Legal Question in Business Law in California

I think the following answers are correct:

(1) A city can run a nonprofit organization. Some cities, for example, own museums.

(2) Yes.

(3) As to the applicability of Goverment Code 1099, I believe the nonprofit is not a governmental entity in any sense; it is a private entity owned by a govermental entity, which is not the same thing. However, I would like to see an Attorney General analysis before I would stick my neck out too far in insisting that I'm right on this.

There are two everyday examples of private corporations owned by governments, but not part of the government: Amtrak and the U.S. Postal Service. For a time, General Motors.

I disagree with Mr. Whipple on the first point, which renders the other points moot. It makes no sense for a city to establish and run a non-profit organization and I have never heard of such a thing. Mr. Whipple's example of city owned museums is not well taken. The Asian Art Museum of San Francisco, for example, is governed by a city commission, not an independent non-profit. I know of no city museums that are not run that way. They often have "Friends Of . . . ." non-profits that exist to support the museum, and it may be established and encouraged with the help and support of the relevant commission, but that is not a city "owned" non-profit. Similarly, I have served on the board of the McCullum Youth Court, a juvenile first-offender diversion program. It was established by judges of the Alameda Superior Court and members of the Oakland Police Dept., but that does not make it "owned" by the court or the OPD. If a city wants to "own" or "operate" the business of a non-profit, there is no reason to establish the non-profit. The city just does it through one of its departments or establishes a commission. If the city, or city employees or officials decide to foster the creation of a non-profit to do things the city cannot or will not do, that is fine. I agree with Mr. Whipple, however, that in that case the non-profit is not a city entity and board members are not holding a city office. Therefore section 1099 would have no application. There might be government ethics conflict of interest laws that would be implicated in some cases, but that is not what section 1099 is about.