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HomeMy WebLinkAbout04.a. Gifts, Honoraria and Travel Expenses (Handout)Aly. a_ - Mo nd 0 1k9 GIFTS, HONORARIA & TRAVEL EXPENSES meyers i nave professional low corporation 555 12th Street Suite 1500 Oakland, CA 94607 510.808.2000 www.meyersnave.com With offices in: Oakland Los Angeles Sacramento Santa Rosa San Francisco Fresno RESTRICTIONS ON GIFTS, HONORARIA, AND TRAVEL EXPENSES I. Introduction The Political Reform Act ( "Act ") restricts receipt of gifts, travel payments and prohibits receipt of honoraria by public officials and certain employees of local government agencies. In addition, the Act and the regulations promulgated pursuant to the Act also include disclosure requirements that apply in certain circumstances. II. Persons Covered The following persons are subject to the Act's gift restriction, travel expense limitation, and honoraria prohibition: • members of boards of supervisors and city councils • mayors • city /county planning commissioners • city /county chief administrative officers • city /county treasurers • district attorneys • county counsels • city managers • city attorneys • public officials who manage public investments Candidates for these offices and positions also fall under regulation by the Act. The Act's regulation of unsuccessful candidates ends after the first of the following occurs: election results are certified or losing candidates complete campaign filing obligations. Note: Certain categories of employees of local government agencies, not listed in Government Code Section 87200, also fall under regulation by the Act if the agency's conflict of interest code requires that employees in that category must file a Statement of Economic Interests (Form 700). (For purposes of this presentation, all covered persons, whether elected or appointed officials or agency employees, will be included in "public officials" or "officials. ") III. Gift Restrictions Public officials may not accept gifts from any single source totaling more than $420 in a calendar year. A "gift" includes any payment or other benefit conferring a personal benefit for which the public official does not provide goods or services of equal or greater value. A rebate or discount not regularly available to members of the public is also considered a gift. A gift has been received or accepted when the official takes actual possession of the gift or exercises direction or control over the gift, including discarding the gift or turning it over to another person. FPPC regulation 18943 provides that a gift given to a member or members of an official's family is not to be considered a gift to the official unless one of the exceptions listed in the regulation apply. For example, the gift will be treated as a gift to the official if there is evidence to support that the person giving the gift had a purpose to influence the official. Gifts aggregating $420 or more could disqualify the official with respect to a decision affecting the party who made the gift. Finally, gifts aggregating $50 or more must be disclosed on a Form 700. Note: An agency's conflict of interest code may require certain categories of employees to disclose specific sources of gifts, which then become subject to the $420 gift limit. A gift to a public agency that confers a personal benefit on a public official will be considered as a gift to the agency, and not count against the $420 gift limit, only if all seven of the following requirements are met: 1. The agency head or his or her designee controls and determines the use of the gift by the agency and which official or employee will benefit. The donor may identify a purpose for the gift, but the donor may not designate by name, title, classification or otherwise the official or type of official who will use the gift. The agency head or designee who controls the use of the gift may not select himself or herself as the individual who will use the gift. 2. The gift must be used for official agency business. 3. Within 30 days after the use of the gift, the agency must report the gift on Form 801. That form, among other things, indicates who gave the gift, the amount of the gift, and how the gift was used. The form is a public record and must be posted on the agency's web site. (If the agency has no web site, the form is provided to the FPPC and posed on the FPPC's website.) The gifts must be recorded in a log that permits search by either the name of the donor or the name of the official benefiting. That log and the forms are to be kept for a period of 4 years. 4. The gift cannot be a gift of travel for a state or local elected official as defined in Government Code Section §82020, or any official specified in Government Code Section §87200. This 2 includes costs of transportation, meals or lodging. 5. Where travel gifts are permitted, the payment cannot exceed any agency- approved reimbursement rates for travel. 6. Where travel gifts are permitted, the agency head must have pre- approved the travel in writing in advance of the actual travel. 7. The payment may not be a gift of travel passes or tickets (receipt of which is regulated by 2 CCR §18944.1). The regulation does not apply to payments received by a government agency from the federal government for education, training or other inter- agency programs. (Additional information is also available at the FPPC's website at: http: / /www.fppc. ca.govlindex.htmi ?id =512.) IV. Exceptions to Gift Restrictions A. The following gifts are not subject to gift limits and are not required to be disclosed: • Gifts returned unused or for which the donor is reimbursed. • Gifts donated unused to a 501(c)(3) non - profit, tax - exempt organization or another government agency within 30 days of receipt (without claiming a deduction for tax purposes). • Gifts from a family member, defined to include those individuals listed in Government Code Section 82028(b)(3) and 2 Cal Code Regs. § 18942(a)(3), unless the family member is an intermediary for a third party who is the true source of the gift. • Home hospitality, as defined by 2 Cal Code Regs § 18942.2, provided to an official by an individual in the individual's home with the individual is present, unless the cost of hospitality is paid or reimbursed by another person, the cost of the hospitality is deducted on any person's government tax return, or there is an understanding between the individual extending the hospitality and another person that any amount of compensation the individual receives from that person include a portion to be utilized to provide gifts of hospitality in the individuals home. • Gifts approximately equal in value exchanged between the official and another individual, who is not a lobbyist registered to lobby the official's agency, on holidays, birthdays, or similar occasions, including reciprocal exchanges, to the extent that the 3 value of the benefits received is not substantially disproportionate. Informational material provided to assist the official in the performance of official duties, including books, reports, periodicals, videotapes, or free or discounted admission to informational conferences or seminars. Informational material may also include scale models, pictorial representations, and maps. However, if the market value of an item is more than $420, the public official has the burden of establishing that the item is informational, and not a gift. • A bequest or inheritance. • Campaign contributions, although these must be reported pursuant to the campaign disclosure provisions of the Act. • A personalized plaque or trophy with a commercial value less than $250. • Two tickets for fundraisers for campaign committees or 501(c)(3) non - profit, tax - exempt organizations. • Gifts to members of the public official's family unless the official receives a direct benefit from the gift or exercises discretion and control over the use or disposition of the gift. • Gifts to the official's agency that confer a personal benefit on a public official will be considered a gift to the agency (and not a gift to the official) provided that the conditions in 2 Cal. Code Regs. 18944 have been met. • Tickets or passes provided to an official by the official's agency, provided that the requirements contained in 2 Cal. Code Regs. 18944.1 have been complied with. • Food, shelter, or similar assistance received from a governmental agency or 501(c)(3) non - profit, tax - exempt charity. These items must be available to the general public in connection with a disaster relief program. • Leave credits, including vacation, sick leave, or compensatory time off, donated to the official in accordance with an emergency leave program established by the official's employer and available to all employees in the same job classification or position. • A ticket or pass provided to an official and one guest of the official for his or her admission to a facility, event, show, or performance for an entertainment, amusement, recreational, or similar purpose at which the official performs as ceremonial role on behalf of his or her agency, as defined in 2 Cal. Code Regs. 2 18942.3, so long as the official's agency complies with the posting requirements set forth in 2 Cal. Code Regs. 18944.1. • A prize or award received in a manner not related to the official's status in a contest or competition. However, a prize or award that is not reported as a gift must be reported as income, unless the prize or award is received as a winning from the California State Lottery. • Benefits received as a guest attending a wedding or civil union as long as the benefits are substantially the same as the benefits received by other guests attending the event. • Bereavement offerings typically provided in memory of and concurrent with the passing of a spouse, parent, child, or sibling other relative of the official. • "Acts of Neighborliness," including a service performed, loan of an item, assistance with a repair or similar acts or ordinary assistance consistent with polite behavior in a civilized society. • Personal benefits commonly exchanged between people on a date or in a dating relationship, unless the exceptions provided in 2 Cal. Code Regs. 18942(17)(D) apply. • Payments provided to an official, or an official's family member, by an individual to offset family medical or living expenses that the official can no longer meet with private assistance because of an accident, illness, employment loss, death in the family, other unexpected calamity; or to defray expenses associated with humanitarian efforts such as the adoption of an orphaned child, so long as the conditions provided in 2 Cal. Code Regs. 18942(17)(B) are met, and the exceptions contained in 2 Cal. Code Regs. 18942(17)(D) do not apply. • A payment provided to an official by an individual with whom the official has a long term, close personal friendship unrelated to the official's position with the agency, unless the individual providing the benefit to the official is listed in 2 Cal. Code Regs. 18942(17)(D). Any other payment that would otherwise meet the definition of a gift, where the payment is made by an individual who is not a lobbyist registered to lobby the official's agency, where it is clear that the gift was made because of an existing personal or business relationship unrelated to the official's position and there is no evidence whatsoever at the time the gift is made that the official make or participates in the type of governmental decisions that may have a reasonably foreseeable material financial effect on the individual who would otherwise be the source of the gift. B. The following exceptions are not subject to dollar limits, but may still be subject to reporting requirements, and may require disqualification: • Transportation within California and any necessary lodging and subsistence provided directly in connection with the speech, panel, seminar, or similar service. • Wedding gifts. V. Honoraria Ban Generally, public officials may not accept honoraria payments. An "honorarium" is any payment for any speech given, article published, or attendance at any conference, convention, meeting, social event, meal, etc. A "speech" given includes a public address, oration, or other form of oral presentation, including participation in a panel, seminar, or debate. "Article published" means a non - fictional written work written in connection with any activity other than the practice of a bona fide business, trade, or profession, and that is published in a periodical, journal, newspaper, newsletter, magazine, pamphlet, or similar publication. "Attendance" means being present during, making an appearance at, or serving as a host or master of ceremonies for any conference, convention, meeting, social event, meal, or the like. A. Exceptions Not Reportable The following payments are not prohibited and are not required to be disclosed on a Form 700: • An honorarium that the official returns to the donor within 30 days. • An honorarium that the official delivers to his or her government agency within 30 days for donation to the agency's general fund, and for which the official does not claim a deduction for income tax purposes. • A payment received from a family member. • An honorarium made directly to a bona fide charitable, educational, civic, religious, or similar tax exempt, non - profit organization. However, the official may not make the donation a condition for the speech, article, or attendance. Second, the official may not claim the donation as a deduction for income tax purposes. Third, the official may not be identified to the non - profit organization in connection R with the donation. Finally, the donation may have no reasonably foreseeable financial effect on the official or the official's immediate family. Campaign contributions. Note: Must be reported in accordance with the campaign disclosure provisions of the Act and may be subject to other limitations imposed by the Act. • Personalized plaques and trophies with a commercial value less than $250. • Transportation within California, and any necessary lodging and subsistence provided directly in connection with an official giving a speech, participating in a panel or seminar, or providing a similar service. B. Exceptions That May Be Reportable While the following payments are not considered "honoraria," they may be reportable: Payments received for a performance (comedy routine, dramatic acting, singing engagement, etc.) and payments received for the publication of books, plays, or screenplays. These payments are reportable as income. Income earned for personal services if the services are typically provided in connection with the recipient's business or profession. Earned income must be reported. • Free admission, food, beverages, and other non -cash nominal benefits provided at a conference, convention, meeting, or social event, whether or not the recipient participates. These items may be reportable as gifts and thus subject to the gift limit. Certain payments for transportation, lodging, and subsistence, although not considered honoraria, may be reportable and subject to the gift limit. (See below.) VI. Gifts of Travel Certain travel payments may be subject to gift limit restrictions and /or may be reportable. Travel payments include payments, advances, or reimbursements for travel, including actual transportation as well as 7 related lodging and subsistence. A. The following categories of travel payments are not subject to any limit and are not reportable. • Travel payments provided by the official's government agency or by any state, local, or federal government agency that would be considered income and not a gift. • Reimbursements for travel expenses provided by a 501(c)(3) non - profit, tax - exempt entity for which the official provides equal or greater consideration. • Travel payments provided directly in connection with campaign activities. Note: Such payments must be reported in accordance with the campaign disclosure provisions of the Act. • Travel payments excluded from the definition of "gift" as described above. B. The following travel payments are not subject to the gift limit, but may be reportable: Travel that is reasonably necessary in connection with a bona fide business, trade, or profession, and that satisfies the criteria for federal income tax deductions for business expenses. Where the public official is provided with travel payments in connection with an event at which the official gives a speech, participates on a panel or seminar or similar activity, the following travel payments are exempt: o Transportation provided to the recipient directly for an event in California. o Lodging, meals and beverages provided directly to the recipient; meals and beverages are limited to those provided on the day of the activity. o Free admission, refreshments, and similar non -cash items. Travel not in connection with giving a speech, participating 1959067.1 on a panel, a seminar, or similar activity, but that is reasonably related to either a legislative /governmental purpose or an issue of state, national, or international public policy and which is provided by one of the following: o A government, governmental agency, foreign government, or government authority; o An bona fide educational institution; o A 501(c)(3) non - profit tax - exempt organization; or o A foreign organization that substantially satisfies the 501(c)(3) requirements for tax - exempt status. L]