Minutes of the Special Meeting of
The San Francisco Ethics Commission
October 18, 2010
Room 408, City Hall
1 Dr. Carlton B. Goodlett Place
San Francisco, CA 94102
I. Call to order and roll call.
Chairperson Studley called the meeting to order at 6:33 PM.
COMMISSION MEMBERS PRESENT: Jamienne Studley, Chairperson; Susan Harriman, Vice-Chairperson; Eileen Hansen, Commissioner; Charles Ward, Commissioner; Benedict Y. Hur, Commissioner.
STAFF PRESENT: John St. Croix, Executive Director; and Garrett Chatfield, Investigator/Legal Analyst.
OFFICE OF THE CITY ATTORNEY: Jon Givner, Deputy City Attorney.
OTHERS PRESENT: Ray Hartz, Charles Marsteller, Esther Marks, Anita Mayo; and other unidentified members of the public.
– Staff memorandum re: Complaint Disposition, dated October 14, 2010;
– Staff memorandum re: Executive Director’s report and recommendation regarding Campaign and Governmental Conduct Code section 1.126, dated October 6, 2010;
– Staff memorandum re: Amendment to GEO section 3.216(d) – deadline for reporting gifts of travel, dated September 8, 2010;
– Staff memorandum re: Proposed amendment related to gift cards from restricted sources, dated September 8, 2010;
– Draft Minutes of the September 13, 2010, Regular Meeting of the San Francisco Ethics Commission;
– Executive Director’s Report to the Ethics Commission for the Meeting of October 18, 2010.
II. Public comment on matters appearing or not appearing on the agenda that are within the jurisdiction of the Ethics Commission.
Ray Hartz stated that this was his first time before the Ethics Commission, but intends to come to every meeting. He stated that all City commissions state on their agendas that the public should know their rights under Sunshine, yet all disregard the law. He stated that the Rent Stabilization Board does not record its meetings. He stated that it still does not record meetings after the Sunshine Task Forces stated that it should. He stated that at Police Commission meetings he was continually interrupted. He stated that he believed in the U.S. Constitution. He stated all City commissioners take an oath to defend the U.S. Constitution.
Charles Marsteller stated that he believed it was a problem that the Ethics Commission cannot bring legislation forward under its own name. He stated that the Board of Supervisor rules could be amended to change this issue. He stated that potential problems could arise once proposed legislation goes to the Board of Supervisors due to politics.
III. Consideration of Ethics Complaint No. 01-100115, alleging that the Library Commission, through its representative Secretary Sue Blackman, violated Sunshine Ordinance sections 67.15(a) and 67.34 by failing to allow public comment at a Library Commission meeting, and section 67.12(e) by failing to send a knowledgeable representative to Task Force hearings.
Chairperson Studley stated that Item III was postponed for discussion due to illness. She stated that matter will be scheduled for a subsequent Ethics Commission meeting.
IV. Consideration of possible amendments to section 1.126 of the Campaign and Governmental Conduct Code relating to the regulations of campaign contributions made by City contractors.
DECISION POINT 1a:
Commissioner Hur asked whether staff considered tailoring section 1.126 to exclude contracts put through a competitive bidding process. He stated this seemed the best way to avoid “pay for play” activity.
Executive Director St. Croix responded to Commissioner Hur stating that staff did not consider excluding contracts subject to competitive bidding, and did not have information as to the percentage of City contracts that are subject to the competitive bidding process. He stated that if the Commissioners wanted that analysis, staff could present the proposed amendments with that information.
Commissioner Harriman stated that she was unsure if Commissioner Hur’s suggestion would serve the purpose of this section, and she stated that she would like to know the percentage of contracts subject to competitive bidding. She further stated that she did not have enough information to determine the likelihood of “pay to play” occurring during the competitive bidding process. She stated that it might be over inclusive and would be willing to look at that information.
In response to Chairperson Studley, Executive Director St. Croix stated that there is no time element driving this change.
Commissioner Harriman stated that the Commission could move forward at this meeting, and address Commissioner Hur’s concerns at a later date.
Executive Director St. Croix confirmed that the Commission could decide on some of the proposed amendments at this meeting and address others at a later meeting as they do not need to be decided as a group.
Commissioner Hansen stated that it was her understanding that most City contracts go through the competitive bidding process. She stated that due to that fact, she is unsure how this amendment would relieve any burden on staff.
Commissioner Hur stated that, regarding decision point one, he is not clear on the rationale to exempt non-profits from this section.
Executive Director St. Croix stated that many non-profits obtain funding from the City, and many of the board members of these non-profits are politically active. He stated that the Commission had received intense public criticism that those board members are currently restricted from participating in the political process while also participating in community organizations.
Commissioner Hur stated that, while he understands the issue raised by the Executive Director, it does not necessarily follow that non-profits are unlikely to be affected by “pay to play” type activity, as many do receive large contracts from the City.
Commissioner Harriman stated that board members of non-profits do not have a personal financial stake in obtaining a City contract, thus the personal profit motivation is significantly diminished.
Chairperson Studley stated that there is a relationship between a non-profit obtaining a City contract and its ability to compensate its senior staff. She stated she is not advocating either for or against the amendment at this point, but there could a benefit in other ways, apart from a direct personal financial benefit, when a City contract is awarded to a non-profit that could influence those members.
Executive Director St.Croix stated that anytime money is involved there is a risk that someone could attempt to use the funds for personal enrichment. He stated that the potential for corruption is diminished when non-profits are involved. He stated that the Ethics Commission is tasked with the enormous job of consistently informing a continually changing set of persons of the restrictions. He stated the Ethics Commission’s resources are better spent on actively policing for-profit entities. He stated that if a complaint is filed against an individual involved in a non-profit entity regarding “pay to play” activity, the information will be available to Enforcement staff in order to conduct an investigation.
Commissioner Hur stated that the fact that the information is public could be enough of a deterrent. He stated that it might be worth considering raising the limit on for-profits compared to non-profits, rather than an outright exemption.
Commissioner Harriman stated that constitutional issues could be raised by any restriction on non-profit or for-profit entities.
Deputy City Attorney Givner stated that any court would apply the same analysis by looking at whether the City has a compelling interest in applying the law in this manner.
Commissioner Ward stated that non-profits do not have the same financial motivation as for-profits entities. He stated that public policy should favor participation in the political process and community service.
Commissioner Hur stated that he agreed the motivation is different; however, he is concerned that money awarded to any type of entity is in the public trust and must be protected. He stated the possibility for corruption increases as the amount of money at stake increases.
Commissioner Ward stated that most non-profits are awarded contracts to replace services that are traditionally provided by the City. He stated that the risk of corruption related to non-profit entities is less than for-profit entities.
Commissioner Hansen stated that she sees the issue as whether or not the Ethics Commission should treat non-profit and for-profit entities in the same manner. She stated that the Commission had a previous discussion that suggested the Commission should treat all entities in the same way. She stated that Commissioner Ward correctly articulated the difference between the two types of entities. She stated that the other issue is that of enforcement. She stated that at the time this issue first arose the Commission was not enforcing this section. She stated once the decision was made to enforce this section, the Commission received complaints from the non-profit community. She stated that the Commission realized that it was virtually unenforceable, and that what she has heard at this meeting is that the Commission is not going to enforce this section due to the lack of resources of the Commission.
Executive Director St. Croix stated that it was the actual reporting requirements that were not enforced earlier, and that the Commission did make the decision to enforce the reporting requirements and staff will continue to do that. He stated that the information will be available in the event that a complaint is raised; however, the Commission does lack the resources to actively cross-check every filing but will actively pursue any complaint that may occur.
Commissioner Hansen stated that she does not see that as a deterrent. She stated that people will not take the reporting requirement seriously if there is no active enforcement on each filing. She stated that there were people in attendance at this meeting that would like to specifically address this issue. She stated that she has heard from members of the public that they will continue to make political contributions if the Ethics Commission will not enforce this section.
Executive Director St. Croix stated that this section has been described as unenforceable and that is where members of the public may be getting that idea.
Commission Hansen stated that some press accounts have stated that this section is unenforceable.
Esther Marks stated that she was disturbed by Commissioner Hur’s comments regarding non-profit entities. She stated that there should be no barriers placed upon people’s political contribution who also serve on non-profit boards. She stated that she was offended that Commissioner Hur’s comments are contrary to public policy.
Anita Mayo stated that the current law is confusing and has an unintended negative impact on non-profit board members who now have to choose between civic participation and the ability to make political contributions.
Ray Hartz stated that not every person who serves on a non-profit board has altruistic reasons for doing so. He stated that many people serve on boards for selfish reasons. He stated the members of the Board of Appeals do not have to know any building codes and are merely there to rubber-stamp recommendations. He stated that the law at issue should be enforced.
Charles Marsteller stated that the Sunshine Ordinance requires that some non-profit meetings be open to the public. He stated that the Ethics Commission should be careful when it attempts to amend voter-approved provisions.
Commissioner Hansen asked Executive Director St. Croix after public comment if the Ethics Commission has ever received a complaint regarding “pay for play” type activity by a non-profit entity. Executive Director St. Croix stated that, although he cannot comment on any current investigation due their confidential nature, there has never been a complaint of this type filed with the Ethics Commission.
Motion 10-10-18-1 (Harriman/Ward): Moved, seconded and passed (5-0) to adopt Decision Point 1a as proposed by staff.
DECISION POINT 1b:
Executive Director stated that this provision is not yet codified into law, but reflects the Commission’s current policy.
Motion 10-10-18-2 (Harriman/Ward): Moved, seconded and passed (5-0) to adopt Decision Point 1b as proposed by staff.
DECISION POINT 2:
Commissioner Hansen stated that there is a history of problems regarding state agency appointees. She stated that one appointee had to resign his seat because he violated this law. She stated that these are large state agencies that have the potential to run into “pay to play” issues.
Anita Mayo stated that one of the most difficult provisions to comply with is the one that prohibits contributions when the contract is with the state agency and an appointee of the elected official sits on the agency’s board. She stated that the average person is unaware of this provision and that contributions to that officer are prohibited under this provision.
Charles Marsteller stated that there have been issues with “pay to play” and appointees. He stated that the Commission should consider calendaring this matter to discuss additional staffing to address this issue. He stated that he was glad this amendment was not proposed in 1995, as enforcement of it was always a concern.
Commissioner Harriman stated that, although sympathetic to Commissioner Hansen’s concerns, it is unclear how the average person subject to this provision is supposed to be aware of it.
Commissioner Ward stated that a person appointed to a state commission is not your average person.
Commissioner Harriman clarified that it not the appointee she is concerned about, but the contracting party that falls subject to this provision.
Executive Director St. Croix stated that there is a degree of separation regarding agency contracts. He stated that in order for any “pay to play” activity to occur the officer would have to go through an intermediary. He stated that it could happen, but it is very unlikely.
Executive Director St. Croix responded to a question by Commissioner Hansen stating that there is currently no staff plan to do outreach to affected individuals regarding this provision. Staff includes language on all Requests for Proposals regarding this law.
Motion 10-10-18-3 (Harriman/Hur): Moved, seconded and passed (4-1, Hansen dissenting) that the Ethics Commission adopt Decision Point 2 as proposed by staff.
DECISION POINT 3:
Commissioner Hansen asked if there was any information on the record of the rationale for the increase in the contract amount.
Executive Director St. Croix stated that the amount of $100,000 was the next logical increase in amounts.
Commissioner Hansen stated that she would rather the rationale be based on something less arbitrary.
Deputy City Attorney Givner stated that the City Charter requires the Board of Supervisors or the Mayor to approve of contracts over $10 million. He stated that occasionally contracts of lesser amounts require mayoral approval because it is required by the Charter or some other provision.
Executive Director St. Croix acknowledged that the amount of $100,000 is arbitrary, but was chosen to reduce the burden on staff without negating the law.
Commissioner Hur stated that it appeared to be a balancing of benefit and burden. He asked Executive Director St. Croix what was the number of filings between $50,000 and $100,000.
Executive Director St. Croix responded the amount is approximately 50 to 60 per year. He also stated that contract amounts are generally rising each year.
Motion 10-10-18-4 (Harriman/Ward): Moved, seconded and passed (5-0) that the Ethics Commission adopt decision point 3 as proposed by staff.
Charles Marsteller asked if the Information Technology staff had considered using tapes to record data, such as is being used at the University of San Francisco.
DECISION POINT 4a:
Executive Director St. Croix stated that this provision is a technical amendment and will allow for consolidated filing.
Motion 10-10-18-5 (Hur/Harriman): Moved, seconded and passed (5-0) that the Ethics Commission adopt decision point 4a as proposed by staff.
DECISION POINT 4b:
Executive Director St. Croix stated that this provision will allow a designated employee to sign off on reports for the Mayor and Board of Supervisors.
Chairperson Studley stated that she wanted to ensure that this change does not affect the legal responsibility of the person making the report if a designee signs off on the report.
Deputy City Attorney Givner responded to Chairperson Studley stating that the legal responsibility will not be affected.
Motion 10-10-18-6 (Harriman/Ward): Moved, seconded and passed (5-0) that the Ethics Commission adopt decision point 4b as proposed by staff.
DECISION POINT 5:
Commissioner Hansen stated that she wanted more information on why staff characterized this requirement as unnecessary and unrealistic.
Executive Director St. Croix stated that the phrase “before initiating negotiations” is in itself an amorphous requirement. He stated that the amendment is an attempt to identify a specific point in time in which the requirement is triggered. He stated that staff’s intent is to clarify this uncertainty.
Chairperson Studley stated that without a specific definition to determine when the requirement is triggered, a contractor would not know when or how to comply.
Commissioner Hansen stated that many discussions between contractors and departments occur prior to the first meeting.
Executive Director St. Croix stated that staff will diligently work with departments to educate them on the requirement.
Deputy City Attorney Givner stated that all City Requests for Proposals include language regarding this provision.
Commissioner Hansen stated that she would like information on whether current contractors are complying with the provision.
Executive Director St. Croix stated that it is difficult to know if compliance is occurring at this point, but with a clear definition, staff will be better able to follow-up on a contractor’s compliance.
Commission Hansen stated that she would like to ensure that staff enforces this provision.
Motion 10-10-18-7 (Hur/Harriman): Moved, seconded and passed (5-0) that the Ethics Commission adopt decision point 5 as proposed by staff.
Anita Mayo stated that currently contractors have no tangible guidelines, so this is a welcome amendment. She stated that the language regarding the contractor ban on contributions, section 1.126, is too broad and could be read to reach into state and local elections.
Commissioner Hansen stated that she would like to see section 1.126 put on a meeting agenda for discussion. She also stated that she wanted to ensure that the definition for “contract” includes all contracts and grants.
Executive Director St. Croix stated that the definition of “contracts” already includes grants.
Deputy City Attorney Givner stated that the language in the draft amendments does delete the word “grant” from the definition of “contract” but that there was no vote at this meeting on that change.
Commissioner Hansen stated that because non-profits are now exempt, “grant” may no longer be needed in the definition of “contract.” She also stated any amendments the Commission makes must strengthen rather than weaken any given provision.
Deputy City Attorney Givner stated that amending a provision by scaling it back might actually further the purpose of the law. He stated that it is a policy judgment that the Commission and the Board of Supervisors are charged with making.
V. Consideration of possible amendments to the Government Ethics Code (“GEO”), San Francisco Campaign and Governmental Conduct Code section 3.216(d), related to disclosure requirements for gifts of travel.
Executive Director St. Croix stated that this is a continuation of a previous discussion regarding this provision. He stated that, currently, elected officials must report who is funding travel and for how much before any given trip. He stated that because the total cost of travel before a trip is unknown, the elected official must estimate the expenses and then re-file the same disclosure as an amendment after the trip. He stated that the benefit of disclosure prior to travel is that the public is made aware of the trip and who is funding the travel. He continued by stating that by making the official file twice, it is duplicative, and often the official has very short notice of upcoming travel, and that weighing the benefit to burden, staff is proposing to only require disclosure after travel.
Chairperson Studley stated that the concern of notice to the public of upcoming travel might be satisfied via an elected official’s public calendar.
Executive Director responded to a question from Commissioner Ward stating that an official’s public calendar must include the identity of the person with whom the official is meeting, where, when, and the purpose of the meeting.
Commissioner Hansen stated that, although an official must keep a calendar, it is not required to be disclosed unless requested by a member of the public. She stated that it has been brought to her attention that the public is more concerned with who else attends a trip, such as lobbyists, rather than who is the actual sponsor.
Executive Director St. Croix stated that, often, an official will not know who else is attending a trip until the official arrives.
Chairperson Studley asked Executive Director St. Croix on whether or not staff considered approaching this disclosure as a two-part process. He responded stating that the current process is, in effect, already a two-part process and that the intent was to reduce the duplicative filing burden on staff.
Responding to Commissioners Harriman and Hur, Executive Director St. Croix stated that officials generally do not know the costs of travel prior to leaving, and in order to comply, they must file the disclosure using their best guess as to the amount. He stated that if the Commission was to require a two-part process in which the sponsor is first disclosed and then the cost of travel, that would not be any real change than what is already happening in practice.
Commissioner Ward stated that it appears the change in the provision is being requested by staff because it is burdensome upon staff, and not necessarily a burden on the filer.
Executive Director St. Croix stated that, as the law is currently applied, even if the official has no information regarding the trip and cannot obtain it prior to leaving, they are in violation of the law if they do not file something, even if it is just a guess and will be significantly amended post travel.
Executive Director St. Croix stated that if the Commission wants, he will look at a two-part process more in line with what has been discussed at this meeting.
Chairperson Studley stated that the most important aspect is that the public is noticed of the trip prior to the official leaving.
Commissioner Hansen stated that the issue is not the total cost of the travel. She stated that it is more important to disclose who is funding the trip and who will be attending the trip.
Executive Director St. Croix stated that he will revise this proposal taking into account the discussion that occurred at this meeting and bring it to the Commission at a later date.
VI. Consideration of possible amendments to Ethics Commission Regulation 3.216(b)-5 to provide that gift cards and gift certificates are not deemed cash gifts under the exemption to the ban on gifts from restrict sources.
Executive Director St. Croix stated that this item was continued from a prior meeting and has not yet been resolved. He stated that the proposal is to clarify what type of gift card may be treated as cash for the purposes of gift limits. He stated that the proposed amendment is just one solution; however, he primarily would like the Commission to determine how to treat gift cards so there is clarity on this issue.
Commissioner Harriman stated that there is a difference between a store specific card and a general value card that may be used like a Visa or MasterCard. She stated the general value card should be treated as cash as it is as portable as cash.
Commissioner Studley stated that a store specific card has very little value to the recipient if it is not from a business that the recipient frequents. She stated that an individual could be presented with a choice of store specific cards, and choose one that is relevant to the recipient, which would be essentially the same thing as a cash gift. She stated that she would like to see the gift limit reduced to zero.
Commissioner Hansen stated that she views any gift card as equivalent to a cash gift.
Motion 10-10-18-8 (Hansen/Ward): Moved, seconded and passed (4-1, Harriman dissenting) that, for the purposes of subsection 3.216(b)-5, a gift card is a cash gift.
Charles Marsteller stated that the Commission should seek the advice of Deputy City Attorney Givner as to what is legally sufficient. He also asked Executive Director St. Croix if staff was strongly concerned with obtaining its proposed position on this matter.
Executive Director St. Croix stated that staff merely wanted clarity as to how to treat gift cards.
Chairperson Studley stated that the Commission understood that staff needed clarity on this issue.
Commissioner Ward stated that small amounts can add up. He stated for example, someone could receive multiple $25 cards for a specific store that would not be considered as cash, and would just create a loophole to be exploited.
VII. Minutes of the Commission’s Regular Meeting of September 13, 2010.
Motion 10-10-18-9 (Hansen/Harriman): Moved, seconded and passed (5-0) that the Ethics Commission adopt the Minutes of the Ethics Commission’s Regular Meeting of September 13, 2010.
VIII. Executive Director’s Report.
Executive Director St. Croix stated that significant public financing funds are being distributed to campaigns for the upcoming election. He stated that the Ethics Commission will likely surpass $2 million in distributed funds. He stated that staff currently projects that next year’s mayoral race will likely surpass $5.4 million in distributed public financing. He stated that staff is currently working hard to police all campaigns during the run-up to the current election. He stated that independent expenditure committees have been extremely active during this campaign cycle and the ceiling amounts are being adjusted every day.
In response to Commissioner Hansen’s question regarding whether or not staff knows the total amount of money being spent, he stated that staff must know the total amount in order to adjust the expenditure ceilings. He stated that some third parties that should file are not, so staff has initiated a network throughout the city to collect electioneering communications in order to police this activity.
In response to Chairperson Studley, Executive Director St. Croix stated that this election has produced the largest number of candidates he has seen since his tenure began and has been the busiest for staff to police and administer.
Chairperson Studley requested that Executive Director St. Croix relay to staff that the Commissioners appreciate all of staff’s effort and hard work.
Charles Marsteller asked Executive Director St. Croix if he could comment on the chart of enforcement actions listed in the Executive Director’s report.
Executive Director St. Croix stated that he cannot comment on confidential complaints.
IX. Items for future meetings.
Executive Director St. Croix responded to Commissioner Harriman stating that the discussion regarding Sunshine Ordinance regulations is planned for the November meeting.
Commissioner Hansen stated that Ray Hartz raised an issue in his public comment regarding the failure of the Rent Stabilization Board to record its meetings. She stated that issue is of some concern and requested that staff look into the matter. She stated that she would like to have a discussion regarding the Ethics Commission’s ability to independently propose legislation.
X. Public Comment on matters appearing or not appearing on the agenda that are within the jurisdiction of the Ethics Commission.
Motion 10-10-18-10 (Studley/Hur): Moved, seconded and passed (5-0) that the Commission adjourn.
Meeting adjourned at 8:30 PM.