H-1700

AN ACT Relating to municipal officers' interest in contracts; amending RCW 42.23.030, 42.23.040, 42.23.050, and 42.23.060; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that:

(1) The current statutes pertaining to municipal officers' beneficial interest in contracts are quite confusing and have resulted in some inadvertent violations of the law.

(2) The dollar thresholds for many of the exemptions have not been changed in over thirty-five years, and the restrictions apply to the total amount of the contract instead of the portion of the contract that pertains to the business operated by the municipal officer.

(3) The confusion existing over these current statutes discourages some municipalities from accessing some efficiencies available to them.

Therefore, it is the intent of the legislature to clarify the statutes pertaining to municipal officers and contracts and to enact reasonable protections against inappropriate conflicts of interest.

Sec. 2. RCW 42.23.030 and 1996 c 246 s 1 are each amended to read as follows:

No municipal officer shall be beneficially interested, directly or indirectly, in any contract which may be made by, through or under the supervision of such officer, in whole or in part, or which may be made for the benefit of his or her office, or accept, directly or indirectly, any compensation, gratuity or reward in connection with such contract from any other person beneficially interested therein. This section shall not apply in the following cases:

(1) The furnishing of electrical, water or other utility services by a municipality engaged in the business of furnishing such services, at the same rates and on the same terms as are available to the public generally;

(2) The designation of public depositaries for municipal funds;

(3) The publication of legal notices required by law to be published by any municipality, upon competitive bidding or at rates not higher than prescribed by law for members of the general public;

(4) The designation of a school director as clerk or as both clerk and purchasing agent of a school district;

(5) The employment of any person by a municipality((, other than a county with a population of one hundred twenty-five thousand or more, a city of the first or second class, an irrigation district encompassing in excess of fifty thousand acres, or a first class school district,)) for unskilled day labor at wages not exceeding ((~~one~~)) two hundred dollars in any calendar month. The exception provided in this subsection does not apply to a county with a population of one hundred twenty-five thousand or more, a city with a population of more than one thousand five hundred, an irrigation district encompassing more than fifty thousand acres, or a first class school district;

(6)(a) The letting of any other contract (((except a sale or lease as seller or lessor) by a municipality, other than a county with a population of one hundred twenty-five thousand or more, a city with a population of ten thousand or more, or an irrigation district encompassing in excess of fifty thousand acres: PROVIDED, That)) in which the total ((volume of business represented by such contract or contracts in which a particular officer is interested, singly or in the aggregate, as measured by the dollar amount of the municipality's liability thereunder, shall)) amount received under the contract or contracts by the municipal officer or the municipal officer's business does not exceed ((~~seven~~)) one thousand two hundred ((~~fifty~~)) dollars in any calendar month((~~: PROVIDED FURTHER, That~~));

(b) However, in the case of a particular officer of a second class city or town, or a noncharter optional code city, or a member of any county fair board in a county which has not established a county purchasing department pursuant to RCW 36.32.240, the total ((~~volume~~)) amount of such contract or contracts authorized in this subsection (6) may exceed ((~~seven~~)) one thousand two hundred ((~~fifty~~)) dollars in any calendar month but shall not exceed ((~~nine~~)) fourteen thousand four hundred dollars in any calendar year((~~: PROVIDED FURTHER, That there shall be public disclosure by having an available~~));

(c) The exceptions provided in this subsection (6) do not apply to a sale or lease by the municipality as the seller or lessor. The exceptions provided in this subsection (6) also do not apply to the letting of any contract by a county with a population of one hundred twenty-five thousand or more, a city with a population of ten thousand or more, or an irrigation district encompassing more than fifty thousand acres;

(d) The municipality shall maintain a list of ((~~such purchases or~~)) all contracts((, and if the supplier or contractor is an official of the municipality, he or she shall not vote on the authorization: PROVIDED FURTHER, That in the case of a first class school district, there shall be notice of the proposed contract by publication given in one or more newspapers of general circulation within the district)) that are awarded pursuant to this subsection (6). The list must be made available for public inspection and copying;

(7) The leasing by a port district as lessor of port district property to a municipal officer or to a contracting party in which a municipal officer may be beneficially interested, if in addition to all other legal requirements, a board of three disinterested appraisers((~~, who shall be appointed from members of the American institute of real estate appraisers by the presiding judge of~~)) and the superior court in the county where the property is situated((~~, shall find and the court~~)) finds that all terms and conditions of such lease are fair to the port district and are in the public interest. The appraisers must be appointed from members of the American institute of real estate appraisers by the presiding judge of the superior court;

(8) The letting of any employment contract for the driving of a school bus in a second class school district((~~: PROVIDED, That~~)) if the terms of such contract ((~~shall be~~)) are commensurate with the pay plan or collective bargaining agreement operating in the district;

(9) The letting of any employment contract to the spouse of an officer of a ((second class school district in which less than two hundred full time equivalent students are enrolled at the start of the school year as defined in RCW 28A.150.040, when such contract is solely for employment as a certificated or classified employee of the school district, or the letting of any contract to the spouse of an officer of a)) school district, when such contract is solely for employment as a substitute teacher for the school district((~~: PROVIDED, That~~)). This exception applies only if the terms of ((~~such~~)) the contract ((~~shall be~~)) are commensurate with the pay plan or collective bargaining agreement applicable to all district employees and the board of directors has found, consistent with the written policy under RCW 28A.330.240, that there is a shortage of substitute teachers in the school district;

(10) The letting of any employment contract to the spouse of an officer of a school district if the spouse was under contract as a certificated or classified employee with the school district before the date in which the officer assumes office((~~: PROVIDED, That~~)) and the terms of ((~~such~~)) the contract ((~~shall be~~)) are commensurate with the pay plan or collective bargaining agreement operating in the district. However, in a second class school district that has less than two hundred full time equivalent students enrolled at the start of the school year as defined in RCW 28A.150.040, the spouse is not required to be under contract as a certificated or classified employee before the date on which the officer assumes office.

A municipal officer may not vote in the authorization, approval, or ratification of any contract in which he or she is beneficially interested even though one of the exemptions allowing the awarding of such a contract applies. The interest of the municipal officer must be disclosed to the governing body of the municipality and noted in the official minutes or similar records of the municipality prior to the formation of the contract.

Sec. 3. RCW 42.23.040 and 1961 c 268 s 5 are each amended to read as follows:

A municipal officer ((~~shall~~)) is not ((~~be deemed to be~~)) interested in a contract, within the meaning of RCW 42.23.030, if ((he)) the officer has only a remote interest in the contract and ((if)) the ((~~fact and~~)) extent of ((~~such~~)) the interest is disclosed to the governing body of the municipality of which ((he)) the officer is an officer and noted in the official minutes or similar records of the municipality prior to the formation of the contract, and thereafter the governing body authorizes, approves, or ratifies the contract in good faith by a vote of its membership sufficient for the purpose without counting the vote or votes of the officer having the remote interest. As used in this section "remote interest" means:

(1) That of a nonsalaried officer of a nonprofit corporation;

(2) That of an employee or agent of a contracting party where the compensation of such employee or agent consists entirely of fixed wages or salary;

(3) That of a landlord or tenant of a contracting party;

(4) That of a holder of less than one percent of the shares of a corporation or cooperative which is a contracting party.

None of the provisions of this section ((~~shall be~~)) are applicable to any officer interested in a contract, ((~~though his~~)) even if the officer's interest ((be)) is only remote, ((~~who~~)) if the officer influences or attempts to influence any other officer of the municipality of which he or she is an officer to enter into the contract.

Sec. 4. RCW 42.23.050 and 1961 c 268 s 6 are each amended to read as follows:

Any contract made in violation of the provisions of this ((~~act shall be~~)) chapter is void and the performance thereof, in full or in part, by a contracting party shall not be the basis of any claim against the municipality. Any officer violating the provisions of this ((~~act shall be~~)) chapter is liable to the municipality of which he or she is an officer for a penalty in the amount of ((~~three~~)) five hundred dollars, in addition to such other civil or criminal liability or penalty as may otherwise be imposed upon ((~~him~~)) the officer by law.

In addition to all other penalties, civil or criminal, the violation by any officer of the provisions of this ((~~act shall work a~~)) chapter may be grounds for forfeiture of his or her office.

Sec. 5. RCW 42.23.060 and 1961 c 268 s 16 are each amended to read as follows:

If any provision of this ((~~act~~)) chapter conflicts with any provision of a city or county charter, or with any provision of a city‑county charter, the ((~~city~~)) charter shall control if it contains stricter requirements than this chapter. The provisions of this chapter shall be considered as minimum standards to be enforced by municipalities.