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SR 07-12-2016 8C Ci ty Council Report City Council Meeting : July 12, 2016 Agenda Item: 8.C 1 of 4 To: Mayor and City Council From: Marsha Moutrie, City Attorney , City Attorney's Office Subject: Revised Language for Proposed Amendments to Article XXII of the City Charter (the Oaks Initiative) Recommended Action Staff recommends that the City Council approve the revised language for proposed amendments to the Oaks Initiative to be placed on the November 2016 ballot. Executive Summary At its meeting of June 28, the City Council considered proposed language for amendments to the Oaks Initiative to be p resented to the voters in the November 2016 general election. After hearing from the public and deliberating at some length, Council directed preparation of additional changes. Attachment A fulfills that direction, and it is presented for final Council a pproval. The new proposed language consists of a “reach back ” provision applicable to all types of City contracts, a change in the placement of language relating to “nesting” corporations, and the addition of language limiting remedies to willful and know ing violations. Background Recent staff reports supply background on the effort to strengthen and better effectuate the Oaks Initiative in Santa Monica through amendments to its text. The law firm of Hueston Hennigan, the City Attorney’s O ffice and memb ers of the public have all made suggestions. Council has considered the matter on three previous occasions in the last several months and gave final direction at its last meeting. Discussion The new amendments requested at the last meeting and those p reviously considered and approved by Council all appear in Attachment A so that Council may take a final look at the complete proposal. Changes made since the last meeting appear in sections 2202(b), 2203(d) (which is new), and 2206 (b). These changes inc lude “reach back” language applicable to Council members seeking re -election , P lanning C ommission members running for the City Council, and applicants/bidders for all types 2 of 4 of public contracts. As per Council direction, this proposed language is similar t o Pasadena’s, but it is broader. Pasadena’s language, which was proposed as a model by the organization Consumer Watchdog, prohibits those seeking to enter into a contractual relationship with the city from making campaign contributions to council candida tes and their controlled committees. The proposed language in Attachment A applies the prohibitions to that group and also to Council members seeking re -election , and Planning Commissioners who are running for Council , and their controlled committees. Council directed two other changes at its last meeting. One related to board members of “nesting” corporate boards. The other was to add a requirement to the civil remedies provision that violations must be “willful and knowing” to trigger civil remedies . Both those changes have been made and appear in Attachment A. The other proposed amendments, previously accepted by Council remain unchanged. If adopted by the voters, the measure would: expand the Oaks Initiative to make its prohibition applicable to both public officials and recipients of public benefits who confer personal or campaign advantages on public officials and to include a “reach back” provision applicable to all types of public contracts; facilitate enforcement by eliminating any ambigu ity in the term “public official ”, delineating enforcement responsibilities, specifying that the prohibition applies outside of the city, and making express that remedies are cumulative; and promote fairness and the preservation of individual rights by spe cifying that civil remedies apply only to knowing violations and that uncompensated volunteers serving local nonprofits that receive City grants need not forego their constitutional right to participate in the democratic process through campaign contributi ons. Staff recommends that Council approve all of the proposed changes. Alternatives: Council could revise the “reach back ” provision to cover all types of public benefits. However, this approach would cause administrative difficulties as previously dis cussed, 3 of 4 particularly in the case of land use permits and approvals. Therefore, staff recommends adhering to the Pasadena model, which limits the “reach back” to all contracts, but expanding the model so that the prohibition applies to both officials and p otential contractors. Next Steps Staff will return with ballot language and the appropriate resolution at Council’s next meeting, which - absent the scheduling of a special meeting - will be Council’s last opportunity to place measures on the November 2 016 ballot. Staff will return with updates to the Guidelines later in the year. Financial Impacts and Budget Actions There are no financial impacts and no budget actions associated with the approval of this language. If the voters adopt the proposed amendments , there will be increased administrative costs associated with implementation. At this time, those costs are unknown but staff anticipates that they will not be substantial, particularly relative to the importance of the measure. Prepared By : Marsha Moutrie, City Attorney Approved Forwarded to Council Attachments: A. PROPOSED AMENDMENTS TO THE CHARTER OF THE CITY OF SANTA MONICA ARTICLEXXII (07122016) B. Staff Report #2013 June 28, 2016 (Web Link) 4 of 4 C. Written comments 1 PROPOSED AMENDMENTS TO THE CHARTER OF THE CITY OF SANTA MONICA, ARTICLE XXII (THE OAKS INITIATIVE) 2202. Definitions. (a) As used herein, the term public benefit does not include public employment in the normal course of business for services rendered, but includes a contract, benefit, or arrangement between the City and any individual, corporation, firm, partnership, association, or other person or entity to: (1) provide personal services of a value in excess of $25,000 over any 12 month period, (2) sell or furnish any material, supplies or equipment to the City of a value in excess of $25,000 over any 12 month period, (3) buy or sell any real property to or from the City with a value, in excess of $25,000, or lease any real pro perty to or from the City with a value in excess of $25,000 over any 12 month period, (4) receive an award of a franchise to conduct any business activity in a territory in which no other competitor potentially is available to provide similar and comp etitive services, and for which gross revenue from the business activity exceeds $50,000 in any 12 month period, (5) confer a land use variance, special use permit, or other exception to a pre - existing master plan or land use ordinance pertaining to real property where such decision has a value in excess of $25,000, (6) confer a tax abatement, exception, or benefit not generally applicable of a value in excess of $5,000 in any 12 month period, 2 (7) receive cash or specie of a net val ue to the recipient in excess of $10,000 in any 12 month period. (b) Those persons or entities receiving public benefits as defined in Section 2202(a)(1)-(7) shall include the individual, corporation, firm, partnership, association, or other person or entity so benefiting, and any individual or person who, during a period where such benefit is received or accrues, (1) has more than a ten percent (10%) equity, participation, or revenue interest in that entity, or (2) who is a trustee, di rector, partner, or officer of that entity . or of another entity that owns or controls the entity receiving the public benefit except ing persons serving in those capacities as volunteers, without compensation, for organizations exempt from income taxes und er Section 501(c)(3), (4), or (6) of the Internal Revenues Code. However, this exception shall not apply if the organization is a political committee or controls political committees as defined by California Government Code Section 82013 or 2 U.S.C. Secti on 431(4) or successor provisions . (c) As used herein, the term personal or campaign advantage shall include: (1) any gift, honoraria, emolument, or personal pecuniary benefit of a value in excess of $50; (2) any employment for compensation; (3) any campaign contributions for any elective office said official may pursue. (d) As used herein, the term public official includes any elected or appointed public official acting in an official capacity. This includes, but is not limited to: City Council 3 members , Planning Commission members , and the City Manager and Department Heads and their designees who confer “public benefits” as defined in this section. 2203. City public official shall not receive personal or campaign advantage from those to whom they allocate public benefits or may award public contracts . (a) No City public official who has exercised discretion to approve and who has approved or voted to approve a public benefit as defined in Section 22 02(a) may receive a personal or campaign advantage as defined in Section 2202(c) from a person as defined in Section 2202(b) and no person or entity who has received a public benefit may confer a personal or campaign advantage upon a public official who ex ercised discretion to confer that public benefit for a period beginning on the date the official approves or votes to approve the public benefit, and ending no later than: (1) two years after the expiration of the term of office that the official is serv ing at the time the official approves or votes to approve the public benefit; (2) two years after the official’s departure from his or her office whether or not there is a pre -established term of office; or (3) six years from the date the official approv es or votes to approve the public benefit; whichever is first. (b) Section 2203(a) shall also apply to the exercise of discretion of any such public official serving in his or her official capacity through a redevelopment agency, or any other public agenc y, whether within or without the territorial jurisdiction of the City either as a representative or appointee of the City. 4 (c) No City public official who has exercised discretion to approve and who has approved or voted to approve a public benefit as defined in Section 2202(a) may receive a personal or campaign advantage as defined in Section 2202(c) from a person as defined in Section 2202(B) in any geographic location, including within and outside the geographic boundaries of Santa Monica. (d) No Ci ty Council member who is a candidate for re -election and no Planning Commission member who is a City Council candidate may receive a campaign contribution from an applicant or bidder for any City contract valued in excess of $25,000 if the Council member o r official may, in the future, have the opp ortunity to exercise discretion to award the contract. Likewise, no applicant, bidder or proposer for a City contract valued in excess of $25,000 may make a contribution to a City Council member or other official who is a candidate for City Council. This prohibition shall be in effect from the time that contract negotiations or discussions with the City begin or from the submission of the application, proposal or bid, whichever is earlier, until the contract is f inally awarded, at which time subsection (a) shall be in effect. 2206. Penalties and enforcement. (a) In addition to all other penalties and remedies which might apply, any knowing and willful violation of this Article by a public official or a person or entity receiving a public benefit as defined in Section 2202(b) constitutes a criminal misdemeanor offense. (b) A civil action may be brought under this Article against a public official who knowingly and willfully receives a personal or c ampaign advantage in violation of Section 2203. A 5 finding of liability shall subject the public official to one or more of the following civil remedies: (1) restitution of the personal or campaign advantage received, which shall accrue to the general fun d of the City; (2) a civil penalty of up to five times the value of the personal or campaign advantage received; (3) injunctive relief necessary to prevent present and future violations of this Article; (4) disqualification from future public office or position within the jurisdiction, if violations are willful, egregious, or repeated. (c) A civil action under subdivision (b) of this section may be brought by any resident of the City. In the event that such an action is brought by a resident of the City and the petitioner prevails, the respondent public official shall pay reasonable attorney’s fees and costs to the prevailing petitioner. Civil penalties collected in such a prosecution shall accrue 10% to the petitioner, and 90% to the City’s general fund. (d) When the City Attorney receives a complaint containing a violation of this Article from any person or entity, the City Attorney must promptly, for the purposes of assessment and prosecution, either: (1) Refer the complaint to the Chief Deputy of the Criminal Division or another attorney in the City Attorney’s Office; or (2) Refer the complaint to an independent investigator hired by the City. (July 12, 2016) 1 Anne Samartha Subject:FW: FPPC language re Contributi ons from the PRA and Regulations Attachments:84308 Contributions prohibited from persons wi th pending applications for lice.pdf; 184387 Prohibitions and Disqualification Under Government Code Section 84308.pdf     ‐‐‐‐‐Original  Message ‐‐‐‐‐  From: Maria  Dacanay    Sent: Monday, July  11, 2016  8:06  AM   To: Anne  Samartha  <Anne.Samartha@SMGOV.NET>  Cc: Denise  Anderson ‐Warren  <Denise.Anderson ‐Warren@SMGOV.NET>; Lisa  Pope  <Lisa.Pope@SMGOV.NET>  Subject: FW: FPPC  language  re  Contributions  from  the  PRA  and  Regulations     Anne, Please  process  as  add ‐to's  for  Item  8 ‐C.      ________________________________________  From: Sue  Hi mmelrich   Sent: Th ursday, July  7, 2016  6:43  PM   To: Rick  Cole; Elaine  Polachek; Marsha  Moutrie; Denise  Anderson ‐Warren   Subject: FPPC  language  re  Contributions  from  the  PRA  and  Regulations     I  am  attaching  the  FPPC  language  concerning  campaign  contributions  and  conflicts  of  interest  to  help  inform  our   discussion  of  the  Oaks  language  we  may  be  discussing  on  Tu esd ay  night. I  wonder  if  you  would  distribute  to  the  entire   Council. Thanks  for  your  help.      Sue       Sue  Himmelrich   Santa  Monica  City  Council   City  Hall   1685  Main  Street, Room  209   Santa  Monica, CA  90401   P  (310) 458 ‐8201   F  (310) 458 ‐1621     Add to 8-C 07/12/2016 § 84308. Contributions prohibited from persons with pending..., CA GOVT § 84308 © 2016 Thomson Reuters. No claim to original U.S. Government Works.1 West's Annotated California Codes Government Code (Refs & Annos) Title 9. Political Reform (Refs & Annos) Chapter 4. Campaign Disclosure (Refs & Annos) Article 3. Prohibitions (Refs & Annos) West's Ann.Cal.Gov.Code § 84308 § 84308 . Contributions prohibited from persons with pending applications for licenses, permits or other entitlements; amount; disclosure by all parties; construction Currentness (a) The definitions set forth in this subdivision shall govern the interpretation of this section. (1) “Party” means any person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use. (2) “Participant” means any person who is not a party but who actively supports or opposes a particular decision in a proceeding involving a license, permit, or other entitlement for use and who has a financial interest in the decision, as described in Article 1 (commencing with Section 87100 ) of Chapter 7. A person actively supports or opposes a particular decision in a proceeding if he or she lobbies in person the officers or employees of the agency, testifies in person before the agency, or otherwise acts to influence officers of the agency. (3) “Agency” means an agency as defined in Section 82003 except that it does not include the courts or any agency in the judicial branch of government, local governmental agencies whose members are directly elected by the voters, the Legislature, the Board of Equalization, or constitutional officers. However, this section applies to any person who is a member of an exempted agency but is acting as a voting member of another agency. (4) “Officer” means any elected or appointed officer of an agency, any alternate to an elected or appointed officer of an agency, and any candidate for elective office in an agency. (5) “License, permit, or other entitlement for use” means all business, professional, trade and land use licenses and permits and all other entitlements for use, including all entitlements for land use, all contracts (other than competitively bid, labor, or personal employment contracts), and all franchises. (6) “Contribution” includes contributions to candidates and committees in federal, state, or local elections. (b) No officer of an agency shall accept, solicit, or direct a contribution of more than two hundred fifty dollars ($250) from any party, or his or her agent, or from any participant, or his or her agent, while a proceeding involving a license, permit, or other entitlement for use is pending before the agency and for three months following the date a final decision is rendered in the proceeding if the officer knows or has reason to know that the participant has a financial interest, as that term is used in Article 1 (commencing with Section 87100 ) of Chapter 7. This prohibition shall apply regardless of Add to 8-C 07/12/2016 § 84308. Contributions prohibited from persons with pending..., CA GOVT § 84308 © 2016 Thomson Reuters. No claim to original U.S. Government Works.2 whether the officer accepts, solicits, or directs the contribution for himself or herself, or on behalf of any other officer, or on behalf of any candidate for office or on behalf of any committee. (c) Prior to rendering any decision in a proceeding involving a license, permit or other entitlement for use pending before an agency, each officer of the agency who received a contribution within the preceding 12 months in an amount of more than two hundred fifty dollars ($250) from a party or from any participant shall disclose that fact on the record of the proceeding. No officer of an agency shall make, participate in making, or in any way attempt to use his or her official position to influence the decision in a proceeding involving a license, permit, or other entitlement for use pending before the agency if the officer has willfully or knowingly received a contribution in an amount of more than two hundred fifty dollars ($250) within the preceding 12 months from a party or his or her agent, or from any participant, or his or her agent if the officer knows or has reason to know that the participant has a financial interest in the decision, as that term is described with respect to public officials in Article 1 (commencing with Section 87100 ) of Chapter 7. If an officer receives a contribution which would otherwise require disqualification under this section, returns the contribution within 30 days from the time he or she knows, or should have known, about the contribution and the proceeding involving a license, permit, or other entitlement for use, he or she shall be permitted to participate in the proceeding. (d) A party to a proceeding before an agency involving a license, permit, or other entitlement for use shall disclose on the record of the proceeding any contribution in an amount of more than two hundred fifty dollars ($250) made within the preceding 12 months by the party, or his or her agent, to any officer of the agency. No party, or his or her agent, to a proceeding involving a license, permit, or other entitlement for use pending before any agency and no participant, or his or her agent, in the proceeding shall make a contribution of more than two hundred fifty dollars ($250) to any officer of that agency during the proceeding and for three months following the date a final decision is rendered by the agency in the proceeding. When a closed corporation is a party to, or a participant in, a proceeding involving a license, permit, or other entitlement for use pending before an agency, the majority shareholder is subject to the disclosure and prohibition requirements specified in subdivisions (b), (c), and this subdivision. (e) Nothing in this section shall be construed to imply that any contribution subject to being reported under this title shall not be so reported. Credits (Added by Stats.1982, c. 1049, p. 3809, § 1. Amended by Stats.1984, c. 1681, § 2, eff. Sept. 30, 1984; Stats.1989, c. 764, § 2.) Editors' Notes CROSS REFERENCES Candidate defined for purposes of this title, see Government Code § 82007 . Committee defined for purposes of this title, see Government Code § 82013 . Computation of time, see Code of Civil Procedure §§ 12 and 12a ; Government Code § 6800 et seq. Contribution defined for purposes of this title, see Government Code § 82015 . Election defined for purposes of this title, see Government Code § 82022 . Elective office defined for purposes of this title, see Government Code § 82023 . Person defined for purposes of this title, see Government Code § 82047 . Public official defined for purposes of this title, see Government Code § 82048 . Add to 8-C 07/12/2016 § 84308. Contributions prohibited from persons with pending..., CA GOVT § 84308 © 2016 Thomson Reuters. No claim to original U.S. Government Works.3 CODE OF REGULATIONS REFERENCES Governing bodies exempted by § 84308 , see 2 Cal. Code of Regs. § 18438.1 . Proceedings covered by § 84308 , see 2 Cal. Code of Regs. § 18438.2 . Notes of Decisions containing your search terms (0) View all 1 West's Ann. Cal. Gov. Code § 84308 , CA GOVT § 84308 Current with urgency legislation through Ch. 30, also including Chs. 33 to 35 of 2016 Reg.Sess., Ch. 8 of 2015-2016 2nd Ex.Sess., and all propositions on the 6/7/2016 ballot. End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. Add to 8-C 07/12/2016 § 18438.7. Prohibitions and Disqualification Under Government..., 2 CA ADC § 18438.7 © 2016 Thomson Reuters. No claim to original U.S. Government Works.1 Barclays Official California Code of Regulations Currentness Title 2. Administration Division 6. Fair Political Practices Commission Chapter 4. Campaign Disclosure (Refs & Annos) 2 CCR § 18438.7 § 18438.7. Prohibitions and Disqualification Under Government Code Section 84308. For purposes of Government Code Section 84308 , (a) An officer knows or has reason to know that a person has a financial interest in the decision in a proceeding if: (1) The person is a party; or (2) The person is a participant and reveals facts in his or her written or oral support or opposition before the agency which make the person's financial interest apparent. (b) An officer knows, or should have known, about a proceeding pending before the agency if either: (1) The officer has received notice of the license, permit or other entitlement proceeding. Notice includes receipt of an agenda or docket identifying the proceeding and the party or other persons affected by name; or (2) The officer has actual knowledge of the proceeding. (c) An officer knows, or should have known about a contribution if: (1) The contribution has been disclosed by the party pursuant to Section 84308(d); or (2) The officer has actual knowledge of the contribution. Note: Authority cited: Section 83112, Government Code . Reference: Section 84308, Government Code . HISTORY 1. New section filed 1-26-83; effective thirtieth day thereafter (Register 83, No. 5). 2. Amendment filed 2-22-85; effective thirtieth day thereafter (Register 85, No. 8). Add to 8-C 07/12/2016 § 18438.7. Prohibitions and Disqualification Under Government..., 2 CA ADC § 18438.7 © 2016 Thomson Reuters. No claim to original U.S. Government Works.2 This database is current through 6/24/16 Register 2016, No. 26 2 CCR § 18438.7, 2 CA ADC § 18438.7 End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works. Add to 8-C 07/12/2016 1 Anne Samartha From:Mary Marlow <m.marlow@verizon.net> Sent:Tuesday, July 12, 2016 4:21 PM To:councilmtgitems Cc:Rick Cole; Marsha Moutrie Subject:Council Agenda Item 8 C Oaks Amendments Attachments:7.12.16 Council Oaks Letter .docx Follow Up Flag:Follow up Flag Status:Flagged Dear  Mayor  Vazquez  and  council  members,    Attached  is  a  letter  from  the  Santa  Monica  Transparency  Project  regarding  the  proposed  amendments  language  for  the   Oaks  Ballot  Initiative.  Please  include  in  the  record  of  tonight’s  meeting.    Thank  you,  Mary  Marlow, Chair   Santa  Monica  Transparency  Project      Add to 8-C 07/12/2016 July 12, 2016. Dear Mayor Vazquez and Council members, The Transparency Project strongly suppor ts all the amendment and guideline changes recommended by Mr. Hueston to strengthen and cl arify Oaks. Recall that you, the City Council, selected and hired this renowned and highly qualified attorney to review and assess the Oaks initiative. And as a neut ral outsider, he found that Oaks serves important anti-corruption interests in the City, and he made re commendations that would STRENGTHEN Oaks. Given the history of former City Councils ignoring Oaks implementation and the City Attorney’s refusal to enforce the law, it is vital that any a ttempt to use the Oaks amendment process to WEAKEN Oaks be firmly rejected. Unfortunately, we are seeing a blatant a ttempt to weaken the law by proposing an unwarranted and significant change to the criter ia for penalties that strikes at the very heart of Oaks enforcement. At the last council meeting, late night changes were made to the enforcement section of the proposed amendments in response to a hypothetical situation raised by a council member about a possible civil action for so-called "inadvertent" action, something that has never occurred. The council member 's response to this academic hypothetical was to completely upend the criteria for assessing Civil Penalties in Section 2206(b) to now require that the violations be both “knowing and willful," wh ich is the current, much higher and more difficult to prove, criminal standard. IT WOULD BE TERRIBLE IF THE COUNCIL USED THE HUESTON REPORT TO WEAKEN OAKS, NOT STRENGTHEN IT. The council also should not substitute so me other language for "knowing and willful" that would also weaken Oaks, which would provide just another def ense to violations such as a "knew or should have known" standard. Both of these would make civil enforcement more difficult and ma ke obtaining Summary Judgement difficult, forcing an expensive trial. The same with the suggestion we have heard for a mandatory notice period and then if the money is returned, there is no violation. This was re jected by voters when the council proposed Prop W to change Oaks in 2006. This would create a giant loophole that would allow public officials to freely vi olate Oaks and accept illegal contributions. And if they ever got caught and were sent a notice of violation, al l they would need to do Add to 8-C 07/12/2016 is return the money and they’d get off scot-free. It would be wr ong for the council to give itself such a free pass. Ordinary citizens are not given such special tr eatment or protection. Is the council now going to build in the requirement of "k nowing and willfulness" or some other weak provision into all ordinances? City official s would Not be held accountable – a direct contradiction of Oaks ant i-corruption purpose. Mr. Hueston did not recommend such special treatment and protections; they are not in the Pasadena law, not in the st ate law, not in federal law, not in LA Metro law, and not in the current Oaks law approved by the public. We urge you to strengthen, not weaken, the ant i-corruption protections in Santa Monica by adding ONLY Mr. Hueston’s recommendati ons for amendments. The Transparency Project strongly supports the st rengthening of Oaks. We will vi gorously oppose a ballot measure that would do the opposite and weaken our anti-corruption law. Sincerely, Mary Marlow, Chair Santa Monica Transparency Project Cc: Marsha Moutrie, City Attorney Rick Cole, City Manager Community Leaders Add to 8-C 07/12/2016