city of los angeles c leeann m. pelham president 200 north

MEMORANDUM September 7, 2010 To: Members of the City Ethics Commission From: Heather Holt, Director of Policy and Legislation Re: AGENDA ITEM 8 Governmental Ethics Ordinance Review: Impartiality and Fairness, Part A (continued) Impartiality and Fairness, Part B (continued) Impartiality and Fairness, Part C Compliance A. BACKGROUND

In January, the staff began a comprehensive review of the Governmental Ethics Ordinance (GEO); and, over the past several months, we have been discussing specific recommendations for improving it. We divided the GEO into three categories, based on its underlying public policy goals: transparency; impartiality and fairness; and compliance. The Commission has reached consensus regarding the public disclosure recommendations in Category 1 (transparency).

Because of the fullness and complexity of the issues in Category 2 (impartiality and

fairness), we spread the discussions out over several meetings. Part A of Category 2 addressed confidential information, non-City employment, and misuse of City positions. The Commission has reached consensus regarding all of the recommendations in Part A, except for one related to the misuse of City positions.

Part B of Category 2 focuses on gifts to City officials, and the Commission has been

discussing those recommendations since July. At the August meeting, the Commission reached consensus that the state’s definitions for gifts and travel expenses should be used for GEO purposes. However, the Commission has not yet reached consensus regarding the other gift recommendations.

This memo addresses the outstanding staff recommendations from Parts A and B, and

begins a discussion of new recommendations related to Part C, of Category 2. The memo also makes recommendations regarding Category 3 (compliance).

CITY OF LOS ANGELES CALIFORNIA

LeeAnn M. Pelham Executive Director

_________

200 North Spring Street City Hall – 24th Floor

Los Angeles CA 90012 (213) 978-1960

(213) 978-1988 Fax http://ethics.lacity.org

Whistleblower Hotline:

(213) 978-1999 (800) 824-4825

CITY ETHICS COMMISSION __________

Helen Zukin

President

Paul Turner Vice President

Marlene Canter Nedra Jenkins

Valerie Vanaman

City Ethics Commission GEO Review: Impartiality/Compliance

September 7, 2010 of 13

B. SUMMARY This memo covers a number of recommendations for improving the GEO’s provisions regarding impartiality and compliance. Some of the recommendations were considered at previous meetings, and some of the recommendations are new with this memo.

1. Existing Recommendations

The staff recommends the following improvements to the GEO provisions that regulate gifts to City officials. See Attachment A (pp. 7-11 of its Attachment 4).

a. Prohibit City officials from soliciting or accepting gifts from persons they

know or should know are restricted sources. b. Prohibit restricted sources from giving gifts to elected officials or to other

City officials in agencies with which they are actively engaged. c. Exempt from the gift ban routine and nominal office courtesies provided at a

restricted source’s place of business. d. Modify the list of restricted sources. e. Extend to lobbyist employers the same gift ban that currently applies to

lobbyists and lobbying firms. f. Require elected officials, general managers, and commissioners to disclose

tickets given to them for events at which they perform ceremonial functions and to maintain records substantiating the ceremonial functions.

g. Eliminate the exception for tickets received in exchange for performing ceremonial functions when the tickets are provided by restricted sources.

The staff also recommends creating a limited exception to the prohibition against misusing a City position so that City employees may solicit donations for philanthropic purposes or for City-sponsored events. See Attachment A (pp. 11-12 of its Attachment 4). 2. Recommendations Under Development The staff has been analyzing ex parte communications and recommends regulating them through the GEO. Broad staff suggestions are identified below. Detailed decision points related to those suggestions require continued analysis and are also identified. See section D below for further discussion. Adjudicative Matters: a. Ban ex parte communications for decision makers in adjudicative matters. b. Exclude from the ban communications regarding ministerial issues. c. Exclude from the ban communications with staff in the decision maker’s

agency, except for staff members who act as parties to the matter.

Decision points: Which decision makers should the ban apply to? When should the ban apply? How should communications that do occur be handled?



Legislative Matters: d. Require the disclosure of ex parte communications that occur regarding

legislative matters. Decision points: Which officials should disclose? When should disclosure be made? What should the method and level of disclosure be? 3. New Recommendations The staff also recommends the following improvements to the GEO provisions regarding compliance. See section E below for further discussion. a. Clarify that the existing protection against retaliation applies when possible

violations of any law or regulation are reported to any appropriate agency. b. Specify that administrative penalties apply to violations of the GEO. c. Require the Ethics Commission to notify agencies when their employees are

found to have violated the GEO. d. Eliminate the 30-day limit on waivers of late filing penalties. e. Clarify that late filers are liable to the Ethics Commission, rather than the

City, for late filing penalties. f. Expand the Ethics Commission’s notice requirement to all agencies,

including proprietaries, when persons are found to have engaged in money laundering.

g. Require persons who must file the restricted source disclosure form to maintain detailed records for four years after the date of filing.

C. GIFTS (Category 2/Part B) In July and August, we discussed recommendations regarding gifts to City officials. The Commission determined that the state’s definitions for gifts and travel expenses should be used for City purposes, but no other decisions have been made. The August memo, which discusses in detail the staff recommendations regarding gifts to City officials, is provided in Attachment A.

At the August meeting, the Commission requested three items to assist in the continuing discussion. The first was a document memorializing information presented verbally at the August meeting regarding gift laws in other cities. That document is provided in Attachment B.

The second request was for a law review article or other type of academic paper that

discusses general policy issues surrounding gifts to public officials. Despite a diligent search, we were unable to locate an article that specifically addresses this issue from a global policy perspective. Most of the documents we found focused on the details of the gift laws in specific jurisdictions. Some other documents referred to gifts as one aspect of governmental ethics but did not provide the general background that we understood to be what the Commission wanted.



The third request was for the minutes of the GEO discussions regarding gifts. The approved minutes of the GEO discussion in July and the draft minutes of the August GEO discussion are provided in Attachment C.

In addition to the requested items, we are also providing in Attachment D a table

regarding the values, based on state law, of certain events that City officials may have the opportunity to attend. The events highlighted in blue are deemed to have no value and are not considered gifts. All other events have a value, and accepting admission to those events requires a City official to report the event (once the value of the admission and all other gifts from the same disclosable source reaches $50 in a calendar year) or to pay the difference if the value exceeds an applicable gift limit. The events in the table that are highlighted in green are deemed to have a value other than face value or fair market value. The table was prepared in the course of conversations with Commissioner Jenkins about the types of events that public officials may attend. D. EX PARTE COMMUNICATIONS (Category 2/Part C) 1. Background The third and final component of Category 2 (impartiality and compliance) focuses on ex parte communications, a fairness issue that is not currently part of the GEO. Two City Council motions, both introduced by then-Councilmember Wendy Greuel, have urged the regulation of ex parte communications. See Council File Nos. 07-3294, 07-3294-S1, Attachment E. The City Attorney’s office has also issued a report regarding a proposed ex parte communications policy. See City Attorney Report No. R07-0457, Attachment F.

Ex parte communications are, essentially, off-the-record interactions with decision makers that occur without the knowledge or consent of all involved parties. An ex parte communication leads to an information imbalance; opposing parties and other decision makers may not be privy to the data or perspectives obtained through the communication and may not be aware that the communication occurred. Ex parte communications may be initiated by either the decision maker or a third party. They may be verbal or written; and they may occur in person or by telephone, letter, fax, email, instant messaging, texting, or any other means of conveying a message.

Two of the GEO’s stated purposes are to ensure that “individuals and interest groups in

our society have a fair and equal opportunity to participate in the governmental process” and to ensure that “the governmental process itself promotes fairness and equity for all residents … .” Los Angeles Municipal Code (LAMC) §§ 49.5.1(C)(1)–(2). Another purpose of the GEO is to “help restore public trust in governmental and electoral institutions.” LAMC § 49.5.1(C)(7). When ex parte communications occur, the public’s confidence in the equity of City decisions can be threatened. Communications that occur outside a formal, public process can lead to the perception that City decisions are biased because of a particular person’s special access or influence, rather than objectively based on facts, law, and good public policy.



To foster the GEO’s important equity goals and to promote transparency about City processes, we believe that the GEO should regulate ex parte communications. In analyzing approaches and beginning to develop recommendations, we have identified a number of policy questions that must be addressed. We generally believe that it is appropriate to ban ex parte communications regarding adjudicative matters and to require the disclosure of ex parte communications regarding legislative matters. As discussed more fully below, there are a number of decision points about these approaches that warrant careful analysis. We believe the recommendations would benefit from your input as they are further developed. 2. Adjudicative Matters

Adjudicative matters are those in which decision makers are required to conduct a hearing and make a decision based on the law and the facts in a particular case. There are parties to adjudicative matters, who have a personal stake in the decision that is made. As a result, minimum standards of due process apply, in order to ensure that the parties receive fair hearings. See, e.g., U.S. Const. amend. V; Cal. Const. art. I, §§ 1, 7(a). Courts have said that receiving and considering evidence outside of the hearing process denies the parties a fair hearing. See City Attorney Report No. R07-0457 (Attachment F, p. 2), citing Mathew Zaheri Corp. v. New Motor Vehicle Bd. (1997) 55 Cal.App.4th 1305, 1319. Furthermore, a court can overturn an adjudicative decision when the parties are not afforded a fair trial. See Id., citing Cal. Code Civ. P. § 1094.5(b).

Ex parte communications jeopardize due process in adjudicative matters, because they do

not provide notice and an opportunity for all parties to participate. We believe that protecting due process and helping to ensure that City decisions are procedurally proper is vital to good government. Accordingly, we believe that a ban on adjudicative ex parte communications has great merit and should be added to the GEO. The ban would apply only to substantive communications and not to communications regarding ministerial matters, such as scheduling. Additionally, the ban would not apply to City staff in the decision makers’ agencies, unless the staff are acting as parties (such as when they serve as prosecutors in an enforcement scenario).

As discussed below, there are several outstanding decision points related to a ban on

adjudicative ex parte communications. a. Officials Subject to the Ban There are a variety of ways that adjudicative City decisions are made. Commissions and

boards, such as the Ethics Commission or the Board of Building and Safety Commissioners, can act as adjudicative decision makers. Individuals such as zoning administrators may also adjudicate City decisions. And the City Council (or certain City Council members acting as the Board of Referred Powers) may also sit as an adjudicative body.

A ban on ex parte communications would apply to commissioners and other city board

members, as well as to non-elected individuals. The decision point is whether the ban should also apply to elected City officials. The City Attorney has advised against applying the ban to them. See Attachment F, pp. 4-5. The City Attorney notes that, in addition to the constitutional



right of due process, citizens also have the constitutional right to petition their elected officials. See, e.g., U.S. Const. amend. I; Cal. Const. art. I, § 3(a). Because of these competing and equally compelling interests, the City Attorney does not recommend including elected City officials in the regulations regarding ex parte communications.

This raises the question of whether due process protections should apply in any

adjudicative setting to any decision maker, regardless of whether the person was elected or appointed. Arguably, the process should be the determining factor, rather than the identity of the decision maker. At the same time, however, including elected City officials may be impractical if those elected officials, who have the responsibility of making themselves available to their constituents, see a ban on certain communications with those constituents as problematic. Regardless of whether the GEO establishes a ban on adjudicative ex parte communications for elected City officials, we understand that the City Attorney’s office will continue to caution them against engaging in adjudicative ex parte communications. In addition, elected officials may voluntarily comply with the regulations when they believe is appropriate to do so.

b. Timing of the Ban Another decision point is when the ban on adjudicative ex parte communications should

apply. One school of thought is to apply the ban from the time the decision makers are formally made aware of a particular matter, either because it appears on an agenda or because an application or appeal is filed, until a decision in that matter is made. Another perspective is that the ban should be constant. In other words, an adjudicative decision maker should never be involved in an ex parte communication regarding an adjudicative matter, regardless of whether that matter has been formally presented.

If the ban applies during a finite period of time, decision makers are better able to

comply. Once they have received official notice of the matter, they will know that ex parte communications are prohibited until that matter is resolved. If the ban is constant, the decision makers could be well into a conversation with a third party before discovering that it relates to an adjudicative matter and that they are in violation of the ban.

On the other hand, a ban that applies only during a finite period of time could be easily

manipulated by parties who know that their matters are due to be but have not yet been scheduled. A constant ban would help prevent ex parte communications that might occur the day before an agenda is posted, for example.

c. Handling Communications That Do Occur A third decision point is how to handle ex parte communications that do occur regarding

adjudicative matters. These communications would likely occur in violation of the ban. However, if the ban is not constant, some ex parte communications would be permissible (e.g., those that occur before a matter is placed on an agenda).

When an adjudicative ex parte communication occurs, the process is compromised

because information becomes imbalanced. One remedy for that imbalance is to require the



decision maker to disclose the communication and to afford other parties an opportunity to respond. Balance is restored and due process is protected in that scenario by making all information available to all parties. Another remedy is to disqualify the decision maker who engages in an ex parte communication from participating in the decision on that matter. Balance is restored and due process is protected in that scenario by eliminating from the process the additional information that was obtained during the ex parte communication.

If disclosure is required, several questions would have to be answered, such as what

should be disclosed, when disclosure should be made, and what constitutes an adequate opportunity to respond. Disclosure should probably include a minimum of the date the communication occurred, the persons involved, and the substance of the information that was exchanged. Without a disclosure deadline, parties could arrive at a hearing fully prepared to argue the merits of a case, only to hear a decision maker disclose an ex parte communication and, depending on the response process, have to return to argue a different day. But a fixed disclosure deadline, such as 24 after the communication occurs or 48 hours before a hearing, might not be feasible in all situations. The California Administrative Procedures Act requires decision makers to provide written notice of ex parte communications and gives parties up to 10 days to request an opportunity to respond. Cal. Gov’t Code § 11430.50. Is that an appropriate interruption in an adjudicative process? And what constitutes a suitable opportunity to respond?

Mandatory disqualification can be viewed as a less complicated way of protecting due

process when an adjudicative ex parte communication occurs, but there are also several concerns with that approach. The City Attorney’s office has advised in the past that the disqualification of a decision maker who engages in an ex parte communication is appropriate “not only to avoid evil, but to avoid the appearance of evil, thereby giving the public a greater confidence in the acts of its public officials.” See Attachment F, p. 3, citing 76 Ops. City Atty. 204, 211 (1967). However, the City Attorney also notes that disqualification is a fact-based determination and should be evaluated on a case-by-case basis. Id. If disqualification is not considered on the merits, it could be applied in benign situations in which due process could be easily protected by other means. For example, a decision maker might receive a letter and not realize until after reading it that it relates to an adjudicative matter. Giving the other parties and decision makers a copy of the letter would be a simpler, and perhaps better, means of protecting due process.

Another concern regarding mandatory disqualification is that it could be manipulated by

the parties. For example, a party who knows that a particular decision maker is opposed to the party’s position could intentionally create an ex parte communication with that decision maker (e.g., by sending the letter mentioned above) to ensure that the decision maker would not be able to participate in the decision. In addition, the validity of an adjudicative decision might be particularly fragile if a decision maker participates in the decision despite a mandatory disqualification requirement.

Finally, we note that neither disclosure nor disqualification should eliminate a person’s liability for engaging in an impermissible adjudicative ex parte communication. Disclosure and disqualification would protect the process by restoring informational balance, but they should not negate other penalties that might apply to an individual who violates the ban.



3. Legislative Matters In contrast to adjudicative matters, in which specific parties have specific interests at stake and decisions based on specific facts must be made, legislative matters apply broadly to all similarly situated persons. Legislative matters establish the policies and laws that are applied to the facts in adjudicative decisions. They can also address other non-adjudicative issues, such as the budget or the awarding of contracts.

The City Attorney report states that there is no legal requirement that ex parte communications regarding legislative matters be banned. See Attachment F, p. 5. However, the GEO does create a legal mandate to ensure fair and equitable governmental processes. See LAMC §§ 49.5.1(C)(1), (2). As a general matter, we believe an important component of that mandate would be requiring the disclosure of ex parte communications regarding legislative matters. Although due process does not have the same connotation in a legislative setting as it does in an adjudicative setting, the same public perception of biased governmental processes can occur as a result of ex parte communications regarding legislative matters. The GEO was adopted to, among other things, “help restore public trust in governmental and electoral institutions.” LAMC § 49.5.1(C)(7). To support that mandate, we believe that a disclosure requirement for legislative ex parte communications should be considered. In developing this recommendation, we have identified various decision points, which are discussed below.

a. Officials Subject to the Disclosure Requirement

Commissions, boards, and other City bodies conduct public meetings that have agendas and address legislative matters, and it seems appropriate to require the members of those bodies to disclose the legislative ex parte communications they have regarding matters within their jurisdictions. One decision point is whether the disclosure of legislative ex parte communications should apply to elected City officials. Elected officials certainly engage in policy making and are heavily involved in activities such as creating the City’s budget. However, as noted above in section D.2, citizens have a constitutional right to petition their elected officials; and a requirement that all petitions be disclosed could affect that right.

More practical concerns are also factors. Even simple verbal disclosure of legislative ex parte communications by members of the City Council could add significant time to every meeting. To fulfill public responsibilities, each council member likely meets with numerous persons each week. Additionally, there are 15 members of the City Council, in contrast to the typical five members of City commissions and boards.

b. Timing of the Disclosure Requirement

A second decision point is when the disclosure requirement should apply. Typically, the most effective disclosure is timely disclosure, so requiring disclosure at each meeting seems to be appropriate. The Los Angeles Board of Harbor Commissioners (the Harbor Commission) currently has such a disclosure requirement in place. Each commissioner identifies on the record the ex parte communications in which he engaged, and the disclosures are included in the



meeting minutes. Copies of the four most recent Harbor Commission minutes are provided in Attachment G as an example. If disclosure is required at each meeting, it seems appropriate to focus on the legislative ex parte communications that occurred since the last meeting. That would minimize the length of time that the commissioners and board members would have to keep track of their legislative ex parte communications. If a commissioner or board member misses a meeting, the disclosure could simply be moved to the next meeting that the individual attends.

c. Method and Level of Disclosure

Another decision point is how disclosure should be made. In the adjudicative setting, it seems appropriate to require written disclosure of ex parte communications, but formal written disclosure may not be necessary in a legislative setting. As noted above in section D.3.b, the members of the Harbor Commission are permitted to disclose legislative ex parte communications verbally. To make compliance as easy as possible, it might be appropriate to permit either written or verbal disclosure.

Disclosure should probably be recorded in the meeting minutes, whatever form it takes,

so that anyone who attends the meeting or later reviews it has actual notice of any ex parte communications that occurred. Disclosure could be a routine agenda item at the beginning of each meeting, as it is for the Harbor Commission. See Attachment G. A member who arrives after that agenda item has passed could disclose as soon as it becomes practical to do so. And what about requiring commissioners and board members who did not engage in any ex parte communications to affirmatively state that fact on the record? Such statements could be easily implemented and would provide significant assistance in monitoring compliance with the disclosure requirement.

Finally, the appropriate level of disclosure for legislative ex parte communications should

be decided. In contrast to adjudicative ex parte communications, where due process is at stake, it is probably not necessary to require disclosure of the detailed substance of legislative communications. It may be sufficient to disclose the date of the communication, the persons with whom the member communicated, and the issue or agenda item that was discussed. The disclosure made by the members of the Harbor Commission focuses on general information and does not delve into the substance of the communications. See Attachment G. 4. Other Jurisdictions Regulating the ex parte communications of public officials is not a novel concept. We surveyed 65 jurisdictions, at all three levels of government, that do so. Charts and a table summarizing the survey data are provided in Attachment H. As noted in the first pie chart, most of the surveyed jurisdictions (74 percent) regulate only adjudicative ex parte communications. However, 17 percent regulate legislative ex parte communications, and 9 percent regulate both. Most of the surveyed jurisdictions (68 percent) impose both a ban and a disclosure requirement on ex parte communications. Fourteen percent of the jurisdictions only impose a ban, and 18 percent only require disclosure.



E. COMPLIANCE (Category 3) The final GEO category relates to compliance issues. One of the GEO’s stated purposes is to ensure that it is “vigorously enforced”. LAMC § 49.5.1(C)(8). We believe that most of the GEO’s compliance provisions are effective, but we do recommend a number of improvements, which are discussed below. Pertinent annotated provisions of the GEO are provided in Attachment I. 1. Protection from Retaliation

SEE PAGE 1 OF ATTACHMENT I The GEO currently prohibits City employees from using their City authority to prevent a person who is acting in good faith from reporting a possible violation of a law or regulation to the Ethics Commission or other appropriate agency. LAMC § 49.5.4(A). The GEO also prohibits City employees from using their City authority to retaliate against another City employee who reports a possible violation. LAMC § 49.5.4(B). We recommend clarifying that the provision applies when any violation of a law or regulation is reported to any appropriate governmental entity. Although LAMC § 49.5.4(A) does refer to “any law or regulation”, it goes on to identify a number of specific types of violations, including “gross waste of City funds, gross abuse of authority, a specified and substantial danger to public health or safety due to an act or omission of a City official or employee, use of a City office or position or of City resources for personal gain, or a conflict of interest of a City officer or employee.” This list of specific violations can create the perception that the protection in this provision is limited to reporting those specific types of violations. We do not believe that retaliation protection should be limited to a particular type of violation. City employees should not be permitted to exert official authority to prevent a person from or retaliate against a person for reporting some violations of some laws. Rather, we believe the public trust is best served when the protection of this provision applies universally. As a result, we recommend eliminating from the provision the list of specific violations and referring simply to possible violations of any law or regulation. 2. Administrative Penalties

SEE PAGE 1 OF ATTACHMENT I The Los Angeles City Charter (Charter) requires the Ethics Commission to “conduct investigations of alleged violations of state law, the Charter[,] and City ordinances relating to campaign financing, lobbying and conflicts of interest and governmental ethics.” Charter § 706. When the Commission determines that a violation has occurred, it may require the violator to cease and desist the violation, to file any delinquent statement, or to pay a monetary penalty. Charter § 706(c). Penalties are capped at the greater of $5,000 per violation or three times the amount the person either failed to properly report or unlawfully spent. Charter § 706(c)(3). The GEO currently identifies some of the ways the Ethics Commission can enforce violations of its provisions. These include criminal enforcement, civil court actions, injunctive



relief, and late filing penalties. LAMC §§ 49.5.19, 49.5.20. The GEO does not, however, mention the Commission’s Charter-based authority to impose administrative penalties. We recommend adding a provision to the GEO to clarify that a person who violates its provisions may also be subject to administrative penalties. The implication of a section in the GEO (or any body of law) entitled “Enforcement” is that it identifies all possible repercussions for a failure to comply. We believe it is important to make that provision of the GEO comprehensive by mentioning administrative penalties, particularly in light of the fact that those are the most common means of enforcement that the Commission currently employs. The Municipal Lobbying Ordinance (MLO) contains a provision that identifies the Charter-based penalties, and we believe a similar provision should be added to the GEO. See LAMC § 48.09(E) (“The City Ethics Commission may impose penalties and issue orders for violation of this Article pursuant to its authority under Charter Section 706(c).”). 3. Notice of Employee Violations

SEE PAGES 2-3 OF ATTACHMENT I The GEO applies largely to City employees, and it specifies that employees who violate its provisions are subject to administrative discipline by their appointing authorities. LAMC §§ 49.5.19(F), 49.5.19(G)(3). We recommend that the Ethics Commission be required to notify an agency when one of its employees is found to be in violation of the GEO. This will help City agencies comply with their disciplinary responsibilities. 4. Late Filing Penalties

SEE PAGE 3 OF ATTACHMENT I As noted above in section E.2, the GEO imposes penalties when reports and statements required by the GEO are not timely filed. LAMC § 49.5.20. The penalty is $25 per day, until the delinquent statement or report is filed, and it applies regardless of other penalties that may be imposed. Id. The penalty may be waived up to 30 days after the filing deadline if the Commission determines that the late filing was not willful and that enforcing the penalty would not further the purposes of the GEO. Id. We make two recommendations regarding late filing penalties. The first is to change the 30-day limit on waivers to mirror the state’s. The GEO’s 30 days run from the date of the filing deadline, but the state’s 30 days do not begin to run until the date the filing officer sends written notice of the filing requirement. Cal. Gov’t Code § 91013(a). The main filing requirement imposed by the GEO is the annual statement of economic interests (SEI). Approximately 6,000 City officials are required to file an SEI, and it typically takes the staff more than 30 days to identify everyone who has failed to timely file. Our communications with City officials who have failed to file can be the first time they understand their filing obligations. Under current law, they are ineligible for a penalty waiver for late City forms if that communication occurs more than 30 days after the filing deadline. We believe it is more equitable to permit waivers up to 30 days after specific notice of the filing requirement has been provided, so that the filer has a real opportunity to remedy the delinquency and request a penalty waiver.



Our second recommendation regarding late filing penalties is to clarify that late filers are liable to the Ethics Commission for their penalties. The GEO is currently vague on this front and states that late filers are liable to the City. LAMC § 49.5.20. In contrast, both the MLO and the Campaign Finance Ordinance (CFO) specify that late filers are liable to the Ethics Commission and that the Ethics Commission enforces the penalties that accrue as a result of late filings. See LAMC §§ 48.09(F), 49.7.29. We believe the GEO should be clarified and made consistent with the MLO and the CFO regarding this liability. 5. Notice of Money Laundering

SEE PAGE 4 OF ATTACHMENT I The GEO prohibits a person from contracting with the City for four years if the person is found by the Ethics Commission to have laundered campaign funds (or stipulates to having laundered campaign funds) in violation of Charter § 470(k). LAMC §§ 49.5.21(A)–(C). The prohibition applies to contracts valued at $1,000 or more. Id. Persons liable for laundering City campaign funds are also ineligible for discretionary fee waivers valued at more than $1,000. LAMC § 49.5.21(D). These restrictions do not apply to the proprietary departments (those that, pursuant to the Charter, control their own funds), including Los Angeles World Airports, the Los Angeles City Employees Retirement System, the Port of Los Angeles, the Department of Fire and Police Pensions, the Library Department, the Department of Recreation and Parks, and the Department of Water and Power. LAMC § 49.5.21(A)(2). The Ethics Commission is currently required to give to general managers a copy of each enforcement decision relating to money laundering, but this notice requirement does not apply to the proprietary departments. LAMC § 49.5.21(E)(1). We recommend that copies of money-laundering enforcement decisions be required for every agency, including the proprietaries. Because the proprietary departments govern their own funds, the City Attorney has advised that the limitations in this provision of the GEO cannot be imposed upon them. However, the proprietary departments may voluntarily limit contracts with persons who have engaged in unlawful activity. We believe it is important for all City agencies to be aware of persons who have violated the Charter by laundering money in City campaigns—one of the most egregious campaign finance offenses. Therefore, we recommend that the Ethics Commission be required to provide notice to all agencies, regardless of whether the contracting and fee restrictions apply to them. 6. Recordkeeping One of the recommendations made with regard to gifts was a four-year recordkeeping requirement for elected officials, commissioners, and general managers who accept tickets or passes to recreational or entertainment events in exchange for performing ceremonial functions at those events. See Attachment A (p. 11 of its Attachment 4); recommendation 1(f) in section B, above. The recommendation was made in conjunction with a recommendation that those City officials be required to disclose the tickets on the annual financial disclosure form that the GEO requires, in addition to California’s Form 700, as part of the officials’ SEIs.



We now suggest that elected officials, commissioners, and general managers be required to maintain records that substantiate all reporting done through the City’s financial disclosure form. We believe the requirement should last four years from the date of the filing to which the records relate, so that the requirement corresponds with the GEO’s statute of limitations. This recommendation will make recordkeeping consistent for all disclosure related to the City’s financial disclosure form. It will also make recordkeeping consistent between the GEO and the MLO, which currently requires detailed recordkeeping for four years. See LAMC § 48.05. These requirements help filers confirm the validity of their filings, should the filings be questioned during the statute of limitations period. They also help limit the resources that are required for staff to determine whether a filing is accurate or not. We believe the burden for authenticating a filing should rest with the filer, and we suggest a recordkeeping requirement to reflect that. F. NEXT STEPS This memo represents the last of the issues related to this comprehensive review of the GEO. Once there is consensus regarding all of the GEO recommendations, we will draft language to implement the recommendations. The language will be presented at a future meeting, at which time the Commission will be asked to formally vote to forward the recommendations to the City Council for adoption.

I look forward to discussing this item with you at the meeting and would be happy to answer questions at any time. Attachments: A GEO memo dated 8/3/10 B Local Government Gift Limits C Minutes of GEO discussions 7/13/10 and 8/10/10 D Special Valuations for Certain Events E City Council File Nos. 07-3294 and 07-3294-S1 F City Attorney Report No. R07-0457 G Minutes of Los Angeles Board of Harbor Commissioners meetings 3/18/10, 4/1/10, 4/15/10, and 5/6/10 H Ex Parte Communications Survey I Governmental Ethics Ordinance Excerpts: Compliance

Attachment A (to memo dated September 7, 2010)

MEMORANDUM August 3, 2010 To: Members of the City Ethics Commission From: Heather Holt, Director of Policy and Legislation Re: AGENDA ITEM 13 Governmental Ethics Ordinance Review: Impartiality and Fairness, Part B (continued) A. BACKGROUND

Last month, as part of our comprehensive review of the Governmental Ethics Ordinance (GEO), we began a discussion regarding the provisions that regulate gifts to City officials. The staff recommended the following improvements to those provisions:

1. Use the state’s definitions for gifts and travel expenses. 2. Prohibit City officials from soliciting or accepting gifts from persons they know or

should know are restricted sources. 3. Prohibit restricted sources from giving gifts to elected officials or to other City

officials in agencies with which they are actively engaged. 4. Exempt from the gift ban routine and nominal office courtesies provided at a

restricted source’s place of business. 5. Modify the list of restricted sources. 6. Extend to lobbyist employers the same gift ban that currently applies to lobbyists

and lobbying firms. 7. Require elected officials, general managers, and commissioners to disclose tickets

given to them for events at which they perform ceremonial functions and to maintain records substantiating the ceremonial functions.

8. Eliminate the exception for tickets received in exchange for performing ceremonial functions when the tickets are provided by restricted sources.

In response to a commission request made at the June meeting, the staff also provided draft language that would create a limited exception to the prohibition on misusing a City position for soliciting philanthropic donations under specific conditions.



_________


Los Angeles CA 90012 (213) 978-1960



(213) 978-1999 (800) 824-4825


Helen Zukin

President



Valerie Vanaman

City Ethics Commission GEO Review: Impartiality, Part B (cont’d)

August 3, 2010 Page 2 of 6

During last month’s discussion, the Commission determined that it would be helpful to have the state and City gift laws presented in a chart format. In response to that request, three separate charts are provided with this memo and explained below. The memo that was presented in July gives more detail regarding each of the recommendations and is provided again as Attachment 4 to this memo. These materials are designed to help you reach consensus regarding the recommendations made last month, pending a vote to officially approve language to implement the desired changes to the GEO. B. CHARTS 1. Attachment 1: Gift Limits

Attachment 1 is a diagram that explains the current and proposed gift limits for City officials. The state limit of $420 per year per source is noted in blue at the top of the page, because it applies regardless of any additional City restrictions. The current City limits are identified in red, and the City limits that were recommended last month (notably a prohibition on all gifts, other than office courtesies, from all restricted sources) are identified in green. See Attachment 4, pp. 7-11.

2. Attachment 2: Gift Definitions Attachment 2 provides a side-by-side comparison of the state and City definitions of

“gift”. The state’s definition and exceptions are identified in blue, and the City’s current definition and exceptions are identified in green. Just as the state gift limit applies regardless of any additional City limits, the state definition also applies to City officials for state law purposes (such as disclosure and disqualification), regardless of whether the City defines the term differently for its own purposes.

The state and City definitions of “gift” are essentially the same. See Attachment 2, p. 1.

The City’s definition for “payment” is identical to the state’s, because the GEO does not separately define it. Id.; see also Los Angeles Municipal Code (LAMC) § 49.5.2 (terms used but not defined in the GEO have the meanings specified in the Political Reform Act of 1974 and the related regulations).

As noted last month, we recommend that the state’s definition of “gift” be used instead of

maintaining a separate City definition. Doing so will eliminate the confusion that can result from inconsistencies in the laws and, as noted above, from the fact that state law applies regardless of whether the City has its own regulations. It will also help ensure that the GEO is never unintentionally out of sync with state law and is more clearly tied to the state’s extensive body of advice, opinions, and case law. See Attachment 4, pp. 2-7.



If the state’s definition is adopted for GEO purposes, three exceptions to the City’s current definition will be eliminated (see Attachment 4, pp. 3-4):

a. Informational material that does not exceed $250. Exception A (Attachment 2,

p. 1). Under state law, informational material is not limited in value. We believe that the state’s definition of “informational material” is narrow enough to avoid possible misuse and that the GEO’s limit is unnecessarily low.

b. Hospitality provided in an individual’s home when the individual is not present.

Exception G (Attachment 2, p. 3). Under state law, the donor must be present and other criteria must also be met. This more lenient provision of the GEO creates confusion, and we do not believe it is enforceable.

c. Gifts of $100 or less given in connection with non-recurring ceremonial events.

Exception H (Attachment 2, p. 3). There is no corresponding exception in state law. This more lenient provision of the GEO creates confusion, and we do not believe it is enforceable.

Exceptions B through F in Attachment 2 are essentially the same in both state and City

law, except that the state provides an additional layer to Exception B for gifts that are donated to government agencies. Exceptions I through X exist only in state law and would be new to the GEO. See Attachment 4, pp. 4-6. The four unlimited gifts that are identified on the last page of Attachment 2 also exist only in state law and would be additions to City law. Like an exception, an unlimited gift of any value may be given to City officials. In contrast to an exception, however, an unlimited gift can trigger disclosure and disqualification requirements. See Attachment 4, pp. 6-7.

3. Attachment 3: Restricted Source Exemptions Attachment 3 highlights the GEO’s limit on gifts from restricted sources. As noted last

month, lobbyists and lobbying firms are prohibited from giving gifts of any value to City officials. All other restricted sources are prohibited from giving gifts valued at more than $100 per year per official. See Attachment 4, pp. 7-8; see also LAMC §§ 49.5.10(A)(3)–(4). We recommend that all restricted sources be treated the same for gift purposes and prohibited from giving gifts of any value to City officials. See Attachment 1; see also Attachment 4, pp. 7-9.

There are currently some exemptions to the City’s restricted source gift limits, to which

the gift ban and the $100 limit do not apply. In other words, restricted sources (including lobbyists and lobbying firms) may give City officials the exempt items as long as their cumulative value does not exceed the state limit of $420 per year. The exempt items are the following:

a. Items that are turned over to the City within 30 days; b. Meals provided at an event at which the City official speaks, participates in a

seminar, or provides a similar service;



c. Travel and meals paid by a government agency; d. Items provided by a union that represents the City official; e. Food and beverages provided by any union, as long as the City official is a

member of a City union; f. Travel paid by a campaign committee; g. Travel paid by a nonprofit organization of which the City official is a member; h. Travel paid by an organization of which an agency or the City official is a

member acting in an official City capacity; and i. Gifts to non-elected City officials for legal expenses related to an ethics

enforcement action.

LAMC § 49.5.10(A)(7). Attachment 3 notes that, if the state’s definition of “gift” is adopted for GEO purposes, items a, b, c, f, g, and h would become unlimited, either as an exception to the general definition or as a gift that is not subject to the limits (but nevertheless remains subject to the applicable reporting and recusal requirements; see section B.2, above). Items d, e, and i would continue to be subject to the state’s $420 gift limit and, because they would no longer be exempt, would become subject to any City gift limit that applies to restricted sources. C. ADDITIONAL CONSIDERATIONS 1. Travel Expenses Travel expenses are a specific type of gift that the GEO currently treats separately. LAMC § 49.5.10(B). One nuance to note is that we recommend using the state’s definitions for both gifts and travel expenses. See Attachment 4, p. 3. Using the state’s definitions would mean that restricted sources would be able to provide travel expenses for City officials who travel within the United States to give a speech that is reasonably related to a legislative or governmental purpose or to an issue of state, national, or international policy. Those travel expenses may include transportation, lodging, and subsistence and must be limited to the day before, the day of, and the day after the speech. See Attachment 2, p. 6 (Unlimited Gift 1). Currently, restricted sources are not permitted to provide travel expenses for these types of speeches. LAMC §§ 49.5.10(B)(2), 49.5.10(B)(5). Using the state’s definitions would also permit restricted sources that are nonprofit organizations to pay for domestic or international transportation and lodging that are reasonably related to a legislative or governmental purpose or an issue of state, national, or international public policy. See Attachment 2, p. 6 (Unlimited Gift 1). Currently, restricted sources that are nonprofit organizations may pay for that type of travel only if the recipient City official or a City agency is a member of the organization. LAMC §§ 49.5.10(B)(2), 49.5.10(B)(6).

The GEO prohibits restricted sources from providing these gifts of travel to guard against the actual or apparent corruption that could result when a person who has active business with the City donates travel to a City official. This is a legitimate consideration. However, we



believe the state’s definition is sufficient to address that concern, because of the reporting and recusal requirements that apply to these types of gifts.

Travel expenses related to a domestic speech that is given for governmental purposes and

travel expenses paid by a nonprofit organization for governmental purposes are not exceptions to the state’s definition of “gift”. They are, instead, unlimited gifts that remain subject to the reporting and recusal requirements that apply to gifts. See section B.2, above; see also Attachment 4, pp. 6-7. Travel expenses cumulatively valued at $50 or more in a calendar year from a single source must be reported on the recipient City official’s Form 700. Cal. Gov’t Code § 87207(a)(1). And the City official would be disqualified during the reporting period from acting on matters that affect the donor if the donor gives travel expenses that exceed an applicable gift limit. Travel expenses paid by a non-restricted source would require recusal once they exceed the state’s annual gift limit of $420. Cal. Gov’t Code §§ 87100, 87103(e). Similarly, travel expenses paid by a restricted source would require recusal if they exceed the City’s limit on gifts from restricted sources. LAMC § 49.5.10.

We believe that any real or perceived corruption that might result from a restricted source

paying the travel expenses of a City official is adequately curbed by these disclosure and disqualification requirements. Regular reporting informs the public of the financial connection between a source and a City official. More importantly, the possibility of undue influence or improper favor is eliminated when recusal is required and the City official cannot act on a matter involving the person who donated the travel expenses. The recommended ban on gifts from restricted sources would ensure that recusal would be required whenever a restricted source might provide travel for a City official. 2. Ceremonial Tickets On August 12, 2010, the Fair Political Practices Commission (FPPC) will discuss the possibility of amending the regulation regarding admission tickets and passes that are given to City officials who perform ceremonial functions at entertainment or recreational events. See 2 Cal. Code Regs. § 18944.1. As noted last month, these tickets are exceptions to the state’s definition of “gift” and, as a result, the state gift limit and reporting requirements do not apply. See Attachment 4, pp. 10-11; see also Attachment 2, p. 5 (Exception R).

The FPPC staff is proposing that a public official who accepts a ticket or pass in exchange for a ceremonial function be required to disclose that fact on a form created by the FPPC. The form would have to be posted online within 30 days. The disclosure would include the name of the recipient, a description of the event, the date of the event, the face value of the ticket, and a description of the public purpose for which the ticket was provided. The August discussion will be simply that. The FPPC staff plans to present formal recommendations to the board for action on September 9.



3. Public Comment Following the July meeting, we received written public comment regarding the gift ban that currently applies to lobbyists and lobbying firms. A copy of the letter is provided in Attachment 5. 4. Philanthropic Solicitations Finally, one issue that is unrelated to gifts remains outstanding. In June, we recommended a number of improvements to the prohibition against misusing a City position to create an unwarranted private advantage or disadvantage. One of the recommendations was that solicitations for philanthrophic donations be specifically exempt from the general prohibition, to make it clear that such activity does not constitute a misuse of a City position. Detailed exemption language was requested in June and provided in July. See Attachment 4, pp. 11-12. Last month’s discussion seemed to favor a more generic exemption, but a formal decision has not yet been made. D. NEXT STEPS The next set of staff recommendations will continue to address the category of impartiality and fairness. It will focus on equity issues that are not currently part of the GEO, such as ex parte communications. We also plan to present recommendations regarding the third review category of compliance.

I look forward to discussing this item with you at the meeting and would be happy to answer questions at any time.

Attachment 1 (to memo dated August 3, 2010)

Los Angeles City Ethics Commission

Gift Limits for City Officials

Current State Limit: $420

Cumulative Gifts cumulatively valued at $50+ must be reported. Cal. Gov’t Code § 87207 Per calendar year Limits apply regardless of recipient’s knowledge or intent. Cal. Gov’t Code § 89503 Per source* 2 Cal. Code Regs. § 18940.2 * Any source for elected officials, city treasurer, city administrative officer, and officials who manage public investments. For all other City officials, any source that must be disclosed pursuant to a conflict of interests code or the Political Reform Act.

CURRENT City Limits

$0 Gifts intended to influence an official City act.

$0 Gifts that City officials knowingly solicit from restricted sources.*

$0 Gifts accepted from or offered/made by lobbyists and lobbying firms, regardless of donor’s or recipient’s knowledge or intent.

$100 Gifts cumulatively accepted from or offered/made by any other restricted source* in a calendar year, regardless of donor’s or recipient’s knowledge or intent.

*Certain lobbying entities, contractors, bidders, persons with proceedings pending, and persons who attempted to

influence the recipient.

Los Angeles Municipal Code § 49.5.10.

PROPOSED City Limits

$0 Gifts intended to influence an official City act.

$0 Gifts that City officials knowingly solicit or accept from restricted sources.*

$0 Gifts offered/made by any restricted source*, regardless of donor’s knowledge or intent.

Except for routine and nominal office courtesies provided at source’s place of business.

*Certain lobbying entities, contractors, bidders, persons

with matters pending, and intermediaries.

August 2010

Definition of “Gift” 1 of 6 City Ethics Commission (August 2010)


State and City Definitions of “Gift” The staff recommends that the state’s definition be used for both state law purposes and City law purposes.

STATE Political Reform Act

CITY Governmental Ethics Ordinance

Definition of “Gift”

“[A]ny payment that confers a personal benefit on the recipient, to the extent that consideration of equal or greater value is not received and includes a rebate or discount in the price of anything of value unless the rebate or discount is made in the regular course of business to members of the public without regard to official status. Any person, other than a defendant in a criminal action, who claims that a payment is not a gift by reason of receipt of consideration has the burden of proving that the consideration received is of equal or greater value.”

Cal. Gov’t Code § 82028(a)

“[A]ny payment to the extent that consideration of equal or greater value is not received and includes a rebate of discount in the price of anything of value unless the rebate or discount is made in the regular course of business to members of the public without regard to official status. Any person, other than a defendant in a criminal action, who claims that a payment is not a gift by reason of receipt of consideration has the burden of proving that the consideration received is of equal or greater value.”

LAMC § 49.5.2

Definition of “Payment”

“[A] payment, distribution, transfer, loan, advance, deposit, gift or other rendering of money, property, services or anything else of value, whether tangible or intangible.”

Cal. Gov’t Code § 82044

“[A] payment, distribution, transfer, loan, advance, deposit, gift or other rendering of money, property, services or anything else of value, whether tangible or intangible.”

Cal. Gov’t Code § 82044 (per LAMC § 49.5.2)

Exceptions

(Payments that are not gifts.)

A. Informational material [any item that serves primarily to convey information and is provided to assist the recipient in performing official duties] such as books, reports, pamphlets, calendars, periodicals, informational conferences, seminars, on-site demonstrations, tours, and inspections. The exception does not apply to payments for travel and reimbursement of expenses.

Cal. Gov’t Code § 82028(b)(1) 2 Cal. Code Regs. § 18942(a)(1)

2 Cal. Code Regs. § 18942.1

A. Informational material such as books, reports, pamphlets, calendars, periodicals, seminars, or informational conferences that is exclusively for official use and valued at less than $250** (or, if received from a government agency, unlimited in value). The exception does not apply to payments for travel and reimbursement of expenses.

LAMC § 49.5.2




Exceptions continued

B. Gifts that are not used and, within 30 days of receipt, are:

i. Returned to the donor (or the recipient reimburses the donor for the gift);

ii. Donated to a nonprofit 501(c)(3) entity without being claimed as a charitable contribution for tax purposes; or

iii. Donated to a local, state, or federal government agency without being claimed as a deduction for tax purposes.


2 Cal. Code Regs. § 18943

B. Gifts that are not used and, within 30 days of receipt, are:

i. Returned to the donor; or ii. Delivered to a charitable organization without being

claimed as a charitable contribution for tax purposes. LAMC § 49.5.2

C. Gifts from an individual’s immediate family members, including spouse, registered domestic partner, child, parent, parent-in-law, grandparent, grandchild, sibling, sibling-in-law, nephew, niece, aunt, uncle, first cousin, and the spouse of any of those persons, unless the donor is acting as an agent for a person who is not listed here. Personal gifts received in a bona fide dating relationship are also exempt.


2 Cal. Code Regs. § 18944 FPPC Advice I-08-085

C. Gifts from an individual’s spouse, registered domestic partner, child, parent, grandparent, grandchild, brother, sister, parent-in-law, sibling-in-law, partner in a bona fide dating relationship, nephew, niece, aunt, uncle, first cousin, or the spouse of any of those persons, unless the donor is acting as an agent for a person who is not listed here.

LAMC § 49.5.2 2 Cal. Code Regs. § 18229

D. Campaign contributions that must be reported under the Political Reform Act.


D. Campaign contributions that must be reported under the Political Reform Act.

LAMC § 49.5.2

E. A devise or inheritance. Cal. Gov’t Code § 82028(b)(5)

2 Cal. Code Regs. § 18942(a)(5)

E. A devise or inheritance. LAMC § 49.5.2





F. A personalized plaque or trophy valued at less than $250. Cal. Gov’t Code § 82028(b)(6)

2 Cal. Code Regs. § 18942(a)(6)

F. A personalized plaque or trophy valued at less than $250. LAMC § 49.5.2

G. Hospitality (including food, beverages, and occasional lodging) provided in the donor’s home when the donor is present, unless another person pays part of the costs or the donor deducts the hospitality as a business expense.

2 Cal. Code Regs. § 18942(a)(7)

G. Gifts of food, beverages, and occasional lodging provided in an individual’s home.**

LAMC § 49.5.2

H. N/a. H. Gifts valued at no more than $100 from an individual to a City official or to a member of the official’s immediate family in connection with a non-recurring ceremonial occasion.**

LAMC § 49.5.2

I. Gifts from an individual with whom the recipient exchanges gifts of substantially proportionate value on holidays, birthdays, and similar occasions.

2 Cal. Code Regs. § 18942(a)(8)

I. N/a.

J. Leave credits (including vacation, sick leave, and compensatory time off but not including cash) that are donated under a catastrophic or emergency leave program that is established by the recipient’s employer and available to all employees in the same job classification or position.

2 Cal. Code Regs. § 18942(a)(9)

J. N/a.

K. Payments received through a government program or a charitable 501(c)(3) organization’s program that is designed to provide disaster relief, food, shelters, or similar assistance to qualified recipients if the assistance is available to the general public.

2 Cal. Code Regs. § 18942(a)(10)

K. N/a.





L. Admission, refreshments, and similar non-cash, nominal benefits provided for an event at which the recipient gives a speech, participates in a panel or seminar, or provides a similar service.

2 Cal. Code Regs. § 18942(a)(11)

L. N/a.

M. Transportation and necessary lodging and subsistence provided by a government entity for an official (excluding an elected official, the city treasurer, the city administrative officer, and an official who manages public investments) who makes a speech for official agency business in the regular course of duties. “Necessary” means the day before, the day of, and the day after the speech.

2 Cal. Code Regs. § 18942(a)(11) 2 Cal. Code Regs. § 18950.3(b)

M. N/a.

N. Travel paid with campaign funds or contributions. Cal. Gov’t Code § 89506(d)(1)

Cal. Gov’t Code § 89513(a) 2 Cal. Code Regs. § 18950.1(c)

N. N/a.

O. Travel provided by the recipient’s employing agency. Cal. Gov’t Code § 89506(d)(2) 2 Cal. Code Regs. § 18950.1(d)

O. N/a.

P. Travel that is reasonably necessary for a bona fide business, trade, or profession and qualifies as a business expense for income tax purposes (unless the primary activity of the business is making speeches).

Cal. Gov’t Code § 89506(d)(3) 2 Cal. Code Regs. § 18950.1(e)

P. N/a.

Q. Travel provided to an elected official or candidate in direct connection with campaign activities, including attendance at political fundraisers.


Q. N/a.





R. A ticket or pass for admission to an entertainment event in either of the following scenarios:

i. The recipient performs a ceremonial role or function on behalf of an agency; or

ii. The ticket or pass is provided by the recipient’s agency in accordance with specific procedures and is treated as income.


R. N/a.

S. A payment that creates a personal benefit for an official if the payment is made to and controlled by a government agency and the agency uses the payment for official agency business in accordance with specific procedures.


S. N/a.

T. A payment from an agency to an official in the agency if it is provided out of the agency’s assets and is a lawful expenditure of public money.


T. N/a.

U. An item that is awarded in an employee raffle and was obtained with agency funds (and is a lawful expenditure of public money) or from an agency employee who is not acting as an intermediary for another donor.

2 Cal. Code Regs. § 18944.4(b)

U. N/a.

V. An item that is received during an employee gift exchange from another agency employee and is not substantially disproportionate in value from the other gifts.

2 Cal. Code Regs. § 18944.4(c)

V. N/a.

W. A prize or award that is received in a bona fide competition not related to the recipient’s status as an official or candidate and is reported as income.


W. N/a.





X. Behested payments that are made for principally legislative, governmental, or charitable purposes (if cumulatively valued at $5,000 per calendar year per source, the payments must be reported).

Cal. Gov’t Code § 82015(b)(2)(B)(iii)

X. N/a.

Unlimited Gifts

(May exceed $420 per year but remain subject to the disclosure and disqualification requirements.)

1. Transportation and lodging that are reasonably related to a legislative or governmental purpose or to an issue of state, national, or international public policy and is either of the following:

i. Connected to a speech made by the recipient, within the United States, and limited to the day before, the day of, and the day after the speech; or

ii. Provided by a government (domestic or foreign), an educational institution, a 501(c)(3) organization, or certain persons domiciled outside the United States.

Cal. Gov’t Code § 89506(a) 2 Cal. Code Regs. § 18942(b)(1) 2 Cal. Code Regs. § 18950.1(a) 2 Cal. Code Regs. § 18950.1(b)

1. N/a.

2. Wedding gifts. Cal. Gov’t Code § 89503(e)(2)

2 Cal. Code Regs. § 18942(b)(2) 2 Cal. Code Regs. § 18946.3

2. N/a.

3. A ticket or pass for admission or access to facilities, goods, services, or other benefits that is not used and is not given to another person.


3. N/a.

4. A ticket or pass for admission to a fundraiser for a campaign committee or candidate that is provided by the committee holding the fundraiser and is used only by the recipient.


4. N/a.

** City exceptions A, G, and H are not included among the state exceptions.

Exemptions: Restricted Source Gift Limit LAMC § 49.5.10(A)(7) currently exempts certain gifts from the City’s restricted source* gift limits, which means restricted sources can give those items up to the state’s cumulative annual limit of $420. If the state’s definition of “gift” is adopted as recommended, restricted sources would be able to give unlimited amounts of some of these items. Other items, because they are not exempt from the state’s definition of or limit on gifts, would continue to be subject to the $420 limit.

Would Become Unlimited Would Remain Subject to $420 Limit

A. Items that are turned over to the City within 30 days of receipt. Unlimited under Exception B (Attachment 2, page 2) if

the item is not claimed as a charitable contribution for tax purposes.

B. Meals provided at an event at which the recipient speaks, participates in a seminar, or provides a similar service.

Unlimited under Exception L (Attachment 2, page 4).

C. Travel expenses paid by a campaign committee. Unlimited under Exception N (Attachment 2, page 4).

D. Travel expenses and meals paid for by a local, state, federal, or foreign government.

Unlimited under the following: • Exception M (Attachment 2, page 4) if the expenses

are necessary because the recipient is making a speech for official agency business; the expenses are limited to the day before, the day of, and the day after the speech; and the recipient is not an elected official, the city treasurer, the city administrative officer, or an official who manages public investments.

• Exception O (Attachment 2, page 4) if the paying government is the recipient’s employing agency.

• Unlimited Gift 1 (Attachment 2, page 6) if the travel is reasonably related to a legislative or governmental purpose or to an issue of state, national, or international public policy.

E. Travel expenses paid by a nonprofit organization of which the recipient is a member.

Unlimited under Unlimited Gift 1 (Attachment 2, page 6), if the travel is reasonably related to a legislative or governmental purpose or to an issue of state, national, or international public policy.

F. Travel expenses paid by an organization of which a City agency or the recipient is a member acting in an official City capacity.

Unlimited under Unlimited Gift 1 (Attachment 2, page 6), if the organization is a 501(c)(3) organization and the travel is reasonably related to a legislative or governmental purpose or to an issue of state, national, or international public policy.

A. Items provided by a union that represents the recipient.

B. Food and beverages provided by any union, as long as the recipient is a member of a City union.

C. Gifts to non-elected City officials for legal expenses related to an enforcement action brought under City or state ethics laws.

* A “restricted source” is a person who has active business with the City. It is recommended that the term be updated to include certain lobbying entities, contractors, bidders, persons with pending City matters, and intermediaries for those sources.

Los Angeles City Ethics Commission August 2010

These items would also become subject to the City’s limit on gifts from restricted sources.* Currently, gifts are banned from lobbyists and lobbying firms and limited to $100 per year for all other restricted sources. The recommendation is that gifts from all restricted sources be banned.

MEMORANDUM July 7, 2010 To: Members of the City Ethics Commission From: Heather Holt, Director of Policy and Legislation Re: AGENDA ITEM 9 Governmental Ethics Ordinance Review: Impartiality and Fairness, Part B A. BACKGROUND In January of this year, the staff began a comprehensive review of the Governmental Ethics Ordinance (GEO); and, over the past several months, we have been discussing specific recommendations for improving the ordinance. We divided the GEO into three categories, based on its underlying public policy goals: transparency; impartiality and fairness; and compliance. In April, the Commission reached consensus regarding the staff recommendations for transparency and public disclosure.

In June, the Commission began to discuss the second category of impartiality and fairness. Because of the fullness and complexity of the issues in that category, they have been spread out over several meetings. In June, the Commission reached consensus regarding the first set of staff recommendations in that category, regarding confidential information, misuse of position, and non-City employment.

This memo continues the discussion of impartiality and fairness by making recommendations regarding gifts to City officials and by revisiting an issue carried over from the June meeting regarding soliciting donations for philanthropic purposes. At the next meeting, we plan to address fairness and impartiality concepts that are not currently part of the GEO but may warrant inclusion, such as ex parte communications. We also plan to address the third category of compliance. As we have been doing through the course of this review, we suggest that you reach consensus on the recommendations made here, pending a vote to officially approve language to implement the desired changes to the GEO.



_________


Los Angeles CA 90012 (213) 978-1960



(213) 978-1999 (800) 824-4825


Helen Zukin

President



Valerie Vanaman

City Ethics Commission GEO Review: Impartiality, Part B

July 7, 2010 Page 2 of 13

B. INTRODUCTION As noted last month, four of the eight stated reasons for the GEO’s adoption reflect the importance of fair and impartial government. The GEO is designed, among other things, “[t]o assure that individuals and interest groups in our society have a fair and equal opportunity to participate in the governmental process.” Los Angeles Municipal Code (LAMC) § 49.5.1(C)(1). Impartiality is critical to good government and helping to “restore public trust in governmental and electoral institutions.” LAMC § 49.5.1(C)(7). Government decisions should be made in the best interests of the public—not based on bias for or against a particular citizen or based on a public servant’s own, personal interests. The state also acknowledges this by declaring in its Political Reform Act that “government should serve the needs and respond to the wishes of all citizens equally …” and that “[p]ublic officials, whether elected or appointed, should perform their duties in an impartial manner ….” Cal. Gov’t Code §§ 81001(a)–(b).

To foster the important goal of fair and impartial government, we recommend a number of improvements to the GEO’s regulations regarding gifts to City officials. This memo explains the suggested improvements, which are based on our experiences in administering and enforcing the law, the experiences that others have had in complying with the law, and changes in state law since the GEO was adopted. For reference purposes, the following documents are attached:

Attachment A: Pertinent sections of the GEO, annotated with key conceptual changes. Attachment B: Pertinent sections of the Political Reform Act. Attachment C: Pertinent sections of the Political Reform Act regulations.

C. GIFTS

SEE PAGE 1 OF ATTACHMENT A Gifts are a type of private benefit that can influence or appear to influence public officials. To help ensure that gifts to public servants are not and do not appear to be a factor in governmental decisions, the state has adopted a complex set of regulations regarding gifts to government officials. See Attachments B and C. In general, government officials may not accept gifts totaling more than $420 per calendar year from any given source (the amount is adjusted biennially to accommodate changes in the Consumer Price Index). Cal. Gov’t Code §§ 89503(a), 89503(c), 89503(f); 2 Cal. Code Regs. § 18940.2(a). Gifts include payments for travel expenses but do not include a number of other things that may be bestowed on government officials, such as informational materials, gifts from family members, and meals provided at events at which a public official speaks. See, e.g., Cal. Gov’t Code §§ 82028, 89506; 2 Cal. Code Regs. § 18942. The GEO also regulates gifts to City officials. It prohibits gifts from lobbyists and lobbying firms to City officials who are employed by agencies that the lobbyists or lobbying firms must register to lobby. LAMC § 49.5.10(A)(4). It limits gifts from persons who are



engaged in specified activity with the City to a cumulative value of $100 per calendar year. LAMC § 49.5.10(A)(3). And it creates its own set of exclusions. See LAMC §§ 49.5.2, 49.5.10(A)(7). When the GEO was first adopted in 1991, the state’s gift rules did not address a number of the issues it now does. Changes at the state and City levels since 1991 have given rise to questions about the interplay between the two sets of laws. To promote clarity for those who must comply with the laws, as well as for those who must administer them, we recommend the following amendments to City law. 1. Use the State’s Definitions First, we recommend eliminating the GEO’s definitions for “gift” and “travel expenses” and deferring to state law. Much in the GEO’s definitions mirrors the state’s, but the differences between them can create complexity and make it challenging to understand how the two laws work together in a particular scenario. Some confusion results because, as mentioned above, many of the state’s regulations did not exist when the GEO was adopted. Additional confusion results because City officials are subject to the state’s laws regardless of whether we have our own, and the provisions in the GEO that are more lenient than state law cannot substitute for state law. See Cal. Gov’t Code § 81013 (local agencies may adopt additional requirements if they do not prevent public officials from complying with the PRA). Using the state’s gift definitions will not only alleviate confusion, it will also more clearly tie the application of City law to the extensive body of state advice, opinions, and case law, which help guide understanding in this area and which we have long used for determining things such as the value of gifts.

By using the state’s definitions, we would be forfeiting three components of the GEO’s

gift definition. See LAMC § 49.5.2. However, two of them are more lenient than state law, and we believe state law sufficiently limits the other: a. A $250 limit on informational materials. The state does not place a limit on the

value of informational materials that may be given to government officials, but the GEO caps them at $250. Cal. Gov’t Code § 82028(B)(1), LAMC § 49.5.2. We believe that the state’s definition of “informational materials” is narrow enough to avoid possible misuse of the exception. The term includes only items that serve “primarily to convey information and [are] provided for the purpose of assisting the recipient in the performance of … official duties ….” 2 Cal. Code Regs. § 18942.1. It covers things such as books, periodicals, videotapes, on-site demonstrations, and admission to informational conferences. Id. It does not cover travel expenses, meals, or other “extras” that may be provided at a demonstration or conference and could be seen as an attempt to curry favor with the official. Id.; Cal. Gov’t Code § 82028(b)(1). Educational conferences and seminars can be very valuable to City officials and, by extension, to the public; but registration fees are typically well over $250. We believe the existing limit is too low and should be eliminated in favor of the state’s regulation in this area.



b. An exception for hospitality when the donor is not present. Under state law, hospitality is not a gift when it is provided in the donor’s home and, among other things, the donor or a member of the donor’s family is present. 2 Cal. Code Regs. § 18942(a)(7). The GEO exempts gifts of food, beverages, and occasional housing provided in an individual’s home, but it does not require the individual to be present and does not incorporate the additional criteria recently adopted by the state. Because the GEO is more lenient than state law in this circumstance, we do not believe that this exception is enforceable. See Cal Gov’t Code § 81013.

c. An exception for up to $100 in gifts connected with non-recurring ceremonial

events. There is no allowance in state law for gifts associated with non-recurring ceremonial events. Again, because this exception results in a City law that is more lenient than state law, we do not believe that it is enforceable. Id. It can also lead to confusion about whether these types of gifts are subject to the state’s gift limit and reporting requirements.

We recommend relinquishing these exemptions to foster clarity, promote consistency,

and improve compliance. Under state law, the definition of “gift” is, generally, “any payment that confers a personal benefit on the recipient, to the extent that consideration of equal or greater value is not received ….” Cal. Gov’t Code § 82028; see also Cal. Gov’t Code § 82044 (a payment is a “…rendering of money, property, services, or anything else of value, whether tangible or intangible”). The following specific items are excluded from the definition:

Citations

a. Informational material; Cal. Gov’t Code § 82028(b)(1) 2 Cal. Code Regs. § 18942(a)(1) 2 Cal. Code Regs. § 18942.1

b. Gifts that are not used and, within 30 days of receipt, are either:

i. Returned to the donor; or ii. Given to a 501(c)(3) organization without being

claimed as a charitable contribution for tax purposes;

Cal. Gov’t Code § 82028(b)(2) 2 Cal. Code Regs. § 18942(a)(2) 2 Cal. Code Regs. § 18943

c. Gifts from an individual’s immediate family members, including spouse, registered domestic partner, child, parent, parent-in-law, grandparent, grandchild, sibling, sibling-in-law, nephew, niece, aunt, uncle, first cousin, and the spouse of any of those persons (as long as the donor is not acting as an agent for a person who is not listed here);

Cal. Gov’t Code § 82028(b)(3) 2 Cal. Code Regs. § 18942(a)(3) 2 Cal. Code Regs. § 18944

d. Campaign contributions that must be reported under the Political Reform Act;




Citations

e. A devise or inheritance;


f. A personalized plaque or trophy valued at less than $250;


g. Hospitality provided in the donor’s home when the donor is present, unless another person pays part of the costs or the donor deducts the hospitality as a business expense.

2 Cal. Code Regs. § 18942(a)(7)

h. Gifts from an individual with whom the recipient exchanges gifts of substantially proportionate value on holidays, birthdays, and similar occasions.

2 Cal. Code Regs. § 18942(a)(8)

i. Leave credits, such as vacation or sick time, that are donated under a catastrophic leave program available to all similarly situated employees.

2 Cal. Code Regs. § 18942(a)(9)

j. Payments received through a government or charity and available to the general public to provide disaster relief.

2 Cal. Code Regs. § 18942(a)(10)

k. Admission, refreshments, and nominal benefits provided for an event at which the recipient gives a speech, participates in a panel, or provides a similar service.

2 Cal. Code Regs. § 18942(a)(11)

l. Transportation and necessary lodging and subsistence provided by a government entity for certain officials who make a speech for official agency business in the regular course of their duties.

2 Cal. Code Regs. § 18942(a)(11) 2 Cal. Code Regs. § 18950.3(b)

m. Travel paid with campaign funds or contributions. Cal. Gov’t Code § 89506(d)(1) Cal. Gov’t Code § 89513(a) 2 Cal. Code Regs. § 18950.1(c) 2 Cal. Code Regs. § 18950.4

n. Travel provided by the recipient’s employing agency. Cal. Gov’t Code § 89506(d)(2) 2 Cal. Code Regs. § 18950.1(d)

o. Travel that is reasonably necessary for a bona fide business, trade, or profession and qualifies as a business expense for income tax purposes (unless the primary activity of the business is making speeches).

Cal. Gov’t Code § 89506(d)(3) 2 Cal. Code Regs. § 18950.1(e)



Citations

p. A ticket or pass for admission to an entertainment event in either of the following scenarios:

i. The recipient performs a ceremonial role or function on behalf of an agency; or

ii. The ticket or pass is provided by the recipient’s agency in accordance with specific procedures and is treated as income.


q. A payment that creates a personal benefit for an official if the payment is made to and controlled by a government agency and the agency uses the payment for official agency business in accordance with specific procedures


r. A payment from an agency to an official in the agency if it is provided out of the agency’s assets and is a lawful expenditure of public money.


s. An item that is awarded in an employee raffle and was obtained with agency funds (and is a lawful expenditure of public money) or from an agency employee who is not acting as an intermediary for another donor.

2 Cal. Code Regs. § 18944.4(b)

t. An item that is received during an employee gift exchange from another agency employee and is not substantially disproportionate in value from the other gifts.


u. A prize or award that is received in a bona fide competition not related to the recipient’s status as an official or candidate and is reported as income.


v. Behested payments that are made for principally legislative, governmental, or charitable purposes (if cumulatively valued at $5,000 per calendar year per source, the payments must be reported).

Cal. Gov’t Code § 82015(b)(2) (B)(iii)

In addition to carving out those specific exceptions, the state also treats several other items as unlimited gifts. In other words, the items are either not subject to the $420 gift limit that applies to other gifts or they are deemed to have no value. However, in contrast to the exceptions listed above, these items are gifts that remain subject to the state’s reporting and disqualification requirements (see, e.g., Cal. Gov’t Code § 87207(a)(1), requiring the reporting of gifts cumulatively valued at $50 or more):



Citations

a. Transportation and lodging that is reasonably related to a legislative or governmental purpose or to an issue of state, national, or international public policy and is either of the following:

i. Connected to a speech made by the recipient, within the United States, and limited to the day before, the day of, and the day after the speech; or

ii. Provided by a government (domestic or foreign), an educational institution, a 501(c)(3) organization, or certain persons domiciled outside the United States.

Cal. Gov’t Code § 89506(a) 2 Cal. Code Regs. § 18942(b)(1) 2 Cal. Code Regs. § 18950.1(a) 2 Cal. Code Regs. § 18950.1(b) 2 Cal. Code Regs. § 18950.3

b. Wedding gifts. Cal. Gov’t Code § 89503(e)(2) 2 Cal. Code Regs. § 18942(b)(2) 2 Cal. Code Regs. § 18946.3

c. A ticket or pass for admission or access to facilities, goods, services, or other benefits that is not used and is not given to another person.


d. A ticket or pass for admission to a fundraiser for a campaign committee or candidate that is provided by the committee holding the fundraiser and is used only by the recipient.


These definitional standards are subject to change in the future, as the state continues to amend and improve the Political Reform Act and its related regulations. Another reason we recommend deferring to the state is that doing so will mean we are never out of sync with the state—as soon as a change at the state level becomes effective, it will also be effective at the City level. This compatibility will improve our partnership with the state as we help City officials comply with the gift laws. However, we will continue to monitor the interplay between state and City law and recommend changes to the GEO that we believe will help ensure that this area of the law remains clear and effective for City officials. In fact, we have a Charter mandate to do so. See Los Angeles City Charter § 702(f).

2. Modify the Gift Limit for “Restricted Sources”

Our next recommendation is to modify the GEO’s gift limits. As noted above in the first

paragraph of section C, state law limits the cumulative value of gifts from a single source to $420 per calendar year. Cal. Gov’t Code §§ 89503(a), 89503(f); 2 Cal. Code Regs. § 18940.2(a). However, the GEO further limits the value of gifts to City officials from certain sources. Lobbyists and lobbying firms are currently prohibited from giving a gift of any value to a City official if the lobbyist or lobbying firm is required to register to lobby the official’s agency.



LAMC § 49.5.10(A)(4). In addition, certain contractors, bidders, persons who have attempted to influence City officials, and persons who have proceedings pending with City agencies—otherwise known as “restricted sources”—may not give more than $100 in gifts per calendar year to a City official. LAMC § 49.5.10(A)(3).

We recommend applying the voter-approved gift ban for lobbyists and lobbying firms to

all restricted sources. The GEO’s gift limits exist to foster public confidence in the way City decisions are made. They set a bar that helps protect against the appearance of improper influence, regardless of the intent behind a particular gift. We believe that the best means of safeguarding the City’s decision-making processes is to ban gifts from all restricted sources.

A restricted source is a person who is actively engaged in business with the City and

desires a favorable result in a City decision. If a City official receives a gift from a person who wants the official to decide a City matter in a particular way, the public’s perception of the integrity of that decision is likely to be compromised—even if the decision is made solely on the merits. We believe that this is true when the gift is given by any restricted source, not just by a lobbyist or lobbying firm.

In addition to improving and protecting public confidence in City decisions, we believe a

ban on gifts from restricted sources is appropriate for several other reasons. Experience has shown us that the current $100 limit can be unnecessarily confusing and difficult for City officials to track. If, for example, a City official attends and eats a meal at a reception held by a restricted source, the official must determine either the actual cost of the meal or his pro-rata share of the cost of the entire evening. Doing so can be difficult and awkward and, as a result, is often avoided. A ban on gifts from restricted sources is simpler to understand and, because no calculating or tracking is required, is easier to comply with and enforce.

Banning gifts from all restricted sources is also a more equitable approach. It treats all

persons who have active business with the City the same way, regardless of whether they are registered as lobbying entities. It also eliminates an existing loophole by which a lobbyist’s client can give a gift even though the lobbyist cannot.

We do suggest an exception to the recommended ban on gifts from restricted sources.

We believe that, just as the state exempts hospitality provided in the donor’s home, it is appropriate to exempt nominal and routine office courtesies that are provided to a City official in a restricted source’s office or place of business. A business entity may routinely provide things such as free parking or light refreshments to its guests, and we do not believe the gift ban should apply to those things. If a City official is a guest of that business, she is receiving no special or personalized benefit—those types of office courtesies have minimal value and are available to anyone who visits that business. As a result, we believe the City official may receive such items without generating concern about the way she makes City decisions.

Finally, to balance the value of a ban on gifts from restricted sources with the need for

those affected to be able to comply, we believe that the bulk of the responsibility for the ban



should rest with the givers—those who know best whether they are restricted sources. It is often difficult, and sometimes impossible, for City officials to know whether potential donors are restricted sources who are limited in their gift giving (especially, as has been discussed, in the area of City contracts). Therefore, we recommend that City officials be prohibited from soliciting or accepting gifts from persons that they know or have reason to know are restricted sources (LAMC § 49.5.10(A)(2) currently prohibits them from knowingly soliciting gifts from restricted sources). And we recommend that restricted sources be flatly prohibited from offering or making a gift to elected City officials and to City officials in the agencies with which they are actively engaged.

3. Modify the Definition of “Restricted Source”

Third, we recommend modifying the list of sources that would be subject to the gift ban. At the June meeting, there was consensus that the sources of outside income that trigger Ethics Commission approval should be consistent for all City officials and should be agency-specific. Just as outside income is most likely to create a conflict (or the appearance of a conflict) when the source is actively engaged with the City official it employs or with that official’s agency, we also believe that gifts are more likely to generate concerns when the donor is actively engaged with the City official or the City official’s agency. The potential for actual or apparent corruption is greatest in that scenario. Therefore, we recommend that gifts to non-elected City officials be banned from the following persons:

a. A lobbying entity that is required to register to lobby the City official’s agency; b. A person who has a contract with the City official’s agency; c. A person who has bid on a contract with the City official’s agency that has not yet

been awarded; d. A person who has a City decision pending with the City official’s agency; and e. A person who is acting as an intermediary in giving a gift to the City official from

one of the persons listed above. For elected City officials, we recommend maintaining the GEO’s current approach and

banning gifts from contractors, bidders, and persons with pending matters, regardless of the specific agency that is involved. Many City matters eventually reach the City Council or Mayor for action, and we believe that safeguarding the City’s decision-making processes is best served by prohibiting gifts to the City’s ultimate decision makers from sources that are actively engaged in business with any agency.


July 7, 2010 Page 10 of 13

4. Treat All Lobbying Entities The Same Fourth, we recommend applying to lobbyist employers (persons who employ in-house

lobbyists) the gift restriction that applies to lobbyists and lobbying firms. As noted above in section C.2, only lobbyists and lobbying firms are currently banned from giving gifts to City officials. LAMC § 49.5.10(A)(4). During the review of the Municipal Lobbying Ordinance, however, the Commission determined that the gift regulations should also apply to lobbyist employers, for two reasons: to reflect the fact that they are as accountable to the public as lobbyists and lobbying firms are and to apply the City’s lobbying laws equitably to all types of lobbying entities. For the same reasons, we again recommend extending the gift ban to lobbyist employers.

5. Add Requirements Regarding Certain Tickets Finally, we recommend adopting additional requirements regarding admission tickets received by elected City officials, general managers, and commissioners for events at which they perform ceremonial functions on behalf of an agency. The state exempts from its definition of “gift” a ticket or pass to an entertainment or recreational event that is given to a public official who performs a ceremonial role or function on behalf of the official’s agency at the event. 2 Cal. Code Regs. § 18944.1(a). The exception applies when the source of the ticket is a person other than the official’s agency. Id. So, for example, the general manager for the Department of Recreation and Parks could accept a ticket to a baseball game at which he presents a certificate of appreciation on the department’s behalf to the City’s summer youth workers during the seventh inning stretch. The ticket would not be considered a gift, and the general manager would not have to report the ticket on his Form 700.

We have three recommendations regarding these types of tickets. First, we believe that the public has an interest in knowing when these events occur and the ceremonial functions that rise to the level of consideration for the ticket. Therefore, we recommend adding a section to the annual disclosure form that was approved at the April meeting. The section would require elected officials, general managers, and commissioners to disclose the following information when they accept this type of ticket:

a. Date of the event; b. Location of the event; c. Description of the event; d. Description of the ceremonial role; e. Source of the ticket; and f. Face value of the ticket. As with the other reporting required on the form, filers who did not receive any tickets in

exchange for ceremonial functions during the reporting period would have to affirmatively declare that they did not. And disclosure would be required as part of their pre-confirmation


July 7, 2010 Page 11 of 13

filings (for those who are being reappointed, for example), their annual statements of economic interests, and their leaving office statements.

Second, we recommend requiring the City officials who must disclose the tickets to

maintain records substantiating their ceremonial functions for four years after the date of the event. Recordkeeping is required for lobbying and campaign finance purposes. See, e.g., Cal. Gov’t Code § 91011(a), LAMC §§ 49.7.12(E)(1) and 48.05, Los Angeles Administrative Code § 24.5(s)(4). And four years is the GEO’s statute of limitations. LAMC §§ 49.5.19(A)(2), 49.5.19(B)(5), 49.5.19(E). To assist City officials in complying with the gift laws, we suggest making recordkeeping an affirmative requirement linked to the recommended disclosure.

Third, we recommend that the state exception not apply when these types of tickets are

given to City officials by the restricted sources identified above in section C.3. Just as a gift from a person who has active business with the City can easily appear to create an improper influence on City decision makers (or an unfair advantage for the donor), an admission ticket to an entertainment or recreational event from such persons can also negatively affect the public’s perception of the integrity and impartiality of the City’s processes. This recommendation would not prevent City officials from performing ceremonial functions on behalf of the City. It would simply prevent them from staying for the entire entertainment event when admission is provided by a restricted source. We believe this is an appropriate way to balance the benefits of City officials engaging in public service with the importance of safeguarding against even the perception of undue influence. D. PHILANTHROPIC SOLICITATIONS

SEE PAGE 1 OF ATTACHMENT A One outstanding issue remains regarding a recommendation made at the June meeting. As discussed last month, the GEO prohibits the use of City positions to induce or coerce a person to create a private benefit for any person. See LAMC § 49.5.5. A number of improvements to that provision were approved. One of the recommended improvements was to carve out a limited exception to the general rule, to make it clear that solicitations for philanthropic purposes are not subject to the prohibition if they meet certain criteria. The general consensus in June was that such an exception is a good idea but that specific language would be helpful in determining the parameters within which such solicitations would be acceptable. The discussion focused on a desire to avoid the possibility that someone might feel improperly coerced to make a donation in response to a solicitation made, for example, by a supervisor. With that in mind, and following further staff consideration, we propose the following amended version of LAMC § 49.5.5(A):

A City official, agency employee, appointee awaiting confirmation by the City Council, or candidate for elective City office may not use or attempt to use his or her position or prospective position to create for any person a private advantage or disadvantage, financial or otherwise, that does not result naturally from the lawful and proper


July 7, 2010 Page 12 of 13

performance of City duties. This subsection does not prohibit the solicitation of donations for philanthropic purposes or agency-sponsored events when all of the following apply:

1. The solicitation is authorized by an elected City official or general manager who

does not have a financial interest in and is not a member of the board of directors of the intended recipient;

2. The solicitor does not have a financial interest in and is not a member of the board

of directors of the intended recipient; 3. The solicitation is disseminated broadly; 4. The solicitation is not knowingly directed to either of the following: a. A person who has a contract with the solicitor’s agency; or b. A person who has a municipal decision currently pending with the solicitor’s

agency; 5. A donation is not mandatory, and a person’s response to the solicitation has no

effect on the person’s employment or business with the solicitor’s agency; and 6. The solicitation activities do not interfere with the ability of the solicitor or the

solicitor’s agency to perform City duties.

The exception is intended to apply to solicitations for philanthropic purposes (such as giving to the United Way) and to solicitations for agency-sponsored events (such as a retirement celebration). The goal of the six proposed limitations on the exception is to avoid situations in which a person feels undue pressure to contribute. For example, a solicitation must be authorized and made by a City employee who does not have too close an interest in the beneficiary, it cannot be targeted at a single person, and it cannot be knowingly directed to persons who have contracts or matters pending with the employee’s agency. The fifth proposed condition makes it clear that contributions are voluntary and that any repercussion based on a person’s decision to make or not make a contribution eliminates the exception. The sixth condition helps protect the public’s interest in the good stewardship of public resources. The proposed language resulted from extensive discussions by staff, during which it became clear that this is a difficult issue to regulate precisely. Feeling undue pressure is a subjective experience, which suggests that it is not possible to protect against every potential scenario—what feels oppressive to one may be a natural interaction to another. Nevertheless, there are some objective minimum standards that we believe are captured in the criteria identified above.

Another option would be to eliminate specific exception language, with the understanding that an employee’s “lawful and proper performance of City duties” can include soliciting donations for charitable and agency-sponsored events. We look forward to hearing your thoughts and welcome further discussion about this at the meeting.


July 7, 2010 Page 13 of 13

E. SUMMARY We recommend that the GEO be amended as follows and that you reach consensus regarding these recommendations: 1. Amend the gift regulations: • Use the state’s definition of “gift”. • Prohibit City officials from soliciting or accepting gifts from persons they know

or should know are restricted sources. • Prohibit restricted sources from giving gifts to elected officials or to other City

officials in agencies with which they are actively engaged. • Exempt from the gift ban routine and nominal office courtesies provided at a

restricted source’s place of business. • Modify the list of restricted sources. • Extend to lobbyist employers the same gift ban that currently applies to lobbyists

and lobbying firms. • Require elected officials, general managers, and commissioners to disclose

tickets given to them for events at which they perform ceremonial functions and to maintain records substantiating the ceremonial functions.

• Eliminate the exception for tickets received in exchange for performing ceremonial functions when the tickets are provided by restricted sources.

2. Create a limited exception to the prohibition on misusing a City position for solicitations for philanthropic donations that meet specific conditions.

F. NEXT STEPS The next set of staff recommendations will continue to address the category of impartiality and fairness. It will focus on equity issues that are not currently part of the GEO, such as ex parte communications. We also plan to present recommendations regarding the third review category of compliance.

I look forward to discussing this item with you at the meeting and would be happy to answer questions at any time.

Attachment A (to memo dated July 7, 2010)

Impartiality & Fairness, Part B 1 of 4 July 2010 Annotated GEO Excerpts City Ethics Commission

Los Angeles City Ethics Commission Governmental Ethics Ordinance Excerpts

Impartiality and Fairness, Part B

CURRENT LAW RECOMMENDATION

SEC. 49.5.5 Misuse of City Position or Resources A. No City official, employee of any agency, appointee awaiting confirmation by

the Council, or candidate for elective City office shall use his or her position or prospective position, or the power or authority of his or her office or position, in any manner intended to induce or coerce any person to provide, directly or indirectly, anything of value which shall accrue to the private advantage, benefit, or economic gain, of the City official or employee, or of any other person. As used in this section, the term “private advantage, benefit, or economic gain” means any advantage, benefit or economic gain, distinct from that enjoyed by members of the public without regard to official status or not resulting naturally from lawful and proper performance of duties. A City official or employee engages in a prohibited use of his or her official position or prospective position when he or she engages in activities other than in the lawful and proper performance of the person's City duties.

See Definitions: Agency (page 3) City official (page 3)

In addition to improvements approved in June, exempt a solicitation for philanthropic purposes or agency-sponsored event if it is: 1. Authorized by an elected

official or GM who does not have a conflict;

2. Made by an employee who does not have a conflict;

3. Disseminated broadly: 4. Not directed to an agency

contractor or person with a pending agency matter;

5. Not mandatory (response has no effect on solicitee);

6. Not an interference with City duties.

SEC. 49.5.10 Restrictions on Gifts and Travel Expenses A. Restrictions on Gifts. 1. No person shall offer or make, and no City official shall solicit or accept,

any gift with the intent that the City official will be influenced thereby in the performance of any official act.

2. No City official shall knowingly solicit any gift from a restricted source. 3. Except in the case of a lobbyist or lobbying firm, no person who is a

restricted source shall offer or make, and no City official shall accept, any gift from a restricted source which would cause the cumulative amount of gifts from such source to the City official to exceed $100 during any calendar year.

4. No lobbyist or lobbying firm shall make, and no City official shall accept, any gift from a lobbyist or lobbying firm which is a restricted source as to that official.

5. No lobbyist or lobbying firm shall act as an agent or intermediary in the making of any gifts or arrange for the making of any gift by another person to any City official.

6. The provisions of Subdivision 3 of this subsection do not apply to foreign gifts made to an officer or employee of the City when representing the Department of Airports or the Harbor Department, which gift is disclosed by that official to the City Ethics Commission within 30 days after receipt on a form prescribed by the Commission.

7. For the purpose of this subsection, the term “gift” does not include: (a) Items received by a City official which are not kept but which are

turned over to the City within 30 days after their receipt. (b) Meals provided to a City official at an event at which the official

speaks, participates in a seminar or similar activity or provides a similar service.

(c) Travel expenses and meals paid for by a local, state, federal or foreign government agency.

Use the state’s definition of “gift”. Prohibit City officials from soliciting or accepting gifts from persons they know or should know are restricted sources. Prohibit restricted sources from offering or making gifts to elected City officials or to other officials in agencies with which they are actively engaged. Redefine “restricted source” as: • Lobbying entity required

to register to lobby official’s agency;

• Contractor with official’s agency (or any agency for elected officials);

• Person who has bid on a contract with the official’s agency (or any agency for elected officials);



(d) Items received by a bargaining unit member from a union representing that City official.

(e) Food and beverages received from any union by a City official who is a member of a union representing a bargaining unit of City officials.

(f) Payment for travel expenses from a campaign committee; a nonprofit organization of which the City official is a member; or an organization of which the City, an agency, or the official is a member acting in an official City capacity.

(g) Gifts to non-elected City official for legal expenses related to an enforcement action brought under City or state ethics laws.

8. A City official may request the City Ethics Commission to provide that official with written advice concerning the legality of accepting any specific gift. Such request shall contain sufficient information to allow the Commission or its staff to properly consider the matter. The Commission or its staff shall provide written advice in response to such a request within 10 working days after the Commission's receipt of the request.

• Person with matter pending with official’s agency (or any agency for elected officials); or

• Person acting as an intermediary for any of the above persons.

Extend to lobbyist employers the same gift ban that applies to lobbyists and lobbying firms. Require elected officials, general managers, and commissioners to: 1. Annually disclose tickets

B. Restrictions on Travel Advances and Reimbursements. 1. No person shall offer or make, and no City official shall solicit or accept,

any advance or reimbursement for travel expenses (including related lodging and reasonable subsistence expenses) with the intent that the City official will be influenced thereby in the performance of any official act.

2. No person who is a restricted source shall offer or make, and no City official shall accept from a restricted source as to that official, any advance or reimbursement for travel expenses (including related lodging and reasonable subsistence expenses).

3. No lobbyist or lobbying firm shall act as an agent or intermediary in the making of, or arrange for the making of, any advance or reimbursement for travel expenses (including related lodging and reasonable subsistence expenses) by another person, to any City official.

4. The payment for travel expenses of a City official traveling on government business shall not be prohibited by this section in any case where the payment is a gift or other payment to the City of Los Angeles or to any government agency for which the City Council is the code reviewing body with respect to that agency's conflict of interest code, rather than a gift or income to the official, within the meaning of the Political Reform Act of 1974, as amended, and the regulations of the Fair Political Practices Commission.

5. Travel expenses subject to the prohibitions of this subsection include expenses for intrastate travel and lodging related to a City official's speaking at an event, participating in a seminar or providing similar services, notwithstanding the provisions of Title 2, California Code of Regulations, Section 18728, or any successor section.

6. Travel expenses subject to the prohibitions of this subsection do not include any payment for travel expenses from a campaign committee; a nonprofit organization of which the City official is a member; or an organization of which the City, an agency, or the official is a member acting in an official City capacity.

7. This subsection does not limit travel expenses and meals paid for by a local, state, federal or foreign government agency.

See Definitions: City official (page 3) Foreign gift (page 3) Gift (page 3) Restricted source (page 4)

to entertainment events at which they perform a ceremonial function on behalf of an agency; and

2. Maintain for four years records substantiating the ceremonial function.

Eliminate the exception for tickets received in exchange for ceremonial functions when the tickets are provided by restricted sources.



SEC. 49.5.2 Definitions [excerpts] “Agency” means the City of Los Angeles or any department, bureau, office, board, commission, other agency of the City, or any other government agency, required to adopt a conflict of interest code subject to City Council approval. With respect to employees of a Councilmember's staff and employees of the Chief Legislative Analyst's office, "agency" means the City Council.

“City Official” means any elective City officer, member, officer, employee, commissioner or consultant of any agency required to adopt a conflict of interest code subject to City Council approval, and who is required to file statements of economic interests pursuant to the conflict of interest code of his or her agency.

“Doing Business with the City” means entering into or performing pursuant to a contract with the City of Los Angeles , an agency of the City or another local government agency required to adopt a conflict of interest code subject to City Council approval. Doing business with the City includes entering into or performing contracts for goods, equipment, services or financial assistance but does not include the receipt of or payment for services normally rendered by the City to residents and businesses such as sewer service, water and power, street maintenance and the like.

“Foreign gift” means a gift from an individual domiciled in a foreign country, a foreign government, or a business entity or other entity having its principal place of business located in a foreign country, which gift is accepted by a City official either while that official is traveling abroad or from the donor while that donor is visiting the United States. A foreign gift includes (1) an otherwise qualifying gift of food, beverages or customary business

entertainment cumulatively valued at no more than $250 during any calendar year accepted by an official during the course and scope of official business and

(2) an otherwise qualifying gift which is accepted by the official on behalf of the City of Los Angeles and which gift is transmitted to and becomes the property of the City. A foreign gift does not include a gift from any corporation organized under the laws of the United States, or under the laws of any state or territory of the United States.

“Gift” means, except as otherwise provided in this definition, any payment to the extent that consideration of equal or greater value is not received and includes a rebate or discount in the price of anything of value unless the rebate or discount is made in the regular course of business to members of the public without regard to official status. Any person, other than a defendant in a criminal action, who claims that a payment is not a gift by reason of receipt of consideration has the burden of proving that the consideration received is of equal or greater value. The term “gift” does not include: (1) Informational material such as books, reports, pamphlets, calendars,

periodicals, seminars, or informational conferences, exclusively for official or office use and valued at less than $250 (except that such dollar limit does not apply to informational material received from a government agency). No payment for travel or reimbursement of any expenses shall be deemed “informational material.”

(2) Gifts which are not used and which, within 30 days after receipt, are returned to the donor or delivered to a charitable organization without being claimed as a charitable contribution for tax purposes.

Use the state’s definition of “gift”.



(3) Gifts from an individual's spouse, child, parent, grandparent, grandchild, brother, sister, parent-in-law, brother-in-law, sister-in-law, partner in a bona fide dating relationship, nephew, niece, aunt, uncle, or first cousin, or the spouse of any such person; provided that a gift from any such person shall be considered a gift if the donor is acting as an agent or intermediary for any person not covered by this paragraph.

(4) Campaign contributions required to be reported under Chapter 4 of the Political Reform Act of 1974, as amended.

(5) Any devise or inheritance. (6) Personalized plaques and trophies with an individual value of less than two

hundred fifty dollars ($250). (7) Gifts of food, beverages or occasional lodging provided in an individual's

home. (8) Gifts valued at no more than $100 from an individual to a City official or to

a member of the official's immediate family in connection with a non-recurring ceremonial occasion.

“Restricted source” means the following with regard to each of the following classes of City officials. (1) With regard to “high level filers” and “high level officials,” “restricted source”

means: (a) a lobbyist, lobbying firm, or lobbyist employer; (b) a person doing or seeking to do business with the City; (c) a person who, during the reporting period, knowingly attempted to

influence the official in any legislative or administrative action which would have a direct material financial effect on such person; or

(d) a person who is a party to a proceeding involving a license, permit or other entitlement for use while a proceeding involving such matter is, or within the prior nine months was, pending before the official or before the City Council or a board, commission, committee, or other similar body of which the official is a voting member, and for nine months following the date a final decision is rendered in the proceeding.

(2) With regard to filers other than “high level filers” and with regard to officials other than “high level officials,” “restricted source” means:

(a) a lobbyist, lobbying firm, or lobbyist employer, seeking to influence decisions of the filer's agency;

(b) a person doing or seeking to do business with the filer's agency; (c) a person who, during the reporting period, knowingly attempted to

influence the official in any legislative or administrative action which would have a direct material financial effect on such person;

(d) or a person who is a party to a proceeding involving a license, permit or other entitlement for use while a proceeding involving such matter is, or within the prior nine months was, pending before the official or before a board, commission, committee or other similar body of which the official is a voting member, and for nine months following the date a final decision is rendered in the proceeding.

With regard to all filers and all City officials, a “restricted source” does not include an individual (other than a lobbyist) who is employed by a restricted source, provided that the gift or income is neither paid for by the employer nor provided at the direction of the employer.

Apply gift restriction in LAMC § 49.5.10 to the following: • Lobbying entity required

to register to lobby official’s agency;

• Contractor with official’s agency (or any agency for elected officials);

• Person who has bid on a contract with the official’s agency (or any agency for elected officials);

• Person with matter pending with official’s agency (or any agency for elected officials); and

• Person acting as an intermediary for any of the above persons.

Attachment B (to memo dated July 7, 2010)

PRA re: Gifts 1 of 6 City Ethics Commission (July 2010)

California Political Reform Act Provisions Related to Gifts

Gov’t Code § 82007 “Candidate” means an individual who is listed on the ballot or who has qualified to have write-in votes on his or her behalf counted by election officials, for nomination for or election to any elective office, or who receives a contribution or makes an expenditure or gives his or her consent for any other person to receive a contribution or make an expenditure with a view to bringing about his or her nomination or election to any elective office, whether or not the specific elective office for which he or she will seek nomination or election is known at the time the contribution is received or the expenditure is made and whether or not he or she has announced his or her candidacy or filed a declaration of candidacy at such time. “Candidate” also includes any officeholder who is the subject of a recall election. An individual who becomes a candidate shall retain his or her status as a candidate until such time as that status is terminated pursuant to Section 84214. “Candidate” does not include any person within the meaning of Section 301(b) of the Federal Election Campaign Act of 1971. Gov’t Code § 82013 “Committee” means any person or combination of persons who directly or indirectly does any of the following: (a) Receives contributions totaling one thousand

dollars ($1,000) or more in a calendar year. (b) Makes independent expenditures totaling one

thousand dollars ($1,000) or more in a calendar year; or

(c) Makes contributions totaling ten thousand dollars ($10,000) or more in a calendar year to or at the behest of candidates or committees.

A person or combination of persons that becomes a committee shall retain its status as a committee until such time as that status is terminated pursuant to Section 84214. Gov’t Code § 82015 (a) “Contribution” means a payment, a

forgiveness of a loan, a payment of a loan by a third party, or an enforceable promise to make a payment except to the extent that full and adequate consideration is received, unless it is clear from the surrounding circumstances that it is not made for political purposes.

(b) (1) A payment made at the behest of a committee as defined in subdivision (a) of Section 82013 is a contribution to the committee unless full and adequate consideration is received from the committee for making the payment.

(2) A payment made at the behest of a candidate is a contribution to the

candidate unless the criteria in either subparagraph (A) or (B) are satisfied:

(A) Full and adequate consideration is received from the candidate.

(B) It is clear from the surrounding circumstances that the payment was made for purposes unrelated to his or her candidacy for elective office. The following types of payments are presumed to be for purposes unrelated to a candidate's candidacy for elective office:

(i) A payment made principally for personal purposes, in which case it may be considered a gift under the provisions of Section 82028. Payments that are otherwise subject to the limits of Section 86203 are presumed to be principally for personal purposes.

(ii) A payment made by a state, local, or federal governmental agency or by a nonprofit organization that is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code.

(iii) A payment not covered by clause (i), made principally for legislative, governmental, or charitable purposes, in which case it is neither a gift nor a contribution. However, payments of this type that are made at the behest of a candidate who is an elected officer shall be reported within 30 days following the date on which the payment or payments equal or exceed five thousand dollars ($5,000) in the aggregate from the same source in the same calendar year in which they are made. The report shall be filed by the elected officer with the elected officer's agency and shall be a public record subject to inspection and copying pursuant to subdivision (a) of Section 81008. The report shall contain the following information: name of payor, address of payor, amount of the payment, date or dates the payment or payments were made, the name and address of the payee, a brief description of the goods or services provided or purchased, if any, and a description of the specific


purpose or event for which the payment or payments were made. Once the five-thousand-dollar ($5,000) aggregate threshold from a single source has been reached for a calendar year, all payments for the calendar year made by that source must be disclosed within 30 days after the date the threshold was reached or the payment was made, whichever occurs later. Within 30 days after receipt of the report, state agencies shall forward a copy of these reports to the Fair Political Practices Commission, and local agencies shall forward a copy of these reports to the officer with whom elected officers of that agency file their campaign statements.

***** Gov’t Code § 82019 (a) “Designated employee” means any officer,

employee, member, or consultant of any agency whose position with the agency:

(1) Is exempt from the state civil service system by virtue of subdivision (a), (c), (d), (e), (f), (g), or (m) of Section 4 of Article VII of the Constitution, unless the position is elective or solely secretarial, clerical, or manual.

(2) Is elective, other than an elective state office.

(3) Is designated in a Conflict of Interest Code because the position entails the making or participation in the making of decisions which may foreseeably have a material effect on any financial interest.

(4) Is involved as a state employee at other than a clerical or ministerial level in the functions of negotiating or signing any contract awarded through competitive bidding, in making decisions in conjunction with the competitive bidding process, or in negotiating, signing, or making decisions on contracts executed pursuant to Section 10122 of the Public Contract Code.

(b) (1) “Designated employee” does not include an elected state officer, any unsalaried member of any board or commission which serves a solely advisory function, any public official specified in Section 87200, and also does not include any unsalaried member of a nonregulatory committee, section, commission, or other such entity of the State Bar of California.

(2) “Designated employee” does not include a federal officer or employee serving in an

official federal capacity on a state or local government agency. The state or local government agency shall annually obtain, and maintain in its files for public inspection, a copy of any public financial disclosure report filed by the federal officer or employee pursuant to federal law.

Gov’t Code § 82020 “Elected officer” means any person who holds an elective office or has been elected to an elective office but has not yet taken office. A person who is appointed to fill a vacant elective office is an elected officer. Gov’t Code § 82028 (a) “Gift” means, except as provided in subdivision

(b), any payment that confers a personal benefit on the recipient, to the extent that consideration of equal or greater value is not received and includes a rebate or discount in the price of anything of value unless the rebate or discount is made in the regular course of business to members of the public without regard to official status. Any person, other than a defendant in a criminal action, who claims that a payment is not a gift by reason of receipt of consideration has the burden of proving that the consideration received is of equal or greater value.

(b) The term “gift” does not include: (1) Informational material such as books,

reports, pamphlets, calendars, or periodicals. No payment for travel or reimbursement for any expenses shall be deemed "informational material."

(2) Gifts which are not used and which, within 30 days after receipt, are either returned to the donor or delivered to a nonprofit entity exempt from taxation under Section 501(c)(3) of the Internal Revenue Code without being claimed as a charitable contribution for tax purposes.

(3) Gifts from an individual's spouse, child, parent, grandparent, grandchild, brother, sister, parent-in-law, brother-in-law, sister-in-law, nephew, niece, aunt, uncle, or first cousin or the spouse of any such person; provided that a gift from any such person shall be considered a gift if the donor is acting as an agent or intermediary for any person not covered by this paragraph.

(4) Campaign contributions required to be reported under Chapter 4 of this title.

(5) Any devise or inheritance. (6) Personalized plaques and trophies with an

individual value of less than two hundred fifty dollars ($250).


Gov’t Code § 82044 “Payment” means a payment, distribution, transfer, loan, advance, deposit, gift or other rendering of money, property, services or anything else of value, whether tangible or intangible. Gov’t Code § 82048 (a) “Public official” means every member, officer,

employee or consultant of a state or local government agency.

(b) Notwithstanding subdivision (a), "public official" does not include the following:

(1) A judge or court commissioner in the judicial branch of government.

(2) A member of the Board of Governors and designated employees of the State Bar of California.

(3) A member of the Judicial Council. (4) A member of the Commission on Judicial

Performance, provided that he or she is subject to the provisions of Article 2.5 (commencing with Section 6035) of Chapter 4 of Division 3 of the Business and Professions Code as provided in Section 6038 of that article.

(5) A federal officer or employee serving in an official federal capacity on a state or local government agency.

Gov’t Code § 87100 No public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest. Gov’t Code § 87103 A public official has a financial interest in a decision within the meaning of Section 87100 if it is reasonably foreseeable that the decision will have a material financial effect, distinguishable from its effect on the public generally, on the official, a member of his or her immediate family, or on any of the following: (a) Any business entity in which the public official

has a direct or indirect investment worth two thousand dollars ($2,000) or more.

(b) Any real property in which the public official has a direct or indirect interest worth two thousand dollars ($2,000) or more.

(c) Any source of income, except gifts or loans by a commercial lending institution made in the regular course of business on terms available to the public without regard to official status, aggregating five hundred dollars ($500) or more in value provided or promised to, received by, the public official within 12 months prior to the time when the decision is made.

(d) Any business entity in which the public official is a director, officer, partner, trustee,

employee, or holds any position of management.

(e) Any donor of, or any intermediary or agent for a donor of, a gift or gifts aggregating two hundred fifty dollars ($250) or more in value provided to, received by, or promised to the public official within 12 months prior to the time when the decision is made. The amount of the value of gifts specified by this subdivision shall be adjusted biennially by the commission to equal the same amount determined by the commission pursuant to subdivision (f) of Section 89503.

For purposes of this section, indirect investment or interest means any investment or interest owned by the spouse or dependent child of a public official, by an agent on behalf of a public official, or by a business entity or trust in which the official, the official's agents, spouse, and dependent children own directly, indirectly, or beneficially a 10-percent interest or greater. Gov’t Code § 87200 This article [regarding statements of economic interests] is applicable to elected state officers, judges and commissioners of courts of the judicial branch of government, members of the Public Utilities Commission, members of the State Energy Resources Conservation and Development Commission, members of the Fair Political Practices Commission, members of the California Coastal Commission, members of planning commissions, members of the board of supervisors, district attorneys, county counsels, county treasurers, and chief administrative officers of counties, mayors, city managers, city attorneys, city treasurers, chief administrative officers and members of city councils of cities, and other public officials who manage public investments, and to candidates for any of these offices at any election. Gov’t Code § 87207 (a) When income is required to be reported under

this article, the statement shall contain, except as provided in subdivision (b):

(1) The name and address of each source of income aggregating five hundred dollars ($500) or more in value, or fifty dollars ($50) or more in value if the income was a gift, and a general description of the business activity, if any, of each source.

(2) A statement whether the aggregate value of income from each source, or in the case of a loan, the highest amount owed to each source, was at least five hundred dollars ($500) but did not exceed one thousand dollars ($1,000), whether it was in excess of one thousand dollars ($1,000) but was not greater than ten thousand dollars ($10,000), whether it was greater than ten thousand dollars ($10,000) but not greater than one


hundred thousand dollars ($100,000), or whether it was greater than one hundred thousand dollars ($100,000).

(3) A description of the consideration, if any, for which the income was received.

(4) In the case of a gift, the amount and the date on which the gift was received.

(5) In the case of a loan, the annual interest rate, the security, if any, given for the loan, and the term of the loan.

(b) When the filer's pro rata share of income to a business entity, including income to a sole proprietorship, is required to be reported under this article, the statement shall contain:

(1) The name, address, and a general description of the business activity of the business entity.

(2) The name of every person from whom the business entity received payments if the filer's pro rata share of gross receipts from that person was equal to or greater than ten thousand dollars ($10,000) during a calendar year.

(c) When a payment, including an advance or reimbursement, for travel is required to be reported pursuant to this section, it may be reported on a separate travel reimbursement schedule which shall be included in the filer's statement of economic interest. A filer who chooses not to use the travel schedule shall disclose payments for travel as a gift, unless it is clear from all surrounding circumstances that the services provided were equal to or greater in value than the payments for the travel, in which case the travel may be reported as income.

Gov’t Code § 87210 No person shall make a gift totaling fifty dollars ($50) or more in a calendar year to a person described in Article 2 on behalf of another, or while acting as the intermediary or agent of another, without disclosing to the recipient of the gift both his own full name, street address, and business activity, if any, and the full name, street address, and business activity, if any, of the actual donor. The recipient of the gift shall include in his Statement of Economic Interests the full name, street address, and business activity, if any, of the intermediary or agent and the actual donor. Gov’t Code § 87313 No person shall make a gift of fifty dollars ($50) or more in a calendar month on behalf of another, or while acting as the intermediary or agent of another to a person whom he knows or has reason to know may be required to disclose the gift pursuant to a conflict of interest code, without disclosing to the recipient of the gift both his own full name, street address, and business activity, if any, and the full name, street address, and business activity, if any, of the actual donor. The recipient of the gift shall

include in his Statement of Economic Interests the full name, street address, and business activity, if any, of the intermediary or agent and the actual donor. Gov’t Code § 89503 (a) No elected state officer, elected officer of a

local government agency, or other individual specified in Section 87200 shall accept gifts from any single source in any calendar year with a total value of more than two hundred fifty dollars ($250).

(b) (1) No candidate for elective state office, for judicial office, or for elective office in a local government agency shall accept gifts from any single source in any calendar year with a total value of more than two hundred fifty dollars ($250). A person shall be deemed a candidate for purposes of this subdivision when the person has filed a statement of organization as a committee for election to a state or local office, a declaration of intent, or a declaration of candidacy, whichever occurs first. A person shall not be deemed a candidate for purposes of this subdivision after he or she is sworn into the elective office, or, if the person lost the election, after the person has terminated his or her campaign statement filing obligations for that office pursuant to Section 84214 or after certification of the election results, whichever is earlier.

(2) Paragraph (1) shall not apply to any person who is a candidate as described in paragraph (1) for judicial office on or before December 31, 1996.

(c) No member of a state board or commission or designated employee of a state or local government agency shall accept gifts from any single source in any calendar year with a total value of more than two hundred fifty dollars ($250) if the member or employee would be required to report the receipt of income or gifts from that source on his or her statement of economic interests.

(d) This section shall not apply to a person in his or her capacity as judge. This section shall not apply to a person in his or her capacity as a part-time member of the governing board of any public institution of higher education unless that position is an elective office.

(e) This section shall not prohibit or limit the following:

(1) Payments, advances, or reimbursements for travel and related lodging and subsistence permitted by Section 89506.

(2) Wedding gifts and gifts exchanged between individuals on birthdays, holidays, and other similar occasions, provided that the gifts exchanged are not substantially disproportionate in value.


(f) Beginning on January 1, 1993, the commission shall adjust the gift limitation in this section on January 1 of each odd-numbered year to reflect changes in the Consumer Price Index, rounded to the nearest ten dollars ($10).

(g) The limitations in this section are in addition to the limitations on gifts in Section 86203.

Gov’t Code § 89506 (a) Payments, advances, or reimbursements, for

travel, including actual transportation and related lodging and subsistence that is reasonably related to a legislative or governmental purpose, or to an issue of state, national, or international public policy, are not prohibited or limited by this chapter if either of the following apply:

(1) The travel is in connection with a speech given by the elected state officer, local elected officeholder, candidate for elected state office or local elected office, an individual specified in Section 87200, member of a state board or commission, or designated employee of a state or local government agency, the lodging and subsistence expenses are limited to the day immediately preceding, the day of, and the day immediately following the speech, and the travel is within the United States.

(2) The travel is provided by a government, a governmental agency, a foreign government, a governmental authority, a bona fide public or private educational institution, as defined in Section 203 of the Revenue and Taxation Code, a nonprofit organization that is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code, or by a person domiciled outside the United States which substantially satisfies the requirements for tax-exempt status under Section 501(c)(3) of the Internal Revenue Code.

(b) Gifts of travel not described in subdivision (a) are subject to the limits in Section 89503.

(c) Subdivision (a) applies only to travel that is reported on the recipient's statement of economic interests.

(d) For purposes of this section, a gift of travel does not include any of the following:

(1) Travel that is paid for from campaign funds, as permitted by Article 4 (commencing with Section 89510), or that is a contribution.

(2) Travel that is provided by the agency of a local elected officeholder, an elected state officer, member of a state board or commission, an individual specified in Section 87200, or a designated employee.

(3) Travel that is reasonably necessary in connection with a bona fide business,

trade, or profession and that satisfies the criteria for federal income tax deduction for business expenses in Sections 162 and 274 of the Internal Revenue Code, unless the sole or predominant activity of the business, trade, or profession is making speeches.

(4) Travel that is excluded from the definition of a gift by any other provision of this title.

(e) This section does not apply to payments, advances, or reimbursements for travel and related lodging and subsistence permitted or limited by Section 170.9 of the Code of Civil Procedure.

Gov’t Code § 89513 This section governs the use of campaign funds for the specific expenditures set forth in this section. It is the intent of the Legislature that this section shall guide the interpretation of the standard imposed by Section 89512 as applied to other expenditures not specifically set forth in this section. (a) (1) Campaign funds shall not be used to pay

or reimburse the candidate, the elected officer, or any individual or individuals with authority to approve the expenditure of campaign funds held by a committee, or employees or staff of the committee or the elected officer's governmental agency for travel expenses and necessary accommodations except when these expenditures are directly related to a political, legislative, or governmental purpose.

(2) For the purposes of this section, payments or reimbursements for travel and necessary accommodations shall be considered as directly related to a political, legislative, or governmental purpose if the payments would meet standards similar to the standards of the Internal Revenue Service pursuant to Sections 162 and 274 of the Internal Revenue Code for deductions of travel expenses under the federal income tax law.

(3) For the purposes of this section, payments or reimbursement for travel by the household of a candidate or elected officer when traveling to the same destination in order to accompany the candidate or elected officer shall be considered for the same purpose as the candidate's or elected officer's travel.

(4) Whenever campaign funds are used to pay or reimburse a candidate, elected officer, his or her representative, or a member of the candidate's household for travel expenses and necessary accommodations, the expenditure shall be reported as required by Section 84211.


(5) Whenever campaign funds are used to pay or reimburse for travel expenses and necessary accommodations, any mileage credit that is earned or awarded pursuant to an airline bonus mileage program shall be deemed personally earned by or awarded to the individual traveler. Neither the earning or awarding of mileage credit, nor the redeeming of credit for actual travel, shall be subject to reporting pursuant to Section 84211.

*****

Attachment C (to memo dated July 7, 2010)

PRA Regulations re: Gifts 1 of 13 City Ethics Commission (July 2010)

California PRA Regulations Provisions Related to Gifts

2 CCR § 18229.1. Definition of “Dependent Children.” For purposes of the Act and Commission Regulations, “dependent child” or “dependent children” means a child, (including an adoptive child or stepchild) of a public official who is under 18 years old and whom the official is entitled to claim as a dependent on his or her federal tax return. 2 CCR § 18727.5. Travel Costs and Other Payments from Campaign Committees. (a) Travel costs and reimbursements therefor paid

by a “committee” as defined by Government Code Section 82013(a), including a “controlled committee,” shall be valued as follows:

(1) A reimbursement, advance, or other payment for actual travel expenses (including meals and lodging) or for other actual and legitimate campaign expenses made by such a committee or controlled committee is neither income nor a gift to an official and need not be disclosed on the official's or candidate's Statement of Economic Interests if the expenditures are reported by the committee in accordance with the provisions of Government Code Sections 84100, et seq.

(2) A reimbursement, advance, or other payment for personal travel expenses not covered by subsection (1) shall be reported by the recipient pursuant to Government Code Sections 87207 or 87302.

(b) Any other payment not covered by subsection (a), including a payment for personal services, such as salary, consulting fees, etc., from a committee is income or a gift (except as provided in Section 18950.3) and reported by the recipient pursuant to Government Code Section 87207 or 87302.

2 CCR § 18940.2. Gift Limit Amount. (a) For purposes of Government Code section

89503, the adjusted annual gift limitation amount in effect for the period January 1, 2009, to December 31, 2010, is $420.

(b) The gift limitation of $250 in Government Code section 89503 shall be adjusted biennially by the Commission to reflect changes in the Consumer Price Index and rounded to the nearest ten dollars ($10). The resulting figure shall be the adjusted gift limitation in effect until January 1 of the next odd-numbered year.

(c) The adjustment shall be based upon the September forecast of U.S. Bureau of Labor Statistics California Consumer Price Index for All Urban Consumers for the calendar year

immediately preceding the year in which the adjustment is to take effect.

(d) The adjusted gift limitation amount shall be calculated by the Commission as follows:

(1) The base dollar amount of $250 shall be increased or decreased by the cumulative percentage change in the annual average California Consumer Price Index from 1990 to the end of the calendar year immediately preceding the year in which the adjustment will take effect.

(2) The dollar amount obtained by application of the calculation set forth in subdivision (b) shall be rounded to the nearest ten dollars ($10).

2 CCR § 18941. Receipt, Promise and Acceptance of Gifts. (a) Receipt or Acceptance of a Gift. Except as

otherwise provided in this section or in California Code of Regulations, Title 2, Section 18943, a gift is “received” or “accepted” when the recipient knows that he or she has either actual possession of the gift or takes any action exercising direction or control over the gift.

(1) In the case of a rebate or discount which, based on Government Code Section 82028, would otherwise be a gift, the gift is “received” or “accepted” when the recipient knows that the rebate or discount is not made in the regular course of business to members of the public without regard to official status.

(2) Except for passes or tickets as set forth in California Code of Regulations, Title 2, Section 18946.1(a), discarding a gift does not negate receipt or acceptance of a gift.

(3) Turning a gift over to another person does not negate receipt or acceptance of a gift.

(b) Disqualification: Promise of a Gift. For the purposes of Government Code Sections 87100 and 87103, a gift is “promised” on the date an offer to give the gift is made if the recipient knows that a gift has been offered and ultimately obtains actual possession of the gift or takes any action exercising direction or control over the gift.

2 CCR § 18941.1. Payments for Food. Except as provided in Government Code section 82028 and California Code of Regulations, Title 2, sections 18727.5, 18941, 18942, 18943, 18946.2, 18946.5, 18950.3, and 18950.4, a payment made to an elected officer or candidate for his or her food is a gift.


2 CCR § 18942. Exceptions to Gift and Exceptions to Gift Limits. (a) For purposes of Section 82028, none of the

following is a gift and none is subject to any limitation on gifts:

(1) Informational material as defined by Regulation 18942.1.

(2) Except for passes and tickets as provided in Regulation 18946.1, a gift that is not used and that, within 30 days after receipt, is returned or donated pursuant to Regulation 18943, or for which reimbursement is paid pursuant to said Regulation 18943.

(3) A gift from an individual's spouse, child, parent, grandparent, grandchild, brother, sister, parent-in-law, brother-in-law, sister-in-law, nephew, niece, aunt, uncle, or first cousin or the spouse of any such person, unless the donor is acting as an agent or intermediary for any person not identified in this subdivision (a)(3).

(4) A campaign contribution required to be reported under Chapter 4 of the Act (commencing with Government Code section 84100).

(5) Any devise or inheritance. (6) A personalized plaque or trophy with an

individual value of less than two hundred fifty dollars ($250).

(7) (A) The cost of hospitality (including food, beverages, or occasional lodging) provided to an official by an individual in the individual's home when the individual is present, unless one of the following provisions applies:

(i) Any part of the cost of the hospitality is paid directly or reimbursed by another person.

(ii) Any person deducts any part of the cost of such hospitality as a business expense on any government tax return.

(iii) There is an understanding between the individual extending the hospitality and another person that any amount of compensation the individual receives from that person includes a portion to be utilized to provide gifts of hospitality in the individual's home.

(B) In determining the applicability of subparagraph (A), the following apply:

(i) The cost of providing hospitality does not include any part of the value or rental cost of the home nor does it include any depreciation value on the home where the hospitality is extended.

(ii) An official may presume that the cost of home hospitality is paid by the host unless the host discloses to the official, or it is clear from the surrounding circumstances at the time the hospitality is provided, that a person, other than the host, paid the cost of the hospitality.

(8) Gifts exchanged between an individual who is required to file a statement of economic interests and another individual, other than a lobbyist, on holidays, birthdays, or similar occasions to the extent that the gifts exchanged are not substantially disproportionate in value. For purposes of this subdivision, and notwithstanding Regulation 18946.2(b), “gifts exchanged” includes food, beverages, entertainment, and nominal benefits provided at the occasion by the honoree or another individual, other than a lobbyist, hosting the event.

(9) Leave credits, including vacation, sick leave, or compensatory time off, donated to an official in accordance with a bona fide catastrophic or similar emergency leave program established by the official's employer and available to all employees in the same job classification or position. This shall not include donations of cash.

(10) Payments received under a government agency program or a program established by a bona fide charitable organization exempt from taxation under section 501(c)(3) of the Internal Revenue Code designed to provide disaster relief or food, shelter, or similar assistance to qualified recipients if such payments are available to members of the public without regard to official status.

(11) Free admission, and refreshments and similar non-cash nominal benefits provided to a filer at an event at which the filer gives a speech, participates in a panel or seminar, or provides a similar service, and transportation and any necessary lodging and subsistence that is exempt under Regulation 18950.3. These items are not payments and need not be reported by the filer.

(12) The transportation, lodging, and subsistence specified by Regulation 18950.4.

(b) The following items, if they are otherwise gifts, are exempt from the limitations on gifts described in Section 89503:

(1) Payments for transportation, lodging, and subsistence that are exempt from limits on gifts by Section 89506 and Regulations 18950, et seq.

(2) Wedding gifts.


2 CCR § 18942.1. Definition of “Informational Material.” "Informational material" means any item which serves primarily to convey information and which is provided for the purpose of assisting the recipient in the performance of his or her official duties or of the elective office he or she seeks. Informational material may include: (a) Books, reports, pamphlets, calendars,

periodicals, videotapes, or free or discounted admission to informational conferences or seminars.

(b) Scale models, pictorial representations, maps, and other such items, provided that where the item has a fair market value in excess of $420, the burden shall be on the recipient to demonstrate that the item is informational material.

(c) On-site demonstrations, tours, or inspections designed specifically for the purpose of assisting the recipient public officials or candidates in the performance of either their official duties or of the elective office they seek. No payment for transportation to an inspection, tour, or demonstration site, nor reimbursement for any expenses in connection therewith, shall be deemed "informational material" except insofar as such transportation is not commercially obtainable.

2 CCR § 18943. Return, Donation, or Reimbursement of a Gift. (a) General Rule for Return, Donation, or

Reimbursement of a Gift. A gift is neither accepted nor received if it is returned, donated, or reimbursed in any manner set forth below:

(1) The gift is returned to the donor, or to the donor's agent or intermediary, unused, within 30 days of receipt or acceptance. In such event, neither the recipient nor the donor shall be required to disclose the receipt or making of a gift or activity expense; or

(2) The gift is donated, unused, to a charitable organization within 30 days of receipt or acceptance, without being claimed as a charitable contribution for tax purposes. In such event, neither the recipient nor the donor shall be required to disclose the receipt or making of a gift or activity expense; or

(3) The gift is donated, unused, to a state, local, or federal government agency, within 30 days of receipt or acceptance, without being claimed as a deduction for tax purposes. In such event, neither the recipient nor the donor shall be required to disclose the receipt or making of a gift or activity expense; or

(4) The recipient, within 30 days of receipt or acceptance, reimburses the donor, or the

donor's agent or intermediary, for all or a portion of the gift. In such event the value of the gift is reduced by the amount of the reimbursement, and the amount of any gift or activity expense which must be disclosed is reduced by the amount of the reimbursement.

(b) Relief from Disqualification by Return, Donation, or Reimbursement. In order to relieve the recipient of an otherwise disqualifying financial interest based upon the receipt or acceptance of a gift valued at $420 or more pursuant to Government Code section 87100, the return, donation, or reimbursement of the gift pursuant to subdivision (a), above:

(1) Must occur within 30 days of receipt or acceptance and prior to the date the recipient makes, participates in making, or uses his or her official position to influence the government decision in question; or,

(2) If the return, donation, or reimbursement has not been made prior to the decision, the recipient must publicly disclose the receipt or acceptance of the gift on the public record, disclose its value, and declare that the return, donation, or reimbursement will occur within two working days following the decision. The subsequent return, donation, or reimbursement must be made within two working days, and within 30 days from receipt or acceptance, and must be documented in the public record.

2 CCR § 18944. Gifts to Members of an Official's or Candidate's Family. (a) Scope of Regulation. This regulation applies

when determining whether a gift to a public official's or candidate's family member also constitutes a gift to the public official or candidate for purposes of the Act.

(b) Definitions. For purposes of this regulation, the following definitions apply:

(1) “Official” means a public official as defined in Section 82048 or a candidate as defined in Section 82007.

(2) “Official's family” or “family member” includes any of the following individuals:

(A) An official's spouse. (B) A “dependent child” of the official as

defined in Regulation 18229.1. (C) An official's child (including an

adoptive child or stepchild) who meets all of the following criteria:

(i) Is at least 18 but no more than 23 years old and is a full-time or part-time student.

(ii) Has the same principal place of residence as the official. For purposes of this provision, a place, located away from the official's residence, at which the


child resides for the purpose of attending school is not the child's “principal place of residence.”

(iii) Does not provide over one-half of his or her own support.

(c) A single gift given to both an official and one or more members of the official's family is a gift to the official for the full value of the gift.

(d) The following applies to a gift given solely to a member of an official's family.

(1) A gift given solely to a member of an official's family is a gift to the official when the gift confers a clear personal benefit on the official. A gift to an official's family member confers a clear personal benefit on the official in any of the following circumstances:

(A) It is reasonably foreseeable at the time the gift is made that the official will enjoy a financial benefit from the gift. A “financial benefit” from a gift includes, but is not limited to, a payment, other than occasional meals, lodging, or local transportation, to fulfill a commitment, obligation, or expense of the type normally paid by a family for the ordinary care and support of one of its members.

(B) It is reasonably foreseeable at the time the gift is made that the official will use the gift, except for a minimal use.

(C) The official exercises discretion and control over who will use or dispose of the gift. Exercising “discretion and control” includes, but is not limited to, when an official, or his or her agent, requests a gift for, or to be used by, the official's family member.

(2) A gift given solely to a member of an official's family and not covered under subdivision (1) is a gift to the official if the gift confers a presumed personal benefit on the official. A gift to an official's family member confers a pressumed personal benefit on the official in any of the following circumstances:

(A) The gift is made to a family member of a state agency official who is subject to Section 87200 by a donor who is a lobbyist, lobbying firm, lobbyist employer, or other person required to file reports under Chapter 6 (commencing with Section 86100) of the Act.

(B) The gift is made to a family member of a local government agency official who is subject to Section 87200 by a donor who is or has been directly involved in a governmental decision, as defined in Regulation 18704.1(a),

in which the official will foreseeably participate or has participated in the prior 12-month period.

(3) Exceptions (A) There is no gift to an official under

paragraph (1) if both of the following circumstances apply:

(i) The official can show there is an established working, social, or similar relationship between the donor and the official's family member independent of the relationship between the donor and the official.

(ii) The person who made the gift is not a donor identified in paragraphs (2)(A) or (2)(B).

(B) The official can rebut the presumption in paragraph (2) if he or she can show there is an established working, social, or similar relationship between the donor and the official's family member independent of the relationship between the donor and the official.

(e) This regulation does not apply to the type of gift that, under the Act or other Commission regulations, would not be considered a gift if given directly to the official.

2 CCR § 18944.1. Gifts: Tickets or Passes to Events. For purposes of this regulation “ticket or pass” means admission to a facility, event, show, or performance for an entertainment, amusement, recreational, or similar purpose. (a) Ticket or pass provided by source other than

official's agency. A ticket or pass provided to an official for his or her admission to an event at which the official performs a ceremonial role or function on behalf of the agency is not a gift to the official.

(b) Ticket or pass provided to official by official's agency.

(1) When an agency provides a ticket or pass to an official of that agency, the ticket or pass is not subject to the provisions of this regulation, provided that the official treats the ticket or pass as income consistent with applicable state and federal income tax laws and the agency reports the distribution of the ticket or pass as income to the official in complying with the provisions of subdivision (d) below.

(2) When an agency provides a ticket or pass to a public official that otherwise meets the definition of gift under Section 82028 and is not exempt under applicable Commission regulations, the official will meet the burden under Section 82028 that equal or greater value has been provided


in exchange therefor, provided that all of the following requirements are met:

(A) With respect to a ticket or pass from an outside source provided to an official by the official's agency:

(i) The ticket or pass is not earmarked by the original source for use by the agency official who uses the ticket or pass;

(ii) The agency determines, in its sole discretion, which official may use the ticket or pass.

(iii) The distribution of the ticket or pass by the agency is made in accordance with a policy adopted by the agency in accordance with subdivision (c) below.

(B) With respect to a ticket or pass provided by the official's agency to an agency official, which ticket or pass the agency obtains (i) pursuant to the terms of a contract for use of public property, (ii) because the agency controls the event (such as a state or county fair), or (iii) that is purchased by the agency at fair market value, the distribution of the ticket or pass is made in accordance with subdivision (c) below.

(c) Any distribution of tickets or passes under subdivision (b)(2) by an agency to, or at the behest of, its officials must be made pursuant to a written policy duly adopted by legislative or governing body of the agency that state the public purposes to be accomplished by the agency policy If the agency maintains a website, the written policy shall be posted on the website in a prominent fashion. The written policy shall contain, at a minimum, the following:

(1) a provision setting forth the public purposes of the agency to be accomplished by the distribution of tickets or passes;

(2) a provision requiring that the distribution of any ticket or pass by the agency to, or at the behest of, an official accomplish a public purpose of the agency; and

(3) a provision prohibiting the transfer by any official of any ticket or pass, distributed to such official pursuant to the agency policy, to any other person, except to members of the official's immediate family solely for their personal use.

(d) The distribution of a ticket or pass pursuant to this regulation, including a ticket or pass that is provided to the official under subdivision (b)(1) above, shall be posted, on a form provided by the Commission, in a prominent fashion on the agency's website, within 30 days after the distribution. If the agency does not maintain a website, the form shall be maintained as a

public record, be subject to inspection and copying under Section 81008(a), and be forwarded to the Commission for posting on its website. The posting shall include the following:

(1) the name of the person receiving the ticket or pass, except that if the ticket or pass is distributed to an organization outside the agency, the agency may post the name, address, description of the organization, and the number of tickets or passes provided to the organization in lieu of posting the names of each individual from the organization;

(2) a description of the event; (3) the date of the event; (4) the face value of the ticket or pass; (5) the number of tickets or passes provided

to each person; (6) if the ticket or pass is behested, the name

of the official who behested the ticket or pass; and

(7) a description of the public purpose under which the distribution was made or, alternatively, that the ticket or pass was distributed as income to the official.

(e) The Commission recognizes the discretion of the legislative or governing body of an agency to determine whether the distribution of a ticket or pass serves a legitimate public purpose of the agency, provided the determination is consistent with state law.

(f) The provisions of subdivision (b) apply only to the benefits the official receives by the admission and are not applicable to any other benefits the official may receive that are not included with the admission, such as food or beverages, or any other item presented to the official at the event.

2 CCR § 18944.2. Gifts to an Agency. (a) Applicability. This regulation sets forth

circumstances under which a payment made to a state or local government agency, that is controlled by the agency and used for official agency business, is not considered a reportable or limited gift to an individual public official, although the official receives a personal benefit from the payment.

(b) Definitions. (1) “Payment” means a payment as defined in

Section 82044 and includes a monetary payment to an agency, a loan, gift, or other transfer, and the payment for, or provision of, goods or services to an agency.

(2) “Agency head” means an individual in whom the ultimate legal authority of an agency is vested, or who has been delegated authority to make determinations by the agency for purposes of this regulation.


(c) Gift to an Agency. A payment, that is otherwise a gift to a public official, as defined in Section 82028, shall be considered a gift to the public official's agency and not a gift to the public official if all of the following requirements are met:

(1) Agency Controls Use of Payment. The agency head, or his or her designee, determines and controls the agency's use of the payment. The donor may identify a purpose for the payment, but the donor may not designate by name, title, class, or otherwise, an official who may use the payment. If the payment will provide a personal benefit to an official, the agency head, or his or her designee, shall select the individual who will use it. The agency official who determines and controls the agency's use of the payment may not select himself or herself as the individual who will use the payment.

(2) Official Agency Business. The payment must be used for official agency business.

(3) Agency Reports the Gift. Within 30 days after use of the payment, the agency reports the payment on a form prescribed by the Commission that includes the following information:

(A) A description of the payment, the date received, the intended purpose, and the amount of the payment (or the actual or estimated value of the goods or services provided).

(B) The name and address of the donor. If the donor is not an individual, the report shall also describe the business activity, or the nature and interests of the entity. If the donor has raised funds from other persons for the specific purpose of making the payment to the agency, the report shall contain the names of and amounts given by these persons.

(C) The agency's use of the payment, and the name, title, and department of the agency official for whom the payment was used. The report shall include the date(s) and place(s) of travel, and a breakdown of the total expenses for transportation, lodging, meals and other related expenses.

(D) The form is signed by the agency head, or his or her designee, and maintained by the agency as a public record subject to inspection and copying under Section 81008(a).

(E) A state agency shall provide the completed form to the Commission (or in the case of the Commission to the office of the Attorney General), within 30 days after use of the payment, by mail, personal delivery,

electronic mail or facsimile. If the state agency maintains a website, the state agency shall also post a copy of the form or the information in the form on its website in a prominent fashion within 30 days after use of the payment. If the state agency does not maintain a website, the Commission shall post a copy of the form or the information in the form on its website.

(F) A local agency shall provide the completed form to the filing officer who receives the agency employees' statements of economic interests, within 30 days after use of the payment, by mail, personal delivery, electronic mail or facsimile. The filing officer shall post a copy of the form or the information in the form on its website, or if it does not maintain a website, shall provide a copy of the form to the Commission which shall post the information on its website.

(G) The individual in the agency who has official custody of these forms is the filing officer for the forms, keeps a log of the forms under both the name of the agency and official receiving the payment, and maintains the forms for a period of not less than four years.

(d) Limitations on Application of this Regulation. The exception provided in subdivision (c) does not apply to the following payments:

(1) A payment for travel, including transportation, lodging, and meals, for a state or local elected officer, as defined in Section 82020, or an official specified in Section 87200.

(2) A payment for travel to the extent that it exceeds the agency's reimbursement rates for travel, meals, and lodging, and other actual and necessary expenses, or if the agency has no standard policy or practice concerning reimbursement rates, the State per diem rates as set forth in applicable sections of the State Administrative Manual and Department of Personnel Administration regulations, or the Internal Revenue Service rates for reimbursement of these expenses as set forth in the U.S. General Service Administration's website under “Per Diem Rates” and Internal Revenue Service Publications 463 and 1542, or their successors.

(3) A payment for travel that the agency head, or his or her designee, has not preapproved in writing in advance of the date of the trip.

(4) Passes or tickets, as described in Regulation 18944.1, which shall be governed by that regulation.


(e) Public Colleges and University Research Projects. Notwithstanding this regulation, a donation to a California public college or university for a specific research project that is received consistent with the requirements of Regulation 18702.4(c) or a meal received in the course of the college's or university's official fundraising activity, which qualifies under federal and state law for a deduction as a charitable contribution for educational purposes, will be deemed a gift to the college or university.

(f) Payments from the Federal Government. Notwithstanding this regulation, a grant, reimbursement, funding, or other payment received by a state or local government agency from a federal government agency for education, training, or other inter-agency programs, will not be considered a gift to the public official who receives a personal benefit from the payment.

2 CCR § 18944.3. Gifts from a Government Agency to Officials in That Agency. Except as provided in Regulation 18944.1 and 18944.2, a payment by a government agency from that agency's assets that provides food, beverage, entertainment, goods, or services of more than a nominal value to an official in that agency is a gift to that official unless the payment is a lawful expenditure of public moneys. 2 CCR § 18944.4. Agency Raffles and Gift Exchanges. (a) Applicability. This regulation identifies when a

payment made by a state or local government agency in the form of an item awarded to an agency employee in a raffle open to all employees of the agency or the unit of the agency holding the raffle, or in an agency gift exchange, will be treated as a gift to the employee.

(b) Agency Raffles. (1) When an agency holds an employee raffle

and the item awarded in the raffle has been received by the agency from a source other than an agency employee and the agency did not purchase the item from its funds, the payment is a gift to the employee from the source who provided the item to the agency, and the agency is the intermediary of the gift. The value of the gift is the fair market value less any consideration paid by the employee to participate in the raffle. If the value of the gift is $50 or more and the employee is required to report the gift on his or her statement of economic interests, the agency and the employee shall comply with Section 87210 or Section 87313 as applicable.

(2) When an agency holds an employee raffle and the item awarded in the raffle has been obtained with agency funds or is otherwise an asset of the agency and not donated to the agency by a non-agency source, the provisions of Regulation 18944.3 apply.

(3) When an agency holds an employee raffle and the item awarded in the raffle has been received by the agency from an agency employee who is not acting as an intermediary for another donor, the item is not a gift to the employee who wins the raffle.

(c) Agency Gift Exchanges. When an employee of an agency participates in an employee gift exchange, any item received by the employee in the gift exchange is not a gift so long as the item received is provided by another employee of the agency and the gifts are not substantially disproportionate in value.

(d) This regulation does not apply to passes or tickets of the type described in Regulation 18944.1, which shall be governed by that regulation.

2 CCR § 18945. Source of Gifts. (a) General Rule. A person is the source of a gift if

the person makes a gift to an official and is not acting as an intermediary.

(b) Gifts through an Intermediary. (1) A person is the source of a gift, and a third

party is an intermediary of the gift under Sections 87210 or 87313, if the person makes a payment to the third party and the payment is used directly or indirectly by the third party to make a gift to an official under any of the following conditions:

(A) The person directs and controls the payment at the time it is used by the third party to make a gift to the official.

(B) The person and third party have agreed that the payment will be used by the third party to make a gift to the official.

(C) The person identifies the official to the third party as the intended beneficiary of the payment prior to the third party making the payment to the official.

(D) The third party identifies the official to the person as the intended beneficiary of the payment prior to the person making the payment to the third party.

(E) The person knows or has reason to know that the sole or primary purpose of the payment is to make gifts to officials.


(F) The official or the official's agent solicits the payment from the person to the third party for the purpose of making a gift to the official.

(2) For purposes of subdivisions (b)(1)(C) and (b)(1)(D), a person or third party “identifies the official” if the person or third party identifies the official by name or any other designation of the official from which it is clear the person or third party is referring to the official, or if the person or third party identifies a group of officials from one or more specific state or local government agencies and the official is part of that group.

(c) A person who pays dues or similar payments for membership in a bona fide association, including any federation, confederation, or trade, labor or membership organization is not the source of gifts made by the association to an official unless the sole or primary purpose of the dues or similar payments is to make gifts to officials.

(d) Presumption of Source by Officials. An official may presume that the person delivering the gift or, if the gift is offered but has not been delivered, the person offering the gift to him or her is the source of the gift unless either of the following apply:

(1) The person delivering or offering the gift discloses to the official the actual source of the gift.

(2) It is clear from the surrounding circumstances at the time the gift is delivered or offered that the person delivering or offering the gift is not the actual source of the gift.

(3) The official solicits a payment pursuant to subdivision (b)(1)(F) and receives or is offered a gift responsive to the solicitation within 12 months of making the solicitation.

(e) Presumption of Source by Intermediaries. A third party otherwise qualifying as an intermediary as a result of a payment solicited from an official pursuant to subdivision (b)(1)(F) may presume that he or she is the source of the gift, and is not required to disclose the actual source of the gift as required by Regulation 18945.3, when both of the following apply:

(1) The third party does not know or have reason to know of the official's solicitation.

(2) The third party does not qualify as an intermediary under subdivisions (b)(1)(A)-(b)(1)(E).

2 CCR § 18945.1. Cumulation of Gifts; “Single” Source. For purposes of the limitations in Government Code Sections 89501 through 89506, two or more

gifts are cumulated as being from a “single” source if any of the following circumstances apply: (a) Gifts from an individual and an entity in which

the individual has an ownership interest of more than 50 percent shall be cumulated as being gifts from a “single” source.

(b) Except as provided in subdivision (a), gifts from an individual and an entity shall be cumulated as being gifts from a “single” source if the individual in fact directs and controls the decision of the entity to make the gifts.

(c) If the same person or a majority of the same persons in fact directs and controls the decisions of two or more entities to make gifts to one or more public officials or candidates, gifts by those affiliated entities shall be cumulated as being gifts from a “single” source.

(d) Business entities in a parent-subsidiary relationship, or business entities with the same controlling (more than 50 percent) owner, shall be considered a “single” source unless the business entities act independently in their decisions to make gifts to one or more public officials or candidates. For purposes of this regulation, a parent-subsidiary relationship exists when one business entity owns more than 50 percent of another business entity.

2 CCR § 18945.3. Intermediary of a Gift. (a) Intermediaries of Gifts to Persons Required to

File Under Title 9, Chapter 7, Article 2 of the Government Code—No person shall make a gift totaling fifty dollars ($50) or more in a calendar year to a person described in Article 2 on behalf of another, or while acting as the intermediary or agent of another, without disclosing to the recipient of the gift both his own full name, street address, and business activity, if any, and the full name, street address, and business activity, if any, of the actual donor. The recipient of the gift shall include in his Statement of Economic Interests the full name, street address, and business activity, if any, of the intermediary or agent and the actual donor.

(b) Intermediaries of Gifts to Persons Required to File Under Title 9, Chapter 7, Article 3 of the Government Code—No person shall make a gift of fifty dollars ($50) or more in a calendar month on behalf of another, or while acting as the intermediary or agent of another to a person whom he knows or has reason to know may be required to disclose the gift pursuant to a conflict of interest code, without disclosing to the recipient of the gift both his own full name, street address, and business activity, if any, and the full name, street address, and business activity, if any, of the actual donor. The recipient of the gift shall include in his Statement of Economic Interests the full name, street address, and business activity, if any, of


the intermediary or agent and the actual donor.

(c) Notwithstanding subdivisions (a) or (b) above, it shall be unlawful for a lobbyist or lobbying firm to act as an intermediary in the making of any gift aggregating more than $10 per calendar month to a state candidate, elected state officer, legislative official or agency official of any agency required to be listed on the registration statement of the lobbying firm or the lobbyist employer of the lobbyist.

2 CCR § 18945.4. A Gift from Multiple Donors. A gift which is received from multiple donors must be reported if the gift's value equals or exceeds $50. The name of any donor whose share of the gift is less than $50 in value need not be separately reported; it is sufficient to describe in general terms those who gave the gift. If, however, the share of any donor or his or her [agent or] intermediary is $50 or more in value, his or her name must be reported. 2 CCR § 18946. Reporting and Valuation of Gifts. (a) Scope of Section. Except as specified in 2 Cal.

Code Regs. sections 18946.1 through 18946.5, inclusive, gifts shall be valued at fair market value as of the date of receipt or promise. Sections 18946.1 through 18946.5 provide for the valuation of specific types of gifts in the following situations:

Passes and Season Tickets—Regulation 18946.1

Testimonial Dinners and Events, Invitation-Only Events, and Ceremonial Functions—Regulation 18946.2

Wedding Gifts—Regulation 18946.3 Tickets to Nonprofit and Political

Fundraisers—Regulation 18946.4 Prizes and Awards From Bona Fide

Competitions—Regulation 18946.5 (b) General Rule for Valuation of Unique Gifts.

Whenever the fair market value cannot readily be ascertained because the gift is unique or unusual, the value shall be the cost to the donor, if known or ascertainable. If the cost to the donor is unknown and unascertainable, the recipient shall make a reasonable approximation. In making such an approximation, the recipient shall take into account the price of similar items. If similar items are not available as a guide, a good faith estimate shall be utilized.

(c) Except as specified in 2 Cal. Code Regs. sections 18943, 18944, and 18946.1, a gift must be valued, for purposes of disclosure and disqualification, even if unused, discarded or given to another person.

(d) Definitions: For purposes of this section and 2 Cal. Code Regs. sections 18946.1 through

18946.5 and section 18640, the following definitions apply:

(1) “Face Value.” The term “face value” means the price indicated on the ticket, or if no price is indicated, the price at which the ticket or similar pass would otherwise be offered for sale to the general public by the operator of the venue or host of the event who offers the ticket for public sale.

(2) “Ticket/Pass.” A “ticket” or “pass” means anything that provides an admission privilege to an event or function and for which similar tickets or passes are offered for sale to the public.

(3) “Invitation.” An “invitation” means a request to attend an event or function by the sponsor of the event or function, that is not a ticket or pass as defined above in subsection (d)(2) of this section and 2 Cal. Code Regs. section 18944.1, and where admission to the event is provided by such invitation only.

(4) “Specific Item.” The term “specific item” means a tangible item received by an official or candidate at an event that is not included among the non-cash nominal items presented to all attendees at the event.

2 CCR § 18946.1. Reporting and Valuation of Gifts: Passes and Tickets. (a) A pass or ticket that provides one-time

admission or access to facilities, goods, services, or other incidental tangible or intangible benefits (including a pass to motion picture theaters, amusement parks, parking facilities, country clubs, and similar places or events, and also including a ticket for theater, opera, sporting, or similar event, but not including travel or lodging) shall be valued at the face value of the pass or ticket, provided that the face value is a price that was, or otherwise would have been, offered to the general public. A pass or ticket has no value unless it is ultimately used or transferred to another person.

(b) A pass or ticket that provides repeated admission or access to facilities, goods, services, or other incidental tangible or intangible benefits (including a pass to motion picture theaters, amusement parks, parking facilities, country clubs and similar places or events, and also including a season ticket for theater, opera, sporting, or similar season events, but not including travel or lodging) shall be valued as follows:

(1) For purposes of disclosure and the gift limits, the value shall be the fair market value of the actual use of the pass or ticket by the recipient, including guests who may accompany the recipient and who are admitted with the pass or ticket,


plus the fair market value of any possible use by any person or persons to whom the privilege of use of the pass or ticket is transferred.

(2) For purposes of disqualification, the value shall be the actual use of the pass or ticket by the official, including guests who may accompany the official and who are admitted with the pass or ticket, plus the fair market value of any possible use by any person or persons to whom the official transfers the privilege of use of the pass or ticket, through the date of the governmental decision in question, plus the fair market value of the maximum reasonable use following the date of the decision. If the official returns the pass or any unused ticket prior to the decision, the value shall be determined pursuant to subdivision (b)(1).

2 CCR § 18946.2. Reporting and Valuation of Gifts: Testimonial Dinners and Events, Invitation-Only Events, and Ceremonial Functions. (a) Testimonial Dinners. When an official or

candidate is honored at a testimonial dinner or similar event, at which campaign fundraising for the official or candidate does not occur, the value received is the official's or candidate's pro rata share of the cost of the event, plus the value of any specific item that is presented to the official or candidate at the event.

(b) Invitation-Only Events. Except as provided in subdivisions (d) through (f) of this regulation, when an official or candidate attends an invitation-only event such as a banquet, party, gala, celebration, or other similar function, other than a nonprofit or political fundraiser as set forth in 2 Cal. Code Regs. section 18946.4, the value received is the official's or candidate's pro rata share of the cost of the event, plus the value of any specific item that is presented to the official or candidate at the event.

(c) “Pro-rata share of the cost of the event.” The term “pro rata share of the cost of the event” means the cost of all food and beverages, rent of the facilities, decorations, entertainment, and all other costs associated with the event, divided by the number of acceptances or the number of attendees.

(d) Official or Ceremonial Functions. When an official performs an official or ceremonial function at an invitation-only event, as set forth in subdivision (b) of this regulation, in which the official is invited to participate by the event's sponsor or organizer to perform an official or ceremonial function, the value received is the cost of any food or beverages provided to the official plus the value of any

specific item that is presented to the official at the event.

(e) Drop-In Visit. Except as provided in subdivision (f) of this regulation, if an official attends an event referred to in subdivision (a) or (b) of this regulation and does not stay for any meal or entertainment otherwise provided at the event, and receives only minimal appetizers and drinks, the value of the gift received is the cost of the food and beverage consumed by the official and guests accompanying the official, plus the value of any specific item that is presented to the official at the event. For purposes of this subdivision, "entertainment" means a feature show or performance intended for an audience, and does not include music provided for background ambiance.

(f) Lobbyists, Lobbying Firms, and Lobbyist Employers. Where an official attends an event referred to in subdivision (a) or (b) of this regulation, sponsored by any person required to file a periodic statement under Article 1 of Chapter 6 of this title, the value of the gift is determined pursuant to the provisions of 2 Cal Code Regs. section 18640.

2 CCR § 18946.3. Reporting and Valuation of Gifts: Wedding Gifts. Notwithstanding the provisions of California Code of Regulations, Title 2, Section 18944, wedding gifts given to an official and his or her spouse or spouse-to-be are considered as gifts to both spouses equally, and the official is deemed to receive one-half of the value as determined pursuant to California Code of Regulations, Title 2, Section 18946, unless the gift is peculiarly adaptable to the personal use and enjoyment of one spouse or specifically and unequivocally intended exclusively for use and enjoyment by one spouse, in which event the full value of the gift is attributed to that spouse. 2 CCR § 18946.4. Reporting and Valuation of Gifts: Tickets Provided by Nonprofit and Political Organizations for Their Fundraising Events. This regulation applies to a single ticket or other admission privilege to a specific fundraising event provided to a public official by a nonprofit or political organization holding its own fundraiser and used solely by the public official. (a) Nonprofit Fundraiser. Except as provided in

subdivision (b), the value of a gift of a ticket, pass, or other admission privilege to a fundraising event for a nonprofit, tax-exempt organization that is not a committee covered by subdivision (c) is determined as follows:

(1) Where the ticket clearly states that a portion of the ticket price is a donation to the organization, the value of the gift is the


face value of the ticket reduced by the amount of the donation.

(2) If there is no ticket indicating a face value or the ticket or other admission privilege has no stated price or no stated donation portion, the value of the gift is the pro rata share of the cost of any food, and beverages, plus any other specific item presented to the attendee at the event.

(b) 501(c)(3) Organization Fundraiser. Where the event is a fundraising event for an organization exempt from taxation under Section 501(c)(3) of the Internal Revenue Code, the organization may provide one ticket per event to an official and that ticket shall be deemed to have no value so long as the cumulative value of the nondeductible portion of the ticket(s), as provided in subdivision (a), received by the official from the same organization during a calendar year, does not exceed the gift limits imposed under Section 89503 and Regulation 18940.2.

(c) Political Fundraiser. For a gift of a ticket, pass, or other admission privilege to a fundraising event for a committee defined in Section 82013(a), or a comparable committee regulated under federal law holding an event in California, the committee or candidate may provide one ticket per event to an official and that ticket shall be deemed to have no value.

2 CCR § 18946.5. Prizes and Awards From Bona Fide Competitions. A prize or an award received shall be reported as a gift unless the prize or award is received in a bona fide competition not related to the recipient's status as an official or candidate. A prize or award which is not reported as a gift shall be reported as income. 2 CCR § 18946.6. Reporting and Valuation of Gifts: Air Transportation. Air transportation that is a gift to a public official shall be valued as follows: (a) For transportation on a “commercial aircraft,”

the value of the ticket or fare the carrier charges to a member of the public for the same transportation provided to the official. For purposes of this regulation, “commercial aircraft” means an aircraft used to transport the general public for compensation or hire on a regular basis, and for which a fare is charged on a per-passenger basis.

(b) For all other air transportation, the value of the normal and usual charter fare or rental charge for a comparable airplane of comparable size, divided by the number of all of the following persons that share the same flight:

(1) “Designated employees” as defined in Section 82019.

(2) Public officials specified in Section 87200.

(3) Members of Congress, and officers and employees of the executive, legislative, or judicial branch of the United States government.

(c) The actual cost or fair market value of any other personal benefits provided to the official during the air transportation, including food, beverages, or entertainment, shall be treated as a separate gift to the official unless the benefit is included as part of the fare determined in subdivision (a) or (b).

2 CCR § 18950.1. Gifts of Travel: Exceptions. The following provisions shall apply to payments made for travel pursuant to Government Code Sections 89501 through 89506: (a) Travel In Connection With Speeches, Panels,

and Seminars. (1) Only a reportable payment is subject to

the limitations on gifts specified in Government Code Section 89503. See California Code of Regulations, Title 2, Section 18950.3, to determine whether a payment in connection with a speech, panel, or seminar is reportable.

(2) A payment made for travel, including actual transportation and related lodging and subsistence, is not subject to the prohibitions or limitations on honoraria and gifts specified in Government Code Sections 89501, 89502, or 89503 if:

(A) The travel is reasonably related to a legislative or governmental purpose, or to an issue of state, national, or international public policy, and

(B) The travel, including actual transportation and related lodging and subsistence, is in connection with a speech given by the official or candidate; the lodging and subsistence expenses are limited to the day immediately preceding, the day of, and the day immediately following the speech; and the travel is within the United States.

Except as otherwise provided by California Code of Regulations, Title 2, Section 18950.3, any payment made for travel specified in this subdivision (a)(2), shall be reported in accordance with Government Code Section 87207(c).

(b) Travel Provided by Governmental Entity or Charity. A payment made for travel, including actual transportation and related lodging and subsistence, is not subject to the prohibitions or limitations on honoraria and gifts specified in Government Code Sections 89501, 89502, or 89503 if:

(1) The travel is reasonably related to a legislative or governmental purpose, or to an issue of state, national, or international public policy; and


(2) The payment is provided by a government, a governmental agency, a foreign government, a governmental authority, a bona fide public or private educational institution, defined in Section 203 of the Revenue and Taxation Code, or by a nonprofit organization that is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code, or by a person that is domiciled outside the United States and that substantially satisfies the requirements for tax exempt status under Section 501(c)(3) of the Internal Revenue Code.

Except as provided by California Code of Regulations, Title 2, Section 18950.3, any payment made for transportation, lodging, and subsistence, specified by subdivision (b), shall be reported in accordance with Government Code Section 87207(c).

(c) Travel Paid From Campaign Funds. A payment made for transportation and necessary lodging and subsistence, which payment is made from campaign funds as permitted by Government Code Section 89513, or which is a contribution, is not an honorarium or a gift.

(d) Travel Provided By Official's Agency. A payment made for transportation and necessary lodging and subsistence, which payment is made by the agency of an official, is not an honorarium or a gift.

(e) Travel In Connection With Bona Fide Business. A payment made for transportation, lodging, and subsistence, which payment is reasonably necessary in connection with a bona fide business, trade, or profession, and which satisfies the criteria for federal income tax deductions for business expenses specified in Sections 162 and 274 of the Internal Revenue Code, is not an honorarium or gift unless the sole or predominant activity of the business, trade or profession is making speeches.

2 CCR § 18950.3. Payments in Connection with Speeches. (a) Definitions: For the purposes of this regulation,

the following definitions apply: (1) “Speech” means making a speech,

participating on a panel, or making a substantive formal presentation at a seminar or similar event.

(2) Lodging, food or beverages are “necessary” only when provided on the day immediately preceding, the day(s) of, and the day immediately following the speech, panel, seminar, or similar service.

(b) A payment made for admission to an event at which an official makes a speech, transportation, and necessary lodging, food, or beverages, and nominal non-cash benefits

provided to the official in connection with making the speech is not a “payment” as defined in Section 82044 and is not reportable if all of the following apply:

(1) The speech is for official agency business and the official is representing his or her government agency in the course and scope of his or her official duties.

(2) The payment is a lawful expenditure made only by a federal, state, or local government agency for purposes related to conducting that agency's official business. For purposes of this subdivision, a payment made to the agency by a nongovernmental source that is earmarked for use by or reimbursement of an official specified by the source is not a "payment by a federal, state, or local government agency."

(3) The official making the speech is not a state or local elected officer, as defined in Section 82020, or an official specified in Section 87200.

2 CCR § 18950.4. Payments for Travel in Connection with Campaign Activities. (a) Except as provided in Section 18727.5, a

payment made to an elected officer or candidate for his or her transportation, lodging, or subsistence is a gift unless the transportation, lodging, or subsistence provided to the elected officer or candidate is in “direct connection” with campaign activities, including attendance at political fundraisers.

(1) Any payment made to an elected officer or candidate for his or her transportation, lodging, or subsistence, during the six month period prior to an election in which the elected officer or candidate is to be voted upon shall be considered “in direct” connection with campaign activities if the payment is for necessary transportation, lodging, or subsistence, used specifically for the purpose of the elected officer's or candidate's:

(A) Participation in candidate forums, debates or similar voter gatherings at which he or she makes a speech; or

(B) Attendance at meetings with campaign staff or political consultants to develop or implement campaign strategy.

(2) A payment made to an elected officer or candidate for necessary transportation to, or lodging and subsistence at, an event described in subdivision (a)(1)(A) or subdivision (a)(1)(B), but not made within the six month period prior to the election in which the elected officer or candidate is being voted upon, shall be considered gifts unless it is clear from the surrounding circumstances that the payment is made


directly in connection with campaign activities.

(b) When a payment is made to an elected officer or candidate for his or her necessary lodging and subsistence or transportation in direct connection with attendance at a political fundraiser or an event listed in subdivision (a)(1)(A) or subdivision (a)(1)(B), which fundraiser event is conducted to benefit another elected officer or candidate, or to benefit a committee as defined in Government Code Section 82013(a), the payment is a contribution to the officer, candidate, or committee benefitting from the fundraiser.

Attachment B (to memo dated September 7, 2010)

Los Angeles City Ethics Commission Local Government Gift Limits

September 2010

CITY LIMIT SOURCE California Jurisdictions Long Beach $0 Lobbyists.

$0 Lobbyists and lobbying firms. Los Angeles $100 per year Lobbyist employers; contractors; persons seeking contracts;

persons attempting to influence the recipient; and parties to permit proceedings.

Los Angeles County $50 per month Lobbyists and lobbying firms.

Metro (Los Angeles County)

$10 per month (max. $50 per year)

Lobbying entities; contractors; subcontractors; and persons doing business with the agency.

Oakland $240 per year Lobbyists and their clients.

Orange County $0 Lobbying entities; contractors; persons seeking contracts; persons seeking, supporting, or opposing a discretionary permit; and anonymous sources.

$0 in travel Lobbying entities; persons doing business with the city; persons who are parties to or directly communicated with a city official about a municipal decision.

$10 per month Lobbyists.

San Diego

$420 per year Any source.

$0 Persons doing or seeking business with the recipient’s agency; persons attempting to influence the recipient.

San Francisco

$25 per gift Lobbyists.

San Jose $50 per gift Persons subject to the recipient’s decision-making authority.

Non-California Jurisdictions Atlanta $0 Lobbyists; persons seeking official action from the city;

persons doing or seeking business with the city; and persons whose interests may be substantially affected by the recipient’s duties.

Austin $100 per year Lobbyists and their clients.

Chicago $50 per gift (max. $100 per year)

Persons with an economic interest in city business.

Jacksonville $100 per gift (max. $250 per year)

Lobbyists and their clients; persons doing or seeking business with the city; and persons subject to permit approval by the recipient’s agency.

$0 Lobbyists and their spouses and children. New York $50 per year Person in or intending to be in business dealings with the

city.

$0 Contractors and persons subject to regulatory or quasi-judicial action.

Seattle

$50 per year Any source. Jurisdictions: 15

Bans: 8 (53%)—Lobbying entities only (Long Beach, LA, NYC); any restricted source (OC, San Diego, SF, Atlanta, Seattle)

Per-gift limits: 4 (27%)—$25 (SF), $50 (San Jose, Chicago), $100 (Jacksonville) Per-month limits: 3 (20%)—$10 (Metro, San Diego), $50 (LA County)

Totals

Per-year limits: 6 (40%)—$50 (NYC, Seattle), $100 (LA, Austin), $240 (Oakland), $420 (San Diego)

These limits are separate from gifts that are intended to influence official action, which are nearly universally banned.

Other aspects of gift laws can also vary, such as the definition of “gift”, the recipients to whom the limits apply, and any knowledge or intent requirements.

Attachment C (to memo dated September 7, 2010)

Attachment D (to memo dated September 7, 2010)


Special Valuations for Certain Events Current Law as of September 2010

Type of Event Value

Event open to the general public without admission fee. $0

Event at which you participate in a panel or give a speech. 2 Cal. Code of Regs. § 18942(a)(11)

$0

Entertainment event at which you perform a ceremonial role or function. 2 Cal. Code of Regs. § 18944.1(a)

$0

Entertainment event to which admission is provided by your agency, if your agency has adopted a distribution policy pursuant to state law. 2 Cal. Code of Regs. § 18944.1(b)

$0

California political fundraiser to which admission is provided by the candidate or committee. 2 Cal. Code of Regs. § 18946.4(c)

$0

No

Valu

e

Fundraiser for a 501(c)(3) organization to which admission is provided by the organization. 2 Cal. Code of Regs. § 18946.4(b)

$0, if the non-deductible portion of all single admissions from that 501(c)(3) do not exceed $420 in a calendar year.

Fundraiser for a nonprofit other than a 501(c)(3) organization to which admission is provided by the nonprofit. 2 Cal. Code of Regs. § 18946.4(a)(1)

The face value of the admission minus the donation.

Testimonial dinner in your honor. 2 Cal. Code of Regs. § 18946.2(a)

Your pro rata share* of the cost of the event, plus the value of any tangible item you receive.

Invitation-only event (e.g., a banquet or gala). 2 Cal. Code of Regs. § 18946.2(b)

Your pro rata share* of the cost of the event, plus the value of any tangible item you receive.

Invitation-only event at which you perform an official or ceremonial function. 2 Cal. Code of Regs. § 18946.2(d)

The cost of any food or beverages provided to you, plus the value of any tangible item you receive.

Valu

e

Invitation-only event at which you “drop in” and do not stay for the meal or entertainment. 2 Cal. Code of Regs. § 18946.2(e)

The cost of any food or beverages consumed by you and your guests, plus the value of any tangible item you receive.

*Your pro rata share of the cost of an event is all costs associated with the event (including food and beverages, entertainment, decorations, facility rentals, etc.) divided by the number of people who accept the invitation or attend the event.

Note: Events not identified here generally have fair market or face value. The value of attending events is important, because City officials are subject to gift limits, as well as disclosure and disqualification requirements, under both state and City laws. The gift laws are detailed and can be complex. Applying them in your circumstances may require analysis by the Ethics Commission (213-978-1960; ethics.lacity.org) or the City Attorney’s office (213-978-7100).

Attachment E (to memo dated September 7, 2010)

IOCT 1 2 2001RULES & GOVERNMENT

MOTION

Ex pare communications are contacts made by one pary with a decisionmaker-such as a City Commissioner - outside the presence of other interested paries. The CityEthics Commission does not curently have a Citywide ex pare communications programfor City Commissioners and parties conducting business with a Commission.

City Commissioners have an obligation to ensure due process on all mattersbefore them, paricularly in the case of quasi-judicial matters. Additionally, the citizensof Los Angeles have a right to imparial decisionmakers and full disclosure oftheevidence used to reach a decision. Ex parte communications by parties involved withbusiness before a Commission could potentially be seen as a violation of ethicalstandards.

It is incumbent upon the Los Angeles City Government to make clear that there istransparency in how decisions get made. It is thc foundation of our democracy thatAngelenos believe that decisions are made on behalf of the people not the powerfuL.

Several City Commissions have adopted their own policies regarding ex parecommunications, addressing the importance of introducing issues of vital concern into thedecisionmaking process. Recent restrictions prevent Commissioners from paricipating ina Department's contracting process effectively create an ex pare restriction oncontracting matters. However, there is no Citywide policy.

Various cities and agencies across the State of California have implemented expare communications restrictions, including the Los Angeles Board of HarborCommissioners, the City of San Diego, the City of Santa Monica Planning Commission,and the California Coastal Commission. Substantial research into this matter as it regardscommissioners in the State has been conducted.

Specific to the Los Angeles Board of Harbor Commissioners, ex partecommunications include items pertaining to upcoming competitively bid contracts anditems on the Board's agenda from the time that it is published until the matter is finallydetermined.

This gap in the City's ethics code should be evaluated. Options for Citywideregulations for City Commissioners should be investigated by the City EthicsCommission and City Attorney and be presented to the City Council for considerationand action.

I THEREFORE MOVE that the City Council REQUEST the City EthicsCommission and City Attorney to evaluate and recommend within 90 days the mostappropriate means to regulate ex parte communications wit ity ommissioncrs.

Presented by:

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APR 292009

RULES .& GOVERNMENTMOTION

Ex parte communications between City Commissioners and parties conductingbusiness with a Commission are of concern that have not been fully considered within thecontext of the City's ethics program. City Commissioners, particularly in the case ofquasi-judicial matters, have an obligation to ensure due process on all matters beforethem. Ex parte communications by parties involved with business before a Commissioncould be seen as a violation of ethical standards.

Several City Commissions have adopted their own policies regarding ex partecommunications, but there is no Citywide policy. In addition, recent restrictions thatprevent Commissioners from participating in a Department's contracting processeffectively create an ex parte restriction on contracting matters.

The City Attorney has prepared a report that evaluates issues associated with exparte communications and recommends that matters related to ex parte communicationsbe addressed through the adoption of a policy on this subject. A policy, however, doesnot have the force of law or penalties for non-compliance with the law, especially withregard to commissions handling quasi-judicial matters.

This gap in the City's ethics code should be closed. An ordinance should bepresented to ensure that all City Commissioners disclose ex parte communications on amatter before their commission.

I THEREFORE MOVE that the City Attorney be requested to prepare and presentan ordinance incorporating the recommendations contained in its report of 2007 on thesubject of ex parte communications in quasi judicial matters and requiring compliancewith all requirements applicable to, including disclosure of, other permissible ex partecommunication.

PRESENTED BY: _~",-. -Tc.~C'::::::c=C-:::::===--VWENDY GREUEL

CokcIlmember, 2nd District

SECONDED BY: ---41221t!f.~:::..---

Attachment F (to memo dated September 7, 2010)

Attachment G (to memo dated September 7, 2010)

Attachment H (to memo dated September 7, 2010)

74%

9%

17%

Legislative v. Adjudicative

Affects Adjudicative Matters (74%)

Affects Legislative Matters (17%)

Affects Both Types of Matters (9%)


Ex Parte CommunicationsSeptember 2010

Based on an informal survey of 65 federal, state, and local government agencies.

68%

18%

14%

Disclosure v. Ban

EPCs Are Banned (14%)

EPCs Must Be Disclosed (18%)

EPCs Are Banned and Must Be Dis-closed (68%)


Ex Parte Communications SurveySeptember 2010

Jurisdiction Restricted PartyAffects

Adjudicative Matters1

Affects Legislative

MattersEPCs Are Banned EPCs2 Must Be

Disclosed Codified3Sanction for

Non-Compliance

California Municipal Agencies

City of Berkeley City Council; Commissions x x

City of Lawndale Elected Official; Public Official x x x x x

Removal, suspension, or

other

City of Los Angeles Board of Harbor Commissioners x x

City of Newport Beach

City Council; Commission; City

Employeesx x

City of Oroville Public Officials; City Employees x x x x x

Removal, suspension, or

other

City of San Diego Ethics Commissioners x x x

City of San FranciscoLocal Agency

Formation Commission

x x

City of Santa Monica Planning Commission x x x

California State Agencies

California Air Resource Board

Hearing Officer; Executive Officer x x x x Disqualification

California Coastal Commission Commission x x x x $7,500

1 of 10





Affects Legislative



Non-Compliance

California Gambling Control Commission

Commission; Interested Person; Employee; Agent

x x xDisqualification;

denial of application

California Judicial Council (Family

Court)

Attorney; Interested Parties x x x

California Judicial Council (Probate

Court)

Attorney; Interested Parties x x x x

California Energy Resource

Conservation and Development Commission

Commissioners; Hearing Advisors x x x x

Disqualification; legal challenges

to decision

California State Mining and Geology

Board

Board Member; Interested Person x x x x Fine up to $7,500

California Occupational Safety and Health Appeals

Board

Appeals Board Member;

Administrative Law Judge

x x x x

2 of 10





Affects Legislative



Non-Compliance

California Local Transportation

Agencies

Board Member; Interested Person x x x x Disqualification

California Public Utilities Commission

Commission; Applicant; Agent; x x x x

Fines; disqualification; determination by

judge

California Waste Management Board

Board Member; Interested Person x x x x x

$50,000 fine; imprisionment for

up to a year; both; civil complaint;

removal from office

California Water Resources Control

BoardBoard Member x x x x x

Disqualification; legal challenges

to decision

California Central Valley Flood

Protection Board

Board Member; Interested Person x x x x x

3 of 10





Affects Legislative



Non-Compliance

California Workers' Compensation Appeals Board

Medical Evaluator x x x

Termination of medical

evaluation; contempt; costs

of case

Non-California Municipal Agencies

City of Centennial Board of Adjustment,

COBoard Member x x

City of Seattle City Council, WA City Council x x

Seattle Ethics and Elections

Commission

Commission; Interested Person x x x x Disqualification

City of Sioux City Board of Adjustment, Planning, and Zoning,

IA

Board Members x x x x Fines

New York City Conflicts of Interest

Board

Legal Counsel; Board Member x x x Penalties

Non-California County Agencies

Montgomery County Board of License

Commissioners, MDBoard Members x x x Removal

4 of 10





Affects Legislative



Non-Compliance

Montgomery County, MD Public Officials x x x x Removal

St. Mary's County Ethics Commission,

MDCommission x x x

Non-California State Agencies

Arizona Citizens Clean Election Commission

Commission; City Employee x x x Penalties

Connecticut Office of State Ethics

Board Member; Designated Judge x x x x Possible Appeal

Connecticut Freedom of Information Commission

Commission; Hearing Officer x x x x Disqualification;

recusal

Florida Public Service Commission Commission x x x x

Removal; fine of $5,000; cannot appear before

board for 2 years

Florida Commission on Human Relations

Commission; Hearing Officer x x x

5 of 10





Affects Legislative



Non-Compliance

Hawaii State Judiciary Judge x x x xCase may be

delayed or dismissed

Iowa Alcoholic Beverages Division Presiding Officer x x x x

Censure; suspension; dismissal; or

other

Iowa Banking Division Presiding Officer x x x x


other

Iowa Civil Rights Commission Presiding Officer x x x x


other

Iowa Dental Board Presiding Officer x x x x


other

Iowa Employee Appeal Board

Board Member; Officer; Employee;

Agent of Boardx x x Disciplinary

action

Iowa Insurance Division

Presiding Officer; Agency Personnel x x x x

Default; decision against offending party; censure;

suspension

6 of 10





Affects Legislative



Non-Compliance

Iowa Workforce Development Department

Presiding Officer x x x x

Dismissal; decision against

the offending party; censure;

suspension; revocation of privilege to

practiceKansas Office of Administrative

HearingsPresiding Officer x x x x

Disciplinary action;

disqualification

Michigan Gaming Control Board

Board Member; Licensee Applicant

or Affiliatex x x x

Disciplinary action;

disqualification

North Carolina General Assembly

Administrative Law Judge; Employee x x x x Disqualification

Minnesota Public Utilities Commission Commission x x x

Recusal; removal;

dismissal of proceeding;

adverse ruling; strike evidence; public censure

New Mexico Public Regulation

Commission

Advisory Staff; Hearing Examiner;

Commissionx x x x

Dismiss, deny, disregard, or

otherwise take adverse action

Ohio State Medical Board

Hearing Examiner; Board Member x x x Recusal

7 of 10





Affects Legislative



Non-Compliance

Ohio Environmental Protection Agency

Director, the Assistant Director,

the Deputy Directors, or

Hearing Examiner

x x x x Disqualification

South Carolina Office of Regulatory Staff

Commission; Hearing Officer;

Employeex x x x Disqualification

Texas Administrative Procedures Agency

Board Member; Employee x x x Class A

misdemeanor

Utah Public Service Commission

Commission; Administrative Law Judge; Employee

x x x x

Item dismissed, denied,

disregarded, or otherwise adversely affected

Utah State Courts (arbitration of fee

disputes)

Parties Involved; Board Member x x x x Disciplinary

Action

Utah Tax Commission

Parties Involved; Commission;

Administrative Law Judge

x x x x Disqualification

Washington State Legislature Presiding Officer x x x x

Disqualification; seal portions of

the record; sanctions; disciplinary

action

8 of 10





Affects Legislative



Non-Compliance

Regional Agencies

Northwest Power and Conservation Council

Council; Council Staff x x Reopen public

comment

Federal Agencies

Federal Aviation Administration

Administration Members x x x

Adverse decision;

dismissal; denial

Federal Communications

Commission

Board Member; Officer; Employee x x x

Disqualification disciplinary

action

Federal Election Commission Commission; Staff x x x x Disciplinary

action

Federal Labor Relations Authority

Authority Member; Administrative Law Judge; Employee

x x x x

Censure; suspension; dismissal; or disciplinary

action

Federal Postal Regulatory

Commission

Decision-making Commission Personnel

x x x x Adverse decision

Occupational Safety and Health

Administration

Commission; Judge; Employee;

Agentx x x x Disciplinary

action

United States House of Representatives

Members of the agency x x x x

Dismissal; disregarded;

denial; adverse decision

9 of 10





Affects Legislative



Non-Compliance

United States Nuclear Regulatory

Commission

Commission Adjudicatory Employee

x x x x

Dismissal; disregarded;

denial; adverse decision

Totals 54 18 53 56 54 49Percentage* 83% 28% 82% 86% 83% 75%

* Percentages are based on the total number of agencies surveyed (65).

1 "Adjudicative" matters are those in which decision makers are required to conduct a hearing and make a decision based on the law and the facts in a particular case.2 Ex Parte Communication.3 Some jurisdictions memorialize these regulations through policies, while others codify them in law.

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Attachment I (to memo dated September 7, 2010)

Compliance 1 of 5 September 2010 Annotated GEO Excerpts City Ethics Commission

Los Angeles City Ethics Commission Governmental Ethics Ordinance Excerpts

Compliance


SEC. 49.5.4 Protection of Employees Against Retaliation for Reporting Fraud, Waste or Misuse of Office

A. No officer or employee of the City shall use or threaten to use any official authority or influence to discourage, restrain or interfere with any other person for the purpose of preventing such person from acting in good faith to report or otherwise bring to the attention of the City Ethics Commission or other appropriate agency, office or department any information which, if true, would constitute: a work-related violation by a City officer or employee of any law or regulation, gross waste of City funds, gross abuse of authority, a specified and substantial danger to public health or safety due to an act or omission of a City official or employee, use of a City office or position or of City resources for personal gain, or a conflict of interest of a City officer or employee.

B. No officer or employee of the City shall use or threaten to use any official authority or influence to effect any action as a reprisal against a City officer or employee who reports or otherwise brings to the attention of the Commission or other appropriate agency, office or department any information regarding the subjects described in Subsection A.

C. Any person who believes that he or she has been subjected to any action prohibited by this section may file a confidential complaint with the City Ethics Commission. The City Ethics Commission shall thereupon investigate the complaint. Upon the conclusion of its investigation, the Commission shall take appropriate action as otherwise provided by law.

D. In the event the Executive Officer of the City Ethics Commission determines the Commission has a conflict of interest in an investigation of a retaliation complaint, City Ethics Commission staff shall refer the investigation of the retaliation complaint to the Equal Employment Opportunities Section of the Human Resources and Benefits Division of the City Personnel Department. That agency shall report its findings to the City Attorney who shall take appropriate action as otherwise provided by law.

Eliminate reference to specific types of violations, to clarify that the section protects the reporting of possible violations of any law or regulation.

See Definitions: Agency (page 5) City official (page 5) Person (page 5)

SEC. 49.5.19 Enforcement A. Criminal Enforcement. 1. Any person who knowingly or willfully violates any provision of this article is

guilty of a misdemeanor. Any person who knowingly or willfully causes any other person to violate any provision of this article, or who aids and abets any other person in the violation of any provision of this article, shall be liable under the provisions of this section.

2. Prosecution of violation of any provision of the article shall be commenced within four years after the date of the violation.

3. No person convicted of a misdemeanor under this article shall act as a lobbyist or as a City contractor for a period of four years following the date of the conviction unless the court at the time of sentencing specifically determines that this provision shall not be applicable.

4. For the purposes of this section, a plea of nolo contendere shall be deemed a conviction.

Specify that the Charter-based administrative penalties also apply to violations of the GEO (consistent with the MLO).



B. Civil Actions. 1. Any person who intentionally or negligently violates any provision of this

article shall be liable in a civil action brought by the City Attorney, the City Ethics Commission or by any person residing within the City for an amount not more than $5,000 per violation, or for more than three times the amount the person failed to report properly or unlawfully contributed, expended, gave or received, whichever is greater.

2. If two or more persons are responsible for any violation, they shall be jointly and severally liable.

3. Any person, other than the City Attorney, before filing a civil action pursuant to this subsection, shall first file with the City Ethics Commission a written request for the Commission to commence the action. The request shall contain a statement of the grounds for believing a cause of action exists. The Commission shall respond within 40 days after receipt of the request indicating whether it intends to file a civil action. If the Commission indicates in the affirmative and files an action within forty days thereafter, no other action may be brought unless the action brought by the Commission is dismissed without prejudice.

4. In determining the amount of liability, the court may take into account the seriousness of the violation and the degree of culpability of the defendant. If a judgment is entered against the defendant or defendants in an action, a private plaintiff shall receive fifty percent (50%) of the amount recovered. The remaining fifty percent shall be deposited into the City's General Fund. In an action brought by the City Attorney or the Commission, the entire amount shall be paid to the General Fund.

5. No action alleging a violation of this article may be filed more than four years after the date the violation occurred.

C. Injunctive Relief. Any person residing within the City of Los Angeles including the City Attorney, may sue for injunctive relief to enjoin violations or to compel compliance with the provisions of this article.

D. Costs of Litigation. The court may award to a party, other than an agency, who prevails in any civil action authorized by this article, his or her costs of litigation, including reasonable attorneys' fees. If the costs or fees are awarded against the City, the payment of such award shall be the responsibility of the City.

E. Limitation of Actions. No civil action alleging a violation of this article shall be filed more than four years after the date of the violation.

F. Discipline. Any appointed officer or employee who violates any provision of this article shall be subject to administrative discipline by his or her appointing authority. Such discipline shall be administered in accordance with procedures, prescribed by law or established by City policy, applicable to the officer or employee.

Require the Ethics Commission to notify an employee’s agency of violations, to assist in this discipline requirement.

G. Enforcement of Community Redevelopment Agency and Housing Authority Ethics Regulations

1. In the event that the Community Redevelopment Agency of the City of Los Angeles and/or the Housing Authority of the City of Los Angeles adopt governmental ethics regulations governing the conduct of their officers and employees and former officers and employees, violations of those regulations shall be subject to the civil enforcement proceedings set forth in Subsections B through E of this section and to the administrative enforcement provisions of Charter Section 706.

2. The City Ethics Commission is authorized to conduct administrative enforcement investigations and proceedings and to impose administrative penalties and orders for violations of governmental ethics regulations adopted by the Community Redevelopment Agency of the City of Los Angeles and/or the Housing Authority of the City of Los Angeles. Those



proceedings shall be governed by the City Ethics Commission's enforcement regulations contained in Section 24.1.2 of the Los Angeles Administrative Code, as amended.

3. Any officer or employee of the Community Redevelopment Agency or the Housing Authority who violates any provision of the governmental ethics regulations adopted by those agencies shall be subject to administrative discipline by his or her appointing authority. That discipline shall be administered in accordance with procedures, prescribed by law or established by agency policy, applicable to the officers or employees.

Require the Ethics Commission to notify an employee’s agency of violations, to assist in this discipline requirement.

See Definitions: Lobbyist (page 5) Person (page 5)

SEC. 49.5.20 Late Filing Penalties If any person files an original statement or report after any deadline imposed by this article, he or she shall, in addition to any other penalties or remedies established by the article, be liable to the City in the amount of twenty five dollars ($25) per day after the deadline until the statement or report is filed. Liability need not be enforced by the City if the Commission on an impartial basis determines that the late filing was not willful and that enforcement of the liability will not further the purposes of the article, except that no liability shall be waived if a statement or report is not filed within 30 days.

Permit waivers up to 30 days after notice of the filing requirement is sent. Clarify that a person is liable to the Ethics Commission for late GEO filings (consistent with the MLO and CFO).

See Definitions: Person (page 5)

SEC. 49.5.21 Effect of Campaign Money Laundering Violation on Contracts and Fee Waivers

A. Applicability. 1. This section is applicable if the City Ethics Commission makes a finding

that a person has laundered campaign funds in violation of City Charter Section 470(k), and that finding is made after an administrative enforcement hearing pursuant to Charter Section 706 or as a result of a stipulation between the person committing the violation and the City Ethics Commission.

2. This section is applicable to the following contracts awarded or fees waived by the City Council or by any City agency, excluding the following proprietary City departments: Airports, City Employees Retirement System, Harbor, Library, Pensions, Recreation and Parks, and Water and Power:

(a) all contracts for personal services, and to all other contracts involving a contract price in an amount of $1,000 or more;

(b) all discretionary fee waivers of $1,000 or more. 3. This section is applicable only to violations committed after the effective

date of the ordinance adding this section. B. Competitively Bid Contracts. 1. Prior to awarding any contract which is required to be awarded to the

lowest responsible bidder, the City Council or other City board, commission or officer charged with the duty to award the contract (the awarding authority) shall determine whether, the lowest monetary bidder has been found to have committed the violation as specified in Subsection A 1 above within the previous four years.

2. The awarding authority shall not award the contract to the lowest monetary bidder, if, following a hearing as described in Subdivision 3 below, it finds that, as a result of the violation, the awarding authority believes that the



bidder lacks integrity such that it is unfit to perform the work specified in the contract. The awarding authority shall make that finding unless there are specific facts brought to its attention, in writing, which indicate otherwise. On that basis, the awarding authority shall deem the bidder to be not responsible.

3. Prior to making a finding that a bidder is not responsible as set forth in Subdivision 2, the awarding authority shall notify the bidder of its intention to consider making such a finding. The awarding authority shall offer the bidder an opportunity to present evidence and argument that, despite the bidder having been found to have violated the City law prohibiting the laundering of campaign funds, the awarding authority should not have reason to question the bidder’s integrity and fitness to perform the contract. If the bidder desires to present such evidence and/or argument to the awarding authority, the awarding authority shall hold an informal hearing. At that hearing the bidder shall be allowed to make a presentation. After having considered the bidders presentation, and the presentations of any other interested parties, the awarding authority may make the finding set forth in Subdivision 2 if it is satisfied that such finding is merited.

C. Contracts Awarded on a Basis Other Than Competitive Bidding. The City Council or other City board, commission or officer charged with the duty to award a contract shall not approve any contract on behalf of the City, other than a contract required to be awarded to the lowest responsible bidder, with any party, if the party has been found to have committed the violation as specified in Subsection A 1 above within the previous four years.

D. Fee Waivers. The City Council or other City board, commission or officer shall not grant any discretionary waiver of more than $1,000 of any City fee for any person if the person has been found to have committed the violation, as specified in Subsection A.1 above within the previous four years.

E. Notice of Violations. 1. The City Ethics Commission shall provide a copy of every Commission

enforcement decision relating to a violation as specified in Subsection A 1, together with a copy of any stipulation filed in the case, to the general manager or other head of each City agency to which this section applies.

2. A person who submits a bid or proposal in connection with any contract or a request for fee waiver with a City agency to which this section applies shall include with the bid, contract proposal or fee waiver documents a copy of the Commission’s decision of violation as specified in Subsection A 1 made within the previous four years, together with a copy of any stipulation filed in connection therewith.

3. With respect to a decision on a contract or fee waiver considered by the City Council, the City Clerk shall submit a report which contains sufficient information to allow the body to comply with the requirements of those provisions.

4. With respect to a decision on a contract or fee waiver considered by a City board or commission, the agency staff shall submit a report which contains sufficient information to allow the body to comply with the requirements of those provisions.

Require the Ethics Commission to provide notice to all City agencies, including the proprietaries identified in subsection A(2).

F. Time Period of Prohibitions and Notification. If the City Ethics Commission makes a finding that the contracting party has either (1) accepted responsibility for the violation in the form of having entered into a

stipulation with the City Ethics Commission in which the party admits the violation, or otherwise exhibits evidence of having accepted such responsibility, or

(2) mitigated the wrongdoing by taking prompt remedial or corrective action, then the City Ethics Commission may reduce the time period during which



the above prohibitions and notification requirements would apply to a period of not less than one year. Any person who has been found by the City Ethics Commission to have violated Charter Section 470(k) may request such a finding from the Commission.

G. Waiver of Provisions. The City Council by a two-thirds vote of its entire membership may waive any or all of the prohibitions contained in this section if the Council makes a written finding that an overriding public policy consideration justifies entering into the contract or waiving the fee despite the prohibition contained in this section. The finding shall set forth the nature of the overriding public policy consideration and the reason why that consideration justifies the waiver of the prohibition and shall be made only when the waiver is justified by a significant community or financial benefit to the City or if it is necessary to preserve the health, safety or welfare of the public.

See Definitions: Agency (below) Contract (below) Person (below)

SEC. 49.5.2 Definitions [excerpts] “Agency” means the City of Los Angeles or any department, bureau, office, board, commission, other agency of the City, or any other government agency, required to adopt a conflict of interest code subject to City Council approval. With respect to employees of a Councilmember's staff and employees of the Chief Legislative Analyst's office, "agency" means the City Council.

“City Official” means any elective City officer, member, officer, employee, commissioner or consultant of any agency required to adopt a conflict of interest code subject to City Council approval, and who is required to file statements of economic interests pursuant to the conflict of interest code of his or her agency.

“Contract” means without limitation any agreement, lease, right of entry, franchise, or concession, including but not limited to agreements for the performance of any work or the rendition of any service or the provisions of any materials, equipment or supplies to the City of Los Angeles or to the public, which is let, awarded or entered into with, or on behalf of, the City of Los Angeles by the City Council, any board or commission, office or department and shall include departments which have control of their own funds.

“Lobbyist” means any individual who is required to register as a lobbyist or municipal legislative advocate pursuant to any City ordinance requiring such registration.

“Person” means an individual, proprietorship, firm, partnership, joint venture, syndicate, business trust, company, corporation, association, committee, or any other organization or group of persons acting in concert.

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