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CITY COUNCIL AGENDA REPORT
City of Anaheim
OFFICE OF THE CITY ATTORNEY
DATE: NOVEMBER 28, 2023
FROM: OFFICES OF THE CITY ATTORNEY AND CITY CLERK
SUBJECT: ANAHEIM CAMPAIGN REFORM LAW AND POTENTIAL
MODIFICATIONS
ATTACHMENT (Y/N): YES ITEM # 32
GOVERNMENT CODE § 84308 APPLIES: NO
REQUESTED ACTION:
Discuss and provide direction to staff on potential modifications to the City of Anaheim Campaign Reform Law.
DISCUSSION:
At the August 29, 2023 Council meeting, City Council approved a priority list of reforms stemming from the recommendations in the JL Group investigative report, and a calendar of when these items were to be brought forward for City Council discussion and action. The review and potential modification of the City of Anaheim Campaign Reform Law was calendared for City Council discussion and direction.
The Anaheim Campaign Reform Law which is codified in Chapter 1.09 of the Anaheim Municipal Code was adopted to minimize the opportunity for, and the appearance or perception of, corruption in City elections; to prevent candidates or contributors from circumventing the contribution limits; and to maintain public trust in governmental institutions and the electoral process. This ordinance is intended to work in concert with the Sunshine Ordinance and elements of State law to promote transparency and reduce corruption in City elections. A narrowly tailored campaign finance ordinance can help voters perceive that the financial strength of certain individuals or organizations does not permit them to exercise a corrupting or controlling influence on the election of City candidates. The Chapter is designed to reduce the corrupting influence of larger contributions and those who make or raise such contributions for candidates. Below is a summary of key elements of the current Campaign Reform Law:
CURRENT CAMPAIGN REFORM LAW
A. Contribution Limitations
Currently, the Campaign Reform Law prohibits any controlled committee to solicit or accept contributions which exceed the contribution limit of $2,500, which is adjusted biennially in January of odd-numbered years to reflect the increase or decrease in the City of Anaheim Campaign Reform Law
November 28, 2023
CPI for all urban consumers for the Los Angeles-Long Beach-Anaheim, CA1, rounded to the nearest hundred dollars. The current campaign contribution limit is $2,500, which became effective January 1, 2023 and will apply throughout the 2024 election cycle. As explained more fully below, SB 1439 (an extension of the Levine Act) now imposes recusal restrictions for any contribution over $250.
The contribution limit also applies to committees which collect contributions for the purpose of making expenditures in support of or opposition to the recall of a City officer as well as to contributions received by that City officer. The contribution limit is not applicable to the recall committees, but the limit is applicable to the City officer who is the subject of the recall, as well as any candidate running to replace the City officer.
This section also provides that upon the failure of a recall effort, funds remaining in a City officer’s recall account, after all expenses associated with the recall are discharged, shall be disposed of by either repayment of the contributions or donation to a tax-exempt nonprofit organization. In the event the recall effort fails, the recall account and committee shall be terminated within 90 days after all expenses have been paid.
B. Slate Mailers
The slate mailer restrictions apply to slate mailers in which more than 10% of the surface area of the slate mailer expressly advocates or opposes the election of an individual City candidate.
If a slate mailer is produced and/or distributed other than at the behest of a City candidate, then it is an independent expenditure, and is not subject to the contribution limitations. A slate mailer paid for by the City candidate or the controlled committee of a City candidate is subject to the contribution limitations.
C. Outstanding Debt Retirement
Currently, indebted former candidate, or any controlled committee of any such officer or candidate, may accept contribution(s) for the purpose of retiring outstanding debt from a prior city election and are required to report such contributions on the Fair Political Practices Commission, Form 460.
Following the retirement of all outstanding debt from the election for which such contributions were collected, any remaining funds which were collected for the purpose of retiring outstanding debt can be used for purposes of defraying the expenses of holding City office, returned to the contributors, deposited in the City’s General Fund, or donated to any bona fide charitable, educational, civic, religious, or similar tax-exempt, nonprofit organization, where no substantial part of the proceeds will have a material financial effect on the former candidate or officeholder, any member of his or her immediate family, or his or her campaign treasurer.
1The Bureau of Labor Statistics revised the CPI geographical regions for metropolitan statical areas. The “Los Angeles-Riverside- Orange Counties Urban Area” was revised to “Los Angeles-Long Beach-Anaheim, CA”.
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November 28, 2023
D. Aggregation of Contributions
For purposes of the contribution limitations, contributions made by a sponsored committee to a City candidate or to an elective City officer (or to a committee controlled by such candidate or officer) shall be combined with those contributions made during the same election cycle. The election cycle for a general municipal election commences on January 1 immediately following the general election for such City office and ending on December 31 of the year in which the next general election for the same City office occurs.
Entities shall be treated as one person when entities share the majority of members of their boards of directors, owned or controlled by the same majority shareholder or shareholders, and are in a parent-subsidiary relationship. There now are similar aggregation rules under SB 1439.
An individual and any partnership in which the individual is a general partner, or an individual and any corporation in which the individual owns a controlling interest (50% or more), or an individual and any business entity in which the individual controls the decisions of such entity regarding the making of contributions to candidates for political office, regardless of the percentage of ownership, if any, of the individual in such business, shall be treated as one (1) person.
Any contributions made by a committee in support of or in opposition to a City candidate shall be aggregated with the contributions made by any other committee in support of or in opposition to the same City candidate, if a majority of the officers of such committees are the same individuals. No committee shall act in concert with, or solicit or make contributions on behalf of, any other committee. This subsection shall not apply to treasurers of committees, if such treasurers do not participate in or control in any way a decision on whether the candidate or candidates receive contributions.
Contributions by a married person shall be treated as the separate contributions of such person and shall not be aggregated with any contributions of the spouse of such person.
Contributions by children under eighteen years of age shall be treated as contributions by their parent(s) or legal guardian(s) (one-half to each parent or guardian) unless only one parent or guardian has legal custody of such child, in which event any such contributions shall be attributed solely to the custodial parent.
E. Transfer of Funds
A City candidate or elective City officer, or committee controlled by a City candidate or elective City officer, is prohibited from making or accepting a contribution to any other City candidate or elective City officer or to any committee controlled by, supporting or opposing any other City candidate or elective city officer. This does not preclude a City candidate or elective City officer from making a contribution from his or her own personal funds to his or her own candidacy or to the candidacy of any other candidate for elective City office, subject to the contribution limitations.
City of Anaheim Campaign Reform Law
November 28, 2023
A City candidate or elective City officer may make a one-time-only transfer of funds from his or her controlled committee for an elective federal, state, local or City office (the “transferor committee”) to his or her controlled committee for a different City office (the “transferee committee”), subject to the contribution limits.
E. Loans and Extensions of Credit
A loan is considered a contribution from the maker and the guarantor of the loan is subject to the contribution limitations. Proceeds of a loan made to a City candidate by a commercial lending institution in the regular course of business on the same terms available to members of the public shall not be subject to the contribution if the loan is made directly to the candidate. The guarantors of such a loan, other than the candidate individually, shall remain subject to the contribution limits.
Extensions of credit (other than loans by a commercial lending institution in the regular course of business) shall be subject to the contribution limitations unless the extension of credit meets the conditions set forth in the California Code of Regulations.
F. Timely Return of Excess Contributions
Contributions accepted in excess of the contribution limitations shall be returned to the donor within fourteen (14) days of their discovery. A written notification showing the donor’s name, the amount returned, and the date of the return shall be provided to the City Clerk within seventy-two (72) hours after such return.
G. Enforcement
Any person who violates or otherwise fails to comply with any provision or requirement of the Campaign Reform Law shall be liable to the City in a sum not to exceed the following amount for the following violations:
For the making or accepting of any contribution in excess of the applicable contribution limits, a sum equal to three (3) times the amount by which the contribution exceeds the applicable contribution limit, or the sum of twenty-five hundred dollars ($2,500), whichever is greater, for each violation. For any other violation, the sum of five hundred dollars ($500) for each violation; provided, however, that the maximum fine for failure to file an amendment as required shall be the sum of one hundred dollars ($100) per day up to a total of five hundred dollars ($500).
The City Attorney of the City of Anaheim may file and prosecute a civil action, in municipal or superior court, to recover any amount(s) due and owing to the City of Anaheim by any person, or to enjoin any violation or otherwise compel compliance. In the event of any civil action within the jurisdiction amount of the small claims court, the City Council may designate the person to bring such action. No civil action shall be brought unless said action is filed within two (2) years following the date of such violation.
City of Anaheim Campaign Reform Law
November 28, 2023
If the City Attorney determines or believes that any person (the “target party”) has violated any provisions, the City Attorney may, at his discretion, advise the target party of remedial measures which may be taken by the target party to avoid possible civil action (the “remedial measures”). Such remedial measures may, but need not necessarily, include the payment of a civil fine to the City. In the event the target party is offered and timely performs such remedial measures to the satisfaction of the City Attorney, the City Attorney shall advise the target party (and any person who, in writing, informed or complained to the City Attorney concerning any such violation), in writing, that the alleged violation has been resolved and the manner in which it was resolved (the “letter of resolution”) and, in such event, no civil action shall thereafter be filed or maintained relating to such alleged violation. Currently, the City Attorney works with the City Clerk who is designated to notify the target party and ensure the alleged violation is resolved.
SB 1429 – RECUSAL INVOLVING CAMPAIGN CONTRIBUTIONS
Earlier this year, Governor Newsom signed into law SB 1429, the most important component of which applies the Levine Act’s campaign contribution recusal rules to elected officials at cities and counties. Before SB 1429, the Levine Act (Government Code Section 84308) applied only to local government agencies whose members were not directly elected by the voters, meaning that elected officials of cities and counties were not subject to the Act. Beginning on January 1, 2023, the Levine Act also began applying to bodies of directly elected officials, including the Mayor and all Councilmembers.
In February of this year, staff started to indicate on each staff report whether Government Code Section 84308 (the Levine Act) potentially applies to that particular agenda item. Examples of items subject to the Levine Act would be consulting contracts and other contracts with private parties, with the exception of low-bid, labor, and personal employment contracts. If a staff report indicates that Section 84308 applies, Council members should review their campaign contributions to determine whether they received contributions of over $250 within the prior 12 months from any parties or participants to that item. If so, Council members would have to disclose the conflict on the record and would be prohibited from any way participating in that item, unless they return that portion of the campaign contribution over $250 back to the party or participant within 30 days from when the Council members knows of both the contribution and the pending proceeding.
Section 84308 prohibits City officials from taking part in any proceedings involving a license, permit, or entitlement for use if the official received a campaign contribution exceeding $250 from a party or participant within the preceding 12 months. An official is also prohibited from accepting, soliciting, or directing a contribution exceeding $250 from a party or participant in the proceeding for a period of 12 months after a final decision is rendered in such a proceeding. A “party” is any person who files an application for, or is the subject of, a proceeding involving a license, permit, or entitlement for use, and has a financial interest in the decision. A “participant” is a person who is not a party but who actively supports or opposes a particular decision City of Anaheim Campaign Reform Law
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involving a permit/license/entitlement, and has a financial interest in the decision. A party to a proceeding before an agency must disclose on the record any contribution in an amount of more than $250 made within the preceding 12 months to an official of the agency.
Notably, the Levine Act does not require recusals of officials based on any contributions made to independent committees that may support or oppose the official. Former Council Member Jose Moreno did present for Council consideration such a recusal rule at the Council meeting on June 21, 2022. However, the Council did not approve such a restriction. Staff is not aware of any other city that has expanded recusal rules to independent expenditures. Were such a restriction to be implemented, there would be significant concern about the inability of officials to participate in votes by returning contributions (because officials have no control over independent expenditures), and whether third parties could strategically disqualify officials from voting on certain matters by contributing to independent committees that support the official or simply making independent expenditures themselves.
POSSIBLE MODIFICATIONS
The City Council may consider the “Gift Ban” as adopted by the County of Orange.
County of Orange Officials are prohibited from soliciting or accepting any gift from anyone, at any time, if the person providing the gift does business with the County or is reasonably likely to do business with the County in the future. Other cities prohibit gifts above certain values from lobbyists. For example, San Diego prohibits gifts of over $10 by lobbyists to candidates or elected officials, while Oakland prohibits gifts of over $240.
IMPACT ON BUDGET:
This is an informational report which will have no budgetary impact.
Respectfully submitted, Respectfully submitted,
Robert Fabela Theresa Bass
City Attorney City Clerk
Attachment:
1. AMC, Chapter 1.09 “City of Anaheim Campaign Reform”