Alert: Philadelphia Contribution and Pay-To-Play Laws

With the upcoming Philadelphia primary elections on May 21, 2019 and general elections on November 5, 2019, many of you will be considering whether to make political contributions to candidates for Philadelphia elected offices. If you or your business has or is seeking non-competitively bid contracts with Philadelphia city agencies, you and certain other persons affiliated with you will be limited in the amount of contributions that you may make. Violating these limitations will prohibit you and your business from collecting fees and other payments under non-bid contracts that you have entered into with the city or its agencies.

The Philadelphia Code & Home Rule Charter (the “Philadelphia Code”) imposes annual limits on contributions from individuals ($3,000), businesses ($11,900) and political committees ($11,900)_¹ to candidates for mayor, city council and certain other elective municipal offices. These contribution limits are ultimately demand-side focused, affecting the candidate, not the contributor, unless and until the contributor desires to enter into a non-competitively bid contract with a city agency.

If an individual or business desires to enter into a non-competitively bid contract with a city agency, the Philadelphia Code contains notice, disclosure and influence rules governing the award of non-competitively bid contracts.² Once the contributor solicits a contract with a city agency, the contributor must provide a detailed disclosure of its past campaign contributions, and if the contributions exceed the limits described above, the contributor is ineligible for certain contracts.

Individuals³ contributing greater than $3,000 in any calendar year to an office holder or candidate for office, are proscribed from entering into a non-competitively bid contract having a contract value in excess of $10,000, for the remainder of the incumbent office holder’s term, or the entire term of the newly victorious candidate, as the case may be. For businesses,⁴ an aggregate contribution of $11,900 results in a similar bar from any non-competitively bid contract having a contract value in excess of $25,000. Contributions of affiliates and related entities, partners, directors, officers, as well as political action committees having a nexus with the business, are attributed to the business. Businesses must also disclose contributions to candidates or incumbents which are attributed to an immediate family member of an officer, director, controlling shareholder or partner. The amount of any such contribution above $3,000 will be attributed to the officer, director, controlling shareholder or partner (and, by extension, the business).

A contribution is any direct or indirect contribution of money or in-kind assistance. Indirect contributions would include contributions not directly given to a candidate, incumbent or political action committee but made with the intent that the contribution will benefit the candidate, incumbent or political action committee; solicitation of contributions on behalf of a candidate, incumbent or political action committee, including the hosting of or solicitation at fundraising events, or providing a venue or food for a fundraising event; and contributions not made directly by the individual/business to a candidate, incumbent, or political action committee but furnished by the individual/business as an “intermediary.”

Any contribution that is solicited from another person or entity by the applicable individual (or a member of the applicant’s immediate family) or business is counted as a contribution by the applicable individual or business. This includes the hosting of a fundraising event, either individually or by having the person’s name listed as a member of the event or fundraising committee. Any contributions made at a fundraising event are attributed to the host(s) of the event (as well as to the person or entity who made the direct contribution). Contributions raised at an event hosted by a person or entity whose own contributions would be attributed to a business are also attributed to the business. Similarly, if an individual (or a member of the applicant’s immediate family) or business serves as an intermediary for the contribution of another person or entity, the contribution is attributed to that individual or business.
____________________________
¹These limits are to be adjusted every four (4) years (beginning in 2008) by application of a consumer price index multiplier. See Philadelphia City Code § 20-1002.

²See Philadelphia City Code § 17-1400.

³See Philadelphia City Code § 17-1405 for specific attribution rules. Note, however, that the amounts of contributions of immediate family members (i.e., a spouse or unemancipated child) are attributed to individuals.

⁴See Philadelphia City Code § 17-1405 for specific attribution rules.

This client alert addresses regulations under the Philadelphia Code & Home Rule Charter only. There are other political contribution regulations governing restrictions on contributions in Pennsylvania and its other municipalities. In addition, other states may have similar regulations. If you have questions about other political contribution regulations, please contact us.

Contact
Please contact Jon Katona at JKatona@klehr.com or (215) 569-4222 or Patrick Murphy at PMurphy@klehr.com or (215) 569-4299 if you have any questions about political contribution regulations.

Disclaimer
The information and material in this newsletter alert has been prepared for informational purposes only. The information and material in this newsletter alert does not represent legal advice. Your receipt and/or use of this newsletter alert does not create an attorney-client relationship between you and Klehr Harrison Harvey Branzburg LLP. Information you send to Klehr Harrison via the law firm’s website or by e-mail will not be considered privileged or attorney-client communications unless and until a formal written agreement for legal representation between an authorized representative of this law firm and you is signed. Examples of prior results do not constitute a guarantee of similar outcome in other matters.

Any opinions expressed in or through this newsletter alert are the opinions of the individual authors and do not reflect the opinions of this firm. The content of this newsletter alert may be considered advertising under applicable law and rules of professional conduct. It is the firm’s intention to abide by all applicable laws and rules pertaining to advertising by lawyers. Copyright 2019 Klehr Harrison Harvey Branzburg, LLP. All Rights Reserved.