CITY AND COUNTY OF HONOLULU
Date and Place: January 6, 2010
Standard Financial Plaza
Conference Room, Suite 211
Present: Lex Smith, Esq., Chair
Susan S. Heitzman, Vice Chair
Matthew H. Kobayashi
Wayne T. Hikida
Patricia Y. Lee, Esq.
Charles W. Totto, Executive Director and Legal Counsel (EDLC)
Matthew J. Viola, Ethics Commission Outside Counsel (ECOC)
Stenographer: Norm Fisher
Excused: Geri Marullo
I. CALL TO ORDER
The 428TH meeting of the Ethics Commission (Commission or EC) was called to order at 11:40 a.m. by the Chair.
II. APPROVAL OF THE MINUTES OF THE OPEN SESSION OF THE
DECEMBER 1, 2009 MEETING
The approval of the minutes of the open meeting of December 1, 2009 was deferred until the next meeting.
III. OLD BUSINESS
A. Confirming the date and time for the February 3, 2010 meeting and setting the date and time for the March, 2010 meeting
The EC confirmed the February 3, 2010 meeting, and scheduled the date and time for the March, 2010 meeting for March 3, 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 December 31, 2009 regarding the following agenda items:
A. Introduction of interns
The EDLC introduce the EC's two interns, Patricia Doronila and Samuel Alton, from UH Manoa, will be working part-time with the staff during the spring semester.
B. Administrative news
The EDLC stated that the EC web site hits for the first six months of fiscal year 2010, is more than the entire 2009 fiscal year.
C. Report and recommendation as to Council Resolution 09-336 for an amendment to the Charter regarding pre-employment conflicts of interest
The EDLC reported that Resolution 09-336 would ask the voters in the 2010 general election whether a new section should be added to the Charter banning certain pre-employment conflicts of interest. The EDLC stated that this measure was last before the Commission in February 2008 in the form of Resolution 07-391, and that Resolution 09-336 is virtually identical to the last version of Resolution 07-391. The Commission supported the final draft of Resolution 07-391 because it closed a potential loop hole in the ethics laws.
The EDLC stated that all conflicts of interest must be disclosed to the Commission and the appointing authority per RCH Sec. 11-103. In addition, RCH Sec. 11-104 prohibits a city officer from using his/her position to obtain special treatment for any person or entity. Currently, ethics laws prohibit conflicts arising from:
1. Having a close personal or family relationship (RCH Sec. 11-101);
2. Accepting prohibited gifts (RCH Sec. 11-102(a) and ROH Secs. 3-8.7 and -8.8);
3. Using confidential city information (RCH Sec. 11-102(b));
4. Having a business activity or financial interest that may tend to impair one's judgment in carrying out one's city duties (RCH Sec. 11-102(c));
5. Accepting compensation from any source other than the city for doing your city job (RCH Sec. 11-102(d); and
6. Representing a private interest against the interests of the city or before any city agency (RCH Sec. 11-102(e).
The EDLC stated that the type of issue that would not be covered by current law, but would be covered by Resolution 09-336 is best illustrated by an example:
Assume that a new Director for a city agency worked for a Contractor before his/her service with the city. Also assume that, during 12 months before his/her city employment, the Director was in charge of carrying out the Contractor's work for the city agency. The city agency is responsible to administer, review performance and approve payment for the Contractor's work. Finally, assume that the Director severs all financial ties with the Contractor.
Under current law, the Director would not be legally banned from administering, paying or reviewing the performance of the Contractor because none of the existing conflicts of interest laws were triggered. However, in this scenario, it would be reasonable to question the Director's impartiality in evaluating the performance of and payment to the Contractor.
The EDLC stated that Resolution 09-336 is designed to require that the Director remove himself from involvement with the Contractor's work.
The EDLC stated that the administration opposed, and the Mayor vetoed Resolution 07-391 and is considering its position on Resolution 09-336. The administration's concern was that a pre-employment conflict of interest ban would discourage potential agency heads from moving from private industry to the cabinet. The administration also did not agree that the EC should be the agency to balance the factors to determine if it the conflict should be waived.
The EDLC stated that the waiver provision described in the Resolution 09-336 is similar to ones used by the federal government and a few other jurisdictions. It requires the EC to balance the need for the government official to act on a matter against the magnitude of the conflict of interest. Factors reviewed include: the need for the official's expertise, whether others in the agency are competent to make an informed decision, the dollar value of the conflict of interest, etc. The EDLC stated that balancing the public interest in the waiver process would stretch the current role of the EC.
Upon reviewing and discussing Resolution 09-336, the EC agreed to support the intent of Resolution 09-336, but to also communicate the administration's concerns with the resolution.
D. Report and recommendation regarding legislative bills to clarify the Commission's power to impose civil fines
The EDLC reported that over recent years, the EC has been working to have the counties civil fine process exempted from a state law.
The EDLC stated that current state law is murky, but may be interpreted to require that a county ethics agency may impose a civil fine only for misconduct that occurs after the wrongdoer has notice to cease or correct his/her misconduct. As a practical matter, this would allow misconduct that occurred before the notice to go unpunished. It would also negate the deterrent effect of a civil fine because the official would conform his/her conduct to the notice from the ethics agency.
The EDLC stated that for this legislative session, the Neighbor Island ethics boards and even Mayor William Kanoi (Big Island) support the bills. As such, the EDLC stated that he will be meeting with the House and Senate Judiciary Committee chairs during the week of January 4.
V. EXECUTIVE SESSION SUMMARY
A. Approval of the minutes of the executive session of the December 1, 2009 meeting
The approval of the minutes of the executive session meeting of December 1, 2009 was deferred until the next meeting.
The EDLC referred to his memorandum dated December 31, 2009 regarding the following agenda items:
B. Report and recommendation regarding notice of charge and hearing for violations of RCH Section 11-104 (misuse of city resources), RCH Section 11-102(c) (financial conflicts of interest), RCH Section 11-103 (failure to file written disclosure of conflicts of interest), ROH Section 3-8.4 (failure to file complete financial disclosure statements), ROH Section 3-8.2(b) (acquiring a business or financial interest in which the officer may take official action) by a city officer, EC No. 09-042(o)
The EDLC reported that the city officer's attorney entered a general denial in response to the Notice of Possible Violation of the Standards of conduct in this case and requested an evidentiary hearing.
The EDLC stated that to date staff has not been able to settle this case. The next step in the process is for the Commission to issue a Charge and Notice of Formal Hearing. The EDLC stated that setting the case for hearing will spur the parties to settle or bring the case to a conclusion.
Upon discussing the matter, the EC suggested that staff first inquire about having a DCCA hearing officer conduct a prehearing conference, and possibly hear the case. If a DCCA hearings officer is not available, the EC instructed staff to set the hearing for the week of February 8, 2010. The hearing will take approximately 4 full days.
C. Report and recommendation regarding notice of charge and hearing for violations of RCH Section 11-102(a) and ROH Section 3-8.7(b) (acceptance of prohibited gift), ROH Section 3-8.7(c) (acceptance of prohibited gift in excess of $200 in value), RCH Section 11-104 (misuse of city resources) and/or RCH Section 11-102(d) (accepting compensation from a non-city source for carrying out city duties) by a city employee, EC No. 05-144(w)
The EC has decided to defer this matter until the next meeting.
D. Report and recommendation regarding request for advice whether RCH Section 11-104 (city resources to be used only for city projects) prohibits the deputies of the Department of Corporation counsel from providing pro bono legal services with city resources, EC No. 09-138(w)
This matter was reported by Matt Viola, the Ethics Commission Outside Counsel (ECOC). The ECOC stated that at the last meeting the Commission asked staff to look at what boundaries, if any, should be placed around the "project with a community-wide benefit" exception in order to safeguard against (or at least to minimize) the risks that the exception is exploited to achieve ends it was clearly not intended for.
The ECOC stated that the appropriate scope of the "project with a community-wide benefit" exception depends on the purpose of the exception and, what the risks of abuse are. The types of risks associated with the exception fall into three basic categories: (1) designating projects or events that do not serve the exception's intended purpose; (2) designating projects or events that result in violations of other ethics laws (i.e., other than the prohibition against using city resources for non-city purposes); and (3) designating projects or events that are unwise or imprudent.
The EDLC stated that staff recommends the following safeguards/limitations for each category:
1. Designating projects or events that don't serve the exception's intended purpose. In order to provide some assurance that a project or event meets the basic purpose of the exception, the designating official minimally should be required to submit a written statement to the Ethics Commission that: (1) identifies the activity to be supported; (2) verifies that the activity is by or on behalf of a non-profit or charitable organization; and (3) explains how the activity provides a community-wide benefit, including an explanation of the anticipated scope of the anticipated benefits.
2. Designating projects or events that result in violations of other ethics laws. The "project with a community-wide benefit" exception is an exception to the fair and equal treatment policy's prohibition against the use of city resources for non-city purposes. It is not a blanket exception to the ethics laws in general. Thus, even if the exception is invoked, all of the other ethics laws regarding conflicts of interest, prohibitions against the use of confidential information, etc. still should apply.
3. Designating projects or events that are unwise or imprudent. The Commission's ability to regulate these types of risks is limited. As the Commission has stated on several occasions, as long as an activity has a city purpose, the Commission does not typically pass judgment on the wisdom or prudence of the activity or its cost. E.g., Advisory Opinion Nos. 2009-6 and 2005-4. Thus, imposing restrictions or requiring disclosures that question the judgment of a particular selection is probably not justified. Nevertheless, an advisory opinion outlining the basic contours of what the Commission considers to be a relatively narrow exception to the fair and equal treatment policy could gently remind designating officials of some sensible considerations that should inform the designation process.
The ECOC stated that like any exception, the "project with a community-wide" benefit exception is subject to risks of abuse. However, as discussed above, staff believes that the Ethics Commission can control these risks by adopting the basic safeguards noted above. Therefore, staff recommends that the Commission issue a formal advisory opinion based on the information contained above, and in staff's earlier memorandum.
Upon discussing the matter, and after reviewing the information provided by the Commission's staff, the Commission moved, seconded, and unanimously carried to accept the staff's recommendation, and instructed staff to draft a formal advisory opinion based on the information provided to the Commission by the staff.
The EC moved, seconded, and unanimously carried to adjourn the meeting. The meeting was adjourned at 12:40 p.m.