Ethics Commission
City and County of San Francisco

Advice Letter – December 20, 2004 – Ross Mirkarimi – Sections 1.114 and 1.200 of S.F C&GC Code (inaugural activities)

December 20, 2004

Ross Mirkarimi

Supervisor-Elect

721 Webster Street

San Francisco, CA 94117

Dear Mr. Mirkarimi:

You have requested advice from the Ethics Commission regarding whether moneys you raise for inaugural and transition expenses are subject to fundraising limitations under sections 1.114 and 1.200 of the San Francisco Campaign and Governmental Conduct Code ("C&GC Code”).

The Ethics Commission provides two kinds of advice: written formal opinions and informal advice.  S.F. Charter Section C3.699-12.  Written formal opinions are available to individuals who request advice about their responsibilities under local laws.  Formal opinions provide the requester immunity from subsequent enforcement action if the material facts are as stated in the request for advice, and if the District Attorney and City Attorney concur in the advice.  See id.  Informal advice does not provide the requestor immunity from subsequent enforcement action.  See id.

Because your letter does not refer to specific actions you may take, the Commission is treating your request as a request for informal advice.

Facts Presented

You were recently elected to the Board of Supervisors for District 5.  In your letter, you state that you are contemplating an inaugural and transition budget.  You ask that the Commission opine on the following question:

            Does Section 1.200 of the Campaign and Governmental Conduct Code determine that Section 1.114 applies to limit the amount of individual contributions that I can accept to $500 in order to fund inaugural and transition expenses?

Relevant Law

Section 1.200, set forth below,[1] prohibits City officers from establishing any account, other than their campaign account, for the solicitation or expenditure of funds to pay expenses incurred directly in connection with carrying out the usual and necessary duties of holding office.  Section 1.200 was enacted to preclude the use of “friends accounts” for officeholder expenses.  See November 2, 1993 Voters Handbook on Proposition X, Elimination of Officeholder Accounts; March 13, 1995 City Attorney Advice Letter to Anita D. Mayo; June 17, 2002 Ethics Commission Advice Letter to Peter A. Bagatelos.  Section 1.200(b) makes clear that all contributions to the City officer’s campaign account are subject to the $500 contribution limit of section 1.114 of the Campaign Finance Reform Ordinance.[2]

Discussion

It is not clear from your letter whether you plan to use your campaign committee to raise funds for inaugural purposes, whether you plan to establish another controlled committee to raise funds for inaugural purposes, or whether a non-profit organization will be established to handle your inauguration.  Nor is it clear what you mean by “transition expenses.”  Accordingly, this letter will discuss some of the concerns that are relevant to the raising and spending of funds for inaugural and transition purposes.  If there are other questions you have, or if you have specific facts that you would want us to address, please do not hesitate to let us know.

1.         You may use funds in your current campaign account for inaugural purposes.

Although not required to do so, you may use funds from your campaign account to pay for inaugural expenses.  Under the Campaign Finance Reform Ordinance and the California Political Reform Act, funds in a campaign account “are held in trust for expenses associated with the election of the candidate to the specific office for which the candidate has stated . . . that he or she intends to seek or expenses associated with holding that office.”  S.F. C&GC Code § 1.106; Cal. Gov’t Code § 89510(b).  Generally, a candidate may use the funds in a campaign account for any expenditure reasonably related to a political purpose.  S.F. C&GC Code § 1.106; Cal. Gov’t Code § 89512.  Campaign funds may be spent in connection with holding the office to which the candidate is elected if the expenditure is reasonably related to a legislative or governmental purpose.  S.F. C&GC Code § 1.106; Cal. Gov’t Code § 89512.  A more stringent test applies when an expenditure of campaign funds (either for seeking office or for officeholder expenses) will confer a substantial personal benefit on the candidate.  In such circumstances, the expenditure must be “directly related” to a political, legislative or governmental purpose.  S.F. C&GC Code § 1.106; Cal. Gov’t Code § 89512.

The Fair Political Practices Commission has advised that an inaugural celebration is a permissible use of campaign funds.  Oettinger Advice Letter, CA FPPC Adv. A-94-295.  Because the Campaign Finance Reform Ordinance incorporates the provisions of the Political Reform Act relating to local elections, except as otherwise provided or inconsistent with local law (see S.F. C&GC Code § 1.106), the Commission concludes that you may use campaign funds from your current campaign account to fund inaugural activities.

2.         Funds in your campaign account are subject to the $500 contribution limit.

All contributions that you receive to your campaign account are subject to the contribution limits set forth in section 1.114 of the CFRO.  S.F. C&GC Code §§ 1.114 and 1.200(b).

3.         Funds expended from your campaign account for inaugural purposes are not subject to the spending limit.

We note that you were a publicly financed candidate for the Board of Supervisors in the November 2, 2004 election.  Thus, you were subject to the $83,000 expenditure ceiling set forth in section 1.130 of the CFRO.  The spending limit remained in effect in District 5 throughout the election.  While public funds may not be spent on inaugural activities,[3] in general, inaugural expenses are not counted in determining whether you have exceeded the limit.

As you know, in the general election, any candidate for the Board of Supervisors who agrees to the expenditure ceiling may not make total qualified campaign expenditures exceeding $83,000.  S.F. C&GC Code § 1.130.  A “qualified campaign expenditure” does not include expenses incurred in connection with, among other things, inaugural activities or officeholder expenses.  Id., § 1.104(n)(6).  Because inaugural activities are excluded from the definition of “qualified campaign expenses,” they are not subject to the limits set forth in section 1.130. 

    * A non-profit public benefit corporation, other than your campaign account, may be established to sponsor your inauguration.

In the Bell Advice Letter (FPPC File No. A-94-376), the Fair Political Practices Commission advised that an inaugural committee that is created but not under the control of the elected officeholder is not operated for political purposes and would not be regulated under the Political Reform Act.  The advice letter referred to an inaugural committee set up as a nonprofit public benefit corporation to sponsor the inauguration of Governor Wilson and related inaugural activities in 1991.  After reviewing the information provided by the requestor related to the creation and operation of the committee, the FPPC noted that the facts did not establish that the committee was a controlled committee of the governor.  The FPPC opined that it did not appear that payments made to the committee were for political purposes; thus, the committee was not regulated under the Political Reform Act.

Nor would a local law within the Commission's jurisdiction regulate such a committee.  As explained above, the provisions of the Political Reform Act relating to local elections, except as otherwise provided or inconsistent with local law, are incorporated into the C&GC Code.  See C&GC Code § 1.106.  Only one section of local law is potentially inconsistent with the Bell Advice Letter, C&GC Code section 1.200.

Section 1.200 prohibits City officers from establishing any account, other than a campaign account, for the solicitation or expenditure of funds to pay expenses incurred "directly in connection with carrying out the usual and necessary duties of holding office."  See C&GC Code § 1.200.  All money raised for this account is subject to the campaign contribution limits imposed by the San Francisco Campaign Finance Reform Ordinance.  See C&GC Code § 1.200(b) (providing, "Any and all monies or services accepted or received by an officer or on behalf of an officer, except monies or services accepted or received from or as a result of the officer's personal or business activities, unrelated to his or her office, shall be deposited, credited or otherwise reported to a campaign fund established by the officer and shall be subject to the provisions contained in Section 1.114 of the Campaign and Governmental Conduct Code").

The question presented by your inquiry is whether inaugural expenses are expenses incurred "directly in connection with carrying out the usual and necessary duties of holding office."  See C&GC Code § 1.200 (emphasis added).  Section 1.200 describes expenses incurred directly in connection with carrying out the usual and necessary duties of holding office as, "travel between an officer's residence and public office, meetings with constituents which are not campaign related meetings, salary payments to staff for other than campaign activities, office promotional materials, advertising, mailings, postage, and paid radio or television air time."  See C&GC Code § 1.200(a).  All of these expenses are incurred in activities that are directly related to performing the duties of holding a City office.  Inaugural expenses are not of the same type and nature as these expenses as they can (and almost always are) incurred before holding office and do not directly relate to the duties of holding office.  Because of the general rule of statutory construction that when a law enumerates examples of what is prohibited, the expression of those examples necessarily involves the exclusion of other things not expressed that are not similar in nature, the Commission concludes that section 1.200 does not apply to inaugural expenses.  See Dyna-Med, Inc. v. Fair Employment & Housing Com., 43 Cal.3d 1379,1391 (1987).

The Commission's conclusion is supported by the legislative history of section 1.200.  As explained above, this law was enacted to preclude the use of “friends accounts” for officeholder expenses.  See November 2, 1993 Voters Handbook on Proposition X, Elimination of Officeholder Accounts; March 13, 1995 City Attorney Advice Letter to Anita D. Mayo; June 17, 2002 Ethics Commission Advice Letter to Peter A. Bagatelos.  When the voters approved Proposition X, only incumbent officeholders were permitted to establish officeholder accounts.  See November 2, 1993 Voters Handbook on Proposition X, Elimination of Officeholder Accounts.  But in many situations, such as yours, an incumbent officeholder will not be the person assuming a City office for which inaugural activities will occur.  Thus, it does not appear that the proponents of Proposition X were concerned with or otherwise sought to prohibit the use of another account for inaugural expenses.

Questions have been raised whether the language in subsection (b) of section 1.200 contradicts the Commission's conclusion.  Although on its own terms, the subsection may be read to mean that any funds accepted on behalf of an officer must be deposited to the officer’s campaign fund and limited to amounts of no more than $500, the subsection cannot be read in isolation from the other subsections of section 1.200, which, as discussed above, relate to officeholder accounts.  Accordingly, subsection (b) merely clarifies that funds solicited or expended for officeholder expenses must go through the campaign account.  Inaugural expenses are not officeholder expenses and, therefore, need not go through the campaign account.  

For these reasons, the Commission concludes that section 1.200 does not require the use of campaign funds for inaugural expenses, and is not inconsistent with the Bell Advice Letter.  Accordingly, a non-profit benefit corporation, other than your campaign committee, may be used to pay for inaugural expenses.

Because your letter was vague as to the course of action that you will take with respect to your inauguration, we wanted you to be aware that the creation of a nonprofit public benefit corporation may be an option.  Please remember, however, that the corporation may not be one over which you exercise control.  See Bell Advice Letter (FPPC File No. A-94-376).

5.         Funds used for transitional purposes must come from your campaign account.

It is not clear what you mean by “transitional expenses.”  Funds from your current campaign account can be utilized for purposes that meet the test for lawful expenses.   As stated above, a candidate may use the funds in a campaign account for any expenditure reasonably related to a political, legislative or governmental purpose.  Expenditures made for purposes of assuring continuity of office would be reasonably related to a legislative and governmental purpose.

As explained above, section 1.200 prohibits City officers from establishing any account, other than a campaign account, for the solicitation or expenditure of funds to pay expenses incurred directly in connection with carrying out the usual and necessary duties of holding office.  Expenses incurred for the purposes of assuring continuity of office are expenses that City officers incur directly in connection with carrying out the usual and necessary duties of holding office.  The gathering of information and performance of acts to ensure the continuity of a particular City office are duties that public officials are expected to perform when assuming a new office.  These expenses relate directly to the officials duties of holding office, and are therefore subject to section 1.200.  Accordingly, the Commission concludes that section 1.200 requires you to place any funds you raise for the purposes of paying for transitional expenses into your campaign account.[4]

Because such contributions must be placed in your campaign account, they would be subject to the contributions limits imposed by section 1.114(a) discussed above.  Likewise, for the same reasons discussed above related to qualified campaign expenditures, transitional expenses would not be subject to the spending limit in section 1.130 of the CFRO. 

I hope you find this information to be helpful.  If you have questions, please do not hesitate to let me know.

Sincerely,

John St. Croix

Executive Director

            By:       Mabel Ng

                        Deputy Executive Director

S:\ADVICE\cfro\04-1207 Mirkarimi\Mirkarimi2.doc

[1] SEC. 1.200.  PROHIBITION ON MULTIPLE CAMPAIGN ACCOUNTS.

     An officer of the City and County of San Francisco, or any person or committee on behalf of an officer of the City and County of San Francisco, is hereby prohibited from establishing any account, other than a campaign fund, for the solicitation and expenditure of funds.  Nothing in this section shall prohibit an officer from spending personal funds on official or related business activities.
     (a)     An account established by an officer or on behalf of an officer of the City and County of San Francisco is defined as any account used to pay expenses incurred directly in connection with carrying out the usual and necessary duties of holding office, including but not limited to, travel between an officer's residence and public office, meetings with constituents which are not campaign related meetings, salary payments to staff for other than campaign activities, office promotional materials, advertising, mailings, postage, and paid radio or television airtime.
     (b)      Any and all monies or services accepted or received by an officer or on behalf of an officer, except monies or services accepted or received from or as a result of the officer's personal or business activities, unrelated to his or her office, shall be deposited, credited or otherwise reported to a campaign fund established by the officer and shall be subject to the provisions contained in Section 1.114 of the Campaign and Governmental Conduct Code.
     (c)     This Section shall not be applied retroactively.  Funds held in officeholder accounts, or accounts on behalf of any officer, existing on November 2, 1993, may be expended on official or business related activities notwithstanding this Section.  No further deposits, transfer, credits or other additions to the balance of the account shall be made.  Upon depletion of all available funds in the officer's account, the account shall be closed.  (Added by Proposition E, 11/4/2003) (Former Section 1.200 added by Ord. 71-00, File No. 000358, App. 4/28/2000; repealed by Proposition E, 11/4/2003. Derivation: Former Section 8 of Appendix K to the 1932 Charter)

[2] SECTION 1.114(a) provides the following on contribution limits:

     (a)     LIMITS ON CONTRIBUTIONS TO CANDIDATES—PRIMARY AND GENERAL ELECTIONS.

     (1)     Per Candidate Limit.  No person other than a candidate shall make, and no candidate campaign treasurer shall solicit or accept, any contribution which will cause the total amount contributed by such person to such candidate in the general election to exceed $500.

     (2)     Overall Limit.  No person shall make any contribution which will cause the total amount contributed by such person to all candidates in the general election to exceed $500 multiplied by the number of City elective offices to be voted on at the general election.

[3]Any unexpended public funds must be delivered to the Ethics Commission no later than 30 days after the Ethics Commission completes its audit of the candidate.  S.F. C&GC Code § 1.148(a) and (d).

[4] Although you are not legally a City officer until you are sworn into office in January, you will incur transitional expenses of the type described above both before and after you are sworn into office.  As such, the Commission concludes that section 1.200 applies to your solicitation and expenditure of all funds to pay for transitional expenses.

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