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Minutes – January 5, 2016

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Minutes of the Special Meeting of
The San Francisco Ethics Commission
January 5, 2016
Room 416 City Hall
1 Dr. Carlton B. Goodlett Place
San Francisco, CA  94102

I. Call to order and roll call. 

Chairperson Renne called the meeting to order at 9:05 A.M. 

COMMISSION MEMBERS PRESENT: Paul Renne, Chairperson; Brett Andrews, Vice-Chairperson; Ben Hur, Commissioner; Peter Keane; Commissioner.  Beverly Hayon, Commissioner, was absent unexcused. 

STAFF PRESENT: LeeAnn Pelham, Executive Director; Shaista Shaikh, Assistant Deputy Director; Patricia Petersen, Education/Administrative Officer; Garrett Chatfield, Investigator/Legal Analyst.

OFFICE OF THE CITY ATTORNEY: Andrew Shen, Deputy City Attorney (DCA).

OTHERS PRESENT: Anthony Ababon (Mayor’s Office Budget Analyst); Bob Planthold; John Sinclair; Ann Treboux; Oliver Luby; Marc Solomon; Larry Bush; Charles Marsteller; Hulda Garfolo; Ian Lewis; Rachel Richman; Debbie Lerman; Sara Matland; Gen Fujioka; Jennifer Fieber; Bruce Wolfe; Peter Cohen; and other unidentified members of the public. 

MATERIALS DISTRIBUTED:

  • Staff Memorandum from Acting Executive Director Jesse Mainardi, re: Ethics Commission Budgets for FY 2016-17 and FY 2017-18, dated December 17, 2015;
  • Staff Memorandum from Acting Executive Director Jesse Mainardi, re: Proposition C Implementation – Interested Persons Meeting Comments, dated December 17, 2015.

II. Discussion and possible action on the Commission’s budget. 

Chair Renne introduced and welcomed newly appointed Executive Director LeeAnn Pelham.  Chair Renne also thanked former Acting Executive Director Jesse Mainardi for his work with the Commission.

Chair Renne invited general public comment prior to the Commission’s discussion of item II.

Public Comment:
Bob Planthold stated that he is former member of the Ethics Commission and is now a member of the Friends of Ethics.  He stated that the Commission must be preemptive regarding the enforcement of campaign committees that are formed by elected officials with the purpose of supporting other candidates.  He stated that a recent court decision out of San Jose dealt with this issue.  He stated that the Commission should consider issuing guidance or regulations to address this issue. 

John Sinclair stated he has been a resident of San Francisco since 1986.  He provided a list of organizations that may be subject to the new regulations regarding expenditure lobbyists.  He stated he obtained the information from publicly-available sources.

Ann Treboux stated the Commission should prioritize complaints alleging violations of the San Francisco Sunshine Ordinance. 

Oliver Luby stated that the issue raised by Bob Planthold could be addressed as an amendment to the current contribution ban. 

Marc Solomon stated that he is a member of the Friends of Ethics and concurred with Bob Planthold statements.  He stated that those committees are merely an outlet for unregulated spending. 

Anthony Ababon stated that he is the Budget Analyst assigned by the Mayor’s Office to assist the Commission in the budget process.  He stated that all City department have been instructed to submit a budget with at 1.5 percent cut for fiscal year 2016-2017.  He stated that the Ethics Commission has been moved to a two-year budget cycle, and that the Commission must include an additional cut of 1.5 percent for its 2017-2018 fiscal year budget.  He stated that the budget instructions include various requirements that should be included in the submitted budget plan. 

Responding to Chair Renne, Mr. Ababon stated that the deadline for all departments to submit their budgets is February 22, 2016. 

Chair Renne reviewed the budget process from the submission date to approval while confirming with Mr. Ababon if the steps he outlined were correct.  At the conclusion of this review, Commissioner Renne handed a member of staff a blown-up reprint of an editorial cartoon entitled “A Guide to the Budget, From Supervisor Louise Renne” which had been drafted many years ago yet outlined the same stages Mr. Ababon had just confirmed were still in place. 

Mr. Ababon further stated that the Board of Supervisors approves an interim budget to take effect on July 1 which acts as a legal placeholder until the final budget is approved.  He stated that, generally, the interim budget that is submitted does not contemplate any changes.

Responding to Chair Renne regarding the submission deadline, Mr. Ababon stated that the departments are strongly urged to meet that deadline.  He stated he was not aware of a process for a department to make changes to a budget after it is submitted, but that he would research if that was possible. 

Responding to Commissioner Hur regarding the response by the Mayor’s Office if the Ethics Commission submits a budget that asks for increased funding, Mr. Ababon stated that the City is legally bound to submit a balanced budget and that it considers the policy goals of all departments. 

Commissioner Hur stated that the City should robustly fund the Ethics Commission and cuts could be made to other departments. 

Mr. Ababon stated that every department can make a case for increased funding and that the Mayor’s Office looks at the needs of the entire City when making budget determinations.

Responding to Vice-Chair Andrews regarding the consequences for submitting a budget that did not adhere to the budget instructions, Mr. Ababon stated that the Mayor’s Office will review all budget requests considering the needs of the entire City. 

Vice-Chair Andrews stated that if the Commission submits a budget asking for increased funding it should provide a strong rationale for the increase.

Mr. Ababon stated his job is to work with the Commission prior to the submission deadline to ensure that the Commission’s budget reflects its priorities.

Commissioner Keane stated that in the past it was possible for departments to negotiate budget requests with the Board of Supervisor’s Budget and Legislative Analyst and asked if that was still part of the process.

Mr. Ababon stated the Board of Supervisor’s Budget and Legislative Analyst reviews the City-wide budget submission in June and July and may make recommendations.  He stated he was not familiar with the process described by Commissioner Keane. 

Executive Director Pelham stated her philosophy on budget requests is to balance the fiscal reality against the department priorities.  She stated that the goal should be to determine what budget is needed to right-size the department.  She stated that a budget request should contemplate how the department will use its resources to advance its mission. 

Responding to Commissioner Hur’s question regarding if the Commission can use the money allocated for public campaign finance fund to cover the cost of the program’s administration, DCA Shen affirmed that the Commission may use up to 15% of that fund for its administration. 

Vice-Chair Andrews stated he would like to see a variance column showing a year over year breakdown of what was budgeted for each line item and what was actually spent. 

Public Comment:
Larry Bush stated that in the past the Mayor’s Office had no role in the budget for the courts.  He stated that may still be the case.  He stated that the Ethics Commission is a quasi-judicial agency and that it should be funded outside of the Mayor’s Office.  He stated that the Commission should consider outsourcing some of its functions to contractors.

Charles Marsteller welcomed Executive Director Pelham.  He stated that the best practices model for funding of ethics commissions is New York City where that city’s Ethics Board funding is directly determined by the city council.  He stated that the Commission should consider advocating that is a quasi-judicial agency.  He stated that prior Commissions held annual strategy meeting that were open to the public in order to brainstorm priorities and policies.  He stated that because the majority of Commission members are lawyers that they should be aware of the legal mandate to have a Commission secretary. 

Hulda Garfolo stated that she is a member of the Friends of Ethics and also served as a member on two Civil Grand Jury panels.  She stated the current budget is not representative of what the Commission’s priorities should be.  She stated that the Civil Grand Jury determined that the former Executive Director ignored the Whistleblower program and recommended that the Proposition C legislation re-establish regulations that the Commission repealed in 2009.  She stated the current Whistleblower Retaliation Ordinance does not adequately protect whistleblowers. 

Bob Planthold stated that the Commission should consider sharing a secretary with the Sunshine Ordinance Task Force.  He stated that when he was a member of the Ethics Commission, the Commission did submit a budget after the required deadline.  He stated that if a budget was submitted a week after the deadline, there would be no repercussions because it would be impossible for the Mayor’s Officer to review all budget submissions within that time. 

Marc Solomon stated that he is a member of Friends of Ethics and he welcomed Executive Director Pelham.  He stated that it does not make sense that the Mayor is asking departments to make budget cuts at a time when the City is receiving record revenues.  He stated that because the Commission has been a sleeping watchdog it has led to the current climate in the City.  He stated that the current nature of corruption in the City is insidious.  He stated that the City has record funds but is spending it on activities such as the Super Bowl.  He stated that whenever the Ethics Commission’s budget is cut, corruption rises. 

Chair Renne stated the Commission will consider the public’s input when drafting its budget request. 

Commissioner Hur stated the Commission should consider requesting funding for positions that went vacant.  He stated that the Commission should think about how to make enforcement more effective and reduce the time it takes to complete audits.  He stated that with the appointment of the new Executive Director it may no longer be necessary for the Commission to have its own secretary.

Commissioner Keane stated the Commission must have the resources for strong enforcement and audit programs.  He stated that it is unacceptable for the Commission to acquiesce to the Mayor’s request for a budget cut of 1.5 percent.  He stated that he agrees with the public comment on the current state of corruption in the City and the more oversight is required.  He stated that the City has slid into an environment of soft corruption, pay-to-play, and bribery, and the Commission must reverse that trend.  He stated the City has record revenues that do not justify budget cuts.  He stated that the only reason the Mayor’s Officer is asking for cuts is to castrate the Ethics Commission.  He stated the Commission must submit a budget reflecting the enforcement and audit priorities as well as a Commission secretary, and that the Commission must fight for its budget requests. 

Chair Renne stated he and Executive Director Pelham will meet with the City Controller this week. 

Vice-Chair Andrews stated he supports Commissioner Keane’s request and should that the Commission should submit a budget without any cuts.

III. Discussion and possible action regarding the Commission’s implementation of Proposition C, which imposes registration and reporting requirements on expenditure lobbyists.

Education/Administrative Officer Petersen outlined the Interest Persons meeting schedule regarding the implementation of Proposition C. 

Responding to Commissioner Hur regarding his question on the waiver of the registration fee for non-profit organizations, DCA Shen stated that the legislation requires the waiver of the fee for employees of tax exempt organizations. 

Commissioner Hur stated he would like to see the Commission develop a bright-line rule regarding the calculation of expenditures that would apply to meeting the monetary threshold amount. 

Public Comment:
Ian Lewis, representing the hotel and restaurant workers union, Local 2, stated Proposition C is ambiguous and it will be difficult to comply absent clear regulations.  He stated that, for example, it is unclear whether the monetary threshold amount contemplates a single expenditure or an aggregate of multiple expenses.  He urged the Commission to adopt bright-line regulations. 

Rachel Richman, representing Local 21, stated the legislation is unclear and clarification is needed whether or not the expenditure lobbying laws would extend to activities related to contract negotiations. 

Debbie Lerman, representing the Human Services Network stated the Commission should exempt non-profit organizations.  She stated the legislation may deter small non-profits from engaging in any form of advocacy.  She stated that the monetary threshold amount of $2,500 is too low and makes no allowance for inflation.  She stated regulations should clarify what constitutes a “member”, “member communication”, “member communications” and other types of things like that which may concern smaller non-profit organizations.    

Sara Matland, representing the Alliance for Justice, stated that non-profits must comply with expenditure lobbyist laws in multiple jurisdictions that each define “activity” differently and require the reporting on different schedules.  She stated the current legislation will deter small non-profits from engaging in advocacy. 

Oliver Luby congratulated the Commission on restoring Proposition C.  He stated any definition of “member communication” should be narrowly construed, otherwise it is subject to being abused.  He stated the Commission should also define what constitutes “other persons” related to those individuals being influenced.  He stated the exemptions related to expenditure lobbying do not mirror those for contact lobbying. 

Gen Fujioka, representing the Chinatown Community Development Center, stated that it is unclear who will actually qualify as an expenditure lobbyist.  He stated that his organization may use research gathered over the course of many years for purposes other than advocacy.  He stated that it is unclear if that research is then used in part for advocacy, if it would count towards that qualifying threshold amount. 

Jennifer Fieber, representing the San Francisco Tenants Union, stated small non-profits will require clarification on the legislation. She stated she had to contact the Secretary and State and Ethics Commission numerous times to clarify what needed to be done to comply with rules surrounding slate mailers.  She stated her organization of one and a half staff members spent about $4,000 on political consultants, lawyers and accountants which is a sizeable amount when considering the limits of its annual budget.  She stated Proposition C sounded like a boon for elite experts that will be hired to guide small organizations like hers through the process.  She asked that the Commission consider perspectives from organizations like hers that advocate on everyday issues without any financial gain. 

Larry Bush stated that some non-profit organizations also file IRS forms that ask if they are spending money on lobbying activity.  He stated that San Francisco has over six thousand non-profit organizations and many are sponsored by very large corporations, or receive public funds. 
Bruce Wolfe stated that there are ambiguities that need to be clarified and compliance by small non-profits could be expensive because they would need to hire experts to ensure compliance. 

Bob Planthold stated that the prior iteration of this law did not exempt non-profits and there was no issue with compliance then, so there will likely not be an issue with compliance now. 

Peter Cohen, representing the Council of Community Housing, stated that he is concerned about unintended consequences if bright line regulations are not adopted.  He stated that the Commission did not reach out to non-profit groups prior to drafting the legislation and that the Commission should engage with non-profits when considering the regulations. 

Marc Solomon stated he is a 26-year resident of the Mission District.  He stated that non-profits snoozed and lost and now want another bite at crafting the legislation.  He stated many non-profits purporting to represent community never reach out to that community to determine its needs.  He stated that non-profits want special rights. 

Charles Marsteller stated the Commission should remember the words “further the purposes of the act” every night when they go to sleep.  He stated this discussion is a good example of what happens when a law is repealed and then reenacted.  He stated that the sharing economy arrived after the law’s initial repeal.  He stated the City now must contend with large international players spending a lot of money to influence the City.  He stated the City is no longer a city, but a resort. 

Commissioner Hur queried whether the Commission might consider exempting a non-profit based on the size of its budget.

DCA Shen stated Commissioner Hur’s suggestion might require an amendment to the legislation rather than a regulation.  He stated that at the Commission meeting where the Commission voted to put the legislation on the ballot, the idea of exempting non-profits was rejected by the Commission. 

Commissioner Hur stated the idea to exempt non-profits based on the size of an organization’s budget was not previously discussed. 

DCA Shen stated the Commission might be liable legally if it attempts to change an ordinance through regulation that needed to be done through an amendment.

Vice-Chair Andrews stated he had been troubled by the lack of exemption for a non-profit.  He stated that large organizations will be able to afford professionals to ensure compliance, but small non-profits may not.  He suggested the Commission might apply the exemption only to those non-profits that assist marginalized populations. 

Commissioner Keane stated that while the suggestion of Vice-Chair Andrews is laudable, it would also lead to a slippery slope that could amount to the entirety of the regulation being struck.  Commissioner Keane then illustrated this point with constitutional law principles and how the application of a law must be applied to all groups equally.  He cited a case in which an exemption to a law allowing unions to picket in residential areas but not any other group was ultimately thrown out because content-based bias is against the First Amendment. 

Vice-Chair Andrews stated the Commission should then consider an exemption based on the budget of the organization or raising the monetary threshold amount. 

Commissioner Hur stated that raising the threshold amount would require an amendment and could not occur through regulation. 

Chair Renne stated that any regulations that are adopted would be interim regulations with the intention to address the issues later through amendment.  He urged staff to create simple registration and reporting forms in the meantime, and urged organizations to contact staff for guidance on compliance.

IV. Adjournment.

Motion 160105-01 (Keane/Andrews): Moved, seconded, and passed (4-0, Hayon unexcused) that the Commission adjourn. 

The meeting adjourned at 11:30 A.M.

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Posted in Commission Meeting Minutes

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