SR 06-14-2016 8C
City Council
Report
City Council Meeting: June 14, 2016
Agenda Item: 8.C
To: Mayor and City Council
From: Marsha Moutrie, City Attorney, City Attorney's Office
Subject: Proposed Amendments to Article XXII of the City Charter (the Oaks Initiative)
Recommended Action
Staff recommends that the City Council review and comment on proposed amendments
to Article XXII of the City Charter (the Oaks Initiative) and direct staff to proceed with
preparation of a ballot measure.
Executive Summary
As part of its ongoing effort to ensure best governmental practices, the City Council directed
staff to agendize Council discussion of possible amendments to City Charter Article XXII
(the Oaks Initiative), which was adopted by the voters in 2000 for the purpose of averting
rection. It discusses
amendments proposed by Hueston Hennigan in conjunction with the report to Council of
April 18, 2016 and includes other suggestions from staff.
The amendments proposed by Hueston Hennigan would expand and thereby clarify the
defini, exempt from the prohibition
persons serving as directors of charitable nonprofits, clarify enforcement responsibility, and
broaden the scope of the law to prohibit As explained in this
report, staff fully supports the first three proposals but has concerns about the fourth.
Additionally, staff recommends Council consider other possible amendments to the Oaks
Initiative and perhaps Municipal Code. Once Council gives direction, staff
will prepare specific language and return promptly to Council with the resolution necessary
to place the amendments on the November 2016 ballot.
Background
The Oaks Initiative qualified for the ballot in Santa Monica and four other California
cities in 2000. At the time, there was significant controversy about the constitutionality
course of filing suit to keep it off the ballot. Over time, four cities sought judicial
determinations of its constitutionality, though no one
indisputably laudable purpose Ultimately, two cities adopted competing or replacement
.
measures to achieve the same or similar
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adopted guidelines but no violations have been prosecuted. In the fourth, the initiative
was never implemented, apparently based on doubts about its constitutionality. Santa
Monica sought a judicial determination of the constitutional questions and also placed a
measure proposing amendments on the ballot, but the voters rejected the proposed
amendments. After that, the City implemented the Oaks Initiative as to the City Council
members and City contractors and posted notice of the measures requirements.
Office received the
first complaint of a violation. Because of an apparent conflict, that complaint was
referred to the Los Angeles County District Attorney, who rejected it; and then to the
California Attorney General, who also rejected it. Both rejection letters gave multiple
Office could ethically pros
Later, when the City Council hired Attorney John Hueston of the law firm Hueston
Hennigan to provide advice about governmental best practices, he concurred that a
Office
establishing the enforcement alternative of hiring an independent investigator. Mr.
Hueston also recommended both the adoption of guidelines and amendments to the
initiative to clarify and strengthen it and thereby facilitate enforcement. Staff prepared
guidelines, working from his draft. Council adopted them and directed staff to return
with proposed Charter amendments. This report fulfills that direction.
Discussion
The changes proposed by Mr. Hueston are shown in the attachment to this staff report
and are explained and discussed in this report by section number. Under the proposal,
by defining it to include Council members, planning commissioners,
the city manager and department heads and their designees, among others. Staff
supports this proposal. It would reduce ambiguity as to the application of the Oaks
prohibition. Doing so would facilitate enforcement because, generally speaking, criminal
sanctions may only be utilized to enforce legal prohibitions that are clear and
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unambiguous.
Under the proposal, Section 2202 would also be modified by creating an exemption for
trustees, directors, partners, or officers of charitable nonprofits. Staff strongly
recommends this proposed modification to Article XXII. As currently worded, it purports
to prohibit a community member, serving as a (volunteer) board member of a city-
funded charitable nonprofit from making a political contribution to a Council member
who voted to approve the funding. Thus, the Oaks Initiative forces some community
members to choose between serving their community on non-profit boards and
exercising their First Amendment right to participate in the political process through
contributions. The proposed amendment would eliminate one of the potential
constitutional infirmities in the Oaks Initiative that motivated Council to challenge the
measure in court. Moreover, the proposed amendment would not undermine the
-profits.
As to Section 2203, the proposal is to broaden the basic prohibition of Article XXII. As
currently worded, it prohibits a public official who approves or confers a public benefit
from thereafter The
.
period covered by the prohibition runs from the date the official approves the benefit and
through a period of up to six years. The amendment proposed by Hueston Hennigan
would expand the time period, by backing up its commencement to include the
application or proposal period. This proposal is apparently connected to a proposed
revision in the section on penalties and enforcement, and their combined effect is
discussed below.
Section 2206 on penalties and enforcement would be changed in at least two ways by
the Hueston Hennigan proposal. Language would be added directing the City Attorney
to refer all complaints of violations to the Chief Deputy of the Criminal Division or
the City. Legal staff continues to have some concerns about the possible appearance
of a conflict of interest. However, given that the District Attorney will not handle these
cases, staff supports the proposal because some remedy must be made available.
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Moreover, the proposal provides two, alternative approaches, which should afford the
flexibility necessary to meet the circumstances of individual cases or complaints. And,
as a matter of fact (rather than appearance) staff believes that the work can be
Criminal Division is fully capable of making objective and independent determinations
about the handling of individual cases. Indeed, he does so, every day.
The other recommendation regarding Section 2203 would apparently expand liability for
violations. At present, the Oaks prohibition applies only to public officials. The
Hueston Hennigan draft would expand criminal and civil liability to include persons and
entities who confer personal or campaign advantages. Thus, for instance, if a Council
member accepted a contribution from a contractor whose contract the Council member
had voted to approve, both the Council member and the contractor could be criminally
and civilly liable. Likewise, if a department head accepted employment from a
contractor whose contract she/he had approved, both the department head and the
contractor could be liable. Staff supports the concept of ensuring that contractors and
concept, staff may propose somewhat different wording to accomplish this purpose.
This proposed expansion in liability is apparently linked to the proposed modification of
the relevant time period, contained in Section 2203, which would include the application
or proposal period. The proposal is somewhat unclear. Apparently, if, during the
application/proposal period, a would
-
and the official could apparently be held liable for an Oaks violation.
unclear how this prohibition could be effectuated. Under the City Charter and Municipal
Code, the bidding and proposal process are handled exclusively by staff in order to
achieve separation from political influence. Professional staff conducts the process and
later, after the competitive process is completed, makes recommendations to Council.
Thus, a Council member would be unaware of the identity of the bidders/proposers and
would not know that she/he could not accept a contribution from one of them.
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Staff assumes that this particular Hueston Hennigan proposal would prohibit what
amounts to bribery. However, modifying local law to address that very serious form of
corruption is arguably unnecessary. Actions undertaken to influence the future award of
public benefits are already prohibited by state laws. See, e.g., Penal Code Section 68.
Bribery, which is a felony, is a crime actively enforced Office.
Therefore, it is apparently unnecessary to create a local, misdemeanor remedy.
Moreover, doing so appears to fall outside the scope of the Oaks Initiative, which serves
past
decision
Thus, staff does not recommend these particular proposed modifications. Nonetheless,
if Council determines that this particular proposal should be included in the package of
Oaks Initiative amendments, staff recommends also amending the basic prohibition in
Section 2203 (a) to make clear that it reaches both forward and back from official
approval so that Article XXII is internally consistent.
Alternatives
In addition to the changes proposed by Hueston Hennigan and discussed in this report,
others may warrant Council consideration. For example, one of the early concerns
about Article XXII is that its penalties attach only to
benefits. Only trigger t,
even though some equally valuable to prospective contributors. For
example,
Thus, Council may wish to consider expanding the prohibition to
Doing so would address another of the
perceived
Initiative in court. On the other hand, determining t
difficult.
Council may also wish to consider modifying the thresholds of value set forth in Section
2202. Likewise, Council might wish to consider shortening the duration of the
prohibition on accepting a personal or campaign advantage because the prohibition
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operates to restrict the constitutional rights to participate in the political process through
contributions and to work. Given that these are protected rights, duration of up to six
years may be excessive. (This was also one of the legal claims made in the litigation
challenging the measure.)
Finally, if Council is concerned about risks relating to City employees accepting work
from City contractors, staff again suggests that modifications to the Municipal Code
might be advisable to supplement the protections afforded by the Oaks Initiative. It
limits the conduct of those who award contracts, but it does not
apply to City employees charged with the responsibility for managing or monitoring
contracts.
ordinance to, for example, safeguard against those employees being offered jobs by the
contractors they monitor.
Next Steps
Once Council gives direction, staff will prepare final language for proposed amendments
to Article XXII and will bring that language to Council in time for its placement on the
November ballot.
Financial Impacts and Budget Actions
There are no direct financial impacts resulting from formulating a measure for the
November ballot. The costs of placing another measure on the ballot are minimal.
Prepared By:
Marsha Moutrie, City Attorney
Approved Forwarded to Council
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Attachments:
A. Proposal to Amend the Charter of the City of Santa Monica, Article XXII-
Taxpayer Protection
B. Written comments
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Add to 8-C
06/14/2016
Anne Samartha
From:Mary Marlow <m.marlow@verizon.net>
Sent:Wednesday, June 08, 2016 12:38 PM
To:Ted Winterer; Kevin McKeown Fwd; Gleam Davis; Terry OÔDay; Pam OConnor; Tony
Vazquez; Sue Himmelrich; councilmtgitems
Cc:Rick Cole; Marsha Moutrie
Subject:Council Agenda item 8C Oaks Amendments
Follow Up Flag:Follow up
Flag Status:Flagged
Dear City Council, City Manager and City Attorney,
The Staff Report for Item 8-C of the Council”s June 14, 2016 Agenda does not include the two changes to
the Mr. Hueston's suggested amendments to Oaks that were directed by the Council at its April 26, 2016
meeting to be included in the Staff Report. The Transparency Project, which had suggested these two
changes,urges Staff to immediately issue a Supplemental Report dealing with these suggestIons that the
Council directed be included in the Staff Report. See discussion of this by the Transparency Project at 2:33:15
of video of April 26, 2016 Council meeting, and at 3:27 for the discussion by the Council at the same meeting.
These two changes are:
1. To limit the exclusion for non-profits to those who are volunteers, and not exclude highly paid officers and
directors of major corporate non-profits such as St. John’s.
2. To clarify that the new proposed language “whichever applicable” does not limit Oaks to only a single remedy, but
rather can, where appropriate.
Here is what we said about these two issues:
"First, On the Proposal to Amend Section 2202(b)(2): We agree with the exclusion of volunteers for non-profits, but
are concerned that the way it was written is too broad. Indeed, on page 54 of the Report it speaks of there being no
interest in stopping donations from “VOLUNTEERS” for non- profits, not highly paid officials.
"In Santa Monica we have some huge corporations, with major development projects and other business before the
City, that are organized as non-profits. They have highly paid officials. For example, Saint John’s Health Center
(http://california.providence.org/saint-johns/ and the RAND Corporation (http://www.rand.org/about.html). St. John’s
will soon have a major expansion before the Council.
"Therefore, the exclusion for non-profits should be worded to only apply to volunteers,which we think would be
consistent with the intent of the proposed exclusion, and it should not apply to officers and directors of these non-
profits,who are often highly paid and in no way volunteers.
"Second, On the Proposal to Amend Section 2206(b), we think the use of “whichever applicable” before listing the
remedies may be interpreted to apply only one penalty. One or more penalties may be appropriate, such as
requiring restitution of an advantage received along with an injunction against future violations. Changing the
wording to include more than one penalty would make clear that multiple remedies might apply."
We also note that a change to the Guidelines proposed by Mr. Hueston relating to I-D-ii to close the loophole that
would permit a corporation that owns a corporation that is the owner of a project not to disclose its more than 10%
owners, officers and directors. This should be included in the Guidelines.
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Add to 8-C
06/14/2016
We will have further comments on the Staff Report, but wanted to get these in so that staff can have time to review
the video of the Council meeting and issue a Supplemental Report before the June 14th Council session.
Sincerely,
Mary Marlow, Chair
The Transparency Project
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