NYC Doing Business Limits: Compliance and Enforcement

Most contribution limits are set in relation to an election, an election cycle, or a precise time period (such as a calendar year). In contrast, New York City’s doing business limits revolve around when a person or entity is considered to be “doing business” with the City of New York, a variable time period that varies further according to the category of business dealings. But even that is an over-simplification. The duty to comply with the DB limits is expressly linked to whether the person’s name is entered into the City’s doing business database (DBDB). The law states that a person is considered to have business dealings with the City as of the date the person’s name is entered into the DBDB, or the date the person began doing business with the city, whichever is earlier. But in no case would a person be considered doing business with the city any earlier than 30 days before the person’s name is entered into the DBDB. In other words, you would need to know the date that a person began doing business and the date the person’s name was entered into the DBDB in order to ascertain whether the DB limit was in effect at the time the contribution was accepted. Currently, the DBDB doesn’t list either date; it lists only the person’s name and the date that the DBDB or a categorical component (e.g., lobbyists) was last updated. Another variable is that the DB limits do not take effect for a particular category until 30 days after the Campaign Finance Board (CFB) and the Department of Information Technology and Telecommunications have certified that the DBDB identifies available information regarding executives, owners, and/or senior managers for that category. The CFB is next expected to certify additional DBDB components on Tuesday, July 1. The associated DB limits would therefore not apply before July 31, 2008. The law requires recipient campaigns to inquire of contributors giving more than the DB limit (via the doing business contribution form) whether they have business dealings with the City. The campaigns must keep a record of the responses received and failures to respond, and report whether a contributor has business dealings in the disclosure software they use for generating reports to the CFB.  The first reports for the 2009 election reflecting the DB disclosure requirement must be filed with the CFB on July 15. The law directs the CFB to check the reported contribution against the DBDB, regardless of whether the campaign’s disclosure report identifies that contributor as doing business. Within 20 days of the disclosure report filing (or within three business days, for filings made in the last six weeks of the election), the CFB must notify the campaign of any DB limit violations. If the CFB fails to do so, the contribution is deemed valid and not considered in violation – although it will not be matchable with public funds. When the CFB provides timely notification, the campaign is required to refund the excess within 20 days. A timely refund will avert a finding of violation and penalty. When DB limit violations do occur, public funds payments may not be delayed as a result but may be reduced by the total unreturned contributions in excess of the DB limits.