HomeMy WebLinkAboutCC AG PKT 2012-03-12 #CAGENDA STAFF REPORT
DATE: March 12, 2012
TO: Honorable Mayor and City Council
FROM: City Attorney
SUBJECT: PETITION TO FPPC REGARDING APPOINTMENTS TO
OUTSIDE BOARDS THAT PAY COMPENSATION
SUMMARY OF REQUEST:
Staff recommends that the Council adopt Resolution No. 6233 directing the City
Attorney to send a letter supporting the petition to amend Title 2, California Code
of Regulations Section 18705.5.
BACKGROUND AND ANALYSIS:
Government Code Section 87103 provides that a public official generally has a
financial interest in a decision within the meaning of Government Code Section
87100 if it is reasonably foreseeable that it will have a material financial effect on:
(1) the public official, which includes income to the public official; (2) on business
entities or real property in which the public official has a financial interest; or (3)
on any of the public official's sources of gifts and sources of income.
Government Code Section 82030 defines "income" as "a payment received,
including but not limited to "any salary, wage, advance, dividend,
interest...reimbursement for expenses, per diem," etc. Government Code
Section 82030(b) further defines that "income" does not include "salary or
reimbursement for expenses or per diem ... or other similar benefit payments
received from a state, local or federal government agency..."
The Fair Political Practices Commission ( "FPPC ") is authorized pursuant to
Government Code Section 83112 to adopt, amend and rescind rules and
regulations to carry out the purposes of the Political Reform Act provided such
rules and regulations are consistent with the Political Reform Act. The FPPC has
adopted a regulation, Title II, California Code of Regulations, Section 18705.5
(the "Regulation "), which it has interpreted to preclude a council member from
voting on his or her appointment to a local agency board if it is reasonably
foreseeable that a council member could receive $250 or more during a 12-
month period from that appointment.
Agenda Item C
Thus, notwithstanding the Government Code's express language to the contrary,
the FPPC regulation has made the receipt of salary and per diem from a local
government agency a "financial interest." Accordingly, the FPPC has opined that
voting on appointments to a local government agency that provides a salary or
per diem is a violation of the Political Reform Act, and has issued warning letters
to numerous city councilmembers in Orange County.
The FPPC's apparently contradictory Regulation has resulted in the entrapment
of large numbers of even the most conscientious public officials. However, the
Regulation does nothing to further the primary purposes of the Political Reform
Act: to insure a better informed electorate; and to prevent corruption of the
political process.
ENVIRONMENTAL IMPACT:
There will be no new environmental impact associated with supporting the
petition.
FINANCIAL IMPACT:
There will be no fiscal impacts associated with adoption of the resolution.
RECOMMENDATION:
That the Council adopt Resolution No. 6233 directing the City Attorney to send a
letter supporting the petition to amend Title 2, California Code of Regulations
Section 18705.5.
SUBMITTED BY:
uinn M. Barrow, City Attorney
Attachments:
A. Resolution No. 6233
B. Letter of Support — Exhibit "A"
C. Letter from City of Orange
Page 2
RESOLUTION NUMBER 6233
A RESOLUTION OF THE SEAL BEACH CITY COUNCIL
SUPPORTING THE PETITION TO AMEND TITLE 2, CALIFORNIA
CODE OF REGULATIONS SECTION 18705.5
WHEREAS, Government Code Section 87100 of the Political Reform Act of
1974 (Government Code Sections 81000 through 91014) prohibits a public
official from making or participating in the making of a decision which could have
a reasonably foreseeable financial effect on the public official's "financial
interest "; and
WHEREAS, Government Code Section 87102.5(b)(2) states that a "financial
interest" means "an interest defined in Section 87103 "; and
WHEREAS, Government Code Section 87103 provides that a public official
generally has a financial interest in a decision within the meaning of Government
Code Section 87100 if it is reasonably foreseeable that it will have a material
financial effect on: (1) the public official, which includes income to the public
official; (2) on business entities or real property in which the public official has a
financial interest; or (3) on any of the public official's sources of gifts and sources
of income; and
WHEREAS, Government Code Section 82030 defines "income" as "a payment
received, including but not limited to "any salary, wage, advance, dividend,
interest... reimbursement for expenses, per diem," etc.; and
WHEREAS, notwithstanding the above, Government Code Section 82030(b)
provides that "income" does not include "salary or reimbursement for expenses or
per diem...or other similar benefit payments received from a state, local or federal
govemment agency...;"
WHEREAS, pursuant to state law the City Council is required to appoint, from
among the members of the City Council, one of its members to sit on various
regional boards of public agencies in Orange County, such as the Vector Control
District, Orange County Sanitation District, and others; and
WHEREAS, council members who are appointed to these boards typically receive
a per diem for each meeting of the board that they attend and thus, are receiving a
"per diem" or "salary' from a local government agency, which pursuant to
Government Code Section 82030 is not considered "income" and thus, not a
"financial interest "; and
WHEREAS, the amount that council members receive for serving on these public
agency boards is governed by state law and within state law parameters is
determined by the boards of these public agencies, not by the City Council; and
WHEREAS, the Fair Political Practices Commission ( "FPPC ") is authorized
pursuant to Govemment Code Section 83112 to adopt, amend and rescind rules
and regulations to carry out the purposes of the Political Reform Act on the
condition that such rules and regulations are consistent with the Political Reform
Act; and
WHEREAS, the FPPC has adopted a regulation, Title II, California Code of
Regulations, Section 18705.5 (the "Regulation "), which it has interpreted to
preclude a council member from voting on his or her appointment to a local
agency board if it is reasonably foreseeable that a council member could receive
$250 or more during a 12 -month period from that appointment; and
Resolution Number 6233
WHEREAS, in adopting the Regulation, the FPPC has, notwithstanding the
Government Code's express language to the contrary, made the receipt of salary
and per diem from a local government agency a financial interest and thus,
voting on appointments to a local government agency that provides a salary or
per diem, a violation of the Political Reform Act; and
WHEREAS, the FPPC's apparently contradictory Regulation has resulted in the
entrapment of large numbers of even the most conscientious public officials; and
WHEREAS, the Regulation does nothing to further the primary purposes of the
Political Reform Act which are to insure a better informed electorate or to prevent
corruption of the political process, the two primary goals of the Political Reform
Act.
NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Seal Beach
hereby resolves as follows:
1. That the City Council supports the Petition filed by Ash Pirayou of
the law firm of Rutan & Tucker on behalf of the cities of Anaheim, Dana Point,
Irvine, La Palma, Newport Beach, San Clemente, Villa Park, and Yorba Linda.
2. That a certified copy of this Resolution be forward to the Fair
Political Practices Commission, along with the formal letter of support executed
by the City Attorney, a copy of which is attached hereto as Exhibit "A ", and
incorporated herein by this reference.
PASSED, APPROVED and ADOPTED by the Seal Beach City Council at a
regular meeting held on the 12th day of March , 2012 by the following vote:
AYES: Council Members
NOES: Council Members
ABSENT: Council Members
ABSTAIN: Council Members
ATTEST:
City Clerk
STATE OF CALIFORNIA }
COUNTY OF ORANGE } SS
CITY OF SEAL BEACH }
Mayor
I, Linda Devine, City Clerk of the City of Seal Beach, do hereby certify that the
foregoing resolution is the original copy of Resolution Number 6233 on file in
the office of the City Clerk, passed, approved, and adopted by the Seal Beach
City Council at a regular meeting held on the 12th day of March , 2012.
City Clerk
richard richards
(1916 -19881
glenn r. watson
(1917 -2010)
harry I. g ershon
(1922 -2007)
steven I. dorsey
william 1. strausz
mitchell e. abbott
gregory w. stepanicich
rochelle browne
quinn m. barrow
carol w. lynch
gregory m. kunert
thomas m. jimbo
robed c. ceccon
steven h. kaufmann
kevin g. ennis
robin d. hams
michael estrada
laurence s. wiener
steven r. orr
b. tilden kim
saskia t. asamura
kayser o. sume
peter m. thorson
lames 1. markman
craig a. steele
t. peler pierce
terence r. boga
lisa bond
janet e. coleson
roxanne m. diaz
jim g. grayson
roy a. clarke
william p. curley
michael f. yoshiba
regina n. danner
paula gutierrez baeza
bruce w. galloway
diana k. chuang
patrick k. bobko
norman a. dupont
david m. snow
lolly a. enriquez
kirsten T. bowman
ginetta 1. giovinco
tnsha ortiz
candice k. lee
billy d. dunsmore
amy greyson
deborah r. hakman
d. craig fox
g. inder khalsa
maricela e. marroquin
aenam. stinnett
Jennifer petrusis
steven 1. flower
christopherj. diaz
enn 1. powers
toussaint s. bailey
serita r. young
shin klima
diana h. varat
julie a. hamill
andrew j. brady
molly r. mclucas
aaron c. o'dell
byron miller
of counsel
mark!. lamken
sayre weaver
jim r. karpiak
teresa ho-urano
los angeles office
telephone 213.626.8484
san francisco office
telephone 415.421.8484
EXHIBIT "A"
INV RICHARDS WATSON GERSHON
Zit ATTORNEYS AT LAW -A PROFESSIONAL CORPORATION
1 Civic Center Circle, PO Box 1059, Brea, California 92822 -1059
Telephone 71 4.990.0901 Facsimile 714.990.6230
March 12, 2012
VIA U.S. MAIL
Zachery P. Morazzini, Esq.
General Counsel
Fair Political Practices Commission
428 J Street
Suite 620
Sacramento, California 95814 -2329
Re: Petition to Amend Regulation 18705.5
Dear Mr. Morazzini:
I am the City Attorney for the City of Seal Beach. Enclosed is Resolution No. 6233
adopted by the Seal Beach City Council supporting the above - referenced petition
filed by Ash Pirayou of Rutan & Tucker on behalf of several cities. In addition, I
concur in all of the points made in Orange City Attorney Dave DeBerry's letter of
support. Please call with any questions.
Very truly yours,
Quinn M. Barrow
City Attorney for the City of Seal Beach
S7296- 0001 \1431604v1.doc
February 28, 2012
Fair Political Practices Commission
Zachery P. Morazzini, General Counsel
428 J Street, Suite 620
Sacramento, CA 95814 -2329
Re: Petition to Amend Regulation 18705.5
Dear Mr. Morazzini:
I am the City Attorney for the City of Orange and am drafting this letter in
support of the petition filed by Ash Pirayou of Rutan & Tucker on behalf of several cities
and appreciate the opportunity to provide input. I will try not to be unnecessarily
repetitive of positions previously laid out by Mr. Pirayou or by others, including my own
letter to Gary Winuk of November 14, 2011, with respect to Regulation 18705.5 (the
"Regulation "). This letter assumes in all of its hypotheticals that the appointment would
potentially result in the $250 threshold being reached and all section references herein are
to provisions of the Government Code.
1. The Regulation is impractical, unnecessary and if strictly applied, would have the
practical effect of excluding the mayor in a city which directly elects its mayor
from sitting on any boards of a local government agency which pays a stipend.
Under the Regulation, city council members have a financial interest in a decision
to appoint themselves to a board of another public agency if it is reasonably foreseeable
that the council member would receive more than $250 during a 12 -month period from
such appointment. Regulation 18702.2 and 18702.3 contain broad definitions of when a
public official is "participating in making a governmental decision." A public official
participates in a governmental decision if he or she "makes recommendations to the
decision maker...directly" or "use[s] his or her official position to influence the decision,
if for purposes of influencing the decision, the official contacts....any member, officer,
employee or consultant of the agency."
In cities with directly- elected mayors, such as Orange, "the mayor, with the
approval of the city council, shall make all appointments to boards, commissions and
committees unless otherwise specifically provided by statute." Section 40605. Any
Letter to Mr. Morazzini
February 28, 2012
Page 2
council member who advised the mayor that he or she is interested in being appointed to
a board would, necessarily, have participated in making the decision to appoint because
he or she would have made a recommendation to the decision maker directly and in
making such a recommendation, would also have been using his or her official position,
since membership on these boards is limited to council members. Thus, if strictly
applied, the Regulation precludes council members from informing the mayor that they
are interested in the appointment and thus, results in the mayor having to make the
appointments in a vacuum, i.e., without any information as to whether a particular
council member was even interested.
If strictly applied, the mayor in Orange could never sit on such a board and
receive a stipend or reimbursement for an expense exceeding the threshold. Since the
mayor makes all appointments and the Regulation makes it a conflict for her to
participate in any decision on such appointments, the net result is that a directly - elected
mayor could not sit on a board. The mayor could not let the other council members know
that he or she was interested in serving on a board because that would, as noted above,
violate the Regulation as well. The mayor could not even place the appointment on the
agenda, even if the mayor then abstained from the decision, because in placing the matter
on the agenda the mayor would violate the Regulation.
Recognizing that travelling to and from meetings of local government agencies
and performing other duties related thereto comes at some financial expense, the state
legislature has statutorily established modest compensation levels for appointed board
members of such local government agencies. If there is a concern that compensation for
serving on such boards is so extraordinary that it taints a council member's decision to
serve, the City respectively submits that that issue should be addressed by the state
legislature and not the FPPC. The Regulation has left council members with the
Hobson's choice of not participating in their appointment, even if simply limited to
expressing an interest therein or in the alternative, to perform such services out of their
own pocket book, no matter what the council members' financial means. The
Regulation's ultimate effect is to discourage participation in these local agencies by
council members of limited financial means.
2. If the legislature had intended to prohibit council members from voting on such
appointments, it would have clearly stated as much. The Regulation creates
ambiguity which otherwise does not exist within the Political Reform Act itself.
The Political Reform Act and in particular Section 82030 is clear and
unambiguous— salary, per diem and reimbursement for expenses do not constitute a
financial interest giving rise to a conflict. There is nothing in the Political Reform Act
that would lead a council member to believe that voting on an appointment to another
public agency board would ever constitute a disqualifying conflict of interest. Indeed, the
unambiguous language of the Political Reform Act would lead a council member to
Letter to Mr. Morazzini
February 28, 2012
Page 3
exactly the opposite conclusion. While a council member would certainly understand
that a decision affecting his or her own personal finances would, under Government Code
Section 87100, generally preclude him or her from participating in the decision, read in
conjunction with Section 82030, it would also be clear that this does not apply when the
decision may affect salary, per diem or reimbursement for expenses received from any
local government agency. The FPPC's interpretation of these statutes, expressed in the
Regulation, nearly eviscerates Section 82030, leaving it essentially only to apply to
salary, per diem or reimbursement received by a council member from his or her elected
city council position.
If the state legislature intended to limit Section 82030's application only to salary,
per diem and reimbursement received from the local government agency to which the
council member was elected, it could have and past history tells us, would have expressly
so provided. One need look no further than the Political Reform Act itself and in
particular the Levine Act, for a model of such expression. As you know campaign
contributions of any size are not considered "income" (Section 82030) or a "gift"
(Section 82028) under the Political Reform Act and thus, do not constitute a financial
interest or a conflict of interest — except in one situation. That situation, expressed in
Section 84308, is when a campaign contribution of more than $250 is received from a
person who is seeking a license, permit or other entitlement before a local government
agency to which a council member was appointed.
In the context of campaign contributions, Section 84308 applies to council
members sitting on the very same boards at issue in this matter. Thus, when the
legislature intended to make an exception to the Political Reform Act's exclusion of
campaign contributions from the definition of financial interest, it expressly provided as
much. By analogy it would follow that if the legislature had intended to make a similar
exception to the definition of financial interest with respect to local government agency
compensation, it would have expressly so provided. It did not.
And as has been pointed out by others, the FPPC's own regulations are
inconsistent. The Regulation directly contradicts Regulation 18702.4 which provides that
public officials are not participating in a governmental decision when they are making
decisions "relating to their compensation..." There is no comment or cross - reference to
the Regulation. It also contradicts Regulation 18232 which expressly exempts from the
definition of income "salary", "per diem" and "reimbursement for expenses" received
from a state, local or federal government agency. While the "Comment" portion of
Regulation 18232 cross - references Government Code sections 82030 and 82048, it does
not cross - reference the Regulation. Regulation 18703.5 which defines "Economic
Interest...Personal Finances" suffers the same problem. In the "Comment" section it
states that for the definition of "income, see Government Code section 82030 and
California Code of Regulations, Title 2, section 18232, both of which exclude salary, per
diem and reimbursement for expenses received from a local agency from the definition of
Letter to Mr. Morazzini
February 28, 2012
Page 4
"income" and thus, from the definition of an economic interest related to personal
finances. No cross - reference is made to the Regulation.
Ambiguities in penal statutes must be construed in favor of the alleged offender.
See In re Jeanice D. (1980) 28 Ca1.3d 210, 217; People v. Poole (1985) 168 Cal.App.3d
516, 527. Although the statute, i.e., the Political Reform Act, is in and of itself not
ambiguous, the FPPC's regulations create an ambiguity, one which carries possibly
criminal penalties. It is bad public policy to draft potential criminal penalties which
cannot be discerned by even the most wary and diligent of public officials and the
attorneys that advise them. For the reasons noted above, the City requests that the FPPC
reconsider the Regulation and adopt the amendment proposed by Mr. Pirayou.
If you have any questions or comments, please do not hesitate to contact me at
714 - 744 -5580 or by e-mail at ddeberry(a�cityoforange.org.
Sincerely,
David De Berry
City Attorney