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HomeMy WebLinkAboutItem 6b. Update on SB 1439 (The Levine Act) and Introduce an Ordinance amending Chapter 2.40.040 (Campaign Contribution Limitations) Item 6b Department: Administration Cost Center: 1021 For Agenda of: 2/6/2024 Placement: Public Hearing Estimated Time: 60 minutes FROM: Greg Hermann, Deputy City Manager Prepared By: Megan Wilbanks, Deputy City Clerk SUBJECT: UPDATE ON SENATE BILL 1439, ADDITIONAL CAMPAIGN CONTRIBUTION DISCLOSURES, AND CONSIDER INTRODUCTION OF AN ORDINANCE TO AMEND MUNICIPAL CODE CHAPTER 2.40.040 (CAMPAIGN CONTRIBUTION LIMITATIONS) RECOMMENDATION 1. Receive an update on Senate Bill 1439; and 2. Provide direction to staff to create disclosure forms to be included with planning applications and modify public comment cards with disclosure statements ; and 3. Consider introduction of a draft Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, amending Chapter 2.40.040 of the Municipal Code related to Campaign Contribution Limitations” reducing the per person contribution limit from $300 to $250. POLICY CONTEXT Municipal Code Chapter 2.40 outlines Elections Campaign Regulations and Section 2.40.040(A) establishes the current total contribution limit per person at $300. Changes to the Municipal Code require two public hearings: 1) Introduction of a draft Ordinance (Attachment A) and 2) Second reading and adoption of the proposed Ordinance. DISCUSSION Background Approved by the Governor in September 2022 and effective January 1, 2023, Senate Bill 1439 (SB 1439) broadens the scope of Section 84308 of the Political Reform Act to prohibit local elected officials from taking part in licensing, permitting, a nd other use entitlement proceedings involving a party or participant who has contributed more than $250 to the official within the 12 months prior to the proceeding. SB 1439 also extends the period in which an official is prohibited from receiving a contribution exceeding $250 from a party or participant in the proceeding from three to 12 months after the final decision. The full text of SB 1439 is provided in Attachment B. Page 187 of 241 Item 6b The City of San Luis Obispo’s Elections Campaign Regulations regarding campaign contributions were last reviewed and amended in 2014 (Ordinance No. 1599, 2014 Series). At that time, upon recommendation from the Election Regulations Review Committee, the Council increased the total per-person contribution limit from $250 to $300. At the July 18, 2023 Council Meeting, the Council decided not to appoint an Election Regulations Review Committee to review whether the maximum allowable contribution should be lowered to $250 to align with SB 1439. Council provided direction (see approved Minutes) to return in the Winter of 2024 to further discuss the status and implementation of SB 1439 and consider a reduction of the maximum allowable contribution. Since presenting to Council in July 2023, City Clerk and City Attorney staff have attended several trainings hosted by the League of California Cities and the Fair Political Practices Commission (FPPC) regarding the implementation of SB 1439 (Attachment C). The FPPC has developed and published resources on their “Pay-to-Play Limitations and Prohibitions (Section 84308)” web page, with key points of information summarized below:  What types of proceedings are covered by Section 84308? Section 84308 pertains to proceeding[s] involving a license, permit, or other entitlement for use. The phrase “license, permit, or other entitlement for use,” in turn, “means all business, trade, and land use licenses and permits and al l other entitlements for use, all contracts (other than competitively bid, labor, or personal employment contracts), and all franchises.  Who does Section 84308 apply to? Officers1 are prohibited from accepting, soliciting, or directing a contribution greater than $250 from a party2, participant3, or their agent4 while the entitlement for use proceeding is pending, and for 12 months after a final decision in the proceeding5. Similarly, local elected officials are prohibited from taking part in licensing, permitting, and other use entitlement proceedings involving a party or participant who has contributed more than $250 to the official within the 12 months prior to the proceeding. 1 Section 84308 defines “Officers” as: Any elected or appointed officer of an agency, any alternate to an elected or appointed officer of an agency, and any candidate for elected office in an agency. 2 Section 84308 defines “Party” as: Any person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use. 3 Section 84308 defines “Participant” as: Any person who is not a party but who actively supports or opposes a particular decision in an entitlement for use proceeding and who has a financial interest in the decision. 4 Section 84308 defines “Agent” as: Any person that represents that party or participant for compensation and appears before or otherwise communicates with the governmental agency for the purpose of influencing the pending proceeding. 5 Historically, in San Luis Obispo, there have been no contributions solicited or received after the election. Page 188 of 241 Item 6b  What contributions are covered by Section 84308? Contributions over $250 that an officer accepts, solicits, or directs to: o The officer’s own campaign or controlled committee, o OR, to another candidate’s campaign or controlled committee. Aggregation rules: o Party/participant’s contributions must be aggregated with contributions by an agent and not exceed $250 in the previous 12 months or from the date the agent was hired as a paid employee, contractor, consultant (whichever is shorter), involving a license, permit, or other entitlement for use.  How do I “cure” a violation of Section 84308? The Officer must return the contribution amount that exceeds $250 within 30 days of the time the officer knows or should have known of both the contribution and the proceeding. An officer may participate in the proceeding before returning a contribution if: o The decision is made at the public hearing; o The officer knew/should have known of the contribution and the proceeding for fewer than 30 days; o The officer discloses the contribution, either orally or in writing, on the record and commits to returning the portion in excess of $250 within 30 days. Alternatively, an officer may choose to recuse from the proceeding and retain the contribution in full. The officer must disclose the fact they have received contributions from the party in question in excess of $250 within the preceding 12 months and the name(s) of the contributor(s). It is unlawful to accept, solicit, or direct a contribution from a party, participant, or agent for 12 months after the final decision. There is no option to cure if the officer knowingly and willingly accepts the contribution ; if they unknowingly accept, the cure is to return the contribution within 14 days.  Do SB 1439’s amendments to Section 84308 apply to contributions received or proceedings participated in throughout 2022, before SB 1439 took effect? No. The Fair Political Practices Commission has determined a local elected official is not prohibited from taking part in entitlement for use proceedings based on contributions received in 2022, nor is an official prohibited from accepting, soliciting, or directing contributions exceeding $250 from parties or participants in proceedings finalized in 2022.  What are the potential consequences for violating Section 84308? As with most provisions of the Political Reform Act, a violation of Section 84308 may result in a civil action brought by the FPPC for an amount up to five thousand dollars ($5,000) per violation. Page 189 of 241 Item 6b Recommendations to Implement SB 1439 There are several best practices to implement SB 1439. These practices would assist Council in knowing when there is a project coming before them that is impacted by SB 1439 and also reduce the likelihood of contributions that violate SB 1439. Due to the need to aggregate party/participant contributions with agent contributions for an individual license, permit, or other entitlement for use decision, staff recommends the creation of disclosure forms to be included with planning applications and the modification of public comment cards with disclosure statements as follows:  For license, permit, or other entitlement for use: o Include a section in staff reports indicating whether the matter is subject to the SB 1439. o Add SB 1439 disclosure requirements on agendas and speaker cards. o Amend project application forms to include disclosure questions.  For all contracts (other than competitively bid, labor, or personal employment contracts), and all franchises: o Add language on bid documents to alert parties of the s tatute. In addition, to reduce the likelihood of contributions that violate SB 1439, Council can consider the adoption of an Ordinance lowering the per-person contribution limit from $300 to $250 (Attachment A). This recommendation is optional; councilmembers would still be required to monitor contributions for aggregated totals exceeding $250 and staff still recommend the disclosure forms and public comment modifications discussed above, but the amendment would align City contributions limits with SB 1439. Previous Council Action On July 18, 2023, staff requested that the Council consider creating a committee to review Elections Campaign Regulations and whether the maximum allowable contribution should be lowered to $250 to align with Senate Bill 1439. Council provided direction (see approved Minutes) to return in the Winter of 2024 to further discuss the status and implementation of Senate Bill 1439 and consider a reduction of the maximum allowable contribution. Public Engagement In accordance with the City’s noticing requirements for proposing amendment s to the Municipal Code, a legal ad will be published in The New Times 10 days prior to introduction of the ordinance and 5 days prior to final adoption, if applicable. Additionally, contents of the ad(s) will be published to the City’s website , with e-notifications sent to subscribers of City News. The public will have an opportunity to provide public comment in writing prior to the meeting or as public comment during the meeting. CONCURRENCE The City Attorney’s Office, Community Development Department, and Finance Department concur with staff’s recommendation. Page 190 of 241 Item 6b ENVIRONMENTAL REVIEW The California Environmental Quality Act does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378. FISCAL IMPACT Budgeted: Yes Budget Year: 2023-24 Funding Identified: N/A Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $N/A $ $ $ State Federal Fees Other: Total $N/A $ $ $ There are no financial impacts directly associated with this item. ALTERNATIVES 1. Direct staff only to introduce an Ordinance to amend Municipal Code Chapter 2.40.040 to lower the per-person campaign contribution limit to $250. Staff does not recommend this alternative as simply lowering the contribution limit does not protect councilmembers from the aggregation requirement and adding additional disclosures into our processes is best practice for implementing SB 1439 2. Do not direct staff to lower the per-person campaign contribution limit to $250 and do not update administrative processes to request SB 1439 disclosures. ATTACHMENTS A - Draft Ordinance amending SLOMC Chapter 2.40.040 (Contribution Limitations) B - Senate Bill 1439 Campaign Contributions C - FPPC Presentation on understanding the Levine Act, post SB 1439 Page 191 of 241 Page 192 of 241 O ______ ORDINANCE NO. _____ (2024 SERIES) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AMENDING CHAPTER 2.40.040 OF THE MUNICIPAL CODE RELATED TO CAMPAIGN CONTRIBUTION LIMITATIONS WHEREAS, the Council of the City of San Luis Obispo conducted a public meeting in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California, on February 6, 2024, for the purpose of considering changes proposed to update the Municipal Code. NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows: SECTION 1. Findings. After considering the meeting minutes and recommendations of the City Clerk and City Attorney and public input and testimony, and having considered arguments and authority supporting and opposing modifications to and continuation of the City's campaign regulations, the Council makes and adopts the following findings in support of the regulations a dopted herein: A. San Luis Obispo is a small and engaged community wherein residents closely follow and scrutinize elections processes and closely monitor the amounts and sources of campaign contributions to individual candidates for elected office . B. Based on an evaluation of campaign expenditures in comparable cities, the Council finds the direct contribution limits adopted herein are consistent with those in place in comparable jurisdictions and, notwithstanding the existing limitations or lack thereof in comparable jurisdictions, that the limitations adopted herein would permit candidates to solicit and accept contributions far in excess of historical expenditures by candidates in the City of San Luis Obispo and comparable cities. C. The Council has considered and affirms the statement of purpose and intent set forth herein and determines the amended and decreased contribution limits adopted herein further and support the stated purpose and intent. SECTION 2. That the following section of the San Luis Municipal Code Chapter 2.40 is hereby amended to read as follows: Page 193 of 241 Ordinance No. _____ (2024 Series) Page 2 O ______ 2.40.040 Contribution limitations. A. Contributions by Persons to Candidates and/or Controlled Committees. No person shall make any contribution to a candidate and/or any controlled committee connected with that candidate, with respect to any single election, which would cause the total amount contributed by such person to the candidate and any controlled committee connected with that candidate, when combined, to exceed three hundred dollars two hundred and fifty dollars. B. Acceptance or Solicitation by Candidates or Controlled Committees. No candidate or controlled committee shall solicit or accept any contribution from any person which would cause the total amount contributed by such person, with respect to any single election, to the candidate and/or any controlled committee connected with that candidate, when combined, to exceed the sum of three hundred dollars two hundred and fifty dollars. C. Contributions by Candidates. The provisions of subsections A and B of this section shall not apply to contributions from a candidate or from his or her immediate family to any controlled committee connected with that candidate, nor to the expenditure, by the candidate, of his or her personal funds. For purposes of this section, "immediate family" means a candidate's or elected officeholder's spouse or domestic partner, and/or dependent children. D. Anonymous Contributions. No candidate or controlled committee shall accept anonymous contributions, with respect to any single election, which e xceed fifty dollars. Subject to the provisions of state law, in the event a candidate or controlled committee receives an anonymous contribution that would result in a violation of this subsection, the candidate or controlled committee shall promptly pay t hat sum to the city for deposit into the general fund to be used to defray the costs of municipal elections. SECTION 3. Ordinance Number 1599 (2014 Series) is hereby amended and superseded to the extent inconsistent herewith. Page 194 of 241 Ordinance No. _____ (2024 Series) Page 3 O ______ SECTION 4. A summary of this ordinance, together with the names of Council members voting for and against, shall be published at least five (5) days prior to its final passage, in The New Times, a newspaper published and circulated in this City. This ordinance shall go into effect at the expiration of thirty (30) days after its final passage. INTRODUCED on the ____ day of ____, 2024, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the ____ day of ____, 20 24, on the following vote: AYES: NOES: ABSENT: ___________________________ Mayor Erica A. Stewart ATTEST: _______________________ Teresa Purrington City Clerk APPROVED AS TO FORM: _______________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________ Teresa Purrington City Clerk Page 195 of 241 Page 196 of 241 Page 197 of 241 Page 198 of 241 Page 199 of 241 Page 200 of 241 Understanding the Levine Act, Post SB-1439 A Guide to Section 84308 and Regulations 18438-18438.8 Nov 1, 2023 Page 201 of 241 Objectives of Training • Understand what Section 84308 is and why it was enacted; • Determine the types of proceedings and individuals Section 84308 applies to; • Recognize the distinctions between parties, participants, and agents; • Examine the basic requirements and limitations of Section 84308 and when they apply; • Familiarize ourselves with the concept of aggregation for purposes of calculating total contributions; and • Learn where to access additional information and how to request assistance from the FPPC. Page 202 of 241 What is Section 84308? • Commonly referred to as “the Levine Act” • California law originally enacted in 1982, in response to Los Angeles Times Article • Amended in 2022 to address inconsistent application • Aimed at combatting “pay-to-play” or quid pro quo practices, and the appearance of such practices Page 203 of 241 General Overview of Requirements • Limits officers’ ability to accept contributions greater than $250 during specific periods • Limits parties’, participants’, and their agents’ ability to contribute more than $250 during specific periods • Officers must recuse themselves from proceedings or return portion of contribution exceeding $250 • Disclosure by officers and parties of contributions • Violations of the Act may result in fines of up to $5,000 per violation Page 204 of 241 Scope of Section 84308 • However, these restrictions and requirements only apply in a specific context: proceedings involving a license, permit, or other entitlement for use, or “entitlement for use proceeding,” for short. • Section 84308 does not apply to proceedings involving general policy decisions or rules where the interests affected are many and diverse. It also does not apply to ministerial (i.e., completely objective) decisions. Page 205 of 241 What is an Entitlement for Use Proceeding? • Section 84308 implements certain restrictions and requirements that apply to contributions greater than $250 made before, during, or after an entitlement for use proceeding. • Section 84308 defines “license, permit, or other entitlement for use” to mean “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.” Page 206 of 241 Entitlement for Use Proceedings • These proceedings involve specific, identifiable parties directly affected by the proceeding or participants that would experience a substantial financial impact. • Generally, ask, “does this proceeding involve an identifiable person or persons seeking some type of permission or allowance, specific to them, from the government agency?” • Again, Section 84308 does not apply to proceedings involving general policy decisions or rules where the interests affected are many and diverse. It also does not apply to ministerial (i.e., completely objective) decisions. Page 207 of 241 Entitlement for Use Proceeding Examples • Building Permits • Charter School Petitions • Conditional Use Permits •Contracts (w/ exceptions) •Event Permits • Private Development Plans • Professional License Revocations • Rezoning of Specific Parcels • Rulemaking Procedure Affecting Small Industry w/ Limited Businesses • Special District Formations • Subdivision/Parcel Maps • Zoning Variances Page 208 of 241 Entitlement for Use Proceeding DO NOT Include • Applications Decided Based Solely on Objective Criteria • City/County Ordinances • City/County Measures • City/County/Departmental Policies • Competitively-Bid Contracts • Labor/Personal Employment Contracts Page 209 of 241 Entitlement for Use Proceeding Examples • A non-profit organization reaches out to a County Board of Supervisors regarding the potential amendment of a specific contract between the non-profit and the County based on inadequate reimbursement rates. • The contracting amendment process would qualify as an entitlement for use proceeding. • A non-profit organization reaches out to a County Board of Supervisors regarding the need for changes in the County contracting process generally (e.g., amending contractor reimbursement methodology). •This likely would not qualify as an entitlement for use proceeding given the general application and numerous County contractors such a change would apply to. Page 210 of 241 Entitlement for Use Proceeding Examples • At a City Council meeting, a non-profit organization advocates in favor of the City allocating increased funds in the City budget for local mental health crisis response resources. • Because the issue relates to a general policy decision (allocation of resources in the City budget), it would not qualify as an entitlement for use proceeding. • The City Council approves additional funding. The City’s Health Department then contracts with the non-profit to provide mental health crisis response resources on behalf of the City. • Unless the contract was competitively bid, the contract and contracting process would qualify as an entitlement for use proceeding. Page 211 of 241 Who Does Section 84308 Apply to? Parties Agents Officers Participants Page 212 of 241 Officers • Section 84308 defines “officer” to include two categories: 1) Candidates for office; and 2) Officers of the agency • FPPC regulations further define “officer of the agency” to include: 1) Elected Officials; 2) Board & Commission Members; 3) Chief Executives of the Agency; and 4) Agency employees with decisionmaking authority in the proceeding, who are candidates for office or have been candidates within the preceding 12 months Page 213 of 241 Officers • “Agency employees with decisionmaking authority in the proceeding, who are candidates for office or have been candidates within the preceding 12 months” • Who does this apply to? • Example: A city employee with discretion to approve or reject an event permit application, and who is running for a position on a local school board. • This person doesn’t have to be a member of the City Council or Planning Commission to be an “officer of the agency.” Page 214 of 241 Excluded Officers • Very few officers and agencies are excluded from the scope of Section 84308: • Courts or any agency in judicial branch; • The Legislature; • The Board of Equalization; • Constitutional Officers (e.g., Governor, Lieutenant Governor, Secretary of State) • If an individual is an elected or appointed official at the local level (or running for such an office), they are subject to Section 84308. Page 215 of 241 Requirements for Candidates • For someone who is just a candidate for office, but doesn’t act as a decisionmaking employee in the proceeding, Section 84308 does not restrict how much can be contributed to them or how much they can accept beyond ordinary contribution limits. • However, if the candidate wins and takes office, they will likely be required to either recuse themselves from the proceeding or return the excess portion of the contribution. Page 216 of 241 Requirements for Officers of the Agency • Section 84308 places more immediate restrictions on those who qualify as an “officer of the agency.” • Prohibited from accepting, soliciting, or directing a contribution greater than $250 from a party, participant, or their agent while the entitlement for use proceeding is pending, and for 12 months after a final decision in the proceeding. • Officers of the agency who have received a contribution exceeding $250 within the past 12 months must either recuse themselves or return the excess contribution. • Must also disclose such contributions. Page 217 of 241 Requirements for Parties • Section 84308 defines a “party” as “any person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use.” • Examples: applicants, claimants, respondents, contracting parties • Parties and their agents cannot contribute more than $250 to an officer of the agency while the entitlement for use proceeding is pending, and for 12 months after a final decision in the proceeding. • Parties must disclose any contribution greater than $250 they have made to an officer of the agency within the 12 months prior to the entitlement for use proceeding. Page 218 of 241 Participants • A “participant” in an entitlement for use proceeding is a person (or entity) who: (1) is not a party; but (2) who actively supports or opposes a particular decision in a proceeding involving a license, permit, or other entitlement for use; and (3) who has a financial interest in the decision. Page 219 of 241 Requirements for Participants • Like parties, participants and their agents cannot contribute more than $250 to an officer of the agency while the entitlement for use proceeding is pending, and for 12 months after a final decision in the proceeding. • Unlike parties, participants are not required to disclose any contribution greater than $250 they have made to an officer of the agency within the 12 months prior to the entitlement for use proceeding. Page 220 of 241 Active Support or Opposition • Communication with an officer or employee of an agency for the purpose of influencing a decision • Can be made via agent • Examples: Providing public comment during a public meeting, directing a message to an officer or employee of the agency via phone, email, physical mail, or in person •Does not include communications made to public outside the proceeding • Examples: Protesting outside government buildings, publishing op-ed articles, advertisements Page 221 of 241 Financial Interests • An individual generally has a “financial interest” in an entitlement for use proceeding if it would have a reasonably foreseeable, material financial effect on one or more of their economic interests. • To determine “reasonable foreseeability,” ask: • Is a material financial effect a realistic possibility, and not just hypothetically or theoretically possible? Page 222 of 241 Material Financial Effects • To determine if a proceeding would have a reasonably foreseeable material financial effect on an individual or entity’s economic interest to qualify them as a “participant,” different standards apply based on the type of economic interest involved, including: • Business entity interests; • Real property interests; and • Source of income interests. • These are the same standards that apply when a public official is determining if they have a conflict of interest in a governmental decision. Page 223 of 241 Agents • A person is an “agent” of a party or participant in a pending entitlement for use proceeding if the person: • Represents that party or participant for compensation; and • Appears before or otherwise communicates with the governmental agency for the purpose influencing the proceeding. • An agent’s contributions are combined with those of the party or participant they represent for purposes of calculating the $250 contribution limit. • Like parties, agents’ contributions exceeding $250 within the past 12 months must be disclosed. Page 224 of 241 How Does Section 84308 Affect Employees? • Most employees will not qualify as agents because their work does not involve representing a company, non-profit, or other entity in the entitlement for use proceeding and they are not communicating with the government agency for the purpose of influencing the proceeding. • If an employee does meet those criteria, they will qualify as an agent for purposes of Section 84308. • An employee qualifying as a “participant” is also a limited scenario and will only occur if they take part in the proceeding (e.g., provide public comment) and the proceeding would have a reasonably foreseeable, material financial effect on one of their economic interests, including their employer. Page 225 of 241 How is the $250 Contribution Calculated? • The $250 limit applies to any 12-month period. • Example: A company contributes $100 to a City Councilmember on January 1, then submits a permit application to the City on January 2. At that point, an entitlement for use proceeding is pending. During the next 12 months, the company may only contribute an additional $150 to that City Councilmember. • Example: An individual submits a permit application to the City on January 1, 2024, then contributes $250 to each City Councilmember on January 2. On January 2, 2025, the proceeding is still pending before the City with no final decision having been made yet. The individual may contribute another $250 to each City Councilmember, even though the proceeding is still pending, because it has been 12 months since any contribution was made. Page 226 of 241 Aggregation • Contributions by a party or participant are combined with contributions by: 1. Their respective agent(s) (e.g., the employee paid to represent the non-profit at the proceeding); 2. Those who direct or control the party’s/participant’s contribution (e.g., a CEO or CFO); 3. Entities with contributions controlled by that same person or a majority of the same persons (e.g., a “parent organization” with contributions controlled by the same person(s)) 4. The majority owner and other entities majority-owned by that person. NOTE: Contributions by non-compensated non-profit officers are not aggregated Page 227 of 241 Aggregation Example On January 1, a non-profit organization applies for a grant from the City. On January 2, the non- profit organization makes a $100 contribution to a city councilmember who will vote on the grant applications. Current total from non-profit: $100 The non-profit organization’s contributions are controlled by two executive team members: Alex and Bobby. Alex is compensated for their work as the company’s CEO. Bobby is not compensated, but serves as a voluntary executive director for the organization. On January 3, Alex and Bobby each contribute $100 to the same city councilmember who received the earlier contribution from the non-profit. Ordinarily, because Alex and Bobby both control the non-profit’s contributions, both of their contributions would be aggregated with the non-profit’s. However, because Bobby is an uncompensated officer of the non-profit, Bobby’s contribution is not aggregated. Because Alex is compensated, their contribution is aggregated. Current total from non-profit: $200 Page 228 of 241 Aggregation Example Continued On January 4, two of the non-profit’s employees—an Organizational Health Manager and a Community Outreach Coordinator—each contribute $100 from their personal funds to the same city councilmember. Because neither employee currently qualifies as an agent, their contributions are not aggregated with the non-profit’s. Additionally, because neither employee currently qualifies as a participant, neither employee is limited to contributing $250, but are only limited to the ordinary campaign contribution limits. Current total from non-profit: $200 On January 5, a City Council meeting on the grant application is held. The Community Outreach Coordinator attends in her capacity as an employee of the non-profit and advocates on behalf of the organization. Because the Community Outreach Coordinator is (1) representing the non-profit (2) for compensation and (3) appearing before or communicating with the City Council for the purpose of influencing the proceeding, they now qualify as an agent. Going forward, any additional contribution by the Community Outreach Coordinator will be aggregated with contributions by the non-profit. On January 6, the Community Outreach Coordinator contributes another $50. The non-profit has now reached the limit of what it may permissibly contribute to the city councilmember. Current total from non-profit: $250 Page 229 of 241 Participants vs. Agents Participants Agents •Not a party or representative of party •Representative of party or participant •Must have personal financial interest •Does not need personal financial interest •Uncompensated in connection w/ proceeding •Compensated in connection w/ proceeding •Contributions are not combined w/ contributions by party •Contributions are combined w/ contributions by party or participant agent is representing Page 230 of 241 Participants vs. Agents Example A non-profit focused on a specific medical issue has submitted an application to the City’s Parks and Recreations Department for an event permit that would allow the non- profit to host a large fundraising and issue awareness event at a City park. • The non-profit is a party in the proceeding. The non-profit has an employee who serves as the organization’s Community Outreach Coordinator. In her capacity as an employee, the Community Outreach Coordinator writes to the Executive Director of the Parks and Recreation Department and appears at a Parks and Recreation Department meeting to express support for the application and explain how the event will benefit the City. • The Outreach Coordinator is an agent in the proceeding. Another employee of the non-profit is not authorized or tasked with speaking on behalf of the organization, but submits a public comment in their personal capacity because the issue is important to them and they also believe the event will be beneficial to members of the community. Because the employee’s source of income—the non-profit organization—is the subject of the proceeding, the employee automatically has a financial interest in the proceeding. • Therefore, the employee qualifies as a participant in the proceeding. Page 231 of 241 Example Continued At the same Parks and Recreation Department meeting, a City resident offers a public comment, stating that while they agree the issue is important, they think a different park located in a less residential neighborhood is a more appropriate venue. The resident explains he lives directly across the street from the entrance of the proposed park and would have difficulty entering and exiting his property if the event was held there. Based on the facts provided, the City resident has a financial interest in the proceeding based on his real property. • Accordingly, the City resident also qualifies as a participant in the proceeding. One of the members of the Parks and Recreations Commission is running for City Council. What are the relevant contribution limits for everyone involved? Non-Profit Outreach Coordinator (Agent) Other Employee (Participant) City Resident (Participant) $250 combined $250 $250 Page 232 of 241 When Do These Restrictions and Requirements Apply? • Parties, participants, and agents are prohibited from contributing more than $250 while the proceeding is pending and for 12 months after a final decision is rendered. • For parties, participants, and their agents, an entitlement for use proceeding is “pending” when it is before the jurisdiction of the agency for its decision or other action. •Examples: • After a company submits a permit application to the City; • After contract bid has been submitted or negotiations have begun. Page 233 of 241 When Do These Restrictions and Requirements Apply? • For officers, an entitlement for use proceeding is “pending” when either: 1) The decision is before the officer for the officer’s consideration; • Example: A party’s development agreement proposal is placed on the City Council’s meeting agenda for discussion or decision. 2) The officer knows or has reason to know a proceeding involving a license, permit or other entitlement for use is before the jurisdiction of the agency for its decision or other action, and it is reasonably foreseeable the decision will come before the officer in the officer’s decisionmaking capacity. • Example: Before the party’s development agreement proposal comes before the City Council, it is first presented to the City’s Planning Commission. A Planning Commissioner discusses the party’s proposal with a City Councilmember. Page 234 of 241 What is a Party Required to Disclose? • When a party has contributed, in the aggregate, more than $250 to an officer of the agency, the party must disclose: • The amount of the contribution(s) made within the past 12 months; and • The names of the persons whose contributions are required to be aggregated with contributions by the party (e.g., contributions by the party’s agent or the company officer who directs and controls the party’s contributions) • Generally, disclosure must be made on the date the party files the application or other request initiating the proceeding. Page 235 of 241 What is an Officer Required to Disclose? • An officer is required to disclose any contribution the officer knows of or has reason to know of, either orally or in writing, on the public record at the beginning of a public meeting, if a meeting is held. • If an officer learns of a contribution during a public meeting, the officer shall make the disclosure on the public record prior to continuing to take part in the proceeding. • If no public record is held, written disclosure shall be entered into the agency’s official records. Page 236 of 241 What is an Officer Required to Disclose? • An officer is required to disclose: • The fact that they have received contributions from the party, participant, or agent greater than $250 within the past 12 months; and • The names of the contributor(s). Page 237 of 241 What if a Party or Participant Contributed More Than $250 Before the Proceeding? • A party or participant does not violate Section 84308 by contributing more than $250 to an officer of an agency before an entitlement for use proceeding is pending. • However, the officer will likely either have to recuse themselves from the proceeding or return the portion of the contribution exceeding $250. • An officer is eligible to return a contribution within 30 days from the time the officer knows, or should have known, about the contribution and the proceeding. Page 238 of 241 Summary Officers and Parties • Section 84308 applies to officers, parties, participants, or agents in entitlement for use proceedings. • Officers of an agency cannot accept—and parties, participants, and agents cannot give—more than $250 while a proceeding is pending and for 12 months after a final decision. • If a person is directly involved in the proceeding, the person is a party. Page 239 of 241 Summary Participants and Agents • If the person is not a party, but is advocating for a decision in the proceeding and has a financial interest in the proceeding, the person is a participant. • “Financial interest” means the person’s economic interest would experience a reasonably foreseeable, material financial effect • If a person is paid to represent a party or participant by communicating with the agency to influence the proceeding, the person is an agent. • Disclosure is required for parties and their agents, but not participants. Page 240 of 241 Conclusion • Resources are available on the FPPC Website •Section 84308 Guide for Officers •Section 84308 Guide for Parties, Participants, and Agents • Section 84308 webpage. •Email the FPPC at advice@fppc.ca.gov with any requests for informal assistance or formal advice Page 241 of 241 1 UPDATE ON SENATE BILL 1439,ADDITIONAL CAMPAIGN CONTRIBUTION DISCLOSURES,AND CONSIDER INTRODUCTION OF AN ORDINANCE TO AMEND MUNICIPAL CODE CHAPTER 2.40.040 (CONTRIBUTION LIMITATIONS) February 6, 2024 2 Recommendation 1.Receive an update on Senate Bill 1439; and 2.Provide direction to staff to create disclosure forms to be included with planning applications and modify public comment cards with disclosure statements; and 3.Consider introduction of a draft Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, amending Chapter 2.40.040 of the Municipal Code related to Campaign Contribution Limitations” reducing the per person contribution limit from $300 to $250. 3 Topics to cover Update on SB 1439 What changed with Section 84308? FPPC Guidance and new Regulations Implementation and Best Practices Disclosure Forms to accompany planning applications Updates to public comment speaker cards Introduction of an Ordinance Lower the contribution limit from $300 to $250? Limitations of the Ordinance 4 What changed with Section 84308? Senate Bill 1439 became effective January 1, 2023, which broadens the scope of Section 84308 of the Political Reform Act to: •Apply to agencies whose members are directly elected by voters including local elected officials such as city councilmembers and county supervisors serving on their respective boards. •Prohibits local elected officials from taking part in licensing, permitting, and other use entitlement proceedings involving a party or participant who contributed more than $250 to the official within the 12 months prior to the proceeding. •Extend the period in which an official is prohibited from receiving a contribution exceeding $250 from a party or participant in the proceeding from three to 12 months after the final decision. •Also includes limited opportunities to cure a violation by 1) returning the contribution, or just the portion in excess of $250, within either 30 or 14 days, depending on certain circumstances, or 2) recusing from participating in the proceeding. 5 FPPC Guidance and New Regulations In response to the changes brought on by SB 1439, the Fair Political Practices Commission: •Issued the Kendrick Opinion (No. O-22-002) •Prepared a package of regulatory amendments (Reg. No. 18438.1-8, 18705) •Is providing guidance and training opportunities on their website: https://fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html 6 Key Takeaways Officers Parties Participants Agents Who is an “Officer”? •Officer: An individual who may make, participate in making, or attempt to influence a decision or exercises authority or budgetary control over those who do. Specifically: o Elected officials (except judges and California Legislature) o Members of appointed boards and commissions o The chief executive of an agency o Any official with decision making authority who is a candidate for elected office in the 12-months prior to the decision. Who is a “Party” or “Participant”? •Party: Any person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use. •Participant: A person with a financial interest in the decision, and Actively supports or opposes the decision by: o Lobbying (direct communications for purposes of influencing) o Testimony or public comment during a proceeding o Other communications to the agency for purpose of influencing a proceeding. Who is an “Agent”? •Agent: A person is an “agent” of a party or participant in the pending proceeding if the person: Represents that party or participant for compensation; and Appears before or otherwise communicates with the agency for purposes of influencing the proceeding •An agent’s contributions are combined with those of the party or participant they represent for purposes of calculating the $250 contribution limit. 7 Aggregation Aggregate $250 Limit Contributions by a party or participant must be aggregated with contributions by an agent in the previous 12 months or from the date the agent was hired as a paid representative. 8 What is a Party required to disclose? When a party has contributed, in the aggregate, more than $250 to an officer of the agency, they must disclose: o The amount of the contribution(s) made within the past 12 months; and o The names of the persons whose contributions are required to be aggregated with contributions by the party. 9 What is an Officer required to disclose? An officer is required to disclose any contribution the officer knows of or has reason to know of, either orally or in writing, on the public record at the beginning of a public meeting, if a meeting is held. If an officer learns of a contribution during a public meeting, the officer shall make the disclosure on the public record prior to continuing to take part in the proceeding. If no public record is held, written disclosure shall be entered into the agency’s official records. 10 Can officers cure a violation? •Prior to the proceeding: o The officer must return the contribution (over $250) within 30 days of the time the officer knows or should have known of both the contribution and the proceeding. •During the proceeding, from the dais: o An officer may participate in the proceeding before returning a contribution under certain circumstances. Required to disclose the contribution on the record and commits to return anything over $250 within 30 days. •Post proceeding: o After a final decision is made, officers may not receive contributions exceeding $250 from involved parties for 12 months. Any contributions over $250 received at this point must be returned within 14 days to avoid violation. 11 Implementation and Best Practices •For license, permit, or other entitlement for use proceedings: o Amend project application forms to include disclosure questions. o Include a section in staff reports indicating whether the matter is subject to the SB 1439 o Add SB 1439 disclosure requirements on agendas and speaker cards. •For all contracts (other than competitively bid, labor, or personal employment contracts), and all franchises: o Add language in contracting documents (that are not competitively bid) to alert parties of the statute. 12 Introduction of an Ordinance “AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AMENDING CHAPTER 2.40.040 OF THE MUNICIPAL CODE RELATED TO CAMPAIGN CONTRIBUTION LIMITATIONS” 13 Recommendation 1.Receive an update on Senate Bill 1439; and 2.Provide direction to staff to create disclosure forms to be included with planning applications and modify public comment cards with disclosure statements; and 3.Consider introduction of a draft Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, amending Chapter 2.40.040 of the Municipal Code related to Campaign Contribution Limitations” reducing the per person contribution limit from $300 to $250.