March 23, 2006


City Council works to plug lobbyist loophole

By Carol Rosen
Staff Writer

At its March 7 meeting, the San Jose City Council amended its Municipal Lobbying Ordinance to include disclosure of contribution amounts and sources regarding fund-raising activity for any city officials and/or candidates for city office made at the direction of a city official/lobbyist during the previous calendar quarter.

Prior to the 2004 ordinance, lobbyists were only required to fill out a form with a list of their clients. The new ordinance requires more disclosure and registration requirements. The lobbyists now must pay a fee, disclose the elected official they met with, what issues were discussed and how many times they met with an elected city official on an issue.

Reports are made on a quarterly basis.

The amendment requires lobbyists to list the names of contributors and the amounts given so the government and the public know to what degree they are influencing an individual official.

“Lobbyist registration reports for the fourth quarter of 2005 revealed a loophole in the implementation of the new disclosure requirements,” said regulation author City Councilmember Ken Yeager. “Lobbyists who engaged in fund-raising activity on behalf of elected officials and candidates disclosed just that. They didn’t, however, disclose any contribution amounts or the corresponding sources of those contributions.

“My amendment closes this loophole. Now the public will have a clear picture of the extent to which lobbyists are attempting to influence the political process,” he said.

While some see this as an important plug to lobbyist loopholes, others don’t think it goes far enough and some lobbyists and council members think there might be some confusion regarding the new rule.

At the same meeting, mayoral candidates and city council members Chuck Reed and Dave Cortese proposed memos that would further tighten the lobbyist rules. In fact, Reed’s memo suggested that “the existing lobbying ordinance [prior to the amendment] has loopholes big enough to drive a Hummer through.” But council members decided not to discuss or consider those memos at this time.

Cortese takes exception to the new rules because he says it isn’t enough. He would like to see reports 48 hours or two business days after each event. The quarterly reports aren’t enough especially since the most important ones won’t appear before the June election.

“I don’t know how my colleagues can continue to talk openness and transparency and continue to allow lobbyists actions to be hidden three to four months at a time,” he told the Times. He also said he would again bring up the need for 48 hour reporting at the Tuesday night City Council meeting, which he did.

Reed agrees with Cortese that the current regulations aren’t enough. “Further changes are necessary because the majority of lobbyists are not required to register,” he told the Times. He said union lobbyists aren’t required to register and don’t have to disclose contributions, although others on the council disagree. In addition, he said business interests with in-house lobbyists don’t get reported.

“Union contributions get reported somewhere,” he added, “but if unions are using their influence to raise money from others, it doesn’t get reported.”

He added that he will keep coming back until the loopholes are closed. At the Tuesday night meeting he introduced a memo containing 35 points. Reed proposed it as an amendment to a motion to study a recommendation by Vice Mayor Cindy Chavez and Councilmembers Judy Chirco, Linda Lezotte and Nancy Pyle.

While some council members agreed with some points, others felt it was not about Sunshine laws but a rehash of points already voted down such as campaign reform and finance. It too was voted down.

Chavez, who also is running for mayor, said she saw merit in a couple of the ideas in both sets of memos and felt they warranted some discussion in the rules committee. “But my colleagues did not support those ideas” at the March 7 meeting, she said.

Speaking for herself, District 9 City Councilwoman Judy Chirco said she didn’t feel “it was appropriate to enact more restrictions when we had a broad based dialog [concerning these same items] a year and a half ago. Ken’s [Yeager] proposal was a clarification of items discussed by the Blue Ribbon task force.”

The Blue Ribbon task force went through months of meetings and used a process where citizens, council members and staff worked out this problem, Chirco said. It may need to be refined further, but she applauded the task force effort, especially the community involvement.

Not surprisingly, lobbyists interviewed by the Times also praised the amendment, but a couple added that there could be some problems. They said the new portion of the ordinance made it a more professional law.

“It’s great to have transparency,” said Ash Pirayou of Pirayou Law Offices in Almaden Valley. “I’m OK with it because it has more transparency.” While there are more things to keep track of, he said, that’s OK because it makes his business clearer. “I’ve been doing this about eight years. The more professional it is the more important the reporting is. The more rules that are made, the clearer the business is, and that’s important for San Jose.”

“We think closing the loophole is a good thing,” said Tom Saggau, a partner at Saggau & DeRollo, a downtown San Jose lobbying firm. “It has a positive effect on our business. This way the public knows who hires us and what we are for and against.”

Saggau is going one step further.

He and his firm are asking the city clerk’s office to conduct a training session for lobbyists showing them what and how these things should be reported. “It’s really important,” he noted. “It’s become quite complicated for lobbyists if they are raising funds [for candidates], how much was given, who gave and in a timely manner.”

One registered lobbyist was a member of the Blue Ribbon task force that created the ordinance in the first place. Former Vice Mayor and City Councilmember Pat Dando is now the president and CEO of the San Jose/Silicon Valley Chamber of Commerce. She also is in favor of the closed loophole, but said the real challenge is being able to follow all the changes that are being made.

Even though she doesn’t think it will significantly affect the Chamber’s business, she says the new amendment will “quantify meetings with elected officials. It will keep track of the time spent with elected officials and ensure that fund-raisers follow the lobby ordinance.”

However, “while I would like to say that the loopholes are plugged, there are always people that will skirt the ordinance … the general intent of the ordinance is to make sure that contributors are giving the correct amount for the correct reasons. Also that there are no expectations that come with the contribution and that the public is aware of who is meeting with whom and what they are contributing.”

Lobbyists do have questions about the ordinance. Pirayou, for example, cited possible mistakes as to whom the lobbyist is working for. He posed that a lobbyist has a client who is interested in attending a function and contributing to a candidate for mayor as an example. The problem, he said, is that he is involved as a lobbyist with one company but this client comes from a different company.

In addition, several lobbyists cited the possibility of double reporting. The contribution is listed on the candidate’s list and also the city-lobbying list. This should not be a problem, according to Chief Deputy City Attorney Norm Sato. The candidate’s reporting requirements comply with state laws while the lobbyist is reporting to the city.

Councilmembers Reed, Cortese offer views to plug up lobby loopholes

As the June election day nears, mayoral candidates are vying to get legislation enacted by the City Council to plug up loopholes in the Municipal Lobbying Ordinance. Whether this is election posturing or not, Councilmembers Chuck Reed and Dave Cortese are vowing to get their recommendations into law.

At the March 7 meeting, the two along with City Councilmember Ken Yeager, who is running for District 4 county supervisor, offered several different options to plug those loopholes. Only Yeager’s was chosen. And, while council members saw important aspects in the two that weren’t chosen, the majority voted not to proceed.

“I think some discussion was warranted [for Reed and Cortese’s proposals] and I thought they should be put to the rules committee. I thought there was merit in a couple of the ideas,” said Vice Mayor Cindy Chavez. “But my colleagues did not support them.”

Yeager’s proposal amends the lobbying ordinance to include disclosure of contributions amounts and contributors regarding fund-raising activity for “any city official candidate for elective office.” Reports are to be made on a quarterly basis.

Both Reed and Cortese felt the amendment wasn’t strong enough.

Cortese proposed six recommendations that he felt would slam the loopholes shut:

He first suggested that quarterly reports were not enough. He recommended lobbyists be required to file disclosure reports within 48 hours or two business days of the fund-raising activity.

He also requested that the city clerk make these reports available on the city’s Web site. The reports would include the lobbyists’ fund-raising activities; the contributions raised and offered and solicitations made on behalf of an elected official.

A permanent ban on former employees of San Jose elected office from returning to City Hall to lobby their former supervisors.

Prohibit former city employees—including elected officials—from registering as lobbyists or providing political consultation services to a registered lobbyist for at least eight years after leaving city hall. Former elected officials or city employees should not be able to exert undue influence on public policy.

Prohibit registered lobbyists, whose prime occupation is to influence election outcomes from serving directly or indirectly through others—fund-raisers, treasurers or other campaign employees or consultants for candidates for city office.

Require the mayor and city council members to report offers of employment and/or negotiation of future employment with any corporation, organization or entity that has or anticipates having legislative issues pending for city council.

Reed’s memo was designed to “amend the ethics ordinance to require disclosure of all contributions raised by lobbyists and to plug loopholes in lobbyist registration requirements so the public can follow money moving among lobbyists, their clients and elected officials.”

In his March 2 memo, Reed said the current ordinance “has loopholes big enough to drive a Hummer through.” Prior to the passage of Yeager’s amendment, according to his memo, “in-house lobbyists are using a 20-hour rule to avoid registration. Registered lobbyists are failing to disclose their sources and the amounts of money they are raising for candidates for city office. And, lobbyists working for an organization with other registered lobbyists are not required to register or report their activities.”

In order to plug these loopholes, he suggested that amendments should include:

Elimination of the 20-hour or more within any three-month period exception that is in the definition of an in-house lobbyist.

Deletion of the section that allows additional lobbyists within a firm to not have to register.

And, amendment-reporting requirements to make clear reports on fund-raising activity including sources and dollar amounts raised for candidates for city office.