2023-024 Proposed Ethics Ordinance Amendments March 10, 2023 Report No. 2023-024
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
2023 Proposed Amendments to the Ethics Ordinance Background& Research
BACKGROUND:
Beginning June 2022, the Board of Ethics began discussing potential amendments to the City of
Denton Code of Ordinance Chapter 2, Article XI—also known as the Ethics Ordinance. Over the
course of seven meetings, the Board developed 11 proposals, nine of which will be presented to
the City Council for consideration and direction on March 21, 2023 during Work Session. This
informal staff report has been prepared to summarize research and background information used
by the Board of Ethics to develop each of the I I proposals.
DISCUSSION:
Proposal 1: Clarification of the Gifts Prohibition
This proposal was originally developed in August 2022 after staff was asked by a City Official if
they were required to disclose the acceptance of a gift that they believed was an exception to the
Ethics Ordinance. The City had created a form to allow City Officials to disclose the acceptance
of a gift; however, staff did not believe that the Ethics Ordinance had a clear requirement for the
disclosure. No research was conducted for this proposal.
Proposal 2: Adjustment to the Subsequent Work on Prior Projects Prohibition
This proposal was originally developed in June 2022 as part of a comprehensive discussion that
the Board of Ethics held over three meetings in 2022. During this meeting, the Board discussed
research conducted by staff on other ethics ordinances' disclosure and recusal procedures. In
general, this research found the following:
• Nine of ten benchmark municipalities as well as Wechsler's Model Code require certain
City Officials to formally recuse themselves from official actions(e.g. official discussions,
deliberations, and votes) typically due to the City Official having an Economic or
Substantial interest in the official action.
• Nine of the ten benchmark municipalities required the City Official to disclose their reason
for recusal typically by filing a written affidavit or other standard form the nature of the
Economic or Substantial interest causing them to recuse. The model code as well as
Mesquite and San Marcos require that this disclosure (i.e. including that nature of the
interest)be publicly disclosed to the applicable body at the beginning of the official action
(i.e. before discussion or deliberation has occurred).
• Six of the ten benchmark municipalities as well as Wechsler's Model Code included
prohibitions for City Officials for their behavior outside of their official capacity. These
prohibited behaviors were more varied and generally more broadly defined such as:
business, professional activities, or actions. These prohibitions generally focused on
behaviors that would conflict with discharging official duties.
On March 6, 2023, the Board of Ethics voted to reject this proposal (7-0), meaning the Board has
no plans to discuss this proposal in the future at this time.
March 10, 2023 Report No. 2023-024
Proposal 3: Adjustment of the Conflict of Interest Financial Thresholds
This proposal was originally developed in August 2022 as part of a comprehensive discussion that
the Board of Ethics held over three meetings in 2022. During this meeting, the Board discussed
research conducted by staff on other ethics ordinances' financial considerations and prohibitions.
In general, this research found the following:
• Five of ten benchmark municipalities as well as the model code do not have specific
financial thresholds defined for their conflict of interest prohibitions.Instead,they typically
prohibit official action if the official's economic interest would be affected in a way that is
distinguishable from the effect on the general public.
• The remaining five benchmark municipalities generally address four financial prohibitions
including ownership through shares or stocks, income, ownership through real value, and
ownership of real property.
On March 6, 2023, the Board of Ethics voted to postpone this proposal (7-0), meaning the Board
plans to continue discussing and reviewing this section of the Ethics Ordinance to develop a future
proposal.
Proposal 4: Addition of a Recusal Requirement for Certain Aggregate Campaign Contributions
This proposal was originally developed in August 2022 as part of a comprehensive discussion that
the Board of Ethics held over three meetings in 2022. During this meeting, the Board discussed
research conducted by staff on other ethics ordinances' campaign contribution prohibitions. In
general, this research found the following:
• One other municipality prohibit a City Official from taking official action when an official
had received campaign contributions greater than $300 from a person, business entity, or
association. The model code prohibits official action if the official has received a campaign
contribution of more than $200 in aggregate during the past election cycle from a person
or entity.
Proposal 5: Addition of a Recusal Requirement for Recent Offers of Employ
This proposal was originally developed in October 2022 as part of a comprehensive discussion
that the Board of Ethics held over three meetings in 2022.During this meeting,the Board discussed
research conducted by staff on other ethics ordinances' personal considerations and prohibitions.
In general, this research found the following:
• Three other municipalities prohibit a City Official from taking official action related to a
person,Business Entity, or Non-Profit Organization with whom they, or their spouse,have
solicited,received and not yet rejected, or accepted an offer of employment from in the last
twelve months. The model code does not include this specific prohibition.
Proposal 6: Addition of a Recusal Requirement for Recent Business Opportunity Negotiations
This proposal was originally developed in October 2022 as part of a comprehensive discussion
that the Board of Ethics held over three meetings in 2022.During this meeting,the Board discussed
research conducted by staff on other ethics ordinances' personal considerations and prohibitions.
In general, this research found the following:
March 10, 2023 Report No. 2023-024
• Three other municipalities prohibit a City Official from taking official action related to a
person,Business Entity, or Non-Profit Organization with whom they, or their spouse,have
directly or indirectly engaged in negotiations pertaining to business opportunities, where
such negotiations are pending or not terminated. The model code does not include this
specific prohibition.
Proposal 7: Addition of a Recusal Requirement for Substantial Outside Client Relationships
This proposal was originally developed in August and October 2022 as part of a comprehensive
discussion that the Board of Ethics held over three meetings in 2022. During this meeting, the
Board discussed research conducted by staff on other ethics ordinances' personal considerations
and prohibitions. In general, this research found the following:
• Two other municipalities prohibit a City Official from taking official action related to the
Official's outside"client." The model code also includes this prohibition.
• The term"client" is defined differently in all three ethics codes.
In December 2022, some City Council members stated that they preferred San Antonio's definition
of client relationship which is as follows: "The term client includes ay business, financial or
professional relationship to which a duty of care, confidence,trust or privilege applies."
Proposal 8: Addition of a Recusal Requirement for Substantial Debtor or Creditor Relationships
This proposal was originally developed in October 2022 as part of a comprehensive discussion
that the Board of Ethics held over three meetings in 2022.During this meeting,the Board discussed
research conducted by staff on other ethics ordinances' personal considerations and prohibitions.
In general, this research found the following:
• Two other municipalities included a prohibition on taking official action related to a
substantial debtor, creditor, or guarantor of the City Official or their spouse whereby
substantial was defined to mean more than $5,000. The model code had a similar
prohibition, but only extended this to include debtors and creditors—not guarantors.
Proposal 9: Revision of the Affiliated or Partner Business Entity Disclosure Requirement to
Recusal
This proposal was originally developed in October 2022 as part of a comprehensive discussion
that the Board of Ethics held over three meetings in 2022.During this meeting,the Board discussed
research conducted by staff on other ethics ordinances' personal considerations and prohibitions.
In general, this research found the following:
• Two other municipalities prohibit a City Official from taking official action related to a
Business Entity that the City official knows is an affiliated business or partner of a business
entity in which that person, or their relative, holds an economic interest. The model code
does not include this specific prohibition.
• Denton has a similar consideration but did not require recusal from official action — only
disclosure.
Proposal 10: Creation of Specific Sanctions for Frivolous Complaints
This proposal was originally developed in August 2022 as part of discussions initiated by lessons
learned from processing Ethics Complaint 22-001, which was the first Ethics Complaint found
March 10, 2023 Report No. 2023-024
frivolous since the Ethics Ordinance was initially adopted. During this meeting, the Board
discussed research conducted by staff on other ethics ordinances' sanctions for frivolous
complaints. In general, this research found the following:
• Two other municipalities had a process for considering if a submitted ethics complaint was
frivolous. The model code does not include a process for considering frivolous complaints.
• Sanctions for frivolous complaints by other municipalities included prohibiting a
complainant rom filing another complaint for certain periods of time or imposing a civil
penalty.
Proposal 11: Creation of an Order to Show Cause Process
This proposal was originally developed in October and November 2022 as part of discussions
initiated by lessons learned from processing Ethics Complaint 22-001, which was the first Ethics
Complaint found frivolous since the Ethics Ordinance was initially adopted. During this meeting,
the Board discussed research conducted by staff on other ethics ordinances' sanctions for frivolous
complaints. A general illustration of an Order to Show Cause process is shown in Figure 1.
Figure 1: General Order to Show Cause Process
Complainant
•Dismisses -Holds Hearing
Complaint p •Provides Response Determines
•Issues Order to Frivoloity
in writting and/or at
Show Cause hearing -Potentially Issues
Sanctions
Ethics Body Body
In general, this research found the following:
• Two other municipalities had a process for considering if a submitted ethics complaint was
frivolous. Both of these municipalities process potentially frivolous Ethics Complaints
through an "order to show cause" process whereby the ethics body holds an evidentiary
hearing to determine whether the complaint is a frivolous complaint.
• One of the municipalities allowed the Respondent to an Ethics Compliant (i.e. the
individual the compliant was submitted against) to terminate the order to show cause
process.
• Both municipalities provide the Respondent with a copy of the order to show cause. Under
one the Respondent may provide a written response and present evidence at the hearing
while the other stops the Respondent from further involvement.
March 10,2023 Report No. 2023-024
ATTACHMENTS:
1. Benchmark Municipality Research Summary
STAFF CONTACT:
Madison Rorschach, City Auditor
Internal Audit Department
(940) 349-7228
Madison.Rorschachgcityofdenton.com
REQUESTOR:
Staff Initiated
PARTICIPATING DEPARTMENTS:
Board of Ethics
STAFF TIME TO COMPLETE REPORT:
49 Hours