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CC - Item 5B - Staff Report Reconsideration of AB 84 /EME Lyi staff,eport TO: HONORABLE MAYOR AND MEMBERS ROSEMEAD CITY COUNCIL FROM: FRANK G. TRIPEPI, CITY MANAGER YF�' DATE: JUNE 2, 1999 � RE: RECONSIDERATION OF AB 84 (GRANLUND) - POLITICAL COMMITTEES: PUBLIC ENTITIES This item has been placed on the agenda for reconsideration by Councilmember Taylor. Attached for the Council's review is a copy of AB 84 (Granlund) and information from the League of California Cities regarding the Action for Better Cities (ABC) political action committee. The packet sent by the League includes general information about ABC and a copy of the by-law-s for the new PAC. AB 84 will be heard next by the Senate Elections and Reapportionment Committee on June 16, 1999. RECOMMENDATION: Because the Council previously took action to oppose this bill, and it is being reconsidered, staff has no recommendation on this bill. wmemo.ab84abc to COUNCIL AGENDA JUN 031999 ITEM No.�.� • JUN 01 '99 03:26P,1 GONSALVES 8 SON P.L-d AMENDED IN SENATE APRIL 26, 1999 AMENDED IN ASSEMBLY APRIL 8, 1999 AMENDED IN ASSEMBLY MARCH 11, 1999 CALIFORNIA LEGISLATURE-1999-2000 REGULAR SESSION ASSEMBLY BILL No. 84 Introduced by Assembly Member Granlund (Coauthor: Assembly Member Frusetta) December 9; 1998 An act to add Section 53072.5 to the Government Code, relating to political committees. LEGISLAT1vE COUNSELS DIGEST AB 84, as amended, Granlund. Political committees: public entities. Existing law generally prohibits any elected state officer, appointee, employee, or consultant from using or permitting others to use state resources for political campaign activity. This bill would prohibit a ,city, county, special district, or other local governmental agency from using public funds to pay membership dues or membership fees to any • organization that is, makes defined contributions to, or establishes or maintains, a committee as defined under the Political Reform Act of 1974 that is established and registered with the Secretary of State on and after January 1, 1999. Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. • 95 JUN 01 '99 0327°M GONSPLVES E SON '- AB 84 • — 2 _ The people of the State of California do enact as follows: 1 SECTION 1. Section 53072.5 is added to the 2 Government Code, to read: 3 53072.5. No city, county, special district, or other local 4 governmental agency may use public funds to pay 5 membership dues or membership fees to any 6 organization that is, makes any contribution to, or 7 establishes or maintains, a committee as defined in 8 Section 82013 that is established and registered with the For 9 Secretary of State on and after January 1, 10 purposes of this section, "contribution" has the same 11 meaning as defined in Section 82015. For purposesses of tis s 12 section, "contribution" does not 13 communication by an organization of its endorsement of 14 a candidate made either directly to the candidate or in its 15 membership based newsletter. 16 SEC. 2. It is the intent of the Legislature that no 17 committee, as defined in Section 82013 of the 18 Government Code, that is established and registered with 19 the Secretary of State on and after January 1, 1999, and 20 that is established, managed, or maintained with any 21 public funds shall participate in any campaign involving 22 the qualification or election of a candidate or ballot. 23 measure. • • 0 96 06/01/99 15:26 UERGUE OR CR CITIES 9 818 327 9218 ST.2.51 ;o L� _ Date (June 1, 1999 Number ofsieges including cover sheet 33 TO: Jeff Steward FROM: Jay Michael City of Rosemead Action for Better Cities 1400 K Street, Suite 307 Sacramento, CA 95814 Phone Phone 916-656-6272 Fax Phone 626-307-9218 Fax Phone 916-658-8289 I CC: — REMARKS: ❑ Urgent (21 For your review ❑ Reply ASAP ❑ Please Comment As requested, please find attached the following documents relating to Action for Better Cities: Six Premises On Which Action For Better Cities (ABC) Is Based l2 pages), Can Cities Strengthen Local Control and Stabilize City Finances Through Political Action? (20 pages), Bylaws of Action for Better Cities (10 pages). Thank you. JM:cm • Ii • 96/01/99 15:25 LEAGUE OP CP CITIES 4 818 304 9218 NJ.05: 902 SIX PREMISES ON WINCH ACTION FOR BETTER Cl'irIES (ABC) IS BASED 1. Despite a few obvious exceptions, local residents and their own elected community leaders are in a better position to govern local affairs_. to decide local issues... than the state legislature, congress or state and federal officials. I Local governance requires independent authority to raise and expend the revenue which finances local services. • 2. At the state level major policy issues are not always decided:on the merits. Critical issues, including those which attempt to micromanage local affairs, often become pawns in partisan power brokering or battles among private interests over priorities in the expenditure of public funds. As a general rule, money drives public policy in the legislature and the interest groups which have, and know how to use, political resources will prevail. Campaign funds provide leverage and power. Thal lawyers, teachers, doctors, large segments of the business community and other special interests want their issues to be decided at the state level because that is where their political money exerts the most leverage. 3. Cities,over the past 20 years, have experienced a loss of effectiveness in the state legislature, not because cities hove gotten weaker but because other interests have learned how to use political resources and have gotten stronger. They have learned how to play and the stakes are so high they feel they must do so in order to survive. An interdependency has developed between state elected officials and special interests. An increasing number of state legislators view interest groups as cash cows for campaign money. "If we don't regulate them, we can't milk them". The political players divide up the pie and there is nothing left for those who don't play the political game. 4. The Legislature can stiff cities with impunity. Individual legislators who vote against city sponsored measures suffer no political consequences. But if they cross the teachers, the doctors or the trial lawyers._ they die. Those interests collect, focus and target their political money and take out any legislator who crosses them. • • An issues PAC,though not as effective as a candidate PAC;would hold legislators accountable to their local consttuencies when they cross their local governments. 1 ABQspeechwiPmmuesiee 611199 i 06/01/99 15:26 LEAGUE CF CP CITIES d BSB 307 9218 "I :5! TC 5. The revenue base of cities has been constricting. Some tax sources have been preempted by the state or through the initiative process. Subventions and shared taxes for cities have become less secure. All indications are that these trends are likely to continue. The narrowing of the city revenue base translates to a loss of local self governance, less local accountability, less local decision making over policies which determine quality of life for the average citizen. • 6. Other means of strengthening the voice of cities in Sacramento have been thoroughly explored and found wanting. Different messages? Packaging the messages differently? Different messengers? These alternatives are no match for campaign money... campaign capability. Campaign capability...the ability to reach the voters and matshall public opinion through well known campaign techniques... is the name of the game. Do we play? Or, do we watch it play out? • If cities have campaign capability, cities have leverage and can sit at the table with other interests rich in political resources. Without that capability cities hive only marginal influence and must be content to accept what others who do to decide their fate. • • ABOSperthesTremise6.Coe 611/99 06/01299 15:26 LERG'JE C= CA CITIES a 91B -a? 92'_9 io.S5t 2" attachment I (2/2) Can Cities Strengthen Local Control and Stabilize City Finances Through Political Action? Action for Better Cities :f -7 f t&: 916.658.8273 R..:o moO,o7 96i91/99 15:26 LERGUE OF CR CITIES 4 818 327 9219 •-1.2=t 710E City and State Officials Disagree on Local Control • City officials believe • policy governing community affairs decided locally • required revenues raised locally • authority commensurate with responsibility equals accountable government. • State officials believe • they should set overall priorities • • be able to allocate all public funds • decide equities among local governments. 2 Action for Bcacr C Ines • City officials and State officials disagree on the fundamental principle of laical government control. • Most city officials believe that most government policy shoud e eb decided localblal government, from revenue and that most of the services needed by the people should be providedYgovernment raised locally. City officials also believe that responsive, accountable, effective city government is not possible unless elected city council members who are responsible far providing the services needed by people have the authority to levy taxes and fees to pay for thoseiservices and that the revenue sources which can be used are clearly defined and that no other goyernmental entity should be able to divert those funds to other purposes. They believe that authority;must be commensurate with the responsibility for regulating community development and providing essential public safety and other community services. • Most state legislators and other state officials believe that, becausethey are responsible for setting overall priorities for the allocation of all public funds, the governor and the state legislature— not local government officials— should have the ultimate authority to reallocate all revenue generated by both state and local governments. They argue that in times of crisis --ejg. an economic recession or natural or manmade disaster--the state legislature and governor Must have the flexibility to respond by utilizing any and all sources of revenue. Equity among all interests and needs can be established only if the state can exercise power over all local government. I d d ously since • This disagreement statehood in 185 ,with neither state nor local office and local officials has ials gainingthe upperthand until the Californian13 ri tn 18x0, Proposition 13 property taxpayers revolt of 1978 was thrust into the,equation. The fragile, piecemeal local government revenue structure which had been Constructed over a period of 125 years was equilibrium tont cal government finance have actually exacerbatedt }he problem for cities. ies to restore 06i01/99 15:26 LEAGUE OF CP CITIES 4 818 327 9219 NC.1251 2OF • State & Federal Support to Local Government has plummeted • State and federal $ dropped from 21 % of total local government revenue to 13% (1978-98). • Cities alone lost $300 million in subsidies since 1978. • Local support eliminated or preempted by the state and not restored • Liquor license fees • Highway carriers uniform tax • • Financial aid to local agencies • Cigarette tax • Trailer coach 1 Mobile home fees • Business Inventory Exemption Reimbursements. 3 Action for ether Cities • For more than 20 years state and federal support to local government has dwindled (from 21% to 13%), while the number of mandated programs and service demands have grown. • In the years following Proposition 13 a variety of long'-standing state subsidies to cities and counties were reduced or eliminated, resulting in a loss of more than $300 million a year to cites. • Since 1980, the state has eliminated and not since restored local revenues including: • Liquor License Fees • Highway Carrier's Uniform Business Tax • Financial Aid to Local Agencies • Cigarette Tax • Trailer Coach f Mobile Home Fees • Business Inventory Exemption Reimbursements 06/01/99 15:26 LEAGUE OF CR CITIES 4 819 307 9219 -, Property Tax Shifts - 11990s ♦ $3.6 billion shift of city, county And special district revenue to the state general fund by shifting to local schools thereby relieving state general fund obligation for school $ ♦ City property tax shares reduced by 24% (on average) ♦ State action enabled by Prop 13 • • Action forDe CIUCS • • In 1992-93 and 1993-94, facing massive deficits in the state budget, the Legislature and Governor transferred $3.6 billion of property tax revenue from cities, counties and special districts to K-14 schools, allowing the state to reduce its general fund spending on education. • Cities and counties depend bstantiially onre already t x and ri property ttaxheaxme me revenues for discretionary income recessionary effects as the state. • These property tax shifts continue today.and erode the base at an average rate of 4% - 5% each year. Since the shifts began, cities have lost a net $2.8 billion, counties a net $6.9 billion and special districts a net $1.9 billion. • After deducting Prop. 172 restoration which is dedicated to public safety, cities will lose $450 million in 1999-2000. • Within 10 - 15 years the property tax revenue taken by the state (ERAF) will double in value'due to strong property tax growth and a healthy economy. 35/01/99 15:25 LEAGUE OF CA CITIES ' 918 307 9219 • Impact of Revenue Loss on Local Contrdl • reduced ability to respond to constituent need and preferences • cut services: especially parks, libraries, museums, maintenance • raised user fees • reduced reserves and increased debt • skewed land use decisions. 5 Action for Ems'Cities • • California's non-partisan Legislative Analyst notes that °the property tax shifts have: • Reduced local government's ability to respond to constituent needs and preferences; • Strained the fiscal condition of some local governments; (and] • Decreased local government incentives to approve new land developments..." • In fact, cities, counties and special districts have responded to these tough financial times by: • Cutting human services including parks, libraries, and museums; • Cutting general government(property maintenance, personnel, data systems and administration): • Cutting land-use planning; • Relying more heavily rather than cash financing for capital improvements; • Cutting subsidies to fee based programs and raising user fees: • Paring down reserves; • • Raising taxes and assessrnenis; and, • • Pursuing sales tax generators, skewing land-use decisions in the process. OG/01099 15:26 LEAGUE OF CR CITIES -> 819 307 9.918 `'10.OF]. cJ3 _ I Billions of $ at Stake • Local gov't revenues are vulnerable to erosion, shift or elimination by the state • $9 billion for cities • $4 billion for counties • • These revenues include: local property taxes • local sales taxes • motor vehicle license backfill • gasoline taxes • reimbursement of state mandates 6 Homo for newccuoe • Without protection or reform of the current system, ;we run the risk of losing the billions of dollars in local government revenue now in the hands of the state. At stake for cities is $8.8 billion; for counties $3.9 billion and for special districts $1.3 billion. • • Revenues, which could be at risk, now being collected by the state and forwarded to local government include. • motor vehicle license fees (motor vehicle in-lieu taxes); • gasoline taxes; • reimbursement of some state mandated costs; and. • homeowners' property tax relief reimbursements. • Experts predict that times will be tight again for the state in the future. It's important we protect our existing assets from future shifts. 06/01/99 15:26 LERGOE OF CA CITIES 4 818 302 9219 Nu. D: ' • What' s Wrong ? • • local independence / control has been weakened O fractionalization of finance & I governance, and • OO distorted fiscal incentives. • Action re.oaw Cities The frequent diagnosis of policy makers, analysts arid other observers of California local finance is that it is "broken ... dysfundtional" • or at least in dire need of repair. Effective local governance is closely tied to rational local finance. When an inadequate and uncertain financial system hampers effective and efficient delivery of public services, effective governance is not possible. Cities are plagued with • The decline of municipal independence -- a loss of fiscal control, local control, home rule; • fractionalization of governance, authority and'responsibility; • distorted fiscal incentives (e.g. need for sales tax revenue drives land use policy). 06/01/99 15:26 LEAGUE OF CA CITIES • 819 307 9318 Local, Independence Weakened • Prop 13 slashed #1 source of local '$ and gave authority to allocate the rest to Legislature. • Cities now face • uncertainty about resources • vulnerability to state-level budget cycles • loss of rate setting powers on key revenues • loss of local accountability - ability to respond • The ability of cities to set priorities, lcoordinate programs and adjust financing to rrieet service needs has been greatly reduced. a Action for Hcomr Cities The authors of the 1879 California state constitution believed that local government would serve the citizens best if wanted generous autonomy over municipal affairs. But over the last two decades local control has been substantially squelched through a series of court decisions, state legislative actions, and a subtle provision of Proposition 13. Loss of fiscal control. Cities face more financial uncertainty today than ever. Over the past twenty years, state has demonstrated its lability and willingness to take local revenues to meet its own needs regardless of local impacts. At the same time, new laws and constitutional initiatives severely limit local revenue raising options. With such uncertainties and constraints, it has become more difficult for city officials to respond to changing local public service needs and priorities. In short cities face: Uncertainty about resources . • Vulnerability to state-level budget cycles • • Loss of rate setting powers on key revenues • Loss of local accountability - ability to respond Decline of Home Rule - state intrusion in local policy. The state legislature continues to assert itself into local policy through more spending limitations, state mandates and preemptions. The actions have gone beyond reasonable matters of statewide interest. 06/01299 15:25 LEPGUE OF Cil CITIES 4 6'-S 307 9219 '27.051. cL7 Fractionalization' of Local Finance and Governance • Multiple overlapping local agencies • Old tax allocation formulas - may not be the most efficient or preferred allocation now . Decline of general purpose government policy making authority due to • fractionalization of policy and finance among too many local authorities Anb�for Pater • 9 Good governance requires • the ability to set priorities across a broad spectrum of needs • the ability to coordinate programs for efficient service delivery • the ability to fund these programs adequately with revenues which are rationally tied to the program, and • the ability to change priorities,funding allocations, end service delivery methods as circumstances change. i But we have serious fractionalization of local finance and governance. In many California localities, municipal public service responsibilities and finances are divided up among dozens of independent local agencies. Property tax allocations are fixed based on circumstance more than two decades old. Because of this fractionalization, the general purpose government, the city, is hampered in its policy choices as to priorities, funding and service delivery. Local government is less efficient, less responsive, less accessible and less accountable to its citizens. We have: • • Multiple overlapping local agencies • Old tax allocation formulas - may not be the most efficient or preferred allocation now • • Decline of general purpose government policy making authority 06/01/99 15:2E LERSLJE OF CR CITES 818 3C7 9218 LL0.051 )'-3 Distorted Fiscal Incentives The decline of city property tax revenue has left cities seeking other revenues, • promotes aggressive sales tax consciousness • housing, industrial uses often cost more in public services than they generate in tax revenues • in partial-service cities, much property taxi revenue goes to special districts, less to the city, creating even greater dependence on other revenues, especially sales tax to fund police, parks, planning etc Anion[or Batts Ciice 0 City property tax revenues have been severely curtailed by Proposition 13 and the shifts by the state in the early 1990s that were enabled by Proposition 13. More and more of city budgets are composed of revenues restricted for specific purposes such as fees or revenues earmarked by the state or voters. Discretionary revenue, the primary source of funds for police, fire, ,the and libraries (among other services), is harder to come by Now more dependent on sales tax revenue, cities seek sales tax generators. They may spurn other land uses including housing and industrial uSes that often cost more in public services than they generate in tax revenue. The situation is made worse in partial service cities where much of the property tax revenue is given to special districts which provide fire or library or other services instead of the city. These cities must look to sales tax and other revenues to fund police, parks, planning and other services. They are made even more hungry for sales tax generators. In short: • The decline of city property tax revenue has left cities seeking other revenues, • promotes aggressive sales tax consciousness • housing, industrial, uses often cost more in public services than they generate in tax revenues • In partial service cities, much property tax revenue goes to special districts, less to the city, creating even greater dependence on other revenues, especially sates tax to fund police, parks, planning etc. 06621/99 15:26 LERGUE OF Ca CITIES d 818 329 4219 NO.0-' • • What California Cities Need •Tools • Reasonable tax & revenue options and limitations • Adequate $revenues with rational connection to needs/uses • Control of all basic municipal services ♦ Independence • Stable reliable, revenues • Autonomy in local affairs 11 Action for Better Cities I What California Cities Need To Effectively Serve Their Communities - Tools • Reasonable tax & revenue options and limitations • Adequate revenues with rational connection td needs / uses • antral of all basic municipal services • Independence • Stable, reliable revenues - Autonomy in local affairs 06/9/99 15:2G LEAGUE OF CR CITIES 4 218 30? 9219 N0.251 ;15 Top Priorities for Change •Constitutionally protect city revenues from other levels of government. ♦ Constitutionally strengthen local government authority in municipal affairs. • Realign local government responsibilities and finances along rational lines. • Anion Cor OemeCium 12 Specific priorities for change include: • Constitutionally prohibit any other level of government from tampering with city revenues. • • Strengthen Home Rule Authority. Establish a rebuttable presumption in favor of home rule authority for cities. • Realign local government responsibilities and finances along rational lines. Eliminate the taxing powers of special districts. Assign responsibility and accompanying property tax revenues for local services to cities or counties. Cities and counties may delegate services to special districts under contract. ©6/81/99 15:26 LEAGUE OF CR CITIES 9 813 327 9216 Top Priorities of Change is Return property tax revenues (ERAF) to cities, counties and special districts. • Authorize majority vote approval for special taxes • Provide for fair taxation of catalogue, telephone and Internet sales ' Anlen for BI3cac.Chic. • Return property tax revenues (ERAF) to cities, counties and special districts. • Authorize majority vote approval for special taxes • Provide for fair taxation of catalogue, telephone and Internet sales E8/81/99 15:26 LEAGUE DE CA CITIES d 918 387 9218 : C.05' 717 Are These Goals Realistic? • ♦ Over the last 25 years, battles for cities have been lost because • Others have developed effective political action. ■ Others were able to use political action tools-without legal constraint. ♦ Other battles are forming up Aulon forDeuv Cities 14 For the past 25 years, cities have experienced a series of losses: Proposition 13 in 1976. Proposition 98 in 1992;.the various enactments which earmarked excise taxes, property tax shifts, reductions In VLF. • Were these bathes lost because of a,lapse in leadership by the League Board or by the League staff? Were the battles lost. because cities were unable to reach consensus? Or, were these battles lost because: • Other interest groups are bolder and willing to take risks, because they have more political resources which they are able to use without legal constraint to marshal public opinion in support of their position? • The League was simply outflanked,finessed and out-gunned by other interests which possess powerful campaign tools that cities are prohibited by law from using. • If cities had a campaign organization rich in political resources which was able to engage in sophisticated political action, could cities win these battles? Other battles are forming up and the future of cities' fiscal stability and home rule are at stake. • Other powerful groups have an Interest in the upcoming billies. Some would further erode the revenue base of titles In order to finance their own gnats and objectives, which are not the same as the goals of cities. • Most of the other interests have well•heeled Issue political action committees. • The Interests with the most campaign money are those most capable of shaping the public policy debate on any issue. 06/01/69 15:26 LEAGLE OF CR CITIES 2 GIG 377 9218 '1051 PIG Cities Must Be Prepared To Take Action • • Subject legislative action to referendum • Mount an initiative campaign • Strengthen the bargaining position of the League in dealing with the legislature and reform commissions Action for°crier Cit c 15 Cities must be prepared for action • To repeal, through the referendum process, measures adopted by the Legislature which would weaken local control; • To motivate the Legislature to act on city issues to prevent cities from resolving their policy concerns through ballot measures instead of through the Legislature; • To force other interest groups to reckon with the interests of cities in drafting reform initiatives and to strengthen the League's position in negotiating provisions favorable to cities in initiative proposals; • Provide a point of leverage for the League's lobbying staff to use when advocating city interests on major issues pending before the Legislature, particularly those which would diminish local control; ; • To strengthen the League's bargaining position in dealing with major contested issues which come before the State Legislature and, in doing so, raise the threshold of compromise 25/21/99 15:25 LEP5UE OP CR CITES a 215 304 9212 rIU.251 Action for Better Cities (ABC) • Created by 'the Board of Directors of the League of California Cities to: • • raise money from non-tax sources • use the money to campaign for public policies which will strengthen local control and stabilize city finances • State law prohibits cities from spending public funds on campaigns. • State law prohibits the League from using dues from cities for campaign purposes. Aman for Better Cttkt16 • • The Board of Directors of the League of California Cities created ABC to- • raise money from non-tax sources • use the money to campaign for public policies Which will strengthen local control and stabilize city finances. • State law prohibits cities from spending public funds on campaigns. • State law prohibits the League from using dues from member cities for campaign purposes. 06/a1299 15:25 LEAGUE OF CO CITIES a B=B 329 9218 Action for Better Cities (ABC) • ABC is a 501 (c)(4) non-profit corporation authorized to engage in campaign activities. ♦ Only non-tax monies will be used by ABC so that ABC can withstand legal challenges by opponents. * ABC Articles of Incorporation prohibit contributions to candidates. 17 Actlon for Brncr Ciucs • ABC Is a 501 (c) (4) non-profi: corporation authorized,to engage in campaign activities. • Only non-tax monies will be used by ABC so that AB9 can withstand legal challenges by opponents. • ABC Articles of Incorporation prohibit contribution's to candidates. 05.21,99 1526 LEAGUE OF CR CIT7E3 9 812 329 9219 I,L.15r It Takes $$$ To Be Successful at This • Key to success is fundraising. • Everything about campaigning is costly: • Qualifying an initiative for the ballot costs $1 .2 million. • Credible initiative campaign costs $5 million, $10 million or more if contested. • A campaign to support a League legislative issue will cost $200,000 to $1 .5 million. • ABC's goal for the next 12 months is $20 million. 18 Action for Ffel¢r Gttes It Takes A Substantial Amount Of Money To Be Successful In This Arena • The key to ABC's success is fundraising • From non-tax sources, we must raise several million dollars. Everything about campaign efforts is costly: • Qualifying an initiative proposal for the ballot costs $1.2 million. • A credible initiative campaign costs $5 million if Rhe proposal is uncontested. $10 million or more if contested. • A grassroots campaign in support of a League I'bgislative issue will cost $200,000 to $1.5 million, depending on the circumstances and the issue. • ABC's goal for the next twelve months is $20 million. as/01./99 15:25 LEAG_'E of CA CITIES a 818 3©' 92x8 ^IC.e51 G2= Over the Next Few Months ABC Will • inform city officials of the need for ABC and secure consensus on its objectives • see if an acceptable proposal to stabilize municipal finance emerges from elsewhere • explore forming a broad-based abolition • raise lots of money (a warchest) • reach consensus on an initiative proposal • ask Legislature put it on the ballot • simultaneously proceed with an action plan to qualify the initiative Action for Better Clue ' - i 19 Over the next several months, ABC will: • inform city officials of the need for ABC and secure consensus on its objectives • see if an acceptable proposal to stabilize municipal finance emerges from elsewhere • explore forming a broad-based coalition • raise lots of money (a warchest) • reach consensus on an initiative proposal • ask Legislature put it on the ballot • simultaneously'proceed with an action plan to qualify'the initiative AG/i1/99 15:26 LEAGUE OF CA CITES d 818 397 8218 • What Can Individual City Officials Do To Help? • • • Form an ABC support committee fdr your city • Provide materials on ABC to city officials and recommend that they endorse the program • Help the statewide fundraising committee develop strategies for raising money. • Provide materials to the statewide: committee which will help solicit contributions. • Provide to ABC a list of the 50 or 'so vendors who do the most business with your city. Action forScncr Citic,. I 20 What Can Individual City Officials Do To Help? • Form an ABC support committee for your city comprised of opinion leaders. • Provide background materials on ABC to key city officials-and recommend that they endorse the program. • bring them up to date, on the critical fiscal history of city revenues over the past 20 years; • explain what the League is trying to do about it (formation of Action for Better Cities); • advise them what they can do to support this major statewide effort. • Help the statewide fundraising Committee develop a plan,l policies and strategies for raising money from non-tax sources. • Provide materials to the statewide corporate fundraising committee which will enable them to solicit contributions. • Prepare a list of the 50 or so vendors who do the most bysiness with the city to the ABC and provide that information to the ABC. 26/01/99 15:26 LEPGUE OF CP CITIES a e:8 '_a7 9219 Bylaws of Action for Better Cities Article I Principal Office The principal office of this corporation shall be located ih the County of Sacramento, California. Article II Membership This corporation shall have no voting members, but the Board of Directors may, by resolution, establish one or more classes of nonvoting members and provide for eligibility requirements for membership and rights and duties of members, including the obligation to pay dues. Article III • Designator The Designator referred to in these Bylaws shall be the League of California Cities, a California nonprofit mutual benefit corporation. Article IV • Directors Section I. Powers. Subject to the limitations of the Articles of Incorporation of this corporation, the terms of these Bylaws, and the laws of the State of California, this corporation shall have powers to the full extent allowed by law.; All powers and activities of this corporation shall be exercised and managed by the Board of Directors of this corporation directly or, if delegated, under the ultimate direction of the Board of Directors. Section 2. Number. The total authorized number of Directors shall be eleven (11). The minimum number of Directors shall be seven (7) . Directors are collectively known as the Board of Directors. Articles of tncorpor&toiBYlaws 3 Action for Benet Cities April 11, 1999 06/01/99 15:26 LESGUE OF CP CITIES -> ele 327 5218 NO-C`1 725 • • Section 3. Selection, Tenure of Office and Vacancies. A. The Designator of the Corporation shall select the initial Board of Directors. The Board of Directors shall be made up of at least seven elected or appointed officials of California cities with expertise and experience in issues of significance to California cities, the delivery of city services, the statewide impact of legislation on cities, and from areas of the State reflecting the population, size, and geographicidiversity of California cities. Such designations shall be made in a writing signed by an authorized representative of the Designator, and delivered to the Secretary of State, to be filed with the proceedings of the Board of Directors of this corporation. The effective date of any such designation shall be as provided therein. B. Except as provided for the initial Board of Directors, Directors shall be designated for a term of three years. Directors may not serve more than two consecutive terms. For the initial Board of Directors, four of the Directors shall be designated for a term of three (3) years and three of the Directors shalt be designated for a term of two (2) years. C. Vacancies. A vacancy stall be deemed to exist on the Board in the event that the actual number of directors is less, than the authorized number for any reason. After the designation of the initial Board of Directors. vacancies shall be filled by a majority vote of the Board of Directors, provided, however,that a vacancy in the office of Chair of the Board of Directors shall be filled by the Executive Committee of the Board of Directors of the League of California Cities. A vacancy shall not be deemed to exist if a member of the Board of Directors ceases to be an elected or appointed official of a California city unless (a)the Director voluntarily resigns; or (b) the Board of Directors removes the Director pursuant to Section 4 of this Article.; or (c) the member's term expires as provided by Section 3B. Section 4. Resignation and Removal. Resignations shall be effective upon receipt in writing by the Chair or the Secretary of this corporation, unless a later effective date is specified in the resignation. The Board of Directors,by vote of a majority of directors then in office,may remove any Director at any time, with or without cause. Section 5. Compensation Directors shall serve without Compensation but each Director may be reimbursed for necessary and actual expenses iricluding travel incident to services as Director, pursuant to resolution of the Board of Directors. Any Director may elect, however, to decline said reimbursement, Section 6. Regular and Organizational Meetings. Regular meetings of the Board of Directors shall be held at such time as the Board may fix by resolution from time to time, provided, however, that a meeting of the Board of Directors shall be held at least once a year. Immediately following the regular meeting of the Board of Directors or any special meeting of the Board of Directors at which Directors shall have been elected, the AM1ICIet or lncorporneon/9ylaws 4 Action for Better C;ticc Apri121, 1999 0G/01/99 15:26 LEPGUE OF CP CITIES 4 819 397 9219 ^10.651 r,29 Directors shall meet for the purpose of organizing the Board,tha election of officers and the transaction of suchbusiness as may come before the meetingPending such. organization meeting, all officers of the Corporation shall hold river. No notice of any organizational meeting of the Board of Directors, held immediately following the regular meeting of the Board of Directors or on or after any special meeting of the Board of Directors shall have been elected, need be given, provided, that if such organizational meeting is not held immediately following such meeting of the Board of Directors, then notice thereof shall be given in a manner provided in Section 8 of this Article, in the same manner as notice of special meetings. Section 7. Special Meetings. Special meetings of the Bdard of Directors may be called by the Chair, or by a majority of the Board of Directors and noticed in accordance with Section 8. Section 8. Notice ..Notice of the annual meeting and any special meetings of the Board of Directors shall be given to each director at least four days before any such meeting if given by first-class mail or forty-eight hours before any such meeting if given personally or by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, facsimile, electronic mail, or other electronic means, and shall state the date, place and time of the meeting. • Section 9. Waiver of Notice. The transactions of any maeting of the Board of Directors, however called and noticed or wherever held, shall be,valid as though taken at a meeting duly held after regular call and notice if a quorum is present. and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding the meeting, or an approval of the minutes. All waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. I • Section 10. Ouorum. A majority of the directors then in office shall constitute a quorum unless a greater number is expressly required by statute;by the Articles of Incorporation, or by these Bylaws. A meeting at which a quorutAn is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum or such meeting. Section 11. Telephone and Electronic Meetings. Directors may participate in a meeting through use of conference telephone, electronic video screen communication, or other communications equipment so brig as all of the following apply: (a) each director participating in the meeting can communicate with all of the other directors participating in the meeting concurrently; and (b) each director is provided with the means of participating in all matters before the Board, including the capacity to propose, or to interpose an objection to, a specific action to be taken by the corporation. Adidas of Incorporation/Bylaws 5 • Aaron for Batter C;:et April 11,1999 ce/61/99 15:25 LEPSiJE OF CA CITIES 4 818 324 9219 • 'JG.C51 Section 12. Standard of Care. A. General. Each Director shall perform the duties of aldirector, including duties as a member of any Board Committee on which the director may serve, in good faith, in a manner such director believes to be in the best interest of this corporation and with such care, including reasonable inquiry, as an ordinarily prudent person in a like situation would use under similar circumstances. In performing the duties of a director, a director shall be entitled to rely on information,opinions, reports, or statements, including financial statements and other financial data in each case prepared or presented by: (i) one of more officers or employees of the corporaEion whom the director believes to be reliable and competent as to the matters presented; (ii) counsel, independent accountants, or other persons as to matters which the director believes to be within such person's professional or expert competence; or (iii) a Board Committee upon which the director does, not serve, as to matters within its designated authority, provided that the'director believes such Committee merits confidence; so long as in any such case,the director acts in good faith atter reasonable inquiry when the need therefor is indicated by the circumstances and without knowledge that would cause such reliance to be unwarranted. Except as provided in Article VII below, a person who performs the duties of a director in accordance with this Section shall have no liability based upon any failure or alleged failure to discharge that person's obligations as a director, including, without limiting the generality of the foregoing, any actions or omissions which exceed or defeat a social welfare purpose to which this corporation, or assets held by it, are dedicated. B. Investments. Except with respect to assets held for use or used directly in carrying out this corporation's charitable activities, in investing,'reinvesting, purchasing or acquiring, exchanging,selling, and managing this corporation's investments,the Board shall avoid speculation, looking instead to the permanent disposition of the funds, considering the probable income as well as the probable safety of this corporation's capital. No investment violates this section where it conforms to provisions authorizing such investment contained in an instrument or agreement pursuant to which the assets were contributed to this corporation. • Section 13. Inspection. Every director shall have the absolute tight at any reasonable time to inspect and copy all books,records, and documents, and to inspect the physical properties of this corporation. • • • Ankles oflncorpomlioraylawe g Action for Better Cities April 21.1999 08201/99 15:26 LEAGUE OF CP CITES a 813 3617 9218 110.OS 7=3 • • Article V Officers • Section I. Officers. The officers of this corporation shall be a Chair, a Vice Chair, a Secretary, a Treasurer, and such other officers as the Board of Directors may appoint. Any number of officers may be held by the same person, except4hat neither the Secretary or Treasurer may serve concurrently as the Chair. Section 2. Election of Officers. The officers of the Corporatiotu shall be chosen annually by the Board of Directors, provided, however, that the Chair of the Corporation shall be chosen by the Executive Committee of the Board of Directors of the League of California Cities. The officers shall hold office until that officer resigns or is removed or otherwise disqualified to serve. All officers shall be subject to the limits specified in Article IV, section 3B. • Section 3. Removal of Officers. With the exception of the Chair. any officer may be removed, either with or without cause, by a majority of the Direftors then in office at any regular or special meeting of the Beard. The Chair may only be,removed, either with or without cause, by a majority vote of the Board of Directors of tie League of California Cities. Should a vacancy occur in any office as a result of death, resignation, removal, disqualification or any other cause, the Board of Directors may delegate the powers and duties of such office to any officers or to any Directors until such time as a successor for said office has been elected and appointed. • Section 4. Chair. The Chai:shall preside at all meetings of the Board of Directors. The Chair shall be an ex-officio member of all Board committees, shall have such other powers and duties as may be prescribed by the Boards or these Bylaws. • Section 5. Vice-Chair. In the absence or disability of the Chair, the Vice Chau shall carry out the duties of the Chair and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or these Bylaws. Section 6. Secretary. The Secretary shall supervise the keeping a full and complete record of the proceedings of the directors, shall supervise the giving of such notices as may be proper or necessary, shall supervise the keeping of the minute books of this corporation, and shall have such other powers and duties as'may be prescribed by the Board or these Bylaws. Section 7. Treasurer. The Treasurer shall supervise theharge and custody of all funds of this corporation, the deposit of such funds in the mannCr prescribed by the Board of Directors, and the keeping and maintaining of adequate and correct accounts of this corporation's properties and business transactions, shall render reports and accountings as required, and shall have such other powers and duties as may be prescribed by the Board or these Bylaws. • Anicla or Incorporatio&BYlews 7 Action for Boner Cities • •' April 21. 1999 ' 99;21/99 15:25 LEAGUE OF CP CITIES a 912 339 9218 No.051 .__ Section 8. Chief Executive Officer. The Chief Executive Officer shall, subject to the control of the Board, generally supervise, direct, and control', the business of this corporation. The Chief Executive Officer shall be a non-voting;ex-officio member of all Board Cornet inees, and shall perform such duties and receive siich compensation as the Board of Directors may from time to time prescribe. Section 9. Executive Committee. There shall be an Executive Committee of the Corporation comprised of the Chair,the Vice-Chair, the Secretary, the Treasurer, and the Chief Executive Officer to act on behalf of the Board of Directots as appropriate. The Chief Executive Officer shall be a non-voting, ex-officio member of the Executive Committee. Each member of the Executive Committee shall receive notice of all meetings of the Board of Directors and all meetings of Committees established pursuant to Article VI. Article VI Committees Section 1. Board Committee. The Board of Directors, may, by resolution, create any number of Board Committee,each consisting of two or more directors, to serve at the pleasure of the Board. -Appointments to any Board Committee stall be by a majority vote of the directors then in office. Section 2. Advisory Committees. The Board may establish one or more Advisory Committees to the Board. Advisory committees may not exercise the authority of the Board to make decisions on behalf of this corporation, but shall be restricted to making recommendations to the Board or Board Committees, and implementing Board or Board Committee decisions and policies under the supervision and control of the Board or Board Committee. Section 3. Adoption of Rules. The Board of Directors tray adopt rules for the governance of any Board or Advisory Committee not inconsistent with the provisions of these Bylaws. Article VII Prohibited Transactions Section 1. Loans. Except a, permitted by Section 5236 of the California Corporations Code, this corporation shall not make any loan of Money or property to, or guarantee the obligation of, any director or officer; provided, however, that this corporation may advance money to a director or officer of this corporation or any subsidiary for expenses reasonably anticipated to be incurred in performance of the duties of such officer or director so long as such individual would be entitled to be reimbursed for such expenses absent that advance. Articles of lncorporuio&aylaws 8 Action for Bator Cities April 21, 1999 05/01AS9 15:25 LEAGUE OF CA CIT!E5 4 ete 307 9218 HO.COI BelA • Section 2. Self-Dealing Transactions. Except as provided in Section 3 below, the Board of Directors shall not approve or permit the corporation to engage in any self- dealing transaction. A self-dealing transaction is a transaction to which this corporation is a parry and in which one or more of its directors has a material financial interest, unless the transaction comes within California Corporations code Section 5233(b). Section 3. Approval. This corporation may engage in a Sell-dealing transaction if the transaction is approved by a court of by the Attorney General. This corporation may also engage in a self-dealing transaction if the Board determines; before the transaction, that (I) this corporation is entering into the transaction for its own benefit; (2) the transaction is fair and reasonable to this corporation at the time;pad (3) after reasonable investigation, the Board determines that it could not have obtained a more advantageous arrangement with reasonable effort under the circumstances. Subh determinations must be made by the Board in good faith, with knowledge of the material facts concerning the transaction and the director's interest in the transaction,without counting the vote of the interested director or directors.. Where it is not reasonably practicable to obtain approvallof the Board before entering into a self-dealing transaction, a Board Committee may approve such transaction in a manner consistent with the requirements in the preceding paragraph,provided that, at its next meeting, the full Board determine in good faith that the Board Committee's approval of the transaction was consistent with such requirements and that it was not reasonably practical to obtain advance approval by the full Board, and ratifies the transaction by a majority of the directors then in office without the vote of any interested director. Article VIII • Indemnification and Insurance • Section 1. Right of Indemnity. To the fullest extent allowed by California Corporations Code Section 5238, this corporation shall indemnify and advance expenses to its agents in connection with any proceeding, and in accordance with Section 5238. For purposes of this Article, "agent"shall have the same meanidg as in Section 5238(a). Section 2. Approval of Indemnity. On written request tb the Board of Directors in each specific case by any agent seeking indemnification, to the extent that the agent has been successful on the merits, the Board shall promptly authorize indemnification in accordance with Section 5238(d). Otherwise, the Board shall pt'omptly determine, by a vote of a majority of a quorum consisting of directors who are nbt parties to the proceeding,whether, in the specific case, the agent has met the applicable standard of conduct stated in Section 5238(b) or Section 5238(c), and, if so, shall authorize indemnification to the extent permitted thereby. Articles of Incorporation/Bylaws 9 Action for Better Cities Apnl 21,1999 25/21/99 15:25 LEAGUE OF Op r1T;99 4 818 320 9212 NO.HSL • Section 3. Advancing Expenses. To the fullest extent allowed by Section 5238 of the California Corporations Code, the Beard shall authorize the advance of expenses incurred by or on behalf of an agent of this corporation in defending any proceeding prior to final disposition if the Board finds that (a)the requested advances are reasonable; and (b)before any advance is made, the agent will submit a written undertaking satisfactory to the Board to repay the advance unless it is ultimately determined that the agent is entitled to indemnification for the expenses under this Article. , Section 4. Insurance. The Board of Directors may adopt a resolution authorizing the purchase of insurance on behalf of any agent against any liability asserted against or incurred by the agent in such capacity or arising out of the agen[I,'s status as such, and such insurance may provide for coverage against liabilities beyond this corporation's power to indemnify the agency under law. • Article IX Disbursement of Funds Section I. Purpose of Disbursements and other Expenditures . This corporation shall have the power to make grants and contributions and to render other financial assistance for the purposes expressed in this corporation's Articles of Incorporation and in a manner consistent with this Article. Section 2. Policy Development. After consultation and advice as determined appropriate,the Board of Directors shall establish the policy priorities of the Corporation no later than sixty (60)days before the close of each fiscal year,lprior to making any disbursement of funds or other expenditures pursuant to this Article for the subsequent fiscal year Section 3. Disbursements in Accordance with Policy Pribrities. All disbursements of the Board of Directors pursuant to this Article, shall be in accordance with the policy priorities established pursuant to Section 2 unless the affirmative vote of two-thirds of the members of the Board of Directors approves a!disbursement which is not in accordance with the policy priorities upon a finding that such disbursement is necessary and responsive to facts and circumstances which arose subsequent to the establishment of that fiscal year's policy priorities. Section 4. Exclusive Power in the Board of Directors. he Board of Directors shall have exclusive control over grants, contributions, and othei financial assistance given by this corporation. The Board shall review all requests for funds and shall require that such requests specify the use to which the funds will be put�in addition to other information the Board deems appropriate. Section 5. Refusal(Withdrawal. The Board of DirectorF, in its absolute discretion, shall have the right to refuse to make any grants or contributions, or to render Articles of Incorporation/Bylaws 10 Action for Bcncr Ci tics April 21. 1999 96/01/99 15:26 LEAGUE CF CA CTTTES e RIB 307 9219 10.0=1 ;7 ' other financial assistance, for any or all of the purposes for which the funds are requested. In addition, the Board, in its absolute discretion, shall have the right to withdraw its approval of any grant at any time and use the funds for other purposes within the scope of the purposes expressed in this corporation's Articles of Incorporation. Section 6. Accounting Required. The Board of Directors shall require that grantees furnish a periodic accounting to show that the funds granted by this corporation were expended for purposes that were approved by the Board. Article X • Miscellaneous Section 1. Fiscal Year. The fiscal year of this corporation shall end each year on June 30. Section 2. Duration of the Corporation. Involuntary Dissolution. A. Limited Corporate Life, This corporation shall remain in existence with all of the powers and duties provided for •n the Articles of Incorporation, these Bylaws, and under the California Nonprofit Public Benefit Corporation Law,solely for a period of eight(8) years from the date on which the first meeting of the Board of Directors is held ("Date of Termination") and thereafter shall be dissolved; provided, however, that no later than one hundred and eighty (180) days prior to the Date of Termination, the Board of Directors of the League of California Cities may, by a two-thirds affirmative vote, continue this corporation in existence for an indefinite period of time. B. Involuntary Dissolution. A complaint for involuntary dissolution of this corporation may be brought by the Board of Directors of the League of California Cities. Section 3. Contracts,Notes, and Checks. All contracts entered into on behalf of this corporation must be authorized by the Board of Directors or the person or persons on whom such power may be conferred by the Board from time to time, and except as otherwise provided by law, every check, draft, promissory note;money order,or other evidence of indebtedness of this corporation shall be signed by the person or persons on whom such power mayhe conferred by the Board from time to time. Section 4. Annual Report. Within ninety (90) days of the end of the fiscal year, the Chair shall furnish a written report to the Board of Directors containing the following information. a) the assets and liabilities as of the end of the fiscal yeb.r; b) the principal changes in assets and liabilities during the fiscal year, c) the revenue or receipts of this corporation for the fiscal year; • Ankles or Incorporulca✓arlaws 11 Anionfor actter Cities April 21, 1999 06/01/99 15:26 LEAGUE OF CA CITIES e 813 307 9218 HL'.;]S. »- • d) the expenses or disbursements of this corporation foi the fiscal year; e) the name and address of each recipient of funds from the corporation pursuant to Article IX and the purpose of the disbursement; f) any other information that, within the discretion of the Chair or as determined by majority vote of the Board of Directors,should be included in such written report in order to provide a complete picture of the financial health of the corporation. Section 5. Amendments. Proposed amendments to these Bylaws shall be submitted in writing to the directors at least one week in advance of the Board meeting at which they will be considered for adoption unless the one-week notice requirement is waived in writing by all directors. Proposed amendments to these Bylaws shall be submitted in writing to the Designator for review and comment; at least thirty (30) days prior to the next scheduled meeting of the Designator's Board of Directors; provided, however, that if thirty (30) days notice is not provided to the Designator, notice shall be provided to the Designator's Executive Committee who shall review and comment upon the proposed amendments. .The comments of the Designator's Executive Committee shall be reviewed, considered and acted upon at the next scheduled meeting of the Designator's Board of Directors. Section 6. Definition of City. Cities. Whenever the tenth "city" or"cities" is used in these Bylaws, such term shall include the City and County o5 San Francisco. Section 7. Governing Law. In all matters not specified kn these Bylaws, or in the event these Bylaws shall not comply with applicable law, the California Nonprofit Public Benefit Corporation Law as then in effect shall apply. ADOPTED by Action for Better Cities on 7-2-, 1999. • • Articles of Incorporation/Bylaws 12 Action frr neau Citic April 31, 1999