October 17, RE: Your Request for Formal Advice Dated October 8, 2003 QUESTION
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1 Via Fax and Hand Delivery October 17, 2003 Deputy Mayor City of Los Angeles 200 N. Spring Street, 3 rd Floor Los Angeles, CA RE: Your Request for Formal Advice Dated October 8, 2003 Dear Ms. Sella: This letter is in response to your October 8, 2003, letter to the City Ethics Commission requesting formal written advice on behalf of Mayor Hahn on the valuation of a gift of a ticket for the Mayor to attend a gala fundraiser to mark the opening of the Walt Disney Concert Hall. Your question, and our response, based on information provided in your request and in correspondence with our office on September 30, October 8, and October 9, 2003, and Deputy City Attorney Renee Stadel on September 30, and October 7, 2003, appear below. Because your question implicates provisions of state law, we discussed the matter with the Office of the City Attorney. The following analysis also reflects the advice of that office. QUESTION May Mayor Hahn accept the gift of a ticket to a fundraiser held in connection with the opening of the Walt Disney Concert Hall?
2 Page 2 of 7 RELEVANT FACTS We have determined that the following facts are relevant to your inquiry: 1. Mayor Hahn is a High Level Filer within the meaning of the Governmental Ethics Ordinance (Los Angeles Municipal Code (LAMC) Sec et seq.). 2. Pursuant to California Government Code Sec and LAMC Sec (C)(1)(c), Mayor Hahn is required to report on his annual Statement of Economic Interests (Form 700) and semi-annual Statement of Economic Interests, respectively, all income (including gifts) received in a reporting period, regardless of where the source of the income is located. 3. Mayor Hahn has been offered a ticket by Mr. Eli Broad, a developer and member of the board of the Los Angeles Philharmonic, to attend a gala fundraiser to celebrate the opening of the Walt Disney Concert Hall (Disney Hall) in downtown Los Angeles to be held on October 23, The fundraiser is being held by and its proceeds will benefit the Los Angeles Philharmonic, a 501(c)(3) organization. APPLICABLE LAW The state s Political Reform Act and the City s Governmental Ethics Ordinance regulate the receipt of gifts to City officials. As defined by the City s Governmental Ethics Ordinance, a City official is anyone who is required by his or her agency s Conflict of Interest Code to file a Statement of Economic Interests pursuant to Los Angeles Municipal Code (LAMC) ). Both California Government Code and LAMC define a gift as any payment that confers a personal benefit on the recipient, to the extent that consideration of equal or greater value is not received. A gift includes a rebate or discount in the price of anything of value unless the rebate or discount is made to members of the public without regard to official status. Pursuant to 2 California Code of Regulations (2 CCR) (a), public officials may not accept gifts valued in excess of $340 from a single source in a calendar year. In addition to the provisions of State law discussed above, LAMC (A)(3) also places a $100 limit on gifts a City official may receive from a restricted source. A restricted source is defined by LAMC , as it applies to the Mayor as a High Level Filer, to include a lobbyist, lobbying firm, or lobbyist employer; a person doing or seeking to do business with the City; a person who knowingly attempted to influence a public official on any legislative or administrative action which would have a material financial effect on that official; or a person who is a party to a proceeding involving a license, permit, or other entitlement for use while a proceeding involving such matter is, or within the prior nine months was, pending before the official and for nine months following the date a final decision is rendered in the proceeding. A City official is prohibited from accepting gifts valued in excess of $25 in a calendar year from any lobbyist or lobbying firm, pursuant to LAMC (A)(4).
3 Page 3 of 7 State law, however, provides rules for valuing gifts of tickets to certain fundraising events. Pursuant to 2 CCR (b), tickets or other admission privileges to a fundraising event to benefit a 501(c)(3) organization have no value. ANALYSIS & CONCLUSION Mayor Hahn has been offered a ticket by Mr. Eli Broad to a fundraiser for the Los Angeles Philharmonic to mark the opening of Disney Hall. In accepting the ticket, Mayor Hahn would not be providing consideration of equal or greater value to Mr. Broad in exchange for the ticket. We have therefore determined that the ticket to the fundraiser is a gift pursuant to the definition of gift in City and State law, and turn next to how that gift should be valued. City law places restrictions on City officials (including elected officials) regarding the value of gifts they may accept from certain sources, such as a restricted source or a lobbyist or lobbying firm. However, State law contains exemptions for cases in which a gift of a ticket or other admission privileges for certain fundraising events is provided to a City official. You state that the Los Angeles Philharmonic is a 501(c)(3) charitable organization, and that the fundraiser is being held to benefit that organization. Pursuant to 2 CCR (b), in the case of a fundraising event for a 501(c)(3) organization, tickets or other admission privileges to that event have no value. Therefore, the ticket offered to Mayor Hahn for the fundraiser does not have a monetary value and he is not prohibited from accepting the ticket. This conclusion applies regardless of the source of the ticket (such as if the source were a lobbyist, lobbying firm, or an otherwise restricted source ). Finally, because the ticket to the fundraiser has no value, Mayor Hahn is not required to report it on his annual or semi-annual Statement of Economic Interests. Thank you for contacting the City Ethics Commission about this matter. If you have any questions regarding this letter, please do not hesitate to contact me or Nora Pollock at (213) Sincerely, LeeAnn M. Pelham Executive Director Attachment
4 Page 4 of 7 ATTACHMENT Los Angeles Municipal Code Definitions, defines the following terms: Gift means, except as otherwise provided in this definition, any payment to the extent that consideration of equal or greater value is not received and includes a rebate or discount in the price of anything of value unless the rebate or discount is made in the regular course of business to members of the public without regard to official status. Any person, other than a defendant in a criminal action, who claims that a payment is not a gift by reason of receipt of consideration has the burden of proving that the consideration received is of equal or greater value. "High Level Filer" means the Mayor, City Attorney, Controller, member of the City Council, member of the City Ethics Commission and Executive Officer of the City Ethics Commission. Restricted source means the following with regard to each of the following classes of City officials. (1) With regard to "high level filers" and "high level officials," "restricted source" means: (a) a lobbyist, lobbying firm, or lobbyist employer; (b) a person doing or seeking to do business with the City; (c) a person who, during the reporting period, knowingly attempted to influence the official in any legislative or administrative action which would have a direct material financial effect on such person. (d) a person who is a party to a proceeding involving a license, permit or other entitlement for use while a proceeding involving such matter is, or within the prior nine months was, pending before the official or before the City Council or a board, commission, committee, or other similar body of which the official is a voting member, and for nine months following the date a final decision is rendered in the proceeding. Los Angeles Municipal Code Disclosure of Economic Interests., in pertinent part, states: A. Persons Required to File. The Mayor, City Attorney, Controller, members of the City Council, each chief administrative officer of a City department or office, and each member of a board or commission who is a designated employee pursuant to the conflict of interest Code of his or her agency shall file a statement of economic interests pursuant to the Political Reform Act of 1974, as amended, and shall additionally file a financial disclosure statement pursuant to the provisions of this section. There shall be two classes of filers, (1) "high
5 Page 5 of 7 level filers and (2) "other filers, who shall include all filers other than "high-level filers." B. Disclosure Periods and Filing Deadlines. On or before April 1 of each calendar year, all filers referred to in Subsection A shall file a statement of economic interests and a financial disclosure statement pursuant to this section, covering a disclosure period of January 1 through December 31 of the previous calendar year. On or before October 1 of each calendar year, all filers referred to in Subsection A shall either certify that there have been no changes in their reportable financial interests during the period of January 1 through June 30 or shall file a semiannual financial disclosure statement disclosing any changes in their reportable financial interests which occurred during that period. C. Disclosure Requirements for High-Level Filers. 1. In addition to statements of economic interests filed pursuant to the Political Reform Act of 1974, as amended, high-level filers shall file financial disclosure statements disclosing the following financial interests: (c) Any income (including loans, honoraria, travel expenses, gifts, and the filer's community property interest in income of a spouse) regardless of whether the source of income resides in; owns an interest in real property located within; or does, within the prior two years did, or plans to do business in the City of Los Angeles. Los Angeles Municipal Code Restrictions on Gifts and Travel Expenses, in pertinent part, states: A. Restrictions on Gifts. 1. No person shall offer or make, and no City official shall solicit or accept, any gift with the intent that the City official will be influenced thereby in the performance of any official act. 2. No City official shall knowingly solicit any gift from a restricted source. 3. Except in the case of a lobbyist or lobbying firm, no person who is a restricted source shall offer or make, and no City official shall accept, any gift from a restricted source which would cause the cumulative amount of gifts from such source to the City official to exceed $100 during any calendar year. 4. No lobbyist or lobbying firm shall make, and no City official shall accept,
6 Page 6 of 7 any gift from a lobbyist or lobbying firm which is a restricted source as to that official. The prohibition of this subdivision shall not apply to gifts of office or other hospitality, or other gifts of nominal value, so long as the cumulative value of such gifts from a single source does not exceed $25 during any calendar year. California Government Code Gift., in pertinent part, states: (a) Gift means.any payment that confers a personal benefit on the recipient, to the extent that consideration of equal or greater value is not received and includes a rebate or discount in the price of anything of value unless the rebate or discount is made in the regular course of business to members of the public without regard to official status. California Government Code Income., in pertinent part, states: (a) Income means, except as provided in subdivision (b), a payment received, including but not limited to any salary, wage, advance, dividend, interest, rent, proceeds from any sale, gift, including any gift of food or beverage, loan, forgiveness or payment of indebtedness received by the filer, reimbursement for expenses, per diem, or contribution to an insurance or pension program paid by any person other than an employer, and including any community property interest in the income of a spouse. Income also includes an outstanding loan. Income of an individual also includes a pro rata share of any income of any business entity or trust in which the individual or spouse owns, directly, indirectly or beneficially, a 10-percent interest or greater. Income, other than a gift, does not include income received from any source outside the jurisdiction and not doing business within the jurisdiction, not planning to do business within the jurisdiction, or not having done business within the jurisdiction during the two years prior to the time any statement or other action is required under this title. California Government Code Applicability. This article is applicable to elected state officers, judges and commissioners of courts of the judicial branch of government, members of the Public Utilities Commission, members of the State Energy Resources Conservation and Development Commission, members of the Fair Political Practices Commission, members of the California Coastal Commission, members of planning commissions, members of the board of supervisors, district attorneys, county counsels, county treasurers, and chief administrative officers of counties, mayors, city managers, city attorneys, city treasurers, chief administrative officers and members of city councils of cities, and other public officials who manage public investments, and to candidates for any of these offices at any election.
7 Page 7 of 7 California Government Code Officeholders; Annual Statements. Every person who holds an office specified in Section shall, each year at a time specified by Commission regulations, file a statement disclosing his investments, his interests in real property and his income during the period since the previous statement filed under this section or Section The statement shall include any investments and interests in real property held at any time during the period covered by the statement, whether or not they are still held at the time of filing. 2 California Code of Regulations Gift Limit Amount, states, in pertinent part: (a) For purposes of Government Code section 89503, the adjusted annual gift limitation amount in effect for the period January 1, 2003, to December 31, 2004, is $ California Code of Regulations , Reporting and Valuation of Gifts: Tickets to Nonprofit and Political Fundraisers, in pertinent part, states: A gift of a ticket or other admission privilege to a specific fundraising event shall be valued as set forth below. (b) Where the event is a fundraising event for an organization exempt from taxation under Section 501(c)(3) of the Internal Revenue Code, the ticket or other admission privilege has no value.
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