The Commission's regulations prescribe materiality standards to be used in deciding whether the reasonably foreseeable financial effect of a governmental decision will be material--that is, sufficiently important to trigger a conflict of interest. (See Regulations 18700(b)(5) and 18705 - 18705.5.) For economic interests in real property which are indirectly involved in a governmental decision, the materiality standards in Regulation 18705.2(b) apply.

Presently, these materiality standards for indirectly involved real property interests are of two types, each of which implements a different strategy for evaluating materiality.

• The first strategy identifies particular situations that are so likely to result in a material financial effect as to justify a presumption of materiality--without actually counting (estimated) dollars. A good example of this "bright-line" strategy is the present materiality standard that applies when the public official's indirectly involved real property interest is within 300 feet of the property that is the subject of the decision. In such a case, any reasonably foreseeable financial effect from the decision is considered material. (Regulation 18705.2(b)(1)(A).)

• The second strategy relies on estimating the likely financial effect of the governmental decision in dollars. An example of this strategy is the present materiality standard to indirectly involved real property interests that are more than 300 feet but less than 2,500 feet distant. In such cases, a reasonably foreseeable financial effect of $10,000 on the fair market value, or of $1,000 in a twelve-month period on the rental value, is considered material. (Regulation 18705.2(a)(1)(C).)

The project is currently examining the following broad sets of issues:

1. Clarifying whether there is a presumption of materiality when real property in which a public official has an economic interest is directly involved in a governmental decision.

2. Examining whether the present "any financial effect" materiality standard for real property economic interests which are directly involved in a governmental decision should be changed to a "de minimis" financial effect standard (that is, a financial effect on directly involved real property would be considered material if it is more than a trifling or small amount).

3. Examining whether to eliminate the present materiality standard for indirectly involved real property interests which are more than 300 feet but less than 2,500 feet from the property which is the subject of the decision; and, if so, whether to increase the 300-feet distance to a greater distance.

4. Clarifying the materiality standards applicable to real property in which public officials have an economic interest because of a lease.

The following documents related to this project are available for review:

• Staff memorandum, "Pre-notice discussion of a possible amendments to Regulation 18704.2 and Regulation 18705.2 (Conflicts project, phase 2, project 'D')." (January 24, 2000)
• Staff memorandum, "Materiality standards for Real Property Economic Interests -- Regulations 18704.2 and Regulation 18705.2 (Conflicts project, phase 2, project D)." (June 26, 2000)
• Staff memorandum, "Materiality Standards for Real Property Economic Interests--Regulations 18704.2 and 18705.2 (Conflicts Project, Phase 2, Project D)." (September 14, 2000)
• Draft Regulation 18704.2.
• Draft Regulation 18705.2.
• Staff memorandum, "Materiality Standards for Real Property Economic Interests -- Regualtions18704.2 and 18705.2 (Conflicts Project, Phase 2, Project D)." (October 24, 2000)
• Draft Regulation 18704.2 and Draft Regulation 18705.2.
• Appendix A: Comparison Chart.
• Appendix B: Fact Patterns.