Los Angeles Imposes New Political Contribution Prohibitions and Ethics Commission Reporting Requirements for Real Estate Developers

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Los Angeles Imposes New Political Contribution Prohibitions and Ethics Commission Reporting Requirements for Real Estate Developers

The City of Los Angeles recently enacted a new prohibition on political contributions from real estate developers with projects pending before the City. Starting on June 8, 2022, real estate developers that have filed applications with the Planning Department for a “significant planning entitlement” may not make a political contribution to the Mayor, City Attorney, City Councilmembers, or to any candidates for these offices or a City committee controlled by any of those individuals. A “significant planning entitlement” includes applications for discretionary entitlements such as site plan review, tentative tract maps, zone changes, general plan amendments, and major development projects. This new prohibition applies from the time a land use application is submitted until twelve months after the final determination letter on the application is issued, or if none, when the decision is final.

The new prohibition applies to contributions from the applicant and/or property owner, an owner of at least 20 percent of the entity and/or property, the real estate developer’s board chair and executive officers, such as the president, chief executive officer, chief financial officer, and chief operating officer, and any in-house employee or outside consultant, attorney, lobbyist, permit expediter, or similar consultant who is authorized to represent the real estate developer before the City Planning Department. The current FAQs published by the Ethics Commission limit the scope of coverage to these more high-level employees and to those employees and consultants directly involved in communications with the City Planning Department with respect to the development project.

In addition to the prohibition on political contributions, at the time of filing an application for a significant planning entitlement, the applicant must now file a report with the City Ethics Commission describing the project, the date the application is filed, and contact information for the applicant and each owner and executive who is covered by the developer contribution ban. The applicant is also required to notify all owners and affected executives, employees, and consultants that they will be prohibited from contributing to candidates for Mayor, City Attorney, or City Council while the land use application is pending and for twelve months thereafter.

A developer that violates this law may face fines or other penalties and will not be allowed to submit a new land use application for twelve months after the determination of the violation, unless the City Ethics Commission determines there are mitigating circumstances concerning the violation.

There remains some uncertainty regarding whether the ordinance can apply to project applications submitted before the ordinance took effect on June 8, 2022. The Ethics Commission has published FAQs stating that the new law applies to every application, including those filed prior to June 8, 2022. However, the ordinance itself states that the reporting requirements are triggered by the filing of the application, which, in the case of pending applications, has already occurred. In addition, the ordinance provides that the application is not complete for purposes of the Permit Streamlining Act until the required reporting information is provided to the Ethics Commission. However, many pending applications already in the system have already been deemed complete, and applying new requirements to applications deemed complete prior to the effective date of the ordinance may conflict with state law regarding application completeness.

Finally, the ordinance requires the Planning Department to notify every applicant of these new requirements. It is not yet clear when the Planning Department will provide this notice, what the contents of the notice will be, and whether failure to provide notice would provide an applicant with an argument that it is not subject to the ordinance.

Should you have any questions about these requirements, please contact one of the authors of this alert or any member of Cox Castle’s Los Angeles Land Use team.   

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