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Atlanta Update: Cooler Heads Prevail

Atlanta’s Fulton County Commission met yesterday as predicted to take up its latest pay-to-play resolution.

Everyone’s dying to know what happened.

Drum roll . . . It failed.

Interestingly, Fulton County’s Commission didn’t simply reject the resolution, they made sure to give the bill sufficient medical attention to permit the orderlies to wheel it in to the room where they could execute it properly and with finality. The Atlanta Journal Constitution reported on the gruesome course of events thusly:

Fulton County commissioners didn’t just reject Vice Chair Emma Darnell’s proposal to limit contractors’ donations to political campaigns. They killed it.

Darnell sought to prohibit any company or individual from bidding for county work if they have donated more than $500 to a commission candidate, or have given gifts to commissioners or county employees, during the past year.

The board opposed the plan 4-2, then, on a motion from Commissioner Tom Lowe, voted 4-2 to officially deny it so it can’t be brought up again. Lowe called the idea stupid and bad for business.

Not everyone sees the issue the same way. On the same day Fulton County was doing its work, the Brigantine Beach, New Jersey, City Council voted a strikingly similar piece of legislation onto the books. The Brigantine Beach ordinance, based largely on an Atlantic County, NJ, ordinance, and drafted with the assistance of the Atlantic County counsel, bans all professional contractor contributions one year before bidding and limits successful bidders to $300 candidate contributions after that with aggregate total limit contributions from a corporation holding a city contract to no more than $2,500 annually.

The regulatory patchwork continues to be sewn together stitch by stitch with no sign of uniformity on the horizon.

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Atlanta Update: Cooler Heads Prevail

So, Does Fulton County KNOW the Resolution it is Considering is Invalid?

We just posted about a pay-to-play resolution being considered by the Fulton County, Georgia, Board of Commissioners. That post considers whether the campaign regulation proposed by the county is good policy and further warns about the legal pitfalls encountered in other states adopting similar proposals.

What I didn’t address is the possibility that someone at Fulton County already knows the resolution is legally invalid as an attempt to regulate campaign activity statutorily reserved to the State. The evidence would appear to indicate that they do.

A careful read of Commissioner Emma Darnell’s website announcing the resolution shows that someone appears to have inadvertently attached a privileged legal analysis from the Indiana Attorney General to the Indiana Senate to the end of her proposal concluding that a virtually identical resolution, “if enacted by the City of Fort Wayne, would be invalid as an attempt to regulate, without specific statutory authority, conduct which is regulated by a state agency.” (emphasis added)

One can only speculate as to the reason why such a legal opinion would be attached to the proposed Fulton County resolution. One potential possibility would be that the Commission is already concerned that the resolution as proposed is legally invalid. On the off-chance that Commissioner Darnell’s website changes subsequent to this post, here is a screen-grab of the resolution along with the apparently inadvertently attached legal opinion as it was originally circulated.

Without offering any legal advice upon which anyone should rely, it would appear that Georgia’s constitutional and statutory structure mirrors that which concerned the Indiana Attorney General when he analyzed the Fort Wayne pay-to-play proposal. As is the case in Indiana, the Fulton County proposal clearly seeks to regulate conduct related to campaign financing and contributions. As is the case in Indiana, Georgia’s “Home Rule” provisions limit the power of municipalities to matters not preempted by the General Assembly through general law and not specifically enumerated as matters of state authority under O.C.G.A § 36-35-6. Included among those powers reserved to the state are authority over election procedures and campaign finance rules, which are specifically administered by the State Board of Elections and Georgia Government Transparency and Campaign Finance Commission in accordance with the requirements of general law and the state constitution.

In fairness, there are some in Indiana who disagree with the analysis and conclusion reached by Indiana Attorney General Zoeller; including Fort Wayne’s former city attorney. Nonetheless, this would appear to be a good opportunity for Fulton County to slow down, exhale, and reconsider.

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So, Does Fulton County KNOW the Resolution it is Considering is Invalid?

Atlanta Takes Another Shot at Procurement Restriction

Fulton County, Georgia – home county to the City of Atlanta – is poised once again to take up an ordinance designed to prohibit any corporation, officer, agent or individual who makes relevant campaign contributions or gifts from seeking county contracts. Just yesterday, the Fulton County Commission announced an agenda item for its August 17, 2011 recess meeting. Deep on page 12 of that agenda is a single line item styled:

Request approval of a Resolution amending the Fulton County Code of Laws regarding campaign contributions from entities doing business with, or seeking to do business with, Fulton County.

The resolution to be taken up, proposed by Commissioner Emma Darnell, closely mirrors a pay-to-play contract restriction proposed two years ago for the City of Atlanta by Common Cause Georgia.  In its current form, the proposed resolution provides that no corporation, entity, or individual will have the right to bid for, or hold, a county contract if it has either made a campaign contribution of $500 or more to a County Commissioner or has provided any direct or indirect gift or contribution to a County Commissioner or any Fulton County employee.

For the purposes of determining whether a person has reached the $500 threshold, Commissioner Darnell’s resolution proposes aggregating all contributions or gifts made by an individual, their parents, siblings, spouse, or children as well as by any company that the individual controls or holds a 10% stock interest in. With respect to company contributions and gifts, the proposed resolution would aggregate all contributions or benefits conferred by any “officers, directors, partners, members, or salaried employees of the entity, and of any affiliated or subsidiary entities.”

Yes, you read that right. Under the proposed resolution, a company such as Delta Air Lines would theoretically be debarred from contracting with Fulton County (they have an airport in Atlanta, don’t they?) if even one of its salaried employees pays for a birthday cake for a next door neighbor who just happens to be a Fulton County employee. (Transparency Note: Delta Air Lines is a client of our firm, but this example could just as easily apply to any corporation having any employee who inadvertently makes a $500 campaign contribution or any gift to a County Commissioner or county employee).

As this blog has noted before, well-meaning and good-intentioned efforts to restrict back room dealing almost always get hoisted upon the petard of the broad language necessary to prevent circumvention but predictably results in negative, unintended consequences. The Law of Good Intentions almost always loses out to the  Law of Unintended Consequences.  Under this proposal, compliance costs will skyrocket, as will the likelihood of unnecessary and inefficient bid protest litigation due to inadvertent violations. In light of these potential effects, simple disclosure of all campaign and gift activity in the contracting process strikes me as the much more sensible approach.

I also have concerns that such restrictions will needlessly limit campaign activity and chill political speech inside of Fulton County. The words I wrote two years ago still ring true to my ear:

While few would argue that the procurement process in Atlanta doesn’t need more sunshine, the Common Cause proposal appears to go a few steps to far. Most troublesome is the proposal to prohibit persons who make contributions of over [$500] from bidding on any … contracts for the next year, as the prohibition applies even if the contract in question was not in existence at the time of the contribution. Restricting contribution amounts in this manner would undoubtedly chill the making of political contributions for City of Atlanta elections altogether, as any person or entity with any potential interest in any City contract in the future could not make contributions without the fear of being locked out of all future business. This is the sort of broad restriction that has proven to be problematic in jurisdictions such as Colorado. Similarly problematic is the apparent willingness to consider contributions by spouses and children of contributors in making prohibition determinations. Again, Colorado should serve as a cautionary tale here.

Needless to say, Common Cause Georgia, and many others, do not share my concerns. Whether Fulton County’s proposed resolution passes tomorrow or not, however, the waves of “restriction as reform” continue to hit the beach.

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Atlanta Takes Another Shot at Procurement Restriction

Common Cause Georgia Proposes Pay to Play Ordinance for the City of Atlanta

We at the Pay to Play Law Blog have received the following from Georgia Common Cause concerning their proposal for a Pay to Play ordinance for the City of Atlanta. We appreciate the submission and attach it herein in its entirety and unedited. The positions taken here are entirely those of Georgia Common Cause.

While we salute Mayor Franklin for her leadership in establishing a more ethical climate in City government, one of the things we see as little changed from past administrations is well-connected insiders continuing to show up in disproportionate numbers of the chosen few who are selected for work contracted by the City of Atlanta, and by the Atlanta airport.

While we can’t – and don’t want to try to – change human nature, we do believe in taking steps to increase trust that those whom we elect and employ to administer our procurement policies will not allow personal preferences to steer contracts to less qualified companies, and that our tax dollars will not be wasted. One reform we can implement, if we want to raise the level of confidence in how our tax money is spent, is to separate the offering up of campaign contributions from the awarding of contracts. That is what Pay-to-play reform is all about.

Pay-to-play has been at the heart of numerous news stories around the country within the past year: Alaska Senator Ted Stevens, Illinois Governor, Rod Blagojevich, The withdrawal of New Mexico Gov. Bill Richardson’s Cabinet nomination, and the collapse of the mortgage giants after Congress – which reaped millions from Wall Street in campaign cash – deregulated the industry and ignored repeated warnings of disaster. In August, New Jersey Governor Jon Corzine issued an order freezing the development approval process in cities and towns whose mayors have refused to resign despite being charged in a federal corruption probe involving bribes paid to local officials to speed up development projects.

Atlanta has had its share of scandals around pay-to-play. The Ronnie Thornton airport runway dirt deal dominated the headlines a few years ago. Airport advertiser Billy Corey and his Airport Services company continue to this day their five year court battle over alleged cronyism in the awarding of the 2002 advertising contract to Clear Channel Communications and their DBE partner Barbara Fouch, a close friend of Former Mayor Maynard Jackson, who has had a piece of the airport advertising business since 1981.

Rather than wait for a local scandal to prompt us, why not take steps to discourage practices that can lead to scandals? Let’s work together to find a way to make it work in the City of Atlanta, then make it work elsewhere in the state as well. Let’s start the process.

How does Pay to play reform work?
Common Cause has offered a model ordinance for consideration in the current Atlanta Mayoral and Council races. Our proposal is not structured as a campaign finance law change, but as a new condition of contracting. It’s quite a simple concept. People can either contribute freely to the campaigns of candidates, or they can qualify to receive contract work with the City of Atlanta. They cannot do both. All companies submitting bids and continuing contracting arrangements with the City would be asked to certify that they had not contributed more than a minimal amount to candidates for Mayor of City Council in the previous 12 months. Enforcement would rest with the contracting office. Companies or individuals violating the statute would be disqualified from further business with the City. To see a summary of the proposed reforms for Atlanta, click here. To read the model ordinance, click here.

We believe it’s time to take Atlanta to the next level of ethical government. No more inferences that those who play should pay. Let’s create a system where we are making sure that City contracts go to the best cost-effective service provider, not the best-connected company.

Bill Bozarth
Common Cause Georgia

We are grateful to Georgia Common Cause for their submission, and invite any interested commentary on the topic.

In addition to the concerns addressed in our previous post, the regulated community should take notice – and contemplate the impact – of the proposed amendment to the City of Atlanta Procurement and Contracting Code. To be sure, the specter of campaign contributions to procurement officials from those seeking city contracts can be unseemly; but so can the prospect of a system in which only individuals wealthy enough to self-fund their campaigns have the means to seek elected office. In our view, public disclosure of contributions and transparency far better balance the competing ideals of democracy and procurement fraud prevention than outright contribution bans.

Moreover, the proposed City of Atlanta Procurement and Contracting Code as offered imposes considerably greater restriction than simply offering one a choice between contributing “freely to the campaigns of candidates, or [qualifying] to receive contract work with the City of Atlanta” as advertised by Georgia Common Cause. Rather, the proposal proffered seeks to disqualify any person or entity from obtaining – or keeping – a city contract, if that person or entity has

             made, directly or indirectly, any payment, gift or other contribution to or for the benefit 
             of any holder of elective office of the City of Atlanta or to any employee;

It is easy to contemplate how that language – crafted as broadly and vaguely as it is – could capture a great deal of seemingly innocent behavior with dire consequences. Imagine being the compliance office who has to tell your boss the CEO that her company’s life-blood contract with the City of Atlanta has been terminated for cause, and the company is liable to the City of Atlanta for all damages resulting from the termination, because the aggregate of all the contributions to a City of Atlanta politician by all of the company’s officers, directors, partners and salaried employees of the company exceeded $250, or because a competitor alleged that the company made a single “indirect” gift “for the benefit” of an employee of the City of Atlanta.

One can envision that birthday parties for City of Atlanta employees would be lonely places indeed.

Stefan Passantino, Esq.
Partner, McKenna Long & Aldridge LLP

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Common Cause Georgia Proposes Pay to Play Ordinance for the City of Atlanta

Proposed Pay-to-Play Regulation in Atlanta: Good Government or Overly Restrictive?

Common Cause Georgia has entered the fray of the upcoming Atlanta Mayoral election by challenging all candidates to support “pay-to-play” reform. Under Common Cause’s proposed legislation, no person or entity who made a contribution of over $250 to the campaign of a Mayoral or City Council candidate would be eligible to submit a bid or perform a contract for the City of Atlanta for the next year. Further, the proposed legislation would restrict contributions of any amount by a City contractor to a City official or candidate during the term of the contract. The proposal places similar restrictions on gifts to City officials or employees.

While few would argue that the procurement process in Atlanta doesn’t need more sunshine, the Common Cause proposal appears to go a few steps to far. Most troublesome is the proposal to prohibit persons who make contributions of over $250 from bidding on any City of Atlanta contracts for the next year, as the prohibition applies even if the contract in question was not in existence at the time of the contribution. Restricting contribution amounts in this manner would undoubtedly chill the making of political contributions for City of Atlanta elections altogether, as any person or entity with any potential interest in any City contract in the future could not make contributions without the fear of being locked out of all future business. This is the sort of broad restriction that has proven to be problematic in jurisdictions such as Colorado. Similarly problematic is the apparent willingness to consider contributions by spouses and children of contributors in making prohibition determinations. Again, Colorado should serve as a cautionary tale here.

In sum, real ethics reform for the City of Atlanta needs to be seriously contemplated. However, the current Common Cause proposal is far too broad in its current state to warrant further consideration.

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Proposed Pay-to-Play Regulation in Atlanta: Good Government or Overly Restrictive?

Senate Bill 70: Gone But Not Forgotten

In the aftermath of the well-publicized “pay-to-play” scandals in locales such as Illinois and New Mexico in early 2009, a number of state legislators across the country felt compelled to propose pay-to-play legislation in their own states. One such state where legislation was proposed in 2009–and likely will be again in 2010–is Georgia.

During the 2009 Legislative Session, veteran Senator George Hooks (D-Americus) proposed Senate Bill 70, which would have extended Georgia’s existing ban on contributions from “regulated entities” to certain “elected state executive officers.” O.C.G.A. § 21-5-30.1 currently states in part that “no regulated entity and no person or political action committee acting on behalf of a regulated entity shall make a contribution to or on behalf of a person holding office as an elected executive officer regulating such entity” or to a candidate for such office.   The statute further states that nothing in this prohibition shall prevent individuals employed by “regulated entities” from making contributions to applicable “elected executive officers” from their personal funds.

Senate Bill 70 maintained both well-reasoned provisions above. The bill also proposed to require “elected executive officers” or candidates, that received contributions from individuals employed by applicable “regulated entities,” to separately identify such contributions on their campaign contribution disclosure reports. Senate Bill 70 would have also prohibited “elected executive officers” from soliciting contributions from individuals employed by “regulated entities.”

While Senate Bill 70 failed to become law, it did not go quietly into the night. Indeed, Senate Bill 70 passed the Senate unanimously, and ultimately was sponsored by legislators of both parties. Such factors indicate both that similar legislation is likely to appear again in Georgia in 2010, and that pay-to-play legislation has the continued potential to receive bi-partisan support nationwide.

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Senate Bill 70: Gone But Not Forgotten