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SR-104-088 (3) e .- ~CitYOf Santa Moniea@ City Council Report City Council Meeting: July 12, 2006 Agenda Item: 6- c. To: Mayor and City Council From: Marsha Jones Moutrie, City Attorney Subject: Proposed Charter Revision Amending Charter Article XXII to Preserve Fair and Open Government Recommended Action This report recommends that the City Council provide direction to staff on the preparation of a ballot measure amending City Charter Article XXII. Executive Summary This staff report presents options as to a potential ballot measure amending Article XXII of the City Charter, entitled "Taxpayer Protection," also known as the Oaks Initiative. It restricts an official from receiving any campaign contribution, any other benefit worth more than $50 or employment from an individual for a specified time after the official has voted to confer a contract, land use variance or other "public benefit" upon that person or upon a business in which the person has a ten percent interest. Article XXII poses both legal risks and practical problems. Accordingly, Council has requested that staff propose alternative measures which would effectuate the purpose of Article XXII, by protecting good and open government, but correct the Article's defects. This report fulfills that request. There are no financial impacts resulting from providing direction to staff regarding the preparation of a measure. 1 Discussion Article XXII was adopted by the voters in 2000. It is intended to promote clean government by averting the possibility that officials will cast their votes and make other decisions in their official capacity with the expectation of receiving a private benefit in return for their vote. Thus, Article XXII prohibits officials from receiving personal or campaign advantages from those to whom they have allocated "public benefits." "Public benefits" include, for example, contracts and land use variances valued in excess of $25,000. An official who has individually voted to confer such a benefit may not receive a "personal or campaign advantage" from the beneficiary for a specified number of years. Beneficiaries include anyone who has a 10% equity interest in a corporation which receives the benefit. The term "personal or campaign advantage" includes any gift or honoraria valued in excess of $50, any employment for compensation, and any campaign contribution. Article XXII has a complicated legal history. It was proposed in several Southern California cities in 2000 and 2001. The City of Vista filed suit to keep the measure off the ballot based upon its apparent unconstitutionality, and the trial court determined that the measure was unconstitutional. The proponents of the measure appealed, and the City of Vista placed a competing measure on the ballot. After the competing measure passed, overriding the Oaks Initiative, the appellate court refused to rule on the measure's constitutionality. 2 The measure passed in Santa Monica and Pasadena, and both cities filed suits to test its constitutionality. Like the Vista litigation, these suits challenged the facial constitutionality of the Oaks Initiative on numerous grounds. These included, among others that: (a) the measure irrationally distinguished between "yes" and "no" votes (given that, particularly in the land use context, either vote could yield a valuable result for some interested party); (b) the prohibition against employment is overbroad and unfairly interferes with the right to work; and (c) the prohibition against contributions from persons who have had matters before the Council interferes with the First Amendment right to participate in the political process. Defendants refused to address the merits, and repeatedly challenged the litigation on procedural grounds. Ultimately, the Court of Appeal agreed that there were serious constitutional questions but refused to decide both cities' constitutional claims, explaining that those questions would have to await future litigation. Thus, the constitutional infirmities of the measure have been noted repeatedly; but never finally resolved. Nonetheless, after the litigation ended, Santa Monica implemented the Oaks Initiative as City Charter Article XXII. This implementation imposes significant burdens on City personnel, officials and those doing business with the City. City personnel must keep track of all "yes" votes by individual officials which confer a "public benefit" as defined in the measure. Entities doing business with the City must disclose the names of all ten percent owners so that staff and officials can ascertain which individuals will "benefit" from particular votes. 3 Officials must keep careful track of their own votes and of their contributors' histories of business with the City to ensure that they do not run afoul of the law. Those doing business with the City must refrain from contributing to incumbent candidates and therefore limit their participation in the political process. Both officials and some City employees must suffer restrictions on future opportunities for employment. Article XXII imposes other burdens as well. It chills the legislative and quasi-judicial processes by imposing adverse consequences for "yes" but not for "no" votes. That is, an official who always votes "no" will not be burdened by the restrictions of Article XXII. Moreover, it severely restricts the right to participate in the political process and to seek office. For instance, anyone who had a measure before the City Council which passed would, in the future, be restricted from contributing to campaigns of those officials who voted "yes." Likewise, an official who wished to seek re-election or another office would not be able to accept contributions from those who had "benefited" from his or her "yes" votes. Because of these problems, Council directed staff to suggest a potential amendment to the City Charter which would further the laudable purposes of Article XXII but which would respect individual rights, facilitate participation in the public process and government service, and reduce the administrative burdens of the current law. 4 Alternatives Several alternatives are available. Staff recommends that the Council enact simpler restrictions which will be easier to understand and administer and which will satisfy the objectives of the Oaks Initiative without impinging upon constitutional rights. The Vista ordinance which overrode the Oaks Initiative in that city provides a convenient model which could be modified to meet this community's needs. A copy of the Vista ordinance is attached. Among other things, that ordinance · Prohibits any city official from accepting gifts with an aggregate value exceeding $200 and indiv.idual gifts valued at more than $100. · Prohibits presenting a gift to an official valued at more than $50 if the presenter has any economic interest in, among other things, a pending or extant city contract or pending land use decision; and requires that all such gifts be returned. · Requires disclosure of gifts valued at more than $25. · Prohibits the acceptance of any honorarium by Council members and candidates and limits the acceptance of honorarium by other officials. · Prohibits officials from making or participating in making or using official positions to influence any governmental decision directly relating to any person with whom the official is negotiating or has any arrangement concerning current, future, or prospective employment. The Vista ordinance also restricts the acceptance of employment by former council members and other officials as agents/representatives/attorneys for those who have business before the city for a period of one year after leaving the city. This prohibition is similar to that contained in Santa Monica's Revolving Door Ordinance. 5 The restrictions contained in the Vista ordinance are, in some important respects, more stringent than the restrictions contained in current City Charter Article XXII. Most notably, as to gifts, the Vista ordinance contains restrictions against gifts from all sources; not simply gifts from those who have benefited from officials' "yes" votes. As to the class of donors who are doing business with the city, the Vista ordinance imposes the same $50 standard as Article XXII. However, the class is defined differently with the Vista ordinance utilizing a broader definition. Likewise, as to honoraria, the Vista ordinance imposes a more stringent prohibition than Article XXII, which allows honoraria of up to $50 from those who have benefited from "yes" votes and otherwise imposes no restriction. The Vista ordinance prohibits council members from receiving any honoraria whatsoever. It also restricts other officials from receiving honoraria which would have to be reported pursuant to the Political Reform Act. As to employment, the Vista restrictions are less sweeping than those contained in Article XXII and are more narrowly targeted at the possibility of improper influence. Thus, the Vista ordinance prohibits an official from using his or her position to influence a government decision which would benefit any person with whom the official is negotiating an employment agreement or has an arrangement for current, future or prospective employment. Otherwise, the Vista ordinance is similar to the City's Revolving Door Ordinance in that, generally speaking, it prohibits former officials from 6 advocacy before the city for a year after their departure from the city. In contrast, Article XXII substantially restricts future employment possibilities for public officials. Additionally, the restrictions contained in the Vista ordinance are tailored to protect both good government and individual, constitutional rights. Thus, the Vista ordinance does not arbitrarily distinguish between "yes" and "no" votes. Instead, it curtails all improper influence, irrespective of the content of the vote. Moreover, while it protects against corruption, the Vista ordinance does not include broad prohibitions against persons who have done business with the City from participating in the political process. Other Alternatives Several other alternatives are also available to Council. One is maintaining most of the present language of Article XXII while amending its most problematic provisions. For instance, the arbitrary distinction between "yes" and "no" votes could be eliminated through an amendment that would extend the prohibitions of the measure to both. Likewise, the sweeping prohibitions against campaign contributions and future employment could be narrowed. However, Article XXII would still be difficult to administer and would still have a chilling effect on political and legislative processes because it would still be triggered by officials' votes, rather than by their acceptance of gifts or other things of value. Alternately, the Council could consider directing staff to prepare an ordinance intended to preserve Article XXII against a constitutional challenge by narrowing it or 7 "interpreting" it to protect individual rights. Such an ordinance would likely draw a legal challenge. Or, the Council could take no action. However, that course would continue to expose the City to the possibility of future litigation by an individual official, employee, or member of the public who believes that his or her constitutional rights have been violated by application of the measure. Moreover, the City, City employees and officials, and those doing business with the City would continue to bear the burdens and expenses resulting from Article XXII. Finally, if the Council wishes to direct staff to proceed with preparation of a ballot measure, Council should give careful consideration to timing. The ballot for the November election may include several measures relating to local government. This fact might militate in favor of deferring presentation to the voters of any proposal to amend Article XXII. BudQet/Financiallmpact There are no financial impacts resulting from directing staff to prepare a ballot measure for Council consideration. Prepared by: Marsha Jones Moutrie, City Attorney Attachment: City of Vista Ordinance 8 Approved: ~~ f: \att y\m uni\strpts \m j m \oaksini tiati vestaffreport Ci 9 Sections: 2.33.010 2.33.020 2.33.030 2.33.040 2.33.050 2.33.060 2.33.070 2.33.080 2.33.090 2.33.100 Vista Municipal Code Chapter 2.33 Good Government Requirements Purposes and Intent Short Title Definitions Restrictions on Public Officials Accepting Gifts Prohibition on Presenting or Receiving Gifts From Parties Having An Interest In Decisions or Actions of City Prohibition on Public Officials Receiving Honoraria Restrictions on Former Public Officials Accepting Employment Prohibition on Use of Position to Influence City Decisions Amendments Rules of Construction; Severability Section 2.33.010 Purposes and Intent The purposes of the provisions of this Chapter are to assure ethical conduct by the elected and appointed officials of the City, to promote fairness and equal treatment for all persons by the City of Vista, regardless of wealth or economic status, and to prevent actual or apparent corruption of the governmental process of the City through the influence of gifts, contributions or payments of any kind. The intent of this Chapter is to establish minimum standards and requirements for ethical conduct by the City's elected and appointed officials, and to provide a means for the City to enforce such standards and requirements. (Ord. No. 2000-9, Added. 111712000 Election) Section 2.33.020 Short Title This Chapter may be cited as the "Good Government Ordinance of the City of Vista". (Ord. No. 2000-9, Added, 111712000 Election) Section 2.33.030 Definitions Except as otherwise set forth below, or elsewhere in this Chapter, the words and terms used in this Chapter shall have the same meanings, and be defined as closely as possible with reference to the City of Vista, as the meanings of such words and terms are given under the Political Reform Act. City means the City of Vista, a municipal corporation organized and existing the general laws of the State of California, and also includes all other public entities of the City in which the City Council of the City serves as governing board. 2.33 (l) (Vista 12/22/00) Vista Municipal Code Council Member means an individual who has been elected to the office of Council Member, or to the office of Mayor, of the City of Vista. Council Candidate means an individual who has filed a declaration of candidacy for, or a statement of organization as a committee for election to, the office of Mayor, or Council Member, whichever occurs first. Appointed Official means any appointed member of any City commission, board, or committee, or any employee of the City who is a "designated employee" under the City's Conflict of Interest Code. Conflict of Interest Code means the Conflict of Interest Code of the City of Vista, as amended, in Chapter 2.32 of the Vista Municipal Code. FPPC means the California Fair Political Practices Commission, established pursuant to the Political Reform Act. Legislative or administrative action shall mean any decision or action taken by the City Council, or any City commission, board or committee, or any decision or action by an Appointed Official. Political Reform Act shall mean the Political Reform Act of 1974, found in Title 9 of the California Government Code, as amended, inclusive of all rules, regulations and interpretations applicable to said Title 9, approved or adopted by the FPPC. (Ord. No. 2000-9, Added, 111712000 Election) Section 2.33.040 Restrictions on Public Officials Accepting Gifts A. It is prohibited and unlawful for any Council Member or any Appointed Official, to accept gifts from any single source or person within any calendar year with a total aggregate value of more than three hundred dollars ($300), or any individual gift with a total value of more than one hundred dollars ($100). B. The limitations on the value of gifts imposed under Subdivision A of this Section shall be adjusted by the City Council to reflect changes in the Consumer Price Index, rounded to the nearest ten dollars ($10), on or following January 1 of the year 2001 and on every odd- numbered year thereafter, provided that such adjustments shall not exceed the limit on the amount of gifts permitted under the Political Reform Act. (Ord. No. 2000-9, Added, 111712000 Election) Section 2.33.050 Prohibition on Presenting or Receiving Gifts From Parties Having An Interest In Decisions or Actions of City A. It is prohibited and unlawful for any person to present to any Council Member or to any Appointed Official, and it is also prohibited and unlawful for any Council Member or Appointed Official to receive from any such person, any gift having a value of more than fifty dollars ($50), if the donor or presenter of the gift has any economic or financial interest in any of the following: 1) A contract or agreement, including any purchase order, franchise, or license, to provide goods, materials, equipment, or services to or for the City, or affecting any property of the City, while the offer of such contract or agreement is pending before the City, or while such contract or agreement remains in effect: 2) Any real property, including improvements, that is the subject of an 2.33 (2) (Vista 12122/00) Vista Municipal Code application for any land use approval, including any zoning change, use pennit, variance, or other entitlement, after such application has been submitted and while such application remains pending before the City; 3) Any lease, purchase or sale agreement affecting real property, to or from the City, that has been presented to the City, or which is pending, or which remains in effect; or 4) Any request or appeal to reduce any tax, assessment, charge, or fee made to the City, while such request or appeal is pending. B. If a Council Member or Appointed Official receives a gift without knowing that the gift was presented in violation of this subdivision A of this Section, the Council Member or Appointed Official shall not be in violation of subdivision A of this Section if, within five (5) days of having discovered that the gift was received in violation of this Section, the Council Member or Appointed Official: (1) files a written report with the City Clerk that such gift was received, and (2) relinquishes such gift, or pays the equivalent fair value, to the City for appropriate disposition or deposit to the City's General Fund. The report filed with the City Clerk shall identify the name and address of each person presenting the gift, the circumstances in which the gift was presented, a full description of the gift, and its actual or estimated fair value, including copies of any available evidence of such value. C. A Council Member or Appointed Official shall disclose in writing to the City Clerk, on a form substantially the same as that required for filing a Statement of Economic Interests required under the Political Reform Act, any gift or gifts received from any person described in Subdivision A, above, if the fair value of the gift is twenty five dollars ($25) or more. Such disclosure shall be filed no later than the seventh (7th) day of the month following the calendar month in which the gift was received. (Ord. No. 2000-9, Added, Ilnt2000 Election) Section 2.33.060 Prohibition on Public Officials Receiving Honoraria A. No Council Member and no Council Candidate shall accept any honorarium. B. No Appointed Official shall accept an honorarium from any source if the Appointed Official would be required to report the receipt of income or gifts from that source on his or her statement of economic interests. C. The provisions of Section 89506 of the Political Refonn Act, as amended, shall apply to the application of this Chapter, and to all payments, advances or reimbursements for travel and related lodging and subsistence. (Ord. No. 2000-9, Added, 11/7/2000 Election) Section 2.33.070 Restrictions on Former Public Officials Accepting Employment A. Former Council Members. For a period of one year after leaving office, no Council Member shall, for compensation, act as agent or attorney for, or otherwise represent, any other person by making any fonnal or informal appearance, or by making any oral or written communication, before the City Councilor any board, commission, committee or subcommittee of the City, or any officer or employee of the City, if the appearance or communication is made for the purpose of influencing any decision of the City Councilor any administrative action of the City. For purposes ofthis Section, an administrative action of the City shall include the issuance, amendment, award or revocation of a pennit, license, grant, or contract, or the sale or 2.33 (3) (Vista 12122100) Vista Municipal Code purchase of goods or services, or sale or leasing of any interest in real property. B. Former Appointed Officials. For a period of one year after leaving office or employment, no Appointed Official shall, for compensation, act as agent or attorney for, or otherwise represent, any other person, by making any formal or informal appearance, or by making any oral or written communication, before the City Councilor any board, commission, committee or subcommittee of the City, or any officer or employee of the City for which the Appointed Official had worked, represented, appeared before, or was a member of, during the twelve months before leaving office or employment, if the appearance or communication is made for the purpose of influencing any decision of the City Council, or any administrative action, as defined in subdivision A of the Section. C. Exceptions. The prohibitions of this Section shall not apply to any individual who is or becomes a member or representative of another City board, commission, committee, subcommittee, or an employee of the City assigned to a different department, if the communication or appearance is for the purpose of influencing a decision of the City Councilor an administrative action, on behalf of the City Board, commission, committee, subcommittee, or department. COrd. No. 2000-9, Added, 11/7/2OCXJ Election) Section 2.33.080 Prohibition on Use of Position to Influence City Decisions No Council Member or Appointed Official shall make, participate in making, or use his or her official position to influence, any governmental decision directly relating to any person with whom he or she is negotiating, or has any arrangement concerning a current, future, or prospective employment. COrd. No. 2000-9, Added, 11/712000 Election) Section 2.33.090 Amendments The provisions of this Chapter may be repealed only by approval of the voters of the City at an election. The provisions of this Chapter may be amended upon adoption of an ordinance by the City Council only for the purpose of conforming any of the provisions of this Chapter with State law or with the Political Reform Act, repairing any constitutional infirmity, or adopting additional standards and regulations for ethical conduct of City elected and appointed officials, consistent with the purposes of this Chapter. COrd. No. 2000-9, Added, 11/7/2000 Election) Section 2.33.100 Rules of Construction; Severability The provisions of this Chapter shall be interpreted in the broadest possible manner, consistent with the constitutions of the United States and the State of California and with ex.isting laws and statutes, in particular the provisions of the Political Reform Act, as amended, to accomplish the purposes and intent of this Chapter. If any portion or provision of this Chapter is found by any court for any reason to be invalid, then all remaining portions and provisions of this Chapter that are not found to be invalid shall remain in full force and effect, and the remaining portions and provisions shall be 2.33 (4) (Vista 121221(0) Vista Municipal Code interpreted as if this Chapter were enacted originally without including the invalid portions or provisions. (Ord. No. 2000-9, Added, 11/7/2000 Election) 2.33 (5) (Vista 12/22/00)