Draft Minutes – August 13, 2021

Draft Minutes of the Regular Meeting of
The San Francisco Ethics Commission
Friday, August 13, 2021
Remote Meeting Held Online via WebEx and aired live on SFGovTV
(Approved __, 2021)

Note: SFGovTV provides a continuous archive of audio, video, and Caption Notes recordings of Ethics Commission meetings that allows viewers to watch those meetings online in full at the viewer’s convenience. These archives of Ethics Commission meetings may be accessed at SFGovTV at http://sanfrancisco.granicus.com/ViewPublisher.php?view_id=142.

(Note: A complete video recording of this meeting is available at SFGovTv.)

Item 1. Call to order and roll call.

Acting Chair Yvonne Lee convened the meeting at 9:40 am and stated that the meeting is being held by Teleconference Pursuant to the Governor’s Executive Order N-29-20 and the Twelfth Supplement to Mayoral Proclamation Declaring the Existence of a Local Emergency Dated February 25, 2020. Online Meeting Moderator Ronald Contreraz summarized procedures for remote participation by members of the public.

COMMISSION MEMBERS PRESENT: With Chair Lee and Commissioners Daina Chiu, Larry Bush, and James Bell attending, a quorum was present.

STAFF PRESENTING: LeeAnn Pelham, Executive Director; Jeff Pierce, Director of Enforcement and Legal Affairs; Jeff Zumwalt, Senior Investigator; Pat Ford, Senior Policy and Legislative Affairs Counsel; Ronald Contreraz, Online Meeting Moderator.

REPRESENTATIVES OF THE OFFICE OF THE CITY ATTORNEY PRESENT: Andrew Shen, Deputy City Attorney.

MATERIALS DISTRIBUTED:

Item 2. Public comment on matters appearing or not appearing on the agenda.

Judith Reese stated she was calling in about Item 7. She stated that she believed that Stojkovic appears to have additional unreported lobbying contacts in 2021 and expressed concern that Stojkovic is on the consent calendar.

Ellen Lee Zhou identified herself as a public social worker and a representative of SEIU. She requested that Ethics Commission reopen City Hall. She identified herself as a member of Revival SF.

A caller stated she heard Judith Reese’s comment and stated that she thought it would be important for the Commission to sever Item 7 from consent.

A caller identified himself as Anonymous. He identified conduct he hoped the Commission would further investigate. He offered remarks on Item 9, including that the penalties were too low and did not account for Mayor Breed’s Sunshine Ordinance violations.

CONSENT CALENDAR ITEMS

Chair Lee called the consent calendar. Lee called Item 3, the draft minutes, separately from the remainder of the consent calendar.

Item 3. Draft Minutes of the Commission’s July 9, 2021 regular meeting.

No public comment was received.

Motion 210813-01 (Bush/Chiu): Moved, seconded, and passed (4-0) to approve the minutes of the Commission’s July 9, 2021 regular meeting as drafted.

Items 4-8.

Item 4. Proposed Streamlined Stipulation, Decision and Order In the Matter of Norman Yee for Supervisor 2016, Norman Yee, and Lisa Le (SFEC Complaint No. 1617-020).

Item 5. Proposed Streamlined Stipulation, Decision and Order In the Matter of Eamonn Herlihy and Richard Hart (SFEC Complaint No. 1819-026, 1920-035).

Item 6. Proposed Streamlined Stipulation, Decision and Order In the Matter of John Dennis for Supervisor 2018, John Dennis, and Kelly Lawler (SFEC Complaint No. 1819-06-2, 1920-35-2).

Item 7. Proposed Streamlined Stipulation, Decision and Order In the Matter of Jennifer Stojkovic (SFEC Complaint No. 1920-011).

Item 8. Proposed Streamlined Stipulation, Decision and Order In the Matter of Yes on Proposition V and Rebecca Olson (SFEC Complaint No. 1920-048).

Public Comment

Judith Reese requested that Item 7 be severed.

A second caller requested that Item 7 be severed.

A caller stated that it was difficult to have learned how to call in to the meeting.

Motion 210813-02 (Bush/Chiu): Moved, seconded, and passed (4-0) to approve items 4, 5, 6, and 8 under the consent calendar.  

ITEMS REMOVED FROM CONSENT CALENDAR TO BE CONSIDERED SEPARATELY UNDER BYLAWS ART. VIII, SEC. 2

Item 7. Proposed Streamlined Stipulation, Decision and Order In the Matter of Jennifer Stojkovic (SFEC Complaint No. 1920-011).

Senior Investigator Eric Willett stated that he administers the streamlined administrative resolution program. He provided context for this proposal in response to prior commenters.

Chiu sought clarification from Willett on the scope of the prior liability, and Willet provided the information.

Commissioner Bell said that it would be helpful to better understand staff’s process and what rationales were at play in arriving at the stipulation.

Public Comment

A caller identified the call-in information and stated that staff have not adequately identified how the public can participate.

Anonymous stated that the parties could stipulate to more facts than stated in the stipulation.

A caller stated that Jennifer Stojkovic has been using sf.citi to hide the activity of major tech companies in SF.

Item 9. Proposed Stipulation, Decision and Order In the Matter of London Breed (SFEC Complaint No. 1920-072).

Senior Investigator Zumwalt introduced the item.

Bush asked about the media coverage that had been given to the parade floats discussed in the stipulation and whether that preceded the complaint.

Zumwalt said that confidentiality prevents staff from commenting on complaints that are received.

Bush said that his interest was in whether the violations in the stipulation had been brought to light by the mayor or someone else. He also asked about whether there was an additional violation resulting from a contribution from a corporation and whether staff had spoken to the mayor. Bush also asked how the mayor would pay the penalty.

Zumwalt said that all potential violations were investigated and all violations that were found are included in the stipulation and that staff cannot provide facts from the investigation that are not included in the stipulation. Zumwalt said the penalty had not been paid yet and did not know how the respondent would pay the penalty. Pierce added that political committee funds can be used to pay a penalty.

Chair Lee asked whether the Commission had the authority to direct respondents to pay a penalty in a particular way.

Shen suggested that a representative of the mayor could answer Bush’s questions.

Bush said that the mayor had directed her staff to take ethics training, which is not necessarily required by law. He suggested that the training filings be publicly filed.

Chiu asked about the laws that apply to gifts, and how they impact the disclosure requirement regarding the car repair that is the subject of the one of the counts in the stipulation.

Zumwalt said that the car repair constituted a gift from a subordinate and was therefore prohibited. It should never have been accepted.

Chiu asked about the exception regarding close personal friends. Zumwalt said that discussion of exceptions would take place under agenda item 10.

Chiu asked if the penalties were the maximum amount available. Zumwalt said that count 1 was the maximum, and that counts 2, 3, and 4 were negotiated based on what is allowed under the Charter. Chiu said it would be helpful to understand the factors that staff used to determine the penalty amount.

Lee said that the stipulation discussed the seven factors that staff used to assess the appropriate penalty. She asked Pierce to review them and asked for clarity about the respondent’s ability to pay.

Pierce reviewed the factors, and noted that prior cases also guide negotiations of penalties. he reminded the Commission that penalties are negotiated. He said that the respondent’s ability to pay is a factor to help ensure that Commission is able to collect the penalties that it assesses.

Bush said that if committee funds can be used, then a respondent’s ability to pay should not be a factor.

Tom Willis identified himself as a representative of the mayor. He reiterated that the Mayor takes the violations very seriously and takes responsibility. He said that she would pay the penalty from a lawful source, which he believes cannot include a third party nonprofit.

Bell asked Willis if the stipulation could serve as an opportunity to strengthen ethics training.

Willis clarified that he represents the mayor in her personal, and not official, capacity. The question pertains to the mayor’s official duties, and he cannot speak directly about that.

Chiu moved to approve the item.

Public Comment

A caller stated he knew former Chair Ambrose for many years and that she could have furthered this discussion. He stated that the mayor has made statements in a “nonchalant” way, including that she did not know at the time of the conduct that she was breaking the law. He stated that the mayor makes $400k and that paying $23k should be easy for her.

Anonymous stated that the mayor’s self-reporting of the gift from Nuru should not be mitigating because she reported it only after Nuru had been arrested by the FBI and that at the time she reported it she stated her belief that it had not been unlawful. He reiterated his request that the Commission

Chiu amended her motion to reflect that the Commission would vote to approve the item and simultaneously acknowledge the practice in the mayor’s office that form 700 filers be required to take sunshine and ethics training.

Motion 210813-03 (Chiu/Bell): Moved, seconded, and passed (4-0) to approve the stipulation.  

The Commission recessed at 11:30am.

The Commission came out of recess at 11:43am.

NON-CONSENT CALENDAR ITEMS

Item 10. Presentation, discussion and possible action on findings and recommendations of Report on Gifts: Gifts to Individuals dated August 2, 2021.

Senior Policy and Legislative Counsel Pat Ford presented the item. He discussed the federal corruption investigations, including criminal complaints, and plea agreements as background on this analysis of the City’s gift rules.

Ford explained the City’s restricted source rule and identified what the federal corruption charges revealed about gifts to individuals. He described staff’s review of gifts reported on e-filed Forms 700 and efforts to identify whether any had been from restricted sources.

Ford stated that the Commission’s restricted source rule relies on the FPPC’s definition of gifts, and that because that definition was created for purposes of the general gift limit and disclosure on Forms 700, staff had concluded that many of the exceptions listed there result in negative policy outcomes when applied to the restricted source rule. He further identified local exceptions to the restricted source rule that staff identified as problematic.

Ford walked the Commission through staff’s recommendations in the report, including (1) to create a local definition of gift for the restricted source rule that omits many state exceptions, (2) to reform the local exceptions to the restricted source rule, (3) to clarify and expand the scope of conduct and individuals affected by the restricted source rule, (4) to clarify how the rule applies to City contractors and others who do business with the City, (5) to reform the exceptions to the subordinate gift rule, and (6) apply to permit expediters the gift prohibition that already prevents lobbyists from giving gifts to officers and employees in departments that issue permits.

Ford noted that the CFO of the airport was attending and wished to speak about the exception that allows Airport officials to accept free meals from certain restricted sources.

Chair Lee thanked Ford for staff’s work.

Bush stated that the report was excellent and educational. He asked whether gifts are limited to financial gifts, or whether unrealized stock options would be considered gifts. Ford stated that state law defines gifts in terms of a “payment” and predicted that stock options would be considered a payment but acknowledge it may be difficult practically to value the gift.

Bush and Ford discussed gifts of travel. Ford noted that the Controller already oversees per diems for travel. He stated that among staff’s recommendations is to prohibit gifts of travel from restricted sources.

Bush asked if someone attempting to influence policy would be a restricted source, and Ford affirmed. They discussed whether an entity who engages a contact lobbyist or undertakes expenditure lobbying would render an entity a restricted source. Ford stated that contact lobbying likely would but stated that because public comment is excluded that expenditure lobbying might not.

Chiu commended staff’s report and presentation. She and Ford discussed staff’s consultation with other jurisdictions in relation to seeking solutions to local problems. They discussed potential penalties that could arise from violations of the laws as amended.

Airport CFO Kevin Kone addressed the commission. He stated that he had worked with Commission staff on the exception to restricted source gifts 14 years ago. He stated that the exception for restricted source gifts at the airport followed the practice in the shipping industry. He stated the exception is necessary for Asian airlines to “save face” by conducting business over dinner with airport staff. Kone stated there was a risk that airlines would fly to Portland, Los Angeles, or Denver instead of San Francisco. Kone stated that under federal law airport staff cannot give different terms to different airlines.

Bush asked Kone how the airport decides which airlines get gates, and which get hospitality suites. Kone stated that gates are distributed primarily under FAA rules and in proportion to the number of seats filled. Kone stated that “flight clubs” (hospitality suites) are very expensive for the airlines.

Bell asked whether Kone was claiming that airlines would no longer fly to SF because airport staff did not accept a meal. Kone acknowledged that there are other reasons why airlines would likely continue to fly to SFO.

Chair Lee asked if airport staff had considered paying for their own meals to ensure that business takes place over dinner, to respect the culture, but to diminish the risk or appearance of corruption. Lee stated that Asian cultures save face by presence, not by receiving the meal. Kone stated that he had not brought that proposal to airport staff and cautioned that the airport lost significant travel during COVID.

Public comment

A caller stated that he has spent 20 years trying to understand the difference between federal approaches and the City’s approach. He stated that while closing loopholes is important, what is most needed is immediate enforcement.

Chair Lee sought clarity on what a motion might include today. Ford clarified that staff is looking for guidance from the Commission about what should be included in any legislative proposal.

Bell asked Ford’s reaction to Kone’s comments. Ford thanked other departments for engaging in this process. He reminded the Commission that ethics rules exist not merely to prevent corruption but to prevent the appearance of corruption. He stated that the average citizen might reasonably wonder why this exception exists. He endorsed Chair Lee’s proposal that employees or the airport pay for their dinners, stating that if this is important for business the airport should provide for it in the budget and noted that the Controller allows departments to pay for such meals. He said that City should adopt ethics rules that are sound and not be constrained by practices among private industries.

Chiu asked if these legislative proposals would have to go on the ballot. Ford stated no, but that the ballot would be one option. Deputy City Attorney Shen reminded the Commission that meet and confer obligations accompany this legislative process. Chiu said it would be helpful to see language that would remove and language that would narrow the Airport exception.

Bush moved, Chair Lee seconded, that the Commission adopt staff’s recommendations and that Commission staff move forward with the project. The motion carried unanimously.

Motion 210813-04 (Bush/Lee): Moved, seconded, and passed (4-0) to approve staff’s recommendations contained in the report.   

Item 11. Continued discussion and possible action on further revised draft of Ethics Commission Annual Report for the Fiscal Year ending June 30, 2021.

Director Pelham stated that the Commission’s annual report reflects commissioner feedback.

Bush recommended that the annual report include facts about lobbyists. Bush further stated that the report should reflect that the Commission interacts with the City Attorney, District Attorney, and DHR on a variety of issues.

Pelham stated that page 16 of the report refers to lobbyists, and that the report refers to collaboration with DHR and the Controller’s Office.

Chair Lee stated that because this has come before the Commission four times and that she believes the Commission should be prepared to approve as is considering that staff have incorporated commissioner feedback from each of the three prior hearings.

Chair Lee moved, Chiu seconded, to approve the annual report.

No public comment was received.

Motion 210813-04 (Lee/Chiu): Moved, seconded, and passed (4-0) to approve the annual report.

Item 12. Discussion of Executive Director’s Report. An update of various programmatic and operational highlights of Ethics Commission staff activities since the Commission’s previous meeting. The written report is available on the Commission’s website and may cover a range of topics such as the Commission’s budget, outreach activities, campaign finance disclosure and public financing programs, audit program, lobbyist program, campaign consultant program, permit consultant program, major developer program, and future staff projects. Any of these subjects may potentially be part of the Director’s presentation or discussed by the Commission.

Director Pelham added her thanks to former Chair Ambrose. She provided an update on the approved budget. She noted that the report provides links related to recall efforts and redistricting. Pelham gave a brief update about the City’s plans to reopen amid developments related to vaccinations and delta.

Chair Lee asked about staff’s vaccination rate. Pelham stated she would have to follow up with DHR and noted that all staff had complied with the vaccination status reporting requirement.

Chiu asked when reopening might happen in light of the delta variant. Pelham stated that the goal had been early fall and stated that she would provide updates as they became available.

Chiu asked that the Commission have an opportunity to discuss the racial equity action plan at a future meeting.

No public comment was received.

Item 13.  Discussion and possible action on items for future meetings.

Chair Lee noted Chiu’s request to discuss the racial equity action plan.

Bell stated his desire that the Commission further discuss how to balance the need that the Commission not serve merely as a rubber stamp but also not to substitute its judgment for staff’s in considering stipulations.

Bell requested that the Commission further discuss the meals exemption for airport staff.

Bell requested that the Commission further discuss how the Commission can keep ethics rules at front of mind for city employees, noting that it need not appear in the next month.

Bush requested that the Commission discuss training for community groups and media.

No public comment was received.

Bush stated that the webpage is greatly improved.

Chiu stated that it would be helpful if Tyler Field could give another presentation on the use of data dashboards.

Item 14. Additional opportunity for public comment on matters appearing or not appearing on the agenda pursuant to Ethics Commission Bylaws Article VII Section 2.

No public comment was received.

Item 15. Adjournment.

The Commission adjourned at 1:47 p.m.

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