Summary and Action Requested
This memo provides the Commission with an update on the status of the ballot measure, now known as Proposition D, that the Commission approved for the March 5, 2024 ballot during its August meeting. In addition to a general update regarding the ballot measure, this memorandum also presents draft regulations for Section 3.218 of the Campaign and Governmental Conduct Code, as it may potentially be amended by the ballot measure.
Staff requests the Commission review and consider these draft regulations and provide feedback to Staff regarding desired next steps.
General Update Regarding Ballot Measure
The measure placed on the March 2024 ballot by the Ethics Commission has been designated Proposition D by the Department of Elections. In late November, the City’s Ballot Simplification Committee met to draft its digest on Proposition D, for inclusion in the March 2024 Voter Information Pamphlet. The final digest was approved on December 1. The Controller’s Office also published its analysis of Proposition D in December, finding that if the measure were approved by voters, it would, in the opinion of Controller Rosenfield, “have a minimal impact on the cost of government.” Staff communicated with, and provided materials to, both the Ballot Simplification Committee and the Controller’s Officer as part of their respective processes.
Commission Staff worked with Chair Lee to submit both a proponent argument for Proposition D and a rebuttal to the opponent argument, prior to their December submission deadlines. A rebuttal to the Commission’s proponent argument was also submitted to the Department of Elections.
Staff also developed and published an informational document about the measure, which is featured on Ethics Commission’s website (https://sfethics.org/PropD). In addition to summarizing the measure and answering questions, this document also links to the various documents, digests, and arguments referenced above.
Commission Staff are available to meet with community groups, media outlets, and other organizations, to provide information about Proposition D as requested. Staff recently presented information on Proposition D to a meeting of the Latinx Democrats and have a meeting scheduled later in January with the Editorial Board of the San Francisco Chronicle. The purpose of such presentations is not to solicit support or acquire endorsements for the measure, but to provide factual information about Proposition D and what it would do if approved by voters.
Update Regarding the Development of Additional Regulations for Section 3.218
As discussed in previous meetings, Staff have been moving forward with the development of potential regulations regarding Section 3.218 of the Campaign and Governmental Conduct Code, as potentially amended by the March 2024 Ethics Commission Ballot Measure.
Section 3.218 of the Campaign and Governmental Conduct Code currently sets forth rules regarding departmental Statements of Incompatible Activities (SIAs). The Ethics Commission’s 2024 ballot measure would amend Section 3.218 to eliminate departmental SIAs and move the rules from those SIAs into the amended Section 3.218. An excerpt from the Commission’s ballot measure regarding Section 3.218 has been provided as Attachment 1.
On October 17 and October 19, the Commission held two interested persons meetings to discuss potential regulations regarding Section 3.218, should it be approved by voters. The meeting announcement provided as Attachment 2 contains details regarding the topics and questions discussed during the meetings. The purpose of these meetings was to create additional opportunities for stakeholders and members of the public to share their thoughts and priorities with the Commission regarding regulations for the potential implementation of this section.
The interested persons meetings in October were attended by various stakeholders, including those affiliated with the Mayor’s office, the War Memorial Board of Trustees, the League of Women Voters, and the San Francisco Human Services Network. During the meetings, Staff facilitated discussions covering the topics described in the meeting announcement, as well as any other issues or questions raised regarding Section 3.218. In general, participants were supportive of the Commission enacting regulations to address the questions raised in the meeting announcement.
Draft regulation amendments are presented as Attachment 3 and summarized in the table below. These draft regulations have been developed to clarify terms in, specify the scope of, and assist with the implementation of Section 3.218 should it be approved by voters.
| Regulation | Description & Rationale |
|---|---|
| 3.218-1 (new) Activities Subject to the Department’s Jurisdiction – Actions on Behalf of Oneself or One’s Immediate Family | Description: Specifies that while an officer or employee may be party to or otherwise appear before their department or commission on behalf of themself or an immediate family member, they must also not participate in and must fully abstain from any invovlement in such matters as part of their City duties. Rationale: While it is important for City officials to be able to engage with City services on their own behalf or the behalf of their immediate family, it is inappropriate for officials to then be involved in those same matters as a part of their City duties. Example: If a City building inspector also owns a home in the City, there may be situations (major renovations, etc.) where that City official’s property needs to be inspected by their department. The City official should be able to access City services the same as any other City resident. However, the City official should also be prohibited from participating in such matters, in any way, in their capacity as a City official. |
| 3.218-2 (new) Activities Subject to the Department’s Jurisdiction – Employment with an Entity Engaging in Activities Subject to the Department’s Jurisdiction | Description: Specifies that merely being employed by an entity that engages in activites subject to the department’s jurisdiction is not prohibited by Section 3.218(a)(1), as long as 1) the City official does not personally and substantially engage in activities that are subject to their department’s jurisdiction for their non-City employer and 2) that they do not participate in matters explicitly involving their non-City employer as part of their City duties. The regulation provides examples of the types of activities that would still be prohibited by Section 3.218(a)(1), which include working in a position that is majority-funded by the officer or employee’s City department, liaising with their department on behalf of their non-City employer, and preparing or contributing to documents or materials on behalf of their non-City employer that are to be shared with their City department. Rationale: Many City officials have additional employement outside of their role with City. While this is often reasonable and appropriate, additional consideration is warranted when that outside employer engages in activities that are subject to the City official’s department, as this could lead to both real, and perceived, conflicts of interest. The proposed regulation would allow this outside employment to occur, while maintaining guardrails to prevent the City official from potentially using their City position to inappropriately benefit themself or their outside employer. Example: A City employee has a second job waiting tables at a San Francisco restaurant, while their City duties require them to perform health inspections of City restaurants. This regulation would specify that Section 3.218(a)(1) does not prohibit this outside employment. However, the City employee would be prohibited from working on things for the resturant that are going to come before their department (such as filling out forms or communicating with other inspectors from their department about the restaurant). Additionally, as part of their City duties, this City employee must not participate in and must fully abstain from any invovlement in any matters explicitly involving the restaurant. |
| 3.218-3 (new) Activities Subject to the Department’s Jurisdiction – Being an Officer or Exercising Management or Control over an Entity Engaging in Activities Subject to the Department’s Jurisdiction | Description: Specifies that owning or exercising management or control over an entity that engages in activites subject to the department’s jurisdiction is allowed if: 1) the City official does not engage in activities that are subject to their department’s jurisdiction for the non-City entity, 2) on behalf of the City, the City official does not participate in and fully abstains from matters involving the non-City entity, and 3) the entity does not contract with the City official’s department. Defines being an “officer or exercising management or control” over an entity as occupying the role of officer, director, partner, or other position that exercises management or control over an entity, owning more than five percent of a publicly traded entity, or owning more than 20% of a non-publicly traded entity. Rationale: City officials may have ownership interests in outside entities or serve on the boards of non-City organizations. Such activity can often be reasonable and appropriate, however when those outside entities engage in activites that are subject to the department’s jurisdiction, additional consideration is warranted to avoid both real, and perceived, conflicts of interest. This regulation would specify that such activity is not prohibited by Section 3.218(a)(1) as long as certain conditions are met, which serve as guardrails to prevent the City official from potentially using their City position to inappropriately benefit themself or the entity they are affiliated with. The langauge defining being an “officer or exercising management or control” is similar to what already exists Section 3.222, which prohibits City officers from contracting with the City. The regulation simplifies the language in Section 3.222 and captures ownership of limited liability companies. Example: A City employee owns 25% of their family’s resturant that operates in the City. Part of their City duties involve reviewing and issuing permits to City restaurants. This regulation would specify that merely having this ownership interest is not prohibited by Section 3.218(a)(1). However, the City employee would be prohibited from engaging in activities that are subject to their department’s jurisdiction on behalf of their resturant and would be prohibited from participating in any matters regarding their resturant as a City employee. Additionally, the employee’s ownership of the restaurant would be incompatible with their City employment if the restaurant was contracting with their City department, as prohibited by Section 3.218(a)(1)(A) and Draft Regulation 3.218-5 (below). |
| 3.218-4 (new) Activities Subject to the Department’s Jurisdiction – Definition of “Engaging in Non-compensated, Volunteer Activity for a Nonprofit Organization” | Description: Specifies that the exception for non-compensated, volunteer activity in Section 3.218(a)(1) does include serving on the board of directors of a nonprofit organization, only if 1) in their capacity as a City official, they do not participate in and fully abstain from any invovlement in any matters explicitly involving the nonprofit organization and 2) the nonprofit organization does not contract with their City department. Rationale: The exception in Section 3.218(a)(1) that allows for “engaging in non-compensated, volunteer activity for a nonprofit organization” was understood by Staff as intended to address direct service volunteer work (planting trees, tutoring children, etc.), not serving on the board of directors of a nonprofit organization. However, stakeholders have expressed that it can be important for City officials to serve on nonprofit boards, even when those nonprofits engage in activites subject to their department’s jursidiction. This regulation would allow City officials to volunteer their time on nonprofit boards, with guardrails in place to prevent the City official from potentially using their City position to inappropriately benefit themself or the nonprofit organization they are affiliated with. |
| 3.218-5 (new) Activities Subject to the Department’s Jurisdiction – Definition of “Contracting With One’s Own Department” | Description: Specifies that “contracting with one’s own department” includes being an officer or exercising management or control over an entity that contracts with the City official’s department. Defines being an “officer or exercising management or control” over an entity as occupying the role of officer, director, partner, or other position that exercises management or control over an entity, owning more than five percent of a publicly traded entity, or owning more than 20% of a non-publicly traded entity. And specifies that this prohibition also applies to subcontracts. Rationale: Section 3.218(a)(1)(A) clearly prohibits City officials from contracting with their own department. This regulation clarifies that this prohibition includes City officials owning or leading an entity that contracts with their department. This langauge is similar to what already exists Section 3.222, which prohibits City officers from contracting with the City. The regulation simplifies the language in Section 3.222 and captures ownership of limited liability companies. Specifying that Section 3.218(a)(1)(A) applies to subcontracts is also consistent with the similar rule in Section 3.222. |
| 3.218-1 – 3.218-8 (current) | Description: Current Ethics Commission Regulations 3.218-1 through 3.218-8 would be removed as part of this proposed regulation change. Rationale: The current regulations regarding Section 3.218 will no longer be relevant if the March 2023 ballot measure is approved by voters. |
Following the interested persons meetings in October, Staff also engaged directly with officials from the Department of Public Health (DPH) regarding these regulations, including Greg Wagner, who is the current Chief Operating Officer of DPH. The officials from DPH shared concerns, which were largely over how DPH nurses, some of whom work additional shifts for non-City healthcare providers, may be impacted by Section 3.218. Based on this feedback from DPH, Staff revised earlier drafts, which were then also shared with DPH officials. Earlier this month, Staff met for a second time with DPH officials, who said the current draft regulations addressed their main concerns, while also maintaining strong conflict of interest rules. Staff intends to remain in contact with DPH and has encouraged DPH to contact the Commission in the future if other potential issues arise. Staff would like to thank DPH for their time and willingness to collaborate on these draft regulations.
Staff have also been in contact with the Mayor’s Office and San Francisco Human Services Network about these regulations since the interested persons meetings in October. Both the Mayor’s Office and the San Francisco Human Services Network have been sent draft copies of these regulations prior to the publication of this memo, so that they could have additional time to review prior to the meeting on January 24.
Staff would like to hear feedback from the Commission and the public during the meeting on January 24. Based on that feedback, Staff could move forward to the next step in the process, which would be to start working with the Department of Human Resources (DHR) to notice these potential changes to City bargaining units, who may wish to meet and confer over the proposed changes. Staff could also delay this process until additional revisions to the draft regulations are completed and shared with the Commission for further feedback. Regardless of the next immediate step, once the City has satisfied its obligation to meet and confer, final regulations will need to be brought back before the Commission for a vote.
As with the Section 3.205 and Section 3.216 regulation amendments already approved by the Commission in August, any subsequent regulations regarding the ballot measure would only become operative if, and when, the ballot measure becomes operative. If approved by voters in March, the ballot measure would become operative roughly six months after the results of the election are certified.
Recommended Next Steps
Staff recommends the Commission review and discuss the draft regulations found in Attachment 3, provide an opportunity for public comment, and offer feedback to Staff regarding the draft regulations and desired next steps. Staff recommends the Commission direct Staff to move forward with noticing these draft regulations to City bargain units, engage in any required meet and confer processes, continue engaging with other stakeholders, and prepare final regulations for the Commission to consider and vote on at a future meeting.
Attachments:
Attachment 1: Section 3.218 – Excerpt from Ethics Commission 2024 Ballot Measure
Attachment 2: IP Meeting Notice October 2023 – 3.218 Regulations
Attachment 3: Draft Regulations for Section 3.218 – 1.19.24