How will new law affect San Jose development?
Construction continues on a development in San Jose. File photo.

    City councilmembers, builders and lobbyists in San Jose may need to keep closer tabs on free-flowing donations thanks to a newly expanded state conflict of interest law.

    With California Senate Bill 1439 in effect since January, local elected officials cannot vote on a project or permit for one year if they accepted more than $250 from the developer or their lobbyist in the past 12 months. The law allows an elected official in certain cases to return the money beyond $250 and vote on the project, but they cannot accept any additional contributions from the developer for another year.

    Some local real estate experts and lobbyists think the change could initially make for a rocky learning experience among elected officials, developers and other people with business in front of the San Jose City Council. But it’s too soon to tell if it could potentially cause chaos on the dais if councilmembers needed to recuse themselves en masse from votes due to donations they have accepted.

    “When someone is running for office, it’s very common that people in the real estate development arena will donate,” Mark Ritchie, a longtime commercial real estate agent, told San José Spotlight. “It might get a little sticky.”

    The law applies beyond just the person or business seeking a permit or approval. A local official also cannot vote on a project if they have accepted more than $250 in total from any of the applicant’s agents or representatives, or any other person who has a direct financial interest in the outcome of the vote, like a neighbor or nearby property owner who supports or opposes the proposal.

    The law will not apply retroactively, so it will only be in effect for donations made on or after Jan. 1, 2023.

    Mayor Matt Mahan said he supports the law, but agreed there could be a learning curve for local officials.

    “I am in favor of anything that eliminates ‘pay to play’ situations and increases transparency in government,” Mahan told San José Spotlight. “The challenge for us now is to ensure we have processes in place to ensure we don’t unwittingly violate these tenets.”

    Sean McMorris, manager of the transparency, ethics and accountability program for California Common Cause, which sponsored the bill, told San José Spotlight the law increases integrity in local politics.

    “I think SB 1439 will significantly improve public trust in the procurement process locally and it will also give the good actors, the good politicians, the good, responsible developers a way to politely decline the shakedowns,” McMorris said.

    Expanding restrictions

    The law expands the Levine Act, a longstanding similar restriction, which only applied to state and local appointed officials, and now applies to locally elected officials and those running for local office.

    Eddie Truong, a business lobbyist and former director of government and community relations at the San Jose Chamber of Commerce, said he will need to be cautious going forward under the expanded law.

    “If I give $700 to a council candidate, for example, and I pick up a client six months later, I may inadvertently be within that 12-month window and I can’t see the future,” Truong told San José Spotlight.

    In San Jose, individuals or businesses were already limited to giving council candidates $700 maximum in the last election, and mayoral candidate giving was capped at $1,400 per person.

    Erik Schoennauer, a prolific land-use lobbyist who represents a host of clients including the Bumb family in its development of the Berryessa Flea Market property and previously Google for its Downtown West project, said the law is reasonable.

    “I think it reflects sort of a principle that the public wants to see and that is that there should be separations between advocates for a project or a policy and the elected official,” Schoennauer told San José Spotlight.

    Schoennauer said when political candidates ask for money, he typically gives it to them, no matter their affiliation. The expanded law has a particular benefit for him and others who give to candidates frequently.

    “I’m happy about it because it saves me money,” he said.

    Truong and Schoennauer both said the law will likely push more special interest money into dark corners, such as political action committees and independent expenditure groups, which are not beholden to limits when supporting or opposing a candidate’s run for office.

    “This law will do nothing to diminish large special interests’ independent expenditures, whether it be labor, or business or environmental groups,” Schoennauer said.

    McMorris agrees that shadowy independent expenditure groups permitted to spend unlimited cash in elections under the U.S. Supreme Court’s ruling on Citizens United is a problem. But he said that shouldn’t hold up other regulations to limit “legally bribing” officials.

    “It’s not just about actual corruption, it’s about perceived corruption or the potential avenues for it,” McMorris said. “So what this does is it cuts off one avenue for that potential corruption.”

    Contact Joseph Geha at [email protected] or @josephgeha16 on Twitter.

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