Draft Minutes of the Regular Meeting of
The San Francisco Ethics Commission
Wednesday, May 29, 2019
Room 416 – City Hall
1 Dr. Carlton B. Goodlett Place
San Francisco, CA 94102
(Approved ___, 2019)
Note: SFGovTV provides a continuous archive of selected Commission, council and board meetings that allows viewers to watch those meetings online in full at the viewer’s convenience. Video and audio archives of Ethics Commission meetings may be accessed here.
1. Call to order and roll call.
Chair Daina Chiu called the meeting to order at 2:01 pm.
COMMISSION MEMBERS PRESENT: With Chair Daina Chiu, Vice-Chair Noreen Ambrose, and Commission Members Yvonne Lee and Fern M. Smith in attendance, and one vacancy on the Commission, a quorum was present.
STAFF PRESENTING: LeeAnn Pelham, Executive Director; Gayathri Thaikkendiyil, Deputy Director & Chief Programs Officer; Jeffrey Pierce, Director of Enforcement and Legal Affairs; Patrick Ford, Senior Policy Analyst; Brian Cox, Policy Analyst.
REPRESENTATIVES OF THE OFFICE OF THE CITY ATTORNEY PRESENT: Andrew Shen, Deputy City Attorney.
MATERIALS DISTRIBUTED:
- Draft minutes for the April 12, 2019 regular meeting of the Ethics Commission.
- Staff report dated May 23, 2019 on Public Financing Program Phase II Legislative Recommendations and Draft Ordinance.
- Staff report dated May 23, 2019 with Proposed Regulations Related to Article I (Chapter I) and Article III (Chapters II and VI) of the Campaign and Governmental Conduct Code.
- Staff’s May Policy Report dated May 23, 2019.
- Staff’s May Enforcement Report May 23, 2019 and attachments.
- Executive Director’s Report dated May 23, 2019.
2. Public comment on matters appearing or not appearing on the agenda.
Ray Hartz stated that he has received 36 orders of determination from the City’s Sunshine Ordinance Task Force that the Commission has never enforced. Hartz stated that violations of the Sunshine Ordinance are each a misdemeanor. As allowed under SF Sunshine Ordinance Section 67.16, Mr. Hartz the following 150-word statement to be included in the meeting’s Minutes:
“KNOW YOUR RIGHTS UNDER THE SUNSHINE ORDINANCE. That admonition is printed on every copy of every agenda, for every meeting of this commission, which might seem only ironic, but is in fact, blatantly hypocritical! This body has no intention of even following the law, let alone enforcing it! Former Ethics Commissioner Quentin Kopp, who I consider the hypocrite-in-chief, said as much after resigning. “I don’t think anyone is afraid of the Ethics Commission who is in competitive political life in San Francisco.” The Civil Grand Jury, C&C of San Francisco 2010-2011 wrote: “Because of the Ethics Commission’s lack of enforcement, no city employee has been disciplined for failing to adhere to the Sunshine Ordinance. The Commission has allowed some city officials to ignore the rulings of the Sunshine Ordinance Task Force.” Thomas Aquinas teaches: “willful ignorance of what one out to know is a mortal sin.” IT’S ALSO ILLEGAL.”
Ellen Lee Zhou stated that SF government and the Ethics Commission have been corrupt. She stated that she had reported to the Commission in April 2019 voting fraud, ballot harvesting, “mono-party,” and improper Super-PAC influence. She further stated that she brought five employees before the commission to report bribery and extortion. She left written information for the public record.
Debbi Lerman spoke on Agenda Item 5. She urged plain-language informational materials, simple fact sheets, and required notices to explain its requirements for those subject to the laws. She added that all forms should be put online to help filers comply with the law. In response to a question by Commissioner Lee, Lerman stated member organizations of the SF Health and Human Services Association would be happy to distribute fact sheets to assist.
CONSENT CALENDAR ITEMS
Chair Chiu called the Consent Calendar item and provided the opportunity for public comment in Item 3.
3. Draft minutes for the April 12, 2019 Ethics Commission regular meeting.
No public comment was received. The Commission had no questions or discussion on the item. Commissioner Lee moved adoption of the draft minutes for the April 12, 2019 Ethics Commission regular meeting as presented. Commissioner Ambrose seconded the motion. The motion was unanimously approved 4-0.
Motion 190529-01 (Lee/Ambrose): Moved, seconded and passed unanimously (4-0) that the Commission adopt the draft minutes for the April 12, 2019 Ethics Commission regular meeting.
4. Discussion and Possible Action on Public Financing Program – Phase II Legislative Recommendations and Draft Ordinance.
Chair Chiu stated the recommendations had resulted from a robust process of public engagement. She said she had received helpful public comment and appreciates the process of engagement. She stated her preference to send the proposal to the Board of Supervisors before the end of the month.
Senior Policy Analyst Pat Ford introduced the Phase II Public Financing Review Project legislative recommendations and draft ordinance.
Chair Chiu asked about the Election Campaign Fund potentially being depleted by the recommendations and urged that the Fund be closely monitored to ensure supplemental appropriations can be sought as needed. DCA Shen confirmed the Charter allows supplemental appropriations to be requested. Vice-Chair Ambrose stated the Fund should be monitored closely so that any needed supplemental appropriation request could be made well in advance of an election. Ford confirmed that Staff will be doing that, adding that the pending recommendations were designed to not outpace the Fund. He said Staff’s analysis considered the likely cyclical draw over a four-year period for upcoming elections and does not anticipate it would deplete the funding. Staff will monitor levels closely and is prepared to come back with further specific recommendations if it appears the sufficiency of the Fund is at risk.
Ford reviewed the recommendations, beginning at page 14 of Agenda Item 4. He highlighted two proposals on which stakeholder consensus had not yet been reached. First was the proposal to match only the first $100 from any one contributor. He stated the purpose was to incentivize candidates to pursue a larger number of smaller contributions and involve more people in elections. Ford said an alternative proposal would match the first $150, which he said was less desirable but still a good policy approach. He stated matching above $150 would counter the policy of pursuing smaller contributions. The second proposal was to allow qualified candidates to receive the initial grant of public funds earlier than current law but retain the current disbursal date for subsequent matching funds. He noted candidates and campaign managers had provided feedback about the value of receiving money earlier. He added that the City’s current system already provides funds earlier than other jurisdictions, however, and that the overall legislative packet would remain strong even if the Commission were to decline to adopt this particular recommendation.
Commissioner Smith asked about the significance in the different amounts that incumbents and non-incumbents could qualify to receive. Ford stated that the difference is modest, as it is under current law, and Staff has recommended that distinction not be changed at this point.
Vice-Chair Ambrose asked whether candidates who drop out of the race would owe the City the amount of the initial grant they received, and Ford responded affirmatively.
Commissioner Lee asked Ford for more detail about the difference between matching $100 versus $150 contributions. Ford directed Commissioners to a chart on page 12 of the report and explained how the match amount would affect funding received under a 6-to-1 matching ratio and under the existing 2-to-1 ratio. Ford and Commissioners engaged in further discussion regarding the matching proposal ratio proposal.
Chair Chiu stated that moving the initial public funds grant out to the 284th day before the election would render the city’s program an outlier compared to other public financing programs and she advised caution on this proposal.
Vice-Chair Ambrose asked about the operative date for this legislation. Ford stated Staff and the City Attorney recommend that the Phase II changes have an operative date of January 1, 2020. DCA Shen added that the Commission could make that amendment to the legislation and vote on the item today. Vice-Chair Ambrose statement her agreement with the Chair’s remarks to not move the initial disbursal date forward. Commissioner Smith added that the proposed date shift seems not to be based on data and echoed the Chair’s comments about not moving forward with that at this time.
Chair Chiu called for public comment.
Ellen Lee Zhou stated she was a candidate for the 2018 mayoral election and stated that no public funds should be allowed because it is a waste of funds and protects criminals. She stated that no candidates other than democrats received public funds.
Steven Hill thanked Commissioners for the process and indicated he believes there is enough in this package to move the proposal to the Board. He urged the Commission to consider a match amount that leans toward $200 and to retain the existing disbursement date.
Helen Grieco from Common Cause stated that organization’s support of the recommendations. She noted that small donors are the point of the system, urged the Commission to favor a system that incentivizes additional small contributions, and encouraged a look at what is the right start date for distributing public funds.
Dall Eichenberger urged the Commission to approve this proposal, adding he views public financing as a solution to Citizens United. He stated he looks forward to the day when candidates don’t have to raise funds to run for office and hopes that the ability to raise and live within a budget becomes more prominent in campaigns.
Casina Fletus, of the ACLU Voting Rights Foundation of Northern California, urged support of the proposal and emphasized the 6-1 match as a way to help promote the ability of community-based candidates to wage effective campaigns.
Nancy Tong identified herself as a public prosecutor but speaking off duty in her personal capacity as a first-time candidate. She cited advice she had received that ‘money is viability’ and believes they are important to change the dialogue and help people from the community and are disenfranchised to have a greater representation in San Francisco. She noted these reforms will not affect her campaign but urged adoption of the reforms and their future expansion to other races such as District Attorney.
Edward Wright, Legislative Aide to Supervisor Mar, noted a letter provided by Supervisor Mar in support of the proposals, along with two amendments: 1) to adjust the amount of a contribution that could be matched from $100 to $165 to further amplify the role of smaller donors; and 2) to retain the current disbursement date and not advance it to the 284th day before the election so that it aligns with the determination of candidates to appear on the ballot.
The Senior Policy Coordinator for Fair Vote California expressed support for retaining the current disbursement date for the initial public funds grant and for increasing the matching value to $165.
Vivian Imperielli identified herself as a campaign worker since 1995 and urged support for the package. She stated that SF needs public financing to protect the public from corrupt practices like basing legislative and policy decisions on the interests of donors.
An individual who described herself as a District 4 small donor urged passage of package as proposed to strengthen democracy in the City.
Esther Marks stated she understood that 28 percent of candidates who had received that initial disbursement received only 5 percent of the vote and expressed concern that the earlier disbursement date would result in more candidates running who should not run.
Ray Hartz stated the work of the Commission as endlessly rewriting campaign finance laws. He stated that the Commission lacks power to control the ethics of elections themselves and that it does not do anything to make elections fair. Hartz stated that because Commissioners are appointed they do not risk biting the hand that feeds them.
Seeing no further public comment, Chair Chiu moved to 1) approve matching $150 contributions at a ratio of 6-to-1; 2) increase the initial public financing grant as written in Staff’s proposal; 3) increase the maximum allowable funding per candidate as written; 4) increase the initial Individual Expenditure Ceilings as written 5) align the fundraising period for qualifying contributions for both mayoral and supervisorial candidates to end on the 70th day before the election; 5) require that supervisorial candidates file threshold reports at the level that matches qualification requirements; and 6) change the operative date of the ordinance to Jan. 1, 2020. Commissioner Smith seconded the motion.
Vice-Chair Ambrose asked about the BLA report, which she noted had reached different results than the analysis conducted by Staff on certain financial modeling questions. She asked whether the BLA analysis had used the higher matching ratio in conducting its analysis. Mr. Wright clarified that the report was in draft form and confirmed it had used a different ratio, adding it is the intent to finalize the report before a vote goes before the Board.
Commissioner Lee emphasized that public financing is to ensure that the voice of the disenfranchised is heard and noted that 30 percent of city residents are older individuals on fixed income. She said she struggles with the $100 vs. $150 match level, as people who contribute only $100 should be included when candidates assemble their platforms. She urged the Commission to ensure public financing supports representation of those who are marginalized in the city’s communities.
DCA Shen reminded the Commission that it requires a unanimous vote to adopt legislation, since there were only four members of the Commission at the meeting.
Chair Chiu called for a vote on the motion to:
- match up to $150 of a qualified contribution at a six-to-one rate;
- increase the initial public financing grant for qualified public financing candidates from $20,000 to $60,000 (Supervisor) and from $100,000 to $300,000 (Mayor);
- increase maximum public funding for a participating candidate to: $255,000 for non-incumbent Supervisorial candidates and $252,000 for incumbent Supervisorial candidates; and to $1,200,000 for non-incumbent Mayoral candidates and $1,185,000 for an incumbent Mayor;
- increase the initial Individual Expenditure Ceilings for candidates participating in the public financing program in Supervisorial races to $350,000 and to $1,700,000 for the Mayoral race;
- allow contributions received by supervisorial candidates on the 70thday before the election to be matched with public funds;
- require Supervisorial candidates to file threshold disclosure reports upon raising or spending $10,000, rather than $5,000; and
- establish an operative date for the ordinance of January 1, 2020.
On a roll call vote the motion was unanimously approved 4-0.
Motion 190529-02 (Chiu/Smith): Moved, seconded and passed unanimously (4-0) that the Commission adopt the motion to: 1) approve matching $150 contributions at a ratio of 6-to-1; 2) increase the initial public financing grant as written in Staff’s proposal; 3) increase the maximum allowable funding per candidate as written; 4) increase the initial Individual Expenditure Ceilings as written 5) align the fundraising period for qualifying contributions for both mayoral and supervisorial candidates to end on the 70th day before the election; 5) require that supervisorial candidates file threshold reports at the level that matches qualification requirements; and 6) change the operative date of the ordinance to Jan. 1, 2020.
Chair Chiu again thanked those who participated in the process and directed staff to prepare the legislation for the Board.
5. Discussion and Possible Action on Proposed Amendments to Regulations Related to Article I (Chapter I) and Article III (Chapters II and VI) of the Campaign and Governmental Conduct Code.
Senior Policy Analyst Pat Ford presented a Staff report on proposed amendments to regulations related to Article I (Chapter I) and Article III (Chapters III and VI) of the Campaign and Governmental Conduct Code to 1) implement the Anti-Corruption and Accountability Ordinance (ACAO); 2) enact general clarifying and interpreting regulations; and 3) non-substantively update other regulations to match the Code. The proposals affect the regulations supporting the Campaign Finance Reform Ordinance, the Government Ethics Ordinance, and the Behested Payment Reporting Ordinance. He explained that the required 10-day notice was circulated publicly to enable the Commission to act at this meeting if it wished to do so.
Ford thanked the public for their comments and noted that Staff had received public comment both before and after Staff had sent out the regulations with the 10-day notice. Ford proposed that two additional sets of amendments based on that public comment be combined with the proposed regulations. One set was documented in a written list that Ford had distributed to the Commission and made available on the public table, and the other set consisted of a pair of minor amendments that Ford would describe orally during his presentation. He noted DCA Shen had confirmed action was possible today in compliance with the Brown Act.
Ford detailed two amendments orally. The first would amend language to conform Reg. 1.126-7 to the statute, to read “greater than 10% owner” instead of “10% shareholder.” The second would correct language in the existing language of Regulation 1.142-5 to read “The candidate may not withdraw or amend his or her statement after the deadline for filing nomination papers[,] unless the deadline to file nomination papers is extended . . .” so that the language would accurately cite state law regarding nomination periods for local elective offices.
Ford explained that Staff had declined to recommend a proposal that no new forms be created to implement the disclosure requirements of the Anti-Corruption and Accountability Ordinance and that filers instead should indicate the required information in a “public note” section on a Form 460 filing. Ford stated that Staff had declined to follow that proposal because it would be hard for filers to know how to use the public note function on a 460, the public would not know to look there, and because the information would not be searchable.
Vice-Chair Ambrose asked whether Staff could make the forms widely available before the filing requirement. Ford stated that forms are not available on the website because filers may believe those are the documents to print out, complete in paper form, and file by email. Vice-Chair Ambrose suggested use of a watermark to address that, and Chair Chiu stated making blank forms publicly available could be useful. She added that a new form was preferable as it allowed for searchable data.
Ford noted Staff had declined to create a safe harbor provision for two of the three disclosure requirements. He noted that the safe harbor provision Staff recommended, for Section 1.114.5, aligned with a statutory requirement on the part of the contributor to inform the committee that the contribution was made at the behest of an elected official such that the Commission could pursue an enforcement action against the contributor, and also because there was no way for the committee to see on the face of the contribution that it triggered disclosure. Ford stated that in contrast, the bundling and entity disclosures create knowledge for the filer that a disclosure requirement may exist so no safe harbor is necessary.
Vice-Chair Ambrose asked about the definition of “bundle” and Ford stated that the language “deliver and transmit” has a physical component.
Commissioner Lee asked whether the general public is aware of these filing requirements. Ford stated that the Commission’s Engagement and Compliance team is developing forms and other materials to help inform the public about these requirements.
Ford stated that Staff proposed to retain “sponsored or controlled committee” in the definition of “affiliated entity.” As an example, he noted that if IBM is prohibited from giving to a candidate, then the IBM-sponsored “IBM PAC” should also be prohibited from giving. Ford explained that prior to the ACAO the language explicitly prohibited contributions from sponsored or controlled committees. Although one commenter suggested that the new language evidences a legislative intent to not have included that prohibition, Ford stated Staff believes that the legislative intent was not to create permission for controlled committees to contribute, and that permitting them to do so would frustrate the purposes of the legislation. DCA Shen noted that he agrees with Staff’s interpretation, noting that not to include sponsored and controlled would be an unreasonable interpretation and yield an unreasonable result.
Chair Chiu called for public comment.
Esther Marks stated that the current provision gives the Executive Director 30 days to determine a candidate’s public financing eligibility and 10 days to determine matching funds. Marks proposed to abbreviate that amount of time, shortening it to 10 working days for eligibility and 3 working days for matching funds. Marks stated that it would not be unreasonable if staff already meet these requirements in practice.
Anita Mayo from Pillsbury Winthrop Shaw Pittman stated that the definition of “affiliated entity” in the regulations exceeded the statutory language and urged that “sponsored and controlled” be deleted from the proposed definition. She stated that such a definition would be consistent with some provisions of state law.
Jesse Mainardi expressed his general support for the regulations and gratitude to Pat Ford for his work on the regulations. Mainardi stated that some filers would prefer to use Form 460 to disclose new campaign-related information instead of three new forms but urged the Commission to integrate any new reporting forms with NetFile as is done with the public financing request process. He added that a safe harbor requirement should be included for a committee that received inaccurate or incomplete information from a donor.
Chair Chiu asked whether Staff would be integrating the new forms with NetFile. Deputy Director Gayathri Thaikkendiyil indicated that the Commission would be using DocuSign instead of NetFile, because doing so would not impose additional costs on the Commission that the Commission is not in a position to absorb. Chair Chiu sought clarification about whether DocuSign forms would be searchable. Thaikkendiyil answered affirmatively, adding that DocuSign integrates in real time with the online datasets. Chair Chiu encouraged Staff to keep the user experience top of mind to enable filings to be a seamless as possible.
Vice-Chair Ambrose asked about the safe harbor provisions and asked if Reg. 1.126-7 operates like a safe harbor. Ford responded he would have to review the language before determining whether satisfying “due diligence” would create a complete defense against enforcement or whether it would only be mitigating. Vice-Chair Ambrose stated that based on her experience many subcontractors may not know they are subcontractors.
Vice-Chair Ambrose commented on Reg. 1.126-8 that given the volume of likely contracts requiring departmental notice, clarity about how that regulation will apply will be important. She stated the number of contracts the City has that exceed even $10 million is quite extraordinary and stated that if a contract database doesn’t already exist it would be interesting to have one.
Chair Chiu moved to adopt the regulations as set forth in Staff’s report and as amended by Ford’s subsequent recommendations described in the supplemental list of amendments distributed at the outset of the meeting and those described orally during the meeting, and the motion was seconded by Commissioner Lee. Seeing no other discussion or questions and no further public comment, Chair Chiu called for a roll call vote. On a roll call vote, the motion was approved unanimously 4-0.
Motion 190529-03 (Chiu/Lee): Moved, seconded and passed unanimously (4-0) that the Commission adopt the motion to adopt the regulations as amended.
6. Discussion of monthly Staff Policy Report.
Senior Policy Analyst Pat Ford introduced the May Policy Report. He acknowledged the work of Policy Analyst Brian Cox, who was leaving the Commission effective May 31 to return to the San Francisco Public Defender’s Office. Programmatically, Ford noted the division’s plan to move forward on three key policy projects: 1) Retain public financing as the top priority as the Commission’s recommendations move to legislative consideration and possible implementation; 2) Campaign and Governmental Conduct Code regulation amendments to finalize and transmit to the Board, with likely implementation after 60 days in close coordination with other divisions assuming enactment of the regulations; and 3) planning and coordination for the implementation of Form 700 e-filing for all.
Ford added that information had been updated to the Commission’s website to help inform the public about how to understand paid online political communications and thanked Brian Cox for his work on that project. Commissioner Lee asked that the information be translated into Chinese. Ford confirmed the Staff will look into that.
The Commission held no other discussion on the report. No public comment was received. No action was taken on the item as it was provided for informational purposes only.
7. Discussion of monthly Staff Enforcement Report.
Director of Enforcement & Legal Affairs Jeff Pierce summarized highlights from the May Enforcement Report. He discussed recent investigative training that Senior Investigators Thomas McClain and Jeff Zumwalt attended in New Orleans held by the Federal US Inspectors General. He added that Senior Investigator Eric Willet had conducted a session for the Enforcement Division on conducting enforcement audits that focus on specific allegations or facts. He noted work underway by Fines Collection Officer Ernestine Braxton on late fee collection and referrals sent to the City’s Bureau of Delinquent Revenues for follow up action. Pierce briefly reviewed current and historical caseload levels and timeframes and noted their use in assessing progress of the division and in evaluating the division’s work priorities moving forward.
Noting the finite nature of staffing resources and time and her desire to entrust Staff with discretion for prosecuting matters as appropriate, Chair Chiu asked that at the next meeting Pierce provide additional information about approaches for best using limited resources to promote the Commission’s enforcement mandate, including prioritization of different matters based on their impact and importance.
The Commission held no other discussion on the report. No public comment was received. No action was taken on the item as it was provided for informational purposes only.
8. Discussion of Executive Director’s Report.
Executive Director Pelham provided various highlights from the May Executive Director report, including staffing news, an update on the FY20 budget, and updates regarding implementation of various programs in the Engagement & Compliance division.
Pelham stated that Policy Analyst Brian Cox had decided to return to the Office of the Public Defender to pursue an opportunity there to do policy work on criminal justice policies with the new Public Defender. She thanked him for his work at the Commission and said he will be missed by his colleagues on the Commission staff. She confirmed that hiring plans over the coming months include recruitments for a clerk, auditor, investigator, and policy analyst.
Pelham reported that the Board of Supervisors Rules Committee had held a hearing on its recommended appointment of Lateef H. Gray to the Ethics Commission and that the full Board planned to act on the appointment on June 4th.
Pelham confirmed that the Commission’s June and July meeting have been rescheduled due to Commissioner scheduling conflicts for Friday, June 28th at 1:30, and Wednesday July 31st at 10:00 am.
Deputy Director and Chief Programs Officer Gayathri Thaikkendiyil provided updates on the Commission’s FY20 budget and operations to implement and conduct outreach on programs. On the budget, she noted that some, but not all requested items were included in the Mayor’s proposed budget. These included partial but not full funding for a work order with the Department of Human Resources for hiring and other matters, and for technology needs. One of the three position reclassifications requested was approved.
On programmatic matters, Thaikkendiyil relayed that compliance rates with Annual Form 700 filing requirements and Sunshine and Ethics trainings were both high, adding that the goal for compliance is always a rate of 100 percent. In response to a question from Chair Chiu, she confirmed that consequences for failing by Board and Commission members to file timely or complete Sunshine and Ethics trainings would result in their disqualification from voting. Regarding implementation of the Anti-Corruption and Accountability Ordinance, Thaikkendiyil reported that eight of 10 new forms required under the law were now built, with two remaining in progress.
Vice-Chair Ambrose expressed her gratitude to Brian Cox for his work on behalf of the Commission, and Chair Chiu added her thanks.
The Commission held no other discussion on the report. No public comment was received. No action was taken on the item as it was provided for informational purposes only.
9. Discussion and possible action on items for future meetings.
Chair Chiu provided the opportunity for public comment and no public comment was received. No items were discussed and no action was taken on the item.
10. Additional opportunity for public comment on matters appearing or not appearing on the agenda pursuant to Ethics Commission Bylaws Article VII Section 2.
Chair Chiu provided the opportunity for public comment and no public comment was received.
11. Adjournment.
Chair Chiu called for a motion to adjourn. Commissioner Lee moved to adjourn the meeting and Commissioner Smith seconded the motion. Adopted unanimously 4-0.
Motion 190529-04 (Lee/Smith): Moved, seconded and unanimously adopted that the Commission adjourn the meeting.
The Commission adjourned at 5:35 pm.