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HomeMy WebLinkAboutFPPC-form-806-Report CITY OF PALO ALTO OFFICE OF THE CITY ATTORNEY November 5, 2012 The Honorable City Council Palo Alto, California Adoption of Form 806, as Required by the California Fair Political Practices Commission, to Provide for Reporting of Election of City Council Members to Stipended Positions, such as Mayor and Vice- Mayor Recommendation Adopt Form 806, as required by the Fair Political Practices Commission (FPPC), for the purpose of reporting appointments of Council Members to stipended positions such as Mayor and Vice- Mayor and direct the City Clerk to post the form on the City’s website. The form will be blank at this time, as there are no City Council Members currently appointed to positions that receive a stipend. After adopting and posting the form, all Council Members will be able to participate in the election of Mayor and Vice-Mayor in January 2013. As part of electing new officers in January, Council should direct the Clerk to amend the posted Form 806 to indicate the Council Members elected as Mayor and Vice-Mayor. Background The Palo Alto Charter requires the City Council, at its first meeting in January, to elect one of its members to serve as Mayor and one as Vice-Mayor, for one-year terms. Charter, Sec. 8. Council policy provides that the Mayor receive a stipend of $150 per month and the Vice-Mayor receive $100 per month to defray the additional expenses of these offices. See Compensation Plan for Management and Professional Personnel and Council Appointees, Sec. P; City Council and Boards and Commissions Policy for Travel and Miscellaneous Expense Reimbursement, p. 5. The California Political Reform Act, Govt. Code §§ 81000 et seq. (the Act), prohibits governmental conflicts of interest. The Fair Political Practice Commission (FPPC) is charged with interpreting and administering the Act. The FFPC adopts regulations to fill in gaps in the statutory scheme. 2 Cal. Code Regs. §§ 18110 et seq. When requested by local officials, the FFPC issues informal assistance letters that provide guidance regarding the FPPC’s interpretation of the Act. FPPC advice letters are public documents, but are not widely publicized. Section 87100 of the Act prohibits public officials from making, participating in making, or using an official position to influence a governmental decision in which the official has a financial interest. Income is one type of financial interest that is subject to the Act. The Act excludes Updated: 10/31/2012 11:14 AM by Sharon Hanks A Page 2 governmental salary and reimbursement from the types of income that create a conflict of interest: “’Income’ does not include: Salary and reimbursements for expenses or per diem . . . received from a state, local, or federal government agency.” § 82030(b)(2). The FPPC regulations confirm a broad definition of government salary: “’Salary’ from a state, local or federal government agency means any and all payments made by a government agency to a public official, or accrued to the benefit of a public official, as consideration for the public official’s services to the government agency.” Reg. 18232. In addition to income, however, the Act also states that a financial interest sufficient to trigger a conflict of interest can be formed by “an economic interest in [the official’s] personal finances.” § 87103. This rule is commonly referred to as the “personal financial effects” rule. The FPPC set a materiality threshold for this type of financial interest of at least $250 in any 12-month period. Reg. 18705.5(a). Discussion For many years, most city attorneys and city officials believed that the appointment of City Council Members to special positions with stipends (such as mayor and vice-mayor, as well as delegates to other regional planning and regulatory bodies) did not create a prohibited conflict of interest because the Act excludes government salary and reimbursement from income that creates a conflict of interest. As a result, it was common for all members of a body to participate in the selection of members to stipended positions, including those interested in and nominated to the positions. In January of 2012, it came to the attention of Bay Area city attorneys that the FPPC had issued a series of advice letters, including one in October 2011, advising that a City Council Member could not make or participate in making a decision to appoint him or herself to a position that provided a stipend of more than $250 annually. The FPPC based its interpretation on the personal financial effects rule, rather than on the rule exempting governmental salary from income that creates a conflict of interest. As a result of the FPPC’s interpretation, Palo Alto’s 2012 Mayor and Vice-Mayor waived in writing the stipend provided by local rule for Mayor and Vice-Mayor. Immediately following the widespread appreciation of the FPPC’s interpretation, city attorneys throughout the state encouraged the FPPC to revise its regulations to exclude stipended government positions from the conflict of interest rules. The city attorneys argued that the FPPC interpretation created an unworkable and potentially anti-democratic rule, and was unnecessary to prevent financial self-dealing in these circumstances. In March 2012, the FPPC responded by amending Regulation 18705.5 to provide that it is not a conflict of interest for an elected official to participate in a decision to appoint him or herself to a stipended government position, such as mayor or vice-mayor, provided that the appointment is one that the body is required to make by state law, local law or a joint powers agreement, Updated: 10/31/2012 11:14 AM by Sharon Hanks A Page 3 and provided that the body posts on its website certain information about the appointment on a form provided by the Commission. Several months later, the FPPC issued Form 806 to implement this regulation. The FPPC requires local bodies to adopt and post Form 806 in advance of making any appointment to a stipended position. Upon appointment of any individual to a stipended position, the local agency amends the form with the names and specific appointment information. We recommend that the Council adopt FPPC Form 806 for the purpose of reporting appointments of Council Members to stipended positions such as Mayor and Vice-Mayor, and direct the City Clerk to post the Form on the City’s website. Resource Impact There are no resource impacts related to this recommendation. Environmental Review Adoption of Form 806 is not a project subject to environmental review under the California Environmental Quality Act (CEQA). ATTACHMENTS:  Attachment A: FPPC Form 806 (PDF)  Attachment B: 2 Cal. Code Regs. § 18705.5 “Materiality Standard: Economic Interest in Personal Finances” (PDF) Department Head: Molly Stump, City Attorney Updated: 10/31/2012 11:14 AM by Sharon Hanks A Page 4 Agency Report of: Public Official Appointments A Public Document California 806 Form 1. Agency Name Division, Department, or Region (If Applicable) For Official Use Only Designated Agency ontact (Name, Title) Date Posted: Area Code/Phone Number E-mail Page __ of __ (Month, Day, Year) 2. Appointments Agency Boards and Name of Appointed Person Appt Date and Per Meeting/Annual Salary/Stipend Commlulons Length of Term ~ Per Meeting: $ ~Name ~ _1 __ 1- (Last, First) Appt Date ~ Estimated Annual: Alternate, if any ~ 0$0-$1,000 0$2,001-$3,000 (Last First) Length of Term 0$1,001-$2,000 0 Other ~ Per Meeting: $ ~Name ~ __ 1 __ 1_- (Last, First) Appf Date ~ Estimated Annual: Alternate, if any ~ 0$0-$1,000 0$2,001-$3,000 (Last, First) Length of Term 0$1,001-$2,000 0 Other ~Name ~ _1 __ 1_-~ Per Meeting: $ (Last, First) Appf Date ~ Estimated Annual: Altemate, if any ~ 0$0-$1,000 0$2,001-$3,000 (Last, Firsf) Length of Term 0$1,001-$2,000 0 Other ~ Per Meeting: $ ~Name ~ _1_1- (Last, First) ApptDate ~ Estimated Annual: Alternate, if any ~ 0$0-$1,000 0$2,001-$3,000 (Last, First) Length of Term 0$1,001-$2,000 0 Other 3. Verification I have read and understand FPPC Regulation 18706.6. I have verified that the appointment and information identified above is true to the best of my information and belief. Signature of Agency Head or Designee Print Name Title (Month, Day, Year) Comment ______________________________________ _ FPPC Form 806 (5/12) FPPC Toll-Free Helpline: 866/ASK-FPPC (866/275-3772) Agency Report of: Public Official Appointments Background This form is used to report additional compensation that officials receive when appointing themselves to positions on committees, boards or commissions of a public agency, special district, and joint powers agency or authority. For example, a city councilmember may be appointed to serve as the city's representative on a joint powers insurance authority or a metropolitan planning organization or mayor. (Regulation 18705.5, amended 03.2012) Each agency must post on its website a single Form 806 which lists all the paid appointed positions. When there is a change in compensation or a new appointment, the Form 806 is updated to reflect the change. The form must be updated promptly as changes occur. Initial Agency Posting As soon as possible, each agency should prepare a Form 806 identifying all of the current paid appointments to other governmental agencies. Thereafter, the form may be amended to include the future appointments. Instructions This form must be posted prior to a vote (or consent item) to appoint a governing board member to a paid position on another agency. Part 1. Agency Identification Identify the agency name and information on who should be contacted for information. Part 2. Appointments Identify the name of the other agency, board or commission. List the name of the official, and an alternate, if any. List the appointment date and the length of term the agency official will serve. Disclose the stipend provided per meeting and the estimated annual payment. The annual salary is an estimate as it will likely vary depending on the number of meetings. It is not necessary to revise the estimate at the end of the calendar year. Part 3. Verification The agency head or his/her designee must sign the verification. Frequently Asked Questions (FAQs) 1. When does an agency need to complete the Form 806? A Form 806 is required when an agency's board members vote on an appointment for a board member to serve on another governmental agency and pay is provided. 2. The city council votes to serve as the city's housing authority, a separate entity. Will the Form 806 be required? If the council members receive an additional compensation for serving on the housing authority, the Form 806 is required. If there is no payment, the Form 806 is not required. California 806 Form A Public Document 3. Are appointments made by a governing board to aPPOint one of its members to serve as an officer of that board for additional pay (e.g. mayor) required to be disclosed on Form 806? Yes. Regulation 18705.5 permits voting on your own appointment to position of mayor as well as other boards and commissions so long as proper disclosure on the Form 806 is made. This exception and disclosure apply to agencies with governing boards that are elected or appointed. 4. In determining the salary, must the agency include mileage reimbursements, travel payments, health benefits, and other compensation? No. The FPPC regulation only requires the reporting of the stipend or salary. 5. Which agency must post the Form 806? The agency that is voting to appoint a public official must post the Form 806 on its website. The agency that the official will serve as a member is not required to post the Form 806. The form is not sent to the FPPC. 6. When must the Form 806 be amended? The Form 806 should be amended promptly upon any of the following circumstances: (1) the number of scheduled meetings is changed, (2) there is a change in the compensation paid to the members, or (3) there is a change in membership on the board or commission. 7. When a body meets irregularly, how should the annual compensation be estimated? The agency should estimate compensation using the highest number of meetings. 8. In 2013 our agency will have a new appOintment to a new agency. How is the Form 806 updated? Before the agency votes on the appointment, the agency should update the Form 806 and identify the other governmental entity's name. If known, also include other information such as the number of meetings and stipend. As long as that information is posted prior to a vote of the governing board on an appointment, the agency is in compliance with Regulation 18705.5. Following the vote, the agency must update the form to identify the individual that will serve. Privacy Information Notice Information requested by the FPPC is used to administer and enforce the Political Reform Act. Failure to provide information may be a violation subject to penalties. All reports are public records available for inspection and reproduction. Direct questions to FPPC's General Counsel. Fair Political Practices Commission, 428 J Street, Ste. 620, Sacramento, CA 95814. FPPC Form 806 (5/12) FPPC TolI·Free Helpline: 866/ASK·FPPC (866/275·3772) (Regulations of the Fair Political Practices Commission, Title 2, Division 6, California Code of Regulations) § 18705.5. Materiality Standard: Economic Interest in Personal Finances. (a) A reasonably foreseeable financial effect on a public official's or his or her immediate family's personal finances is material ifit is at least $250 in any 12-month period. When determining whether a governmental decision has a material financial effect on a public official's economic interest in his or her personal finances, neither a financial effect on the value of real property owned directly or indirectly by the official, nor a financial effect on the gross revenues, expenses, or value of assets and liabilities of a business entity in which the official has a direct or indirect investment interest shall be considered. (b) The financial effects of a decision which affects only the salary, per diem, or reimbursement for expenses the public official or a member of his or her immediate family receives from a federal, state, or local government agency shall not be deemed material, unless the decision is to appoint, hire, fire, promote, demote, suspend without payor otherwise take disciplinary action with financial sanction against the official or a member of his or her immediate family, or to set a salary for the official or a member of his or her immediate family which is different from salaries paid to other employees of the government agency in the same job classification or position, or when the member of the public official's immediate family is the only person in the job classification or position. (c) Notwithstanding subsection (b), pursuant to Section 82030(b)(2) and Regulation 18232, a public official may make, participate in making, or use his or her official position to influence or attempt to influence, a government decision where all of the following conditions are satisfied: (1) The decision is on his or her appointment as an officer of the body of which he or she is a member (e.g., mayor or deputy mayor), or to a committee, board, or commission of a public agency, a special district, a joint powers agency or authority, a joint powers insurance agency or authority, or a metropolitan planning organization. (2) The appointment is one required to be made by the body of which the official is a member pursuant to either state law, local law, or a joint powers agreement. (3) The body making the appointment referred to in paragraph (1) adopts and posts on its website, on a form provided by the Commission, a list that sets forth each appointed position for which compensation is paid, the salary or stipend for each appointed position, the name of the public official who has been appointed to the position and the name of the public official, if any, who has been appointed as an alternate, and the term of the position. COMMENT: Cross-references: For the definition of "immediate family," see Government Code section 82029. Note: Authority cited: Section 83112, Government Code. Reference: Sections 87100, 87102.5, 87102.6,87102.8 and 87103, Government Code. HISTORY 1. New section filed 11-23-98; operative 11-23-98 pursuant to the 1974 version of Government Code section 11380.2 and title 2, California Code of Regulations, section 18312( d) and (e) (Register 98, No. 48). 2. Change without regulatory effect amending section heading filed 3-26-99 pursuant to section 100, title 1, California Code of Regulations (Register 99, No. 13). 3. Editorial correction of History 1 (Register 2000, No. 25). 4. Amendment of section heading and section filed 1-17-2001; operative 2-1-2001. Submitted to OAL for filing pursuant to Fair Political Practices Commission v. Office of Administrative Law, 3 Civil C010924, California Court of Appeal, Third Appellate District, nonpublished decision, April 27, 1992 (FPPC regulations only subject to 1974 Administrative Procedure Act rulemaking requirements) (Register 2001, No.3). 5. Amendment of subsection (a) filed 1-16-2002; operative 2-15-2002 (Register 2002, No.3). 6. Amendment of subsection (b) filed 6-21-2005; operative 7-21-2005 (Register 2005, No. 25). 7. Amendment of subsection (a) filed 12-18-2006; operative 1-17-2007. Submitted to OAL for filing pursuant to Fair Political Practices Commission v. Office of Administrative Law, 3 Civil C010924, California Court of Appeal, Third Appellate District, nonpublished decision, April 27, 1992 (FPPC regulations only subject to 1974 Administrative Procedure Act rulemaking requirements) (Register 2006, No. 51). 8. New subsections (c)-(c)(3) filed 4-23-2012; operative 5-23-2012. Submitted to OAL for filing pursuant to Fair Political Practices Commission v. Office of Administrative Law, 3 Civil C010924, California Court of Appeal, Third Appellate District, nonpublished decision, April 27, 1992 (FPPC regulations only subject to 1974 Administrative Procedure Act rulemaking requirements and not subject to procedural or substantive review by OAL) (Register 2012, No. 17).