Under the Ordinance, covered individuals or entities may make or solicit contributions of no more than $300 per year to a covered recipient if the associated business entity wishes to maintain eligibility for contracting with Bergen County.  “Covered recipients “ include: (i) any candidate or holder of elected office in Bergen County; (ii) any campaign committee of a candidate or holder of public office in Bergen County; (iii) any Bergen County party committee; (iv) any municipal party committee within Bergen County; (v) any candidate committee, state or county political party committee, legislative leadership committee, continuing political committee or political action committee (PAC) organized under Section 527 of the Internal Revenue Code, that has within the past year provided financial or in-kind support to any candidates for Bergen County municipal elections or candidates for Bergen County elections.   

The Ordinance also contains a $2,500 annual aggregate limit to all covered recipients for any group of individuals or entity associated with the business entity. 

For a business entity, both the per recipient and the aggregate limitations on contributions to covered recipients commence at the time of the first public announcement or solicitation of a request for proposals by the County of Bergen and continue through the term of the contract, if awarded to the business entity.

The Bergen Ordinance’s prohibition provisions are similar to many of the other county and municipal ordinances in New Jersey.  Unlike many other local ordinances, however, the Bergen County Ordinance contains comprehensive disclosure requirements.  For example, the Bergen County Ordinance requires disclosure of contributions in any amount to Federal and state officeholders representing the County of Bergen.  Care must be taken, therefore, to maintain compliance given the subtle distinctions that often occur in language and/or interpretation among various local ordinances.

When: Today, Monday December 5, 2011; 6-9PM
Where: NY County Lawyers’ Association (14 Vesey Street, NY, NY)

Faculty:

• Rebecca Gordon, Partner, Perkins Coie
• Laurence Laufer, Partner, Genova, Burns & Giantomasi
• Lee Michel, Director, Barclays Capital

To register click here.

Although the economy and pay-to-play restrictions may be partially to blame, ELEC has indicated that “the recent growth of independent non-profit political groups organized under IRS rules” may be one of the factors leading to this decline.  Prior to yesterday’s election, these groups – commonly referred to as Super PACs or Independent Expenditure Only PACs – were required to report their independent spending in excess of $1,200 to ELEC on pre-election and 48-hour notice reports. 

In the wake of Citizens United v. FEC, will the level of independent spending in New Jersey foreshadow the level of independent spending in the 2012 federal election cycle or in the 2013 New York City elections where new independent expenditure reporting requirements will likely be in effect?

According to the White Paper, fundraising for the 2005, 2007 and 2009 legislative elections was $1 million less than the previous three election cycles (1999, 2001 and 2003). The economy, wealthy candidates and pay-to-play restrictions may be to blame. Could the fact that the first three election cycles included only one gubernatorial election whereas the second three cycles included two gubernatorial elections also have had an impact on giving?

ELEC concluded that although state parties were hit hardest by statewide pay-to-play restrictions, “all state candidates suffered to some extent because many contractors simply stopped writing checks due to general fear over losing contracts.”  

Will the impact be the same for the 2011 legislative elections?  In spite of the economy, will vendors begin to write checks greater than $300 to legislative candidates? Will the fact that 2011 is not a gubernatorial election year have an impact on contributions to legislative candidates? Although vendors may be “afraid” of losing contracts, with a well executed compliance plan in place, vendors may be surprised to learn that they need not put their political giving on hold – particularly when it comes to legislative candidates.

In conjunction with this press conference, the State Comptroller issued both a press release and a procurement report on “weaknesses” of the “fair and open process” applicable at the state and county level in New Jersey. According to the report, the “fair and open” system “presents few, if any, real obstacles to a government entity seeking to award a contract to a potentially favored vendor.”

Following yesterday’s press conference, ELEC also issued a press release  on pay-to-play reform, which sets forth a series of recommended changes to New Jersey’s statewide pay-to-play law applicable to county and municipal government contracts. ELEC recommends: (1) one state law that would apply across the board; (2) elimination of the “fair and open process” exception; (3) a change in the reporting threshold for ELEC’s Business Entity Annual Disclosure Report from a $50,000 aggregate annual threshold to a $17,500 per contract threshold; and (4) an increase in contribution limits for government contractors.

ELEC and the State Comptroller’s Office are hoping that “by joining forces”, they will bring about meaningful pay-to-play reform to the Garden State.

The best practices check list is designed to provide standards by which local government officials can perform an assessment of municipal operations.  In order to receive 100% percent of permissible state aid, a municipality needs to satisfy certain criteria, including the adoption of a local pay-to-play ordinance.

As these ordinances begin to take effect, government contractors should take steps to ensure that they are in full compliance with varying local pay-to-play restrictions.

The Newark redeveloper pay-to-play ordinance has been under consideration for quite some time, but was not passed by the City Council until May 4, 2011. 

The ordinance will take effect on Thursday, June 2, 2011 and bars redevelopers from contracting with the City of Newark if the redeveloper has made or solicited a contribution greater than $300 to a covered recipient within the year period prior to the contract. 

The ordinance defines the term “redeveloper” to include: any person or entity entering into a contract with the city, or with another redeveloper, for the rehabilitation of any area in the City of Newark.  The definition includes: those with a 10% or greater ownership in the entity, partners, officers, subsidiaries, and the spouses and adult resident children of the 10% or greater shareholders, partners and officers.

Covered recipients include:   

• A holder of or candidate for Newark elective office;
• A Newark municipal political party committee;
• An Essex County political party committee; and
• Any PAC that regularly engages in the support of Newark municipal campaigns.

The ordinance also contains a $3,000 aggregate limit on contributions to covered recipients during the four-year municipal election cycle.

The Newark redeveloper ordinance permits covered persons and entities to make and solicit contributions up to the reduced limits set forth above both during the one-year period prior to entering into a contract with the City of Newark and during the term of any such contract.

Unlike many contractor pay-to-play ordinances, not only does the Newark redeveloper pay-to-play ordinance cover contributions by the persons and entities listed above, but the ordinance also covers contributions by certain professionals, consultants and lobbyists contracted or employed by the business entity ultimately designated as the redeveloper.

Local government officials include: mayors, council members, county constitutional officers, freeholders, county prosecutors, members of local government boards and authorities and municipal attorneys. A roster of 2011 local government officials can be found on the New Jersey Department of Community Affairs’ website. 

The FDS requires disclosure of all sources of income, fees, honorariums, sources of gifts, reimbursements or prepaid expenses received by the local government official and/or his/her immediate family members during the previous calendar year. 

All sources of gifts, reimbursements and prepaid expenses with an aggregate value of $400 or more from any single source, excluding relatives, received by the local government official and/or his/her immediate family members must be disclosed. So, before offering to take a local government official and/or the official’s immediate family members out to a high priced ball game, a government vendor should decide whether the peanuts and crackerjacks are worth the public scrutiny.

The precedent for executive action to implement pay-to-play standards was famously set by New Jersey Governor James McGreevey in 2004 after he announced his pending resignation from office. Indeed, there are striking echoes of the 2004 McGreevey EO in the draft Presidential order. For example:

• McGreevey: political contributions “to obtain a contract awarded by a government agency … raise[] legitimate public concerns about whether the contract was awarded on the basis of merit”

• White House: the “Federal Government must ensure that its contracting decisions are merit-based in order to deliver the best value for the taxpayer.”

• McGreevey: “it has long been the public policy of this State to secure for the taxpayers the benefits of competition, to promote the public good by promoting the honesty and integrity of bidders for public contracts … and to guard against favoritism, improvidence, extravagance and corruption”

• White House: “When the public lacks confidence that the contracting system works fairly, it may deter participation and deprive the government of the most robust competition and the best providers”

• McGreevey: “I must … impos[e] restrictions on State agencies … to insulate the negotiation and award of State contracts from political contributions that pose the risk of improper influence, purchase of access, or the appearance thereof”

• White House: “additional measures are appropriate and effective in addressing the perception that political campaign spending provides enhanced access to or favoritism in the contracting process”.

When a legislature fails to act, executives may tests the limits of their constitutional authority, as current New Jersey Governor Chris Christie unsuccessfully attempted last year with an executive order limiting labor union contributions. Given that the draft EO would seemingly extend the reach of pay-to-play disclosure to encompass independent expenditures, despite the U.S. Supreme Court’s conclusion that such expenditures pose no risk of quid pro quo corruption, one might conclude the draft EO is a bit of an odd mix, such that other constitutional boundaries may also be tested.

Without regard to pay-to-play restrictions, an individual or corporation may contribute up to $2,600 per election to a candidate running for school board in New Jersey.  Vendors are required to disclose contributions greater than $300 per election to a school board candidate on certain pay-to-play disclosure forms. 

Although contributions to school board candidates are generally beyond the scope of New Jersey’s statewide pay-to-play prohibition laws, school boards are authorized to adopt local pay-to-play ordinances.  Thus, before writing a check (in any amount) to a school board candidate, vendors should determine whether a local ordinance is in effect.