A California attorney didn’t violate state conflict-of-interest rules when he negotiated a tax incentive deal between Best Buy Inc. and the city of Dinuba that netted him more than $8 million, the state’s ethics board ruled.
The Fair Political Practices Commission told Robert E. Cendejas that it closed its investigation without taking any enforcement action. The commission launched the investigation in 2020 in response to a Bloomberg Tax probe into its role in negotiating the Best Buy deal, as well as similar agreements between several other cities and retailers.
It’s a 2015 agreement whereby Best Buy designates its Dinuba warehouse as the point of sale for online sales to California customers, meaning that any local sales taxes paid on those purchases go to Dinuba and not to the place of residence of the buyer. The city gives half of the proceeds to Best Buy and 10% of that to Cendejas.
In a December 29, 2022 letter released by the commission on Thursday, Senior Counsel Bridgette Castillo said there was insufficient evidence to show that Cendejas violated state law by acting on his own behalf, while representing the city.
Cendejas did not negotiate the agreement in a public capacity for the city and “only had an income expectation after online businesses were recruited in the city of Dinuba, which did not happen,” Castillo said in the letter.
Best Buy opened the Dinuba warehouse in 2009. The 2015 tax-sharing agreement didn’t change the company’s operations in the city, but it did change the flow of sales tax revenue from online sales to Californian customers.
Since then, Dinuba’s total sales tax revenue has grown from $4.9 million a year to a peak of $30.8 million in 2020, according to data from the California Department of Taxes and Fees Administration. Most of that increase is due to the tax-sharing deal, according to city budget records.
Checks issued by the city and other public records show that Dinuba paid $37.9 million to Best Buy and $8.2 million to Cendejas through the third quarter of 2022 — meaning Dinuba has paid about 30 million dollars retained.
Thomas Hiltachk, an attorney at Bell, McAndrews & Hiltachk LLP, who represented Cendejas in the FPPC matter, did not immediately respond to a request for comment.
“Mr. Cendejas has always shown the utmost integrity and professionalism in his dealings with the City of Dinuba,” said Deputy City Manager Daniel James. “We are pleased that the FPPC investigation has been completed and his reputation has been cleared.
