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HomeMy WebLinkAboutOLD BUS 1 CAMP CONT 07-06-92� F, r7-lo-9d, OLD BUSINESS NO. 1 7-6-92 ' _ Inter -Com ��,;., DATE. JUNE 22, 1992 TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS FROM: CITY ATTORNEY SUBJECT: PROPOSED CAMPAIGN CONTRIBUTION ORDINANCE Pursuant to Council direction the City Attorney's office has worked to develop an ordinance dealing with restrictions on campaign contributions. This direction came after the Council reviewed our opinion dated February 26, 1992 of a draft ordinance submitted to the City - by Mr. Maughan. That draft ordinance provided for extensive restrictions on campaign -contributions and was modelled after an ordinance developed by the private organization known as the California Commission on Campaign Financing. Our February 26, 1992 legal opinion is enclosed for your review as background information. I. MONETARY CAPS ON CAMPAIGN CONTRIBUTIONS An innovative feature of this ordinance is the alternative option arrangement of (i) a monetary cap of $100.00 per individual contribution to a candidate for election to the City Council [Section 1232 (a) (1) ] , or (ii) each candidate has a choice at the time of filing nomination papers to voluntarily submit to a $30,000.00 total expenditure cap and if the candidate chooses the expenditure cap, then the candidate is free to receive contributions of up to $500.00 from each individual contributor (instead of only $100 per contribution). [Sections 1233(a) and (c).] There has been no adjudication of which we are aware as to whether this type of arrangement will be considered by the courts to be, in fact,., voluntary. Council should take special note of the fact that unless a candidate agrees at the time of filing to accept the expenditure ceiling, there is no limit on the amount a candidate could spend, -and the only limitation would be on the maximum amount of the contribution the candidate could accept from each contributor. In other words, a candidate who declined to accept the expenditure ceiling provisions of Section 1233 could accept contributions of $100 per contributor, but also would be totally free to spend as much of his own money as he wished, with no limit whatsoever. The Honorable Mayor and City Council Members June 22, 1992 Page 2 Court decisions have clearly held that while there can be limitations imposed on the amount of contributions, there can be no limits imposed on the amount of expenditures, unless the candidate has voluntarily agreed to a limitation of expenditures. The upshot of this is that if a candidate does not voluntarily accept the campaign expenditure limitation option and is willing to spend his or her own money, the candidate can vastly out -spend other candidates who rely only on the limited contributions they could receive under this proposed ordinance. The ordinance also provides that no more than a total of $10,000.00 can be received from contributors who are other than individuals, e.g. corporations, etc. [Section 1232(b).] II. OFF YEAR CAMPAIGN CONTRIBUTIONS PROHIBITED .Section 1232(c) prohibits receipt of contributions more than six months before the candidate is listed on the ballot. This applies to both incumbents and non -incumbents alike. III. CERTAIN CONTRIBUTIONS PROHIBITED The ordinance provides for prohibitions of campaign contributions from certain City contractors and solicitation of contributions by "non -elected City public officials" on behalf of Council candidates. [Sections 1232(1) and 1232(m).] IV. ENFORCEMENT The ordinance provides for both civil and criminal remedies in the.event of violations. The scheme of the ordinance provides that the City Attorney shall have initial jurisdiction in determining whether to bring either a civil or criminal action for enforcement purposes. If the City Attorney makes a finding that in •his opinion there is insufficient evidence to bring an action, any resident may bring a civil action seeking compliance with the ordinance. There is also an array of other controls over reporting and disclosure requirements with respect to the handling of the contributions. A brief summary of the various sections of the ordinance are set forth in Exhibit A to our original opinion. As our February 26, 1992 opinion indicates, it is our legal opinion that the ordinance, taken as a whole, is constitutionally valid in the present state of the law, both statutory and pursuant Honorable Mayor and City Council Members June 22, 1992 Page 3 to the court decisions to date. [See, Buckley v. Valeo, 424 U.S. 1; Austin v. Michigan Chamber of Commerce (1990) 110 S. Ct. 1391; Harwin v. Goleta Water District, 91 Daily Journal D.A.R. 16146 (December 30, 1991).] V. ORDINANCE ADOPTION ALTERNATIVES. 1. Council Adopted Ordinance. The Council can adopt the ordinance itself, without submitting it to an election. If Council adopted, it could be amended in the future by Council action. An ordinance in this form is attached as Option A (Attachment 1). 2. Voter Adopted Ordinance. The Council can submit a proposed ordinance to the voters, which, if approved by a majority of those who vote, becomes law and can only be amended by a subsequent ballot measure submitted to the voters and approved by a majority of those voting (Option B, Attachment 2). 3. Voter Adopted Ordinance, with Provision for Council Amendment. The Council can submit a proposed ordinance to the voters in the same form as Option B (Attachment 2 ) , except also containing a provision that the Council could amend the ordinance in the future if that appeared necessary or desirable. An ordinance in this form is attached as Option C (Attachment 3). Mr. Maughan has been quite insistent that the ordinance should be adopted by the voters, apparently because he fears this Council or a future Council might repeal the ordinance. However, any future ordinance to amend the campaign contribution ordinance (like other Council ordinances) would be subject to referendum. If ten percent of the registered voters sign a petition, the ordinance is suspended and put to an election for the voters to decide whether to allow it to become law. Changes in the State laws, future court decisions or simply experience with this campaign contribution ordinance may in the future indicate that amendments to it are necessary or desirable. VI. RECOMMENDATION: Council discretion: A. Council adopted ordinance: Adopt campaign contribution ordinance in the form of Option A (Attachment 1) ; Honorable Mayor and City Council Members June 22, 1992 Page 4 B. Voter adopted ordinance: Determine to submit campaign contribution ordinance to the voters in the form of Option B (Attachment 2) and direct staff to prepare resolution and take the other steps to proceed to an election; C. Voter adopted ordinance with provision for Council amendment: Determine to submit campaign contribution ordinance to the voters in the form of Option C (Attachment 3) and direct staff to prepare resolution and take other steps to proceed to an election; or D. Take no action. JAMAS G. U KE, City Attorney J GR: jab: R 12: 062292(IC-195. jab) Enclosures cc: William Huston • OPTION A (Attachment 1) DRAFT ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, ESTABLISHING LIMITA- TIONS ON CAMPAIGN CONTRIBUTIONS IN TUSTIN MUNICIPAL ELECTIONS. The City Council of the City of Tustin hereby ordains as follows: SECTION 1. ESTABLISHMENT OF LIMITATIONS ON CAMPAIGN CONTRIBUTIONS. Part 3 entitled "Limitations on Campaign Contributions" is hereby added to Chapter 2 of Article 1, "Administration," to read as follows: "Part 3. Limitations on Campaign Contributions. 1230 Findings and Purpose. The City Council hereby finds and declares the following policy statements: (a) Monetary contributions to political campaigns are a legitimate form of participation in the American political process, but the financial strength of more affluent individuals or organizations should not permit them to exercise a disproportionate or controlling influence on the election of candidates. (b) The increasing costs of political campaigns could motivate candidates to seek campaign funding from contributors with financial interests in matters involving the City. This could lead to the public perception of decisions being improperly influenced by monetary contributions and this perception would undermine the credibility and integrity of the governmental process. (c) It is desirable: (i) To ensure that individuals and interest groups in our society have a fair and equal opportunity to participate in the elective and governmental process; (ii) To limit the potential influence of larger contributors with specific financial stakes in matters Option A JGR:jab:R4:061692(A180A.jab) (Attachment 1) Option A (Attachment 1) Ordinance No. Page 2 involving the City, in order to counter the possible perception of potential conflicts of interest; (iii) To encourage limitation of overall expenditures in campaigns, thereby reducing the pressure on candidates to raise larger amounts, beyond the amounts necessary to communicate reasonably with voters; (iv) To eliminate off-year fund raising; (v) To achieve greater equality of fund raising and more equal competition for elective office; (vi) To allow candidates and officeholders to spend less time on fund raising and thereby leave greater time for matters of importance to their constituents; (vii) To improve the disclosure of contribution sources in reasonable and effective ways; and (viii) To increase public trust in governmental and electoral institutions. 1231 Definitions. (a) Interpretation of This Ordinance. Unless the term is specifically defined in this Ordinance or the contrary is stated or clearly appears from the context, the definitions set forth in Government Code Sections 82000 et seq. shall govern the interpretation of this Ordinance. (b) Candidate. "Candidate" means any person running for any elective office in Tustin. (c) Qualified Campaign Expenditure. (1) "Qualified campaign expenditure" for candidates includes all of the following: (i) Any expenditure made by a candidate for city office, or by a committee controlled by such a candidate, for the purpose of influencing or attempting to influence the actions of the voters for or against the election of any city candidate. (ii) A non -monetary contribution provided at the request of or with the approval of the candidate, officeholder or committee controlled by the candidate or officeholder. Option A (Attachment 1) Ordinance No. Page 3 (iii) That portion of the total cost of a slate mailing or mailing of other campaign literature produced or authorized by more than one candidate which is the greater of the cost actually paid or incurred by the committee or controlled committee of the candidate or the proportionate share of the total cost attributable to each such candidate. The number of candidates sharing costs and the emphasis on or space devoted to each such candidate shall be considered in determining the cost attributable to each such candidate. (2) "Qualified campaign expenditure" does not include any payment if it is clear from the surrounding circumstances that it was not made in any part for political purposes. 1232 Contribution Limitations. (a) Limitations on Contributions From Persons. (1) Except as provided in Section 12 3 3 (c) , no person shall make to any candidate for office and the controlled committee of such a candidate and no such candidate and the candidate's controlled committee shall accept from any such person a contribution or contributions totaling more than $100.00 for each election in which the candidate is on the ballot or is a write-in candidate. (2) No person shall make to any committee which supports or opposes any candidate and no such committee shall accept from each such person a contribution or contributions totaling more than $100.00 per election. (b) Limitations on Contributions from Non - Individuals. No candidate and the controlled committee of such a candidate shall accept a total of more than $10,000 in contributions from non -individuals in any election. (c) Prohibition on Non -Election Year Contributions. No candidate or officeholder or the controlled committee of such a person shall accept any contribution more than six months before the date on which the candidate or officeholder is listed on the ballot or is a write-in candidate. (d) Transfers. No candidate and no committee controlled by a candidate or officeholder shall make any contribution to any other candidate running for office or to any committee supporting or opposing a candidate for office. This section shall not prohibit a city candidate 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 city elective office. Option A (Attachment 1) Ordinance No. Page 4 (e) Limitations +on Payments of Gifts and Honoraria. No officeholder or candidate and any fund controlled by such a person shall receive more than $500.00 in honoraria and gifts in a two-year period from any person other than a member of the candidate's family as specified in Government Code Section 82030(b)(9). (f) Return of Contributions. A contribution shall not be considered to be received if it is not negotiated, deposited, or utilized, and in addition it is returned to the donor within fourteen (14) days of receipt. (g) Aggregation of Payments. For purposes of the contribution limitations in Sections 1232(a), (b) and (e), the following shall apply: (1) All payments made by a person or organization whose contributions or expenditure activity is financed, maintained or controlled by any corporation, labor organization, association, political party or any other person or committee, including any parent, subsidiary, branch, division, department or local unit of the corporation, labor organization, association, political party or any other person, or by any group of such persons shall be considered to be made by a single person or committee. (2) Two or more entities shall be treated as one person when any of the following circumstances apply: (i) The entities share the majority of members of their boards of directors. (ii) The entities share two or more officers. (iii) The entities are owned or controlled by the same majority shareholder or shareholders. (iv) The entities are in a parent - subsidiary relationship. (3) An individual and any general partnership in which the individual is a partner, or an individual -and any corporation in which the individual owns a controlling interest, shall be treated as one person. (4 ) No committee which supports or opposes a candidate for office shall have as officers individuals who serve as officers on any other committee which supports or opposes the same candidate. No such committee shall act in concert with, or solicit or make contributions on behalf of, any other committee. Option A (Attachment 1) Ordinance No. Page 5 This subdivision shall not apply to treasurers of committees if these treasurers do not participate in or control in any way a decision on whether the candidate or candidates receive contributions. (h) Loans. (1) A loan shall be considered a contribution from the maker and the guarantor of the loan and shall be subject to the contribution limitations of this Ordinance. (2) Every loan to a candidate or the candidate's controlled committee shall be by a written agreement and shall be filed with the candidate's or committee's campaign statement on which the loan is first reported. (3) The proceeds of a loan made to a candidate by a commercial lending institution in the regular course of business on the same terms available to members of the public and which is secured or guaranteed shall not be subject to the contribution limitations of this Ordinance. (4) Extensions of credit [other than loans pursuant to subdivision (3)] for a period of more than thirty (30) days are subject to the contribution limitations of this Ordinance. (5) No candidate who has made a loan to the candidate's committee shall be repaid more than $10,000 on the aggregate for such loans. (i) Family Contributions. (1) Contributions by a husband and wife shall be treated as separate contributions and shall not be aggregated. (2) Contributions by children under eighteen years of age shall be treated as contributions by their parents and attributed proportionately to each parent (one-half to each parent or the total amount to a single custodial parent). (j) Money Received by Officials Treated as Contributions, Income or Gifts. Any Funds (other than government funds received by an elected city official which, is used for expenses, including legal expenses, related to holding public office) received by any elected official or candidate running in the jurisdiction or any committee controlled by such an official or candidate shall be considered either a campaign contribution, income or a gift. All campaign contributions received by such persons shall be subject to the provisions of this Ordinance unless such campaign contributions are used exclusively for elections held outside the jurisdiction. All income and gifts shall be subject to Option A (Attachment 1) Ordinance No. Page 6 the disqualification provisions of the Political Reform Act, Government Code Sections 87100 et seq. (k) One Campaign Committee and One Checking Account Per Candidate. A candidate shall have no more than one campaign committee and one account out of which all expenditures shall be made. This Section shall not prohibit the establishment of savings accounts, but no qualified campaign expenditures shall be made out of these accounts. (1) Prohibition on Contributions From Contractors Doing Business With the Jurisdiction. No person who contracts with the jurisdiction, for the rendition of personal services, for the furnishing of any material, supplies or equipment to the jurisdiction, or for selling or leasing any land or building to the jurisdiction, whenever the value of such transaction exceeds $1,000, shall make any contribution to an elected official, candidate, or committee controlled by such official or candidate at any time between the commencement of negotiations and either the completion of .the performance under, or the termination of negotiations for, such contract, whichever occurs later. (m) Solicitation of Contributions from Persons Who Have City Business Dealings. No non -elected public official shall solicit, direct or receive a contribution from any person, or his or her agent, who has a proceeding involving legislative or administrative action pending before the public official or has had such a matter pending during the preceding 12 months and for 3 months following the date a final decision is rendered by the agency of the official. (n) Contributions From the Candidate and the Candidate's Spouse. The provisions of this Ordinance, other than Section 1232(h)(5), shall not apply to a candidate's contribution of his or her personal funds to his or her own campaign committee, but shall apply to contributions from a spouse. .(o) Cut-off Date for Receipt of Campaign Contributions. A candidate or controlled committee shall not accept any campaign contribution for that election after sixty (60) days from the date of the election. 1233 Expenditure Ceilings. (a) Expenditure Ceilings. No candidate for office who accepts expenditure ceilings and any controlled committee for such a candidate shall make qualified campaign expenditures above the following amount: $30,000 per election. (b) Time Period for Expenditures. For purposes of the expenditure ceilings, qualified campaign expenditures made at Option A (Attachment 1) Ordinance No. Page 7 any time up to the date of the election and 60 days thereafter shall be considered expenditures for that election. (c) Candidate Acceptance or Resection of Expenditure Ceilings. (1) Each candidate for office, at the time of filing his or her nomination papers, shall file a statement of acceptance or rejection of the expenditure ceilings in accordance with Section 1233(a). (2) If a candidate declines to accept the expenditure ceilings in Section 1233(a), the candidate shall be subject to the contribution limitations in Section 1232. (3) A candidate who agrees to accept the expenditure ceilings in Section 1233(a) may not change that decision, except that if an opposing candidate files a statement of rejection, then the candidate may rescind his or her acceptance within ten (10) calendar days of the last date for filing nomination papers provided that the candidate has not accepted any contributions in amounts greater than the limitations set forth in Section 1232. (d) Contribution Limitations for Candidates Accepting Expenditure Ceilings. A candidate who accepts the expenditure ceilings in Section 1233(a) shall be subject to the limitations set forth in Sections 1232(b) -(o). In addition, no person shall make to any candidate for office and the candidates controlled committee and no such candidate and the candidate's controlled committee shall accept from any person a contribution or contributions totaling more than $500 for each election in which the candidate is on the ballot or is a write-in candidate if such a candidate has accepted the expenditure ceilings. 1244 Independent Expenditures. (a) Contribution Limitations. Any person who makes independent expenditures supporting or opposing a candidate shall not accept any contribution in excess of the amounts set forth in Section 1232. (b) Reproduction of Materials. Any person who reproduces, broadcasts or distributes any material which is drafted, printed, prepared or previously broadcast by a candidate or a committee controlled by such a candidate shall report such an expenditure as a non -monetary contribution to such candidate or committee. (c) Notice of Independent Expenditures. Any person who makes independent expenditures of more than $250 in Option A (Attachment 1) Ordinance No. Page 8 support of or in opposition to any candidate shall notify the local filing officer and all candidates running for the same seat by telegram each time the threshold is met. 1245 Additional Disclosure Requirements. (a) Disclosure Thresholds. In addition to the disclosure requirements of the Political Reform Act, commencing with Government Code Section 81000, candidates, their controlled committees and other committees primarily formed to support or oppose candidates in Tustin, shall disclose all contributions cumulating $50 or more, by providing the amount of the contribution as well as the name, address, occupation and employer of each such contributor; and shall disclose all expenditures of $50 or more, by providing the amount of the expenditure as well as the name and address of the vendor and a description of the consideration for the payment. (b) Additional Pre -Election Campaign Statement. In addition to the campaign statements required to be filed pursuant to the Political Reform Act, commencing with Government Code Section 81000, candidates, their controlled committees and committees primarily formed to support or oppose candidates in Tustin shall file a pre-election statement on the Friday before the election. This statement shall have a closing date of the Wednesday before the election. (c) Disclosure of Occupation and Employer. No contribution of $25.00 or more shall be deposited into a campaign checking account unless the name, address, occupation and employer of the contributor is on file in the records of the recipient of the contribution. 1246 Enforcement. (a) Criminal Misdemeanor Actions. Any person who violates any provision of this Ordinance is guilty of a misdemeanor. Any person who causes any other person to violate any provision of this Ordinance, or who aids and abets any other person in the violation of any provision of this Ordinance is guilty of a misdemeanor. (b) Civil Actions. (1) Any person who intentionally or negligently violates any provision of this Ordinance shall be liable in a civil action brought by the city attorney for an amount of up to not more than three times the amount of the unlawful contribution or expenditure, or $1,000 per violation whichever is greater. Option A (Attachment 1) Ordinance No. Page 9 (2) If two or more persons are responsible for any violation, they shall be jointly and severally liable." (3) Any person residing within the City may also bring a civil enforcement action under this Ordinance (including injunctive relief), subject to the fine amounts listed in subsections 1246 (b) (1) . (i) Any person, before filing a civil action shall first file with the city attorney a written request for the city attorney to commence the action. The request shall contain a statement of the grounds for believing a cause of action exists. The city attorney shall respond within forty (40) days after a receipt of the request indicating whether he or she intends to file a civil action. If the city attorney indicates in the affirmative and files a suit within forty (40) days thereafter, no other action may be brought unless the action brought by the city attorney is dismissed without prejudice. (ii) No civil action alleging a violation of any provision of this Ordinance shall be filed more than four (4) years after the date the violation occurred. (c) Litigation Costs. The court, at its discretion, may award to a citizen plaintiff or defendant who prevails in the civil action authorized by this Ordinance, his or her costs of litigation including reasonable attorneys' fees. SECTION 2. SEVERABILITY. If any provision of this Ordinance, or the application of any such provision to any person or circumstances, shall be held invalid, the remainder of this Ordinance to the extent it can be given effect, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby, and to this extent the provisions of this Ordinance are severable. PASSED AND ADOPTED, at a regular meeting of the City Council for the City of Tustin on this day of , 1992. DRAFT LESLIE ANNE PONTIOUS, Mayor MARY E. WYNN, City Clerk OPTION B (Attachment 2) DRAFT ORDINANCE NO. AN ORDINANCE OF THE PEOPLE OF THE CITY OF TUSTIN AMENDING THE TUSTIN MUNICIPAL CODE ESTABLISHING LIMITATIONS ON CAMPAIGN CONTRIBUTIONS IN TUSTIN MUNICIPAL ELECTIONS. Pursuant to California Elections Code 4017, the people of the City of Tustin hereby ordain as follows: SECTION 1. ESTABLISHMENT OF LIMITATIONS ON CAMPAIGN CONTRIBUTIONS. Part 3 entitled "Limitations on Campaign Contributions" is hereby added to Chapter 2 of Article 1, "Administration," to read as follows: "Part 3. Limitations on Campaign Contributions. 1230 Findings and Purpose. The People hereby find and declare: (a) Monetary contributions to political campaigns are a legitimate form of participation in the American political process, but the financial strength of more affluent individuals or organizations should not permit them to exercise a disproportionate or controlling influence on the election of candidates. (b) The increasing costs of political campaigns could motivate candidates to seek campaign funding from contributors with financial interests in matters involving the City. This could lead to the public perception of decisions being improperly influenced by monetary contributions and this perception would undermine the credibility and integrity of the governmental process. (c) It is desirable: (i) To ensure that individuals and interest groups in our society have a fair and equal opportunity to participate in the elective and governmental process; (ii) To limit the potential influence of larger contributors with specific financial stakes in matters involving the City, in order to counter the possible perception of potential conflicts of interest; Option B JGR:jab: R4:061692(A I SOB jab) (Attachment 2 ) Option B (Attachment 2) Ordinance No. Page 2 (iii) To encourage limitation of overall expenditures in campaigns, thereby reducing the pressure on candidates to raise larger amounts, beyond the amounts necessary to communicate reasonably with voters; (iv) To eliminate off-year fund raising; (v) To achieve greater equality of fund raising and more equal competition for elective office; (vi) To allow candidates and officeholders to spend less time on fund raising and thereby leave greater time for matters of importance to their constituents; (vii) To improve the disclosure of contribution sources in reasonable and effective ways; and (viii) To increase public trust in governmental and electoral institutions. 1231 Definitions. (a) Interpretation of This Ordinance. Unless the term is specifically defined in this Ordinance or the contrary is stated or clearly appears from the context, the definitions set forth in Government Code Sections 82000 et seq. shall govern the interpretation of this Ordinance. (b) Candidate. "Candidate" means any person running for any elective office in Tustin. (c) Qualified Campaign Expenditure. (1) "Qualified campaign expenditure" for candidates includes all of the following: (i) Any expenditure made by a candidate for city office, or by a committee controlled by such a candidate, for the purpose of influencing or attempting to influence the actions of the voters for or against the election of any city candidate. (ii) A non -monetary contribution provided at the request of or with the approval of the candidate, officeholder or committee controlled by the candidate or officeholder. (iii) That portion of the total cost of a slate mailing or mailing of other campaign literature produced or authorized by more than one candidate which is the greater of the cost actually paid or incurred by the committee or controlled Option B (Attachment 2) Ordinance No. Page 3 committee of the candidate or the proportionate share of the total cost attributable to each such candidate. The number of candidates sharing costs and the emphasis on or space devoted to each such candidate shall be considered in determining the cost attributable to each such candidate. (2) "Qualified campaign expenditure" does not include any payment if it is clear from the surrounding circumstances that it was not made in any part for political purposes. 1232 Contribution Limitations. (a) Limitations on Contributions From Persons. (1) Except as provided in Section 12 3.3 (c) , no person shall make to any candidate for office and the controlled committee of such a candidate and no such candidate and the candidate's controlled committee shall accept from any such person a contribution or contributions totaling more than $100.00 for each election in which the candidate is on the ballot or is a write-in candidate. (2) No person shall make to any committee which supports or opposes any candidate and no such committee shall accept from each such person a contribution or contributions totaling more than $100.00 per election. (b) Limitations "on Contributions from Non - Individuals. No candidate and the controlled committee of such a candidate shall accept more than $10,000 in contributions from non - individuals in any election. (c) Prohibition on Non -Election Year Contributions. No candidate or officeholder or the controlled committee of such a person shall accept any contribution more than six months before the date on which the candidate or officeholder is listed on the ballot or is a write-in candidate. (d) Transfers. No candidate and no committee controlled by a candidate or officeholder shall make any contribution to any other candidate running for office or to any committee supporting or opposing a candidate for office. This section shall not prohibit a city candidate 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 city elective office. (e) Limitations on Payments of Gifts and Honoraria. No officeholder or candidate and any fund controlled by such a person shall receive more than $500.00 in honoraria and Option B (Attachment 2) Ordinance No. Page 4 gifts in a two-year period from any person other than a member of the candidate's family as specified in Government Code Section 82030(b)(9). (f) Return of Contributions. A contribution shall not be considered to be received if it is not negotiated, deposited, or utilized, and in addition it is returned to the donor within fourteen (14) days of receipt. (g) Aggregation of Payments. For purposes of the contribution limitations in Sections 1232(a), (b) and (e), the following shall apply: (1) All payments made by a person or organization whose contributions or expenditure activity is financed, maintained or controlled by any corporation, labor organization, association, political party or any other person or committee, including any parent, subsidiary, branch, division, department or local unit of the corporation, labor organization, association, political party or any other person, or by any group of such persons shall be considered to be made by a single person or committee. (2) Two or more entities shall be treated as one person when any of the following circumstances apply: (i) The entities share the majority of members of their boards of directors. The entities share two or more officers. (iii) The entities are owned or controlled by the same majority shareholder or shareholders. (iv) The entities are in a parent - subsidiary relationship. (3) An individual and any general partnership in which the individual is a partner, or an individual and any corporation in which the individual owns a controlling interest, shall be treated as one person. (4) No committee which supports or opposes a candidate for office shall have as officers individuals who serve as officers on any other committee which supports or opposes the same candidate. No such committee shall act in concert with, or solicit or make contributions on behalf of, any other committee. This subdivision shall not apply to treasurers of committees if these treasurers do not participate in or control in any way a Option B (Attachment 2) Ordinance No. Page 5 decision on whether the candidate or candidates receive contributions. (h) Loans. (1) A loan shall be considered a contribution from the maker and the guarantor of the loan and shall be subject to the contribution limitations of this Ordinance. (2) Every loan to a candidate or the candidate's controlled committee shall be by a written agreement and shall be filed with the candidate's or committee's campaign statement on which the loan is first reported. (3) The proceeds of a loan made to a candidate by a commercial lending institution in the regular course of business on the same terms available to members of the public and which is secured or guaranteed shall not be subject to the contribution limitations of this Ordinance. (4) Extensions of credit [other than loans pursuant to subdivision (3)] for a period of more than thirty (30) days are subject to the contribution limitations of this Ordinance. (5) No candidate who has made a loan to the candidate's committee shall be repaid more than $10,000 on the aggregate for such loans. (i) Family Contributions. (1) Contributions by a husband and wife shall be treated as separate contributions and shall not be aggregated. (2) Contributions by children under eighteen years of age shall be treated as contributions by their parents and attributed proportionately to each parent (one-half to each parent or the total amount to a single custodial parent). (j) Money Received by Officials Treated as Contributions. Income or Gifts. Any Funds (other than government funds received by an elected city official which is used for expenses, including legal expenses, related 'to holding public office) received by any elected official or candidate running in the jurisdiction or any committee controlled by such an official or candidate shall be considered either a campaign contribution, income or a gift. All campaign contributions received by such persons shall be subject to the provisions of this Ordinance unless such campaign contributions are used exclusively for elections held outside the jurisdiction. All income and gifts shall be subject to the disqualification provisions of the Political Reform Act, Government Code Sections 87100 et seq. Option B (Attachment 2) Ordinance No. Page 6 (k) One Campaign Committee and One Checking Account Per Candidate. A candidate shall have no more than one campaign committee and one account out of which all expenditures shall be made. This Section shall not prohibit the establishment of savings accounts, but no qualified campaign expenditures shall be made out of these accounts. (1) Prohibition on Contributions From Contractors Doing Business With the Jurisdiction. No person who contracts with the jurisdiction, for the rendition of personal services, for the furnishing of any material, supplies or equipment to the jurisdiction, or for selling or leasing any land or building to the jurisdiction, whenever the value of such transaction exceeds $1,000, shall make any contribution to an elected official, candidate, or committee controlled by such official or candidate at any time between the commencement of negotiations and either the completion of the performance under, or the termination of negotiations for, such contract, whichever occurs later. (m) Solicitation of Contributions from Persons Who Have City Business Dealings. No non -elected public official shall solicit, direct or receive a contribution from any person, or his or her agent, who has a proceeding involving legislative or administrative action pending before the public official or has had such a matter pending during the preceding 12 months and for 3 months following the date a final decision is rendered by the agency of the official. (n) Contributions From the Candidate and the Candidate's Spouse. The provisions of this Ordinance, other than Section 1232(h)(5), shall not apply to a candidate's contribution of his or her personal funds to his or her own campaign committee, but shall apply to contributions from a spouse. (o) Cut-off Date for Receipt of Campaign Contributions. A candidate or controlled committee shall not accept any campaign contribution for that election after sixty (60) days from the date of the election. 1233 Expenditure Ceilings. (a) Expenditure Ceilings. No candidate for office who accepts expenditure ceilings and any controlled committee for such a candidate shall make qualified campaign expenditures above the following amount: $30,000 per election. (b) Time Period for Expenditures. For purposes of the expenditure ceilings, qualified campaign expenditures made at any time up to the date of the election and 60 days thereafter shall be considered expenditures for that election. Option B (Attachment 2) Ordinance No. Page 7 (c) Candida,e Acceptance or Resection of Expenditure Ceilings. (1) Each candidate for office, at the time of filing his or her nomination papers, shall file a statement of acceptance or rejection of the expenditure ceilings in accordance with Section 1233(a). (2) If a candidate declines to accept the expenditure ceilings in Sec:ion 1233(a), the candidate shall be subject to the contribution limitations in Section 1232. (3) A candidate who agrees to accept the expenditure ceilings in Section 1233(a) may not change that decision, except that if an opposing candidate files a statement of rejection, then the candidate may rescind his or her acceptance within ten (10) calendar days of the last date .for filing nomination papers provided that the candidate has not accepted any contributions in amounts greater than the limitations set forth in Section 1232. (d) Contribution Limitations for Candidates Accepting Expenditure Ceilings. A candidate who accepts the expenditure ceilings in Section 1233(a) shall be subject to the limitations set forth in Sections 1232(b) -(o). In addition, no person shall make to any candidate for office and the candidate's controlled committee and no such candidate and the candidate's controlled committee shall accept from any person a contribution or contributions totaling more than $500 for each election in which the candidate is on the ballot or is a write-in candidate if such a candidate has accepted the expenditure ceilings. 1244 Independent Expenditures. (a) Contribution Limitations. Any person who makes independent expenditures supporting or opposing a candidate shall not accept any contribution in excess of the amounts set forth in Section 1232. (b) Reproduction of Materials. Any person who reproduces, broadcasts or distributes any material which is drafted, printed, prepared or previously broadcast by a candidate or a committee controlled by such a candidate shall report such an expenditure as a non -monetary contribution to such candidate or committee. (c) Notice of Independent Expenditures. Any person who makes independen_ expenditures of more than $250 in support of or in opposition to any candidate shall notify the local filing officer and all candidates running for the same seat by telegram each time the threshold is met. Option B (Attachment 2) Ordinance No. Page8 1245 Additional Disclosure Requirements. (a) Disclosure Thresholds. In addition to the disclosure requirements of the Political Reform Act, commencing with Government Code Section 81000, candidates, their controlled committees and other committees primarily formed to support or oppose candidates in Tustin, shall disclose all contributions cumulating $50 or more, by providing the amount of the contribution as well as the name, address, occupation and employer of each such contributor; and shall disclose all expenditures of $50 or more, by providing the amount of the expenditure as well as the name and address of the vendor and a description of the consideration for the payment. (b) Additional Pre -Election Campaign Statement. In addition to the campaign statements required to be filed pursuant to the Political Reform Act, commencing with Government Code Section 81000, candidates, their controlled committees and committees primarily formed to support or oppose candidates in Tustin shall file a pre-election statement on the Friday before the election. This statement shall have a closing date of the Wednesday before the election. (c) Disclosure of Occupation and Employer. No contribution of $25.00 or more shall be deposited into a campaign checking account unless the name, address, occupation and employer of the contributor is on file in the records of the recipient of the contribution. 1246 Enforcement. (a) Criminal Misdemeanor Actions. Any person who violates any provision of this Ordinance is guilty of a misdemeanor. Any person who causes any other person to violate any provision of this Ordinance, or who aids and abets any other person in the violation of any provision of this Ordinance is guilty of a misdemeanor. (b) Civil Actions. (1) Any person who intentionally or negligently violates any provision of this Ordinance shall be liable in a civil action brought by the city attorney for an amount of up to not more than three times the amount of the unlawful contribution or expenditure, or $1,000 per violation whichever is greater. (2) If two or more persons are responsible for any violation, they shall be jointly and severally liable." Option B (Attachment 2) Ordinance No. Page 9 (3) Any person residing within the City may also bring a civil enforcement action under this Ordinance (including injunctive relief), subject to the fine amounts listed in subsection 1246(b)(1). (i) Any person, before filing a civil action shall first file with the city attorney a written request for the city attorney to commence the action. The request shall contain a statement of the grounds for believing a cause of action exists. The city attorney shall respond within forty (40) days after a receipt of the request indicating whether he or she intends to file a civil action. If the city attorney indicates in the affirmative and files a suit within forty (40) days thereafter, no other action may be brought unless the action brought by the city attorney is dismissed without prejudice. (ii) No civil action alleging a violation of any provision of this Ordinance shall be filed more than four (4) years after the date the violation occurred. (c) Litigation Costs. The court, at its discretion, may award to a citizen plaintiff or defendant who prevails in the civil action authorized by this Ordinance, his or her costs of litigation including reasonable attorneys' fees. SECTION 2. SEVERABILITY. If any provision of this Ordinance, or the application of any such provision to any person or circumstances, shall be held invalid, the remainder of this Ordinance to the extent it can be given effect, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby, and to this extent the provisions of this Ordinance are severable. SECTION 3. EFFECTIVE DATE. Pursuant to Elections Code 4017, the Ordinance shall become effective upon the City Council's and City Clerk's certification that this measure has passed by a majority vote of the people. PASSED AND ADOPTED, at a regular meeting of the City Council for the City of Tustin on this day of , 1992• DRAFT LESLIE ANNE PONTIOUS, Mayor MARY E. WYNN, City Clerk OPTION C (Attachment 3) DRAFT ORDINANCE NO. AN ORDINANCE OF THE PEOPLE OF THE CITY OF TUSTIN AMENDING THE TUSTIN MUNICIPAL CODE ESTABLISHING LIMITATIONS ON CAMPAIGN CONTRIBUTIONS IN TUSTIN MUNICIPAL ELECTIONS. Pursuant to California Elections Code 4017, the people of the City of Tustin hereby ordain as follows: SECTION 1. ESTABLISHMENT OF LIMITATIONS ON CAMPAIGN CONTRIBUTIONS. Part 3 entitled "Limitations on Campaign Contributions" is hereby added to Chapter 2 of Article 1, "Administration," to read as follows: "Part 3. Limitations on Campaign Contributions. 1230 Findings and Purpose. The People hereby find and declare: (a) Monetary contributions to political campaigns are a legitimate form of participation in the American political process, but the financial strength of more affluent individuals or organizations should not permit them to exercise a disproportionate or controlling influence on the election of candidates. (b) The increasing costs of political campaigns could motivate candidates to seek campaign funding from contributors with financial interests in matters involving the City. This could lead to the public perception of decisions being improperly influenced by monetary contributions and this perception would undermine the credibility and integrity of the governmental process. (c) It is desirable: (i) To ensure that individuals and interest groups in our society have a fair and equal opportunity to participate in the elective and governmental process; (ii) To limit the potential influence of larger contributors with specific financial stakes in matters involving the City, in order to counter the possible perception of potential conflicts of interest; (iii) To encourage limitation of overall expenditures in campaigns, thereby reducing the pressure on Option C JGR:jab: D: 062292(A I 80C.jab) (Attachment 3 ) Option C (Attachment 3) Ordinance No. Page 2 candidates to raise larger amounts, beyond the amounts necessary to communicate reasonably with voters; (iv) To eliminate off-year fund raising; (v) To achieve greater equality of fund raising and more equal competition for elective office; (vi) To allow candidates and officeholders to spend less time on fund raising and thereby leave greater time for matters of importance to their constituents; (vii) To improve the disclosure of contribution sources in reasonable and effective ways; and (viii) To increase public trust in governmental and electoral institutions. 1231 Definitions. (a) Interpretation of This Ordinance. Unless the term is specifically defined in this Ordinance or the contrary is stated or clearly appears from the context, the definitions set forth in Government Code Sections 82000 et seq. shall govern the interpretation of this Ordinance. (b) Candidate. "Candidate" means any person running for any elective office in Tustin. (c) Qualified Campaign Expenditure. (1) "Qualified campaign expenditure" for candidates includes all of the following: (i) Any expenditure made by a candidate for city office, or by a committee controlled by such a candidate, for the purpose of influencing or attempting to influence the actions of the voters for or against the election of any city candidate. A non -monetary contribution provided at the request of or with the approval of the candidate, officeholder or committee controlled by the candidate or officeholder. ( iii) That portion of the total cost of a slate mailing or mailing of other campaign literature produced or authorized by more than one candidate which is the greater of the cost actually paid or incurred by the committee or controlled committee of the candidate or the proportionate share of the total cost attributable to each such candidate. The number of candidates Option C (Attachment 3) Ordinance No. _ Page 3 sharing costs and the emphasis on or space devoted to each such attributable candidate shall be considered in determining the cost to each such candidate. (2) "Qualified campaign expenditure" does not include any payment if it is clear from the surrounding circumstances that it was not made in any part for political purposes. 1232 Contribution Limitations. (a) Limitations on Contributions From Persons. (1) Except as provided in Section 12 3 3 (c) , no person shall make to any candidate for office andheontroand lied committee of such a candidate and no such candidate the candidate's controlled committee shall accept than $100.00 forfrom any such erson ach a contribution or contributions totaling m election in which the candidate is on the ballot or is a write-in candidate. (2) No person shall make toany mittee shall which supports or opposes any candidate and no such committee accept from each such person a contribution or contributions totaling more than $100.00 per election. (b) Limitations on Contributions from Non - Individuals. No candidate and the controlled committee of such a candidate shall accept more than $10,000 in contributions from non - individuals in any election. (c) Prohibition ° n Nn ri theon. Year controlled Contributions. No candidate or officeholder o committee of such a person shall accept any contribution te o tr but officeholder ore than six months before the date on which the candid is listed on the ballot or is a write-in candidate. (d) Transfers. No candidate and shall makeantee y controlled by a candidate or officeholder contribution to any other candidate running for office or to any committee supporting or opposing a candidate for office. his section shall not prohibit a city candidate nal funds tofrom Ohis or hergown contribution from his or her own per candidacy or to the candidacy of any other candidate for city elective office. ( e) Limitations on Payments of Giftled by andHonoraria. No officeholder or candidate and 000 any fund control honoraria and such a person shall receive more than $ gifts in a two-year period from any person other than a member of Option C (Attachment 3) Ordinance No. Page 4 the candidate's family as specified in Government Code Section 82030(b)(9). (f) Return of Contributions. A contribution shall not be considered to be received if it is not negotiated, deposited, or utilized, and in addition it is returned to the donor within fourteen (14) days of receipt. (g) Aggregation of Payments. For purposes of the contribution limitations in Sections 1232(a), (b) and (e), the following shall apply: (1) All payments made by a person or organization whose contributions or expenditure activity is financed,- maintained or controlled by any corporation, labor organization, association, political party or any other person or committee, including any parent, subsidiary, branch, division, department or local unit of the corporation, labor organization, association, political party or any other person, or by any group of such persons shall be considered to be made by a single person or committee. (2) Two or more entities shall be treated as one person when any of the following circumstances apply: (i) The entities share the majority of members of their boards of directors. The entities share two or more officers. (iii) The entities are owned or controlled by the same majority shareholder or shareholders. (iv) The entities are in a parent - subsidiary relationship. 1(3) An individual and any general partnership in which the individual is a partner, or an individual and any corporation in which the individual owns a controlling interest, shall be treated as one person. (4 ) No committee which supports or opposes a candidate for office shall have as officers individuals who serve as officers on any other committee which supports or opposes the same candidate. No such committee shall act in concert with, or solicit or make contributions on behalf of, any other committee. This subdivision shall not apply to treasurers of committees if these treasurers do not participate in or control in any way a decision on whether the candidate or candidates receive contributions. Option C (Attachment 3) Ordinance No. Page 5 (h) Loans. (1) A loan shall be considered a contribution from the maker and the guarantor of the loan and shall be subject to the contribution limitations of this Ordinance. (2) Every loan to a candidate or the candidate's controlled committee shall be by a written agreement and shall be filed with the candidate's or committee's campaign statement on which the loan is first reported. (3) The proceeds of a loan made to a candidate by a commercial lending institution in the regular course of business on the same terms available to members of the public and which is secured or guaranteed shall not be subject to the contribution limitations of this Ordinance. (4) Extensions of credit [other than loans pursuant to subdivision (3)] for a period of more than thirty (30) days are subject to the contribution limitations of this Ordinance. (5) No candidate who has made a loan to the candidate's committee shall be repaid more than $10,000 on the aggregate for such loans. (i) Family Contributions. (1) Contributions by a husband and wife shall be treated as separate contributions and shall not be aggregated. (2) Contributions by children under eighteen years of age shall be treated as contributions by their parents and attributed proportionately to each parent (one-half to each parent or the total amount to a single custodial parent). (j) Money Received by Officials Treated as Contributions, Income or Gifts. Any Funds (other than government funds received by an elected city official which is used for expenses, including legal expenses, related to holding public office) received by any elected official or candidate running in the jurisdiction or any committee controlled by such an official or candidate shall be considered either a campaign contribution, income or a gift. All campaign contributions received by such persons shall be subject to the provisions of this Ordinance unless such campaign contributions are used exclusively for elections held outside the jurisdiction. All income and gifts shall be subject to the disqualification provisions of the Political Reform Act, Government Code Sections 87100 et seq. (k) One Campaign Committee and One Checking Account Per Candidate. A candidate shall have no more than one Option C (Attachment 3) Ordinance No. Page 6 campaign committee and one account out of which all expenditures shall be made. This Section shall not prohibit the establishment of savings accounts, but no qualified campaign expenditures shall be made out of these accounts. (1) Prohibition on Contributions From Contractors Doing Business With the Jurisdiction. No person who contracts with the jurisdiction, for the rendition of personal services, for the furnishing of any material, supplies or equipment to the jurisdiction, or for selling or leasing any land or building to the jurisdiction, whenever the value of such transaction exceeds $.1,000, shall make any contribution to an elected official, candidate, or committee controlled by such official or candidate at any time between the commencement of negotiations and either the completion of the performance under, or the termination of negotiations for, such contract, whichever occurs later. (m) Solicitation of Contributions from Persons Who Have City Business Dealings. No non -elected public official shall solicit, direct or receive a contribution from any person, or his or her agent, who has a proceeding involving legislative or administrative action pending before the public official or has had such a matter pending during the preceding 12 months and for 3 months following the date a final decision is rendered by the agency of the official. (n) Contributions From the Candidate and the Candidate's Spouse. The provisions of this Ordinance, other than Section 1232(h)(5), shall not apply to a candidate's contribution of his or her personal funds to his or her own campaign committee, but shall apply to contributions from a spouse. (o) Cut-off Date for Receipt of Campaign Contributions. A candidate or controlled committee shall not accept any campaign contribution for that election after sixty (60) days from the date of the election. 1233 Expenditure Ceilings. (a) Expenditure Ceilings. No candidate for office who accepts expenditure ceilings and any controlled committee for such a candidate shall make qualified campaign expenditures above the following amount: $30,000 per election. (b) Time Period for Expenditures. For purposes of the expenditure ceilings, qualified campaign expenditures made at any time up to the date of the election and 60 days thereafter shall be considered expenditures for that election. (c) Candidate Acceptance or Resection of Expenditure Ceilings. Option C (Attachment 3) Ordinance No. Page 7 (1) Each candidate for office, at the time of filing his or her nomination papers, shall file a statement of acceptance or rejection of the expenditure ceilings in accordance with Section 1233(a). (2) If a candidate declines to accept the expenditure ceilings in Section 1233(a), the candidate shall be subject to the contribution limitations in Section 1232. (3) A candidate who agrees to accept the expenditure ceilings in Section 1233(a) may not change that decision, except that if an opposing candidate files a statement of rejection, then the candidate may rescind his or her acceptance within ten (10) calendar days of the last date for filing nomination papers provided that the candidate has not accepted any contributions in amounts greater than the limitations set forth in Section 1232. (d) Contribution Limitations for Candidates Accepting Expenditure Ceilings• A candidate who accepts the expenditure ceilings in Section 1233(a) shall be subject to the limitations set forth in Sections 1232(b) -(o). In addition, no person shall make to any candidate for office and the candidate's controlled committee and no such candidate and the candidate's controlled committee shall accept from any person a contribution or contributions totaling more than $500 for each election in which the candidate is on the ballot or is a write-in candidate if such a candidate has accepted the expenditure ceilings. 1244 Independent Expenditures. (a) Contribution Limitations. Any person who makes independent expenditures supporting or opposing a candidate shall not accept any contribution in excess of the amounts set forth in Section 1232. (b) Reproduction of Materials. Any person who reproduces, broadcasts or distributes any material which is drafted, printed, prepared or previously broadcast by a candidate or a committee controlled by such a candidate shall report such an expenditure as a non -monetary contribution to such candidate or committee. (c) Notice of Independent Expenditures. Any person who makes independent expenditures of more than $250 in support of or in opposition to any candidate shall notify the local filing officer and all candidates running for the same seat by telegram each time the threshold is met. Option C (Attachment 3) Ordinance No. Page 8 1245 Additional Disclosure Requirements. (a) Disclosure Thresholds. In addition to the disclosure requirements of the Political Reform Actr commencing with Government Code Section 81000, candidates, their controlled committees and other committees primarily formed to support or oppose candidates in Tustin, shall disclose all contribution utions cumulating $50 or more, by providing the amount o as well as the name, address, occupation and employer of each such contributor; and shall disclose all expenditures of $50 or more, by providing the amount of the expenditure as well as the i a anfor address of the vendor and a description of the cons derat the payment. (b) Additional Pre -Election Campaign Statement. In addition to the campaign statements require`dith Government to be filed pursuant to the Political Reform Act, commencing Code Section 81000, candidates, their controlledcommittees and committees primarily formed to support or oppose Tustin shall file a pre-election statement on the Friday before the he election. This statement shall have a closing d Wednesday before the election. (c) Disclosure of Occupation and Employer. No contribution of $25.00 or more shall be deposited into a campaign checking account unless the name, address, occupation the red. employer ipient of of the contributor is on file in the records the contribution. 1246 Enforcement. (a) Criminal Misdemeanor Actions. Any person who violates any provision of this ordinancestuilty of a o violate any misdemeanor. Any person who causes any other person provision of this Ordinance, or who aids and abets any other person in the violation of any provision of this Ordinance is guilty of a misdemeanor. (b) Civil Actions. (1) Any person who intentionally or negligently violates any provision of this Ordinance shall be liable in a civil action brought by the city attorney ot the an amount of up to not more than three times the amount lawful contribution or expenditure, or $1,000 per violation whichever is greater. (2) If two or more persons are responsible for any violation, they shall be jointly and severally liable." Option C (Attachment 3) Ordinance No. Page 9 (3) Any person residing within the City may also bring a civil enforcement action under this Ordinance (including injunctive relief), subject to the fine amounts listed in subsection 1246 (b) (1) . (i) Any person, before filing a civil action shall first file with the city attorney a written request for the city attorney to commence the action. The request shall contain a statement of the grounds for believing a cause of action exists. The city attorney shall respond within forty (40) days after a receipt of the request indicating whether he or she intends to file a civil action. If the city attorney indicates in the affirmative and files a suit within forty (40) days thereafter, no other action may be brought unless the action brought by the city attorney is dismissed without prejudice. No civil action alleging a violation of any provision of this Ordinance shall be filed more than four (4) years after the date the violation occurred. (c) Litigation Costs. The court, at its discretion, may award to a citizen plaintiff or defendant who prevails in the civil action authorized by this Ordinance, his or her costs of litigation including reasonable attorneys' fees. SECTION 2. SEVERABILITY. If any provision of this Ordinance, or the application of any such provision to any person or circumstances, shall be held invalid, the remainder of this Ordinance to the extent it can be given effect, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby, and to this extent the provisions of this Ordinance are severable. SECTION 3. AMENDMENTS. This ordinance may be amended by the City Council from time to time as deemed necessary or desirable. SECTION 4. EFFECTIVE DATE. Pursuant to Elections Code 4017, the Ordinance shall become effective upon the City Council's and City Clerk's certification that this measure has passed by a majority vote of the people. Option C (Attachment 3) Ordinance No. Page 10 PASSED AND ADOPTED, at a regular meeting of the City Council for the City of Tustin on this day of , 1992. DRAFT LESLIE ANNE PONTIOUS, Mayor MARY E. WYNN, City Clerk 'E: TO: FROM: FEBRUARY 26, 1992 HONORABLE MAYOR CITY COUNCIL MEMBERS CITY ATTORNEY `1 7 - Inter -Com 3- SUBJECT: ELECTION CAMPAIGN CONTRIBUTION RESTRICTIONS/REVIEW OF DRAFT ORDINANCE AND OTHER RELEVANT STATUTES Pursuant to the City Council's request, this emcontd m is to address a draft ordinance regulating campaign tions presented to the City Council by Mr. BerkleeMaughan. Other County campaign contribution ordinances from other orange jurisdictions (including a new Costa Mesa ordinance) are also reviewed. The ordinance was prepared by attorney Bob Stern who is with an organization by the name of California Commission on Campaign Financing. Mr. Stern advises that the dollar limits set forth in the draft ordinance were provided to him by Mr. Maughan. He states no public entity in California has adopted such an ordinance ( in toto) to date. The Tustin Municipal Code does not regulate campaign contributions in any respect. I. SUMMARY OVERVIEW Regulation of election campaign contributions fall generally into the following two groupings: A. Limitations or "CAPS" on the amount of each contribution to a candidate; B. Prohibitions or restrictions against an off ice holder's ability to vote on City matters which could have a financial effect on the candidate's contributor. The draft ordinance submitted by Mr. Maughan 1 respects regulations restricting campaign contributions in se the full (A summary of the ordinance is attached as Exhibit unique d provision draft is attached as Exhibit B . ) It also has a que p dealing with limitations on campaign expenditures if voluntarily accepted by the candidate. First, the ordinance creates a $100 lid d o i$50individual ual contributions, or in the alternative, allowsa on individual contributions if the candidate voluntarily a rees to limit his/her campaign expenditures to a maximum a candidate had $30,000 per election. ( Sections 300 and 500 of ordinance.) no intention of spending $30,000 on the election, he/she would naturally opt for the $500 CAP on individual contributions. Second, it restricts campaign contributions by prohibiting contributions from certain contractors doing business with the City. (Section 311.) Further, contributions to "non -elected City officials" from persons having proceedings pending before the public official are prohibited. (Section 312.) It is our opinion that the ordinance taken as a whole would more likely than not be held constitutional in light of the case law decisions discussed in this opinion. II. OVERVIEW OF THE COSTA MESA ORDINANCE On November 61 1990, the voters of the City of Costa Mesa approved regulations which restrict a Council Member's ilability to It vote on matters affecting the Council Member's contributor. provides: "For purposes of this section, ancial interest as defined by the Act shall also include any campaign contribution of $500.00 or more from a contributor or the agent of a contributor -in a twelve month interval prior to the date on which the decision involving City the contributor is to be made. y Council member shall accept, solicit or direct a contribution of $500.00 or more from any party or his or her agent, while a proceeding involving a license, permit or other entitlement for use is pending before City Council and for three months following the date a final decision is rendered in the proceeding if -the Council member knows, or has reason to. -know, that the participant has a financial interest, as that term is used in the Political Reform Act of 1974.11 In essence, this ordinance seeks to prevent a Councilperson from voting on governmental decisions which could havea financial on effect, distinguishable from its effect on the public generally, major contributors (more than $500.00) to the Councilperson's 1) providing campaign. The ordinance achieves this purpose tre t by: na governmental that the Councilperson has a financial decision wherein a major contributor to that Cocno campaign has given $500.00 or more within the last 12months and 2 the governmental decision involves the contributor; and 2) the ordinance further provides that a Councilperson shall not accept, solicit or direct a contribSeionof $500-00 other entitlement is or more while a proceeding involving a license, pe pending before the City Council. We are advised that this ordinance was patterned after a state law provision which regulates voting of governmental officers serving on multiple boards. (See Government Code 84308.) To our knowledge, no appellate decision has ever ruled on the constitutionality of a Costa Mesa type ordinance or Constitutient onal c 84308 upon which it is based. However, a Con attack appellate could be made on this ordinance based on the recent app decision Harwin v. Goleta Water District 91 D.A.R. 16146, discussed below. III. OTHER PUBLIC ENTITIES Our survey of .other governmental entities in the County indicate the following: A. No other city in Orange County has an ordinance similar to the draft ordinance. Four cities do have specific CAPS on total contributions from one contributor. Those cities with CAPs on contributions from individual contributors are: CITY Irvine San Juan Capistrano Fountain Valley Huntington Beach CAP ON INDIVIDUAL CONTRIBUTIONS $150 maximum $100 maximum $500 maximum $300 maximum In addition, Proposition 73 (enacted by the voters in 1988) prohibits individual contributions of more than Thi 1 provisto ion candidate for elective office in any fiscal year was held unconstitutional on 2/7/92 by the Ninth Circuit Court of Appeals. (See discussion below.) B. The County of Orange does have a voting prohibition provision similar to the Costa Mesa rule• Orange of County the Boardipon Municipal Code Section 1-6-4 provides that a member of Supervisors may not vote on a public matter where the decision may eff on have a reasonably foreseeable material epublic andel generally, on a distinguishable from its effect p "major campaign contributor" to that Board member. A "major contributor" of a campaign is defined to be one who has contributed 3 more than $1,874.00 in the aggregate over the past 48 months. (See Exhibit A, copy of County of Orange Ordinance.) IV. OVERVIEW OF CASE LAW In 1976, the United States Supreme Court ruled that public entities may lawfully limit the total amount of contributions received from individual contributors to a election campaign. However, campaign limitations on expenditures are not constitutionally valid. Buckley v. Valeo 424 U.S. 1. Since 1988, state law (Propositions 68 and 73) has limited contributions to $1,000 per contributor. Proposition 68 was held invalid because Proposition 73 passed with a greater vote during the 1988 statewide election. Proposition 73 also provided that local government could create more restrictive contribution limits (Government Code Section 85101). Very recently, a federal appeals court held the Proposition 73 $1,.000 campaign Contribution limit to be unconstitutional in the case of Service Employees International Union v. Fair Political Practices Commission Fed. 2d _____ (1992). The Ninth Circuit Court of Appeals found that Proposition 73 unconstitutionally discriminated against non -incumbents because the campaign contribution limitation was tied to each fiscal year. Since non - incumbents decide to run relatively late in an election cycle, the court reasoned they have far less time to raise the amount of funds available to an incumbent. The draft ordinance appears to comply with the Service Employees case because it treats candidates and challengers equally. Also, that portion of Proposition 73 giving authority to local government to limit contributions was unaffected by this case. Very few cases have dealt with the issue of whether it is constitutionally permissible to restrict the right of a legislative body member to vote on matters affecting contributors to that person's campaign. In 1990, the U.S. Supreme Court stated the general legal proposition that public regulation of campaign contributions to prevent corruption, or the appearance of corruption may be legally valid depending on the circumstances of the situation. Austin v. Michigan Chamber of Commerce (1990), 110 S.Ct. 1391. The regulation must be narrowly drawn and must reasonably relate to the goal to be achieved. The Austin case, however, emphasized that regulations which impact campaign contributions to candidates for office restrict First Amendment Rights. Because First Amendment Rights are implicated, the government has an obligation to demonstrate that there is a compelling interest served by the regulation.. 4 Recently, in Harwin v. Goleta Water District 91 Daily Journal D.A.R. 16146 (December 30, 1991), the Ninth Circuit Court of Appeals invalidated a Goleta Water District ordinance which barred board members from voting on water connection applications from persons who had contributed $250.00 or more to that person's campaign. The Ninth Circuit Court of Appeals held that the ordinance was unconstitutionally discriminatory because the Board member was not barred from voting on a water application where opponents of the water connection application had contributed large sums to that particular Board member's campaign. Citing the Austin case, the court acknowledged that the Goleta Water District had a legitimate governmental interest in seeking to develop nondiscriminatory rules in eliminating the potential of public corruption through excessive contributions to a legislative member's election campaign. These cases stress the importance of public regulation treating groups of persons "similarly situated alike." Any regulation affecting campaign contributions impacts First Amendment guarantees of "freedom of speech and association. As such, the regulation cannot be discriminatory. The draft ordinance, taken as a whole, meets this constitutional standard in our opinion. The voluntary restriction of $30,000 on campaign expenditures may withstand constitutional attack under the Buckley_ case because it triggers only upon the candidate's acceptance of this CAP. However, no case has ever ruled on this type of regulation. V. CONCLUSIONS 1. The draft Tustin Campaign Ordinance is both comprehensive and complex. It sets limits on individual contributions and offers a mechanism for self imposed limits on expenditures ($30,000); it has prohibitions on contributions from certain contractors and receipt of contributions to "non -elected City public officials"; it has extensive controls over reporting and disclosure requirements. In our opinion, the ordinance, taken as a whole, would probably pass constitutional muster. 2. Costa Mesa is the first Orange County City to restrict voting where there may be a financial effect on the Council person's contributor. The County of Orange has a similar rule. Such a prohibition raises Constitutional concerns based upon the Harwin decision. 3. The U.S. Supreme Court has stated that the prevention of corruption in governmental. voting through the regulation of campaign financing is constitutionally permissible. However, the regulation cannot be overly broad. The effect of the regulation cannot be discriminatory against persons who are similarly situated. F-1 4. It is recommended that should the City Council desire to - move in the direction of regulation of campaign contributions, our office be directed to prepare an ordinance consistent with the legal principles discussed above. JAMES +�,/"RQURKE CITY A VORNEY CC: William Huston F:\HOME\KATHIE\JRS\HI2 0 41-9 I dv-- JOH R. SHAW AS STANT CITY ATTORNEY V VW TR TT A SUM'•!ARY OF DRAFT TUSTIN CAMPAIGN ORDINANCE Section 300 Establishes a $100 lid on -individual contributions. Section 301 Establishes a $10,000 lid on contributions from "non -individuals". Section 302 No fund raising more than 6 months before election date. Section 303 No transfer of contributions from one candidate or committee to another. Section 304 gifts and honoria in excess of $500 over two year period (other than family member) prohibited. Section 305 Contributions can be returned if not cashed or Negotiated. Section 306 organizations and other entities are treated as one contributor. Section 307 Rules governing Loans. Section 308 Family contributions. Section 309 All funds received by Candidate running for office treated as campaign contribution. Section 310 Candidate shall have one committee and one campaign account. Section 311 Contributions from certain Contractors prohibited; that is, a contractor doing business with City in amount of more than $1,000 cannot contribute to the campaign. "Contractor" defined to be: those providing personal services, furnishing of material, supplies, equipment, or selling or leasing of any land or building to the City. The intent of this prohibition would be to prevent the appearance of impropriety, whether or not a conflict of interest under state law exists. This provision has not be tested in the courts. action 312 Contributions to "non -elected city public officials" prohibited when contributor has matter pending before the city official.during the preceding 12 months and for • 3 months following the date a final decision is rendered. Example: A Tustin City Planning Commissioner would be barred from soliciting a contribution from a developer to be used in a Councilmember's campaign. Section 400 Creates a $30,000 expenditure cap if Candidate accepts this cap - on a voluntar Tasis Section 500 If $30,000 lid accepted, then $500 cap on individual contributions kicks in. Also, the $10,000 total lid on contributions from non -individuals applies. Section 700 Candidate shall disclose source of each contribution (name, address, employer) if more than $50) "action 800 Each violation is a misdemeanor Section 801 City Attorney authorized to bring civil action. Or -Resident may bring civil action; complaint must first be filed with City Attorney