The Los Angeles City Council is expected to approve a recommendation to place a measure on the March 2011, Los Angeles municipal ballot banning bidders on LA contracts from making contributions or fundraising for City officials or candidates. The recommendation was made by a unanimous vote of the Los Angeles City Ethics Commission earlier this month.
Interestingly, the LA City Ethics Commission chose to enhance the bite of the proposed ban on bidder contributions by adding further recommended restrictions. The Commission recommended that the proposed ban:
• Apply the ban to bidders and their agents, their subcontractors, and their subcontractors’ agents and require bidders to disclose these agents and subcontractors in the bid documents. A common drafting, enforcement (and ultimately compliance) challenge with pay-to-play legislation surrounds the casting of the “agent” net. Here, when one examines the staff recommendations - which were ultimately adopted - the net is cast to ban contributions by to the following agents of bidders: the bidder’s Board chair; its president; its chief executive officer; its chief financial officer; its chief operating officer; any individual who holds an ownership interest of 20 percent or more; and any individual authorized in the bid to represent the bidder before the City. That 20 percent ownership piece becomes a pretty widely-cast net and one that has seen successful constitutional challenges in other jurisdictions.
• Apply the ban from the date a bidder submits a bid until one of the two following dates: a) For bidders who are not awarded the contract, the date the successful bidder signs the contract; and b) For bidders who are awarded the contract, the date 12 months after they sign the contract.
• Apply the ban to any contract (including a lease, franchise, permit, license, grant, amendment, change order, renewal or extension) that is required by law to be approved by an elected City official.
• Apply the ban to both personal contributions and fundraising activity and apply the same restrictions to lobbying entities that are applied to bidders. Again, without much fanfare, the proposed ban extends not just to “bidders” but also to any lobbyist. In our experience, lobbyists dance in the aisles when legislation such as this is passed and incumbents come to learn that their campaign coffers pay a steep price for a “throw-in” expansion such as this.
• Apply the ban to a City official who would solicit or receive contributions or fundraising proceeds from a person that the official knows or has reason to know is a person subject to the ban. Well, THAT should serve as a particular little compliance nightmare for officials and the unfortunate lawyers who work to keep them on the straight and narrow path. The opportunity for inadvertent violation and second-guessing is rampant with language such as this.
• Apply the ban to contributions to and fundraising for any City committee controlled by an elected City official or candidate for elected City office.
• Require invitations for bids to include notice of the ban. This provision will require bidders to certify that they will comply with and inform their agents and subcontractors of the ban.
• Prohibit persons who violate the ban from contracting with the City for four years following the violation. Ouch. That is a steep price to pay for an inadvertent violation. Does that mean I can buy a 20% ownership interest in a competitor and effectively put them out of business with a $10 contribution?
Interestingly, several news reports have noted that while “law firms, taxicab companies, airport concessionaires and construction firms doing business with the city get a special rule against padding the pockets of city officials”, one group is conspicuously absent from the “Rolls of the Regulated”: developers. The reason for the omission has nothing to do with the power or wealth of developers, said Yusef Robb, spokesman for City Council President Eric Garcetti, but rather because to include such a group would be “extremely complex”.
I buy that. Do you? Let’s just chalk it up to bad timing that the same day that Robb’s quote hit the LA Times, this article ran as well.