City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: JUNE 13, 2023 FROM: CITY ATTORNEY’S OFFICE WARDS: ALL
SUBJECT: report on Senate Bill 1439 “PAY-TO-PLAY” STATUTE; Government code section 84308 revisions ISSUE:
To receive and file a report from the City Attorney regarding recent Senate Bill 1439 revisions to Government Code § 84308, commonly known as the “pay-to-play” statute.
RECOMMENDATION:
That the City Council receive and file a report from the City Attorney’s Office regarding recent revisions to Government Code section 84308, made pursuant to State Senate Bill 1439, for purposes of compliance with the Levine Act’s “pay-to play” restrictions pertaining to City proceedings.
BACKGROUND:
Government Code (GC) § 81000 et seq. (“Political Reform Act”) was the result of Proposition 9, passed in 1974 to regulate campaign finance, lobbying activity, and conflicts of interest. It was amended several times thereafter, and in 1982, GC § 84308 (“Levine Act”) was adopted to prevent the practice of “pay-for-play.” Before the Levine Act was added to the provisions of the Political Reform Act, some appointed public officers solicited contributions from applicants for government approvals and then voted on decisions affecting applicants. GC § 84308 set a contribution limitation to appointed members of boards and commissions, although that limitation did not apply to certain officials such as members of the State Legislature, Board of Equalization, State constitutional officers, and local government officials who were directly elected by the voters.
Effective January 1, 2023, Senate Bill (SB) 1439 amended GC § 84308 to, among other things, expand the contribution limitations to local government (including City of Riverside) officers who are directly elected by voters. (GC § 84308, subd. (a)(4).) Political campaign contributions fall within the limitations set forth in GC § 84308. (GC § 84308, subd. (a)(6).) SB 1439 also extended the prohibition on officers accepting, soliciting, or directing a contribution over $250, from a party or participant, from three to 12 months after a final decision in a proceeding. (GC § 84308, subd. (b).) GC § 84308 imposes two main limitations on certain agency officers participating in proceedings involving a license, permit, or entitlement for use: (1) an officer may not accept, solicit, or direct a contribution over $250 from a party or participant (or agents thereof) in a license, permit, or other entitlement-for-use proceeding for a period of 12 months after a final decision is made in the proceeding; and (2) if an officer “willingly or knowingly” accepted a contribution of over $250 from a party or participant within 12 months before a proceeding, the officer must disclose that fact on the record of the proceeding, and may “not make, participate in making, or in any way attempt to use the officer’s officer position to influence the decision” in the proceeding. (GC § 84308, subd. (b), (c).) All contributions by covered donors are aggregated for purposes of the over $250 restriction and recusal requirements.
The Levine Act’s definition of proceedings for “licenses, permits or other entitlements for use” includes: (1) proceedings for business, profession, trade and land-use licenses/permits; and (2) entitlements for use, such as entitlements for land use, contracts (other than competitively bid, labor or personal employment contracts), and franchises. (GC § 84308, subd. (a)(5).) A “party” under the Levine Act means any person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use. (GC § 84308, subd. (a)(1).) A “participant” under the Act means any person who is not a party but who actively supports or opposes a particular decision in a proceeding involving a license, permit or other entitlement for use and who has a financial interest in the decision. A person actively “supports or opposes a particular decision in a proceeding” if that person lobbies in person the officers or employees of the agency, testifies in person before the agency, or otherwise acts to influence officers of the agency. (GC § 84308, subd. (a)(2).) Certain “cure” options are available for government officers under the Levine Act. Regarding future proceedings, an officer may participate in the proceeding, if the officer refunds the violating contribution within 30 days from the time the officer knows, or should have known, about both the contribution and the proceeding involving a license, permit or entitlement for use. (GC § 84308, subd. (d)(1).) Regarding past proceedings, an officer may cure a past violation if the officer returns the contribution within 14 days of accepting, soliciting, or directing the contribution during the 12 months after a final decision is rendered in the proceeding. (GC § 84308, subd. (2)(A).) However, this post-violation cure is only available if the officer did not knowingly and willfully accept, solicit or direct the contribution. (GC § 84308, subd. (2)(B).) The officer’s controlled committee, or in the alternative, the officer must maintain a record of any cure options that are exercised. (GC § 84308, subd. (2)(C).) On December 22, 2022, the California Fair Political Practices Commission (FPPC) issued Opinion No. O-22-002 (“Kendrick Opinion”), in response to specific questions posed by the League of California cities on behalf of an El Cajon city councilmember (rather than as a direction towards all local agencies statewide). The Kendrick Opinion concluded there is no “lookback” period for local elected officers for their actions before the January 1, 2023 effective date of the amendment. (Kendrick Opinion at p. 1, 5.) The opinion also concluded an officer is not barred from participating in a proceeding involving a license, permit, or other entitlement for use based on contributions received before Jan 1, 2023. (Ibid.) The Kendrick Opinion also stated that an officer is not barred from receiving a contribution based on the officer’s participation in a license, permit, or other entitlement for use proceeding so long as the officer’s participation occurred before January 1, 2023. (Ibid.) GC § 11180 et seq. and §91001 et seq. authorize investigations and civil prosecutions for Political Reform Act violations. Two agencies with enforcement authority include the State Attorney General (GC § 91000) and District Attorneys (GC § 91000). The FPPC also exercises regulatory and oversight authority. For example, the FPPC has issued implementing regulations (FPPC Regulations 18438.1-18438.8), and its Enforcement Division may initiate administrative or civil actions for warnings or fines up to $5,000 per violation.
A case filed in February 2023 in Sacramento Superior Court challenged the validity of the recent SB 1439 revisions to the Levine Act. In Family Business Association of California et al. v. FPPC, the Plaintiffs (which included the California Retailers Association, California Business Properties Association, California Business Roundtable, Sacramento Regional Builders Exchange, and California Manufacturers and Technology Association) alleged free speech infringements and an unconstitutional amendment to the Political Reform Act. On May 26, 2023, after cross-motions for judgment on the pleadings, the Superior Court denied the Plaintiffs’ motion in its entirety and entered judgment in favor of the Defendant FPPC.
FISCAL IMPACT:
None.
Prepared by: Byron Shibata, Senior Deputy City Attorney Attachment: Presentation regarding Senate Bill 1439 revisions to Government Code § 84308 SB 1439 ReportPage 2