City of Kingston Report to Council Report Number 18-190

To: Mayor and Members of Council From: Denis Leger, Commissioner, Corporate & Emergency Services Resource Staff: John Bolognone, City Clerk Date of Meeting: June 26, 2018 Subject: Kingston Election Compliance Audit Committee (2018 - 2022)

Executive Summary: All candidates running in the 2018 municipal election and all third party advertisers registered in the City of Kingston for the 2018 election must submit a financial statement detailing the contributions received and expenses incurred during their election / advertising campaign. If a candidate’s or third party advertiser’s campaign contributions or expenses total more than $10,000, the candidate or third party advertiser must also submit an auditor’s report. The Municipal Elections Act, 1996 (the Act), as amended, establishes a compliance audit process for campaign finances. An eligible elector who believes on reasonable grounds that a candidate or third party advertiser has contravened the Act may apply for a compliance audit of the candidate’s or third party advertiser’s campaign finances. The City Clerk may also request a compliance audit if it appears a contributor to a candidate’s or third party advertiser’s campaign exceeded the contribution limits prescribed by the Act.

The Act requires the municipality and local boards to establish a Compliance Audit Committee before October 1 in an election year (i.e. by September 30, 2018) for a term that is the same as the Council or local board that takes office following the next regular election. The role of the Kingston Election Compliance Audit Committee (the Committee) is to consider elector applications for compliance audits of candidate or third party advertiser campaign finances and to determine whether an application should be granted or rejected. A decision of the Committee to proceed with an audit may be appealed to the Superior Court of Justice. In addition, the Committee will consider any reports from the City Clerk with respect to an apparent contravention of the contribution limits by a contributor to a candidate or third party advertiser campaign. In either case, the Committee will decide whether or not to commence a legal proceeding for any apparent contraventions of the Act. The Committee does not have any authority to set penalties. Penalties can only be determined through the legal proceedings by the Court.

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The Committee will be in place until November 14, 2022 (the end of the new Council term) and will also be responsible for any compliance audit duties associated with any by-elections that may occur during the term.

This report is being presented in order to obtain Council approval to establish the Kingston Election Campaign Audit Committee (2018 - 2022) and to authorize the City Clerk to seek candidates to serve on the Committee for a term ending November 14, 2022, in accordance with the provisions of the Municipal Elections Act, 1996, as amended. Three readings of the By-law are required to allow staff to begin the recruitment process as soon as possible.

Recommendation: That in accordance with the Municipal Elections Act, 1996, Section 88.37, the Kingston Election Compliance Audit Committee (2018 - 2022) be established; and

That pursuant to the Municipal Elections Act, 1996 (Section 88.33 (16)), the municipality or local board shall pay the auditor’s costs of performing an audit and Council or the local board, as the case may be, shall pay all costs in relation to the Committee’s operation and activities (Section 88.37 (7)); and

That a By-law be presented, for all three readings, to amend By-Law 2010-205, as amended (the Committee By-law), to Delete in its entirety the existing Schedule C-6, “Kingston Election Compliance Audit Committee (2014-2018)”, and replace it with a new Schedule C-6, “Kingston Election Compliance Audit Committee (2018 - 2022)”; and

That the compensation for members of the Kingston Election Compliance Audit Committee (2018 – 2022) shall be $200 per meeting attended, including any orientation meeting(s) that may be held and that there shall be no additional compensation for mileage; and

That in addition to the normal advertisements placed in the paper, and other recruitment measures for volunteers to serve on Committees, the City Clerk be authorized to solicit interest from auditors, accountants, lawyers and academics to serve on the Kingston Election Compliance Audit Committee and that the slate of potential candidates be submitted to the Nominations Advisory Committee for consideration and recommendation to Council.

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Authorizing Signatures:

Denis Leger, Commissioner, Corporate & Emergency Services

Gerard Hunt, Chief Administrative Officer

Consultation with the following Members of the Corporate Management Team: Lanie Hurdle, Commissioner, Community Services Not required Desirée Kennedy, Chief Financial Officer & City Treasurer Not required Jim Keech, President & CEO, Utilities Kingston Not required

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Options/Discussion: Background In accordance with the Municipal Elections Act, 1996 (the Act), as amended, s. 88.37 (1), the municipality must establish a Compliance Audit Committee before October 1st in an election year (i.e. by September 30, 2018). The Kingston Election Compliance Audit Committee (2014- 2018) was appointed by Council in 2014 to consider any applications for compliance audits for the 2014 municipal election and any subsequent by-elections during the 2014-2018 term of Council. It is noted that there were no requests for compliance audits during this term of Council. A new Compliance Audit Committee must be established for the next term of Council.

In addition, the Act stipulates that school boards must also establish a Compliance Audit Committee for the review of any compliance audit applications received relating to School Board Trustee candidates.

All candidates running in the 2018 municipal election for the offices of Mayor, District Councillor and School Board Trustee must file a financial statement (Form 4) detailing the contributions received and expenses incurred during their election campaign. If a candidate’s campaign contributions or expenses total more than $10,000, the candidate must have an auditor review their Financial Statement and provide an auditor’s report (Form 4).

Recent changes to the Municipal Elections Act, 1996 introduced new rules for third party advertisers. A third party advertiser must register with the City and can be any person who is a resident of , a corporation carrying on business in Ontario or a trade union that holds bargaining rights for employees in Ontario. Third party advertising refers to advertisements or other materials, such as brochures or signs, used to express support or opposition to a candidate or a referendum question and to try to persuade electors to vote a certain way. Similar to candidates, all third party advertisers registered in the City of Kingston for the 2018 election must file a financial statement (Form 8) detailing the contributions received and expenses incurred during their advertising campaign and an auditor’s report (Form 8) if their campaign contributions or expenses total more than $10,000. If a candidate’s or third party advertiser’s campaign has a deficit and their respective campaign period is extended in order to raise additional contributions, they must submit a supplementary financial statement and auditor’s report (Form 5).

An elector who is entitled to vote in the municipal election may apply for a compliance audit of the candidate’s or third party advertiser’s campaign finances. In addition, recent changes to the Municipal Elections Act, 1996 now require the City Clerk to review the contributions made to a candidate’s or third party advertiser’s campaign. The Clerk must forward a report to the Compliance Audit Committee identifying any contributor whose contributions appear to exceed the maximum contribution limits prescribed by the Municipal Elections Act, 1996, as amended, and the amount of the excess contributions.

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Duties of the Kingston Election Compliance Audit Committee (2018 – 2022) The Kingston Election Compliance Audit Committee (the Committee) will have the following duties: • Consider a compliance audit application received from an eligible elector and decide whether it should be granted or rejected; • If the application is granted, appoint an auditor to conduct a compliance audit of the candidate’s or registered third party’s campaign finances; • Receive and consider the auditor’s report; • After considering the auditor’s report, the Committee may:  Commence legal proceedings against the candidate or registered third party if the report concludes that the candidate or registered third party appears to have contravened the Municipal Elections Act, 1996 in respect of election campaign finances;  Make a finding as to whether there were reasonable grounds for the application if the report concludes that the candidate or registered third party does not appear to have contravened any of the election campaign finance rules. Based on this finding, the Committee can recommend to Council or the local board whether or not to pursue the recovery of the auditor’s costs from the applicant; and • Consider a report from the City Clerk with respect to a contributor who appears to have exceeded the contribution limits to a candidate’s or a third party advertiser’s campaign. It is noted that the Committee would not have any authority to set penalties. Only the Court can decide if a candidate, third party advertiser or contributor contravened the Act and, if so, which penalties should apply.

Compliance Audits (a) Elector Application for Compliance Audit of a Candidate’s Financial Statement An eligible elector who believes on reasonable grounds that a candidate or registered third party has contravened the provisions of the Municipal Elections Act, 1996 in respect of election campaign finances may apply for a compliance audit of the candidate’s or registered third party’s election campaign finances. The application must be made on the prescribed form and must clearly outline the reasons for the elector’s belief that there was a contravention of the Act. The application must be filed with the City Clerk or the secretary of the local board, as the case may be, within ninety (90) days after the prescribed timelines for the submission of candidate and third party advertiser financial statements and auditor’s reports. There is no fee associated with the application process for a compliance audit.

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Elector Application Process • Within ten (10) days after receipt, the application for a compliance audit is forwarded by the Clerk or the secretary of the local board to the Kingston Election Compliance Audit Committee (the Committee). • The meeting(s) of the Committee shall be open to the public and reasonable notice of the meeting(s) shall be given to the candidate or registered third party, the Clerk or secretary of the local board, the applicant and the public. • Within thirty (30) days after receipt, the Committee holds a meeting to consider the application and decides if it should be granted or rejected. • The Committee’s decision to grant or reject the application, and brief reasons for the decision, shall be given to the candidate or registered third party, the City Clerk or secretary of the local board, and the applicant.  The decision of the Committee may be appealed to the Superior Court of Justice within fifteen (15) days after the decision is made and the Court may make any decision the Committee could have made. • If the application is granted, the Committee appoints an auditor to conduct the compliance audit of the candidate’s or registered third party’s election campaign finances. • The purpose of the compliance audit is to determine whether or not there has been a contravention of the provisions of the Municipal Elections Act related to election campaign finances. • The auditor prepares a report that outlines any apparent contravention of the Act by the candidate or registered third party. • The auditor submits the report to the following: the candidate or registered third party; the City Clerk or the secretary of the local board, if applicable; and, the applicant. • Within ten (10) days after receiving the auditor’s report, the Clerk or secretary of the local board submits the report to the Committee. • The Committee holds a meeting to consider the auditor’s report within thirty (30) days after receipt and if the report concludes that there was a contravention of the Act relating to election campaign finances, the Committee decides whether to commence a legal proceeding against the candidate or registered third party for the apparent contravention. • The Committee’s decision (with brief reasons) with respect to commencing legal proceedings shall be given to: the candidate or registered third party; the City Clerk or the secretary of the local board, if applicable; and, the applicant.

What if the Auditor’s Report finds that there was No Apparent Contravention of the Act? If the auditor’s report indicates that there was no apparent contravention of the Act and the Committee finds that there were no reasonable grounds for the application, the Council or local board is entitled to recover the auditor’s costs from the applicant.

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(b) City Clerk’s Reports – Contributions to a Candidate or Third Party Advertiser The Municipal Elections Act, 1996 (the Act) now requires the City Clerk to review the contributions reported on the financial statements of candidates and third party advertisers in order to determine if any contributor appears to have exceeded the prescribed contribution limits. The Clerk must prepare a separate report for each contributor who appears to have exceeded a contribution limit. In the case of a candidate for municipal Council or a third party advertiser, the Clerk must submit the report to the Committee. In the case of a candidate for School Board Trustee, the Clerk submits the report to the secretary of the local board. Within ten (10) days after receiving the report, the secretary of the local board must submit the report to the Committee. • Within thirty (30) days after receipt, the Committee holds a meeting to consider the Clerk’s report and decides whether to commence a legal proceeding against the contributor for the apparent contravention. • The meeting(s) of the Committee shall be open to the public and reasonable notice of the meeting(s) shall be given to the contributor, the Clerk or secretary of the local board, the candidate or third party advertiser and the public. • In the case of a contributor to a candidate’s campaign, the Committee’s decision, and brief reasons for the decision, shall be given to the contributor and the City Clerk or secretary of the local board, as the case may be. • In the case of a contributor to a third party advertiser’s campaign, the Committee’s decision, and brief reasons for the decision, shall be given to the contributor and the City Clerk.

Recruitment of Committee Members

The Municipal Elections Act, 1996 (the Act) provides that the Kingston Election Compliance Audit Committee (2018 – 2022) shall be comprised of no fewer than three (3) and not more than seven (7) members. Staff is recommending that the Committee be comprised of three (3) members. In accordance with the provisions of the Act, membership shall NOT include: i. employees or officers of the municipality or local board; ii. members of the Council or local board; iii. any persons who are candidates in the election for which the Committee is established; and iv. any persons who are registered third party advertisers in the municipality in the election for which the Committee is established. Committee members must possess an in depth knowledge of the campaign financing rules of the Act, and previous experience on a committee or board would also be an asset. Due to the technical nature and expertise required of members of the Committee, it is recommended that the City Clerk solicit interest from the following groups:

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a) Accounting and Audit – accountants or auditors with experience in preparing or auditing the financial statements of municipal candidates; and/or; b) Academic – college or university professors with expertise in political science or local government administration; and/or c) Legal; and/or d) Other individuals with knowledge of the campaign financing rules of the Municipal Elections Act, 1996, as amended.

All applications to serve on the Committee will be submitted to the Nominations Advisory Committee for consideration and recommendation to Council. The new Committee must be appointed by September 30, 2018 as prescribed by the Act.

In order to avoid conflict of interest, care must be taken to ensure that any auditors or accountants appointed to the Kingston Election Compliance Audit Committee do not audit or prepare the financial statements of any candidate running for office in the election for which the Committee is established or any third party advertiser registered in the municipality in the election for which the Committee is established. Accordingly, it is staff’s recommendation that any auditor or accountant appointed to the Committee would have to agree in writing to not undertake the audits or preparation of the financial statements of any candidate running in or any third party advertiser registered in the City of Kingston in the 2018 municipal election or any future By-Elections up to 2022. Failure to comply with and/or adhere to this requirement would result in the individual being ineligible or removed from the Committee.

Compensation for Committee Members

The current Committee By-law does not address the issue of compensation for members of the Kingston Election Compliance Audit Committee. Clerks in other Ontario municipalities were polled to determine the compensation levels in place for their Committees. Generally, regional municipalities tended to pay their Committee members a retainer plus a set amount for each meeting attended or a per meeting amount. In some cases, members were also compensated for attending an orientation meeting and mileage costs. Some regional municipalities also partnered with local municipalities to create a joint committee. The compensation rates are summarized as follows:

• York Region (partnered with all local municipalities) - $400 retainer plus $350 per diem (i.e. per meeting) plus mileage; • Region of Peel - $175 per meeting plus mileage; • Region of Muskoka (partnered with lower tier municipalities) - $250 per meeting (including training meeting) plus mileage; • Region of Waterloo (partnered with all local municipalities) - $150 per meeting (including training meeting) with an increase to $175 per meeting being recommended for next term (per meeting cost paid by municipality requiring the Committee’s services);

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• Region of Durham (partnered with some local municipalities and one school board) - $400 retainer plus $350 per meeting plus mileage (training session covered by retainer fee); and • Halton Region (partnered with its four local municipalities) - $80 per meeting – recommending $400 retainer plus $250 per meeting (retainer shared by all five municipalities, per meeting cost paid by municipality requiring the Committee’s services).

Single tier municipalities tended to pay Committee members a set amount for each meeting attended. The per meeting compensation for municipalities ranged from $50 to $350 and are summarized as follows:

• - $50 per meeting; • Windsor - $100 per meeting; • - $175 per meeting (including orientation meeting); • Guelph - $175 per meeting plus mileage (including orientation meeting); and • - $350 per meeting. Toronto indicated they are considering increasing the amount to $500 to be more consistent and competitive with other City and provincial tribunals that operate in Toronto.

In some cases, members were also compensated for attending an orientation meeting. Generally, if there is no Committee meeting, no compensation is paid.

Thunder Bay and Chatham-Kent indicated that they do not compensate their Compliance Audit Committee.

Staff is recommending that the compensation for members of the Kingston Election Compliance Audit Committee (2018 – 2022) be $200 per meeting attended, including any orientation meeting(s) that may be held. There would be no additional compensation for mileage.

Existing Policy/By-Law: Municipal Elections Act, 1996, as amended – Sections 88.33 to 88.37, inclusive By-Law Number 2010-205 - “A By-Law to Define the Mandate and Meeting Procedures for Committees Established by The Corporation of the City of Kingston”

Notice Provisions: Not applicable

Accessibility Considerations: This report is AODA compliant and may be available in alternate formats upon request.

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Financial Considerations: Pursuant to the Municipal Elections Act, 1996 (Section 88.33 (16)), the municipality or local board shall pay the auditor’s costs of performing the compliance audit and (Section 88.37 (7)) Council or the local board shall pay all costs in relation to the Committee’s operation and activities. It is being proposed that Committee members be compensated at a rate of $200 per meeting attended ($600 total cost per meeting if all members attend). The Election budget should be sufficient to cover any auditor’s costs and the compensation paid to Committee members, it being noted that there were no compliance audits requested during the current Council term. If the compliance audit relates to a school board trustee candidate, then the auditor’s costs and per meeting rate would be paid by the respective school board.

Contacts: John Bolognone, City Clerk, 613-546-4291 extension 1247 Other City of Kingston Staff Consulted: Janet Jaynes, Deputy City Clerk George Wallace, Senior Special Projects Manager

Exhibits Attached: Exhibit A Draft By-Law to Amend By-Law Number 2010-205 “A By-Law to Define the Mandate and Meeting Procedures tor Committees Established by The Corporation of the City of Kingston” (To Delete in its entirety Schedule C-6, “Kingston Election Compliance Audit Committee (2014-2018)” and Replace with a new Schedule C-6 “Kingston Election Compliance Audit Committee (2018 - 2022)”.

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By-Law Number 2018-XX

A By-Law to Amend By-Law Number 2010-205 “A By-Law to Define the Mandate and Meeting Procedures for Committees Established by The Corporation of the City of Kingston” (To Delete in its entirety Schedule C-6, “Kingston Election Compliance Audit Committee (2014-2018)” and Replace with a new Schedule C-6 “Kingston Election Compliance Audit Committee (2018 - 2022)”.

Passed: Month date, 2018

That the Council of The Corporation of the City of Kingston hereby enacts as follows:

1. By-Law Number 2010-205 of The Corporation of the City of Kingston entitled, “A By-Law to Define the Mandate and Meeting Procedures for Committees Established by The Corporation of the City of Kingston”, as amended, is hereby further amended as follows:

1.1. That the existing Schedule C-6, “Municipal Election Compliance Audit Committee 2014-2018”, be Repealed and be Replaced with the new Schedule C-6, “Kingston Election Compliance Audit Committee (2018 - 2022)” attached hereto.

2. This By-Law shall come into force and take effect on the date of its passing.

Given All Three Readings and Passed Month date, 2018

John Bolognone City Clerk

Bryan Paterson Mayor

Council Meeting 16 June 26, 2018 90 Exhibit A to Report Number 18-190 Page 2 Schedule C-6 - Legislated Committees

1. Committee Name Kingston Election Compliance Audit Committee (2018 - 2022)

2. Term of Office The Kingston Election Compliance Audit Committee must be established by September 30, 2018 and shall serve for a term that is the same as the term of office of the Council or local board that takes office in 2018 and shall therefore serve in the instance of any By-Election that may take place during that time. The term of office for the individual members of the Committee is the same as the term of the Committee.

3. Committee Mandate The Kingston Election Compliance Audit Committee has the authority provided by Sections 88.33 to 88.37 of the Municipal Elections Act, 1996, as amended, (the Act) to address applications requesting an audit of a candidate’s or a third party advertiser’s election campaign finances and to address reports from the City Clerk requesting a review of contribution’s to a candidate’s or third party advertiser’s campaign. The Committee will be required to: a) hold a meeting to consider elector applications received for a compliance audit relating to election campaign finances and grant or reject such compliance audit requests, with brief written reasons for the Committee’s decision, within thirty (30) days of receipt of the application. The decision shall be provided to the candidate or third party advertiser as the case may be, to the City Clerk or to the secretary of the local board (if applicable), and the applicant; b) where an application is granted, the Committee shall appoint an auditor to conduct a compliance audit; c) hold a meeting to consider the auditor’s report within thirty (30) days after receiving it and: i) if the report concludes that the candidate, or third party advertiser, appears to have contravened a provision of the Act relating to election campaign finances, the Committee shall decide whether to commence a legal proceeding against the candidate or third party advertiser. The decision, and brief written reasons for the Committee’s decision, shall be provided to the candidate or third party advertiser as the case may be, to the City Clerk or to the secretary of the local board (if applicable), and the applicant; ii) if the report concludes that the candidate, or third party advertiser, does not appear to have contravened a provision of the Act relating to election campaign finances, make a finding as to whether there was reasonable grounds for the application;

Council Meeting 16 June 26, 2018 91 Exhibit A to Report Number 18-190 Page 3 d) based on the finding in c) ii) above, the Committee can recommend to Council whether or not to pursue the recovery of the auditor’s costs from the applicant if the Committee finds there were no reasonable grounds for the application; and

e) hold a meeting to consider a report from the City Clerk, within thirty (30) days after receiving it, with respect to a contributor who appears to have exceeded the contribution limits to a candidate’s or a third party advertiser’s campaign and decide whether to commence a legal proceeding against the contributor for an apparent contravention. The decision, and brief written reasons for the Committee’s decision, shall be provided to the contributor and the City Clerk or to the secretary of the local board, as the case may be.

4. Limitation The Committee does not have any authority to set penalties. Only the Court can decide if a candidate, third party advertiser or contributor contravened the provisions of the Act and, if so, which penalties should apply.

5. Committee Membership The Committee will be composed of three (3) members and shall NOT include: i. employees or officers of the municipality or local board; ii. members of the Council or local board; iii. any persons who are candidates in the election for which the Committee is established; and iv. any persons who are registered third parties in the municipality in the election for which the Committee is established. Membership will be drawn from the following groups: a) Accounting and Audit – accountants or auditors with experience in preparing or auditing the financial statements of municipal candidates; and/or; b) Academic – college or university professors with expertise in political science or local government administration; and/or c) Legal; and/or d) Other individuals with knowledge of the campaign financing rules of the Municipal Elections Act, 1996, as amended.

6. Membership Selection The City Clerk will contact individuals from the groups listed above. Members will be selected on the basis of the following: a) a demonstrated knowledge and understanding of municipal election campaign financing rules;

Council Meeting 16 June 26, 2018 92 Exhibit A to Report Number 18-190 Page 4 b) proven analytical and decision-making skills; c) experience working on a committee, task force or similar setting; d) availability and willingness to attend meetings; and e) excellent oral and written communications skills. To avoid a conflict of interest, any auditor or accountant appointed to the Committee must agree in writing to not undertake the audits or preparation of the financial statements of any candidates in the election for which the Committee is established or any third party advertiser registered in the municipality in the election for which the Committee is established. Failure to adhere to this requirement will result in the individual being removed from the Committee. All members of the Committee are subject to the approval of Kingston City Council.

7. Committee Chair The Committee members will select a Chair from amongst its members at its first meeting.

8. Role of City Clerk or Secretary of the Local Board The City Clerk or the Secretary of the Local Board, as the case may be, shall establish administrative practices and procedures for the Committee and shall carry out any other duties required under the Municipal Elections Act, 1996, as amended, to implement the Committee’s decisions.

9. Staffing and Funding Staff from the City Clerk’s Office will provide administrative support to the Committee. The Council or local board, as the case may be, shall pay all costs in relation to the Committee’s operation and activities.

10. Compensation Compensation for members of the Kingston Election Compliance Audit Committee (2018 – 2022) shall be $200.00 per meeting attended, including any orientation meeting(s) that may be held. There shall be no additional compensation for mileage.

11. Committee Meetings All meetings of the Committee will be open to the public and reasonable notice shall be given to the candidate, third party advertiser or contributor, as the case may be the City Clerk and the secretary of the local board (if applicable), the applicant and the public. The City’s website will be used to communicate the meeting notices and agendas to the public.

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