CITY OF
OFFICE OF THE CITY ATTORNEY
TO: Maria
Stewart, City Clerk
FROM: Marsha Jones Moutrie, City Attorney
DATE: February
27, 2007
RE: Interpretation
and Application of City Charter Article XXII (The Oaks Initiative)
You
have requested advice about interpreting and applying City Charter Article
XXII, which was adopted by the voters in
My
intent in supplying this memorandum is limited.
I want to provide a compilation of answers to various questions which
have arisen since the Article was implemented.
Hopefully, this memorandum will facilitate consistent application of the
measure with due regard to both the restrictions adopted by the voters and the
constitutional rights of all community members.
As
you know, the Oaks Initiative was intended to forestall corruption by, in the
language of the measure’s findings, “reducing the corruptive influence of
emoluments, gifts, and prospective campaign contributions on decisions of
public officials in the management of public assets and franchises, and in the
disposition of public funds.” Article
XXII restricts gifts, contributions and other emoluments to a Council member from
anyone who has benefited from the Council member’s previous vote to confer a
public benefit, such as a contract or franchise, upon the donor. Thus, Article XXII limits community members’
rights to participate in the political process by making campaign contributions
to Council members who voted “yes” on items benefiting the community
members. For example, if a Council member
voted to award a $100,000 contract to a particular architect that Council member
would thereafter be barred from receiving a campaign contribution, in any
amount, from that architect for a specified number of years. Conversely, the architect would be barred
from making a contribution to any Council member who voted to award the
contract.
As
we have discussed, the language of the measure makes its sweep extremely broad. The language restricts officials’ receipt of gifts,
honoraria, emoluments and other personal pecuniary benefits of a value in
excess of just $50. When applicable, Article
XXII prohibits campaign contributions of any size made for any elective office
(local or not), as well as all employment.
Those prohibited from making
campaign contributions include board members of corporations, including
nonprofits, which receive grants from the City exceeding $10,000. Also, the
prohibitions of the measure are triggered by a Council member’s “yes” vote on a
wide range of matters involving amounts as small as $10,000.
As
has been frequently noted, the broad sweep of the language of these
prohibitions restricts the exercise of certain constitutional rights. The First Amendment protects the right of
individuals to petition their government and to participate in the political
process by making contributions to candidates.
While cities may restrict the size of contributions for the legitimate
purpose of averting corruption and the appearance of corruption, cities may lack
authority to prohibit contributions outright.
Moreover, triggering prohibitions based upon “yes” votes, but not “no”
votes, may be irrational (and therefore unconstitutional) given that either
vote could confer a financial benefit upon someone. Additionally, the restrictions on employment
also limit the exercise of protected rights.
One
of the duties of this office is to preserve and effectuate local law. Accordingly, if a local measure is
susceptible to interpretation and may be unconstitutional in its application,
this office must interpret it to forestall constitutional violation and thereby
preserve the measure by safeguarding it from constitutional challenge. Therefore, insofar as Article XXII is
ambiguous, this office interprets it narrowly to preserve it and thereby
effectuate its purposes and the voters’ intent in adopting it.
We
have received questions about the application of Article XXII to the following
groups and have supplied the following answers:
City
Employees, Their Unions and Union PACs
– We were asked whether employees, their unions and union PACs may make, and a Council
member seeking re-election may accept, contributions if the Council member
voted to approve the union contract. Article
XXII exempts “public employment” from the restrictions of the Article: “As used
herein, the term public benefit does not include public employment in the
normal course of business for services rendered, but includes a contract,
benefit, or arrangement between the City and any individual [or] association …
to … provide personal services … .” Thus, by its plain language, Article XXII
does not prohibit City employees from making contributions to incumbent Council
members based upon their votes to approve employment contracts. As the number of City employees who have individual
employment contracts with the Council is very small, the exemption for votes on
employment contracts was likely intended to encompass votes on union
contracts. Therefore, we conclude that
Article XXII does not restrict campaign contributions from unions. It is less clear whether Article XXII
purports to prohibit contributions from unions PACs. However, since Article XXII is ambiguous on
this point and since the right to participate in the political process through
contributions is constitutionally protected, a narrow reading of Article XXII
is appropriate. Therefore, this office
interprets Article XXII to allow campaign contributions by employees, unions
and their PACs. We note, however, that
other provisions of local law apply, notably the campaign contribution
limit.
Board
and Commission Members – We have
been asked whether members of City Boards and Commissions are precluded by
Article XXII from making campaign contributions to Council members who
appointed them. In our judgment, they
are not. Their appointments to office might
be perceived as benefits. However,
Article XXII defines the term “public benefit” through the use of monetary
thresholds; and Board and Commission members are not compensated for their
services (though some are reimbursed for expenses).
Nonprofit
Board Members – We have been asked
whether persons serving as board members of nonprofits which receive funds from
the City may make campaign contributions to Council members who voted to
approve the contract or grant. They may
not. The language of Article XII is not
ambiguous on this point. It makes no
distinction between nonprofit and for profit corporations. Thus, Article XXII prohibits members of the
Boards of Directors of all nonprofits which receive more than $10,000 in
funding annually, or have contracts exceeding $25,000, from the City from
making campaign contributions to Council members who voted to approve their
contracts. This prohibition currently
applies to nonprofit City grantees as well as to those nonprofits with which
the City has service contracts, i.e., the Bayside District Corporation, the
Pier Restoration Corporation and the Convention and Visitors Bureau. It also applies to members of the school district
and college boards.
Board
Members and Employees of Corporations Doing Business With the City – We were asked whether board members and employees
of a local corporation from which the City has purchased land can make
contributions to Council members who voted for the land purchase. Employees may and board members may not. As to corporations doing business with the
City in specified (and relatively low) amounts, Article XXII precludes 10%
equity owners, trustees, directors, partners and officers from making campaign
contributions to Council members who voted to approve the contract or purchase
from the company. However, this
prohibition does not apply to employees.
City
Lessees and Sublessees -- Questions
have also arisen about the impact of Article XXII on City lessees, such as the
tenants on the Pier, the master tenant at Bergamont Station and the Viceroy
Hotel. Many City leases predate the
adoption and implementation of Article XXII.
Persons and corporations which are parties to such leases are
unaffected. However, Article XXII would
affect parties to leases made after the adoption and implementation of the
measure. In contrast, sublessees are not
subject to the prohibitions of Article XXII.
By its plain language, Article XXII applies to contracts, including
leases, made with the City. There is no
reference which would apply to sublessees, who do not have contracts with the
City. Moreover, given that Article XXII
operates as a limitation upon individual rights, it should not be interpreted
to apply to sublessees.
City
Contractors and Subcontractors -- Article
XXII applies to contracts over $25,000 and to cash payments over $10,000. The disparity between these two numbers
creates some ambiguity, particularly since the City seldom, if ever, pays out
funds without some kind of contractual agreement. However, this ambiguity may be insignificant
since contracts in these relatively low amounts do not go to the City
Council. In general, the prohibitions of
the Oaks Initiative apply to all contractors working on contracts approved by
the City Council. However, Article XXII
makes no reference to subcontractors or to indirect beneficiaries. Therefore, this office interprets the
prohibitions of the measure to be inapplicable to subcontractors.
Recipients
of Text Amendments -- Article XXII
includes among the list of “yes” votes that preclude contributions a vote to
“confer a land use variance, special use permit, or other exception to a
pre-existing master plan or land use ordinance pertaining to real property
where such decision has a value in excess of $25,000.” In
The
above information constitutes a compilation of all the advice we have provided
about the application of Article XXII to date.
If you receive additional inquiries, we will be happy to provide more
advice.
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