Shelton's property purchase raises legal questions

Acting as the Successor Agency to redevelopment, the Porterville City Council discussed state conflicts of interest out of concern that Council member Greg Shelton had violated the codes, even though the Redevelopment Agency the statues govern no longer exists.

After a long discussion, the council approved a motion to direct the city’s legal counsel to write a letter to be sent through the Legislature to the Attorney General to clarify the questions raised in the discussion.

Shelton has admitted he purchased property in the Project No. 1 area since joining the city council, but questions whether the code still applies.

According to special counsel to the city, Vanessa S. Locklin of Stradling Yocca Carlson & Rauth in Newport Beach, the dissolution of redevelopment agencies on Feb. 1 did not render the Health and Safety codes which deal with conflicts of interest under redevelopment inactive. So, as long as council members and city employees are making decisions about property in the Porterville Redevelopment Project No. 1 area, which is likely to occur, the council and employees are still subject to the codes prohibiting the purchase of property, unless it meets three exceptions.

Locklin explained that Shelton could be found in violation of the code, or in “misconduct in office. That would be determined by a grand jury and judicial announcement and could result in removal of office.”

Loklin said that as far as a remedy, the statute gives none. “If you had acquired a property that was in violation of 33130... You could obviously disclose and sell the property interest. That doesn’t necessarily fix that, but it seems like a reasonable reaction.”

Shelton raised a number of questions and while Loklin’s memo clarified a number of things, it still did not answer something he’d been asking since he came onto the council.

“One of them I asked two and a half years ago, and I never did get an answer: In a situation where you come into council and you own 13 pieces of property in the redevelopment zone already, and given that the stated intent of this... is to prevent conflicts of interest,” Shelton said, reading the section which states the purpose of the codes, “there are two problems. What does 14 matter if I already have conflicts and second of all, and by the very nature of this, if there is an implied indirect conflict of interest in me having property in the redevelopment zone, how could I even be part of the successor agency?”

Locklin answered that in regards to the property he owned before he entered the council, and the piece that he bought while on the council, there are two conflict of interest provisions in the law which address his concerns. The first deals with disclosing the ownership of that property in writing to the council upon entering the council. The second, laid out by the California Fair Political Practices Commission in the Political Reform Act, states that officials aren’t prohibited from buying property, but that any time the official is asked to make a decision which affects the property he or she has purchased, that official must abstain from the decision-making process.

Lockin continued “you are prohibited from acquiring any interest in property within the project area, unless it fits neatly within one of these exceptions. Then you can acquire the property and immediately disclose.”

Shelton wondered if his property would meet the third exception, which says that personal residential use is acceptable, as he said the newest piece of property he owns is a vacant lot which he intends to build a personal residence on.

Council Member Pete McCracken noted the property was on Cleveland Street, and city officials have said the area is zoned as mixed-use/residential.

Locklin said the statute states that a “as long as the property is used for your personal residence” it is exempt, but that she was not sure a vacant lot would count. She continued that “personal use” has a narrow interpretation of “you live there” but if Shelton wanted to, he could either take the risk of being found in violation of the code, or get an opinion from the Attorney General. Locklin also said that in her interpretation, the code still applied as “while working on the redevelopment project... you are directing how property is going to be developed, so this is to prevent speculation in real property.”

Shelton felt that it would be best he resigned from the Successor Agency, but was concerned that wasn’t allowed. City Attorney Julia Lew said that he could resign, that wasn’t an issue, but that he could still be found to be in violation of the code. The law isn’t that ambiguous, Lew said, but if the council wished to do so, it could direct its counsel to ask for clarification.

Shelton also wondered whether any of the rules still applied since redevelopment no longer exists. The inability to enter into new contracts, as the memo notes, seems like that would put an end to speculation and, by extension, any conflict of interest, he said.

“The law says what it says,” Lew said, noting that another city in Placer County has actually seen a council member removed, after the abolition of the Redevelopment Agency, because the statues still exist in the Health and Safety Code. She added that the intention of the law was always to make sure that a member of a Redevelopment Agency was not motivated to engage in speculation, as the Successor agencies are still dealing with selling or the development of property.

“I can see why they would want to keep these on the books,” said Lew.