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MINUTES
ETHICS COMMISSION
CITY AND COUNTY OF HONOLULU
Date and Place: April 8, 2010
Standard Financial Plaza
Conference Room, Suite 211
Present: Lex Smith, Chair
Susan S. Heitzman, Vice Chair
Wayne T. Hikida
Patricia Y. Lee, Esq.
Geri Marullo
Charles W. Totto, Executive Director and Legal Counsel (EDLC)
Matthew J. Viola, Ethics Commission Outside Counsel (ECOC)
Stenographer: Norm Fisher
I. CALL TO ORDER
The 430TH meeting of the Ethics Commission (Commission or EC) was called to order at 11:45 a.m. by the Chair.
II. APPROVAL OF THE MINUTES OF THE OPEN SESSION OF THE
MARCH 3, 2010 OPEN MEETING
The minutes of the open session of March 3, 2010 meeting were unanimously approved.
III. OLD BUSINESS
A. Confirming the date and time for the May 6, 2010 meeting and setting the date and time for the June, 2010 meeting
The EC rescheduled the May 6, 2010 meeting to May 5, 2010 and scheduled the date and times for the June, 2010 for June 8, 2010 at 11:30 a.m. in the Standard Financial Plaza Conference Room, Suite 211.
IV. NEW BUSINESS
The Executive Director and Legal Counsel (EDLC) referred to his memorandum dated April 5, 2010 regarding the following agenda items:
A. Adminstrative News
Office space
The EDLC reported that the city is still negotiating with our landlord to find another space in this building for the Commission.
Financial disclosures filed by city officers and employees
The EDLC reported that, thanks to Norm's hard work and persistence, the Commission has now received all of the financial disclosures.
B. FY 2011 budget, salaries and workload
The EDLC reported that due to budget restrictions imposed on most departments, the Commission's FY11 budget will be reduced by about 7% from $209,027 to $194,729. The EDLC stated that the budget reduction is a result of a 5% reduction in pay for the EDLC and a 9.3% reduction in pay for staff. Staff will be furloughed (that is, not at work) 2 workdays each month. The EDLC will not be furloughed.
The EDLC also reported that because of the continuing increase in the Commission's workload, the Council Budget Committee has expressed its interest in adding another position at the Commission for a full-time attorney in FY11.
C. Report regarding Resolution 08-232, requiring recusal from participation or voting when a councilmember has a conflict of interest
The EDLC reported that the resolution is gaining traction with the Council. At this time, the Executive Affairs and Legal Matters Committee has introduced a draft that would prohibit participation in or voting on a matter by a councilmember who has an interest in the matter. The EDLC stated that the resolution has created worthwhile discussion with the councilmembers about conflicts of interest in general. However, the real test will be whether the resolution is important enough to be among the three or four questions that will be selected by the Council to go on the fall election ballot.
D. Report and recommendation regarding the value to the recipient of a political fundraiser ticket
This issue was reported by the Commission's outside counsel, Matt Viola (ECOC).
The ECOC reported that the Commission received an oral inquiry regarding the appropriate valuation of gifts of tickets to political fundraiser events. The question is whether the full "face value" of the ticket is considered to be the gift amount for purposes of the city's gift prohibition laws, or whether the gift amount is the fair market value of the dinner, etc. provided at the event.
The ECOC reported that in Advisory Opinion No. 2003-3, the Ethics Commission considered the following question: "For purposes of the city gift prohibition laws, should the full price of the ticket be considered a gift, or should the valuation of the gift be limited to the fair market value of the benefit received in exchange for the ticket?" In concluding that the value of the gift should be limited to the fair market value of the benefit received, the Ethics Commission relied on the main concern that the gift prohibition laws address: the exchange of a payment (in the form of a gift) for an official favor.
The ECOC stated that if the gift prohibition laws are intended to prohibit the exchange (or even the appearance of an exchange) of a payment for special treatment, it follows that the valuation of the gift should be limited to what the recipient actually receives.
The ECOC stated that in the case of charitable fundraising tickets with a clear donation component, the required exchange element is missing with respect to the donation amount. The exchange is between the original purchaser of the ticket and the charity, which directly receives the benefit of the donation. The city officer/employee is essentially a bystander to this part of the transaction. He or she receives none of the benefits of the donation -- i.e., nothing that would influence or reward his or her official decisions. As a result, there is no reasonable inference to be drawn that he or she is being influenced in discharging his or her official duties or is being rewarded for taking official action.
The ECOC stated that, therefore, staff recommends that the same reasoning the Commission employed in Advisory Opinion No. 2003-3 should be applied to the valuation of political fundraiser tickets: the gift valuation should be equal to the fair market value of the tangible benefits the city officer/employee receives by attending the fund raiser.
The ECOC stated that this analysis would change if there were reason to believe that the officer/employee did in fact receive some benefit from the donation. For example, if the officer/employee attempted to claim the donation as a charitable deduction for tax purposes, the full amount of the ticket, including the donation amount, would be a gift under the gift prohibition laws. Also, if the ticket provided some benefit to the officer/employee beyond the dinner (e.g., participation in a raffle drawing held at the dinner) the value of the additional benefit would be a gift under the gift prohibition laws.
The ECOC presented the Commission with a draft of a proposed advisory opinion for its review and approval, which incorporates staff's recommendations.
Upon discussing the matter, and after reviewing the information provided by the Commission's staff, the Commission moved, seconded, and unanimously carried to accept staff's recommendation, and the proposed advisory opinion as written.
E. Annual election of officers
The Commission moved, seconded, and unanimously carried to keep the status quo until the end of 2010 (i.e., Lex Smith, Chair, and Susan Heitzman, Vice Chair).
V. EXECUTIVE SESSION SUMMARY
A. Approval of the minutes of the executive session of the March 3, 2010 meeting
The minutes of the executive session meeting of March 3, 2010 was unanimously approved.
The EDLC referred to his memorandum dated April 5, 2010 regarding the following agenda items:
B. Status report regarding Advisory Opinion No. 2010-2, Councilmember Rod Tam
The EDLC reported that the following events occurred as a result of the Commission's Advisory Opinion No. 2010-2 (AO 2010-2): (1) Council Chair Apo decided to have a press conference to announce Councilmember Tam's voluntary resignation as the Zoning Committee chair and his removal from all other committees; (2) the Commission received a lot of positive feedback for the caliber of AO 2010-2 and taking on a councilmember; (3) on behalf of the Attorney General's office, HPD subpoenaed the Commission's case file in this matter; and other matters.
The EDLC stated that staff is working with Council Chair Apo to rewrite the Annual Contingency Allowance Policy as recommended by the Commission, and other matters resulting from AO 2010-2.
Upon discussing the matter, and after reviewing the information provided by the Commission's staff, the Commission instructed staff to draft a policy for Commission review that outlines a process of disseminating opinions to the public.
C. Annual performance review of the Executive Director and Legal Counsel
The EC decided to defer this matter until the next meeting.
D. Report and recommendation regarding complaint of misuse of city resources against a city officer
This matter was reported by Matt Viola, the Commission's Outside Counsel (ECOC). The ECOC reported that the Commission received a complaint by email, alleging that a city officer engaged in unethical conduct in connection with a trip to Japan in 2006 that was financed by a non-city entity.
The ECOC stated that the basic allegation seems to be that the city officer violated the city's fair and equal treatment policy by using city resources for non-city purposes.
The ECOC stated that Chuck Totto, Executive Director and Legal Counsel (the "EDLC"), sent a response to the complainant via email, in which he summarized his initial investigation and conclusion that there was no probable cause to find an ethics violation.
The ECOC stated that immediately after receiving the EDLC's email, the complainant replied by email, stating that he objected to the EDLC's conclusion, which he felt was not based on sufficient documentation and asked to have the Commission review this matter and the manner by which the matter has been handled.
Upon discussing the matter, and after reviewing the information provided by the Commission's staff, the Commission instructed the ECOC to inform the complainant that the Commission finds no basis to question the EDLC's impartiality or his handling of the investigation in this matter. However, the Commission does agree with the EDLC's voluntary decision to remove himself from the investigation and to assign this matter to the ECOC.
The Commission also instructed the ECOC to inform the complainant that if he wished to make a formal complaint against the EDLC, then he should submit to the Commission a detailed written statement setting forth the factual basis of the complaint.
E. Status of EC No. 05-144.
The status of case EC NO. 05-144 is deferred to a future meeting to give the EDLC the opportunity to review the case.
VI. ADJOURNMENT
The EC moved, seconded, and unanimously carried to adjourn the meeting. The meeting was adjourned at 1:15 p.m.
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