sr-060181"T~~pinion is a p,:~ic document and available' ,o the public upon payment
~f copying costs.`?
CITY ATTORNEY OPINION NOS. 80-150, 80-190 ~ ?/U
U
Status of Rent Control Board {'~,:\~~
1' ° v J I
~ Within Structure of City Government ,, ~r~, ~ya~J~ J,~~~w\
.Y ~, \ J" '
~~ tai INTRODUCTTON ~ ~~~
w. Pa
cn __
a.C'
`; Section 100 of the Santa Monica City Charterl declares
s~u_i ~ -
`~,he C~ty~-of Santa Monica to be "a body politic and corporate."
c
s2 N
The Santa Monica Rent Control Board ("Board") was established by
initiative charter amendment on April 10, 1979, now codified as
Article XVIII of the City Charter. Article XVIII does not
establish the Board as an independent corporate entity, but
states that it shall be "in the City of Santa Monica" (Section
1803(a)).
The Board is authorized to "finance its reasonable and
necessary expenses by charging landlords annual registration fees
in amounts deemed reasonable by the Board [and] "to request
and receive funding when if necessary, from any available source
for its reasonable and necessary expenses" (Section 1803(n)). It
has the power to and shall "issue and follow such rules and
regulations as will further the purposes of the Article,"
(Section 1803(g)), and "employ and pay such staff as may be
necessary to perform its functions efficiently in order to
fulfill the purposes of this Article" (Section 1803(p)).
On March 25, 1980, the City Council amended the local
ordinance implementing Article XVIII to provide, in essence, for_
1 Unless otherwise indicated, all references hereafter to "the
Charter" are to the Santa Monica City Charter, and all references
to "Sections" are to sections of the Charter.
t
1
the independent authority of the Board over its financial,
purchasing and personnel affairs (Santa Monica Municipal Code
(SMMC) §§ 4601-4613).
The City Manager, Purchasing Agent, and Personnel Board
have requested opinions interpreting the relationship of Article
XVIII to the sections of the Charter specifying the powers and
duties of several City agencies over budgetary, purchasing, and
personnel functions. There are three basic questions:
1. What authority does Article XVIII confer on the Board
with respect to its budgetary, purchasing and. personnel affairs.
2. Does the Charter, construed as a unified whole,
specifically confer on the City Council, the City Manager and the
Personnel Board powers and duties with respect to budgetary,
purchasing and personnel matters which cannot be delegated by
ordinance to the Board.
3. To the extent that powers in the specified areas may be
delegated to the Board by ordinance, does the Council's
delegation of such powers to the Board constitute a lawful
delegation.
We conclude the Board is not an entity independent of the
City; accordingly, it is subject to those personnel, budgetary
and purchasing provisions which, under the Charter, are
applicable to all boards, departments, offices and agencies of
the City. The powers given the Board under Article XVIII to make
rules, finance its necessary activities and hire necessary
personnel may be harmonized with the general procedures specified
in the Charter and appropriate to a Council-Manager form of
2
government. The City Council, as the repository of all powers in
the City (Section 605), may delegate to the Board certain
additional functions in the areas of personnel, purchasing and
budget, so long as the delegation contains adequate safeguards
against the total abdication of the Council's fundamental
responsibilities. However, the Council may not delegate those
functions which are specifically assigned by the Charter to other
City officers or agencies.
We recommend that the Council, before the adoption of the
1981-82 budget, consider amendments to SMMC Sections 4601 et seq.
to reflect Charter limitations on the Board's control of its
budgetary, personnel and purchasing affairs. Emergency
legislation may be required to assure the continuity of Board
functions prior to approval of the new budget and to protect the
rights of existing employees.
The remainder of this opinion will discuss in detail the
relevant provisions of the Charter and the ordinance implementing
Article XVIII in the context of each of the three subject areas
involved. The opinion begins with an overview of the Charter and
a discussion of the general legal principles governing
construction of a city charter.
OVERVIEW OF THE CHARTER
In 1948, the voters of the city. adopted a Charter which
established the City of Santa Monica as a body politic and
corporate (Section 100) with power to make and enforce all laws
in respect to municipal affairs and such other powers as may be
exercised by a chartered city subject only to the limitations of ,
3
the California Constitution and paramount state law (Section
400). The Charter establishes a "City-Manager" £orm of
government (Section 500), under which the City Council is vested
with all powers of the City except as limited by the Charter and
the State Constitution (Section 605); the City Manager is
designated the chief executive officer and head of the
administrative branch of the City government, responsible to the
Council for the proper administration of all affairs of the City
(Section 704).
The Charter establishes an overall budgetary process under
which the City Manager is to prepare and transmit to the Council
a proposed budget based on estimates of revenue and expenditures
received from each of the various departments of the City.
(Sections 1502-1503). The Council is then to consider the
proposed budget, make appropriate revisions and, following public
hearing, adopt a budget; adoption of the budget constitutes an
appropriation to the several offices, departments and agencies of
the City of the amounts included in the budget as proposed
expenditures (Sections 1503-1506).
The Charter establishes under the control and direction of
the City Manager, a centralized purchasing system for all City
departments and agencies to be implemented under rules proposed
by the Manager and adopted by the Council, with specified duties
reposed in a purchasing agent (Section 1507); competitive bidding
is required with such exceptions as the Council may prescribe
(Section 1508).
4
The Charter also establishes a civil service system based
on the merit principle and intended to insure to all persons an
equal opportunity to obtain and hold employment and advance
therein from or within any board, department, officer or agency
provided for in the Charter. (Sections 1100-1101). The Charter
specifies positions within the unclassified service and provides
that all other positions not specifically enumerated are to be
within the classified service (Section 1102). Positions in the
classified service must be filled by the appointing authority
from candidates selected on the basis of competitive examinations
(Section 1108); classified employees have the substantive and
procedural rights guaranteed by Section 1110. The Council has
the power to determine the number of employees in a given
department (Section 1305), and to abolish a position or to reduce
the number of employees in a given class in the classified
service (Section 1109).
The Charter recognizes the rights of employees to petition
the City Council or the board, officer or commission having
jurisdiction of such matters with regard to wages, hours or
conditions of employment (Section 1101); however, the Charter is
silent as to the negotiation and execution of employment
contracts and the determination of wages, hours and conditions of
employment. This subject is covered by Ordinance No. 801, which
designates the City Manager to negotiate employment contracts
subject to City Council approval.
Article XVIII does not expressly change or limit the
application of any of the above-described provisions of the ~
5
Charter. It provides for the establishment of an elected Rent
Control Board and assigns to it duties including the registration
of all controlled rental units, the establishment and adjustment
of fair and equitable rent levels for those units, and the
issuance of permits for the removal of controlled units (Section
1803). The Board is expressly given the dower to issue necessary
rules and regulations, and to hire and pay necessary staff
(Sections 1803(f)(6), 1803(g)). The Board is empowered and
required to charge landlords annual registration fees in amounts
it deems reasonable in order to finance its reasonable and
necessary expenses (Section 1803(n)).
On June 29, 1979, the Council adopted Ordinance No. 1127 to
codify, clarify and implement Article XVIII and "to integrate it
into the whole of the City, its government, law and plans."
Ordinance No. 1127 provided, inter alia, that the Board is an
integral part of the City government and the City Manager and
City Staff were to administer and supervise its financial,
personnel and purchasing affairs. Ordinance No. 1127 did
recognize the Board's final appointing authority over its
employees. Moreover, while the Board was required to submit a
budget in the same manner as other City departments, its budget
was to be approved as transmitted except the Council reserved
power to disapprove items requiring the expenditure of general
funds or involving "a manifestly unreasonable use of public
resources or manifestly unreasonable risk of loss to the City".
Suits against the Board were to be considered suits against the
City and defended by the City Attorney.
6
On April 14, 1980, Ordinance No. 1127 was extensively
amended by Ordinance No. 1153, codified as Sections 4601-4613 of
the SMMC. This ordinance, although declaring the Board to be an
integral part of the City government (Section 4606), also
declares the Board's independent power to determine its own
personnel, financial and budgetary policies (Section 4609), and
authorizes the Board's administrative staff to administer and
supervise the Board's financial, personnel and purchasing affairs
(Section 4606). Specifically, the Ordinance recognizes the
Board's authority to hire, pay, promote and fire such employees
as it deems necessary, including its own legal staff, and to
determine which of these positions are unclassified pursuant to
Section 1102 of the Charter (Sections 4607, 4611). The Board is
further authorized, following public hearing, to adopt a budget,
and the amounts stated therein are thereby appropriated by the
Board to the Rent Control Administration (Section 4608).
GENERAL PRINCIPLES
The City of Santa Monica is a charter city under the
provisions of the state constitution. Cal. Const. Art. 11,
Section 5. The City's charter is its local constitution; it is
the supreme organic law of the City, subject only to conflicting
provisions in the United States and California Constitutions and
to preemptive state law. San Francisco Fire Fighters v. City and
County of San Francisco, 68 Ca1.App.3d 896, 898, 137 Cal.Rptr.
607, 608 (1977); Brown v. City of Berkeley, 57 Ca1.App.3d
223,231, 129 Ca1.Rptr. 1,4 (1970)..
7
Under settled rules of statutory interpretation, .
Sections of the Charter must be construed together, giving effect
and meaning so far as possible to all parts thereof, with the
purpose of harmonizing them and effectuating the legislative
intention as therein expressed." Hanley v. Murphy, 40 Ca1.2d
572, _, 255 P.2d 1,3 (1953). Where it is impossible to
reconcile conflicting provisions, special provisions control more
general provisions, Diamond International Corp. v. Boas, 92
Ca1.App.3d 1015,1041,155 Ca1.Rptr. 616, 626 (1979); later enacted
provisions control those earlier in time. City of Petaluma v.
Pacific Telephone & Telegraph Co., 44 Ca1.2d 284, 282 P.2d
43,46 (1955).
Section 605 of the Charter vests all powers of the City in
the City Council, subject, however, to the provisions of the
Charter and the State Constitution. Although the Council is the
repository of all powers of the City not expressly conferred by
the Charter, it may not exercise its plenary powers in a manner
which impinges on powers or duties vested by the Charter in some
other agency of the City government. Hubbard v. City of San
Diego, 55 Ca1.Ap.3d 380, 388, 127 Ca1.Rptr. 587, 592 (1976); San
Francisco Fire Fighters v. City of San Francisco, supra, at 609,
610. Indeed, Section 1303 of the Charter provides that while
"the City Council by ordinance may assign additional functions or
duties to offices, departments or agencies established by this
Charter, [it] may not discontinue or assign to any other office,
department or agency any function or duty assigned by this
Charter to a particular office, department or agency." An
8
ordinance which conflicts with the Charter is invalid. Brown v.
City of Berkeley, supra.
There is a general rule that legislative power cannot be
delegated. However, the California Courts have limited the scope
of this doctrine to permit delegation "so long as the truly
fundamental issues are resolved by the legislative body of the
municipality and the delegation of power is accompanied by
safeguards adequate to prevent its abuse." Bock v. Lompoc City
Council, 109 Ca1.App.3d 52, 167 Ca1.Rptr. 43, 45 (1980),
citing Kugler v. Yocum, 69 Ca1.2d 371, 71 Cal.Rptr. 687 (1968).
This principle must be understood in light o£ the fundamental
obligation of a municipal government to protect the public good
and, as trustee for the citizens and taxpayers, to act to prevent
the waste of public funds. E. McQuillin, 1 Municipal
Corporations §1.56 at pp. 80-81, 2 Municipal Corporations §10.31
at pp. 818-819.
The three questions presented are derived from this
theoretical framework. We must look first to Article XVIII to
determine what powers are expressly or impliedly granted to the
Board. These must be harmonized, if possible, with the rest of
the Charter; in the event of an irreconcilable conflict, Article
XVIII, being later and more specific, would prevail. Where
Article XVIII is silent or ambiguous, it must be determined
whether the Board's delegated authority under Ordinance No. 1153
conflicts with provisions of the Charter. If so, the conflicting
provisions of the ordinance and the purported delegation are
k
9
invalid. If there is no conflict, nor total abdication of the
Council's fundamental responsibilities, the delegation is valid.
RELATION OF BOARD TO THE CITY
A board, agency or department of a city may be created by
charter or pursuant to a grant of authority from the state. It
is general rule that a city agency which derives its power from
the city charter is not an entity separate from the
municipality.
A municipal board or department,
such as a board of education or a board
of health, may ordinarily be created by
the state or by the municipal corporation,
and may be a public corporation disconnected
with the government of the municipal corpor-
ation or it may be merely a department of
the city. If the department or board is
created by the legislature as a state agency
it is generally, but not always, considered
a separate entity; but a department of a
city, created by its charter, is not an
entity separate from the municipality, even
though a distinct city department. However,
corporate agencies created by a municipality
pursuant to an enabling statute are usually
considered to be independent public corporations.
E. McQuillin, 1 Municipal Corporations §2.30 at 176. See
e.q. State ex rel. v. Mowser v. Underwood, 61 Ohio App.
103, 22 N.E.2d 424 (1939).
Even in cases where a state enabling act exists, a body
discharging duties primarily resting upon a municipality and
which cannot be made solely responsible for damages resulting
from any act in performance of its duties, cannot be deemed a
corporate entity separate and distinct from the City. Brownlee
v. Dalton Board of Water etc. Commission, Ga.App. 1
S.E.2d 599, 600 (1939).
10
Municipal departments, commissions
and boards possess those powers expressly
conferred by charter, general statute,
ordinance, or those necessarily implied.
In the discharge of these powers, the
department, commission,- or board acts
as the agent of the municipality.
Eddy, Inc. v. City of Arkadelphia, 303 F.2d 473, 476 (8th
Cir. 1962), quoting Rhyne's treatise on Municipal Law (1957 ed.)
at Section 6-2 pp. 92-93.
The Board, in performing its duties under Article XVIII
exercises the municipal police power. Its actions in the control
and regulation of land use create a potential liability for
damages from which the City can not be insulated. See Agins v.
City of Tiburon, 24 Ca1.3d 366 (1979), aff'd 447 U.S. 255 (1980);
Greater Westchester Homeowners Assn. v. City of Los Angeles, 26
Cal. 3d 86, cert. denied, U.S. , 66 L.Ed.2d 22 (1980). While
the Board is empowered to charge fees to finance its necessary
and reasonable expenses, damages resulting from acts of the Board
determined to constitute a "taking" of property or involving
other constitutional violations could not constitutionally be
assessed against the landlords by way of fees. Thus, the City
could be required to use its general revenue funds to compensate
persons aggrieved by improper acts of the Board. Owen v. City of
Independence, U.S. 63 L.Ed.2d 673 (1980).2
2 A land-use regulation does not constitute a taking of
private property unless the owner has been deprived of
substantially all use of the property. Agins v. City of Tiburon,
supra. The United States Supreme Court has reserve judgment on
the question of whether a property owner is automatically
entitled to damages from the time the taking occurred until the
time the offending regulation is rescinded, or whether equitable
relief, without damages, will sufficiently compensate the owner. ,
San Diego Gas & Electric Co. v. City of San Diego, 49 L.W. 4317,
11
Whether or not the Board could have been established as an
independent corporate entity, see Hubbard v. City of San Diego,
supra, 127 Ca1.Rptr. at 594, it is clear that it was not so
established. Nothing in Article XVIII establishes the Board as a
corporate entity, independent or otherwise, or specifically
confers upon it the power to enter binding contracts or to sue or
to be sued in its own name, or to assume liability for damages as
a result of its action. On the contrary, Article XVIII provides
simply that "the Board shall be in the City of Santa Monica ."
(Section 1803(a)).
Because the Board is not an entity independent of the City,
it is subject to all the provisions of the City Charter, and in
particular, except to the extent of powers expressly granted it
by Article XVIII, to all provisions of the Charter applicable to
boards, departments, offices and agencies in the City.
armr.Fm
Section 1803(n) makes the Board responsible for financing
its activities:
The Board shall finance its reasonable and
necessary expenses by charging landlords annual
registration fees in amounts deemed reasonable by
the Board. The first annual registration fee
shall be set by the Board within thirty days
after assuming office. The Board is also em-
powered to request and receive funding when
if necessary, from any available source for
its reasonable and necessary expenses. Notwith-
standing the preceding provisions of this
paragraph, the City Council of the City of Santa
Monica shall appropriate sufficent funds for the
reasonable and necessary expenses of the Interim
Board and Board during the six month period
following adoption of this Article.
12
However, nothing in Article XVIII expressly or impliedly gives
the Board the power to appropriate money or exempts the Board
from the general budgetary process described in Article XV of the
Charter.
The Board's power to finance is in no way inconsistent with
the duty vested by the
general budget for the
amounts to the several
City. The concepts of
and logically distinct
providing funds, as by
Charter in the City Council to adopt a
City and to appropriate the budgeted
offices, departments and agencies of the
financing and appropriation are legally
Financing has to do with raising or
the collection of fees, for a particular
purpose. Appropriation is a formal or governmental action by
which funds are set aside or assigned to a particular use. See
Webster's Third International Dictionary (1961 ed.).
The fees collected by the Board create a special fund which
may only be used to finance the Board's operations; these funds
are not to be commingled with the general fund and may not be
drawn on for general City purposes. E. McQuillin, 15 Municipal
Corporations §39.45 at 131. However, the Board is not a special
district, established pursuant to enabling legislation, but a
part of the City. Therefore, the funds generated by the Board
from registration fees, like all other funds of the City, must be
deposited in the City Treasury and can be expended only pursuant
to the appropriation process expressly prescribed in the Charter.
See Commissioner of Woburn Cemetery v. Treasurer, _ Mass._,64
N.E.2d 627 (1946) (distinguishing between creation of special
fund and power to appropriate moneys from the fund). Any other
13
procedure would give the Board a financial autonomy inconsistent
with its status as an agency of the City established pursuant to
City Charter; it would result in the de facto creation of an
independent corporation without benefit of the substantive and
procedural safeguards which would normally accompany creation of
a special district as an agency of the state. See generally 63
Cal.Jur.3d §§847,863 (irrigation districts).
Under the well established principle .that a Charter must be
construed as a unified whole and harmonized whenever possible,
the Board's power to finance its operations must, if possible, be
harmonized with the City's express power to appropriate and its
plenary power and duty to retain control of the financial affairs
of the municipality. Nothing in the language of Section 1803(n)
can be construed--either expressly or by necessary implication--
to override the fundamental power vested in the City Council with
respect to the City's budgetary affairs.3
The City Council cannot delegate absolutely its budgetary
responsibilties. As the repository of all powers of the City,
the Council bears the ultimate responsibility to the citizens of
Santa Monica to avoid the waste of public funds. The burdens of
this responsibility are further increased by the limitations
imposed on cities to raise taxes (Ca1.Const.Art.13A) and to spend
money (Ca1.Const.Art.13B). In the event that the fees which can
3 Section 1803(n) provides that the City Council shall
appropriate sufficient funds for the reasonable and necessary
expenses of the Board during the six months following the
adoption of the Amendment. This does not suggest that the
Council will not thereafter appropriate funds for the Board's
expenses, but only that, prior to the Board's raising funds
through registration fees, the Council will be required to make
the appropriations from the general fund.
14
reasonably be assessed against landlords are not sufficient to
cover the Board's actual expenditures or unforeseen liabilities,
the difference would ultimately have to be borne by the City
through its general fund. Thus, in exercising its duty to
prevent waste of public funds and to maintain the City's total
spending limitation, the Council cannot abdicate totally its
ability to review and to modify the Board's budget to the extent
that its proposed expenditures exceed fees which can reasonably
be assessed or expose the City to an unreasonable risk of loss.
Moreover, although Article XVIII entrusts to the Board the
primary responsibility to enforce the rent control law, the City
also has a responsiblity to assure that laws enacted pursuant to
its police power are properly implemented. Thus, if the Board
fails to assess sufficient fees to cover the necessary costs of
full and fair enforcement, the City would again be obliged to
appropriate additional monies to assure the rights of all persons
entitled to the law's protection. In this respect, too, its
independent obligation to the public precludes its total
abdication of all budgetary controls.
At the same time, the Council cannot usurp or unduly burden
the power vested in the Board initially to determine and finance
the reasonable and necessary expenses of implementing the rent
control law. It is suggested that the standard of budgetary
review in Ordinance No. 1127 is a reasonable means of harmonizing
the mutual duties and powers of the Board and the Council, i.e.
15
The Board shall prepare a budget and
submit it to the City Manager at the
same time and in the same form as do
other departments of the City; the
Manager shall transmit such budget
to the City Council. The Council shall
approve the budget as transmitted, ex-
cept that it may disapprove an item
requiring the expenditure of City funds,
and any other item that involves a mani-
festly unreasonable use of public resources
or manifestly unreasonable risk of loss to
the City.
This standard eliminates any discretion in the City Manager
to revise the Board's budget estimates and strictly limits the
Council's discretion to disapprove the proposed budget. It
essentially permits the Board to determine its own budget.
However, the Council retains sufficient control to guard against
a total abdication of its Charter obligations to ensure that the
City's laws are effectively enforced within the limits of its
fiscal responsibilities.
PURCHASING
The Charter Amendment is silent with respect to the issue
of purchasing, and it is unnecessary to imply an independent
power over its purchasing affairs in order to give effect to the
powers and duties which are given to the Board by Article XVIII.
Conversely, Section 1507 expressly provides that there shall be a
centralized purchasing system under the control and direction of
the City Manager for all City departments and agencies and
further designates specific duties with respect to purchasing to
be vested in the Purchasing Agent. Nothing in Article XVIII
indicates an intent to relieve the Board from the fiscal and
administrative controls embodied in the centralized purchasing
16
system; nor do these controls impinge upon or frustrate the Board
in carrying out its duties. See IIiamond International Corp. v.
Boas, 92 Ca1.App.3d 1015, 1035, 155 Ca1.Rptr.616, 629 (1979).
The City Council may not by ordinance grant to the Board
autonomy with respect to purchasing. The purported delegation
of this power under Ordinance 1153 is invalid because it
duplicates duties delegated by the Charter to the City Manager
and the Purchasing Agent and thus, violates the express
provisions of Section 1303 which prohibits the Council from
"assign[ing] to any other office, department or agency any
function or duty assigned by this Charter to a particular office,
department or agency."4
PERSONNEL
Article XVIII gives the Board the power to "employ and .pay
such staff as may be necessary to perform its functions
efficiently in order to fulfill the purposes of this Article"
5
(Section 1803(p)). These words, imprecise in any event,
cannot be read in isolation, but must be construed and, if
possible, harmonized with all other relevant provisions of the
Charter.
The Charter provides in Article XI for the establishment of
a civil service system. A merit principle is adopted in Section
1100 which expressly provides that "[a]ppointments and promotions
4) Pursuant to Section 1508, the City Council may, by
ordinance, prescribe such exceptions as it deems appropriate to
the general competitive bidding requirement contained in that
section. Thus, in appropriate cases, the Board could be relieved
from the competitive bidding aspects of the purchasing system.
5) Section 1803(f)(6) also specifies that the Board shall have
the duty and power to "hire and pay necessary staff".
17
in the administrative service of the City shall be made according
to merit and fitness, to be ascertained, so far as practicable,
by competitive examination." To this end, the Charter provides
that the Personnel Director shall hold competitive examinations
for all positions in the classified service (Section 710), and
that positions shall be filled by the department heads, as
appointing authority, from eligible candidates chosen on the
basis of competitive testing (Section 1108). Classified
employees are entitled to specified protection against arbitrary
suspensions, demotions or dismissals, including the right of
appeal to the Personnel Board (Section 1110). The City Manager
is designated the head of the administrative branch o£ the City
government (Section 704) and the City Council is expressly
required to "deal with the administrative service under the City
Manager solely through the City Manager ." (Section 610).
Section 1101 makes the principle of equal job opportunity
applicable to positions within "any board, department, office or -
agency in the Charter enumerated or provided for ." The
Board is a City agency established by Charter; therefore,
notwithstanding the power granted to the Board to hire necessary
employees, these employees, as well as persons seeking employment
from the Board, are entitled to the protection of the civil
service system and the Board must exercise its power consistent
with civil service provisions. See Hanley v. Murphy, 255 P.2d
1,4 (1953). It does not detract from the Board's authority to
hire and pay necessary staff to require that Board staff
positions be classified by the Personnel Board; that, in making
18
appointments, the Board hire from candidates deemed eligible on
the basis of civil service testing; and that employees fired,
suspended, or demoted by the Board be afforded the right to an
appeal hearing in accordance with Section 1110 of the
Charter.6
Section 1102, which defines the positions in the classified
and unclassified services, on its face would appear to make all
Board employees part of the classified service. However,
because of the unique role of the Board's attorneys, it is our
opinion that these positions must be treated comparably to those
of city attorneys and not included in the classified service.
The role of a staff attorney differs from that of any other Board
employee in that the employer is also the client. As a
consequence of this dual relationship, the attorney/employee
employee has overriding professional obligations, see e.g.
Business and Professions Code §6068, which may not be identical
with the employer's interest, and the employer, as client, should
retain the freedom to dismiss its attorney.
The City Council has the power under Section 708b to hire
attorneys other than the City Attorney to conduct the legal
business of the City. SMMC Section 4611 constitutes a proper
delegation of authority to the Rent Board to hire its necessary
6 We recognize that most Board employees were not hired ,
through the civil service system. As discussed in the
"Implications" section of the opinion, some action will be
required to protect the rights of these employees.
7) In light of this provision of the Charter, the Council's
purported delegation to the Board of power to determine which of
its positions are unclassified (S.M.M.C. §4607) is clearly
invalid. ~
19
legal staff outside the civil service system.$
Requiring the Board to comport with civil service
requirements does not conflict with its authority to hire and pay
necessary staff. However, certain other personnel provisions of
the Charter would, if applied, infringe upon the power vested in
the Board; accordingly, under settled rules of construction, the
later enacted and more specific provisions of Article XVIII must
be deemed controlling. Thus, the Board has the power to
determine the size and make-up of its staff, unlike the city
departments for which the City Council determines staffing needs
(Section 1305). Rent Board appointments, again unlike those made
by department heads, need not be approved by the City Manager
(Section 704(a), 1305). Finally, except insofar as it retains
power to disapprove unreasonable budget expenses, the City
Council may not abolish positions in the Rent Control
Administration (Section 1109).
In addition to the power to hire staff it deems necessary
to effectuate its duties under Article XVIII, the Board also is
authorized "to pay" such staff. Giving the word "pay" its common
and accepted meaning, the Board is empowered to determine and to
finance from registration fees the amount of staff wages and
fringe benefits which together constitute an employee's
$} The Council's power to hire or to delegate the hiring of
attorneys under Section 708b is limited to civil matters.
Criminal prosecutions are undertaken in the name of the people of
the state and, thus, do not constitute the legal business of the
City. Section 708g gives the City Attorney the power and the
duty to prosecute all criminal matters. Thus, SMMC Section 4611
is invalid to the extent it purports to delegate to the Board the
authority to hire attorneys to represent it in criminal matters.
20
compensation. City and County of San Francisco v. Cooper, 13
Ca1.2d 898,923 at n.13, 120 Cal. Rptr. 707,713 (1975}.
The Board's power to determine its payroll is limited. only
in that the Council retains the right to review budget items
which involve an expenditure from or risk of loss to'general'City
funds. Again, this limitation is mandated by the inherent power
of the City Council with respect~to its budgetary affairs.
"Indeed, if it is assumed that the most important function of the
municipal legislative body, the City Council, is to oversee the
expenditures of public funds entrusted to it, it is hard to
imagine how it can do so effectively unless it has full control
over its largest expenditure item - the public payroll." J.Witt,
"State Regulation of Local Labor Relations: the Demise of Home
Rule in California?", 23 Hastings L.Rev. 809 (1972); see also
Fitzgerald v. Badaracco, 202 Ca1.18, 258 P.937,938 (1927).
A further question remains as to the Board's power to
negotiate with its employees and to enter into binding contracts
of employment. While the Board's power to "hire and pay" would
seem to comprehend the power to negotiate wages and benefits, it
does not empower the Board to set or negotiate hours or other
conditions of employment. Nor is the Board empowered to execute
a memorandum of understanding which would constitute a binding
contract, Chula Vista Police Officers' Association v. Cole, 107
Ca1.App.3d 242, 246, 165 Ca1.Rptr. 598, 601 (1980), enforceable ,
against the City.
The Charter does not empower any department or agency of
the City to negotiate labor contracts. Therefore, pursuant to
21
Section 605, this power resides in the City Council. Pursuant to
Ordinance No. 801, which was adopted to implement the
Meyers-Milias-Brown Act (MMB), Government Code §§ 3500 et set by
providing orderly procedures for the administration of
employer-employee relations, the City Manager or his delegee is
authorized to negotiate employment contracts to be approved by
the City Council.
Ordinance No. 1153 may be read as a valid delegation to the
Board of the power to negotiate with its staff regarding the
terms and conditions of employment. However, the Council cannot
delegate to the Board the power to ultimately execute a binding
employment contract.
MMB recognizes the right of all public employees to join
organizations to represent them in their employment relationships
and imposes upon all public agencies, including chartered .cities,
the obligation to bargain with such employee organizations with
respect to wages, hours and conditions of employment. Government
Code §§3500, 3501(c); See Professional Fire Fighters, Inc. v.
City of Los Angeles, 60 Ca1.2d 276, _, 32 Ca1.Rptr. 830, 841
(1963); Huntington Beach Police Officers' Assoc. v. City of
Huntington Beach, 58 Ca1.App.3d 492, 129 Cal. Rptr. 893 (1976).
While not intended to preempt all aspects of labor relations in
the public sector, MMB has been construed to prohibit local
regulations which would frustrate its declared purposes and
policies. Huntington Beach, supra, 58 Ca1.App.3d at 501-02, 129
Cal.Rptr. at 899.
22
MMB at Section 3505 imposes on "the governing body of a
public agency, or such boards, commissions, administrative
officers or other representatives as may be properly designated
by law or by such governing body," an obligation to "meet and
confer in good faith regarding wages, hours and other terms and
conditions of employment with representatives of [ ] recognized
employee organizations." However, pursuant to Section 3505.1,
only the "governing body or its statutory representative" may
conclude a binding contract:
If agreement is reached by the
representative of the public agency
and a recognized employee organiza-
tion or recognized employee organiza-
tions, they shall jointly prepare a
written memorandum of such understan-
ding which shall not be binding, and
present it to the governing body or
its statutory representative for deter-
mination.
"As a general rule, powers conferred upon public agencies
and offices which involve the exercise of judgment or discretion
are in the nature of public trusts and cannot be surrendered or
delegated to subordinates in the absence of statutory
authorization." California School Employees Association v.
Personnel Commission, 3 Ca1.3d 139, 144, 89 Ca1.Rptr. 620, 623
(1970). See E. McQuillin, 2 Municipal Corporations, §10.39.
In Bagley v. City of Manhattan Beach, 18 Ca1.3d 22, 132
Ca1.Rptr. 668 (1976), the Supreme Court held that because
sections of the Government Code, including §3505.1 of MMB,
specifically delegate to local governing bodies the power to fix
employee compensation, that power and duty cannot be delegated.
See also City and County of San Francisco v. Cooper, 13 Ca1.3d
23
898, 929-30, 120 Ca1.Rptr. 707,728 (1975) (construing §13088 of
the Education Code, since repealed, to preclude the School Board
from delegating power specifically granted to it by the State).
Bagley, supra, involves a general law city; however, insofar as
the decision relies on §3505.1 of MMB, which applies'to chartered
cities as well as general law cities, the reasoning of Bagley
would appear to preclude delegation by the City Council of the
duty specifically imposed on it by §3505.1 to itself approve and
thereby make binding, employment contracts. See Glendale City
Employees Assoc., Inc. v. City o£ Glendale, 15 Cal.3d 328, 337,
124 Ca1.Rptr. 513,517 (1975), cert. denied 424 U.S. 943
(memorandum of understanding becomes binding contract upon
approval of the governing body).
Accordingly, while the Board's delegated power under
Ordinance 1153 authorizes it to "meet and confer" with its
employees as the representative of the public agency, any
negotiated agreement must be approved by the City Council in
order to be binding. In view of the Board's charter power to set
employee salaries, the Council's review of wage and benefit
provisions in the proposed memorandum of understanding is limited
to a determination that these terms are consistent with the
Board's approved budget.
IMPLICATIONS
This opinion attempts to address novel and extremely
complex questions concerning how to integrate into the
preexisting structure of Santa Monica's government a large agency
which was created by initiative charter amendment to administer
24
an ambitious and pervasive rent control law and which has
operated for nearly two years in a largely autonomous manner.
This opinion responds to specific questions which have arisen.
We have attempted to set out a framework within which to address
these issues. We recognize, however, that myriad other issues,
in the context of these questions, as well as those not yet
asked, will undoubtedly arise which will require further
research. Hopefully, the framework of this opinion will provide
guidance in answering them.
Ordinance 1153, adopted by the City Council on April 14,
1980 declared the "independent power of the Rent Control Board to
determine its own personnel, financial and budgetary policies."
While much of Ordinance 1153 constitutes a valid delegation to
the Board and/or a proper recognition of its authority under
Article XVIII, it is our opinion that certain provisions of the
Ordinance cannot be construed in a manner consistent with the
Charter and with the City Council's undelegable legislative
responsibilities. Specifically, the following provisions are
considered invalids
--- Section 4607 to the extent that it purports to give the
Board the power to determine which of its positions are
classified;
--- Section 4608 in its entirety;
--- Section 4609 to the extent that the Board°s independent
authority to determine its own personnel, financial and budgetary
policies infringes upon powers expressly granted by the Charter
to the Personnel Board and the City Manager and upon
25
non-delegable powers vested in the City Council.
--- Section 4611 to the extent. it_purports to delegate to the
Rent Control legal staff the authority to prosecute criminal
actions on behalf of the People.
The reasoning of this opinion leads, in addition, to the
following conclusions:
1. There has been no valid appropriation of funds to cover
the Board's operating expenses for the present budget year.
2. Rent Control employees, with the exception of those
employees hired through the civil service system and the possible
exception of the legal staff, have an uncertain status. It is
believed that such employees have a vested right to continue in
their employment; however, some action will be necessary to
assure their rights within the classified service.
RECOMMENDATIONS AND ALTERNATIVES
1. If the Council is not satisfied with this opinion it
may do nothing in response or it may seek a second opinion, in
which event we recommend it do so as quickly as possible.
2. If the Council accepts this opinion, we recommend the
Council take the following action:
(a) consider, prior to the adoption of the 1981-82
budget, amendments to SMMC §§4601-4613 to remedy those
problems identified in this opinion;
(b) consider adoption of an emergency appropriation
sufficient to cover the Board's expenditure until approval
26
of the 1981-82 budget;
(c) consider adoption of legislation to protect the
rights and continued employment of existing Board employees
within the civil service system.
a
Steph Shane Stark,
Acting City Attorney
i~ ,.~„ ~ ~
Susan L. Carroll,
Deputy City Attorney
-~
r i~
Bettyl~u Borovay, `j
Deputy City Attorney
27