More than three months after Phoenix realized it could not enforce its regulations for lobbyists seeking to influence decisions at City Hall, city leaders have yet to fix the problem.
The city's toothless lobbying rules could get some bite this month under a set of proposals City Council members will debate, but one option under consideration would weaken them even further.
The effort comes after The Arizona Republic reported in January that a high-profile law firm hadn't complied with the city's lobbyist-registration rules for two years and filed falsified documents to make it appear the firm had followed the rules, according to the city.
But the episode spurred a bigger eye-opener for Phoenix officials: The City Attorney's Office said the city couldn't do anything to penalize the firm or others that do not comply with its lobbyist regulations because of how they were written.
The revelation means lobbyists who do not register or report meals, gifts or other expenses made on behalf of elected officials currently face no penalties for breaking the city's lobbying law by not disclosing their activity. And some city leaders and a government watchdog say the delay in making the rules enforceable erodes public confidence.
Should a violation be criminal?
Making the ordinance enforceable likely only requires the addition of several key words stating that it is unlawful to not comply with the lobbyist rules. But the city is now looking at a broader overhaul of its lobbying ordinance.
Last week, the city unveiled the basic details of proposed changes. One of the biggest questions for council members: Should a violation be a criminal or civil matter?
For years, the city has treated a violation of its lobbying rules as a criminal misdemeanor offense, punishable by up to six months in jail, a $2,500 fine and three years of probation, although few cases, if any, were ever prosecuted.
Proposed changes prepared by the city's Law Department asks council members to consider making infractions a civil offense, and such a citation likely wouldn't carry the risk of jail time. The department says many other large cities treat lobbyist violations as civil offenses.
Mayor Greg Stanton, who called for reforms to the lobbyist ordinance in January, wants the penalty to remain criminal.
“It’s absurd that Phoenix does not have an enforceable lobbying ordinance with consequences for those who violate it.”Robbie Sherwood, Phonix Mayor Greg Stanton's spokesman
"It’s absurd that Phoenix does not have an enforceable lobbying ordinance with consequences for those who violate it," said Robbie Sherwood, Stanton's spokesman, in an email. "Our residents need to have confidence that our lobbying ordinance is enforceable and has teeth."
Stanton's office said the mayor wanted to take action sooner and blamed a council subcommittee for the delay.
"I look forward to discussing the best way forward, and getting more detail on the options available," Nowakowski said in an email.
One part of Phoenix's lobbying ordinance already carries a criminal misdemeanor penalty. That provision prohibits lobbyists from being paid based on whether a specific action passes or fails a council vote. But the rest of the law currently carries no penalty, according to the city.
The city's Law Department has also asked the subcommittee to determine who would investigate lobbyists for potential violations.
Three options are outlined: The city's Ethics Commission could investigate and suggest penalties, though it's unclear who would make the final call to impose sanctions; the Ethics Commission could investigate and refer cases to the city attorney to file a complaint; or the Police Department could investigate and issue citations or refer cases to the city prosecutor.
Two of those options face a clear logistic challenge: The city's independent Ethics Commission, which council members voted to create in February, isn't expected to be formed until early 2018.
Joel Edman, executive director of the Arizona Advocacy Network, an open-government watchdog group, said he's less concerned about whether the violation is criminal or how complaints are vetted than he is that the city has gone months without real lobbyist rules.
He said he thought The Republic's initial reporting would be a "starter’s pistol to get this going quickly."
"I am disappointed," Edman said. "In the meantime, there could all kinds of people just not bothering to report or disclose their lobbying spending because they don’t really have to right now. If there’s no penalty for people to not do it, then there isn’t much incentive for people to comply."
Nowakowski delayed hearing
The debate is scheduled to start in earnest Wednesday, when Nowakowski's subcommittee considers the proposed changes.
That subcommittee was supposed to hear the item on April 12, but Nowakowski canceled the meeting. He said there were few items on that month's agenda so the items were "moved to the May 10 meeting to make best use of council members’ time."
But Stanton's office chided Nowakowski for the delay on the issue, which ultimately will go to the full council.
Sherwood said the issue was assigned to the public-safety subcommittee because the body previously worked on the city's ethics ordinance and Nowakowski requested to hear it there. He said Stanton is now disappointed by "the pace of action."
"Mayor Stanton is frustrated that proposed reforms to the lobbyist ordinance have not yet progressed through subcommittee, and he finds it unacceptable that last month’s subcommittee meeting on this matter was cancelled for no apparent reason," Sherwood said in an email.
Nowakowski responded to the criticism during a council meeting Tuesday. He said it’s not uncommon for council meetings to be canceled and called the comments from Stanton’s office a “cheap shot.”
The $1.2 million deal that raised questions
Phoenix officials began reviewing the lobbyist law in January after a council vote on a controversial proposal to pay a developer about $1.2 million for storm-water culverts built on its property in Ahwatukee Foothills.
The council denied the request.
But lobbyist conduct drew attention because the developer had hired two lobbyists who, according to the city, weren't registered at the time. The developer, Investment Property Associates or IPA, used lawyer Ed Bull of the firm Burch & Cracchiolo and political consultant Joe Villasenor, a former city staffer.
The law firm had not registered since 2014, and Villasenor was last registered as a lobbyist in 2011, city officials said in January.
Villasenor's lawyer Kory Langhofer insisted that Villasenor had properly registered in 2016 and 2017, and said the forms he mailed in were somehow lost or not properly logged by the City Clerk's Office.
Burch & Cracchiolo filed a signed affidavit with the City Clerk's Office contending it had submitted nine separate filings over the past two years, which would have put the firm in compliance with the city. Attached were those filings, with various dates in 2015 and 2016. All bear the signature of a firm attorney and were notarized by a firm employee with those dates.
But City Attorney Brad Holm said he looked at the documents and compared them with letterhead from official correspondence the law firm sent to the city in previous years and determined the documents had been falsely created and backdated.
Burch & Cracchiolo withdrew the forms and blamed the false documents on a non-attorney staff member. The firm has since re-registered.
The State Bar of Arizona said last week no complaints had been filed over the incident.
Langhofer said in January that Villasenor would file an original copy of his lobbyist registration, but Villasenor was still not listed as a lobbyist in city records as of May 1. Villasenor filed a new registration form with the City Clerk's Office on Friday afternoon.
According to the City Clerk’s Office, Villasenor’s lobbyist registration is “pending” until he provides a copy of his business filings with the Arizona Corporation Commission.
The business name listed on Villasenor’s latest lobbyist form is different from prior registration attempts. Those attempts led to questions from the city about why his business wasn’t on file with the state.
Langhofer said the city cannot reject Villasenor’s registration based on corporate domiciliary filings. He said Villasenor’s business, domiciled in Delaware, is filing with the Arizona Corporation Commission.
'Don’t give me that excuse'
In January, Holm said he asked the City Prosecutor's Office to review if a "specific person could legally be prosecuted for failing to register as a lobbyist."
He said he referred the issue to the prosecutor after learning that Villasenor was not in the city's registry for several years and hearing that Villasenor recently lobbied council members.
Holm said he and the city prosecutor realized the current ordinance doesn't explicitly say that failure to file proper lobbying documents is unlawful and it doesn't specify the penalty for failing to register. He had previously said non-compliance could result in a misdemeanor charge for a violator.
"Specifically, the lobbying ordinance did not flatly state that failure to register was illegal. That missing language is the minimum required to trigger (a misdemeanor charge)," Holm said in a statement Thursday.
"The current ordinance has no penalty."
Several council members have since called for the city to overhaul its lobbyist-registration process.
Councilwoman Thelda Williams said she had always assumed that lobbyists could face penalties and was shocked to learn otherwise. She said she wants a registration kiosk outside council offices at City Hall. And Williams said the episode should motivate the city to create an online-registration process so nobody can have an excuse.
"You could register online at home, your office or here," Williams said. "So don’t give me that excuse ever again."