Introduction and Purpose

The purpose of this report is to seek approval from the Council for certain changes to the City�s Conflict of Interest Code (BMC Sections 2-1601 � 1604) (�Code�), including the employment classifications for which the filing of a Statement of Economic Interest is required under state law; and the disclosure categories applicable to those employees, boards and commissions.  State law requires that the City have a conflict of interest code and biennial review of that code for the express purpose of providing reasonable assurance that all foreseeable potential conflict of interest situations involving City employees, and members of listed Boards and Commissions not otherwise covered by State law will be disclosed or prevented; to provide each affected person with a clear and specific statement of his or her duties under the code; and to adequately differentiate between designated employees and board and commission members with different powers and responsibilities.  Upon completion of the review, the City is required to amend its Code to reflect any changes necessitated by the review, including new and/or different positions, duties and responsibilities.

We have discovered through the review that the list of designated positions and the disclosure categories need to be revised as explained in more detail below. We have also proposed amending the Code to clean up confusing and repetitive language, and to add the Appendix which lists the positions and disclosure categories to the Burbank Municipal Code instead of adopting it separately by Resolution.  This will avoid confusion in the future and make the review more efficient, thorough and effective.

The City Clerk and the City Attorney are recommending that the City Council introduce and adopt the ordinance presented here.

Background

The overarching purpose of the California Political Reform Act is to ensure that a public officer or employee should not be involved in making or participating in the making of decisions through the exercise of his or her official duties, which may foreseeably have a material effect on any financial interest of the employee (�employee� by definition includes spouse and dependent children).  To that end, Government Code �� 87300 et seq. require every local agency to promulgate a Conflict of Interest Code which contains (1) a specific listing of the positions within the agency which involve the making or participation in the making of decisions which may foreseeably have a material effect on any financial interest, and (2) for each such position, the specific types of investments, business positions, interests in real property and sources of income which are reportable. All such listed employees are required to file an annual Form 700 Statement of Economic Interest.[1]

The reporting categories in the Form 700 include the following financial interests:

A.        Schedule A-1 

Investments � Stocks, Bonds and Other Interests (>$2000)

For this category, �investment� means any financial interest in any business entity which is located in, doing business in, or which has done business during the previous two years in Burbank and in which the employee/spouse/dependent children had a direct, indirect or beneficial interest totaling $2,000 or more at any time during a reporting period.  �Doing business in Burbank� means the entity has business contacts on a regular or substantial basis with a person who maintains a physical presence in Burbank (e.g., manufacturing, distributing, selling, purchasing, or providing services or goods.)

B.        Schedule A-2

Investments, Income, Assets of Business Entities/Trusts

This category requires reporting investments in and income derived from a business entity or trust in which employee/spouse/dependent children have a 10% or greater interest valued at $2,000 or more during the reporting period, and, which is located in, doing business in, or which has done business during the previous two years in Burbank.   This category includes commission income in excess of $10,000 and real property interests held by the business entity or trust. 

C.        Schedule B - Interests in Real Property

This category requires disclosure of interests in real property located in Burbank other than a residence, including an ownership interest, deed of trust, easement, option, leasehold interest, or interest in real property held by a business entity in which the employee has 10% or more ownership interest.  Note that this category also requires disclosure of a spouse�s separate interest in real property as well. 

D.        Schedule C � Income and Business Positions

This category would require disclosure if the employee/member receives a gross income exceeding $500.00 from any source located in, doing business in, planning to do business in or which has done business in Burbank within the previous two years. It would include salary, wages, per diem, expense reimbursement, the employee�s community property interest in a spouse�s income from such a business, commission income, gross income from sale of house or car not otherwise reported on another schedule, honoraria, payments received on loans made to others, etc.

E.        Schedules D, E and F � Loans, Gifts, Honoraria, Travel Payments, etc.

These categories relate to reporting requirements for any income received from non-government sources located in or doing business in Burbank whether it be in the form of loans, gifts, honoraria, or travel payments, advances and reimbursements.  We believe that absent some extraordinary circumstance, these categories should still be applicable to all designated employees, and board and commission members and all should disclose in these categories.

The City previously adopted the form Conflict of Interest Code promulgated by the Fair Political Practices Commission, (Code of California Regulations � 18700).  It is set forth in BMC �� 2-1601 � 1604.  The employee designations are reflected in the Appendix adopted by separate Resolution and amended from time to time by the City Council as circumstances necessitate. The City�s current Code requires all designated employees to report interests in all Form 700 categories.   

Government Code � 87306 requires an agency to amend its Conflict of Interest Code when necessitated by changed circumstances including the creation of new positions and changes in the duties assigned to existing positions on the list.  Government Code � 87306.5 requires every agency to review its Conflict of Interest Code every two years to determine if changes are needed due to the changed circumstances listed above and, if so, to make those changes no later than October 1. 

Review Process

Both the spirit and the letter of the Political Reform Act require that the designated disclosure categories for each position be reflected in the actual job duties of the employee. The original Conflict of Interest Code was written to require disclosure in all the reporting categories, including stock, bond and other business investments, interests in real property, income and personal business interests, loans, gifts and travel payments and honoraria.  We have determined, however, that for many positions, such broad disclosure categories are unrelated in any manner to the job duties of the position and as such, are overly personally intrusive.  This years� review was much more detailed and comprehensive and was designed to more accurately link the disclosure requirements to the actual job duties and responsibilities of the employees.  The departments were asked to determine (1) for those that were on the list, whether there were any changed circumstances in those employees� duties that would affect either their reporting status or the disclosure categories; and, (2) whether there were any employee classifications whose duties would necessitate them being added to the list and if so, for which disclosure categories.  The departments were also asked to determine whether the designated employee position makes or participates in making decisions regarding business entities located in or doing business in Burbank; and/or whether the designated employee makes or participates in making decisions regarding real property located in Burbank.  Boards and Commissions were reviewed to determine whether their code-mandated responsibilities would put them in a position to make or participate in making decisions regarding business entities located in or doing business in Burbank; and/or regarding real property located in Burbank.

Proposed Appendix Revisions

We have proposed a new Appendix list which designates the employee and board and commission position and their respective disclosure categories.  We have also designated the disclosure categories in such a manner as to reflect a better nexus between the job or board/commission duties and the categories as follows:

1. If the employee/board/commission member is involved in making or participating in the making of decisions regarding any business or business entity which is located in, doing business in, planning to do business in or which has done business in Burbank within the previous two years, then the reporting categories should be Schedules A-1, A-2, and C.

2. If the designated employee/board/commission member makes or participates in making decisions regarding Real Property located in Burbank, then the reportable categories should include Schedule B, Interests in Real Property.

3. All employees shall continue to be required to report on Schedules D, E and F � Loans, Gifts, Honoraria, Travel Payments, etc.

Proposed Changes to BMC Provisions

The City�s Conflict of Interest Code is set forth in BMC �� 2-1601 � 1604.  The existing Code incorporates by reference the terms of the Fair Political Practices Commission�s Regulation �18730 (Code of California Regulations or �CCR�). This Regulation provides that a city may incorporate its provisions, designate reporting employees and formulate reporting categories, and that doing so will constitute adoption of a conflict of interest code within the meaning of the Government Code requirements. The designated employees and their respective reporting categories are contained in an Appendix which in the past was adopted separately by Resolution.    

After completion of the biennial review process, we are proposing changes to the Conflict of Interest Code as follows:

1. Update code references (�California Administrative Code�, referred to in BMC � 2-1601 is now called �California Code of Regulations�) and re-write other grammatically difficult and redundant phrasing to make it easier to understand.  The provisions of BMC � 2-1603 have been incorporated into �� 2-1601 and 1602  and � 2-1603 has been deleted as being repetitive.  BMC � 2-1604 has been renumbered � 2-1603.  

2. The current code requires all designated employees to report in all disclosure categories.  As indicated above, the Government Code, the FPPC Regulations and the FPPC itself contemplate that a public agency will tailor the required reporting categories to the actual job duties of the employee and board and commission classification.  The proposed code amendments designate disclosure categories determined by the review to more accurately reflect the actual duties and responsibilities for each position.

3. Instead of adopting the Appendix of designated positions and disclosure categories in a separate resolution, we are including the Appendix with the Ordinance.  We think this will be a more efficient process, will lead to a more thorough and effective review for the future.

Boards and Commissions

City Planning Board members are required by state law to file statements of economic interest. For all other boards and commissions, it is up to the City Council to designate who should file and their disclosure categories.  The criteria are the same as for city employees discussed above, i.e., does the board/commission and its members make or participate in the making of decisions regarding any business or business entity which is located in, doing business in, planning to do business in or which has done business in Burbank within the previous two years; does the board/commission and its members make or participate in making decisions regarding real property located in Burbank. 

The following boards and commission members file Form 700 statements of economic interest and are required to report in all disclosure categories:

Art in Public Places Committee    

Board of Building and Fire Code Appeals

Burbank Water and Power Board

Park, Recreation, and Community Services Board

Traffic and Transportation Committee

Transportation Commission

For no discernable reason, the following Boards and Commissions are not currently required to file the Form 700:

Board of Library Trustees

Burbank Civic Pride Committee

Civil Service Board

Heritage Commission

Landlord�Tenant Commission

Police Commission

Senior Citizen Board

Youth Board

We would recommend that the following Boards and Commissions make or participate in making decisions regarding either businesses or real property in Burbank and should be added to the list of required filers and with the disclosure categories noted:

1. The Board of Library Trustees� duties include recommending to the City Council the acquisition of property for library sites.  As they could be considered to participate in making decisions regarding real property located in Burbank, their disclosure categories should include Schedule B, Interests in Real Property;

2. The Senior Board�s duties including advising the Council on expansion of existing facilities and development of new facility services.  As they could be considered to participate in making decisions regarding real property located in Burbank, their disclosure categories should include Schedule B, Interests in Real Property;

3. The Landlord-Tenant Commission makes tenant referrals to private and public agencies. As they could be considered to participate in the making of decisions regarding any business or business entity which is located in, doing business in, planning to do business in or which has done business in Burbank within the previous two years, then their reporting categories should be Schedules A-1, A-2, and C. 

4. The Heritage Commission has many responsibilities relating specifically to recommending properties for designation as historic structures, making recommendations to council on demolition or removal of historical structure, to encourage private acquisition of historical buildings, to establish rehabilitation loan programs, among others.   As they could be considered to participate in making decisions regarding real property located in Burbank, their disclosure categories should include Schedule B, Interests in Real Property.

Recommendation

That the Council introduce �AN ORDINANCE OF THE COUNCIL OF THE CITY OF BURBANK AMENDING SECTIONS 2-1601, 2-1602, AND 2-1603 OF THE BURBANK MUNICIPAL CODE, RELATING TO CONFLICT OF INTEREST CODE�.

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