contributor guide city elections

los angeles CITY ETHICS COMMISSION...preserving the public trust. contributor guide city elections 2013 Election Update Includes changes to the City s campaign finance laws that become effective October 29, 2012. Campaign Contributions to Citywide & City Council Candidates

Table of Contents Introduction........ 1 Types of Contributions to City Candidates... 2 What is a Contribution? Monetary Contributions Non-monetary Contributions Contribution Limits...... 3 Per-person Contribution Limits Cumulative Contribution Limit Aggregated Contributions..... 4 Contributions Considered to be from a Single Source Contributions by Immediate Family Members Making a Contribution to a Candidate s Campaign.. 5 Prohibited Contributions...... 6 Public Matching Funds Program..... 7 Non-Candidate Spending...... 7 Officeholder Committees..... 7 Consequences for Violating Campaign Finance Laws......... 8 Report a Complaint....... 8 Conclusion........ 9

Introduction In April 1985, Los Angeles City voters enacted limits on contributions to City campaigns, which became the first in a series of political campaign reform measures designed to encourage broader participation in the political process and help restore public confidence in government. In June 1990, the voters approved an amendment to the Los Angeles City Charter, which created the Los Angeles City Ethics Commission, strengthened City campaign finance laws, and funded the Public Matching Funds Program for City elections. This guide summarizes significant provisions of the City s Campaign Finance Ordinance and relevant state campaign finance laws that apply to contributors to candidates running for Mayor, City Attorney, Controller, and City Council in the City of Los Angeles. It is provided as a means of educating contributors about the general provisions of these laws. However, any contributor who is contemplating an action covered by the campaign finance rules is encouraged to contact the City Ethics Commission or the Office of the City Attorney with questions about applying the law. Thank you for your interest and cooperation in providing open, honest, and accountable government to the people of the City of Los Angeles. Mission Statement As an independent voice for more open and responsive City government, the Los Angeles acts through its voter-established mandate to preserve the public trust. Through meaningful public disclosure and effective education, the Commission is committed to supporting and equipping an informed citizenry. Dedicated to upholding the public interest, the Commission shapes, administers and enforces City ethics, campaign finance and lobbying laws that ensure Los Angeles elections and government decision-making are fair, transparent and accountable. Contact Information 200 North Spring Street City Hall, 24th Floor Los Angeles, CA 90012 Tel: (213) 978-1960 TTY: (213) 978-2609 Fax: (213) 978-1988 E-mail: ethics.commission@lacity.org Whistleblower Hotline: (800) 824-4825 or (213) 978-1999 For additional information about the campaign finance rules contained in this guide, the text of the City s laws, and campaign finance forms, you may also visit the City Ethics Commission s website at http://ethics.lacity.org. 1

Types of Contributions What is a contribution? A contribution is a monetary or non-monetary payment made to a candidate or committee for which no goods, services or other consideration of equal value is provided to you in return. CA Gov t Code 82015. Generally, a contribution means: A payment (this could be in the form of money or non-monetary items, such as donated goods or services or discounts); Forgiveness of a loan; A payment of a loan by a third party; or An enforceable promise to make a payment for political purposes. Monetary Contributions Monetary contributions can include: A check written to the campaign committee; Cash contributions (which may not exceed $25); A credit card charge made to the campaign committee; A money order written to the campaign committee (which may not exceed $99); Loans made to the campaign committee; or An enforceable promise to make a payment (such as a loan guarantee). Contributions made by text message (not to exceed $25, per-candidate, perelection). Non-monetary Contributions Non-monetary (in-kind) contributions are goods or services provided to a campaign or paid for at the behest of a candidate. Typical examples of non-monetary contributions include: Food, beverages, flowers, and decorations donated to the campaign; Printing or mailing costs of a campaign mailer donated by the printer; An expenditure made at the behest of the candidate; A discount or rebate that is not generally extended to the public; The transfer of anything of value to a campaign committee without full consideration provided in return; or The reproduction, broadcast, or distribution of any material belonging to a candidate. All contributions, including non-monetary contributions and loans (other than contributions or loans from the candidate to his or her campaign committee), are subject to City contribution limits listed on the next page. Loans must be made in writing and repaid within 30 days. City Charter 470(c)(8). The contract should include the loan amount, interest rate, and due date. 2

Contribution Limits Per-Person Contribution Limit A person is an individual, proprietorship, firm, partnership, joint venture, syndicate, business trust, company, corporation, limited liability company, association, committee, or any other organization or group of persons acting in concert. CA Gov t Code 82047. As of March 8, 2012, a person is limited to the following, per election, maximum contributions under City Charter 470(c)(3) & (c)(4): Election Type of Candidate Per Person Contribution Citywide Office Primary (Mayor, City Attorney, Controller) $1,300 per candidate City Council $700 per candidate Citywide Office General (Mayor, City Attorney, Controller) $1,300 per candidate City Council $700 per candidate Example: You contribute $700 to City Council Candidate Jones s campaign committee in the primary election. Candidate Jones goes on to the general election. You may then contribute another $700 to her general election committee. Cumulative Contribution Limit In addition to the individual limits, there is a cumulative limit on the overall amount one person may contribute to all candidates in an election. This limit changes with each election, because it is determined by a formula based on the number of elective City offices that will appear on the ballot for that particular election. City Charter 470(c)(6). The limit for the 2013 primary election is calculated as follows: Three Citywide seats multiplied by $1,300 plus eight City Council seats multiplied by $700. Therefore, the cumulative contribution limit for the March 5, 2013, Primary Election is $9,500 per person. Election Type of Candidate Cumulative Contribution Limit Primary All candidates combined $9,500 General All candidates combined [Depends on the number of seats on the General election ballot.] 3

Aggregated Contributions Contributions Considered to be from a Single Source Under certain circumstances, contributions from two or more persons or entities will be aggregated and considered to be from a single person meaning they will be subject to the per-person, per-election contribution limits. Under Los Angeles Municipal Code 49.7.4, contributions (both monetary and non-monetary) will be aggregated under the following circumstances: A corporation, limited liability corporation ( LLC ), firm, joint venture, syndicate, business trust, company, general or limited partnership, or other business entity that is not a sole proprietorship and an individual who owns an investment of 50% or more or holds a majority of voting rights in that organization; A sole proprietorship and the individual who owns it; A general or limited partnership and a general partner who owns an investment of 50% or more or holds a majority of the voting rights; Two persons when one controls the other s contribution or expenditure activity; Two persons when one is the sponsoring organization (as defined in CA Gov t. Code 82048.7 and 2 CCR 18419(2)) of the other; Two entities when the same individuals make up the majority of the members of their boards of directors; Two entities that share the same officers or a majority of officers (other than a member of the board of directors); A corporation or LLC and another corporation or LLC that share the same majority shareholder or member; A corporation or LLC and another corporation or LLC that holds a majority of voting rights in the first; or Two corporations in a parent-subsidiary relationship, provided that at least one of them is not publicly traded. Note: If a person or entity is prohibited from making contributions under City law (see page 6), then all aggregated persons or entities are also prohibited. Example: You are the sole proprietor of a restaurant, and you make a $500 contribution to a City Council candidate. You may not make a separate contribution from your restaurant s bank account of more than $200, because the contributions would be aggregated and the contribution limit is $700 for a City Council candidate. Contributions by Immediate Family Members Contributions by a husband and wife are treated as separate contributions if applicable attribution rules are followed (see page 5.) Contributions from children under the age of 18 are presumed to be contributions by their parents and attributed proportionately that is, one-half to each parent or the total amount to a single custodial parent. Los Angeles Municipal Code 49.7.5. 4

Making a Contribution The following are additional requirements to be aware of when contributing to candidates running for elective office in the City of Los Angeles: Give no more than $25 in cash. No person may give more than $25 in cash to a candidate. City Charter 470(d). Make contributions of $100 or more on imprinted checks. A monetary contribution of $100 or more must be made by an imprinted check that: a) contains your name; b) contains the name of the payee; and c) is drawn from your account. Contributions of $100 or more may not be made by cashier s check or traveler s check. CA Gov t Code 84300(c). Other rules apply to contributions made by credit card (see below). Provide address, occupation, and employer information. A candidate must have your name, address (including zip code), occupation, and employer on file before depositing your contribution into his or her campaign bank account. Los Angeles Municipal Code 49.7.16(A). Make contributions in your own name only. It is illegal for you to make a contribution in someone else s name or for you to reimburse someone for a contribution. City Charter 470(k). If you are asked to make a contribution in another person s name or are offered reimbursement for your contribution, please contact the. Certify that your contribution is legal under City, state, and federal law. Committees are required to obtain certification that each contribution is being made in compliance with the law. Contributions cannot exceed applicable limits, or be made by persons prohibited under City, state, or Federal law. Los Angeles Municipal Code 49.7.16(B). You may make a contribution from a joint checking account. If you make a contribution with a check that has the name of more than one individual imprinted on it, the contribution will be attributed to the individual whose name is imprinted on the check and who also signs it, unless a signed document accompanying the check states otherwise. If more than one individual whose name is imprinted on the check signs it, the contribution will be attributed to each contributor equally, unless a signed document accompanying the check states otherwise. You may make a contribution using a credit card. If you contribute by credit card, you must disclose to the campaign committee whether you are making the contribution with a personal or business credit card and provide all other contributor information that is required. Report your contributions, if required. If your contributions to City candidates and to other California state or local committees total $10,000 or more in a calendar year, you must file a Major Donor Committee Campaign Statement (California Form 461). The deadline and location for filing this statement will depend upon the types and timing of contributions you have made. 2 CCR 18427.1(b). Once you become a major donor, you may be required to file a late contribution report within 24 hours if you make contributions totaling $1,000 or more to a single candidate or committee during the 16 days before an election. CA Gov t Code 84203 and 2 CCR 18427.1(b). 5

Prohibited Contributions The following types of contributions are prohibited under City and state law: Contributions in exchange for action It is illegal to ask for or offer to make a political contribution in exchange for an official action. Los Angeles Municipal Code 49.5.5. For example, if you are applying for a permit or license and you are told that you must make a contribution to receive favorable treatment, do not make the contribution. You should not be pressured into making a political contribution. If you are pressured or threatened, please contact the. Contributions from lobbyists and lobbying firms A lobbyist or lobbying firm may not make a contribution to a City candidate if the lobbyist or lobbying firm is registered to lobby the office the candidate is seeking or the candidate s current agency. Similarly, candidates for City office are prohibited from receiving such contributions. City Charter 470(c)(11). Contributions delivered or received in City buildings Contributions may not be received or delivered in City Hall, any other City-owned building, or any building for which the City pays the majority of the rent, unless the location is routinely made available for rent to the public. Los Angeles Municipal Code 49.7.11(B)(2). Soliciting contributions from City employees No one may knowingly solicit contributions from City officers or employees, including commissioners. CA Gov t Code 3205; Los Angeles Municipal Code 49.7.11(B)(1). Contributions by foreign nationals Federal law prohibits foreign nationals from contributing to political campaigns. A foreign national is a person who is not a citizen of the United States of America or does not have legal permanent residency status, as well as any foreign corporation, partnership, or organization that has a foreign country as its principle place of business. Additionally, a U.S. subsidiary of a foreign or U.S. corporation that is owned by a foreign national also may be prohibited from making contributions under certain circumstances. Title 2, US Code 441(e). Contributions and fundraising from bidders on some City contracts City law restricts certain City bidders from making campaign contributions to and fundraising for certain City candidates and officeholders. For more information please see the attached Special Bulletin New Charter Amendment Limits Bidder Contributions and Fundraising. Note: City Charter section 609(e) bars an underwriting firm (including related entities and certain executives and employees of the firm) from being selected in a non-competitive sale of proprietary revenue bonds if the firm has made contributions of $100 or more in the 12 months prior to selection or has made any contributions or engaged in prohibited fundraising as further provided in an ordinance which has not yet been adopted. If selected, the firm and its subcontractors are barred from making contributions or fundraising for 12 months. 6

Public Matching Funds Program In 1990 the voters of the City, through Proposition H, established a public matching funds program to help restore public trust in government and to promote a stage for multiple voices to be heard in the City s elections. The matching funds program helps qualified candidates for elective City office raise funds without having to rely on large campaign contributions and on excessive fundraising and expenditures. Candidates must meet certain qualifying requirements before they are eligible to receive any public matching funds. Once qualified, a candidate can use the formula detailed in the law to request public funds to match contributions received from individuals, up to a certain maximum. To participate in the system and receive matching funds, a candidate must agree to limit his or her campaign spending and use of personal funds and must agree to debate his or her opponent. Non-Candidate Spending Non-candidate spending, also called independent expenditures or member communications, may not be made at the behest of or in consultation or coordination with candidates or their agents. If either independent expenditures or member communications are made in cooperation with a candidate or a candidate s committee, they are in-kind contributions subject to the City s contribution limits. There are additional rules, including disclosure and disclaimers that apply to noncandidate spending. Please contact the for assistance before engaging in any non-candidate spending. Los Angeles Municipal Code 49.7.2(A). Officeholder Committees An elected Los Angeles City officeholder may establish an officeholder committee to raise and spend money for the purposes of assisting, serving, or communicating with constituents while in office. Officeholder funds may not be used for purposes of election or re-election to City office. Officeholder expenditures are limited to the allowable uses listed in Los Angeles Municipal Code 49.7.19. Contributions to officeholder accounts do not count toward the cumulative election-related contribution limits discussed on page 3. Contribution limits to officeholder accounts are as follows: Type of Officeholder Officeholder Mayor, City Attorney, Controller Committee City Council Per-Person Contribution Limit $1,000 per fiscal year $500 per fiscal year Officeholders and candidates may also open legal defense funds. For officeholders, these are considered sub-accounts of their officeholder committees. Separate contribution limits apply to legal defense funds. LAMC 49.7.20. For more information, please contact the CEC. 7

Consequences for Violating Campaign Finance Laws A person who violates any provisions of the City s Campaign Finance Ordinance may be subject to an administrative enforcement action and monetary penalties up to $5,000 per violation or three times the amount not properly reported or unlawfully contributed, expended, given, or received, whichever is greater. Furthermore, a person who knowingly, willfully, or negligently violates the ordinance may also be subject to civil and criminal penalties. Appointed officers or employees who violate the ordinance may also be subject to administrative discipline from their appointing authorities. Los Angeles Municipal Code 49.7.38. Report a Complaint The is authorized by the Los Angeles voters to independently investigate violations of the City s campaign finance law. Under the City charter, any person may file a complaint if they become aware of or are asked to participate in illegal activity regarding political contributions, or if they have information about a possible violation of these laws. All complaints are treated by the Commission confidentially, to the extent permitted by law. Complaints may be submitted several ways: by phone at the toll-free, 24-hour whistleblower hotline at 1-800-824-4825; online at http://ethics.lacity.org/ Whistleblower/complaint.cfm; or in writing at the address on page one of this guide. You may also call the directly during regular business hours at (213) 978-1960 to discuss the matter with an investigator. Please be sure to provide as much specific detail as possible. To view enforcement stipulations and decisions that have been issued by the Commission, visit our enforcement page at http:// ethics.lacity.org/enforcement/enforcement.cfm. 8

Conclusion This handbook is designed to be a general overview to help you comply with City and state campaign finance laws when making a contribution to a candidate for elective City office. Because the laws are complex, applying them to your circumstances may require analysis by the or the Office of the City Attorney. Advice from the City Ethics Commission The will gladly answer any general questions that you may have regarding the laws contained in this guide. Situation-specific advice can also be provided, either informally or formally: Informal advice can be provided in person or by phone during regular business hours. Informal advice does not provide immunity in enforcement actions. Formal advice is provided in writing. Your request must be submitted in writing before taking any action and must provide specific facts about your circumstances. A person who receives formal, written advice and acts in good faith based on that advice will not be subject to enforcement actions or administrative penalties. To view advice letters that have been issued to others, visit the City Ethics Commission s advice page at http://ethics.lacity.org/advice/advice.cfm. 200 North Spring Street Tel: (213) 978-1960 City Hall 24th Floor TTY: (213) 978-2609 Los Angeles, CA 90012 Fax: (213) 978-1988 E-mail: ethics.commission@lacity.org http://ethics.lacity.org Advice from the Office of the City Attorney or Fair Political Practices Commission The does not have jurisdiction over matters of state law and, therefore, cannot advise you about some matters. Questions regarding state law should be directed to the Office of the City Attorney or Fair Political Practices Commission. Office of the City Attorney City Hall East Tel: (213) 978-7100 200 North Main Street, 8th Floor Fax: (213) 978-8250 Los Angeles, CA 90012 http://www.lacity.org/atty Fair Political Practices Commission 428 J Street Tel: (866) 275-3772 Suite 620 Fax: (916) 322-0886 Sacramento, CA 95814 www.fppc.ca.gov 9