SR 05-10-2016 11B
City Council
Report
City Council Meeting: May 10, 2016
Agenda Item: 11.B
To: Mayor and City Council
From: Marsha Moutrie, City Attorney, City Attorney's Office
Subject: Guidelines for Implementing Article XXII of the City Charter
Recommended Action
Staff recommends that the City Council adopt the attached resolution establishing
guidelines for Implementation of Article XXII of the City Charter, commonly known as
the Oaks Initiative.
Executive Summary
At its meeting of April 26, 2016, the City
With Review and Recommendations of Best (the
Report) prepared by the law firm of Hueston Hennigan LLP. Council had hired the firm
to conduct an independent review of the circumstances underlying Riel v. City and of
recent complaints alleging violations of Article XXII of the City Charter and to make
findings and recommendations as to best practices.
After hearing an oral presentation by Attorney John C. Hueston and receiving public
testimony, the City Council directed staff to implement the recommendations in the
Report by, among other things, preparing a resolution for adoption of guidelines for
implementation of the Oaks Initiative.
This staff report and the attached resolution fulfill that direction. The resolution would
adopt the draft guidelines (the Draft) prepared by Hueston Hennigan with the addition of
introductory information intended to enhance the utility of the guidelines and with minor
changes. Attachment 1 to this report is a strikeout version of the Draft showing
additions and proposed minor modifications.
recommended resolution.
The proposed changes to the Draft are explained in this report. They are intended to
enhance clarity or to eliminate minor typographical errors or omissions in the Draft.
Only one is substantive, and it was was suggested by a member of the public and
approved by Council.
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Background
The circumstances underlying the Riel dispute and subsequent complaints made by
residents are set forth, in detail, in the Report. The dispute was acrimonious, and the
litigation it spawned was costly to the City and to individuals both financially and
otherwise. In the wake of the Riel dispute, residents expressed concerns, including
concerns about alleged violations of Article XXII, which prohibits an official from
receiving a personal advantage from an individual or entity upon whom the official has
conferred a public benefit, thereby
about an alleged violation of City Charter Section 610, which precludes City Council
service.
In order to obtain an objective assessment and to ensure best practices going forward,
the Council engaged Hueston Hennigan. Under the direction of John C. Hueston, that
firm investigated by, among other things, conducting 21 interviews, reviewing relevant
documents and obtaining information about other jurisdictions' best practices. On April
th
20, the City received the report and immediately posted it
At the Council meeting of April 26, Mr. Hueston presented the report to the Council and
community and explained his findings and recommendations. Among them were these
two:
ative serves important anti-corruption interests in Santa
Monica. To the extent that there are enforceability issues, interpretation
issues, or legal infirmities with the Oaks Initiative, the law should be
clarified or amended by the City Council and City
of the Oaks Initiative and the City Council should pass those guidelines by
In addition, to assist the City in implementing the recommendations, Hueston Hennigan
supplied the Draft, as well as proposed amendments to Article XXII. Staff has reviewed
the Draft and offers some minor proposed modifications, which are shown on
Attachment 1 and explained in this report. The resolutions necessary to place Charter
amendments on the ballot will be brought to Council in time for the November election.
Discussion
Legal staff concurs he Oaks Initiative serves
important public purposes, that guidelines should be adopted for purposes of
clarification and that the law should be amended to strengthen it by, among other
,
things, addressing legal concerns and thereby promoting its enforceability. These steps
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would add Santa Monica to the list of cities (several of which are noted in the Report)
that have attempted to effectuate the will of the voters by clarifying and modifying
initiative measures identical or similar to Article XXII.
These laws were conceived, drafted and approved for the important purpose of
promoting good government. However, like many political reform initiatives, they may
run afoul of constitutional constraints, including the First Amendment. (As Council and
the community are well aware, the courts have interpreted First Amendment protections
so broadly that they often frustrate voters attempts to achieve campaign reform and
otherwise promote good government.) Thus, as described in the Report, a number of
California cities have addressed potential legal issues by working to clarify, strengthen
and thereby insulate their local anti-corruption laws. The proposed guidelines would
serve that purpose, as would the proposed Charter amendment, which Council will
consider in the coming weeks.
The Draft divides the proposed guidelines into four categories: definitions, requirements
of Article XXII, duties of the City, and duties of officials. This report addresses each
category separately.
Definitions: The Draft proposes definitions that would clarify and supplement the
basic terminology of Article XXII and thereby facilitate compliance and enforcement.
Public Official. That
term is not clearly defined by the law, though inferences as to
application may be drawn from the text. However, partly because Article XXII carries
criminal sanctions, staff strongly supports clarifying the definition to ensure fair notice.
would be defined to include
persons making final approvals on the disposition of public benefits. This would
expressly include, but not be limited to: Council members, Commission members, the
City Manager and City
designees. The proposed guidelines would expressly exclude those making
recommendations, acting within a series of requirement approvals but not making the
last approval, persons approving as to form, content, process or execution only, and
hearing officers who are not City employees.
Staff concurs with this approach because it is consistent with the purpose and the
language of Article XXII. Staff recommends two minor changes to ensure clarity: adding
City board members to the list of clarifying th
Also, staff notes that the Council may wish to consider the bright line that the proposed
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guidelines draw between those who make final approvals and those who make
recommendations prohibition
against self-dealing in contracts applies to those who influence decisions as well as to
those who actually make them. And, as a practical reality, though Department Heads
and the City Manager ultimately sign off on contracts, they may not be the persons
actually deciding to whom contracts (below the Council threshold) should be let.
Changing the guidelines to explicitly apply to those who actually make the determination
of who should receive a public benefit may be worth considering. That approach may
be more in keeping with the purpose of Article XXII than simply applying the prohibition
On the other hand, limiting the prohibition to final approvals has
advantages, including clarity and ease of administration; and it may better insulate
Article XXII against legal challenges by narrowing its application. And, the guidelines
could be revised, in the future, based on experience.
Public Benefitt
would modify the time period for valuation of benefits and would expressly list
exclusions from the definition, and specify valuation methods
.
As to the time period for valuation, the language of Article XXII from Sections 2202 (a)
(1) through (4), and (6) and (7) any 12
Hueston
recommendation is likely proposed to facilitate administration and enforcement. And,
staff agrees that it will serve that purpose. Staff simply notes that, the Draft language
could result in two different beneficiaries, who received the same total amount from the
City, being treated differently. Therefore, Council may wish to consider revising the
language, and staff will have alternative wording available at the meeting.
As to the valuation methodology included in the Draft, staff concurs that it should be
included but notes one possible concern: special development approvals are proposed
to be valued according to the presumed value as indicated by the applicant.
concern is that this valuation method may be unreliable. However, given the very low
threshold ($25,000 in value) this may not be a problem since virtually all approvals will
qualify except for home repairs that, though minor, require a discretionary approval.
T
cover: third-party benefits, loans reasonably certain to be repaid, sponsorships,
membership dues or obligations, purchases made with credit cards held by mid-level
staffers and used for ongoing minor purchases, which are not aggregated under the
purchasing ordinance, licenses that result in income less than $10,000, and public utility
trading transactions. Staff concurs with these exclusions. They appear to cover
circumstances or transactions that are unlikely to foster corruption and/or are relatively
small in number or value.
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Finally, staff notes that the strike outs to this section shown in Attachment 1 also include
corrections to an apparent typographical error that omits a provision of Article XXII
(which covers receipt of more than $10,000 in cash).
Personal or Campaign Advantage: The definition of this term incorporates
and narrows the definition in Article XXII. Specifically, the Draft excludes from the
prohibition gifts that are exempted from state reporting requirements by the Fair Political
Practices Commission (FPPC) regulations. Staff concurs. The Political Reform Act,
which is implemented by the FPPC regulations, serves the same purposes as Article
XXII: forestalling corruption and promoting public trust in government. The Draft also
proposes excluding gifts from public agencies and gifts distributed by City. Staff also
concurs as to these exclusions, partly because
serve legitimate public purposes.
The Draft would also limit the definition of campaign contributions to those made after a
candidate has declared an intent to run or established an account to run. The
explanation supplied in the D
could encompass campaigns fo
Staff also concurs with this proposal. Narrowing the prohibition is in keeping with the
very substantial legal protection that the courts afford to political participation in the form
of contributions.
: As to this term, the Draft repeats
the language of Article XXII with four additions. They would:
1. include requiring disclosure of real parties in interest;
2. exclude from the definition governmental entities and agents who do not
have more than 10% equity and are not trustees, directors, partners or
officers of the recipient entity;
3. include anyone who acquires a 10% equity interest or becomes a trustee,
director, partner or officer of the recipient entity within 12 months of the
accrual of the public benefit; and
4. exclude from the category of recipients that must be disclosed any
and is itself an entity.
Staff agrees with the first two additions. Staff also agrees with the third but notes that it
may add significant administrative work since those doing business with the City will
need to update their information as changes occur in their organizations, and this
information will need to be disbursed. Finally, as to the fourth change, a resident
th
opposed this exclusion on April 26, and Council concurred. Staff supports this
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decision for the reasons noted at the meeting: complexities of corporate ownership and
control may facilitate obfuscation and frustrate efforts to achieve transparency.
Requirements of Article XXII: The Draft includes language explaining that Article
XXII does not apply to the exercise of a ministerial duty or to the award of any public
benefit made because of an emergency. Staff concurs with these recommendations.
Article XXII is intended to avert corruptive influences on discretionary actions not the
ministerial discharge of duties established by law. And, in time of true emergency staff
must often act very quickly to promote public health and safety a reality reflected in
the Municipal Code provisions governing emergency purchases.
The Draft also highlights that the Article XXII prohibition applies only when a public
benefit is conferred and not when it is denied. As noted in the past, this distinction may
be legally problematic (because denials to some may benefit others, particularly in the
area of land use). But, Article XXII clearly so states, and its plain language may only be
changed by the voters. Accordingly, staff also concurs with this recommendation.
Duties of the City (and Applicants): This section of the Draft effectuates Section
2205 of Article XXII,
applying or competing for public benefits. It also imposes disclosure obligations upon
Staff suggests two minor changes to the wording of this section. The change in the title
would clarify that it imposes obligations on applicants, as well as the City. The
language requiring disclosure of real parties in interest is proposed to be relocated from
a definition for the sake of clarity and emphasis.
Duties of Public Officials: This section of the Draft helps clarify the duties of
public officials. It functions as an interpretation of Section 2204 of the Charter which
requires public officials to diligently monitor their own receipt of personal and campaign
advanta,
receipt is prohibited by Article XXII. Section 2204 also requires public officials to
ies and persons who qualify
as public benefit recipients under Article XXII.
The Draft states that the City has assumed the responsibility for keeping track of actions
conferring public benefits. And, indeed, the City has, in the past, assumed that
responsibility as to the City Council. Moreover, with this clarification of the definition of
, the City will assume the responsibility as to Board and Commission
members and City employees who are covered by Article XXII. Implementation will
probably require promulgation of an Administrative Instruction from the City Manager
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providing express directions to City staff on compliance. And, legal staff will assist with
training of Board and Commission members who .
This section of the Draft also requires , who are candidates, to keep
track of campaign contributions for elective offices for which they have either declared
an intent to run or established an account. This language appears to narrow the
obligations imposed by Article XXII, Section 2202 (c)(3), which defines a personal or
campaign advantage
Article XXII to situations in which the official is actually running and not merely
considering a future run. As such, staff supports the proposed language.
For the purpose of clarity, staff also proposes a minor modification to the language
reflecting the requirement that personal or campaign advantages received in violation of
the Oaks be promptly returned. Otherwise, staff concurs with the recommendations in
the Draft.
Next Steps
Staff will distribute the guidelines as soon as they are adopted and will return to Council
in the coming weeks with the resolutions necessary to place amendments to Article XXII
on the November ballot.
Financial Impacts and Budget Actions
Adoption of the recommendations made in the report and these guidelines will have
financial impacts on the budgets for the Offices of the City Clerk and City Attorney, the
Finance Department, and the City Departments that staff boards and commissions
which confer public benefits. The amount of those impacts is difficult to predict at this
time because each office or department will need to assess staffing changes
necessitated by expanding workloads. Staff anticipates that financial impacts will be
addressed through the budget process and budget adjustments.
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Prepared By:
Marsha Moutrie, City Attorney
Approved Forwarded to Council
Attachments:
A. Suggested Guidelines with Revisions
B. Resolution with Guidelines
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