STAFF REPORT. Meeting Date: June 19, 2018 To:

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1 STAFF REPORT Meeting Date: June 19, 2018 To: From: Honorable Mayor & City Council Emily B. Milder, Assistant City Attorney Laurence S. Wiener, City Attorney Subject: Attachments: Potential Regulations Aimed at Curbing Abuse of the Referendum Process None INTRODUCTION The City Council adopted Ordinance No , known as the Basement Ordinance (the Ordinance ), in March Shortly thereafter, opponents of the Ordinance began to circulate a referendum petition calling for the Ordinance s repeal. The referendum petition, which contained the required number of prima facie signatures, was accepted by the City Clerk upon its submission within the timeframe prescribed by state law. At that point, the Clerk had thirty days to review the validity of the petition signatures (this task was delegated to County elections officials). Upon review, officials determined that the petition lacked the required number of valid signatures. The Ordinance therefore survives. However, Councilmembers remain concerned about certain issues raised by the abovedescribed events. The Council received reports alleging that circulators of the referendum petition made false statements regarding the effect of the Ordinance in an effort to induce residents to sign the petition. Moreover, voters were not informed about who was hiring the signature gatherers to allow them to determine the identities of the referendum s supporters. The Council expressed interest in adopting new measures aimed at enhancing transparency and curbing abuse of the local referendum and initiative processes going forward. The following is a list of approaches the Council asked the City Attorney s office to research, and brief conclusions as to their viability: Page 1 of 5 B \ v1.doc

2 Requiring petition circulators to wear badges stating whether they are paid or volunteer, and if paid, by whom. A court would probably deem this to be an acceptable regulation of speech. Requiring petition circulators or proponents to register as local legislative advocates. The City would likely be able to require proponents to register, but requiring petition circulators to register is prohibited under the First Amendment. Making available to the public a neutral, City-drafted summary of a referendum s purpose that circulators have the option to distribute while gathering signatures. This would probably be an acceptable use of the City s funds. Requiring circulators to distribute a City-drafted summary to the public; or requiring circulators employers to distribute a City-drafted summary to circulators, or requiring that the City-drafted summary appear on the text of the referendum petition. A court would likely disapprove of these approaches due to the procedural difficulties they would create, and perhaps also for First Amendment reasons. Imposing criminal penalties on the proponent or financial backer of a referendum campaign in which petition circulators made false statements or otherwise violated the Elections Code. A court would likely find such a penalty to be a violation of due process. Temporarily suspending projects affected by a zoning ordinance that is the subject of a referendum campaign, during the time period between when the City Clerk accepts a petition and when the petition either fails to be certified, or, if certified, is either repealed or submitted to voters at an election. There is no authority that expressly prohibits the City from enacting such an ordinance, but if the City chooses this approach it should take care to design the ordinance so as to avoid creating the impression that it is attempting to evade the effect of a referendum. DISCUSSION Viability of a Paid-Status Badge Requirement for Local Petition Circulators The City Council asked the City Attorney s office to research how residents can be better informed about who is contributing money to referendum efforts. Although the City Attorney s office found no case which is on point, one option would be requiring those collecting signatures for local ballot measure petitions to identify (1) whether or not they are being paid to collect signatures, and (2) if they are being paid, by whom. Our conclusion is that a court would probably deem such an ordinance to be an acceptable restriction on speech. In Buckley v. Am. Constitutional Law Found., Inc. (1999) 525 U.S. 182, the United States Supreme Court examined several Colorado statutes regulating initiative petition circulators and proponents, including one that required petition circulators to wear badges displaying their names and home addresses; their status as paid or volunteer; and if paid, the name of their employer. The Court held that requiring circulators to wear badges featuring their names and addresses violated the First Amendment; however, it expressly declined to opine on the constitutionality of the requirement that the badge disclose whether the circulator was paid or volunteer, and if paid, by whom. Page 2 of 11 B \ v1.doc

3 Following this decision, Colorado repealed the requirement that petition circulators wear badges displaying their names and addresses, but it has retained the provision requiring circulators to wear badges indicating their paid status and identity of the circulator s employer. The Colorado law is currently worded as follows: A circulator who is not to be paid for circulating a petition concerning a ballot issue shall display an identification badge that includes the words VOLUNTEER CIRCULATOR in bold-faced type that is clearly legible. [...] A circulator who is to be paid for circulating a petition concerning a ballot issue shall display an identification badge that includes the words PAID CIRCULATOR in bold-faced type that is clearly legible and the name and telephone number of the individual employing the circulator. Cob. Rev. Stat. Ann (2). Our research revealed that neither this provision, or any similar provision, appears to have ever been challenged in court. The Ninth Circuit has examined other regulations pertaining to either petition circulators, or proponents, and the disclosure of expenditures related to ballot measures. While these cases do not involve badge requirements, they do clarify that the appropriate level of scrutiny for a disclosure requirement such as this one is exacting scrutiny. Exacting scrutiny requires a substantial relation between the disclosure requirement and a sufficiently important governmental interest. Chula Vista Citizens for Jobs & Fair Competition v. Norris (9th Cir. 2015) 782 F.3d 520; [emphasis added]. Moreover, the Ninth Circuit has established that a local government s interest in ensuring that voters are informed regarding the identities of a ballot measure s supporters and opponents qualifies as a sufficiently important governmental interest for the purpose of exacting scrutiny. While a paid-status badge requirement would therefore likely be legally viable, the City Council may wish to go beyond the Colorado statute. Paid signature gatherers are usually directly hired and paid by companies that exist to provide this service. If the ordinance is worded to require a paid petition circulator s badge to provide the name of his or her employer (as Colorado s statute does), that employer would be the signature gathering service, rather than the entity that contracted with the service to circulate the petition at issue. Moreover, if the ordinance were to require a paid circulator s badge to display the name of the entity that hired the signature gathering service, that entity could be a political committee, e.g. Concerned Residents of Beverly Hills. If the City Council wants to ensure that the circulator s badge contains the name of the individual or corporation ultimately responsible for funding the circulation of the petition, the ordinance would have to be worded in such a way so as to require the badge to display the name of the primary funder(s) of the committee that hired the signature gathering service. Requiring Petition Circulators and Proponents to Register as Legislative Advocates The City may require ballot measure proponents to register as legislative advocates under the City s legislative advocacy ordinance. However, a court would likely disapprove of requiring petition circulators to register under this ordinance, as this would result in public disclosure of circulators identities while a petition is still in circulation. The City s municipal code ( BHMC ) currently requires legislative advocates to register with the City Clerk within ten days of beginning any legislative advocacy. BHMC A legislative advocate is defined as [amy individual who is compensated or who is hired, directed, retained Page 3 of 11 B \ v1.doc

4 or otherwise becomes entitled to be compensated for engaging in legislative advocacy and makes a direct or indirect communication with a City official or who is an expenditure lobbyist. BHMC Registration entails that the legislative advocate provide, among other information, his or her full name, phone number, and address. BHMC (A). This information is then made available to the public on the City s website in a searchable database. BHMC (C). Amending the BHMC to require petition circulators and proponents to register as legislative advocates would therefore mean that the names and contact information for circulators and proponents would be made public at the beginning of the petition circulation process. The Supreme Court and the Ninth Circuit have approved similar provisions in regard to proponents, but have struck down such provisions when they applied to circulators. In addition to the circulator badge requirement (discussed in the previous section), the Court in Buckley, supra, examined five other Colorado provisions related to petition circulators and proponents. One of those required ballot initiative proponents who pay petition circulators to file monthly disclosure statements with the secretary of state during the petition circulation period. Id. at 201. These monthly statements revealed the names and addresses of paid circulators and the amount of money paid to each of them. Ibid. In holding that this provision failed to meet exacting scrutiny (the standard for election-related disclosure requirements; discussed above), the Court explained that the state s substantial interest in the financial transparency of ballot measure campaigns was already sufficiently served by requiring proponents to disclose their identities and the amounts they paid to circulators ( [wjhat is of interest is the payor, not the payees ), and that the added benefit of revealing the names of paid circulators and amounts paid to each circulator [...] is hardly apparent and has not been demonstrated. Id. at 203. Note that the Colorado provision struck down by the Court only required that the petition circulators personal information be filed with the secretary of state. It is unclear how accessible this information would have been to the general public. The ordinance contemplated by the City, on the other hand, would render petition circulators personal information more or less immediately available to anyone with a smartphone. Note also that the Court in Buckley discussed with approval the lower court s upholding of a state provision requiring petition circulators to submit affidavits containing their personal information at the end of the circulation period. Id. at 198. The Court viewed the affidavit requirement as less intrusive than a monthly disclosure report or an ID-badge requirement because the affidavit, being submitted at the end of the circulation process, is separated from the moment the circulator speaks and not instantly accessible, and [...] therefore less likely to be used for such purposes as retaliation or harassment. Id. at 199. Relying on Buckley, in (WIN) Washington Initiatives Now v. Rippie (9th Cir. 2000) 213 F.3d 1132, 1140 the Ninth Circuit struck down a Washington state law that required political committees sponsoring ballot measures to file public reports at several points throughout the initiative process containing the names and addresses of all paid petition circulators. Concluding that the State s asserted interests in fraud detection and in educating voters through campaign finance disclosure do not justify the required disclosure of the names and addresses of paid circulators[,] the court pointed out that these reports were filed during the petition circulation period, when hostility toward petition circulators is at its highest. Id. at 1140, Page4of 11 BO785OOO1\21 $9199v1.doc

5 Moreover, the court expressed deep skepticism regarding whether disclosure of circulators personal information provided any value to the voting public: [TJhere is no logical explanation of how a voter who signs an initiative petition would be educated in any meaningful way by learning the circulator s name or address, [...] nor how that disclosure would assist a voter in judging the credibility of individual petition circulators. Id. at Proponents, however, do not make face-to-face contact with the public and are therefore less likely to be targets of harassment. The proponent s role is both more remote (in terms of public interaction) and yet more fundamental than that of the circulator. State law in fact requires that the names of an initiative s proponents 1) be published in a newspaper prior to circulation of the initiative petition, and 2) appear on the initiative petition itself. Elections Code 9205, 9206, In upholding these requirements against a First Amendment challenge, the Ninth Circuit explained that [alt the petition circulation stage, an official proponent resembles a candidate for public office, and the petition is effectively the ballot used by voters to imbue him with special legislative authority. [...] Accordingly, when deciding whether to sign a petition, the identity of the official proponent matters, and voters need to know whom they are being asked to vest with that authority. Certainly no one would argue that candidates for elective office have a right to be anonymous on the ballot. Chula Vista Citizens for Jobs & Fair Competition, supra, at 538. If the First Amendment allows for the publication of a ballot measure proponent s identity in the newspaper and in the text of the petition, it almost certainly follows that a proponent s information may be published in an online database. Supreme Court and Ninth Circuit precedent therefore strongly suggest that the City may require a proponent to register as a legislative advocate and thereby disclose information at the outset of the petition process; however, any requirement resulting in petition circulators names and addresses being disclosed to the public during the petition circulation period would be unlikely to overcome exacting scrutiny. City-Drafted Referendum Summaries 1. May the City draft a factual summary describing the effect of a referendum and make it available to the public, including petition circulators? The City may spend public funds on the creation of an informational summary of the effect of a pending referendum and make this summary available to the public, including petition circulators, through its regular communication channels. Government Code ( GC ) provides that a city may not expend or authorize the expenditure of any of the funds of the local agency to support or oppose the approval or rejection of a ballot measure, or the election or defeat of a candidate, by the voters. However, a city may provide information to the public about the possible effects of a ballot measure on the activities, operations, or policies of the city, so long as (1) The informational activities are not otherwise prohibited by the Constitution or laws of this state[,] and (2) The information provided constitutes an accurate, fair, and impartial presentation of relevant facts to aid the voters in reaching an informed judgment regarding the ballot measure. GC 54964(c). However, city-funded materials that do not expressly support or oppose a ballot measure may still be an improper use of funds if those materials qualify as traditional campaign activities. Vargas v. City of Salinas (2009) 46 Cal. 4th 1, 32. In Vargas, supra, the California Supreme Court explained that there is a need to distinguish between campaign materials and activities Page 5 of 11 B \ v1.doc

6 (whether or not they expressly support or oppose a measure), toward which no public money may be spent, and informational material which may be paid for with public funds. Id. at 7. Many activities clearly fall within one category or another, while those that are more difficult to categorize must be examined for style, tenor, and timing in order to determine whether they are permissible informational materials or impermissible campaign materials. Ibid. The Court in Vargas identified a number of activities that clearly qualified as impermissible campaign activities, such as bumper stickers, advertising floats, billboards, television and radio advertisements, and the dissemination, at public expense, of campaign literature prepared by private proponents or opponents of a measure. Id. at 24. On the other hand, it is clearly acceptable for a city to give a fair representation of the facts in response to a citizen s request for information[.] Id. at The facts of Vargas are relevant to the question presented here. In response to a local ballot measure to repeal a utility users tax that constituted 13% of the City of Salinas general fund budget, the City Council of Salinas directed city staff to prepare detailed analyses discussing the reduction or elimination of services and programs that would occur if the measure were to be adopted by voters. Id. at 9. These analyses were presented to the city council at multiple public city council meetings, and at one such meeting the council formally voted to adopt staff s recommendations regarding program and service cuts in the event of the measure s passage. Id. at 10. Pursuant to the city s normal practice, these analyses were posted to the city s website along with the minutes of the meetings. Id. at 11. The city also produced a one-page document that briefly described the proposed measure and listed, in separate categories, Facilities To Be Closed, Programs/Services To Be Eliminated, Community Funding To Be Eliminated, and Programs/Services To Be Reduced if the measure were to be approved. Id. at 12. Copies of this document, in English and Spanish, were made available to the public at the city clerk s office and in all city libraries. Ibid. Additionally, the city included this information in several articles in its regular quarterly newsletter, which was mailed to all city residents. Ibid. Proponents of the measure argued that the materials posted on the city s website, the one-page document, and the newsletter qualified as campaign materials and were therefore an improper use of public funds. Id. at 13. The Court disagreed for the following reasons: (1) the information conveyed generally involved past and present facts [...J; (2) the communications avoided argumentative or inflammatory rhetoric and did not urge voters to vote in a particular manner or to take other actions in support of or in opposition to the measure; and (3) the information provided and the manner in which it was disseminated were consistent with established practice regarding use of the Web site and regular circulation of the city s official newsletter. Id. at 40. The court also noted that this reasoning would apply regardless of a ballot measure s subject matter. Ibid. Therefore, the City may use public funds to draft a factual, objective summary of the effect of a proposed ballot measure and make it available to the general public through its regular communication channels, such as the internet, in a regularly published newsletter or at locations where it normally provides informational materials to those who seek them out, like public libraries. However, note that a special mailing of such a summary, either to specific individuals or the general public, would likely cross the line into campaign activities. See Fed. Election Comm n v. Massachusetts Citizens for Life, Inc. (1986) 479 U.S. 238, 250. Page6of 11 B \ v1.doc

7 2. May the City require petition circulators to distribute a City-drafted summary to potential petition signers, or require circulators employers to distribute such a summary to circulators, or require that the text of the petition include such a summary? The City most likely may not requite petition circulators to distribute a City-drafted summary to potential petition signers, or require circulators employers to distribute such a summary to circulators, or requite that the text of the petition include such a summary. First, incorporating a mandatory City-drafted summary into the referendum procedure would likely create insurmountable logistical problems. State law does require that an initiative petition, unlike a referendum petition, contain a city-attorney drafted summary of the measure. EC The city attorney is given 15 days to draft the summary, and there is a provided mechanism for amending the summary if anyone should object to its content (an expedited court heating on a writ of mandate). EC 9203, If the City were to require a summary to be incorporated into the referendum process, it would likewise have to allot a certain amount of time for drafting the summary, and provide a process for challenging the summary. While an initiative petition may be circulated for 180 days following receipt of the summary, a referendum proponent has only 30 days to circulate a referendum petition and obtain the required number of signatures. EC Note that drafting a summary of a referendum could be a more complicated task than would initially appear. Building in a mechanism for challenging the content of the summary on top of the drafting time even if it totaled only a few days, which seems implausible would significantly cut into the very limited petition circulation time available to referendum proponents. A period of just 10 days for drafting and challenging, and a decision on the challenge, would reduce the amount of time in which a proponent may circulate a referendum petition by 33%. Moreover, incorporating a City-drafted summary into the referendum process may qualify as compelled speech. Compelled speech is by its nature content-based regulation: [m]andating speech that a speaker would not otherwise make necessarily alters the content of the speech. We therefore consider [compelled speech] a content-based regulation of speech. Riley v. Nat I Fed n of the Blind of N. Carolina, Inc. (1988) 487 U.S. 781, 795. Content-based speech regulations are subject to strict scrutiny. Reed v. Town of Gilbert, Ariz. (2015) 135 S. Ct. 2218, Whether the compelled speech qualifies as fact or opinion makes no difference in the degree of scrutiny warranted. Id. at Requiring a circulators or proponents to distribute a content-specific statement, or a referendum petition to include a content-specific statement, would each qualify as compelled speech and thus be required to meet strict scrutiny. Speech regulations subjected to strict scrutiny, the most rigorous standard of review, are presumed invalid and are nearly always held to be unconstitutional. Ysursa v. Pocatello Educ. Ass n (2009) 555 U.S. 353, 358. Under a First Amendment strict scrutiny analysis, the City would have to prove that the speech regulation furthers a compelling government interest, and is narrowly tailored to achieve that interest. Gilbert, supra, at A restriction is narrowly tailored if it is the least restrictive means of furthering the government s stated interest. McCullen v. Coakley (2014) 134 S. Ct. 2518, In Levine v. Fair Political Practices Comm n (ED. Cal. 2002) 222 F. Supp. 2d 1182, the court examined a state law regulating slate mailers, materials that are mass-mailed to prospective voters expressing support or opposition for a total of four or more candidates or ballot Page 7 of 11 B l\ v1.doc

8 measures. The law required that whenever a slate mailer expressed a recommendation that differed from the official recommendation of the political party that the mailer appeared to represent, the following notice must be printed on the mailer: THIS IS NOT THE OFFICIAL POSITION OF THE [political party the mailer appears to represent]. Id. at The court identified this as a compelled speech regulation, and thus applied strict scrutiny. Id. at The court held that California s interest in protecting voters from confusion and fraud was compelling, but the law at issue was not the least restrictive means of furthering that interest, as other laws addressing misleading political statements existed that did not involve compelled speech. Ibid. While the City s effort to ensure that every person who is asked to sign a referendum petition has the opportunity to read a factual summary of the referendum s effect is clearly aimed at a compelling goal providing voters with full, accurate information a court is unlikely to accept that either requiring circulators to distribute the summary, or requiring the petition to include the summary, is the least restrictive means of achieving this goal. The condensed timeline for a referendum petition means that requiring even a brief delay before circulation would represent a significant burden. Moreover, the City has other means available to it to ensure the integrity of the process that do not involve compelled speech: as described above, the City is itself permitted to disseminate information to the public about a referendum s consequences, and the City may also enforce state laws that make it a misdemeanor for petition circulators to provide misleading information to those whose signatures they seek. See Elections Code fec ) et seq. The fact that state law requires city-drafted summaries of measures on initiative petitions muddies this analysis. This requirement appears to have never been challenged on First Amendment grounds. If it were to be challenged, it would presumably undergo the same compelled speech analysis. It would likely have a better chance of surviving strict scrutiny, since a summary requirement is much less burdensome when imposed in the initiative context, with its expansive timeline, than in the heavily time-pressured referendum context. The bottom line is that, as a result of a referendum s brief, inflexible timeline, incorporating a mandatory City-drafted summary into the referendum procedure would likely create insurmountable logistical difficulties. Criminal Penalties for Funders of Ballot Measures When Circulators Make False Statements Elections Code ( EC ) provides that a petition circulator who makes intentionally false or misleading statements regarding the contents, purport or effect of the petition to any person whose signature is being sought is guilty of a misdemeanor. However, there is no existing mechanism by which a ballot measure s proponent or principal funder would be held responsible for the illegal behavior of petition circulators. Councilmembers have noted that this penal scheme provides no incentive to funders and proponents to actively ensure that circulators do not use illegal tactics to obtain signatures. However, it is unlikely that a court would approve of an attempt by the City to impose criminal liability on funders or proponents for circulators actions. The Fourteenth Amendment of the United States Constitution provides in part that [n]o state shall [...J deprive any person of life, liberty, or property, without due process of law. A Page8of 11 B \2 189] 99 I.doc

9 fundamental feature of due process is that an individual may not be held criminally responsible for the act of another: Guilt by association is a thoroughly discredited doctrine; personal guilt, on the other hand, is a fundamental principle of American jurisprudence, inhabiting a central place in the concept of due process. People v. Chambers (1964) 231 Cal. App. 2d 23, In our jurisprudence guilt is personal, and when the imposition of punishment on a status or on conduct can only be justified by reference to the relationship of that status or conduct to other concededly criminal activity [...], that relationship must be sufficiently substantial to satisfy the concept of personal guilt in order to withstand attack under the Due Process Clause of the Fifth Amendment. Scales v. United States, 367 U.S. 203, We did not encounter any existing statutes that impose criminal liability on one party solely on the basis of the criminal acts of another, or any case examining such a statute. However, there are cases in which courts have disapproved of the application of a particular penalty to an individual who was not sufficiently connected to the criminal behavior. For example, in United States v. Castaneda (9th Cir. 1993) 9 F.3d 761, 768 (overruled on other grounds), the Ninth Circuit vacated a woman s conviction under 18 U.S.C.A. 924(c), which provides enhanced penalties for those who use or carry a firearm in the commission of a crime of violence or a drug trafficking crime. The woman was the wife of a drug trafficker, and was minimally involved as a conspirator only insofar as she answer[ed] her home phone, [took] messages from callers and answer[edj [her husband s] questions when he called. Id. at 767. Nevertheless, she was convicted of multiple 924(c) violations based only on the fact of her husbands associates possession of firearms during their commission of drug crimes. There are two distinct elements to a 924(c) violation: the carrying of a firearm and the predicate drug trafficking offense in relation to which the firearm is utilized. Id. at 765. The predicate crimes which were the basis of the woman s 924(c) convictions were her husbands associates drug possession crimes, not her own act of conspiracy. Id. at 764. The court vacated these convictions as violations of due process because she had no involvement with or awareness of the associates crimes. Id. at In the civil context, of course, individuals may be held liable for the actions of others in certain circumstances, such as when there is a principal-agent relationship, or when the individual s own lack of action qualifies as negligence. This does not translate to the criminal context. An ordinance that imposed criminal penalties on a proponent or funder solely based on the actions of circulators would therefore violate the proponentlfunder s right to due process. Suspension of Projects Affected by Challenged Ordinance During Period When Challenged Ordinance is in Limbo After a referendum petition is properly submitted, the challenged ordinance is suspended while the elections official verifies the signatures on the petition. EC 9237, 9239, If the petition does not contain enough valid signatures (as occurred in this case), the petition is rejected and the ordinance goes into effect. However, if the petition contains the required number of valid signatures and the legislative body decides to submit the referendum to the voters at an election rather than repeal the ordinance, the ordinance remains suspended until the election. EC If voters approve the referendum, the ordinance is repealed and the legislative body may not enact a substantially similar ordinance for a period of one year. Ibid. Page 9 of 11 B \2189i99v1.doc

10 This means that a scenario could occur in which a project that is affected by a challenged zoning ordinance continues to proceed while the ordinance is suspended; but the challenged ordinance ultimately survives, either because the petition was disqualified for lack of valid signatures or the voters rejected the referendum. In this scenario, the affected project essentially slips through a timing loophole. A referendum proponent could potentially exploit this loophole by filing a petition containing mostly invalid signatures (duplicates, non-residents, etc.) in order to advance an affected project during the time when the signatures are being verified and the ordinance is suspended knowing that the petition ultimately has very little chance of qualifying. It is unclear whether the City may close this loophole by enacting an ordinance that calls for temporarily halting all projects affected by a challenged zoning regulation during the time when that regulation is suspended pursuant to state law. We have not come across an instance in which a court has examined a remotely similar ordinance, and state law provides no further guidance beyond the prohibition in EC 9241 against enacting a substantially similar ordinance within one year of the challenged ordinance s repeal. Therefore, there is no statute or case law that expressly prohibits the City from enacting an ordinance that suspends affected projects while a challenged zoning ordinance is in limbo. However, neither is there any authority that expressly approves of such an ordinance. Regarding EC 9241, courts have developed the Stratham rule to determine whether legislation enacted in the wake of a referendum-initiated repeal is unacceptably similar to the repealed ordinance. The Stratham rule is a two-part inquiry: first, courts compare the repealed ordinance and the new ordinance, focusing on the features of the repealed ordinance that gave rise to popular objection; next, courts ask whether the new ordinance was enacted in bad faith, or in other words, whether it was enacted with the intent to evade the effect of the referendum petition. Rubalcava v. Martinez (2007) 158 Cal. App. 4th 563, 575. To reiterate, it is not entirely clear whether the Stratham rule is applicable, as it is used to compare subsequently enacted ordinances to their repealed counterparts, and the ordinance contemplated by the City would not have a repealed counterpart to which it could be compared. However, it is worth considering the Stratham rule, if only for insight into the attitude with which courts treat cities attempts to negotiate the consequences of a referendum action. The most relevant case to examine is Lindelli v. Town of San Anselmo (2003) 111 Cal. App. 4th While all of the other Stratham rule cases involve subsequent ordinances that were enacted following the repeal of a referended ordinance, Lindelli concerns an interim action that was only in effect for the time period between the referendum petition s certification and the date when the election on the referendum would be held in other words, before the referended ordinance s fate was decided. In Lindelli, the city passed a resolution awarding a waste management franchise to a different company than the one that held the previous franchise. Id. at The previous franchisee submitted a referendum petition challenging the franchise award that contained the requited number of valid signatures, and the city set a date more than a year in the future for when the referendum would be submitted to the voters at an election. Ibid. In the meantime, the previous franchise agreement was set to expire imminently, and the city awarded an interim franchise agreement to the same company to which it had awarded the referended agreement. Ibid. The court held that this interim contract was essentially the same as the contract that had been stayed by the referendum petition and therefore a violation of EC Id. at In so holding, the court emphasized that [a]n essential component of the referendum power is the ability to stay legislation until voters have Page loof 11 BO785-OOO12i 89199v1 doc

11 had the opportunity to approve or reject it[,] characterizing the interim ordinance as an attempt to evade the stay provision and thereby nullif[y] the power of the referendum. Id. at Moreover, the court provided an additional policy rationale for its rejection of the interim contract: eliminat[ingj any incentive on the part of a municipality to drag its feet in setting a date for a referendum election. Id. at Lindelli is distinguishable from our scenario, because by its nature the terms of the contemplated ordinance would not be at all similar to those of whatever challenged ordinance was at issue. On the other hand, a party objecting to the City s suspension of affected projects might argue that preventing projects affected by a suspended zoning ordinance from proceeding as usual is essentially a clever attempt to evade the effect of the stay provision in EC 9241, and thereby nullify the people s referendum power. This argument is supported by the general proposition that the referendum power is constitutionally reserved by (rather than granted to) the people, and therefore statutory provisions dealing with [the referendum power] are always to be liberally construed in favor of the power. Dye v. Council of City of Compton (1947) 80 Cal. App. 2d 486, 49. However, the City can counter that the objective of a project suspension ordinance is simply to close a loophole that invites bad-faith referendum campaigns which are destined to fail but not before allowing projects to proceed that would otherwise have been prevented or modified under the (unsuccessfully) referended ordinance. Also, the long-term effects of allowing development contrary to the City s latest zoning regulations could be significant. For example, the planning and zoning law allows interim zoning ordinances to be adopted without following the standard due process requirements because of the deleterious effects of development contrary to the zoning law. Still, it would be wise of the City to demonstrate its good faith and avoid the Lindelli problem by limiting the project suspension and applying it only to zoning ordinances, and to include a provision that requires the City to submit a qualified referendum to the voters as soon as possible, perhaps within 100 days. In summary, while nothing expressly forbids the City from temporarily halting projects affected by a challenged ordinance while that ordinance is stayed pending the outcome of a referendum attempt, courts are skeptical of efforts to elude the stay requirement in EC Therefore, the City should therefore take care to design a carefully targeted project suspension ordinance that treads as lightly on the referendum power as possible. RECOMMENDATION The City Attorney s office seeks further guidance from the City Council in regard to designing new legislation aimed at enhancing the transparency and minimizing the potential for abuse of the referendum and initiative processes. Laurence S. Wiener Approved by Page 11 of 11 B v1.doc