Burbank’s Treasurer, Investor in B of A, Is Cautioned on City Funds

The state’s political watchdog agency has advised Burbank’s city treasurer to remove himself from decisions involving investment of city funds in Bank of America, in which he owns more than $20,000 worth of stocks and bonds.

The Fair Political Practices Commission recommended that City Treasurer Jim Rogers stay out of such investment decisions to avoid running afoul of state conflict-of-interest laws.

Rogers asked the city attorney’s office last year for legal guidance regarding his investments, which include more than $10,000 worth of Bank of America stock and a bank bond valued at more than $10,000. In December, the city attorney relayed the question to the FPPC. The response was recently made public.

The city owns a $1-million certificate of deposit in Bank of America and also has a non-interest bearing checking account there, officials said. The city’s overall investment portfolio is about $165 million, including redevelopment agency funds, Rogers said.

Rogers said his office plans to cash in the certificate of deposit when it matures in October. He said the CD was purchased by a former city treasurer.

Under the state Political Reform Act, government officials are prohibited from participating in decisions that have a financial impact on any business or property in which they have an interest of $1,000 or more.

Assistant City Atty. Terry B. Stevenson said Rogers has not been involved in investment decisions involving Bank of America since his May, 1989, election as treasurer.

In a letter last month, FPPC attorney Jill R. Stecher also advised Rogers to refrain from making investment decisions involving First Interstate Bank, Chase Manhattan Bank and Security Pacific Bank if they would have a “material financial effect” on any of those institutions.

Under FPPC rules, a decision having a material financial effect on the banks would be one that caused their gross revenues to increase or decrease by more than $1 million in one year.

Rogers owns zero-coupon bonds at First Interstate and Security Pacific worth more than $1,000 apiece and another zero-coupon bond at Chase Manhattan valued at between $1,000 and $10,000. Zero coupon bonds pay no interest until maturity, similar to U.S. savings bonds.

The city’s redevelopment agency keeps its general account at First Interstate and the city has purchased government securities through that bank, Rogers said. The city has no other investments in First Interstate, Security Pacific or Chase Manhattan, he said.

Rogers said he will abide by the commission’s advice and will consider selling his personal holdings in Bank of America to eliminate possible conflicts.

“I like my job, I like what I’m doing and I’ll do what’s right,” he said. “I might not agree with it, but if I have to do it I have to do it.”

Stevenson, the assistant city attorney, said that although Rogers has not been involved in investment decisions involving Bank of America, he has used city money to purchase federal government-backed securities through the bank. He said such transactions are not investments because the bank is only acting as a broker for the securities.

Stevenson said the conflict issue arose when Rogers asked the city attorney’s office for an opinion on the matter after his election.

“There was enough there that we felt more comfortable seeking an opinion from the FPPC,” Stevenson said. “It took them awhile after that for an opinion to get back to us.”

Mayor Tom Flavin said the situation with Rogers’ personal holdings has had no impact on city financial operations or investment strategy. Investment decisions are made collectively by Rogers, the city’s finance director and an assistant city manager, he said.

Rogers said he has also asked the FPPC whether his personal investments would prohibit him from making decisions about buying government securities through Bank of America. The agency has yet to render advice on that issue.