Ethics Commission Meeting: December 9, 2022 – Agenda Item 8 – Discussion and possible action regarding request for waiver of post-employment restrictions for Phillip Wong

Print packet containing memo and attachments

Date: December 2, 2022
To: Members of the Ethics Commission
From: Michael Canning, Senior Policy Analyst
Re: AGENDA ITEM 8 – Discussion and possible action regarding request for waiver of post-employment restrictions for Phillip Wong.

Summary and Action Requested

This memo provides background and analysis to assist the Commission in determining whether to grant a post-employment waiver to Phillip Wong. The Commission should evaluate Mr. Wong’s waiver request and, as required by city law, consider if granting Mr. Wong’s waiver would create the potential for undue influence or unfair advantage. Based on its review of Mr. Wong’s request and applicable law, Staff recommends that the Commission not approve the waiver.

Background

On November 24,  Phillip Wong sent a formal request to the Commission asking that certain post-employment restrictions of the Campaign and Governmental Conduct Code (C&GCC) be waived. Mr. Wong is a current City employee with the Office of Economic and Workforce Development (OEWD) and wishes to assume a new director position with BRIDGE Housing. Mr. Wong’s detailed waiver request is included as Attachment 1. The facts included in this memorandum are drawn from Mr. Wong’s written request.

Mr. Wong first contacted Staff about this matter on September 28, following guidance he stated he received from the City Attorney’s Office that several one-year and permanent post-employment restrictions would apply and that a waiver from the Ethics Commission would be required if he wanted to pursue this employment opportunity. Following several communications with Mr. Wong, on October 31, Staff provided Wong with informal advice that confirmed a waiver from the Commission would be required if he were to pursue the director position with BRIDGE Housing and offered guidance on how to formally request such a waiver. A copy of Staff’s informal advice to Mr. Wong is included here as Attachment 2.

Applicable Law

The City has rules for all officers and employees that restrict what former City officials can do after they leave City service. These rules include a permanent restriction on representing any other person (except the City) before any court or government agency in connection with particular matters in which the former City official was personally and substantially involved and a one-year restriction on communicating with the former City official’s former department with the intent to influence a government decision.

Both the permanent restriction on representation and the one-year post-employment communication ban further the purpose of the Campaign and Governmental Conduct Code, which per Section 3.200 is chiefly to “promote fairness and equity for all residents and to maintain public trust in governmental institutions.” The law seeks to ensure “that public officers and employees [are] independent, impartial, and responsible to the people and that public office and employment [is] not [] used for personal gain.” The Code also asserts that government decisions by City officers and employees “should be, and should appear to be, made on a fair and impartial basis.”

Permanent Restriction on Representation in Particular Matters

Section 3.234(a)(1) of the C&GCC prohibits former employees from representing any other person (except the City) before any court or government agency in connection with particular matter in which the former employee was personally and substantially involved in as a City employee, with intent to influence. Ethics Commission Regulation 3.234-1 outlines the scope of this restriction and provides guidance on determining whether this permanent ban applies to certain activities.

This permanent restriction on representation furthers the goals of the Campaign and Governmental Conduct Code by ensuring that former City officers and employees cannot switch sides and begin representing a non-City entity in matters they had been personally and substantiality involved in as a City official. Without this rule, a City employee could leave a position where they had been representing the City in a legal dispute or in the administration of a contract, and then accept employment with other side of that legal dispute or with the City Contractor and continue working on the same matter they had been working on as a City official.

This sort of switching sides raises several concerns that the prohibition is intended to address. One is the risk that the former City official would have access to proprietary information that could be applied in their new role to disadvantage the City. Another concern is that this situation could give the new employer an unfair advantage, as they are able to leverage the knowledge, resources, and connections of the former City official to their advantage. This sort of “revolving door” could also lead to undue influence and unfair advantage if other City officials begin to see these non-City entities as prospective employers and begin to seek favor with them while still representing the City.

One-Year Restriction on Communicating with Former Department

Section 3.234(a)(2) of the C&GCC prohibits former employees from, with the intent to influence a government decision, communicating on behalf of any other person (except the City) with any officer or employee of the department for which the former employee served, for one year following the termination of their employment with the City. Ethics Commission Regulation 3.234-2 outlines the scope of this restriction and provides guidance on determining whether this one-year ban applies.

This one-year post-employment communication ban furthers the goals of the Campaign and Governmental Conduct Code by ensuring that former City officers and employees cannot use their recent position with a department to unduly influence or appear to influence the actions of that department. Without this rule, officials and employees would be able to leave City service and immediately begin communicating with their former departments to affect decisions in favor of their new employer. This outcome would exemplify the “revolving door” issue arising from the public-to-private movement of individuals.

The one-year post-employment communication ban is designed as a modest but fundamental safeguard to support the fairness of governmental decision making and to preserve the public’s trust in the integrity of governmental decisions. The rule contemplates that former City officers and employees, in light of their recent positions with the City, may be able to exert or appear to exert undue influence over other City officers or employees to secure favorable outcomes for their non-governmental employer or clients. This ‘revolving door’ to non-governmental service gives rise to issues of unfair advantage because former City officers and employees can have unique knowledge and access that can uniquely advantage the ability of their new employer or clients to secure beneficial outcomes in a way not available to other entities or organizations in the same field who also may seek opportunities to do business with government.

Waiver Authority of the Ethics Commission

Section 3.234(c)(1) of the C&GCC grants the Commission the ability to waive the permanent restriction on representation in particular matters and the one-year restriction on communicating with former department, “if the Commission determines that granting a waiver would not create the potential for undue influence or unfair advantage.”

Ethics Commission Regulation 3.234-4 further outlines the process for submitting and potentially approving post-employment waivers. The regulation specifies that the Commission “shall not approve any request for a waiver from the permanent or one-year bans made under subsection 3.234(c)(1) unless the Commission makes a finding that granting such a waiver would not create the potential for undue influence or unfair advantage.” When determining the granting of such a waiver would create the potential for undue influence or unfair advantage, the regulation specifies that the Commission may consider:

  • the nature and scope of the communications the individual will have with his or her former department, board, commission, office, or unit of government;
  • the subject matter of such communications;
  • the former position held by the officer or employee;
  • the type of inside knowledge that the individual may possess; and
  • any other factors the Commission deems relevant.

When considering waiver requests, the Commission should consider whether granting a waiver would further the purposes of the Campaign and Governmental Conduct Code. The Commission may grant a waiver only if it finds that a waiver “would not create the potential for undue influence or unfair advantage.”

Waiver requests are evaluated based on the facts that are provided in the request. These facts allow the Commission to evaluate whether a waiver is appropriate and must therefore be complete and accurate. Any waiver that the Commission grants is limited to the facts provided, and, should the facts change, the requestor should seek an updated waiver from the Commission.

Facts Presented in the Request

In his waiver request, Mr. Wong describes his current role with the City and the role he would like to assume with BRIDGE Housing. Mr. Wong is currently a project manager with the City’s Office of Workforce Development (OEWD). Wong has worked for OEWD in different capacities since 2013 and has been in his current role as a project manager tasked with implementing the City’s development agreement projects since 2016.

One of the projects Mr. Wong works to implement is the Potrero HOPE SF Project, which is a development agreement between the City, the Housing Authority of San Francisco, and BRIDGE Housing, which was approved by the Board of Supervisors in 2017 (File # 161161). Mr. Wong’s current duties include coordinating numerous aspects of the project’s implimentation with various stakeholders, including multiple City departments, other government agencies, and the developer, BRIDGE Housing. Wong’s work also involves coordinating legislative actions and building permit reviews.

Should the Ethics Commission grant Mr. Wong a waiver, he intends to begin employment with BRIDGE Housing as the director of Potrero HOPE SF. In this new role with BRIDGE Housing, Wong’s “primary task would be to implement the project’s major approvals, for example, coordinating with the City and various partners on the design review and permitting processes, budget approvals process, and construction start and completion actions.” This role would involve regularly communicating with Wong’s former department and representing BRIDGE Housing before different government agencies regarding the implementation of the Potrero Hope SF project, which is the same matter he has regularly worked on as a City official.

Analysis

The Need for a Waiver to Perform the Duties of Mr. Wong’s Desired Position

Based on the facts presented in Mr. Wong’s waiver request, Staff agrees that a waiver for both the permanent restriction on representation rule and the one-year post-employment communication ban would need to be acquired in order for Mr. Wong to carry out the described duties of his desired position with BRIDGE Housing.

Based on Ethics Commission Regulation 3.234-1, the permanent restriction on representation rule would apply to Mr. Wong’s new duties at BRIDGE Housing, since:

  1. Wong would be a former City employee,
  2. He would be representing his new employer, BRIDGE Housing,
  3. Before various government agencies and employees thereof,
  4. With an intent to influence,
  5. A particular matter (the implementation of Potrero HOPE SF) in which the City has a direct and substantial interest, in which Mr. Wong was personally and substantially involved in as a City employee, and which involved specific parties, and
  6. The exception for witness testimony does not apply.

Based on the guidance from Ethics Commission Regulation 3.234-2, the one-year post-employment communication ban would apply to Mr. Wong’s new duties at BRIDGE Housing, since:

  1. Wong would be a former City employee,
  2. With less than one year elapsed since terminating his employment with the City and OEWD,
  3. Who would be representing his new employer, BRIDGE Housing, and
  4. Be communicating with the intent to influence his former Department, OEWD.

Should Mr. Wong leave City employment and pursue this role with BRIDGE Housing, he would need a wavier from the Ethics Commission to engage in the activities described in his waiver request, to avoid violating both the permanent restriction on representation rule and the one-year post-employment communication ban.

Considering if Granting a Post-Employment Waiver to Mr. Wong Would Create the Potential for Undue Influence or Unfair Advantage

As the Commission considers if granting a wavier to Mr. Wong would create the potential for undue influence or unfair advantage, Regulation 3.234-4 identifies several factors the Commission consider. These factors include: the nature and scope of the communications the individual will have, the subject matter of such communications, the former position held by the officer or employee, the type of inside knowledge that the individual may possess, any other factors the Commission deems relevant. These factors are discussed below.

Similarities in the nature, scope, and subject matter of the communications and duties of the two positions.

The nature, scope, and subject matter of the communications are described by Wong as being similar to the communications he makes in his current role with the City. It appears that a central aspect of his role with BRIDGE Housing would be to represent his employer before different government agencies, including his former department, with the intent to influence those agencies, in the matter of the Potrero Hope SF project. These communications would likely continue to involve coordinating permit applications and approvals, as well as pushing for legislative changes to benefit the Potrero HOPE SF project.

In addition to the type of communications being similar, the position Mr. Wong would like to take with BRIDGE Housing appears to be very similar to position he currently holds with the City. As Mr. Wong states in his waiver request: “In my current role, I represent the City on the implementation of Potrero HOPE SF. In my new role, I would represent BRIDGE Housing on the implementation of Potrero HOPE SF…”

Public officials who leave a governmental role to assume employment with a non-governmental entity that is doing business with their former agency, and whose new role involves the ability to influence the actions and decisions of their former agency, is the exact type of revolving door activity that the City’s post-employment restrictions are intended to as address.

Mr. Wong currently works on the Potrero HOPE SF project as a City official and his communications carry the weight and impact of a City official. If Mr. Wong leaves the City for employment with BRIDGE Housing to work on that same project as he has proposed, he would soon be communicating to the same recipients on the same issues but doing so on behalf of his non-governmental employer.

Although Mr. Wong’s request details the important and worthy shared purpose that the City’s partnership with BRIDGE Housing is created to serve, that arrangement does not alter the underlying nature of his changed employment status. Nor does it alter the important need to ensure all government decisions and actions uphold, and are trusted to uphold, the highest standards of integrity. Revolving door laws designed to address that goal and are built on the recognition that as with any new employment, the actions and allegiances of a former public official become newly and distinctly linked to serving the interests of their new employer.

When officials switch roles immediately following their public service to assume work on the same project or matter but for a non-governmental employer, that switching of roles can lead to confusion about the interests being represented by the former official. This can create the potential for undue influence over former colleagues and reduce confidence in the integrity of those interactions with others given the official’s prior relationships and access. When these factors are present, an unfair advantage can accrue to the new employer whose actions are benefitted by leveraging the unique knowledge, relationships, and insights of their new employee.

Mr. Wong’s waiver request also notes that his communications in both his current role and new role would be subject to public information and disclosure rules. While such transparency enables some visibility into decision making processes, it does not directly address the potential for undue influence or unfair advantage, which is what the Commission is asked to consider.

Inside knowledge Mr. Wong may possess.

Mr. Wong has stated in his waiver request that “given the transparency of Potrero HOPE SF to involved stakeholders, I do not possess any material inside knowledge about Potrero HOPE SF that is not already available to other Potrero HOPE SF stakeholders, including those currently involved at BRIDGE Housing.” As discussed above, even if Mr. Wong does not have proprietary information, his firsthand experience and years of service navigating City processes and professional relationships are examples of the kinds of knowledge that can be used to the unfair advantage of a non-governmental employer. Additionally, Mr. Wong’s statement speaks only to information shared by Potrero HOPE SF’s current stakeholders but does not consider other entities. For example, BRIDGE Housing presumably is one among a number of non-profit housing entities that may wish to enter into development agreements with the City. Such entities, however, would not have similar access to the benefits that Mr. Wong would be providing to BRIDGE Housing.

Other factors that may be relevant.

The partnership between the City and BRIDGE Housing on the Potrero HOPE SF project does not negate the fact that the these are two distinct entities, with their own interests and objectives, and Mr. Wong is seeking to transition from representing the City in this partnership to representing BRIDGE Housing. Should the City’s interests and those of BRIDGE Housing diverge, Mr. Wong’s direct governmental experience and established relationships with City officials have the potential to, even though unintended, provide BRIDGE Housing with actual or perceived undue influence and an unfair advantage over the City.

The Commission may also wish to consider the interests of other parties potentially impacted by granting Mr. Wong’s desired waiver. As mentioned earlier, having Mr. Wong in their immediate employ for this project could provide BRIDGE Housing with unique leverage as a developer. As one unintended consequence, that practice could result in positioning BRIDGE with an advantage over other organizations that may hope to secure future development agreements of their own if BRIDGE Housing is an alternative. Additionally, granting a waiver to enable a former official to work immediately following the conclusion of their public service on the same project they worked on while in City service could disadvantage other qualified, would-be applicants for this position with BRIDGE Housing, who may never be considered if Mr. Wong assumes the position.

Recommendation

The activity Mr. Wong would like to engage in through his requested waiver is the type of behavior the City’s post-employment rules are intended to prevent. In his new position with BRIDGE Housing, Mr. Wong would be switching sides on a matter he has worked on closely, potentially giving BRIDGE Housing undue influence and an unfair advantage over the City as the Potrero HOPE SF project continues to be implemented. Additionally, Mr. Wong would need to be regularly communicating with his former City colleagues in this new position, which would create the potential for Mr. Wong to leverage his knowledge of City operations and established relationships with OEWD officials to provide BRIDGE Housing with undue influence and an unfair advantage. On the whole, the need for a waiver does not outweigh the danger of creating this potential for undue influence and unfair advantage. Staff recommends the Commission not approve Mr. Wong’s waiver request.

Staff would like to thank Mr. Wong for his detailed waiver request, thoughtful communications throughout this process, and service to the City.

Attachments:   

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