Ethics and Campaign Financing: A guide for persons or business entities that have or seek contracts with the City of Chicago

Chicago’s Governmental Ethics and Campaign Financing Ordinances (Chapters 2-156 and 2-164 of Chicago’s Municipal Code, respectively) impose restrictions on the interactions of persons and business entities who are City contractors or vendors (or who seek City contracts) with City employees or officials. This brochure summarizes these restrictions.

Note: This publication contains only an overview intended to help persons or businesses that have or seek City contracts to develop a basic understanding of their responsibilities under these Ordinances. To the extent this summary differs from the language of the Ordinances, the language of the Ordinances controls. For authoritative guidance about specific situations, please consult with the Board of Ethics. The Board maintains the confidentiality requirements of the Ordinances.

Other City and state laws and policies apply to persons or business entities that have or seek contracts with the City of Chicago, including but not limited to the requirement to file Economic Disclosure Statements, the City’s False Claims and Statements Ordinance (Chapter 1-21-010 et seq. of Chicago’s Municipal Code), and Illinois Procurement Code. For more information, please contact the City’s Departments of Law or Procurement Services. The provisions of the Governmental Ethics Ordinance do not limit the power of any other City agency to adopt more restrictive rules.

Gifts and Favors:

No person (or business entity) or lobbyist shall:

give any anonymous gift to any City official, employee or candidate for elected City office (or to their spouse, domestic partner, minor child or other immediate family member living in the same residence)
give or offer to give anything of value to any City official, employee, contractor (or to their spouse, domestic partner, minor child or other immediate family member living in the same residence) based on a mutual understanding, either implicit or explicit, that the votes, official actions, decisions or judgments of the City official, employee or contractor concerning City business would be influenced by the offer or gift
give or offer to give anything of value to a candidate for City elected office (or to the candidate’s spouse, domestic partner, or minor child), if based on a mutual understanding, either implicit or explicit, that the candidate’s votes, official actions, decisions or judgments as an elected City official would be influenced by the offer or gift.

Note: any City department or agency may adopt rules that are stricter than these, such as a gift ban for its personnel. And,

No person (or business entity) with an economic interest** in a specific City business, service or regulatory transaction, or their lobbyist(s), shall:

give any gift of cash or its equivalent, regardless of value, to any City official or employee in a position to affect that business, service or transaction (or to the official’s or employee’s spouse, domestic partner, minor child or immediate family member living in the same residence)
give any single item or service worth $50 or more directly or indirectly to any City official or employee in a position to affect that business, service or transaction (or to the official’s or employee’s spouse, domestic partner, minor child or other immediate family member living in the same residence); NOTE: there is a $100 limit per calendar year on the value of gifts to any such City official or employee or spouse, etc.

No subcontractor, or any person acting on a subcontractor’s behalf, shall:

make any payment, gratuity or offer of employment in connection with any City contract, to a prime contractor or higher-tier subcontractor or any associated person, as an inducement for the award of a subcontract or order (this prohibition is in every City contract and solicitation thereof).

Loans to City employees and officials

No City elected official or employee (or their spouse or domestic partner), or any entity in which the official or employee (or spouse or domestic partner) has a financial interest**, shall apply for, solicit, accept or receive a loan in any amount from any person doing business** or seeking to do business** with the City; this does not prohibit application or solicitation for, or acceptance or receipt of, market rate loans from a financial lending institution, if negotiated at arm’s length and made in the ordinary course of the lender’s business.

Persons with a business relationship** with an elected official

No elected official or head of any City department or agency shall retain or hire as a City contractor any person with whom any elected official has a business relationship**.

Hiring or retaining current or former City personnel

A former City employee or official may not, for one year after leaving City service, assist or represent any person–like a new employer or client–on a transaction involving the City if he or she was personally and substantially involved in the subject matter of that transaction;.
A former employee or official who exercised contract management authority** on a City contract may not assist or represent any person–like a new employer or client–on that contract;
A former employee or official who was personally and substantially involved in a judicial or quasi-judicial proceeding involving the City may not assist or represent any person other than the City–like a new employer or client–in that proceeding;
A former Mayoral staff member or department head may not lobby the City for 2 years after leaving City service; a former Shakman-exempt employee in the executive branch may not lobby his or her former department for 2 years after leaving City service;
A current City official or employee (or their spouse, domestic partner or minor child) cannot solicit or accept anything of value (including but not limited to money, gifts, favors, services, or promises of future employment) in return for advice or assistance on matters concerning City business;
A current City employee or elected official cannot (except for certain designated housing assistance programs) have a financial interest** in his or her own name or in the name of another in any City contract, work or business, or in the sale of any article, if the expense, price or consideration of the contract, work, business or sale is paid with funds belonging to or administered by the City, or is authorized by ordinance.

Retaining Lobbyists

A lobbyist is any individual who, on behalf of any person other than her- or himself, or as any part of her or his duties as an another’s employee, undertakes to influence any legislative** or administrative action**, such as, for example: i) the preparation of contract specifications; ii) the solicitation, award or administration of a contract; iii) the award or administration of a grant, loan, or other agreement involving the disbursement of public monies; or iv) any other determination made by an elected or appointed City official or employee of the City with respect to the procurement of goods, services or construction.

Each lobbyist must register with the Board of Ethics by filing a sworn lobbyist registration statement no later than January 20th of each year, or within five business days of engaging in lobbying activities. The annual fees are $350 per individual lobbying and $75 for each client after the first. Each lobbyist must also complete an annual ethics training program designed and administered by the Board.

Individuals who fail to register as lobbyists as required are subject to fines of $1,000 per day. Persons who retain or employ lobbyists who have failed to register as required are subject to fines of $2,000 per day for each day the non-registered lobbyist undertakes to influence legislative** or administrative** action. Any contract entered into, negotiated or performed with any person who has retained or employed a lobbyist who has failed to register as required is voidable as to the City

Political contributions

Anonymous contributions prohibited:

No person shall give or offer to give an anonymous contribution to :

any candidate for elected office of City government
the candidate’s spouse, domestic partner or minor child
the candidate’s committees, or
any person acting on behalf of the candidate or his/her committees

Pseudonymous contributions prohibited:

No person shall make or offer to make any contribution other than in the name of the true donor to:

any candidate for elected office of City government
the candidate’s committees, or
any person acting on behalf of the candidate or his/her committees

Limitations on contributions

No person shall make any cash contribution to any candidate in an amount over $250.
Certain persons may not contribute more than $1500 in a reporting year (a reporting year is from July 1 through June 30) to any elected City official, or to any candidate for elected City office, or to any City employee or official seeking election to any other office.

These persons are:

lobbyists registered with the Board of Ethics; or
persons who have done business** with the City or any of its sister agencies within the preceding four reporting years; or
persons seeking to do business^ with the City or any of its sister agencies

Contributions to a candidate’s authorized political committees are considered contributions to the candidate.

An entity and its subsidiaries, parent company or otherwise affiliated companies, and any of their employees, officers, directors and partners who make a political contribution for which they are reimbursed by the entity or its affiliates are considered a single person for purposes of these contribution limitations.

Note: by Mayoral Executive Order, City contractors and subcontractors and their owners and registered lobbyists are prohibited from making political contributions to the Mayor or his political fundraising committee. Executive Orders 2011-2; -4.

Additional restrictions on contributions are imposed by state law, namely the Illinois Election Code, as amended. Consultation with qualified counsel is recommended.

Compliance and Penalties

All City contracts shall include a provision requiring compliance with the Governmental Ethics Ordinance. Any contract negotiated, entered into, or performed in violation of any of the provisions of that Ordinance shall be voidable as to the City, including any contract entered into with any person who has retained or employed a non-registered lobbyist for the purpose of negotiating, soliciting or otherwise seeking the contract. Any permit, license, ruling, determination or official action of a City agency applied for or in any other manner sought, obtained or undertaken in violation of that Ordinance shall be invalid and without any force or effect whatsoever. Violators may also be subject to judicial penalties or recommendations for corrective action.

** Definitions of terms in this brochure marked with an asterisk can be found in the Governmental Ethics Ordinance (Chapter 2-156 of the Municipal Code of Chicago)..

^ For purposes of these limitations, “seeking to do business” means: 1) taking any action within the past six months to obtain a contract or business from the City when, if the action were successful, it would result in the person doing business with the City, and the contract or business sought has not been awarded to any person; or 2) any matter that was pending before the City Council or any Council committee in the 6 months prior to the date of contribution if the matter involved the award of loan funds, grant funds or bond proceeds, bond inducement ordinances, leases, land sales, zoning matters, the creation of a tax increment financing district, concession agreements, or the establishment of a Class 6(b) Cook County property tax classification