First Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 11-0676.01 Bob Lackner HOUSE BILL 11-1215 HOUSE SPONSORSHIP Ryden, SENATE SPONSORSHIP (None), House Committees Senate Committees Local Government A BILL FOR AN ACT Concerning measures designed to improve the accountability to the public of special purpose authorities. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) Applicability of specified laws to special purpose authorities. The bill makes a special purpose authority (authority) subject to the following statutory provisions to the same extent as any other political subdivision of the state that is also subject to the administrative direction of any department, commission, bureau, or agency of the state: Statutory provisions addressing open meetings; and The "Colorado Open Records Act". Covered persons' conflicting interest transactions. The bill prohibits an authority from making any loans to a member of the board of directors or comparable governing body of a special purpose authority or an officer or employee of such authority (covered person). Any covered person who assents to or participates in the making of any such loan is liable to the authority for the amount of such loan until the loan has been repaid. The bill specifies circumstances in which a contract, transaction, or other financial relationship is permitted between an authority and a covered person, between the authority and a party related to a covered person, or between the authority and an entity in which a covered person is a director or officer or has a financial interest. Removal of board member of special purpose authority for cause. In the case of any board member of an authority who was appointed by the governor, the bill authorizes the governor to remove such board member for malfeasance in office, for failure to regularly attend meetings, or for any other cause that renders the member incapable or unfit to discharge the duties of his or her office. Any such removal shall not be subject to review. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW ARTICLE to read: ARTICLE 19.9 Accountability of Special Purpose Authorities 24-19.9-101. Definitions. As used in this article, unless the context otherwise requires: (1) "Conflicting interest transaction" means a contract, transaction, or other financial relationship between an authority and a covered person, between the authority and a party related to a covered person, or between the authority and an entity in which a covered person is a director or officer or has a financial interest. (2) "Covered person" means a member of the board of directors or comparable governing body of a special purpose authority or an officer or employee of such authority. (3) "Official act" or "official action" means any vote, decision, recommendation, approval, disapproval, or other action, including inaction, that involves the use of discretionary authority. (4) "Special purpose authority" or "authority" shall have the same meaning as set forth in section 24-77-102 (15). 24-19.9-102. Applicability of specified statutes to special purpose authorities. (1) Notwithstanding any other provision of law, an authority shall be subject to the following statutory provisions to the same extent as any other political subdivision of the state that is also subject to the administrative direction of any department, commission, bureau, or agency of the state: (a) Statutory provisions addressing open meetings, codified in part 4 of article 6 of this title; and (b) The "Colorado Open Records Act", part 2 of article 72 of this title. 24-19.9-103. Covered persons' conflicting interest transactions. (1) No loans shall be made by an authority to a covered person. Any covered person who assents to or participates in the making of any such loan shall be liable to the authority for the amount of such loan until the repayment thereof. (2) No conflicting interest transaction shall be void or voidable or be enjoined, set aside, or give rise to an award of damages or other sanctions in a proceeding by a covered person or by or in the right of the authority, solely because the conflicting interest transaction involves a covered authority or a party related to a covered person or an entity in which a covered person is a director or officer or has a financial interest or solely because the covered person is present at or participates in the meeting of the authority's board of directors or of the committee of the board of directors that authorizes, approves, or ratifies the conflicting interest transaction or solely because the covered person's vote is counted for such purpose if: (a) The material facts as to the covered person's relationship or interest and as to the conflicting interest transaction are disclosed or are known to the board of directors or the committee, and the board of directors or committee in good faith authorizes, approves, or ratifies the conflicting interest transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; (b) The material facts as to the director's relationship or interest and as to the conflicting interest transaction are disclosed or are known to the members entitled to vote thereon, and the conflicting interest transaction is specifically authorized, approved, or ratified in good faith by a vote of the members entitled to vote thereon; or (c) The conflicting interest transaction is fair as to the authority. (3) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee that authorizes, approves, or ratifies the conflicting interest transaction. (4) For purposes of this section, a "party related to a director" means a spouse, a descendent, an ancestor, a sibling, the spouse or descendent of a sibling, an estate or trust in which the director or a party related to a director has a beneficial interest, or an entity in which a party related to a director is a director, officer, or has a financial interest. 24-19.9-104. Removal of board members for cause. Notwithstanding any other provision of law, any member of the board of directors of an authority who was appointed to the board of such authority by the governor may be removed by the governor for malfeasance in office, for failure to regularly attend meetings, or for any other cause that renders the member incapable or unfit to discharge the duties of his or her office. Any such removal, when made, shall not be subject to review. SECTION 2. Effective date. This act shall take effect Ju1y 1, 2011. SECTION 3. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.