,000 to the contractor, who accompanied the code enforcement officer, out of fear that not doing so would result in delays to having the permit approved. The business owner suspected being the subject of a scheme whereby the contractor and/or code enforcement officer would benefit financially from the inspection. AB 2485 limits situations that would allow local government code enforcement officers or health officers from being accompanied by a third party independent contractor to only those where the individual is only there to provide professional expertise and will not financially benefit from remedying any of the issues found during the inspection."

1. Background. Code enforcement is the prevention, detection, investigation and enforcement of violations of statutes or ordinances regulating public health, safety, and welfare, public works, business activities and consumer protection, building standards, land-use, or municipal affairs.

A code enforcement officer is any person who is not a peace officer and who is employed by any governmental subdivision, public or quasi-public corporation, public agency, public service corporation, any town, city, county, or municipal corporation, whether incorporated or chartered, who has enforcement authority for health, safety, and welfare requirements, whose duties include enforcement of any statute, rule, regulation, or standard, and who is authorized to issue citations, or file formal complaints.

A code enforcement officer also includes any person who is employed by the Department of Housing and Community Development who has enforcement authority for health, safety, and welfare requirements pursuant to the Employee Housing Act, the State Housing Law, the Manufactured Housing Act of 1980, the Mobilehome Parks Act, and the Special Occupancy Parks Act.

A county health officer enforces and observes in the unincorporated territory of a county orders and ordinances of the board of supervisors pertaining to public health and sanitary matters, orders of the local health department, and statutes relating to public health. A city health officer exercises similar functions for cities.

Code enforcement officers and health officers are the local officials that would be subject to this bill's requirements.

1. Arguments in Support. None on file.
2. Arguments in Opposition. The California Building Officials (CALBO), in opposition, state, "As agents of local government, building officials often refer to subject matter experts when providing inspections. Although CALBO understands the intent of the bill, we believe violators to be few and far between. 'Financially interested parties,' such as contractors, can be a resource, and can provide valuable insight into inspection and construction particulars. Limiting their access and communication with building officials during an inspection can be harmful to the client and the overall inspection process."

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958 FN: 0002887

Date of Hearing: May 9, 2018

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Cecilia Aguiar-Curry, Chair

ABPCA Bill Id:AB 2485 (

Author:Chau) – As Amended Ver:April 16, 2018

SUBJECT: Code enforcement: financially interested parties.

SUMMARY: Prohibits local inspection officials from being accompanied by financially interested persons during inspections of commercial properties or businesses. Specifically, this bill:

1. Prohibits a local official who inspects a commercial property or business for compliance with a state statute or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection, unless the person is any one of the following:
   1. The owner of the property or business;
   2. The agent or representative of the owner of the property or business; or,
   3. A person who has an existing contract with the local government of the local official
      to provide inspection, abatement, or remediation services for that particular inspected property or business.
2. Provides the following definitions:
   1. "Agent or representative" may include, but is not limited to, a licensed contractor that is performing work on, or has completed work on, the commercial property or business that is the subject of the inspection;
   2. "Local official" means a code enforcement officer of a city, county, or a city and county, a county health officer, a city health officer, or the designated agent of those health officers, as specified; and,
   3. "Person with a potential financial interest in the outcome of the inspection" is any of the following:
      1. A person who offers to remediate for compensation potential violations of a state statute or regulation or local ordinance found in the course of an inspection by a local official; or,
      2. A person who offers to provide or provides compensation to a local official in exchange for recommending the remediation services of a specific person, providing the contact information for those services to the owner or agent of the owner of the premises or business inspected, or providing the name of the owner of the property or business or agent or representative of the owner to the person who offers the remediation services.
3. Finds and declares that this bill addresses a matter of statewide concern, rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution.

EXISTING LAW:

1. Allows cities to make and enforce all local, police, sanitary and other regulations not in conflict with state law.
2. Requires the building department of every city or county to enforce within its jurisdiction all the provisions published in the State Building Standards Code, State Housing Law, and the other rules and regulations promulgated pursuant to the State Housing Law pertaining to the erection, construction, reconstruction, movement, enlargement, conversion, alteration, repair, removal, demolition, or arrangement of apartment houses, hotels, or dwellings.
3. Makes it a misdemeanor for every executive or ministerial officer, employee, or appointee
   of the State of California, or any county or city therein, or any political subdivision thereof, to knowingly ask, receive, or agree to receive any emolument, gratuity, or reward, or any promise thereof excepting such as may be authorized by law for doing an official act.

FISCAL EFFECT: None

COMMENTS:

1. Bill Summary. This bill prohibits a local official who inspects a commercial property
   or a business for compliance with state law or regulation or local ordinance from being accompanied during the inspection by a person with a potential financial interest in the outcome of the inspection. Exceptions to this prohibition include the owner of the property or business or his or her representative, or a person with an existing contract with the inspector's local agency to provide inspection, abatement, or remediation services for that particular inspected property or business. Local officials subject to the provisions of this bill include code enforcement officers, county health officers, and city health officers.

This bill is sponsored by the author.

1. Author's Statement. According to the author, "Businesses typically go through code enforcement inspections to make sure they are safe, habitable, and healthy places for the public. A local government code enforcement officer, or health officer, will inspect a business and issue citations for anything that is not up to proper safety levels. The business must then fix any cited issues in order to receive a permit to operate.

"In December of 2017, a newspaper publication reported on a possible case of inappropriate behavior by a code enforcement officer and independent contractor. The article detailed an anonymous tip submitted by the owner of an auto body factory who applied for a permit with a city to renovate his business. When the time came for an inspection of the property, the code enforcement officer was accompanied by a third party independent contractor who operates a design and construction business.

"Prior to the inspection, the business owner previously had an architect design the plans for the renovation consistent with the city’s codes. However, the code enforcement officer cited a number of issues with the business and the architectural plan and required the business owner to fix them. After the inspection was complete and the code enforcement officer left the business, the owner was approached by the contractor who stayed behind and offered to redesign and construct the project for $30,000. The business owner was quoted $10,000 by the initial architect.

"The business owner ultimately paid $30,000 to the contractor, who accompanied the code enforcement officer, out of fear that not doing so would result in delays to having the permit approved. The business owner suspected being the subject of a scheme whereby the contractor and/or code enforcement officer would benefit financially from the inspection. AB 2485 limits situations that would allow local government code enforcement officers or health officers from being accompanied by a third party independent contractor to only those where the individual is only there to provide professional expertise and will not financially benefit from remedying any of the issues found during the inspection."

1. Background. Code enforcement is the prevention, detection, investigation and enforcement of violations of statutes or ordinances regulating public health, safety, and welfare, public works, business activities and consumer protection, building standards, land-use, or municipal affairs.

A code enforcement officer is any person who is not a peace officer and who is employed by any governmental subdivision, public or quasi-public corporation, public agency, public service corporation, any town, city, county, or municipal corporation, whether incorporated or chartered, who has enforcement authority for health, safety, and welfare requirements, whose duties include enforcement of any statute, rule, regulation, or standard, and who is authorized to issue citations, or file formal complaints.

A code enforcement officer also includes any person who is employed by the Department
of Housing and Community Development who has enforcement authority for health, safety, and welfare requirements pursuant to the Employee Housing Act, the State Housing Law, the Manufactured Housing Act of 1980, the Mobilehome Parks Act, and the Special Occupancy Parks Act.

A county health officer enforces and observes in the unincorporated territory of a county orders and ordinances of the board of supervisors pertaining to public health and sanitary matters, orders of the local health department, and statutes relating to public health. A city health officer exercises similar functions for cities.

Code enforcement officers and health officers are the local officials that would be subject to this bill's requirements.

1. Arguments in Support. None on file.
2. Arguments in Opposition. The California Building Officials, in opposition, state, "As agents of local government, building officials often refer to subject matter experts when providing inspections. Although CALBO understands the intent of the bill, we believe violators to be few and far between. 'Financially interested parties,' such as contractors, can be a resource, and can provide valuable insight into inspection and construction particulars. Limiting their access and communication with building officials during an inspection can be harmful to the client and the overall inspection process."

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

California Building Officials

Rural County Representatives of California

Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958