News

Palo Alto takes aim at state's conflict-of-interest law

City Council questions FPPC's regulations on recusals

When the Palo Alto City Council met last month to consider creating an annual limit on new office development, one voice was notably missing from the discussion.

Tom DuBois, a councilman who has been a leading proponent of protecting residential neighborhoods from the effects of new development, recused himself from the conversation for reasons some colleagues found odd. His wife works at Stanford University, which owns Stanford Research Park, a sprawling network of high-tech campuses. Even though the industrial park is not subject to the proposed growth limit (which would apply only to areas around downtown, California Avenue and El Camino Real), the state Fair Political Practices Commission advised DuBois to refrain from the discussion because an office cap in other parts of the city may positively influence the research park.

DuBois' absence proved particularly obvious when the council's discussion devolved into a series of 4-4 votes, pitting the council's slow-growth "residentialists" against members more accepting of new development. The item under dispute – whether the office cap should apply to parts of the city subject to the "specific area plans" – was punted to the Planning and Transportation Commission and will return to the council for more discussion in the fall.

Though the council followed the FPPC's advice, some members appeared puzzled by it and suggested that the state's conflict-of-interest rules be re-examined. Councilman Pat Burt in particular urged on June 22 that the city advocate for changes. After debate, the council voted to instruct the city's lobbyists to seek legislative opportunities to make "materiality" a requirement in conflict-of-interest findings. Thus, a council member would not be disqualified from partaking in the discussion unless the policy would have a direct material effect on him or her.

For the Palo Alto council, the issue is not new. Members who have jobs at Stanford or spouses employed by the university have routinely recused themselves from discussion that may affect the university, however indirectly. Councilman Larry Klein, for instance, had to step out of the room during conversations about Stanford because his wife is a professor emeritus at the school. This included any budget considerations involving Stanford funds, and land-use issues involving Stanford and the university's recently approved hospital facilities expansion. Former Mayor Yiaway Yeh, whose wife was a Stanford scholar, also had to leave when the council discussed anything Stanford-related.

The case of DuBois differed, however, because the proposed office cap did not explicitly include Stanford or any of its properties. Nevertheless, because bans on office development at other parts of the city could make Stanford Research Park more lucrative to potential builders, the FPPC determined the link strong enough to create a potential conflict of interest for DuBois.

In its letter, the FPPC argued that the financial effect of the office cap on Stanford "can be recognized as a realistic possibility and more than hypothetical or theoretical." Under the Political Reform Act, the financial effect on a parcel of real property by a government action is deemed "material" whenever the decision would "cause a reasonable prudent person, using due care and consideration under the circumstances, to believe that the governmental decision was of such nature that its reasonably foreseeable effect would influence the market value of the official's property."

The fact that the property is Stanford's and not DuBois' didn't obviate the FPPC's determination. In fact, the FPPC stated, because Stanford would be impacted whether or not the ordinance applies to the Research Park, the conflict would exist in either scenario. Thus, "the effect on the council member's source of income is foreseeable and material and the council member may not participate in the decision," the FPPC ruled on April 29, in response to an inquiry from the city.

Some council members found this interpretation puzzling. Burt noted that DuBois had to recuse himself despite the fact that the office cap "specifically did not include Stanford University." But because the law could "potentially impact some value of their property and Tom DuBois' wife works in mechanical engineering, it is perceived that under the law there is some conflict-of-interest here."

"There is no materiality that we can construe," Burt said.

Figuring out whether a council member or commission has to recuse from a discussion can be tricky, particularly when there's no clear indication that the policy would have a material effect on the official. The council has generally taken a conservative stance, with members recusing. The council's discussion of last year's downtown new Residential Parking Permit Program required several council members and the city manager to leave the room whenever the subject arose. In recent weeks, Vice Mayor Greg Schmid and Councilman Cory Wolbach have been leaving the room any time the council discussed the topic of "single-story overlays," a zoning designation in which two-story homes are banned. That's because both live in a neighborhood that is considering seeking an overlay.

When in doubt, the city has relied on advice from the FPPC. In addition to consulting the commission about DuBois' participation in the office-cap discussion, the city made similar inquiries about council members Marc Berman, Eric Filseth, Liz Kniss and Greg Scharff, as well as City Manager James Keene. Each has an interest in property at or near downtown. The question for the city was whether the office cap's potential economic effects on the economic interests of these officials are "reasonably foreseeable." The commission ruled that all except DuBois can participate in the discussion of office caps.

The commission also affirmed the right of Liz Kniss, who owns a residential property near the California Avenue business district, to participate in discussions of limiting chain stores in the district (to be on the safe side, she had recused in the past). It also ruled that Berman, Keene and Scharff are allowed to participate in the council's consideration of 429 University Ave., a mixed-use project that was challenged by a neighbor and ultimately halted by the council last month. All three own properties near the project site.

Yet in light of the FPPC's determination that DuBois should not participate in the office-cap discussion, the council agreed on June 22 to take a closer look at existing conflict-of-interest rules and explore possible lobbying opportunities. The council voted 6-3, with Berman, Kniss and Scharff dissenting, to direct the city's Sacramento lobbyist to investigate opportunities for adding a requirement of "material impact" to elected officials when it comes to conflict-of-interest determinations. The council also directed Stump's office to investigate the regulatory changes happening in the field of FPPC policies and to report its findings to the council's Policy and Services Committee.

The three members who dissented did so largely because of the proposed sequence. They argued that the city attorney and the council committee should discuss the subject further and only later give direction to the lobbyist. The majority argued that the lobbyist and the city attorney should work concurrently and collaborate, with the understanding that the council will still have a chance to vet any lobbying opportunities before actual legislation is pursued by the city.

Changing the rules won't be easy. As the city attorney's office knows all too well, the topic is inherently complicated and is made more so by the fact that the FPPC's regulations are are currently in flux. The FPPC is now in the latter stages of of a multi-year project of reviewing all of these regulations and revising some, City Attorney Molly Stump said.

"They are lengthy and complex and they have been revising them in a series of phased actions," Stump told the council on June 22. "This is a very, very complex area of law and there has been a lot of attention recently to this review."

The June discussion wasn't the first time that Palo Alto council struggled with state requirements about how meetings are conducted. Earlier this year, the council inadvertently ran afoul of the Brown Act when five council members found themselves on the same thread of emails pertaining to a resident's appeal of a new home on Corina Way. After Wolbach, Filseth, Mayor Karen Holman and Tom DuBois all agreed that the item should be pulled, Schmid joined the conversation and said he also supports pulling it. Because this meant that five out of the nine council members were now privately discussing an item, the conversation violated the "serial meetings" provision of the Brown Act. After Stump flagged the violation, the city made public the email correspondence concerning the item.

Kniss suggested on June 22 that the Brown Act "serves the public so poorly." She noted that state officials have no similar prohibitions on talking to one another behind closed doors to muster support for legislation.

"We are here tied to the Brown Act, and if you listen to anyone in the Senate or the Assembly, they will tell you that they have talked to every member there to get their bill passed," Kniss said. "Truly, is that justice? Hardly."

Burt, for his part, defended the Brown Act, noting that its mission is to provide a "greater transparency to the public" and foster an open democracy."

"It's been a hallmark to open government in California now for many decades," Burt said. "It may from time to time need to have modifications to it, but I'm not in favor of disbanding it or any other wholesale changes to it."

Comments

8 people like this
Posted by logic
a resident of Crescent Park
on Jul 7, 2015 at 11:42 am

Kniss said> anyone in the Senate or the Assembly, they will tell you that they have talked to every member there to get their bill passed," Kniss said. "Truly, is that justice? Hardly."

The legislature breaks the law, so why can't we?
Thank you councilmember Kniss, your logic is consistent with your development votes.


13 people like this
Posted by Falbergasted old guy
a resident of Old Palo Alto
on Jul 7, 2015 at 11:43 am

This shows that political correctness has clearly gone too far. I fail to see how an employee of one department at Stanford has any benefit from increased rental or sale income at Stanford Industrial Park. To carry this concept to the extreme, if one of the council members owns some shares in a mutual fund that owns stock in a company that will be impacted by a City action - say Waste Management when the City did not give them the refuse contract - that would be a conflict too. I wonder if anybody asked for the holdings of each council member and then looked at any mutual funds' holdings to guard against this clear example of self-enrichment.


61 people like this
Posted by Abitarian
a resident of Downtown North
on Jul 7, 2015 at 12:44 pm

While I appreciate an "abundance of caution," something is seriously amiss when Council Member DuBois must recuse because his wife works in a non-property related field (mechanical engineering) at Stanford and Council Member Scharff may participate when he owns commercial property right on University Avenue.


23 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Jul 7, 2015 at 12:56 pm

What a ridiculous double standard to ban Tom but not Greg. Anything to rig the system, huh?


8 people like this
Posted by anon
a resident of Evergreen Park
on Jul 7, 2015 at 2:24 pm


The article doesn't explain that Scharff owns office property just a few hundred feet away from others that will be impacted by the office cap. Was the FPPC told that? How did they conclude that Scharff's downtown office space wouldn't be economically impacted by an office cap covering downtown but Dubois' wife's employer's holdings would?

Frankly, Scharff should have recused himself anyway. It's a blatant conflict of interest.


5 people like this
Posted by mauricio
a resident of Embarcadero Oaks/Leland
on Jul 7, 2015 at 3:19 pm

mauricio is a registered user.

It's simple. The pro growth council members don't recuse themselves when conflict of interest situations occur, while the residentialists do. During the Sand Hill Project debate, there were a number of council members with close ties to Stanford, including business ties, but all refused to recuse themselves.


5 people like this
Posted by Agenda
a resident of Another Palo Alto neighborhood
on Jul 7, 2015 at 3:46 pm

Clearly, Mauricio. Has not bothered to read the actual article and his eagerness to bash certain council members is making things up

The article clearly states:
"When in doubt, the city has relied on advice from the FPPC. In addition to consulting the commission about DuBois' participation in the office-cap discussion, the city made similar inquiries about council members Marc Berman, Eric Filseth, Liz Kniss and Greg Scharff, as well as City Manager James Keene. "

So claiming that certain pro-progress council members are not recusing themselves is false.

The article further states:
"Members who have jobs at Stanford or spouses employed by the university have routinely recused themselves from discussion that may affect the university, however indirectly. Councilman Larry Klein, for instance, had to step out of the room during conversations about Stanford because his wife is a professor emeritus at the school. This included any budget considerations involving Stanford funds, and land-use issues involving Stanford and the university's recently approved hospital facilities expansion. Former Mayor Yiaway Yeh, whose wife was a Stanford scholar, also had to leave when the council discussed anything Stanford-related."

The article talks about former members that I am sure Mauricio dislikes that recused themselves.

The article also,states:
"The commission also affirmed the right of Liz Kniss, who owns a residential property near the California Avenue business district, to participate in discussions of limiting chain stores in the district (to be on the safe side, she had recused in the past). It also ruled that Berman, Keene and Scharff are allowed to participate in the council's consideration of 429 University Ave., a mixed-use project that was challenged by a neighbor and ultimately halted by the council last month. All three own properties near the project site."
Knows, I am sure, is one of the pro- progress council members that Mauricio claims does not recuse herself. The article clearly says that has recused herself in the past. The commission also addressed the issue of scharffs participation that the anti- progress crowd bring up over and over again.

If you do not like the commissions rulings, let them know or change the law.

Perhaps Mauricio would like to return with some actual facts regarding council members behavior.

My question is did Dubois inform the anti- progress crowd that he may have major conflict of interest before he ran for the council or did PASZ and the weekly not do their due diligence in looking into this?


9 people like this
Posted by logic
a resident of Crescent Park
on Jul 7, 2015 at 5:09 pm

What Scharff did is much more serious. He convinced the council to EXEMPT small medical offices from the cap.
Turns out his University Ave property is a medical office.

New definition, courtesy of Mr.Agenda:
progress = making big bucks, no matter the consequences


5 people like this
Posted by Agenda
a resident of Another Palo Alto neighborhood
on Jul 7, 2015 at 5:26 pm

"What Scharff did is much more serious. He convinced the council to EXEMPT small medical offices from the cap.
Turns out his University Ave property is a medical office."
How is it " more serious"? Obviously the anti- progress group did not need too much convincing. The vote was unanimous!!!
Plus what is wrong with exempting medical offices from the cap??? Obviously the council saw the reasoning behind it.
This bashing of scharf at every turn has become a hallmark of the desperation of the people who are against any change in Palo Alto ( things were so wonderful x years ago)


10 people like this
Posted by logic
a resident of Crescent Park
on Jul 7, 2015 at 5:42 pm

They probably did not know what his property contained. Even if they did, it is hard in a public meeting to confront someone who is slipping in a private interest. It is confrontational and politeness is a requirement. So a skillful scoundrel can get away with alot.

Why pick on Scharff? Because of his hypocrisy when he ran for office last year. He pretended to have residentialist views. He even convinced some naive residents that he was sincere, and they publicly supported him, despite his history.


2 people like this
Posted by Agenda
a resident of Another Palo Alto neighborhood
on Jul 7, 2015 at 5:48 pm

[Post removed.]


2 people like this
Posted by Agenda
a resident of Another Palo Alto neighborhood
on Jul 7, 2015 at 6:05 pm

Logic-- here is part of story regarding the cap that you using to bash scharff with:

". Over the course of what at times was a tense discussion, the council reached consensus on an exemption for office projects smaller than 2,000 square feet, another exemption for small medical offices and the criteria for evaluating competing office projects."

Web Link

Whee exactly to,you get the claim that he pushed through the exemption for small medical,offices?


2 people like this
Posted by SteveU
a resident of Barron Park
on Jul 7, 2015 at 6:35 pm

SteveU is a registered user.

A bit extreme if we are talking Wages of a relative.
Your kids work at McDs. So you can not participate in Drive Thru discussion.

Wages of an employee (not involved with negotiations with the city) should not count.


4 people like this
Posted by Online Name
a resident of Mayfield
on Jul 7, 2015 at 8:30 pm

F.Y.I Gregg Scharff is now on the Santa Clara County Recycle and Waste Reduction Commission .
Web Link

These are the folks that implement programs like the Superscription drug take back program,plastic bag ordinance, Zero waste, ect.... These folks are one of the reasons our refuse rates are going through the roof. You guys need to keep a close eye on these characters.

God help us.


2 people like this
Posted by Online Name
a resident of Mayfield
on Jul 7, 2015 at 8:43 pm

Sorry, I meant to type prescription take back program.


2 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Jul 7, 2015 at 11:59 pm

Online Name from Mayfield, you're using my registered name to make points with which I agree. Just an FYI.

Maybe you could be Mayfield Online?


2 people like this
Posted by mauricio
a resident of Embarcadero Oaks/Leland
on Jul 8, 2015 at 6:29 am

mauricio is a registered user.

"Agenda", no council member involved with Stanford recused him/herself during the Sand Hill project process back in 1997. [Portion removed.] The anti progress group, aka pro growth, don't recuse themselves very often, certainly not when big development projects are on the table.


2 people like this
Posted by six of one
a resident of Another Palo Alto neighborhood
on Jul 8, 2015 at 6:40 am

Okay, Maurucio, which council members in 1997 did not recuse themselves? Did they consult the FPPC? what was their postion? You have made the claim, now provide the names.
Anyway the Sand Hill issue was decide by the voters in 1997 (measure M, I believe).
You further claim that the pro-growth group do not recuse themselves "often". What is "often". The article clearly gives examples of these people recusing themselves.
It is also clear that they rely on guidance from the FPPC when these questions arise. Why then do you continue to make false statements regarding these past and present members?
I doubt the city would allow councilmembers to ignore the FPPC, since that would open the door to potential criminal charges and lawsuits.
But I eagerly await the list of names of councilmembers you claim do not recuse themselves when they should ( and not when you think they should)
[Portion removed.]


7 people like this
Posted by mauricio
a resident of Embarcadero Oaks/Leland
on Jul 8, 2015 at 8:36 am

mauricio is a registered user.

Not even one recused himself, not even one. The pro growth group has close ties to big developers. They have never recused themselves when projects of the same developers came up before the council. At least one, Greg Scharff, who is a real estate attorney and has business relationships with developers, has never recused himself, even when the subject was exemptions for downtown properties similar to the one he owns himself. This is outrageous conflict of interest, if not corruption. All the five pro development members are guilty.


2 people like this
Posted by six of one
a resident of Another Palo Alto neighborhood
on Jul 8, 2015 at 8:47 am

Mauricio--what are you talking about. Go back and read the article--you will see examples of council members that have recused themselves. Plus the fact that the city let's the FPPC decide about recusal. Are you saying some councilmembers ignore the FPPC? Which ones do? Please give us specific names.
[Portion removed.]


Like this comment
Posted by mutti allen
a resident of Adobe-Meadow
on Jul 8, 2015 at 9:09 am

Just a nit-pick. FPPC is not a Federal program. It is state. The Fair Political Practices Commission.


4 people like this
Posted by logic
a resident of Crescent Park
on Jul 8, 2015 at 10:37 am

One example of conflict for six of one:
John Barton did not recuse himself from voting on the huge JCC on San Antonio road even though is wife's development company built one of the buildings.

The reason I found out about Scharff's office building was not the article in the Weekly but watching that meeting on tv. His pressure in pushing for the exemption of small medical offices prompted me to look up his property ownerships. (and that doesn't even cover the properties of his clients).

He also owns a building near California Ave. He should not participate in those deliberations.


4 people like this
Posted by mauricio
a resident of Embarcadero Oaks/Leland
on Jul 8, 2015 at 3:58 pm

mauricio is a registered user.

Besides Scharff's very clear conflict of interest, and Burton's too, the norm is for council members with close ties to developers is to not recuse themselves. Not one of the 1997 council members with ties to Stanford recuses themselves for the Sand Hill Project deliberations and voting, and this practice has continued to this day. The problem is that the game is really rigged.


Like this comment
Posted by Agenda
a resident of Another Palo Alto neighborhood
on Jul 8, 2015 at 5:20 pm

Mauricio-- can you provide us with some facts instead of conjecture. Which council embers did not recuse themselves from the sand hill development that was decided by a vote by the public. Pretty simple, which council members are you accusing.
And once again the article clearly discusses who has recused themselves and how the issue of recusing oneself is handled. I am not sure what you do not understand about that and why you continue to make baseless accusations about them. As for burton-- you are relying on an unsubstantiated comment by another poster. I believe that burton contacted the FPPC and he was allowed to vote on the matter.


4 people like this
Posted by mauricio
a resident of Embarcadero Oaks/Leland
on Jul 8, 2015 at 5:54 pm

mauricio is a registered user.

Agenda, I noticed that you don't mention Scharff, whose blatant conflict of interest in a recent hearing about downtown real estate should have perhaps led to criminal charges. I have been aware of Burton's conflict of interest regarding the JCC issue and others for a long time. Stop making stuff up. You can easily research the Sand Hill Project and find out the names of the council members who were doing business with Stanford and or had close ties to it, there were enough articles about it in the local papers. None ever recused themselves. You don't call the shots, don't be lazy. You seem to have an agenda, which is to protect the council members who should recuse themselves. I guess you are doing it in order to protect development and unethical support from council members who enable developers.


2 people like this
Posted by Agenda
a resident of Another Palo Alto neighborhood
on Jul 8, 2015 at 6:19 pm

"Agenda, I noticed that you don't mention Scharff, whose blatant conflict of interest in a recent hearing about downtown real estate should have perhaps led to criminal charges. "

I do not mention scharff because it is discussed in the above article. You will note that it clearly states:
"When in doubt, the city has relied on advice from the FPPC. In addition to consulting the commission about DuBois' participation in the office-cap discussion, the city made similar inquiries about council members Marc Berman, Eric Filseth, Liz Kniss and Greg Scharff, as well as City Manager James Keene. Each has an interest in property at or near downtown. The question for the city was whether the office cap's potential economic effects on the economic interests of these officials are "reasonably foreseeable." The commission ruled that all except DuBois can participate in the discussion of office caps."

So the commission ruled that scharff DID NOT HAVE A CONFLICT OF INTEREST. So no problem and no criminal charges. What do you not understand about scharff now?

"I have been aware of Burton's conflict of interest regarding the JCC issue and others for a long time. "
As I stated, I believe the city discussed this with the FPPC and they found there was NO CONFLICTS OF INTEREST.

"Stop making stuff up. "
I am not making anything up. I am providing you with facts that contradict your claims

"You can easily research the Sand Hill Project and find out the names of the council members who were doing business with Stanford and or had close ties to it, there were enough articles about it in the local papers."
But you are accusing former council members of violation no the law. Just provide their names. Very simple-- if they really do exist

" None ever recused themselves. You don't call the shots, don't be lazy. You seem to have an agenda, which is to protect the council members who should recuse themselves. "
Which ones did not recuse themselves? I am not protected me anyone. The article clearly states which council members recused themselves and which the FPPC said did not need to,recuse themselves. I am not sure why you think that council members should follow your rules regarding recusing themselves instead of the ruling of a professional committee which specifically deals with these issue.

"I guess you are doing it in order to protect development and unethical support from council members who enable developers."
You guess wrong. I am pro- progress. But if you want to,talk about unethical what about some of "residential" council members knowing about the 27 university project and not informing the public, even though they learned about the plans. Or how about these same council members knowing about arillagas desire to buy a portion of the foothills for,his,own personal use?


8 people like this
Posted by Neighbor
a resident of Barron Park
on Jul 8, 2015 at 9:32 pm

@ Agenda

"So the commission ruled that scharff DID NOT HAVE A CONFLICT OF INTEREST. So no problem and no criminal charges. What do you not understand about scharff now?"

Maybe not in the above case but definitely for the Cal. Ave project.
Scharff used every trick in the book to make sure the Cal Ave project got a yes vote.
Scharff,being the real estate attorney that he is, should have recused himself.After all he owns a building in the Cal Ave area.


2 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Jul 8, 2015 at 9:57 pm

Why does Stanford itself get to participate in our land-use planning panel? Why isn't that a conflict? If Dubois has to recuse himself because his wife works at Stanford in an unspecified capacity which may have no bearing on Stanford's growth, so should Stanford and its representative from its environmental planning dept who ALSO works at Stanford and CLEARLY represents Stanford's interests!

For decades, they've been telling us that all their massive building projects that will employ more workers won't have the slightest impact on traffic.

They spend a fortune polling us on things like the hospital expansion "Well, if we told you we could cure more 100 sick kids by adding 100 more beds, would you be more likely to approve our latest expansion plans? How about adding 500 beds to cure sick kids, would that make you more likely to favor our growth?"


Like this comment
Posted by politicians
a resident of Crescent Park
on Jul 9, 2015 at 10:42 am

they are ALL crooks!!!


2 people like this
Posted by Duveneck Resident
a resident of Duveneck/St. Francis
on Jul 9, 2015 at 4:03 pm

Double standard. If Dubois is to be recused then Scharff needs to as well. I'd rather see neither recused though.


Sorry, but further commenting on this topic has been closed.

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