L.A. Ethics Commission backs restrictions on developer donations amid FBI corruption probe

Faced with persistent complaints about a “pay-to-play” culture at Los Angeles City Hall, the City Ethics Commission backed new restrictions Tuesday on political donations from real estate developers seeking city approval for their building plans.

The proposed ban would cover a broad array of people “substantially involved” in a proposed development project, including real estate executives, architects, engineers and others. Such donors would also be barred from fundraising or gathering political donations for city officials.

The push for new restrictions comes as the FBI carries out a corruption probe of City Hall. No one has been arrested or charged, but the ongoing investigation has added new fuel to long-standing worries about political donations influencing decisions on what gets built in L.A.

The commission also backed new restrictions on “behested payments” — donations solicited by politicians for charitable or governmental causes. And it endorsed the idea of barring businesses, organizations, unions and other entities from giving to candidates and officeholders, allowing only political donations from individuals.

Such a move would ultimately require voter approval.

Tuesday’s votes represented a sea change for the commission, which previously had been hesitant to pursue such aggressive restrictions. The commission held off on pursuing a developer donation ban last year, citing legal and practical concerns.

The proposals now head to the City Council for consideration. Councilman David Ryu called for his colleagues to swiftly take up the proposed ban, which had languished at City Hall for two years before being revived last month, along with the other proposed ethics measures.

“A perception of corruption and pay-to-play politics, fueled by the outsized influence of developer money, threatens the very foundation on which we stand,” Ryu said. “Twice I have tried to advance legislation that would target this problem. And twice I have seen this legislation go ignored while the problem only gets worse.”

FBI agents raided the home and offices of Councilman Jose Huizar in November, carrying out an array of materials, including a cardboard box marked “Fundraising.”

Investigators have also sought evidence of possible bribery, kickbacks and extortion involving Huizar, Councilman Curren Price, aides to Mayor Eric Garcetti and Council President Herb Wesson, and others tied to downtown development, according to a warrant filed in federal court.

The package of proposed rules was billed by the Ethics Commission as the agency’s “most comprehensive set of restrictions on contributions and fundraising” since it was established by voters in 1990.

In a new report, commission staffers said real estate developers made up roughly one-third of those targeted for violations in the last decade. Staffers also pointed to the ongoing criminal case against real estate developer Samuel Leung, who was charged last year with making illegal donations to politicians after a Times investigation.

At Tuesday’s meeting, activists urged the city to move ahead with a developer donation ban.

“We support a ban on developers not because they’re lesser people, but because they’re not greater people,” said Sean McMorris of the nonprofit Represent.Us.

Some critics of the proposed ban have argued that instead of prohibiting developers from donating, the city should pare back the power of council members over what gets built, so developers do not need to court the favor of politicians.

Others have questioned the legality of singling out real estate developers.

Stuart Waldman, president of the Valley Industry and Commerce Assn., predicted that any crackdown on donations directly to campaigns would simply spur much bigger donations, known as “independent expenditures,” to outside committees that support L.A. candidates. Those groups have no limits on the amount of money they can accept.

“Money is like water. It always finds a way to flow,” he said.

Commission members also recommended that the city allow only individuals to donate to candidates and officeholders.

Doing so, staffers argued, would make it easier to tell who is giving, but would also require a change in the City Charter, which would have to go before voters. The only exemption from the proposed “people only” rule would be for political parties, according to commission officials.

The change would prohibit donations to candidates from city employee unions, which are a major force in municipal elections. The Los Angeles Police Protective League, which represents police officers, argued such a move would trample on its members’ free speech rights.

“Stripping away the voices of workers is the wrong approach,” the league’s board said in a statement.

Union members would still be able to give as individuals. David Burke, founder of the nonprofit Citizens Take Action, argued that banning contributions from corporations and other entities would in no way stifle debate, since there was nothing that a corporation or other entity could express that individuals could not.

The Ethics Commission also voted for new restrictions on behested payments: charitable donations made at the request of politicians. City elected officials would be barred from asking for such donations from “restricted sources,” including lobbyists, city contractors, and people who had business before the city in the last year.

That prohibition would not apply in some cases, however, such as when charitable donations are solicited from the general public.

Out of 597 behested payments reported by city politicians in the last five years, at least 311 came from donors with business before City Hall, according to an Ethics Commission analysis.

Although behested donations can be valuable for local charities, “we also recognize that there is a significant potential for corruption,” commission policy director Tyler Joseph said.

The vote comes three months after The Times reported that Huizar had personally asked companies that do business at City Hall to donate to Bishop Mora Salesian High School, where his wife was working as a professional fundraiser. The Times also reported that former Deputy Mayor Raymond Chan asked real estate companies building projects in L.A. to help fund Asian Pacific American Heritage Month celebrations.

And this week, The Times reported that Councilman Mitchell Englander had been heavily involved in an annual fundraiser for the North Valley Family YMCA, yet had not reported any behested donations since 2013.

Under state law, L.A. elected officials have to report such fundraising requests only if they result in a donation totaling $5,000 or more. Commissioners recommended that the city lower that threshold to $1,000 and require more information to be turned over by donors.

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