SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK

x

YETTA KURLAND, JO ANNE SIMON, MEL

GAGARIN AND DAN JACOBY, Docket No.

Petitioners, ORDER TO SHOW

CAUSE
-against-

NEW YORK CITY CAMPAIGN FINANCE BOARD,

Respondent.
x

Upon the Affirmation of Leo Glickman, Esq., dated December 2, 2008

LET Respondent by its attorneys show cause at the Supreme Court of the State of

New York, New York County, located at , New York, NY, Rm.

, on the day of , 2008, at 9:30 am or as soon thereafter as

counsel may be heard, WHY an Order granting the following relief should not be

granted:

(a) A Declaratory Judgment pursuant to CPLR §3017(b) stating that

Respondent's Advisory Opinion 2008-7 is in violation of the Campaign Finance
Act and therefore invalid;

(b) Issue a permanent injunction enjoining Respondent from exempting

expenditures made by a candidate in furtherance of a campaign for any municipal
office from 2006-2008; and

(c) any other relief the court deems just and proper.

IT IS ORDERED that service by hand delivery of a copy of this Order to Show

1
Cause and supporting papers, upon Respondent on or before the day of

2008, shall be deemed sufficient.

ENTER:

Justice of the Supreme Court

of the State of New York

2
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK

YETTA KURLAND, JO ANNE SIMON, MEL

GAGARIN AND DAN JACOBY Index No.

Petitioners, AFFIRMATION IN
SUPPORT OF ORDER TO
-against- SHOW CAUSE
NEW YORK CITY CAMPAIGN FINANCE BOARD,

Respondent.

LEO GLICKMAN, an attorney admitted to practice in the courts of the State of New

York, hereby affirms the following to be true under the penalties of perjury pursuant to

CPLR § 2106:

PRELIMINARY STATEMENT

On November 3, 2008, Mayor Michael Bloomberg signed Local Law 51 to extend

term limits for all municipal office holders from two to three terms. The Mayor and

supporting Council members justified the legislation by stating that given the challenging

times ahead, New Yorkers ought to have a choice to stay with their elected leaders or

choose another if they believed we needed new leadership.1

New York City has a campaign finance program which, among other things, is

designed to "level the playing field" between those with access to large amounts of

campaign funding and those without. By limiting the amount a participating campaign

can spend on an election, the Program seeks to equalize the impact of money on the

campaign, so that elections are decided on the power of ideas and effective community

1 See e.g. CityRoom, New York Times, October 23, 2008.

service. Dollars and Disclosure: Campaign Finance Reform in New York City,

September, 1990 at p.11.

New Yorkers agree, including the proponents of the Term Limits extension

legislation, that this is an especially critical time to ensure competitive elections? New

York City is fortunate to have the Campaign Finance Act. To ensure competitive

elections this time around, the New York City Campaign Finance Board ("CFB") could

have administered the law as it exists. Instead, it issued an advisory opinion that both

runs afoul of the law and will have the effect of making competitive elections less likely.

In essence, the CFB's advisory opinion ignores the large amounts of spending that

sitting elected officials have spent on their 2009 election campaigns, while forcing

challengers to abide by the Program's restrictive expenditure limits. This special

exception is custom tailored for incumbents; it is not available to a non-incumbent who

under the same fact pattern initially runs for higher office and then decides to run for City

Council.

There were fairer approaches that the CFB could have taken. Indeed, the

Petitioners offered one such idea, attached as Exhibit "A". Instead, the CFB seeks to

hand certain incumbents a big advantage over their challengers. In doing so, it is

violating the letter and the spirit of the law it is required to administer.

PARTIES

1. Petitioner Yetta Kurland is a candidate for the 3 rd District of the New York City

Council in the 2009 municipal elections. She intends to join the New York City

Campaign Finance Program.

2 Council member Miguel Martinez stated "If my constituents are not

satisfied with the work I've done , on the City Council, they will vote
me out" New York Times CityRoom, October 23, 2008

2
2. Petitioner Jo Anne Simon is a candidate for the 33 th District New York City

Council in the 2009 municipal elections. She intends to join the New York City

Campaign Finance Program.

3. Petitioner Mel Gagarin is a candidate for the 29 th District of the New York City

Council in the 2009 municipal elections. He intends to join the New York City

Campaign Finance Program.

4. Petitioner Dan Jacoby is a registered Democratic voter in the 26 th Council district.

He is aggrieved by the Respondent's advisory opinion because he will be denied

the right to vote in a fair election under the auspices of the Campaign Finance

Act's expenditure limit provisions.

5. Respondent New York City Campaign Finance Board ("CFB") is the agency

empowered by New York City Charter Chapter 46 § 1052 to administer the New

York City Campaign Finance Act.

STATEMENT OF FACTS

6. Petitioners Kurland, Simon and Gagarin are candidates for New York City

Council.

7. Kurland, Simon and Gagarin all filed "Filer Registration Forms" with Respondent

in 2008.

8. Petitioners Kurland, Simon and Gagarin have been observing the contribution and

expenditure limits that apply to their races for City Council.

9. The contribution limit for a candidate for City Council is $2,750.

10. The expenditure limit for a candidate for City Council is $161,000 in the year of

the election. Ad. Code § 3-706(2).

3
11. In addition, if candidates for City Council spend over $43,000 from January 1,

2006 to December 31, 2008, the amount in excess is attributed to the election year

(in this case calendar year 2009) expenditure limit. Ad. Code § 3-706(2)(a)

12. A violation of the expenditure limit can result in penalties of up to three times the

amount the candidate has spent in excess of the limit. Ad. Code § 3-711(2)(a).

It can also result in a finding of a "breach of certification" which requires

repayment of all public funds to the CFB. Board Rule 2-02.

13. The Respondent abrogates these provisions of the Act by declaring in Advisory

Opinion 2008-7 that expenditures made prior to November 3, 2008 by incumbents

who say they were running for higher municipal office do not count for the 2009

elections if they "freeze" their committees and start new ones.

14. Incredibly, Respondent proposes to make this benefit available only to the

beneficiaries of the term limits extension law (i.e. Council and Borough President

incumbents). Others who had been running for higher office but ultimately

decide to run for city council can not apply for this extra spending benefit.

15. Petitioner Kurland's potential opponent has already spent $288,829 up through

July 11, 2008. Thus, the Act requires that at least $245,829 must be attributed to

her election year expenditure limit if she joins the Program.

16. Petitioner Gagarin's potential opponent has already spent $775,076 up through

July 11, 2008. Thus, at least $732,076 must be attributed to her election year

expenditure limit.

17. Petitioner Simon's potential opponent has already spent $144,661 up through July

11, 2008. Thus, at least $101,661 must be attributed to his election year

4
 expenditure limit.

18. In addition, all other City Council and Borough President incumbents who run for

re-election may now claim to have been running for a higher office and elect to

have all of their expenditures to date erased by Respondent CFB.

19. When candidates who join the Campaign Finance Program have an opponent who

spends above the limit and does not join the Program, the expenditure limit is

lifted for the Program participant and additional public funds are provided to the

participant. Ad. Code § 3-706(3)(a) and (b).

20. The purpose of these provisions is to level the playing field between program

participants who would otherwise be confined to the spending limits of the

program and the higher spenders — the exact scenario that is presented here.

21. Respondent's advisory opinion, however, allows incumbents to exceed the

Program's restrictive expenditure limits while forcing challengers to abide by the

limits without the leveling benefits that the Act provides.

22. Rather than working to increase choices for voters in the electoral process and

leveling the playing field between candidates after the recent legislative to extend

term limits (voted into law by many of the incumbent candidates who now benefit

under this CFB opinion) as Respondent is mandated to do, they issued an advisory

opinion handing an enormous advantage to incumbents. The advisory opinion

violates the letter and the spirit of the law, and we respectfully submit that it must

be struck down.

DECLARATORY JUDGMENT

23. Petitioners bring this action pursuant to CPLR §3017(b), asking this court to

5
 declare invalid Respondent's Advisory Opinion 2008-7 (attached as Exhibit "B")

because it violates Ad. Code § 3-706(2) and (2)(a).

ARGUMENT

The Campaign Finance Act's Expenditure Limits

24. The New York City Campaign Finance Act is a voluntary public funding program

for candidates who run for the offices of Mayor, Public Advocate, Comptroller,

Borough President, and Member of the City Council. Ad. Code § 3-701 et seq.

25. If a candidate wishes to participate in the Program, she must file a written

certification that she is joining the Program. Ad. Code § 3-703(1)(c). She must

agree to abide by, inter alia, the Program's expenditure limits prescribed in Ad.

Code § 3-706. Ad. Code § 3-703(1)(i).

26. Each office has different expenditure limits. A participating candidate for City

Council may not spend more than $161,000 in non-exempt expenditures during

the election year. Ad. Code § 3-7060).

27. In addition, there are expenditure limits for the first three years of a four year

election cycle, again, depending on the office the participating candidate

ultimately seeks. A participating candidate for City Council in a 2009 election

has an expenditure limit of $43,000 for 2006-2008. Ad. Code § 3-706(2).

28. Any amount of spending in the first three years that exceeds the limit must be

attributed to the participating candidate's election year spending limit Ad. Code

§ 3-706(2a)(a). For example, if a candidate and her committee spent $50,000

between 2006 and 2008, and the candidate files a certification declaring that she is

running for City Council, the $161,000 election year expenditure limit must be

6
 reduced to $154,000.

29. Candidates for municipal office are free to choose to not join the Program.

Candidates who do not participate in the Program have no expenditure limits.

30. However, a non-participating candidate's opponents who do join the Program and

agree to all of its proscriptions get additional benefits under the Act.

31. Program participants running against a non-participant who raises or spends half

the expenditure limit or more are eligible to receive increased public matching

funds and their expenditure limit raised by 50% (in the case of City Council in

2009, the participating candidate will be allowed to spend an additional $80,500).

Ad. Code § 3-706(3)(a).

32. Program participants running against a non-participant who raises or spends three

times the expenditure limit or more are eligible to receive additional public funds

and a total lifting of the expenditure limit. Ad. Code § 3-706(3)(6).

33. Ad. Code § 3-706(3)(a) and (b) are designed to allow Participating candidates to

effectively compete with non-participating candidates who can spend unlimited

amounts on their campaign. Without these provisions, candidates who join the

Program would operate at a severe disadvantage because they would otherwise be

subject to restrictive expenditure limits while their non-participating opponents

would have only the sky as their limit.

Respondent's Advisory Opinion

34. Respondent's Advisory Opinion 2008-7 overrules the statute as it pertains to

expenditure limits. It declares that in this election, spending in the nearly three

years of this election cycle prior to November 3, 2008 does not count for

7
 incumbents who say they were running for higher municipal office but ultimately

run for City Council or Borough President candidate. All the incumbent must do

is choose "option A" by "freezing" her account.

35. Furthermore, it invites such incumbent to join the Program with a clean spending

slate (when in fact, in many cases hundreds of thousands of dollars were spent),

but forces challengers to abide by the Program's restrictive spending limits

without the relief of higher expenditure limits and additional matching funds that

Ad. Code § 3-706(3) provides to compliant Program participants.

36. Respondent's advisory opinion abrogates an unambiguous statute by

administrative fiat, something that it is clearly not entitled to do.

Respondent Administrative Agency May Not Overrule the Statute it

Administers by Advisory Opinion

37. Petitioners concede that Respondent has the authority to issue advisory opinions

and to promulgate rules. New York City Charter § 1052.

38. However, it is axiomatic that "administrative agencies can only promulgate rules

to further the implementation of the law as it exists; they have no authority to

create a rule out of harmony with the statute." Seittelman v. Sabol, 91 N.Y.2d

618, 626 (1998) citing Matter of Jones v. Berman, 37 N.Y.2d 42, 53, 371

N.Y.S.2d 422, 332 N.E.2d 303.

39. Indeed, the Appellate Division has struck rules promulgated by Respondent CFB

because it lacked a statutory basis. "[F]undamental principles of statutory

interpretation instruct us that where there is a conflict between a statute and an

administrative rule or regulation promulgated pursuant to that statute, the wording

and the meaning of the statute prevails." New York City Campaign Finance Bd.

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 V. Ortiz, 826 N.Y.S.2d 244 (A.D. 1 2007) at 250, citing Matter of Weil, Gotshal

& Manges v. O'Cleireacain, 83 N.Y.2d 591, 596, 611 N.Y.S.2d 823, 634 N.E.2d

195 [19941

40. Similarly, the court in Ortiz found that Respondent's Advisory Opinions and

"purported common sense interpretations of the Act" can not prevail when

confronted with a contrary and unambiguous statute. Id. at 249.

41. Moreover, Respondent can not argue that it is mere oversight that the legislature

did not create a different spending limit for participants who run for City Council

but who had a different municipal office in mind earlier in the election cycle. The

legislature has considered this very issue as applied to non-municipal offices.

42. When a participating candidate had previously made expenditures for a non-

municipal campaign (such as state or federal offices), they do not count towards

the campaign for municipal office. Ad. Code § 3-712.

43. Furthermore, the Act specifically addresses certain expenditures that are in

furtherance of a municipal campaign that are exempt from the limit. Expenses

related to bringing or responding to proceedings before administrative agencies,

ballot litigation, and the CFB's post election audit are all considered exempt from

the expenditure limit. Ad. Code § 3-706(4). Again, there is no such exemption

for spending money to run for one municipal office, then changing your mind and

running for a different one.

44. As evidenced by Ad. Code §§ 3-706 and 3-712, the legislature has clearly

contemplated when expenditures for another office do not count towards the limit

of a participating candidate (non-municipal races), and when they do count

9
 (municipal races).

45. Also, as evidenced by Ad. Code §3-706(4), the legislature has contemplated

which expenditures should be exempt from the limit and which should not be so

exempt. Clearly, the legislature has concluded that all other expenditures for

municipal races must count towards the Program participant's limit for the

municipal race she ultimately chooses to run for.

46. Nevertheless, Respondent CFB seeks to impose an advisory opinion on

candidates that is clearly contrary to the statute it administers. And in so doing, it

is disadvantaging the types of candidates that the Act is designed to help;

challengers who do not share the advantages of incumbency with their opponents.

47. The CFB makes no effort in its Advisory Opinion to explain how its new rules are

in harmony with the statute it administers. The ruse of requiring candidates to

"freeze" the old committee and establish a new one does not harmonize the

opinion with statute.

48. Respondent CFB is empowered to recommend needed amendments to the

Campaign Finance Act to the City Council with respect to, inter cilia, expenditure

limits. Ad. Code § 3-713(1). If it believes that the statute does not properly

accommodate the situation that the term limits extension law permits, it should

make recommendations to the Council. But it does not have the authority to

amend the statute on its own by advisory opinion or rule.

49. Respondent's Advisory Opinion 2008-7 as applied would violate the statute and

we therefore respectfully submit that is should be declared invalid by this court.

50. This is the parties' first request for such relief.

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 WHEREFORE, Petitioners respectfully request that the court:

(a) Issue a Judgment Declaring that Advisory Opinion 2008-7 is in violation of

the Campaign Finance Act and therefore invalid;

(b) Issue a permanent injunction enjoining Respondent from exempting

expenditures made by a candidate in furtherance of a campaign for any

municipal office from 2006-2008;

Dated: December 2, 2008

Stoll, Glickman & Bellina, LLP

Leo Glic 'an, Esq.

71 Nevins St.
Brooklyn, NY 11217
(718)852-0507
Fax: (718)852-3586
lglicicman@stollglicicrnan.com

11
STOLL, Mr
&BELLINA P AT LAW

71 Nevins Street
Brooklyn, NY 11217
P: (718) 852-3710
F: (718) 852-3586
www.stellgliekman.coin

New York City Campaign Finance Board October 24, 2008

Sue Ellen Dodell, General Counsel
40 Rector St., 7m Floor
New York, NY 10006

Dear Ms. Dodell:

I write on behalf of candidates for City Council who were planning to run for an

open seat.* Some may run against the incumbent, while others will wait four more years.

Regardless, each is concerned that the proposed guidelines will hand a huge advantage to

current council members who had previously been running for higher municipal office.

The campaign finance program has accomplished many positive reforms for our

democracy in New York City. One reform it has not achieved, however, is addressing

the advantages of incumbency, especially at the City Council level. While the Program

provides resources to help challengers be competitive, the power of incumbency has

proven too powerful. The CFB itself has concluded that this is one of the central

challenges to the Program's effectiveness (see e.g. Public Dollars for Public Good: A

Report on the 2005 Election, Forward of Chainnan Schwarz). We were therefore very

surprised that the CFB s proposed guidelines would heavily favor incumbents and saddle

challengers with huge disadvantages.

Council candidates not currently holding public office have been playing by the

rules set out in the Campaign Finance Act. The Rules say the following:
 The following limitations apply to all expenditures made by
a participating or limited participating candidate and his or
her principal committee in the three calendar years
preceding the year of the election for which such candidate
chooses to file a certification as a participating or limited
participating candidate ... [S]uch expenditures by a
participating or limited participating candidate for one of
the following offices and his or her principal committee
shall not exceed the following amounts:

mayor, public advocate or

comptroller: $ 290,000
borough president: $ 129,000
member of the city council: $ 43,000

The CFB now proposes to suspend this provision of the law for incumbents,

effectively turning a blind eye to the expenses incurred made by current council members

who have been raising and spending funds in anticipation of running for higher elective

office but who, pending the Council's vote, may decide to run for re-election. We

strongly urge the CFB not to take this action and propose the following alternative.

We propose that for this — and only this — upcoming election, the spending limit

be raised for any challenger running against an incumbent who has already spent beyond

the limit. We acknowledge that not all spending for a city or borough wide race would

benefit the Council campaign, so we propose that the CFB raise the election year

spending limit by two thirds of all spending above the out year spending limitations for

council races for challengers. So, for example, if a council incumbent spent $343,000 on

a race for Citywide office in 2008, then the challenger would have a spending limit of

$361,000. $343,000 exceeds the $43,000 spending limit for 2008 by $300,000. Two

thirds of $300,000 is $200,000. Add the $161,000 spending limit for 2009 council races

and you would have an expenditure limit of $361,000. We would also recommend that

2
the bonus funding for candidates who run against high-spending non- participants apply

to participants in this unique situation.

As of July 12, 2008, sitting City Council Members and Borough Presidents who

were running for higher office had spent over $5 million. No doubt that number is much

higher now. The CFB proposal treats these expenditures as if they never happened by

offering current council members the option of "freezing" their accounts. Challengers,

on the other hand, playing by the rules have been hamstrung with the $43,000, 2006-2008

spending limit.

If the CFB adopts the draft guidelines, it will likely drive potential challengers out

of the race. Many City Council Members favoring the extension have argued that if the

people do not like their vote, the people can vote them out. While theoretically possible,

the undeniable advantages of incumbency make these arguments ring hollow. The CFB's

proposed guidelines will deny the voters a choice at this critical juncture of the City's

political life by handing incumbents a huge advantage.

Incumbents running for higher office have spent significant sums on raising funds

and have benefitted from the spending they have already made. Moreover, fundraising

in itself— without even spending the money raised — raises the profile of candidates, itself

a significant advantage. The media has been reporting for over a year about the

fundraising prowess of various city council members running for higher office. There

have been few, if any, media reports on plucky council candidates who raised $20 or $30

thousand.

Moreover, relationships with major donors that have been established through

huge fundraising expenditures will make raising money for the upcoming council
campaigns much, much easier for incumbents. It is pure fiction to deny the advantages of

spending tens or hundreds of thousands of dollars on fundraising efforts. Council

incumbents running for reelection will benefit significantly from this spending.

Pretending otherwise is bad public policy.

Similarly, other types of spending will provide a big benefit to incumbents. Large

amounts of money spent up front to consultants well in advance of when the most work is

to be done, the election year, will lead to significantly discounted or donated services for

what will now be a smaller council campaign. We doubt that the CFB will be able to

detect such in-kind contributions. And, at any rate, to pretend that such expenditures

provide no benefit to a Council campaign amounts to willful ignorance. Furthermore,

donations to political organizations before the "freeze" will provide other benefits for the

Council campaign. For example, certain polling activities are likely to be useful in a

council race, and obviously, any expenditures on voter contact will be a giveaway to the

council campaign under the draft guidelines.

Rather than ignoring the direct and indirect benefits of millions of dollars of

spending, the CFB must take clear, affirmative steps to level the playing field. At the

very least, it should allow challengers to spend as much money as their incumbent

opponents. Hence, our proposal.

Our one-time only proposal may need Council approval. But the CFB is

empowered by law to make recommendations to the Council, and we strongly urge you

to make recommendations that will level the playing field between incumbents and

challengers in this situation. We also suggest that the CFB's draft guidelines would
require Council legislation, and there would almost certainly be litigation challenging its

enactment by the CFB alone in its current form.

We thank the CFB for this opportunity to respond to its proposed guidelines, and

look forward to working with you to make this unusual situation as fair as possible to all

candidates.

Leo Glickman, Esq.

Stoll, Glickman & Bellina, LLP

David Kerpen, 23 rd Council District

Yetta Kurland, 3 rd Council District
Richard Realmuto, 10th Council District
Ydanis Rodriguez, 10 th Council District
Jo Anne Simon, NY State Committeewoman, 33 rd District
Bob Zuckennan, 39 th Council District

5
Advisory Opinion No. 2008-7 (November 3, 2008)

SUMMARY

On November 3, 2009, Mayor Bloomberg signed Local Law No. 51 (2008), extending
term limits from two terms to three for current elected officials. The Board is issuing this
advisory opinion to address the impact of this legislation on two groups of candidates
subject to the provisions of the Campaign Finance Act: (1) Candidates with reported
activity who now will seek re-election to their incumbent offices in 2009, instead of the
higher offices they anticipated seeking in 2009; and (2) Candidates with reported activity
who will no longer run in 2009, but will seek office in 2013. The Board interprets the Act
and Rules to permit Group 1 candidates to either "restart" the 2009 election by "freezing"
the original committee and opening a new one for 2009, applying a 15 percent
fundraising expenditure to the 2013 expenditure limit, or maintain the same committee
for 2009 and allocate expenditures between the aborted 2009 campaign and the 2009 re-
election campaign. Group 2 candidates may maintain the same committee for 2013 and
apply a 15 percent rate of expenditures for funds raised prior to the 2013 election cycle
towards the 2013 expenditure limit. The Board's interpretation of the relevant law, as
outlined in this Opinion, attempts to make it practical for all candidates who wish to join
the Program to do so, to treat both incumbents and potential challengers in 2009 and 2013
fairly, and to encourage competitive races for all offices covered by the Program.

FULL TEXT

Re: New York City Administrative Code ("Admin. Code") §§ 3-703(1)(d), (e), (f), (g),
(14), 3-705, 3-706, 3-708(11), 3-710(2)(c), 3-718, 3-719; New York City Campaign
Finance Board Rules ("Rules") 1-04(f), 1-07, 1-08(c), (o), 3-03(c)(2), 4-01; Advisory
Opinion Nos. 1993-7 (July 20, 1993), 1997-6 (June 24, 1997), 2001-12 (September 20,
2001), Op. No. 2008-7.

Overview

Today, Mayor Bloomberg signed Local Law No. 51 (2008) which extends term limits for
current elected officials. This unprecedented change in the electoral landscape less than
one year prior to the primary elections compels the New York City Campaign Finance
Board (the "Board") to provide guidance concerning the legislation's effect on candidates
subject to the provisions of the Campaign Finance Act (the "Act"). 1 Given this significant
change in the law, there are numerous legal and practical implications for many current
and potential candidates — incumbents and challengers alike. The Board is issuing this
advisory opinion (the "Opinion") to address the impact of this legislation on two groups
of candidates:

1. Group 1: Candidates with reported activity who now will seek re-election to their
incumbent offices in 2009, instead of the higher offices they anticipated seeking
in 2009;

1
 2. Group 2: Candidates with reported activity who now will not run in 2009, but
will seek office in 2013.

This Opinion is restricted in its application. It only applies to these two groups of
candidates. It does not apply to those candidates who choose to continue to run for the
same (or higher) office that they were planning on running for prior to the passage of this
legislation. This Opinion also does not apply to those who have not had any financial
activity as of the date of issuance of this Opinion. It also does not apply to candidates
who otherwise would fall into Group 1 but who fail to make a timely choice of Option A
or B. Z

Specifically, the Board interprets the Act and its Rules to:

1. Allow "Group 1" candidates to choose between two options:

1. "Restart" the 2009 election by freezing their current committee until the
2013 election cycle, and opening a new committee for the 2009 election;
all expenditures incurred prior to the issuance of this Opinion, except
those associated with fundraising (as defined below), will not count
towards the 2009 re-election campaign or the 2013 election; or
2. Use their current committee for the 2009 election to his/her current office;
return over-the-limit contributions; all expenditures incurred will be
allocated between the aborted 2009 campaign and the 2009 re-election
campaign.
2. Allow "Group 2" candidates to keep the committee that was originally established
for 2009 to instead be used for a 2013 election. All expenditures incurred prior to
January 12, 2010, except those associated with fundraising, will not count towards
the 2013 election.

This approach falls within the Board's mandate, effectuates the law's purpose, and
encourages participation in the Campaign Finance Program (the "Program") by not
penalizing candidates for changing their plans at this late date in the election cycle in
light of this extraordinary legislation. 3 The Board has solicited and taken into account
comments from the public. 3 The Board acknowledges that this Opinion cannot anticipate
every possible situation that candidates affected by this change may face. Candidates
with circumstances that are not covered by this Opinion are encouraged to promptly
contact the Board's Candidate Services Unit for further guidance 5

INTRODUCTION

On October 23, 2008, the New York City Council passed legislation extending term
limits from two terms to three for current elected officials, allowing such candidates to
run for their incumbent seats in the 2009 general election. As a result of this unique
circumstance, there are significant legal and practical issues, as well as issues of fairness,
that the Board needs to consider in interpreting and applying the Act. The extension of
term limits three years into the 2009 election cycle creates an unprecedented challenge
for the Board.

2
As a result of this legislation, many candidates may no longer choose to run in the 2009
election or may choose to run for a different office than that for which they have been
raising and spending money. The biggest challenge is that the Board's rules presume that
all contributions and spending are for a candidate's next election. At this late point in the
election cycle, a substantial number of candidates have received many contributions at a
higher limit than will apply if they run for a "lower office." More importantly, many
candidates have spent well over the total expenditure limits for the "lower office."

The Board's interpretation of the relevant law, as outlined in this Opinion, attempts to
make it practical for all candidates who wish to join the Program to do so, to treat both
incumbents and potential challengers in 2009 and 2013 fairly, and to encourage
competitive races for all offices covered by the Program. The Board strongly believes
that the ultimate "level playing field" is achieved through Program participation, and the
approach outlined in this Opinion strives to reach this goal, to the overall benefit of all
candidates and the public.

I. Group 1 Candidates:

Candidates Must Provide Proof That They Were Previously Seeking Higher Offices

The first group of candidates affected by the change in term limits, herein referred to as
"Group 1," are those candidates who had raised and spent money for a campaign for
higher office but now are intending to seek their lower incumbent office. These Group 1
candidates have two options (described below).

To avail themselves of these options, these candidates must show that they were
originally running for a higher office in 2009, but now that term limits have been
extended, they will run for re-election. For candidates choosing Option A, this showing
will allow them to overcome the presumption in the rules that contributions and spending
are for the next election and to receive the favorable treatment for contributions and
spending that this Opinion provides. See e.g., Rules 1-04(f) (contributions), 1-08(c)
(expenditures), 7-03(c) (both); see also Advisory Opinion Nos. 1997-6 (June 24, 1997)
(the "Ferrer Opinion"), 1993-7 (July 20, 1993) .€ For candidates choosing Option B, each
candidate will have to overcome the presumption by demonstrating that each expenditure
did not benefit his/her re-election campaign. See Ferrer Opinion.

Candidates who wish to choose Option A or B must provide a written submission to the
Board of the following: (1) a prior declaration to the Board of the higher office sought; or
(2) other indicia that they were seeking higher office, including but not limited, to: (a)
candidate solicitation and/or receipt of contributions at a higher contribution limit, or (b)
prior public statements by the candidate in the press or through publicly distributed
material demonstrating an intent to run for a higher office.

Given that it is late in the election cycle, the deadline for submission of this proof is
January 15, 2009.2- By this date, candidates must submit this form, attaching any relevant
evidence; this same form will also require candidates to choose Option A or By

3
setting an early deadline the Board hopes to ensure a reasonably level playing field for
candidates and their opponents. This deadline also provides clarity for the public and
candidates, avoids additional disclosure deadlines which apply beginning the year of the
election, and provides a bright line for Board administration and audit.

The filing of this form does not obligate the candidate to run for the "lower" or any
office. However, if the candidate does not ultimately run for the lower office this Opinion
does not apply. Such candidates are encouraged to seek further guidance

A. Option A: Restart the 2009 Election Campaign

Group 1 candidates may choose to "restart" the 2009 election by "freezing" their original
committees, and opening a new committee for their 2009 re-election campaign. The
original committee must remain "frozen" until January 12, 2010, the beginning of the
2013 election cycle. The candidate would start the 2009 election with no funds and no
expenditures except as provided below. Option A optimizes the goal of ensuring Program
participation in both the 2009 and 2013 elections.

Candidates will be allowed to make only ministerial transactions, such as bank fees, from
these "frozen" committees. 2 All outstanding debts for services or goods incurred prior to
the issuance of this Opinion must be settled before a candidate "freezes" his/her
committee. 00 Candidates who wish to preserve previously raised matchable claims for the
2013 election must choose Option A.

1. Reporting Requirements

Candidates will be required to file disclosure statements for both the "frozen"
2009 committee and new 2009 committee, if applicable, on January 15, 2009
(covering the period through January 11, 2009). Thereafter, the "frozen" 2009
committee will file semi-annual disclosure statements with the Board of Elections
("BOB"), until the first disclosure statement for the 2013 election cycle. 11 The
new 2009 committee will file with both the Board and the BOE as required for
any 2009 committee.

2. Contributions

Candidates may keep contributions made prior to the issuance of this Opinion in
the original 2009 "frozen" committee. These contributions in the "frozen"
committee would be eligible for matching funds for a 2013 election. See Rule 1-
07(a). Contributors may make contributions to the new 2009 committee up to the
applicable limit for the 2009 election for the office the candidate is now seeking,L2
even if such contributors have already contributed to the "frozen" committee. The
"Doing Business Law" — 13 now in effect will apply to all contributions.

3. Expenditures

4
 Most expenditures by the original 2009 committee prior to issuance of this
Opinion will not be applied to the new 2009 re-election committee; nor will they
be applied to the future 2013 electionli (except as detailed below). Expenditures
made by the original 2009 committee between November 3, 2008 (the date of the
issuance of this Opinion and the effective date of Local Law No. 51) and the
"freezing" of this committee will count towards the 2009 expenditure limit. 16 See
Admin. Code § 3-706(2).

Notwithstanding this, certain costs associated with funds raised by the committee for the
aborted 2009 election will count against the candidate's spending limit for the 2013
election. Under this option, candidates are freezing the original 2009 committee, and
thus, will be using the funds raised for the aborted election campaign for a 2013 election.
Since the candidate clearly will "receive[]" the benefit of the funds raised in 2013, the
cost of raising those funds must count towards the 2013 spending limit. See Admin. Code
§ 3-706(1), (2); Rule 1-08(b); cf. Admin. Code § 3-703(14)(b); Rule 3-03(c)(2) (requiring
an allocation of cost for transfers). In order to ensure as fair and efficient a process as
possible, the Board will calculate the fundraising expenditure by assessing a 15 percent
flat rate of the total amount of funds on hand in the candidate's frozen committee on
January 11, 2009.11 If the 15 percent allowance is greater than the campaign's total
spending before the issuance of this Opinion, only the lower total amount will apply."-

If the committee for the 2009 re-election campaign wishes to use any goods (e.g.,
computers, office equipment, furniture, supplies, lists) that were originally purchased by
the committee for the aborted 2009 campaign, the new committee must purchase the
goods from the original committee. The goods must be purchased at the same prices that
were paid by the committee for the aborted 2009 election, and such purchases will count
towards the candidate's spending limit for his/her 2009 re-election campaign. Admin.
Code § 3-706(1), (2); Rule 1-08(b). Such purchases must be made prior to the deadline
for "freezing" the original committee, January 15, 2009.

Candidates who choose Option A, but fail to actually "freeze" their committees (i.e.
continue to engage in committee activity) lose the ability to take advantage of any
benefits provided by Option A.

B. Option B: Maintain Current Committee for 2009 Election

Group 1 candidates may choose to continue to use their current 2009 committees.'.̀'`-

1. Reporting Requirements

Candidates will continue to report activity in the same manner as previously.

2. Contributions

All candidates must abide by the contribution limit for the 2009 office s/he is
seeking. n Admin. Code § 3-703(1)(f). If a contribution exceeds the legal

5
 contribution limit for the incumbent office sought, the over-the-limit portion must
be returned to the contributor. The deadline for returning over-the-limit portions
of contributions is June 10, 2009, the Program certification deadline 22
Contributions returned by this date will not be subject to findings of violation by
the Board. Funds in the committee which comply with applicable contribution
limits and other rules will be eligible to be matched with public funds for the 2009
election. Admin. Code §§ 3-703, 3-705.

3. Expenditures

Expenditures will be reviewed on a case-by-case basis. The Board rules presume

that expenditures are for the next election. Rules 1-08(c), 7-03(c). Expenditures
made by a candidate who subsequently abandons his/her campaign for a higher
office and seeks re-election to a lower office are "presumptively subject to the
[lower office] spending limit," with certain exceptions. Ferrer Opinion. 23

The Board's presumption functions as the starting point for determining which, if any, of
a candidate's expenditures are not subject to the spending limit for the lower office. Id.
Expenditures will not count towards the 2009 election to the candidate's current office if
the candidate can overcome this presumption by demonstrating that such expenses were
actually used for the aborted 2009 campaign, with no or minimal benefit to the
candidate's 2009 re-election campaign. Apportionment of expenditures will be based on
the standards applied in the Ferrer Opinion. Candidates who choose Option B will face a
heavy burden in demonstrating that the spending they have already incurred should not
count towards their re-election campaigns. See Ferrer Opinion2'1; see also Advisory
Opinion No. 1993-7 (July 20, 1993). Therefore, when deciding whether to choose Option
B, a candidate should consider that most expenditures incurred by the original 2009
committee for the higher office will likely apply to the new 2009 re-election campaign.

Once a candidate files the requisite folio indicating s/he would like to pursue Option B,2-5
which must be submitted to the Board by January 15, 2009, the Board will immediately
begin the process of apportioning expenditures based on the Ferrer Opinion. The Board
will complete this analysis by the May 15, 2009 filing date and inform the candidate of
the total amount of expenditures that will apply to the spending limit for the 2009
election.

II. Group 2 Candidates

The other group of candidates affected by this legislation and covered by this Opinion are
those candidates who have been running an active 2009 campaign, but now choose to
delay running until 2013. In order to qualify as a member of this group, a candidate must
have activity reported or required to be reported on the January 15, 2009 disclosure
statement. These candidates may use the same committee that was originally intended for
a 2009 election for the 2013 election. This committee can remain active.

1. Reporting Requirements

6
 The committee must file the January 15, 2009 disclosure statement to report
activity during the period of July 12, 2008 — January 11, 2009. It must also
continue to file any additional mandatory disclosure statements until the
committee files a termination of candidacy form with the Board. 0 To receive the
benefits of this Opinion, a candidate must file a termination of candidacy form by
June 10, 2009, the certification date. Thereafter, the committee will report only to
the BOE until the first Board disclosure statement of the 2013 election cycle, in
which the committee will report all activity from the start of the committee's
existence. U-

2. Contributions

The 2013 contribution limit applies to the 2013 election; a contributor can only
contribute to the committee within the legal limits. Funds in the committee will be
eligible for public matching for a 2013 election.

3. Expenditures

Except for expenditures associated with fundraising, committee expenditures

made for the aborted 2009 election will not count towards the 2013 expenditure
Only expenditures made from January 12, 2010 onwards will count
towards the 2013 election cycle. See Admin. Code § 3-706(1), (2); Rule 1-08(c).
Since candidates will be using the funds previously raised for the aborted election
campaign for the 2013 election, costs associated with raising those funds incurred
by the committee for the aborted 2009 election will count against the candidate's
spending limit for the 2013 election. See Admin. Code § 3-706(2). Again, in order
to ensure as fair and efficient a process as possible, the Board will calculate the
fundraising allocation by assessing a 15 percent flat rate of the total amount of
funds in the committee on January 11, 2010. 33° the 15 percent allowance is
greater than the campaign's total spending before the issuance of this Opinion,
only the lower total amount will apply.

CONCLUSION

Given the unique circumstances presented by the legislation extending term limits, the
Board has issued a plan that provides a legal, practical, and fair course of action:A The
Board's conclusions, resting on its interpretation of the Campaign Finance Act, are
supported by the Board's power to take actions "necessary and proper to carry out the
purposes of [the Act]." Admin. Code § 3-708(11); see Advisory Opinion No. 2001-12
(September 20, 2001). In the face of this significant legislative change, the Board's plan
addresses the practical implications of the term limits extension, while maintaining the
integrity and purpose of the Program and the law.

NEW YORK CITY

CAMPAIGN FINANCE BOARD

7
i All candidates running for one of the five covered offices—mayor, comptroller, public
advocate, borough president, city council member—are subject to the Act's contribution
limits, ban on certain contributions, and reporting requirements. See Admin. Code §§ 3-
703, 3-718, 3-719.

z This Opinion also does not apply to candidates in future elections who never sought
office in 2009 or did not have any reported committee activity in the 2009 election cycle;
nor does it permanently alter how the Board normally administers the Program and
conducts Board business.
3
- Local Law No. 51 (2008). In the event that Local Law No. 51 does not survive litigation
challenges or fails to obtain the requisite federal pre-clearance, the Board will re-evaluate
the application of this Opinion. See Voting Rights Act of 1965, § 5, 42 U.S.C. § 1973c
(requiring pre-clearance for any attempt to change "any voting qualification or
prerequisite to voting, or standard, practice, or procedure with respect to voting" in any
"covered jurisdiction").
4
- On October 14, 2008, the Board issued a press statement seeking comments from the
public on how to address these issues. On October 17, 2008, the Board released an
outline of its proposal and requested further comment from the public. On October 23,
2008, the Board issued a press statement seeking comments from the public until October
28, 2008, and informing the public of the Board's intention to issue an advisory opinion
addressing these issues on November 3, 2008.

The Board will release a plain language document that explains this Opinion and gives
detailed guidance to candidates on how to implement the advice herein for their
campaigns. This guidance document will be available on the Board's website at
www.nyccfb.info and will be sent via e-mail from the Board to all candidates and their
treasurers.

n For campaigns choosing Option A, which requires them to re-start their 2009 campaigns
with no funds and no expenditures, the Board interprets that funds expended prior to the
passage of Local Law No. 51 were for the election for higher office. Such expenditures,
except those associated with raising funds, will provide no or minimal benefit to these
candidates' 2013 election.

The filing of this form on this date coincides with the filing of the mandatory disclosure
statement that is also to be filed with the Board on January 15, 2009. If a candidate does
not make this showing and file this form by January 15, 2009, then the candidate cannot
take advantage of Option A or B.

This form will be available on the Board's website at www.nyccfb.info and will be sent
via e-mail from the Board to all candidates and their treasurers.

2 Any payments for bookkeeping services and preparation of applicable disclosure

statements for the "frozen" committee can be made by the new 2009 committee for the

8
"lower" office and will count towards the applicable 2009 expenditure limit. See Admin.
Code § 3-706(1), (2); Rule 1-08(b). These expenditures, however, are not related to the
2009 campaign and thus will be deducted when calculating the 2009 unspent campaign
funds. See Admin. Code § 3-710(2)(c); Rule 1-02 (definition of "unspent campaign
funds").

If a candidate fails to do so, then payment of such debts can be made by the new 2009
committee for the "lower" office and will count towards the applicable 2009 expenditure
limit. See Admin. Code § 3-706(1), (2).

"The Board's C-SMART software allows candidates to file these statements with both
the City and State BOE.

12 See Admin. Code § 3-703(1)(0.

See Admin. Code §§ 3-702(18), 3-703 (1-a), (1-b); Rule 4-01(n).

u There is no spending limit for the 2013 election cycle that ordinarily would apply to
spending made before 2010. See Admin. Code § 3-7060), (2).

11 In order to avoid potential unfairness, the Board, in the course of its normal audit
functions, will evaluate expenditures incurred between October 17, 2008 (the date the
Board issued its Opinion guidance document) and November 3, 2008 to determine if
these expenditures, due to their amount and nature, should be allocated to the 2009
election for "lower office."

Payments made by the original 2009 committee to settle outstanding debts incurred by
that committee prior to the issuance of this Opinion will not count towards the 2009
spending limit provided that the campaign can adequately document the date these debts
were incurred.

11 The Board acknowledges that 15 percent might not be a perfect replica of any
particular candidate's actual spending on fundraising. 15 percent is a reasonable
approximation of the standard fee charged by professional fundraisers. In the interests of
clarity and certainty for candidates and the Board's audit process, the Board uses this
allocation.

All candidates are subject to ongoing auditing of their campaign finances. See Admin.
Code §§ 3-703(1)(d), (g), 3-7100); Rules 4-01, 4-05. During this audit process, the
Board will evaluate expenditures, including the amount of funds in the committee on
January 11, 2009, for compliance with this Opinion to ensure full enforcement of the
Campaign Finance Act.

n For the 2013 elections there are three applicable spending limits—the limit for the
three years prior to the year of the election (the "out-year limit"), the primary limit, and

9
the general election limit. See Admin. Code § 3-706(1), (2); Rule 1-08(b). The
fundraising allowance will count towards the out-year limit.
20
— Based on a review of the actual disclosures to date, it is the Board's belief that few
candidates can choose Option B and still participate in the Program.

n The contribution limits apply to all candidates for a covered office even if they choose
not to participate in the Program.
22
The refund of any over-the-limit portion of a contribution must be made by bank or
certified check. Rule 1-04(c)(1). This Opinion does not address the deadlines for
returning contributions which are subject to the "doing business" limits.

a The Ferrer Opinion apportioned expenditures between Fernando Ferrer's 1997

abandoned mayoral campaign and his Bronx borough presidential campaign. The Board
found that most expenditures incurred for the abandoned mayoral campaign applied
towards the Bronx borough presidential campaign. The noted exceptions included
spending for polls and research for higher office, salaries for the higher office campaign
staff, cost of campaign offices and equipment outside of the lower office geographical
area, and costs of announcements, literature and events for the higher office, as long as
the candidate was able to demonstrate there was no benefit or even ancillary benefit to
the campaign for lower office. See Ferrer Opinion.

Li Costs that were attributed to the lower office expenditure limit in the Ferrer Opinion
include all fundraising costs, most contributions to other candidates and political
organizations, any staff salaries, offices and equipment which provided a benefit to the
campaign for lower office, and a proportional allocation of costs for public events and
communications for the higher office. See Ferrer Opinion.

a This form will be available on the Board's website at www.nyccfb.info and will be sent
via e-mail from the Board to all candidates and their treasurers.
z6 that many of the assumptions outlined in Section II do not apply if this committee
is used in an intervening election, e.g., an election for state office. The methodology
outlined in Section II also does not apply to any special elections the candidate may run
in in the 2009 or 2013 election cycles.

121 Disclosure statements are due on March 15, 2009 and May 15, 2009; if the candidate
does not file a termination form prior to the start of these disclosure periods, s/he must
file that statement. The termination of candidacy form will be available on the Board's
website at www.nyccfb.info and will be sent via e-mail from the Board to all candidates
and their treasurers.

a Campaigns may use the Board's C-SMART software to make their filings with the City
and State BOEs. The Board's Candidate Services Unit is available to assist candidates.

10
29
See supra n.14.

-3-Q See supra n.18.

n This Opinion cannot anticipate every possible situation that candidates affected by this
change may face. The Board strongly encourages candidates with circumstances that are
not covered by this Opinion to promptly contact the Board's Candidate Services Unit for
further guidance.