Summary and Action Requested
This item has been placed on the Ethics Commission’s August 18 agenda to enable it to consider and possibly act on proposed amendments to strengthen the City’s gift, training, and other ethics laws currently before the Commission as a draft Ethics Commission ballot measure (Attachment 1) and draft Commission regulation amendments (Attachment 2). This memo and attachments provide background on the project, a summary of the proposed reforms, a review of the Commission’s deliberative process to date, an update regarding the City’s meet and confer process, and a summary of revisions made to the proposed reforms as a result of the recently concluded meet and confer process.
To address demonstrated shortcomings in the City’s ethics laws and help prevent future acts of corruption like those identified through numerous recent investigations into the conduct of City officials and those doing business with the City, Staff recommends that the Commission move forward to strengthen the City’s ethics law by adopting the proposed provisions in two steps:
- consider the draft ordinance presented in Attachment 1 and vote to place the ordinance directly before San Francisco voters as an Ethics Commission ballot measure on the March 5, 2024 ballot; and
- consider the proposed regulation amendments presented in Attachment 2 and vote to adopt the amended regulations pursuant to its authority under Charter Sec. 15.102.
Background
In January 2020, the U.S. Department of Justice began bringing criminal corruption charges against multiple City officers, employees, and contractors. The charges allege numerous instances in which individuals seeking favorable outcomes from City government provided things of value to City officials in an attempt to influence the actions of those officials.
The gift, training, and other ethics proposals presented in this document result from a robust process of analysis and lengthy stakeholder engagement by the Commission on core public policy matters within its jurisdiction. These proposals have been designed to uphold fairness in City decision-making, ensure an effective framework of local ethics laws, and strengthen public trust in local government.
The Commission’s Government Ethics and Conflict of Interest Review project undertook a comprehensive review of the City’s ethics laws and practices in phases to identify current weaknesses in the law and ensure that the types of conduct alleged in the criminal complaints are appropriately prohibited and deterred by strengthened City laws going forward.
- The first phase of the project addressed the issue of behested payments, which are payments made at the behest of a government official to a third party. That work resulted in legislation enacted in December 2021 that now prohibits City officers and designated employees from soliciting behested payments from those who have official business before their department.
- The second and third phases of the project resulted in policy reports and recommendations to strengthen City laws that govern gifts made directly to City officials, gifts made through City departments, and other essential ethics provisions. The recommendations contained in the last three reports that stemmed from Phases II and III of the Commission’s project are the basis for the proposed ballot measure (Attachment 1) and regulation amendments (Attachment 2). For additional reference, this memo includes summary charts (Attachment 3) listing the proposed changes organized by the sections of the San Francisco Campaign and Governmental Conduct Code that would be changed by the proposed ballot measure and what regulations would be amended.
These proposed changes would clarify and expand aspects of the City’s restricted source rule, which limits gifts to City officials from those doing business with their department and those who have recently attempted to influence them. The changes would also strengthen the City’s bribery rule, standardize and codify rules regarding incompatible activities, and expand the number of City officials required to complete annual ethics training. An overview of the recommendations is provided in the following section.
While this project was initiated in reaction to the ongoing federal corruption investigation, the recommendations produced by this project address larger issues facing the City. The proposed recommendations seek to promote a culture in City government that promotes fairness, responsiveness, and equity. More robust ethics rules, greater restrictions on gifts, expanded training requirments, and increased transparency regarding the sources of City funding are tools for ensuring City government works for everyone, not just a small minority that engage in, or appear to engage in, ‘pay to play’ actions to secure favorable treatment from City officials. Together, the package of reforms stemming from these three phases of the Commission’s work have been designed to help ensure that in the City of San Francisco, the processes of governmental decision-making operate, and can be trusted by the public to consistently operate, in a manner that provides fair, just, and equitable treatment for all.
Recap: Summary of Proposed Ethics and Gift Recommendations
The ways in which the Ethics Commission’s proposed reforms are designed to strengthen local ethics laws are summarized below. A more detailed summary that is organized by code section and regulation number can be found in Attachment 3.
Gift-Related Recommendations (Phase II)
- Create a definition of gift in the Campaign and Governmental Conduct Code. Currently, the restricted source rule relies on the state law definition of gift, which results in a less effective rule.
- Regulations would include certain state law gift exceptions but omit those that undermine the purposes of the restricted source rule.
- Regulations containing local exceptions to the restricted source rule would be amended.
- Expand the application of the restricted source rule to prohibit other aspects of a gift transaction beyond the receipt or solicitation of the gift by an official, including prohibiting:
- City officials from soliciting or accepting gifts from restricted sources for any immediate family members of the official.
- City officials from soliciting, coordinating, facilitating, or accepting gifts for other City officials.
- The giving of gifts by lobbyists and permit consultants.
- City officials from accepting anything from a City department or non-City organization or person that bestows a personal benefit on the official if the official knows or has reason to know that the true source of the gift is a restricted source.
- Any person or organization from acting as an intermediary for a restricted source gift.
- Clarify how the restricted source rule applies to City contractors.
- Amend the restricted source rule to explicitly apply to individuals and entities that apply for or obtain a permit, license, or other entitlement for use from a City department.
- Amend the restricted source rule to explicitly apply the rule to affiliates (directors, officers, and major shareholders) of an entity that is a restricted source.
- Create a single, standardized disclosure requirement for payments to City departments.
- Amend regulations containing exceptions to the rule against gifts from subordinates.
Essential Ethics Provision Recommendations (Phase III)
- Strengthen San Francisco’s bribery rule by incorporating elements of the federal bribery rule.
- Extend the annual ethics training requirement to all Form 700 filers.
- Codify rules contained in departmental Statements of Incompatible Activities into the Code and discontinue departmental Statements of Incompatible Activities.
- Standardize penalty provisions to make it clear that all violations of the Code are punishable unless otherwise specified and that proving a particular mental state is not required.
- Protect ethics laws from legislative amendments by requiring approvals by a supermajority of the Ethics Commission and Board of Supervisors for legislative amendments.
- Add a general provision that allows the Commission to require electronic filing of public disclosures.
To facilitate review and discussion of the substantive changes the ordinance proposes, Staff has produced a “condensed version” of the proposed ordinance to illustrate only the Code sections the measure would change substantively. This 37-page condensed version in included as Attachment 4. It excludes sections that are simply being reauthorized as they already appear in the Code, which is necessary in order to establish the new supermajority approval requirements for legislative amendments.
The full 133-page version of the measure is included as Attachment 1. This document details all changes that would be made, and therefore shows all provisions as they will be changed, including text that would be stricken and reauthorized verbatim.
The City Attorney’s Office has also prepared a legislative digest summarizing existing law and the amendments proposed through the ballot measure, which is included as Attachment 5.
Recap: The Commission’s Deliberative Process
The proposals being considered by the Commission have gone through an extensive process of public engagement, review, and stakeholder input. The Commission has been engaged in this process for more than two years, which has provided stakeholders and the public with an abundance of opportunities to engage with the Commission on these reforms. This process has included the following:
- Interested Persons Meetings: Four interested persons meetings in 2021 held on April 27, 2021 and April 29, 2021 and November 16, 2021 and November 18, 2021.
- Policy Reports: The Ethics Commission published three substantial policy reports that present evidence and rationale for the recommendations, focused on gifts made directly to City officials, gifts made through City departments, and other essential ethics provisions.
- Engagement with City Bargaining Units: Since November of 2021, Ethics Staff have met 13 times with representatives from the Municipal Executives Association (MEA) and exchanged numerous written communications containing proposals and counterproposals from both MEA and the City. The substance of these communications has been regularly discussed with the Commission during multiple closed sessions, so as to maintain the confidentiality of the meet and confer process.
- Discussion at Public Commission Meetings: The Commission has discussed the proposed reforms at public meetings, in open session, during 10 Commission meetings since December 2021. During these meetings the Commission and Staff heard feedback from the public and key stakeholders, which informed subsequent revisions to the proposals.
- Direct Staff Engagement with Stakeholders: Throughout this process, Commission Staff have met extensively with stakeholders to hear concerns, provide additional information, and solicit feedback that was used to inform revisions to the proposals.
As demonstrated above, the Commission has sought to engage stakeholders and incorporate feedback from a variety of sources throughout this process. This input from the public has led to several revisions to the proposals initially put forward in November of 2021. An initial round of revisions was presented to the Commission in a Staff memo dated February 7, 2022, which was discussed at the Commission’s February 11, 2022 meeting. A second round of revisions was subsequently presented to the Commission in a Staff memo dated July 5, 2022, which was discussed at the Commission’s July 8, 2022 meeting. These changes, as well as those described in the following section are reflected in the current versions of both the draft ballot measure (Attachment 1) and draft regulation amendments (Attachment 2).
Update on the Meet and Confer and Recent Revisions to the Proposed Reforms
The Ethics Commission previously sought to place the attached ballot measure before voters on both the June 7, 2022 ballot and then again on the November 8, 2022 ballot. In both instances, the Commission was advised that it was unable to vote to place the measure on the ballot due to the ongoing meet and confer process between the City and the Municipal Executives’ Association (MEA).
State law requires that the City meet and confer with employee bargaining units prior to undertaking certain actions that would impact City employees. Since November of 2021, the Commission has been working with the Employee Relations Division of the City’s Department of Human Resources (DHR) to meet and confer with City bargaining units and satisfy the City’s obligation to meet and confer with bargaining units in good faith.
Following 21 months of engagement in the meet and confer process with MEA, on July 26, 2023, DHR sent out a ‘close out’ notice to MEA, which notified MEA that the City now considers the meet and confer on this matter closed, since the parties had reached agreement. Because this process has been successfully concluded, the Commission is now able to vote to place the measure on the March 5, 2024 if it chooses to do so.
In order reach agreement with MEA and conclude the meet and confer, the City agreed to provide additional training opportunities to City officials before the proposed changes would become operative. The effective date the ordinance is ten days after the date the official vote count is declared by the Board of Supervisors and the operative date is six months after the effective date. Should the measure be approved by voters, during the three months prior to the operative date of the measure, the City has agreed to provide multiple opportunities for City officials to attend live/interactive trainings on the upcoming changes, an additional training for department heads and deputy department heads focused on issues more applicable to those positions, and to make self-study materials available for City officials on the policy changes. The City has also agreed to solicit feedback from department heads within three months of the passage of the ballot measure (should it be approved by voters), to help determine what training resources, methods, and time commitments they believe are the most optimal to best support their knowledge base and the practice of ethical leadership strategies to ensure an ethical tone at the top.
Additionally, the City agreed to several revisions to the proposed regulation amendments, which are detailed below in Table 1. These changes are currently reflected in the draft regulation amendments found in Attachment 2.
Table 1: Proposed Regulation Amendments – Changes Made Since July 2022
| Regulation Amended | Description of Change Made |
| Regulations 3.205(a)-1—3 | These newly added regulations: establish that the new annual ethics training created by the ballot measure would have a deadline of April 1, which aligns with the deadlines for the existing ethics training and the filing of the Form 700; clarify the deadline for employees who are assuming positions required to take the training and specify conditions under which those assuming office may not be subject to monetary penalties before having taken the required training; and specify April 1 as the deadline by which departments must annually provide their officers and employees with a summary of relevant State and local ethics rules produced by the Ethics Commission. |
| Regulation 3.216(b)-5(a) | This regulation change replaces the current general exception for gifts with an aggregate value of less than $25, limited to four times a year, with a narrower exception that can only be used to accept routine office courtesies when visiting the place of business of a restricted source. The previous version of this draft regulation had placed the per occasion dollar value for this exception at $15, it has since been increased to $25 per occasion, but is still limited to routine office courtesies and can only be used on four occasions per calendar year. Langauge was also added to this regulation to specify that multiple restricted sources cannot pool their resources to provide routine office courtesies valued at more than $25 per occasion. |
| Regulation 3.216(b)-5(b) | This existing regulation exempts the gift of free attendance to widely attended conventions, conferences, seminars, or symposiums, where attendance is appropriate to the official duties of the officer or employee. Language has been added to this regulation to specify that free attendance at a widely attended “ribbon-cutting or ceremony, including before or after construction” is also exempt, if attendance is appropriate to the official duties of the officer or employee using the exception. This regulation also currently requires the free attendence to be provided “voluntarily.” Earlier versions of the draft regulations had sought to change this language from being provided “voluntarily” to being “unsolicited.” However, that change has been removed in favor of leaving the “voluntarily” standard in place. |
| Regulation 3.216(b)-5(j) | This is an existing State gift exception that is being added to the City’s local exceptions. It exempts admission to an event and associated nominal items when a City official is making a speech at the event. Language has been added to this exception to allow the exception to be used by one additional official, who is attending the event to support or assist the official who is making the speech. |
| Regulation 3.216(b)-5(l) | This is an existing State gift exception that is being added to the City’s local exceptions, which exempts tickets provided to certain events where the official performs a “ceremonial role on behalf of the official’s agency.” Language has been added to this exception to specify that the exception can be used for tickets to facilities, events, shows, or performances that are held for “cultural” purposes, as well as entertainment, amusement, recreational, or similar purposes. |
| Regulation 3.216(b)-5(n) | This draft regulation was added to the proposals in 2022, based on feedback from stakeholders. It allows for City officials to accept a single ticket to certain events if such attendance is necessary to carry out the official’s City duties and is properly disclosed by their department. The draft regulation also allows certain employees to accept a single additional ticket for a guest to accompany them to the event. Language was recently added to this exception to specify that the exception applies to “cultural, or other entertainment event[s] or production[s].” Additionally, the part of the exception that allowed certain employees to accept a single additional ticket for a person to accompany them to the event used to only apply to employees of “the City’s arts and culture departments.” But, this has been revised so that it now applies to employees of “City departments that regularly fund or permit arts, recreational, and culture events and productions.” |
Staff believes these changes to be reasonable, as they allowed for the conclusion of the meet and confer process, while maintaining the core reforms contained within the proposed ballot measure and regulation amendments.
Additional Revisions to the Regulation Amendments and Ballot Measure
Staff have also added language to the draft regulation amendments that specifies the effective and operative dates of the regulations, should they be approved by the Commission. Since the draft regulations were part of the same meet and confer process as the ballot measure, the Commission needs to act on both together. Per Charter Section 15.102, regulations approved by the Commission will become effective 60 days after adoption, unless vetoed by a two-thirds majority of the Board of Supervisors. However, since these regulations are based on the Code changes that would be brought about by voters through the ballot measure, the regulations should only become operative 1) if the ballot measure is approved by voters and 2) when the ballot measure would become operative following approval. Staff, in consultation with the City Attorney’s Office, have added the language necessary to delay the operative date of the regulations as described above.
There have been no substantive changes to the ballot measure, with the exception of including an appropriation in Section 10 of the ballot measure ordinance. This addition will appropriate $43,000 from the General Reserve fund for implementation of the measure in the first year and will request $25,000 be appropriated for ongoing costs in subsequent years. These costs are associated with technology needs stemming from the expanded ethics training requirement and the new method for reporting gifts to City departments.
Minor changes to the measure have also been made to reflect the proper election date, ensure the current Code sections are accurately reflected, and make the long title of the measure more accurately reflect the contents of the measure.
Recommended Next Steps
With the meet and confer process resolved, the City Attorney’s Office has approved the draft ballot measure as to form, and the Commission is now able to vote to place the measure before voters during the next election, which will occur on March 5, 2024. Additionally, the conclusion of the meet and confer process also allows for the Commission to vote on the proposed regulation amendments, which have been noticed to the public more than ten days prior to the August 18, 2023 meeting, as required by Charter Section 4.104.
The regulations before the Commission today are integral to the ballot measure, which is why they were included as part of the same meet and confer process and have been considered concurrently with the measure. However, the Commission may consider additional regulation amendments in the future. If approved by the Commission today, the Commission will have more than a year before the potential operative date of the measure, should it be approved by voters in March. During that time the Commission would be able to consider and pass any additional regulations that may be necessary to clarify or better implement the measure. Staff is continuing to engage with stakeholders to identify and resolve issues to ensure an effective implementation of these reforms, should they be approved by voters. Depending on stakeholder feedback and Commission direction, Staff can bring additional draft regulations to the Commission in the coming months, so that any additional clarifications or exemptions that may be needed can be addressed. Identifying and resolving potential issues with City ethics laws is a regular, and essential, aspect of the Commission’s ongoing policy-making process.
Staff recommends the following Commission actions to help strengthen the effectiveness of the City’s ethics laws:
- consider the draft ordinance presented in Attachment 1 and vote to place the ordinance directly before San Francisco voters as an Ethics Commission ballot measure on the March 5, 2024 ballot; and
- consider the proposed regulation amendments presented in Attachment 2 and vote to adopt the amended regulations pursuant to its authority under Charter Sec. 15.102.
Placing the proposed measure on the ballot next March will allow voters the opportunity to take concrete action in response to the corruption scandals that have plagued the City in recent years and to use their democratic powers to promote a fairer, more ethical government in San Francisco.
Attachments:
Attachment 1: Ethics Commission Ballot Measure – Approved as to Form on 8/9/23
Attachment 2: Ethics Commission Regulation Amendments – Noticed Publicly on 8/7/23
Attachment 3: Summary Charts of Proposed Reforms – Updated 8/9/23
Attachment 4: Condensed Version of Ethics Commission Ballot Measure – Updated 8/9/23
Attachment 5: Legislative Digest from the City Attorney’s Office – Finalized 8/9/23