Item 7 Action

Recusal Review – Edward Renwick

Executive Summary: This item presents a recusal review under Charter § 707 regarding Edward Renwick, vice president of the Board of Harbor Commissioners.

Recommended Action: Adopt the resolution in Attachment D to find that vice president Renwick does not have a significant and continuing conflict of interests at this time.

Authors: Heather Holt, Executive Director Tyler Joseph, Director of Policy

Presenter: Tyler Joseph, Director of Policy

Ethics Commission August 18, 2020

Recusal Review – Edward Renwick

A. Introduction

Members of City boards and commissions are required to complete and submit a recusal notification form (Form 51) each time they recuse themselves due to an actual or apparent conflict of interests. Los Angeles Municipal Code (LAMC) § 49.5.6(D). When a board or commission member submits a threshold number of recusal forms in a 365-day period, the Ethics Commission is required to review the recusals and determine whether the member has a significant and continuing conflict of interests. Los Angeles City Charter (Charter) § 707.

This item discusses the recusals of Edward Renwick, the vice president of the Board of Harbor Commissioners (Harbor Commission). Vice President Renwick has been cooperative with staff throughout the process. He received a copy of this report and declined to submit written comment.

B. Recusal Requirement

Under Charter § 707, the Ethics Commission is required to “examine the nature and extent” of a board or commission member’s conflicts of interests whenever the member is disqualified during a 365-day period from acting on either of the following:

1. Three or more agenda items, because of the same investment in a business entity, the same interest in real property, or the same source of income; or

2. One percent or more of all items pending before the commission, because of any investments in business entities, interests in real property, or sources of income.

In conducting its examination, the Ethics Commission must determine whether the commissioner has a “significant and continuing” financial conflict of interests. If the Ethics Commission determines that the conflict is significant and continuing, it must order divestment of the interest that causes the conflict. Charter § 707.

Assessing whether a conflict is “continuing” is often a straightforward task. Considering the items for which recusals were submitted, as well as the reasons for the recusals, can be helpful in determining whether the conflict is ongoing. However, Charter § 707 does not define or otherwise provide guidance regarding the specific meaning of “significant”—a more subjective term. It is our practice to analyze the significance of recusals by addressing the following questions:

1. Is the number of recusals significant? 2. Is the subject matter of the recusals significant? 3. Is the impact of the recusals on the City or affected persons significant?

Item 7 Ethics Commission 1 of 5 August 18, 2020 Board and commission members who are deemed to be public officials within the meaning of the California Political Reform Act of 1974 are required to disclose certain financial holdings by filing statements of economic interests (SEIs). These SEIs include the state’s Form 700 and the City’s Form 60.

Form 700 requires a public official to disclose the financial interests specified for the official’s position in the conflict of the interests code of the official’s agency. It helps filers and the public identify personal interests that could be affected by governmental decisions and is, therefore, a useful tool for identifying when recusal may be necessary. Form 60 requires high ranking City officials to disclose personal interests associated with sources that are actively engaged in business with the City.

Here, Vice President Renwick is required to disclose the financial interests identified in Attachment A by filing periodic SEIs with the Ethics Commission. Copies of Vice President Renwick’s SEIs for the relevant period are provided in Attachment B.

When a board or commission member is disqualified from acting on a matter because of an actual or apparent conflict of interests, the member is required to complete a Form 51 and submit copies to the Mayor’s office, the City Attorney’s office, the Ethics Commission, and the executive secretary for the commission on which the member serves. Each of the Form 51s submitted by Vice President Renwick during the review period are provided in Attachment C.

C. Facts

Vice President Renwick has served on the Harbor Commission since November 2013. He was reappointed in May 2017, and his current term will expire on June 30, 2022.

Vice President Renwick recused himself from 21 matters between November 6, 2019, and July 15, 2020 (the review period). All 21 of the recusals related to his interests and investments in the banking industry.

Vice President Renwick is the co-founder and CEO of Raineth Holdings, a property investment, management, and leasing company. He and his spouse also receive partnership income from their interests in the real estate development companies Wah TG, LLC and Insight Development, LLC. Prior to founding Raineth Holdings, Vice President Renwick was a partner with the Los Angeles-based investment firm The Yucaipa Companies and a consultant for The Boston Consulting Group. Vice President Renwick reported partnership income from Wah TG, LLC, Insight Development, LLC, and various subsidiaries of The Yucaipa Companies on his most recent Form 700.

Item 7 Ethics Commission 2 of 5 August 18, 2020 Of Vice President Renwick’s 21 recusals during the review period, 15 resulted from his personal friendship with the CEO of Harbor Performance Enhancement Center, LLP (HPEC), which is participating in a single lawsuit involving the Port. That lawsuit, HPEC v. City of Los Angeles Harbor Department, et al. (the HPEC litigation), is currently pending in U. S. District Court. Twelve of those 15 recusals were for closed-session discussions of the HPEC litigation. Vice President Renwick also recused himself from an amendment to the legal services agreement with Nossaman LLP, the firm providing the Port with legal advice and support for the HPEC litigation, and from a conflict of interests waiver and legal services agreement allowing Crowell & Moring, LLP to represent the Port in the HPEC litigation.

Of the remaining six recusals during the review period, each was for a closed-session discussion concerning other active or potential litigation involving the Port and resulted from Vice President Renwick’s business affiliations with the banking community.

Vice President Renwick was the subject of two previous recusal reviews, both resulting from his relationships in the banking industry. The first of those reviews, in April 2016, concluded that none of his recusals were required under City or state law and was presented for informational purposes only. The second, in December 2019, found that Vice President Renwick’s recusals were continuing but not significant, and no divestment was required. A copy of those reviews are provided in Attachment F and are also available online.

D. Analysis

1. Continuing Nature of the Recusals

All 21 of Vice President Renwick’s recusals during the review period came as a result of his business relationships in the banking industry. He and his spouse continue to own and operate Raineth Holdings and receive income from The Yucaipa Companies, Wah TG, LLC, and Insight Development, LLC. In addition, the HPEC litigation is ongoing. For these reasons, we believe that conflicts are likely to continue and that Vice President Renwick may be required to recuse himself again in the future.

2. Significance of the Recusals

a. Number of Recusals

During the review period, the Harbor Commission met 17 times in regular and special sessions and considered approximately 242 items. Vice President Renwick recused himself from participating in 21 items, or approximately nine percent of all items considered by the Harbor Commission during that time. Of those 21 recusals, 15 related to a single law suit. Because Vice President Renwick participated in over 91 percent of all matters before the Harbor Commission during the review period, and because nearly three-quarters of his recusals concerned a single recurring item, we do not believe the number of recusals is significant.

Item 7 Ethics Commission 3 of 5 August 18, 2020 b. Subject Matter of the Recusals

In 2015, the Port solicited proposals to develop a vacant 110-acre property for the purpose of operating a support facility to ease shipping and storage congestion in the Port. The Port selected the proposal offered by HPEC, and the two parties entered into an exclusive negotiating agreement that was later extended by amendment. During the following years, both parties invested significant resources in the project, and HPEC secured $130 million in financing from global investment firm Macquarie Group Limited.

The plaintiffs in the HPEC litigation name the Port, the City, and multiple organized labor groups as defendants. The complaint alleges, among other things, restraint of trade, breach of contract, unfair labor practice, and violation of the Sherman Antitrust Act. The allegations are serious in nature and allege millions of dollars in lost investment and revenue, as well as conspiratorial conduct.

In addition to the financial considerations, the project at the center of the HPEC litigation was initially viewed by both parties as a critical infrastructure upgrade to the Port’s core operations. For these reasons, we believe the subject matter of the recusals is significant.

c. Impact of the Recusals

According to the meeting minutes provided by Harbor Commission staff, the closed session items relating to discussion of potential or ongoing litigation from which Vice President Renwick recused himself were informal in nature, and no action was taken. The three matters requiring a vote—those involving the legal services agreements and conflict waiver—were approved unanimously in Vice President Renwick’s absence.

Harbor Commission staff advised that nothing about Vice President Renwick’s recusals during this period was unusual or disruptive to the Harbor Commission’s ordinary course of business. The recusals did not affect the Harbor Commission’s ability to act. Therefore, we do not believe the impact of the recusals was significant.

E. Recommendation

Based on our examination of the recusal forms received during the review period, we believe that Vice President Renwick’s interests in the banking industry may require additional recusals for the duration of his term. However, despite the continuing nature of these conflicts, we do not believe the number or impact of Vice President Renwick’s recusals is currently significant.

For these reasons, we recommend against a finding that Vice President Renwick has a “significant and continuing” conflict of interests under Charter § 707. Therefore, we recommend that no divestment be required of Vice President Renwick at this time and that the resolution in Attachment D be adopted. If you reach a different conclusion, you must order divestment, and the resolution in Attachment E may be adopted for that purpose.

Item 7 Ethics Commission 4 of 5 August 18, 2020 Attachments: A Financial interests Vice President Renwick must disclose. B Vice President Renwick’s SEIs. C Vice President Renwick’s Form 51s. D Recommended resolution (no divestment). E Alternate resolution (divestment). F Previous recusal review reports (without attachments) dated April 2016 and December 2019.

Item 7 Ethics Commission 5 of 5 August 18, 2020 HARBOR DEPARTMENT REVISED CONFLICT OF INTEREST CODE SCHEDULE "A" - DESIGNATED POSITIONS

DISCLOSURE CLASSIFICATION CATEGORY

Commissioner 2

General Manager Harbor Department 1

First Deputy General Manager Harbor Department 1

Second Deputy General Manager 2

Chief Financial Officer 1

Financial Manager II (Treasury Management) 1

Chief Harbor Engineer 2

Director of Port Administration 2

Director of Port Marketing I,II 2

Harbor Planning and Research Director I, II 2

Harbor Public and Community Relations Director 2

Information Systems Manager II 2

Legislative Representative 2

Public Information Director II 2

Senior Management Analyst II (Director of Management Services) 2

Traffic Manager 2

Marine Environmental Manager 3

Marine Environmental Supervisor I 3

Departmental Chief Accountant I 4

Approved on April 25, 1997, by the City Council. Council Index File No.: 97-0525

Item 7—Attachment A Ethics Commission 1 of 10 August 18, 2020

HARBOR DEPARTMENT REVISED CONFLICT OF INTEREST CODE SCHEDULE "A" - DESIGNATED POSITIONS (contd.)

DISCLOSURE CLASSIFICATION CATEGORY

Financial Manager I, II 4

Risk Manager 4

Property Manager II, IV 5

Real Estate Officer 5

Senior Real Estate Officer 5

Director of Purchasing Services 6

Departmental Personnel Officer 7

Harbor Engineer I, II (Design) 8

Director of Port Construction and Maintenance I, II 9

Harbor Engineer I, II (Construction) 9

Port Warden 10

Chief Wharfinger I, II 10

Wharfinger II 10

Consultants **

* Whether any individual is a consultant shall be determined by the General Manager, who also determines which of the above categories is applicable to that consultant. Revised 01/28/97

Approved on April 25, 1997, by the City Council. Council Index File No.: 97-0525

Item 7—Attachment A Ethics Commission 2 of 10 August 18, 2020 Item 7—Attachment A Ethics Commission 3 of 10 August 18, 2020 Item 7—Attachment A Ethics Commission 4 of 10 August 18, 2020 Item 7—Attachment A Ethics Commission 5 of 10 August 18, 2020 HARBOR DEPARTMENT REVISED CONFLICT OF INTEREST CODE SCHEDULE "B" - DISCLOSURE CATEGORIES

GENERAL PROVISION

A designated employee is required to disclose that he or she is a director, officer, partner, trustee, employee or holds any position of management in a business entity if he or she would be required to disclose income from that entity. Income includes loans and gifts.

CATEGORY 1

As required by State law (Government Code Section 87200), positions in this classification must disclose all investments, income, and interests in real property as defined in this Conflict of Interest Code.

CATEGORY 2

A. Any investment, as defined by this Code.

B. Any interest in real property located on or within one-half mile of the Harbor District or other property under the jurisdiction of the Harbor Department.

C. Any income, including gifts, from any person or business entity which currently supplies or within the past 12 months supplied goods or services to the Harbor Department, or is or was a subtenant of the Harbor Department, or is or was a party to a legal proceeding (whether administrative or judicial) involving the Harbor Department, or is or was licensed by the Harbor Department to use its facilities, or makes use of Harbor Department facilities pursuant to Tariff, or is or was a competitor of any person or business entity described above.

D. Any business positions held in relevant business entities.

CATEGORY 3

A. Any investment in, income from, or business positions with any person or business entity which provides, proposes to provide, or during the past 12 months provided or proposed to provide environmental consulting services for the Harbor Department.

B. Any investment in, income from, or business positions with any person or business entity which uses, proposes to use, or during the past 12 months used or proposed to use Harbor Department property.

C. Any investment in, income from, or business positions with any person or business entity which is, proposes to be, or during the past 12 months was or proposed to be

Approved on April 25, 1997, by the City Council. Council Index File No.: 97-0525 Item 7—Attachment A Ethics Commission 6 of 10 August 18, 2020 Harbor Department COI Code Schedule B - Page 2

CATEGORY 3 (contd.)

engaged in the construction or maintenance of facilities within the Harbor District as a contractor or subcontractor or any direct competitor of such person or business entity.

D. Any interest in real property which is located on or within one-half mile of the Harbor District or other property under the jurisdiction of the Harbor Department.

E. Any business positions held in relevant business entities.

CATEGORY 4

A. Any investment in, income from, or business positions with any person or business entity which provides, proposes to provide, or during the past 12 months provided or proposed to provide investment counseling, financial auditing or insurance services for the Harbor Department.

C. Any investment in, income from, or business positions with any person or business entity which currently is, proposes to be, or during the past 12 months was or proposed to be engaged in the business of shipping or providing shipping related services for goods which are, are proposed to be, or were transported through the Harbor District or property under the jurisdiction of the Harbor Department.

D. Any business positions held in relevant business entities.

CATEGORY 5

A. Any investment in, income from, or business positions with any person or business entity which sells, leases, rents, or manages property, makes appraisals and title examinations of property, or which sells or purchases land, easements, licenses and land management services involving property located on or within one-half mile of land which is under the jurisdiction.

B. Any interest in real property located on or within one-half mile of the Harbor District or other property under the jurisdiction of the Harbor Department.

Approved on April 25, 1997, by the City Council. Council Index File No.: 97-0525 Item 7—Attachment A Ethics Commission 7 of 10 August 18, 2020 Harbor Department COI Code Schedule B - Page 3

CATEGORY 5 (contd.)

C. Any investment in, income from, or business positions with any person or business entity which uses, proposes to use, or during the past 12 months used or proposed to use Harbor Department property.

D. Any business positions held in relevant business entities.

CATEGORY 6

A. Any investment in, income from, or business positions with any person or business entity which supplies, proposes to supply or during the past 12 months supplied or proposed to supply materials, goods, or services to the Harbor Department.

B. Any business positions held in relevant business entities.

CATEGORY 7

A. Any investment in, or income from, or business positions with any person or business entity which provides, proposes to provide, or during the past 12 months provided or proposed to provide personal services or management consulting services for the Harbor Department.

B. Income from any individual who is currently employed, seeking employment, or during the past 12 months was employed or sought employment with the Harbor Department.

C. Any business positions held in relevant business entities.

CATEGORY 8

A. Any investment in, income from, or business positions with any person or business entity which provides or proposes to provide services involving the design, construction or maintenance of facilities for the Harbor Department.

B. Any investment in, income from, or business positions with any person or business entity which is, proposes to be, or during the past 12 months was or proposed to be engaged in the construction or maintenance of facilities within the Harbor District as a contractor or subcontractor or any direct competitor of such person or business entity.

Approved on April 25, 1997, by the City Council. Council Index File No.: 97-0525 Item 7—Attachment A Ethics Commission 8 of 10 August 18, 2020 Harbor Department COI Code Schedule B - Page 4

CATEGORY 8 (contd.)

D. Any interest in real property which is located on or within one-half mile of the Harbor District or other property under the jurisdiction of the Harbor Department.

E. Any investment in, income from, or business positions with any person or business entity which supplies or manufactures, proposes to supply or manufacture, or during the past 12 months supplied or manufactured or proposed to supply or manufacture materials for use in the construction or maintenance of facilities within the Harbor District.

F. Any business positions held in relevant business entities.

CATEGORY 9

A. Any investment in, income from, or business positions with any person or business entity which currently is, proposes to be, or during the past 12 months was or proposed to be engaged in the construction or maintenance of facilities within the Harbor District as a contractor or subcontractor or any direct competitor of such person or business entity.

C. Any investment in, income from, or business positions with any person or business entity which supplies or manufactures, proposes to supply or manufacture, or during the past 12 months supplied or manufactured or proposed to supply or manufacture materials for use in the construction or maintenance of facilities within the Harbor District.

D. Any business positions held in relevant business entities.

CATEGORY 10

A. Any investment in, income from, or business positions with any person or business entity which uses, proposes to use, or during the past 12 months used or proposed to use Harbor Department property.

Approved on April 25, 1997, by the City Council. Council Index File No.: 97-0525 Item 7—Attachment A Ethics Commission 9 of 10 August 18, 2020 Harbor Department COI Code Schedule B - Page 5

CATEGORY 10 (contd.)

B. Any investment in, income from, or business positions with any person or business entity which ships or receives, or during the past 12 months shipped or received goods transported through the Harbor Department.

C. Any investment in, income from, or business positions with from any person or business entity which currently is or during the past 12 months was engaged in the business of shipping or providing shipping related services for goods which are or were transported through the Harbor District.

D. Any business positions held in relevant business entities.

Revised 01/28/97

Approved on April 25, 1997, by the City Council. Council Index File No.: 97-0525 Item 7—Attachment A Ethics Commission 10 of 10 August 18, 2020 Statement of Economic Interests Date Initial Filing Received CALIFORNIA FORM700 Filing Official Use Only Fair Political Practices Commission Cover Page Filed Date: 03/12/2020 07:18 PM SAN: 011300006-STH-0006 Please type or print in ink. A Public Document Name of FileR (Last) (First) (Middle) Renwick Edward R 1. Office, Agency, or Court Agency Name (Do not use acronyms) Harbor Department Division, board, Department, District, if applicable Your Position Commissioner

► If filing for multiple positions, list below or on an attachment. (Do not use acronyms)

Agency: Position:

2. Jurisdiction of Office (Check at least one box) State Judge, Retired Judge, Pro Tem Judge, or Court Commissioner (Statewide Jurisdiction) (Statewide Jurisdiction) Multi-County County of City of Los Angeles Other

3. Type of Statement (Check at least one box) Annual: The period covered is January 1, 2019, through Leaving Office: Date Left / / December 31, 2019. (Check one circle.) -or- The period covered is / / , through The period covered is January 1, 2019, through the date of leaving office. December 31, 2019. -or- Assuming Office: Date assumed / / The period covered is / / , through the date of leaving office. Candidate: Date of Election and office sought, if different than Part 1:

4. Schedule Summary (must complete) ► Total number of pages including this cover page: 12 Schedules attached

Schedule A-1 - Investments – schedule attached Schedule C - Income, Loans, & Business Positions – schedule attached Schedule A-2 - Investments – schedule attached Schedule D - Income – Gifts – schedule attached Schedule B - Real Property – schedule attached Schedule E - Income – Gifts – Travel Payments – schedule attached

-or- None - No reportable interests on any schedule 5. Verification Mailing Address street ity State Zip Code (Business or Agency Address Recommended - Public Document)

Daytime telephone number Email address

I have used all reasonable diligence in preparing this statement. I have reviewed this statement and to the best of my knowledge the information contained herein and in any attached schedules is true and complete. I acknowledge this is a public document. I certify under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

03/12/2020 07:18 PM Date Signed Signature (month, day, year) (File the originally signed paper statement with your filing official.)

FPPC Form 700 - Cover Page (2019/2020) [email protected] • 866-275-3772 • www.fppc.ca.gov Page - 5

Item 7—Attachment B Ethics Commission 1 of 13 August 18, 2020 Schedule A-1 CALIFORNIA FORM 700 Investments Fair Political Practices Commission Stocks, Bonds, and Other Interests Name (Ownership Interest is Less Than 10%) Edward Renwick Investments must be itemized. Do not attach brokerage or financial statements. ► Name of business entity ► Name of business entity Ford Motor Company Yucaipa American Affiliate II, LLC General description of This business General description of This business

Common Stock Private Equity Inv. in Retail, Logistics, Hotels

fair market value fair market value $2,000 - $10,000 $10,001 - $100,000 $2,000 - $10,000 $10,001 - $100,000 $100,001 - $1,000,000 Over $1,000,000 $100,001 - $1,000,000 Over $1,000,000

Nature of investment Nature of investment Stock Other Stock Other (Describe) (Describe) Partnership Income Received of $0 - $499 Partnership Income Received of $0 - $499 Income Received of $500 or More (Report on Schedule C) Income Received of $500 or More (Report on Schedule C)