The state Fair Political Practices Commission has ruled that Councilman David L. Margrave is not necessarily barred from voting on city payments to his plumbing company, but the controversy appears far from over because the city attorney believes that the votes probably are a conflict of interest.
The commission, which enforces the Political Reform Act of 1974, last week issued a letter of advice stating that the $1,386.76 in March transactions it reviewed was too little to qualify as a conflict of interest under the act, spokeswoman Lynn Montgomery said.
Montgomery added that since Margrave was elected in 1982, his firm has not done enough business with the city in any year to breach the act's conflict-of-interest guidelines.
However, in a 14-page opinion issued last last week, City Atty. Ronald J. Einboden concluded that Margrave appears to have violated another state conflict-of-interest law, and he suggested that the city may be able to recoup the $14,500 paid to the councilman's firm for plumbing maintenance since his election.
No More Business
Meanwhile, the city has stopped doing business with Morrow & Holman Plumbing Inc., which Margrave and his wife own. It is the only company used by the city for plumbing maintenance since Margrave took office, City Manager John Bernardi said.
Margrave has never concealed his ownership in Morrow & Holman and voted on payments to his firm only after former City Atty. Charles Martin advised him that it was legal, Margrave and other city officials have said.
Margrave, who has denied a conflict of interest, said he disagrees with Einboden's interpretation of the law. He said he plans to seek a separate legal opinion to convince his colleagues that his actions were correct.
"One attorney's opinion is meaningful," Margrave said, "but it's not the end of the line. I don't believe he read the books."
Einboden declined to respond to Margrave's remarks.
The conflict-of-interest issue arose again at a March meeting when Lee Prentiss, a newcomer to the City Council, raised the question in connection with the $1,386.76 plumbing bill.
"We all wanted a clearly defined opinion," Prentiss said.
The council directed Einboden to study the problem and ask the Fair Political Practices Commission for an opinion. Last week, after receiving the commission's advisory, he issued his opinion based on another set of conflict-of-interest laws, state Government Code Section 1090.
Einboden's report said that Margrave's activities violated public policy in the state and that even if Margrave had abstained from voting on the plumbing bills the city faced an "absolute prohibition" against doing business with Margrave's plumbing company under Section 1090. The report cited a provision which reads:
"City officers or employees shall not be interested in any contract made by them in their official capacity or by any body or board of which they are members. Nor shall city officers or employees be purchasers at any sale or vendors at any purchase made by them in their official capacity."
Einboden recommended that the council refuse to pay the $1,386.76 to Morrow & Holman and wait until the California Supreme Court rules in a similar case before deciding whether to try to recover money paid to the company since Margrave's election.
Although he did not mention it in his opinion, Einboden said the council also could ask the district attorney to seek criminal sanctions against Margrave. A violation of Section 1090 is punishable by a fine up to $1,000 or by imprisonment and a ban on holding public office, Einboden said.
Would Return Money
Margrave said he hopes that if the council agrees with Einboden, it will not request a refund or press criminal charges because the plumbing bills were approved by the council. He said he believes that he should be allowed to do business with the city and that he should be paid for work his firm has done.
But he said that if the City Council demanded it, he would return the money. "If push comes to shove and I had to give it back, I'd give it back."
The council, which has been considering its own conflict-of-interest ordinance, is not scheduled to meet until May 15, but Prentiss said he plans to follow Einboden's advice. He indicated, however, that he would not be harsh in his judgment of Margrave.
"David is caught in a Catch-22," Prentiss said. "He was acting in good faith on the advice of the city attorney we used to have. I don't think any of us believe David had any malice."
Act Not Violated
Montgomery said that while the commission's letter of advice technically applies only to the $1,386.76 invoice, which has not been been voted on, neither that bill nor the total of Morrow & Holman's annual billings while Margrave has served on the council are enough to violate the Political Reform Act's conflict-of-interest guidelines.
Under the act, an official with more than a $1,000 investment in an enterprise doing business with a city has a conflict if the amount of business is at least $100,000 or at least 1% of annual gross revenues, or $50,000 or 0.5% of annual net profits, or 0.5% of current assets or liabilities.
Margrave said that Morrow & Holman Plumbing has annual gross revenues of $1 million. If his figures are accurate, his highest annual income from the city of $6,571.28 in 1983 amounts to less than 1% of the company's revenues.