February 2, 2011
There are four areas that are causing confusion with the proposed new municipal advisors registration:
1. Elected Official exemption: The current intrepretation is that only "elected" officals are exempted. The test should also include whether or not the officals serve on a "governing" board or not.
Many local and regional governing boards consist of officials appointed according to statutory provisions. At BATA, for example, according to our authorizing statute, our 16 board members are appointed from the cities and counties in the 9 county region with 3 appointed from federal, state and local agencies. Still, they serve as our governing board with the same legal responsibility and liabilities they would have in their home jurisdictions.
May I suggest you exempt all "governing board" members of a statutorily authorized local government or governing board, elected or appointed.
2. Definition of employee:
Many board and council members are not "unpaid volunteers", but actually paid through salary or perdiem for their services. since there is no definition may i offer a suggestion that an employee is anyone regularly paid through approved documentation such as timecards or roll sheets, particularly if they receieve w2. This would help get the exemption to all board and council members serving in their home (elected) jurisdiction as well as boards they are appointed to as part of their elected duties.
3. financial/investment advice:
Another issue is board members making recommendations on financing plans or investment reports. the current feeling is any discussion could be construed as giving "advice".
We have many discussions with my board regarding financial plans and monthly investment reports and the fact they ask questions or suggest a course of action does not direct or even authorize me to take action.
In my last assignment we had a finance committee appointed by the city council and the committee's job was to approve financial plans and options. Im not sure their recommendation to the council was anything more that saying yes or no (or maybe) to a staff proposal. We did, however, have a broker who was careful to recuse himself on anything that involved his firm and we were careful to note that he did so. Would he have had to register if he took part in the committee's discussions or voted. This will happen in a lot of local agencies since a lot of agencies have advisory committees, particularly for finance and investments.
May i suggest that discussions in the normal course of business, whether there is an apporval or recommendation, undertaken by an appointed committee or governing board should be exempted.
4. Definition of Municipal Advisor:
Another concern is that anyone who offers advice on debt or securities issues has to register as a municipal advisor.
In the course of our jobs board members, officals and the public alike feel free to give us advice on just about anything, particularly financial matters. Most of these people have no ties to the financial industry at all, much less municipal finance. Still, they feel free to give advice, as they should
I know you have no interest in limiting general public involvement but I wonder if it would be better to clarify that a person has to have some formal attachement either by contract, employment of other arrangement with a party or firm that is involved in the municipal finanace industry and would either directly or indirectly benefit from an agency taking the advice.
I respect and support your work and if these areas were clarified I believe you would go a long way to achieving your goals.