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Item 10A Item 10A Proposed amendments to Ordinance No. 635, Code of Ethics and Conduct October 6, 2015 Good Evening Madam Mayor, Members of the City Council. Last on your Agenda is item 10A – Proposed Amendments to Ordinance No. 635 the Code of Ethics and Conduct 1 City of Southlake Strategy Map Critical Business Outcomes CBO1 - Continue to implement Southlake 2030 Plan by focusing on short-term initiatives. CBO2 - Become an employer of choice by developing a plan to recruit, develop and retain employees committed to excellence. CBO3 - Develop long-term strategies to address future financial uncertainties and challenges. CBO4 - Improve mobility by proactively completing traffic analysis of key areas. CBO5 -Optimize resources through collaboration and partnerships to reduce costs and add service value. The City of Southlake provides municipal services that support the highest quality of life for our residents, businesses, and visitors. We do this by being an exemplary model of balancing efficiency, fiscal responsibility, transparency, and sustainability. Deliver on Our Focus Areas Performance Management & Service Delivery C1 Achieve the highest standards of safety & security C2 Provide travel convenience within City & region C3 Provide attractive & unique spaces for enjoyment of personal interests C4 Attract & keep top-tier businesses to drive a dynamic & sustainable economic environment C5 Promote opportunities for partnerships & volunteer involvement Serve our Customers Manage the Business B1 Achieve best-in-class status in all City disciplines B2 Collaborate with select partners to implement service solutions B3 Enhance resident quality of life & business vitality through tourism B4 Provide high quality services through sustainable business practices B5 Enhance service delivery through continual process improvement B6 Optimize use of technology Provide Financial Stewardship Promote Learning and Growth F1 Adhere to financial management principles & budget F2 Invest to provide & maintain high quality public assets F3 Achieve fiscal wellness standards F4 Establish & maintain effective internal controls L1 Ensure our people understand the strategy & how they contribute to it L2 Enhance leadership capabilities to deliver results L3 Attract, develop & retain a skilled workforce L4 Recognize & reward high performers L5 Empower informed decision-making at all levels in the organization C6 Enhance the sense of community by providing excellent customer service and citizen engagement opportunities L6 Foster positive employee engagement This item supports the City’s strategy through the focus area of Performance Management & Service Delivery and specifically to the objective to Achieve Best-in-Class status. It also aligns directly with the City’s core value of Integrity. 2 Code of Ethics and Conduct Ordinance 635 State Law Changes Council Discussion / Feedback This evening I would like to provide you with a brief overview of City’s currently adopted Code of Ethics and Conduct, review changes made to State law, and then open it up for discussion and feedback regarding the state required changes or any other topic regarding the code of Ethics. 3 Ordinance 635 Adopted in 1995 Amended Twice June 6, 2006 October 2, 2007 Officers, Employees and Advisory Board Members The Code of Ethics and Conduct was originally adopted in 1995 by Ordinance No. 635. It has been amended twice, both times in response to changes made to state law. It was amended 2006 via Ordinance 635-A and in 2007 via Ordinance 635-B. It applies to officers, employees and advisory board members. The ordinance defines officers as any member of the City Council, P&Z, Board of Adjustment, Building Board of Appeals and any member of a board, commission or committee established by ordinance, charter or state law. Employee is defined any person employed by the City. And advisory board member is defined as a board, commission, or committee of the City that functions only in an advisory or study capacity. 4 Ordinance 635 Ordinance 635 establishes the City’s broad ethics policy. It requires that public officials and employees be independent, impartial and responsible only to the people of the City, It requires that governmental decisions and policy should be made within the proper channels of the government structure, It requires that officers, employee and board members should not have any interest in any business, transaction or professional activity that conflicts with the proper discharge of duties, And it requires that officers, employees and board members are not to use their public position for personal gain. 5 Ordinance 635 In addition to establishing the policy, it provides additional direction in in four key areas – The ordinance prohibits certain behaviors – which I will go over in more detail on the next slide… It requires that an officer, employee or board member disclose any conflict of interest and/or receipt of any gifts from a business that has contracted with the City or a business that the city is considering contracting with. It directs the City Manager to establish an Employee Business Code of Conduct, which was adopted by resolution 06-029 and is currently in effect. (2006) And, it requires that the Code of Ethics be distributed annually. 6 Prohibited Behaviors I mentioned on the previous slide that the Ordinance prohibits a number of behaviors, specifically it states that officers, employees and board members cannot: Accept or solicit gifts, favors, services, or things of value from any person, group or business that might reasonably tend to influence the individual Cannot in their official duties grant any improper favor, service or thing of value to any person, group, or business Cannot knowingly disclose confidential information gained by reason of the position Cannot use the position to secure special privileges for self or others or for private gain Cannot engage in exchange, purchase, or sale of property, goods or services to City Cannot represent self in capacity other than which he or she was appointed, elected or hired Cannot engage in or accept private employment or render a service that is incompatible with official duties or that would impair his or her judgement in the performance of official duties Cannot make or permit the unauthorized use of city vehicles, equipment, materials or property Cannot grant special treatment, consideration or advantage to any citizen beyond that is available to every other citizen Cannot transact City business with any business in which s/he has substantial interest Cannot engage in dishonest or criminal act or any act that reflects discredit upon the government of the City Cannot knowingly perform or refuse to perform any act in order to deliberately thwart City ordinances, rules or regulations 7 Disclosure Requirements The Ordinance also has several disclosure requirements. Most notably, if an officer, employee or board member has a substantial interest in a business entity or any real property that is involved in any pending decision, the interest must be disclosed on the appropriate form and submitted to the City. If a family member has a substantial interest in a business or property, the officer, employee or board member must also disclose that interest. Also, the individual is prohibited from discussing the substance of the matter at any time with any other board member who will vote or participate in the consideration of the item. [[ Interest is considered to be substantial with a business entity if the individual owns 10% or more of the business, if funds received from the business exceeds 10% of the person’s gross income for the previous year, if the person holds a position on the board of directors or other governing board, if the person serves as elected officer, or if the person is an employee or creditor. Substantial interest in real property exists if the ownership a fair market value of $2,500 or more. ]] The second disclosure requirement is in regards to the relationship an officer, employee or board member, or their family member, may have with person or business who contracts with the city or with whom the City is considering entering into a contract. A relationship exists if the officer, employee, board member of family member receives taxable income that exceeds $2,500 during a 12 month period. If such a relationship exists, the officer, employee or board member must complete the appropriate disclosure paperwork. The third primary disclosure that must occur is if an officer, employee, or board member, or family member has received one or more gifts totaling $250 or more from a person or business who has contracted with the City or with whom the City is considering entering into a contract with. Currently, political contributions, gifts from family members, and food, lodging, transportation or entertainment accepted as a guest are excluded from this provision. Family member is defined as a person related by blood or marriage in the first degree (spouse, father, mother, son, daughter, father-in-law, mother-in-law, and son-in-law, and stepson or step daughter) 8 State Law Changes With the last legislative session, HB 23 and HB 1295 were adopted into law. HB 23 specifically impacts the City’s Code of Ethics while HB 1295 effects the City’s purchasing policy and procedures 9 HB 23 Local Government Code Chapter 176 HB 23 amends Chapter 176 of the Local Government Code in several respects. Most notably, it amends the definition of local government officer to apply to nearly all City employees, thus expanding the disclosure requirements for employees. Previously, state law only required certain individuals employed by the City to disclose a conflict, now the definition expands to any employee who exercises discretion in the planning, recommending, selecting or contracting with a vendor. Under the City’s current Code of Ethics, all employees are already required to disclose conflicts of interest using a City created form. With the new law, the disclosure must be now be completed on the “Local Government Officer Conflicts Disclosure Statement” created by the state. The law also changes the definition of “gift.” The new definition removes the exemption of lodging, transportation and entertainment accepted as a guest and amended the disclosure threshold from $250 to $100. Political contributions, gifts from family members and food accepted as a guest are still excluded from disclosure requirements. Final ly, the definition of Family Relationship was also expanded to include relationships to the third degree by consanguinity (blood) or the second degree by affinity (marriage). 10 HB 1295 Local Government Code Chapter 2252 HB 1295 amends Chapter 2252 of the Local Government Code. It requires business entities contracting with the City to disclose each “interested party” to the City  by submitting a disclosure form on or before the date the contract is executed.   “Interested party” is defined to include a person who has a controlling interest in the business entity  or who actively participates in facilitating the contract or negotiating the terms of the contract, including a broker, intermediary, advisor, or attorney for the business entity.  The City may not enter into a contract that required an action or vote by the City Council or that has a value of at least $1 million, without having first received this disclosure.  The disclosure must be on a form which will be prepared by the Texas Ethics Commission.  Upon the City’s receipt of the form, the City must forward and file the completed form with the ethics commission.  The commission has until December 1, 2015 to create the form and promulgate rules.   The disclosure requirement goes into effect January 1, 2016. These changes will be incorporated into the City’s purchasing policies and procedures. 11 Proposed Amendments Included in your packet was the revised ordinance and policy that incorporates the changes mandated by HB 23. The table on the screen summarizes the proposed changes. The changes include adding the vendor definition as defined in HB 23. Revising the family definition to third degree by consanguinity and second degree by affinity. Requiring all employees disclose any conflict of interest or gift on the state created “Local Government Officer Conflicts Disclosure Statement.” Staff also recommends employees who do not have conflict of interest file a written statement indicating such on a form created by Human Resources. This would require that every employee complete a written statement of some kind. Including the definition of gift as defined in HB 23. The amended gift definition includes lodging, transportation and entertainment as a guest. Amending the gift disclosure threshold from $250 to $100. Also, the proposed ordinance includes formatting changes to the policy document provided to officers, employees and board members to match the formatting of the Southlake Code of Ordinances. 12 Questions / Discussion 13 This completes the presentation. I’d be happy to answer any questions you may have and/or discussion.