SR-12-11-1984-11A~i~-~~~
~i~~:EDD:N~:~,b
Council Meeting bec~mber 11, 1984 ~anta Monica, California
I1-~
T0; Mayor ana City vo~ncil ~~C f 1 jgg4
FR~[~: C~~.y Staff
SUB,7ECT: Recomm~ndation to Approv~ a Code of Ethics for the Thir3
S~re2t Dev~lopment Corpoxation
INTR~DUCT'IOiV
On May 8, 19r34 and J~n~ 26, 1984, Council approved th~ Third
S~.reet Develo~m~nt ;,orporat~.on {TSDC) operatzng contract and the
hiall Improvement ~oan Fu;nd cvn~ract, respectively. Both con-
tracts requiLe that the TSDC submit, for Council approval, a Con-
flict of Inter~s~ ~ode gov2rn~.ng i'ts of~icers, agents and em-
pioye~s in the administr~tion of ToDC activ~ties. The TSDC has
pr~partid a Code of Eth~cs wnach ~.ncorporates a Conflict of Int~r-
2st ~ade (~hibit A). ~his reporc transmats ~hat ~ode and reco~n-
mends Cauncil approval.
BAC~GRJi7i3~
'~he TSDC ~stablished an ~thics Commit~~e to gu~de the preparation
of the Cqn~l~ct of Int~r~st ~od~. Tne ~,or.imit~ee discu~sed the
types of issues and situa~~on~, which could af~ect its d~rec~.ors,
offac°rs and ~mployees and de~ide~ to pr~par~ a d~cument larger
in scop~ trtan a Conflict af Inter~st Coae. A Code of Ethics was
pr~parpd und~r zhe supervision af the Ethics i.ommi~.tee and pres-
enz~d for approval to tn~ 3oard of D~rectoLS of the TSDC. ~'he
Board approvedi the attaclned Cod~ at a regular Board m~eting on
lr ~
DEC 1 1 1984
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October i8, ~984. 'rne Code of Ethics has also been r~viewed and
appra~ed by the CYty Attorney and th~ bepartm~nt of Community and
Econom~c Dev~lopment.
DISC~5SI3N
Th~ stated purpose of the Ca~e ~f Et~YCS is to pre~~nt the misus~
of TSQC r~so~rces and to pr~ven~ impropriety ar tne appearance of
improprzety by the Cor~oration's repr~sentat2v~s zn connect~on
with TS~C acti~ities. T~e Code pr~vides standards and guidance
ta the directars, afficers and employees of khe TSDC by r~gu~at-
ing triezr act~vities and b~hav~or in the followin~ ways:
i. S~tt~ng standards for t~,e d~sseminat~on of non-public
informat~on (Sectivn Vj;
2. Regulating "self-d2al~.ng transactivr-s" by the Dzr~ctors
of the TSDC (Sect~on vI);
3. Imposing reporting an~ disc~osure r~quirements on tlie
em~loyees, officers and Dlr2i.tors of tt~p TSDC with
regard to their receipt of gifts fra~ p2rsons wl~o ha~e
matters pending before th~ Corporation (Sectivn V~I);
4. Establishing standards for informal meet~ngs among mem-
b~rs af the Baard of ~irectors to avaid violat.tons of
California corpor~tions law and to a~a~~3 'the possible
a~pAarance af i~propr~ety (Section VIFI); and
5. Requzring dzsclosure oblzgations of the employees, of-
fic~r~ and Dir~ctors of the TSDC with regar~s to thez~
~conomic znterests in tY~e '~hird Street ~`~ial.~ area (Sec-
tion IX).
SUD;ETJFI-3A~TCIAL IMPACT
~I'her~ xs na fiscal impact with appro~al of thls staff report.
RECOMMEi3DAT ~ON
It xs respectfully r~commend~d tnat Counc~l approve the attached
_ ~ _
Co~L ~f ~thics wnich provz3as stan~ards and ~~idanc~ to the di-
rectors, o~ficer~ and employees of the Third 5tr2et De~elopm~nt
Corporation.
Prepared by: Nan~y Gut~errez, Pro~ect Manag~~
Economic Dev~lopmen~ D~vision
Community & Econom~c llevelopm~nt Department
et~sr
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EXHIBIT A
CODE OF ETHICS
OP
THE THIRD STREET DEVELOPMENT CORPORATIOI~
I. i1~fTRODCiCT[ON
The Third Street Develapment Corporation ~s a non-profit ~ubl~e benef-t corpora-
tian est~blished ta pl~n, asszst and supervise the redevelopment and revitalizatton of
the area of Sa~ta Monica knawn as the ~~nta iVloniea Mell. This Code of Eth~cs provides
stand~rds and guidance to the directors, officers and employees of the Corporation in
their dealings on behalf of the Carporatian. This Code of Ethics recognizes that few
peo~le will have as muct~ interest in the goaLs of the Corporation as those who ttave an
interest irt the SantB Monica Mall Area a~td who hr~ve devoted tt~eir t~me and energy to
ser~ing on behaif of t~e Carporation ~nd promo~ing its gaals. Therefore, lest the
Corporation lose ~d~antageous opport~ni~ies atherwise availabie to it, this Code of
Ethics establishes standards for transactions betwee~ the directors, offieers and
err:ployees of t~e Corporation and the Corporation itse~f in those sit~atians in wh~ch a
director, officer or ernployee has a ma~terial financial interest. It is the purpose of this
Code of Ethics to pre~ent the rn~suse of the Carporation's resources and to prevent
impropriety or tha appe8rance of impropriety by the COx[?O!'Rt10n~S represenf.atives in
connection with the Corporation's activities.
II. DEgINITIONS
A. Corporation. "Corporatian'~ rneans The Third Street Development Corpora-
t~on.
S. Board of Directors. "Board of Directors" means the Bo~rd of Directors of
tY~e Corporatian as appointed by the City Counesl of the City of Santa ~ti~anica, the
Corporation's sale member.
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C. Directors. t'Directors" mear~s the memi~~rs of the Bo~rd of Directors of the
Carporation_
D. Ern~Ioyee. "HmQloyeett means the Executi~e Directar of the Corporation,
all atficers of the Carporation (other than Directors) and all employees on the staff af
the Corparetion.
E. Direct or Indirect Interest. For purposes of this 5ection, direct or ind~rect
interest rneans any in~estment or intsrest owned by a Director's or Employee's Spouse,
~arentf child, brother, sister, father-in-law, mot~er ~n-Iaw, brother-in law, sister-in-
~aw, da~~hter--in-law ar sor~-in-l~zv, or by ttre Dcrector or ~rnptoyee hirnselff~erse}.f, or
by an agent on his/Fter beha~f, or by any business entity controlled by the Director or
Employee, or by a trust in which ~he nirector or Employee ha~ a substantia~l interest. A
business entity is controlled by a person if that person, his/her agent, or a rslative, as
defined ~bo~e, passesses more than fif~y percent (SO%) of the ownership interest. rsi
person has a substential interest in a trust if that person or a relative, as defined abo~e,
has a current or f~tture ir~terest worth mote than One Thousand Dollars t~1,00Q.0{3).
F. Person. "Pe1'SOr~n mesns an individual, proprietorship, firrti, p~rtnership,
~oint venture, syndieate, business trust, eoEnpany, corpor~tion, essociation, cornmittee,
ar any other organiz~tion or gro~p of persons acting in concert.
IiI. AVOIDING THE APPEARANCB OR IMPROPRI~TY AND UNDUE INFLU~NCE
All members of the Bogrd of Directors and all Employees must strive to avaid the
appearance of impropriety and un~ue influe~ce in their de~lings on behalf of and in
connection with the Corporation. Directors snd Em~loyees st~all refrain frorn using the
Corporation's faeilities, eguiQment ar supplies ~or their petsonal p~rposes or fo~ the
advantages af another person. Directars and Emplo~rees are }~rahibited frorn using non-
~~bltc ir~forrnstion availabie as a result of a Directoris or ~n Empioyee's assoc~stian
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wrth the Corporation for personal gain or far the adventage of another person, prior ta
tha# ~nformation's dissernination #a the publ2c ir~ accardance w~th Section V of this Cade
of Ethics.
In the event any member of the Baard of Directors or any Ernployee is uRCertain
of his/her obligt~tions ar has a question concerning e decisian, actian or pian of con~uct
contezr[p~ated by said rnem~er or EmpZoyee, such persfln shfluid first confer wcth t~e
Board of Dlrectars regarding the propriety oP such contemplated decision, activn ar
plan of conduct.
N_ PURPOSE
The Directors of the Carporation are sensitive to the issues raised in this Cade af
Ethics, rnotivated ta svaid any a~pearance ef imprapriety ati~ng fram their dealin~ o~
behalf of the Carparation, and interested in assuring that the Corporetion's goals and
welfare be ~ro~erly edvancea. This Code of Ettties has been adopted ta a~dv~nce these
goaLs.
This Code of Ethics regulates the activities and behaviar of the ernployees,
afficers and Direc~.ors af the Corporatian in the follawir~g ways;
I. It regulates the ciissemination of non--public ~nforma#ion (Section V);
2. It regulates "self-de~ling transactions" by the Directors of t~a Corpar$tion
ESection VI);
3. It irrtposes reparting artd aiscios~re reqtiirements or~ the err;ploy~es, officers
and Directors of the Corpor~tion with regerd to their receipt of gifts from pers4ns who
have matters pending before the Corporation (Section VII);
4. It regn~Iates informal meetings amang members of the Board of Directors to
avoid ~iaietions of Califorriia corporations law and to ~vo~d t}~e passible appearance af
impropriety (Section VIII}; and
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5. It imposes disclasure obli~ations an the employees, officers e-nd Directors af
the Corporetian with regards to tf~eir econamic interests in the Third Street ~iall grea
~Seetian iK).
V. DiSSEtitINA`iION OR INFORMATTON
Inforrnation that comes to the atter~tion of the Directors and Em~loyees of the
Corporation may sometimes be oF a na~-publie nature and be wholly or partjslly
una~ai~able to tt~e generat pubiic. Directors end Em~loyees of the Corporation rnust
refrain from aeting on, dissemingt~ng or disclosing any such non-public information until
suct~ information ~as been made gublic in accordance with the provtsions af this Section
Y of this Code of Ethics. This standard of conduct is applicable regardless whether or
not the infvrntatian is "market-sensitiverc, as defined in Parag~p~ Br ae~aw.
A. P~blie$tion of .'Viir~t~tes of Board of D2rectors Meetin~s ~nd SuSeommittee
Meetings. Tentative or draft rninutes of the meeti~s of the Board of Directars and of
any Subco~nmittees of the Board of Directors ("Board ~Iinutes") shall be rnade a~ail~ble
for public re~iew and inspectior- wit~in three (3) business days after a~ty sueh rrteeting.
Tne tent~.tive or draft Boerd ~Vlinutes sh8ll 6e postea in tne Cor~oration's office and
shall be filed with the City Cleric of the City of Santa Monica. After the tentative ar
draft Board Niinutes have been posted irt the Corporation's office, the information
car~tained therein shall be considered pubiic information e~d the Directors arzd
EmpZoyees of the Corporatior~ r~~y theceupor~ disclose, aissernir~ate ar aat upan any such
infarrnation. As soan as the tentative or draft min~tes have ~een approved at the next
Board of Directors meeting, the approved !Vlinutes shall be posted snd filed in this
m anner:
B. "Merlcet-Ser~siti~e" Inforrrtation. Certain inforrr~ation can be reasonab]y
expecte~ ta have e. "significant'T or "mater~aln effect on people and an the eeanomic
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mar~cetpZace upon its disc~osure. Such 11rnsrket-sensiti~e'~ information must be handled
with especially sensiti~e and s~roit care a~td concern by the Directors and Em~loyees of
the Corpar~tion. Accordi~gly, the Dzrectors ~r-d Ernployees of the Corpor~tion ~nust
rePrain frorn d~sclosing, disseminating, or actir~g upon any s~ch non-pUbl~c, 'Tma*ket-
sensEtive" ir~forrnatton prior to ~ts dzsclosure to the pubtic by rneans of publieataan and
posting of the 8oard ?V~inutes ena thraugh t~te issuar~ee of a press r~tease, as dtscussed i~
the fol2owir~g par~grapt~.
Before the Director and Emplayees of the CarporatioR esn disciose~
disseminate ar aet on any such non-pubiic '~cnarket~ensiti~e'~ infarmation, aiI sueh non-
public, "market-serzsiti~e" information s~all ~e released ta tl~e public by the issuance of
a~ress-release by the Corpor~tion's Executive DirectQr. The Directors and Emplayees
of the Corporatior~ must refrain from discussing, disclosing or acting upon any such non-
public, "market-sensitive" inforrr~ation for forty~ight {48} hours e~fter the Executrve
Director has issued a press release with respect to such information. After farty-eight
(48} hflurs have e~pseci e.fter the issuance of the press re~ease, ~tnd after the Board
:Viinutes have been posted, such infor~nat~on shall be deemed purilie iRformation.
The Board o$ Directors uf the Corporatian shall determine and specify at
their Board af Directors' ~eetings which information discussed or disc~osed during any
meeti~g shall be cansidere~ non-pubiic, '~market-serisitive" information. T~te Board of
Directors may at such time direct the Corporation's Executi~e Director to issue a press
release vvith respect to such information.
V~. PROHIBITION AGAINST SELF-DEALING TRANSACTIONS
A. Prohibited Self-Dealin~ 'I~ansgetions. Directors of the Corporation sha11 not
eng~ge Zn "self-dealir~ transactions" unless the transaettons are permitted in acCOr-
d~nce with Subsection B. of this Section VI, of this Code of Ethics. A self-~eal.ing
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transaction refers to a transaction to which the Corporation is a perty and ~n which a
Director has a ~'materiai financ~al interest" ~$s defined 2n Subsection D, of th~s Ssc~ion
YI. below). Fo~ purposes o~ this Sectian Vi, such a Director is reterred to ns an
"interested Director.'T
The Corporat~an shall nat be proht~i~ed from entering into and engagin~ i~ ~
trans8cttan ir~ w?~ict~ a Director ~as a material financial. tnterest pro~rir~ed:
a. The interested Director discloses his interest ta the Board of
Direetors prior to the Boerd of Directors' ap~roval of the transaetian; end,
b. The interestsd Director refrains frorn voting upon or in connec-
tian with t~te Board of Directorsr approvaI of the transac~ion; and,
c. Th~ interested Director refrains from-frifluencing ather rnembers
of the Baard of Directars with respect to the approvsl of the transaction.
T}zis Sectior~ sha~ll n~t be eonstrued to prohibit (a) e trerrsaction w~ief~ is part of a
public or charitable program of the Corporatior~ if it: (i) is appro~ed or authorized by
the Corporation in good faith and without unjustified fa~oritism, and {ii) results in a
benefit to one or more Directors or their families because they are in the class of
persons intended to be ber~efited by the public or charitable prograrn; or (b) a
tra~saction, of whie}~ the interested Direetor or Directors have no actual knowledge and
which does not exceed the lesser af 1 percent of the gross receipts of the Carporatian
for the precedi~g fzscal ye$r or o~e hundcea thousr~r~c~ dollars ($1.00,000}.
B. Per-nztted Self-Dea~in~ 'I~ansactions. Directors af the Corporatian shall be
authorized to engege in s self-dealing tra~saction if:
a. The California Attorney General or the court in an action in
which the C~Iifornia Attorney General is an indispenssble party, has xpproved tt~e
transaction before dr after it was consumrnated; or
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b. The fallowin~ fr~cts are establ~st~ed:
i. The Corporation entered into t~e trans~etion for its own
benefit;
ii. The transectcan ;vas fair $nd reasanab3e r~s to the Carvara-
tion at t~e time the Corporatian entered ~nip the transaction;
i-i. Prior to consurr~mating the transaction ar any p~rt thereof,
the Baard a~thorize~ or approved the transactton in good faith by a voie of a rnalority
of the Directors then in office without counting the vate of the interested Directar or
Dareetors, ~nd wit~ knowiedge of tt~e materis~ facts caneecning the tr~ns~ctio~ afld tF~e
Director's interest in the transaction. Except ss provided in parao aph (c) of this
Section, actiore by a~ comrnittee of the Board shall not s~tisfy^Lfiis paragreph; and
iv. A. Prior to authorizing ar approving the transaction the
Board consi~ered and in goad faith determined after reasonable in~estigatiort under the
cireumstances th~t th~ Corpar~tian could nat have oi~ta~ned a more advantagsaus
arrangerrient with reasoneble effort under the circurnstas~ces; or
B. T~e Carporation in fact could not have obtainec~ a
more advantageous arrangemeRt w~th reasonable effoct under the circumstances; or
c. The following facts are estsblished:
i. A committee or person authorized ~y the 8oard ~.pproved
the trensaetion in a rnanner cansistent with tne standards set ~orfh in paragraph (b) of
this Section;
ii. It was nat reasonahly practicable to obtain approval of the
Board prior tv ~ntering into the transaction; and
iii. T~e Board, after determining in govd faith that the condi-
tions of subparagraphs (i) and (ii} of this paragraph were satisfied, ratifie~ the
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transact~on a;t its n~xt ;n~eting by a vote of the majority aT the Directors Ehen i~ office
w~thout counting t~e vat~ of the interested Director ar Directors.
C. Prohibited Loarts gnd Gu~r~ntees. The Corparatian shall not rnake any laan
of money or ~raperty to or guarantee the obiigation of ar~y Directar or officer, unless
appraved by t~e California Attorney General, except th~t:
s. TMe Corporation may Sdvance money to g Direct~r or officer of
the Carporation for expenses reasonably a.nticipated to be incurred in the perform8~ce
of the dtities of sueh officer or Director, provided that in the absence of such sdvance~
such Director or offxcer would be entitled ~o be reimbursed far such ex~enses by the
Corporation; and
~. Th~ Corpar8tion may pay prerr~iums ~r~"whole or in part on e life
insurance policy on the life of any Director or officer so long as repayment to the
Corporatian of the amount paid by rt is secured by tt~e proceec~s of #he policy and its
castt surrer~der value.
At~y Director vr Employee who is unsure of his or her duties under this Code
of Ethics shoul~ re~uest irnmediste edvice and counsei frot~ the Board of Directors.
D. Material Financi8~ Interest. The financial interest of 8 Directar i~ a
transaction shall be deemed nlTlat@CIB~~r if there will be a"significant effect" (as
described in Subsection E., belaw} an any of the fallowing:
1.. any business entity in which a Director has a direct or indirect investment
worth mare than $1,OOQ;
2. any real property in which a Director has a direct oc indirect interest worth
more than $1,UOD;
3. any source of income, other than loa~ns by a commercial lending institution
in the re~Iar course of husiness oR tert~s avsilable ~o the public without regard to
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official statits, aggcegatir~g $25U or more in value prov~ded ta, received by or promised
to the Director within tweive mor~ths prior to t~e time when the decision is made; or
4. any business entity in which the Director is a~irector, officer, partner,
trustee, emplayee, or holds any pos~tion of managemer~t.
E. Si~nificant Effeet. in determining whether it ~s reQSOnably foreseeable thst
the effects of ~ transaction upon the ftnanci~l interest of a Darector will ~e
"significant" within the meaning of this Code of Ethzcs, consideration should be given to
the following factors:
1. whether, in the case nf a business entity in whieh a Directar or
Ernp3oyee hol.ds a direct or i~direct ir~vestmertt of $1,004 or rrtoce, nr irt t#re case of e
business entity in whicf~ a Director or Employee is a d~irector, offieer, partner,
ernpioyee, trustee, or holds any position of manegement, the effect will be to increase
or deerease:
e. the ann~alized gross revenues by the ~esser of:
i. ~~,000; or
ii. 19i6, if the effect is ~1,OOU or more; or
b. annual net income by the Iesser of:
i. $50,OQ4; or
ii. 1/2 of 19b if the effect is $1,004 or more; or
c. current assets or liabilities by the Iesser of:
i. $IOQ~OQO; or
ii. 1/2 of 1% if the effeet is $1,OD0 or moee. (Current e-ssets
shall be aeamed ta be decreased by the amount of at~y expenses incurred as a result af a
bovernmental decision.)
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2. whether, ire the case of a direet ar ind-rect interest in real ~roperty of
$I,(3fl4 or mare held by a Bir~etor ar Employee, t~e effect w~u be to increase or
decre~se:
a. the ineome-Qroducing potential of Ehe property by the ~esser of:
i. $1,404 per manth; or
ii. 596 ~er inont~ if the effect is $50 ar rnore per month; or
b. the fair market value of the property by the lesser of:
i. $10,000; or
ii. 1/2 of 19b if t~e effect is $~,040 or maee.
3. wfiether, in the ca,se of a source of ineome as defined m Government
Code Sectiar~ $7103(~y, of $25Q ar more received by or ~romised to s Direetor or
Emp~oyee wit~in ~v+relve rnonths prior to ~he time the dec~sion is made:
a. the effect will be to inerease or decrease tha amount of income
(other tha~ rents} to 5e received by a Direetar or Employee, or to confer a financial
benefit or detriment upon a Director or Em~layee or e member of such personts
irrtmediQte farni~y, i~ an amount af $~00 or more, or
b. there is e nexus between the gavernrnental decision and the
purpase for which e Directar or Employee recei~es ineome; or
c. in the case of a source af income which is a business entity, t~e
busine~.s entity wi~t be a:ffecteci ire 8 msnner as described in Subsectfor~ (B}(1) above.
VII. GIFTS
The Directors and Employees of the Corporation shall report and dxsclose in
writing ta the Exeeutive Director, in ti~e case af Employees other than the Executive
Directar, and to the Soard of D'zrectors, zn the case of the Directors ar~d the Exec~tive
Director, alI gifts of a vaiue greater thar~ $10Q from persons who have m~tters pending
before the Corporatior~.
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The Directors of the Corpore.ttion she.ll be permitted to d~ne with persor~s who have
matters pending before the Gorporatian and to ellow such persons #o pay for the
D~rectors' meals, sts~~ect to the limitations imposed by Section VIIF., below, of this Code
of Ethics. It rnay often be prefer~ble, especlally where rnore than one D~rector is
dining w~th ~ member of the publ-c with interests in t~e Th~rd Street Ma~, tt~at the
Directors pay for their awn meals or have the Corporattan ~~y for Eheir meaLs if
Corporation business is being discussed.
Ir~ case af doubt as to the propriety of accepting a gift frarn or dining with a
person with ~ rnatter pending before the Corporation, all do~bts should be resolved in
aacordance with the generai standard set forth in Section IY of t~is Code o#' ~thics so as
to avoid the appeare~nce of impropriety and undue influer~ce. y~'
V1II. INF4RMAL MEETINGS OF :VIE~VIBERS O~ THE BOARD OF ~IRECTORS
The Directors of the Corporation should refrain from engeging in meetings or
discussions among tnemselves in grouQs ar gatherings of more t~tan four (4) DirECtors at
any one time except at formal meetings of the Board of Directors or at ~orrnal.
meetings of subcammittees of the Board af Directors. The tsasis €ar this standard is tp
avoid a violation of California law whict~ requires that r~otice be given of ineetings of a
carporatian's Board af Directors, and, in connection therewith, to avoid the eppearance
of impropriety which might arise in the event a su~ficient number of Direetars ta
constitute a quorum ar majority were asser~ctbied without notice to the absent metnbers.
The standard to be applied with res~ect ta informal gatherings, meetings and discus-
sians of and by the members of the Board of Directors is the avoidance of the
appearance of irnpropriety due to the appear~nce that a majority or a q~orum of tne
&aard of Directors may be engaging in substsnti~e deeision-m8king at an inforrnal
meeting or other social gathering.
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IX. DISCLOSURS OBLIGATIONS
~ach Directar af the Corporahon shall disclose to the full Board of Directors,
prior to discussing, exerting influer~ce tow~rds, or voting upon a matter pend~ng before
the Board, any material fisiancial interest such Director has ~n those matters pend~ng
before the 8oard of Directors. After a Director Ytas disclosed to the Board of Directars
his or her interest in ~ particular m~tter pending before the Board, such Dtreetor may
vote upon such issue so Iong as snch act~on does not constitute a self-dealing
trensactiort within the meanin~ of Section VI, af this Cade of Ethics.
The Directors, officers end employees of the Corporat~on mi~st aIsa file disclosure
st~ternents of eeonomi~ interest vsrith th~ Corpor~tiar~ at the time that they are
employed by the Corporation, in the case of an ~mployee, or~~at the tirne that they are
appointed or elected to ser~e on the Baard of I}ireetors, in the case of a Director. Such
statemer~ts of economic interest must be filed within thirtq (30) days after such
ernpioyment, election or appoin#ment and mast el.sa be ~iled by all Ern~loyees and
Directors on an annual hasis tt~ereafter. Employees and Directors of tl~e CorporatFOn
s~all aLso file ste~ter~tents of economic interest within thirty (30) days after t~rminatian
af their employrr~ent or lea~ing office.
"I'he statements of eeonar~ic in#ecest shall be in such form and shall d~sclose st~ch
matters as the Board of Directors shall deem necessary, but at a mir-imurn sh~ll disclose
~ person's i~terests and investments in the Thicd Street Mall, interests snd invest[nents
in real property in the Third Street Mall, incorne i~ business positiosxs held or recei~ed
in connection with the Third Street Mall and other interests in or ciaims to the Third ;
Stree~ Mall.
When ~n invesiment ar $n interest ~ req~ired to be reported, the d~sclosure
statement shall contain the following:
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1. a statement of the nature of the in~estmer~t or interest;
2. t~e jtame of the business entity in wh~ch the investment or interest is held,
and a genera~ description of the business acti~ity ~n which the business ent~ty is
engaged;
3. the eddress or athee preeise Iocatlfln of the real property constitutin; the
investment or interest;
4, a statement of the estrmated fasr-market vaZue of the investment or
interest in real property.
When personal income ~s required ta be reported, the disclosure statement s~ail
co~t~ir~ the fol3owin~:
1. the name and address of each sauree of incarne a~d a generai descriptior~ of
the business activity, if any, of each source;
2, a statement of the esYimeted aggregate ~aiue of income from each source,
or in the case of a loan, the highest amount owed to e$ch source;
3. a descriptior~ af the cansideration, if any, far which the income was
reeei~ed;
4. in the ease af a gift, the name, address, and business acti~ity of the donor
erid any intermediary thraugh which the gift was made;
5. a description of the gift;
6. t~e a~ount or ~alue of the gift;
7. the date on which the gift was received;
8. in the case of a ioen, the annual ir~terest rate and the security, if any, given
for tt~e loan.
When income of s business entity, ineludi~tg tneome of a sole ~roprietorship, is
reguired to be reported, the disclos~re statemec~t shall contain the follawing:
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1, tne name, ~ddress, and a gener~l descript~on of the business activity of the
bus~ness entity;
2. the narne of every person from whorr~ tl~e bus~ness entity rece~ved payments
if the f~ler's pro rata share of gross rece~pts fro~n such person wss equai to or greater
than $10,000.
When business ~ositians are req~ired ta be reported, a person shall lisl tt~e narne
and address af each business entaty in whlch 1~e or she is a director, o£ficer, g~rtner,
trustee, oc employee, ar in whic~ he or she haids any ~osttian of mana~~rnent, a
deseriptian of the business activity in wh~ch the business entity i.s engaged, and such
person's ~ositio~ with the busine~s e~tzty.
In the case of en ann~al or lea~ir~g office staternent, i~ran invest~ent or interest
in real ~roperty vyss partially or wholly acquired or disposed of during thQ period
covered by the disclosure state~nent, the d~seZasure statement st~all eontain the date of
acquisition or disposal.
X. GENERAL P~LICIES
A. Dzseiplinary Actian. Every Employes, except the Executive Director, will
be subject to diseiplinary action, including severance, for a vxolation of any af the
provisions of this Code of Ethics. The Executive Director will be sub~ect to disciplinary
action, irtcluding rerno~al frorrt office, by the Board of Direetars for a viol.ation of any
of t~e pro~isinns of this Code of Ethics. ~ach member of the Board o~ Directors will be
sub~ect to disciplinary action, includxr~ ~~ving that memberts seat on the Board of
Directors decla~ed vacant by the City Council of the City of Santa Monica pursuant to
the terms of Article III, Section 4 of the By-Laws of the Corporation, for a violation of
any of the provisions of this Code of Etf~i~s. The nature a,~d extent of disciplina~y
action, with the exception of deelaring a Director's seat v~cant, shall at all ttmes be
2425 -i4-
wit~in the discretion and determination af the Board of D-rectors. All Emplayees and
Directors are hereby advised ~d ROt1f1E~ that they shall be subject to disciplirtary
acUan for a violation 4f tttis Code of Et~ics.
All ~atters in~ol~ing ~osstble ~xolations af this Code af Ethics st~all be referred
initially to the Ethics Subc~rnmitCee of the Baard o€ ~~rectors foe its review and
determin~tion. The Ethics Subcomm~tteE may e~ther issue a decis~on or may refer the
matter to the Board o~ Directors far -ts cons~deration.
B. Grievance Procedure. Every membec of the Board af Dtrectors and every
Employee may appeai g decisian with respect to disci~linary action agairtst that person
by filirtg in the Corparation's affice s Natice of Grievarice with respect to the disputed
decisian within ten (l.0} days o~ the issuance of the dispute~ decision. The Notice of
Grievance shall contain the person's name, the reason the decisian is disQuted, snd a
reqe~est that the decision be reconsidered.
Upon such submission of a Natice aP Grievance within said ten ~~0) day geriad, the
matter shall be referred ta the Board of Directors for its consideration. The aggrieved
party shall glso be invited to appear at a meeti~tg of the Baard of Directors to present
those writings, documents, comments, facts and argumen#s relevant and necessary to a
full and fair consideration of ~he situation. The Board of Directors rnay determine a
reasonable length of time in which the eggrie~ed person may present his/her case and
may in~ife other Employees and persons, including the Executi~e Director, to present
reZevant f~cts to the Boarc~. The ~o~cd o€ Directors, after t~e~ring all prese~tations,
inc~uding the report err~d recommendatio~ of its Ethics Subcorrtmittee, shall be entitled,
should it so choose, to reeonsider its previous decision or the previous decision of the
Executive Directar. Tt~e Board of Directors shall thereafter deliber~fe in Executive
Sessio~ and its final decision shall be made a part of the minutes of the ~eeting. The
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decision of the Board of Directors made after 5uch ~earir~g and deiiber~tion shall b~
final.
C. Revtsions. The Boa~d of ~irectors may approve e.r~d recommend to tf~e City
Counc~I of the City of Sant~ Manica pro~ased re~is~ons to th~s Code of ~th~es, Ali
8mployees si~all be notified of eny proposed ehanges for at iesst a ten (10) ~ay ~eriod
~rior to their appro~al by t~e Board of Directors. All re~isions to [his Code af Ethics
spQroved by the Soard of Directors shall be effecti~e only upon theie approval by the
Czty Council of the City of Santa Monica.
XI. DISCUSSIO~ Og HYPOTHETICAL SITOATIONS.
T~e foIlawirt~ hypotheticsl sit~aatiorts are presented in en effort ta ill~strste the
~arious scenarios and tssues whieh will be faced by the Etn~k~yees and Directors of the
Corporation frocn tisne to time. The following are by no me~ns art ~xhaustive list of ell
possibilities, but are merely intended to explicate and illustrate the tyPe of analysis
required to be conducted in these situations. ~fnployees and Directors ar~ ~dvised to
consu3t with the Corporation's Bosrd of Directors in the event of any con€usion or
questions regarding any real life situations. Howe~er, tt-e following examples shauld be
helpfe~l and are intended to act as a guide to proper behavior and analysis by persons
associated with the Corporation.
1. Factual Settin~: The Corporation is interested in p~rchasing one af two
buildings far a passageway frort~ the parking structures ta the Third Street Mall and that
fact is mentioned to the owner of orre of the buil~ings by a mernber of the Board of
Directors of Ehe Corparatian.
Analysis:
So lorrg as the inform~tion reg~rding the Corporatian's intentions t~a~e been made
puhlic information pursuar~t ta Sectton V of the Gode of Ethics, a Director is permitted
242~ -16--
to discuss tt~is fact with a rnernber af the p~bl~c, including ar~y owner af property on the
Third Street Mall.
If the fact that the Corparation is tnterested in purchasing property on the Third
Street iviall for e passageway has nat yet been made pubitc information in accardance
with Section V of the Code of Ethics, Emplayees and Directors of the Corporation shall
not be allvwed to d~scuss such information unt~l it has been rnade p~tblic in accordance
with Sectian V of the Cade of Eth~cs. As Section V sets forth, such information is fnade
pub~~c by its inclusion in the minutes af the meeting of the Board of Direetors or in the
minutes of a meetin~ of a subcommittee of tt~e Board of Directors and the pasting af
such minutes within three {3) b~s~ness days after such meeting. If the Board of
Directors has determined th~t such informatxon is "market~cnsitive's informatior~, and
if the Board aP Directors wishes to disseminate ar act on se~ch information, in addition
to the posting of the minutes of the meeting, such information must aLso be released as
part of 8 press rel~ease issued by the Executive Director af the Corporation. Such
information must ~iot be disclosed to the public or acted upon until at least forty-eight
(48) hours ha~e passed ~fter the issuance of the press re~ease and after the Board
Minutes h~ve been posted.
2. Factual Settin~: A prospective tenant of a buil.ding o~vned by a member of
the Board of Directors of the Cocporation applies for a loan from the Corporation's
Revolving Loan gund.
Analysis: ,
i
The foregoing f~etual setting appea:rs to be a"self-dealitzg tra:nsaction" within the ~
definition set farth in Section VI. of the Code of Ethics. The transaction at iss~te
appears to involve a~'material financial interest" of e member o#' ~t~e Board of Directors
since rt seems likely that at will have a sagn~ficant effect on an in~+estment in wh~ch the
2425 ~l"-
Director has an interest, end is a transactlon to which the Carparation will be a party,
Thus, the transaction eppeers to saiisfy the definition of a seif~eal~ng transaction
under Section VI. of the Code of Ethics.
As Sect~on V', in~icates, where the Cor~aration is consider~ng a transaction in
whictt a Director t~~ a meterteZ fena~caal interest, tt~e tnterested Director m~s# diselose
f~is interest in the transaction to the full Board of Directors. 17oreover, the interested
Director must refra~n from influencir~ other members of the Board of Directars with
respect to a decision. In additian~ the interested Director must refrain from voting
upon the r~atter when a decision is voted upon by thE full Board of Direciors.
3. Factual Setttrt~: The Corporation hes dec2de~ to invest 9~~6 of ~ts
landscap~n~ reso~rces into improving one black of the Third Sireet Mall as a demonstra-
hon project. That inforrnation is disclosed to a Iocal commercial realtor by a member
of the Soard of Directors.
Analysis:
The aetioR of the tnember of the Board of Direetors in passing aIong th~s
information to a local eommercia~ realtar wauld be in violation of the Code af Ethics
only if the inform~tion had not been made pubLc in accordsnee with Section Y. of the
Code of Ethics. In other words, if the inforrnation had been made public by its inclusion
in the minutes af the meeting of tY~e Board of Directors and tt~e pasting of such minutes
at the offices of the Corporation with2n tnree (3~ 6usiness d~ys efter the Board of
Directors meeting, no violation of the Code of Ethics would have occurred. I~ tYlIS
infarmation had been deemed by the Boerd of Directors st its meeting to be 1tmarket
sensiti~en information in aceordance with Section V(b} of the Code of Ethxes, then such
information could not be disseminated by 8 member of the Boerd of Directars untii
~fter the postir~g of the Saar~ Minutes en~ the ex~iration of forty--eight {48} ho~rs
2425 '1$-
after such tnforrnation hgs been released tv ~he public by mea~s af the issuance of a
press release by ttre ~xecutive D~rec~or. After the ~osting of the Board Ntinutes and
Lhe exptration of forty-eigitt (48) hours from the issuance af the press eeiease, such
information would be deemed public ~nformation in accordance wtth Section V(b) ef the
Code of Ethics.
It shou~d be noted that the vialation of the Cade of Ethics descrtbed in the
Factual Setting sbove is not a violation of any sts.tute or law. The diselosure
requtrements contained in this Code of Ethics ha~e been irnposed to protect the
Direetors from allegations of rnisuse a.nd self-dealirig but are not dietated or required
by ~ny statate or ordinance.
4. Factusl Settir~: A Request For Propos8l (RFP~is issued for development
work an the Mall and a firm with which e Director is ~ssociated sut~mits a proposat.
Analysis:
In aecoraar~ce wittt Seetion VI af t~e Code of Stt~ies, meinbers of the Board af
Directors must a~oid engaging in "sel.f-dealing transactions" unless certain requirements
are satisfied. A s~lf~eali~ transaction is a transaetion to yvt~ich the Carporatian is a
party and in which a Director has a"material financisl interest:'
In the factual setting given a~ove, the first level of anslysis is to determine
whether the Direetor has ~ material fittancial interest in the proposal submitted to the
Cocporation. The stsndards for the determination of materisl financial interest ere set
forth in Section YI(d} of the Code af Ethics. A determinstian ~nust be r~ade whether
there will be e;'sigr~ificant e~fect'i on that Directar's financial interests. T~e standards
ta be applied in deterrnining whether an effect will be "significar~t" is set forth in
SECtion VI(e) of the Code of Ethics.
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If it is determinec~ tt~at the fi~anc~al interest of the D~rector is a m~terzal
financial irsterest because it will have a significant effect on any of t1~e vacivus
interests set for~h in Seetia~t VI(d} of the Code of Ethtes, then such Directoe must first
disclose to the full Board of Directors his interest ir~ the tre~saction be~ng considered
by tf~e Boaed of Directvrs. The interested Directar rr~ust also refrain from influencing
any of the other members nf the Board of ~ireetors with respect ta their vote u~on the
approval of the transaction. Finally, the interested Director ~ust eLso refrain from
voting upon the transaction in which he has a material financi~l interest.
So long es all af the faregoing restrictions are satisfied in accordance with the
Code of Ethics, then the Corporation is entitled to enter into a transaction wit~ a firm
in wt~ich 8~ember has s ma~eri8~ fir~ancial interest. ''~
Had it been determined that the Director d'zd not f~ave a material financi~l
interest in the transaction, then the Direetor would be entitied to discuss with tha other
members of the Board of Directors the issue of approval of that firm as well 8s e~titled
tti vote upon appraval af the contract so long as lie/she disclosed whatever interest
he/she ha:d to the full Board of Directors. In other words, th'e Code of Ethics prohibt~s
participation in decisio~-ma[cing by a Director onZy where a Directar has ~ material
fina.ncial ir~terest in the transactian.
S. Factual Setting: A~otentiai anchor tenant af the Third Street Mall invites
tfuee {3) Directors of the CarporaLian to lunch.
AnaIysis:
Members af the Board of Directors are eneouraged to discuss issues conCerr~ing ~
the Third Street Mall with meml~ers of the general public, incl~ding mEtnbers of the
public who have potential or present interests in the Third Street Mall. Indeed, it is the
obifgation af inembers of the Board of Directors to create a: positi~e public image of
2425 -2Q°
the Corporat'soR and to provide accessibility to the~nselves so that members of the
public concerned with the Third Street ~~Iall mey discuss iss~es w2th the Corporation.
However, in accorda~nce with 5ectian IV. of the Code of Eihics~ rnembers af the
Bosrd of Directors must strive to a~aid tf~e appearance of impropr~ety and undue
infiuence. Thus, if a potential anchor tenant or other intereste~ person ~nvites
Directors of the Corporation to lu~ch or to dinner, it may be ad~isable th~t the
Directors either pay for their vwn meals or have the Corporatian pay for theu meals if
business is discussed,
Thece can be, of course, no har~ a~d fast rnle to determins w~ether Directors
must paty for their own mea.Ls or allow themsexves ta be treated by interested public
persons. However, Directocs must ~waqs strive to fulfill t#ie obligations im~ased ~y
Section IV. of the Code of Ethics to avoid the 8ppearance of im~ropriety and undue
influence in connection with tt~e Third Street Mall and the Corporatian.
Wh:il~ the sbove fact~al setting referred to three (3) Direetors of the Corporation,
it should be noted that, pursusnt to Section VIII. of the Code of Ethics, Directors of the
Corpor8tian must refrain from rneeting arnong themselves or~ ditscussing rn~tters among
themsel~es in gra~ps or ga~herings of more than four (4} Directors at any one time
except at a formel meeting af #he Board of Directors or at a formal ~neeting oP a
subcomrnittee of the B~atd. Thus, ~ad the potential anef~or tenant invited more than
four (4~ members of the Boa~d to Iuneh, some or all of the Board rnembers invited must
refrain €rom a.ttendixig.
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