Below is the full email from Councilman Doug Emerson responding to a Free Lance inquiry:
Hi Kollin,
I appreciate your email. There was terrible traffic getting home from Oxnard tonight, but I had intended to email you regardless.
I have to admit that, frequently, I say and do things too quick and without thinking them through. After we talked, I realized that all of the reimbursements for Linda’s expenses are gifts. So, this may be lengthy, but I want to give you the complete history of what happened with this trip and my filing of the form 700.
As I said, I received a phone call from Claude Legaspi, probably during the latter part of May or early June. Claude said that a company called Clean Focus would be going on an EB5 recruiting trip to Bejing and asked if I would be interested in being part of their presentation. He gave some information about EB5 and I said that if I was interested he would have a friend or acquaintance contact me with more information. I said I would discuss it with my wife and get back to him. I contacted Claude about a week later and told him to, at least, have his contact get in touch with me.
I was then contacted by Matt Coleman, one of the 4 principals at Clean Focus, who outlined the trip to me. He also gave background on Clean Focus, a company of which I knew nothing about.
Matt explained that Clean Focus was a relatively new company but had done a number of solar projects in the United States but none in California. Clean Focus either had contracts for, or was on the verge of completing, 3 contracts in California (I can’t remember which). One contract was in the San Diego area, one in Sacramento and I can’t recall where the third was. Two were power purchase agreements with public agencies and the third was for a revenue generating plant something like our discussions with Clear Spot. Clean Focus was in the process of assembling investors for the projects and were looking at EB5 as a source of investment. It should be noted that, except for Matt Coleman, the other 3 principals in Clean Focus are all Chinese and have dual offices in China and the Bay area. There hope was to recruit a minimal of 5 and hopefully 10 EB5 investors at the China seminar.
In their planning for the Bejing seminar, they decided it would be very beneficial to have someone speak from the customer or “offtake” point of view regarding power purchase agreements. As they had never done a project in California they had no sources for that aspect. Whether Matt was aware of our project, our Claude told him about our project, I don’t know but, regardless, it was suggested that I might be a person familiar with governmental power purchase agreements and could speak intelligently about the “purchaser” side
Matt and I reached an agreement that basically said, I would particpate in the seminar and Clean Focus would reimburse me for plane fare and VISA expense for my wife and I, 3 nights hotel lodging at their hotel, taxi fare to and from the airport and a per diem. In turn I would give a 30 minute presentation on Hollister’s part of a power purchase agreement for the plant at our wastewater treatment plant.
I also agreed to be present at a meeting in Bejing the day before the seminar to go over strategy and final planning. Originally, Clean Focus proposed 2 nights lodging and 2 days per diem. I explained that to fly to Bejing, do the pre seminar planning, the seminar and then fly home was reiduclous. We agreed on the three nights and three days per diem.
While I may have given the impression that it was a simple, go to bejing, talk for 13 minutes, come home, it was not as simple as that. Prior to the trip, I spent considerable time with Matt trying to come up with a presentation that was accurate for the Hollister contract and beneficial to Clean Focus. At the strategy meeting before the seminar, it was pretty clear that Clean Focus needed to get a minimum of 5 investors on board. there was a high degree of stress and anticipation.
At the seminar, 3 people spoke, the CEO of Clean Focus, myself and Matt Coleman. After the 1 1/2 hour presentation, we remained for about 1 1/2 hour for questions. I actually enjoyed the presentation and the questions because it gave me an opportunity to talk about San Benito County – and there were a lot of questions about Holister and our community. After the questions, I remained for about 2 hours while the principals of Clean Focus tlaked with potential recruits.
I do not know the exact result of the seminar, but I believe Clean Focus recruited 12 – 14 investors at that seminar. They indicated to me that a large part of their success was due to my speaking about a small community in California which is ideal for solar.
I heard little from Clean Focus after the trip other than a call from Matt indicating that a number of investors were in California and would like to see our solar project. I met 8-10 of them at our waste water treatment plant probably in October and we had a good chat.
So – getting back to the reporting. Here is my understanding of the FPPC requirements (and I may be wrong). Whether the $4,600 is considered a gift or reimbursement, or travel expense,it is clearly over any limit and must be report. That is why I reported it on my 700 form. I reported it as income and expense reimbursement. The expense reimbursement might be wrong and the income might be wrong, but I chose to report the entire $4,600 becuae I am legally obligated to do so. So, I believe, and what I was advised by City staff, there has been no FPPC violation. I was required to report the amount and I did.
The other aspects of reporting gifts or other things of value is the responsiblity of the offical to recuse themself from any action regarding the contributor for a year prior to or after the gift (or whatever). In this case,I find nothing in the regulations that preclude me from accepting the offer from Clean Focus so I accpeted. If you are aware of something to the contracry please let me know and I will refund and amounts that are illegal and withdraw from the Mayorial race. Clean Focus has never applied for any contract with the City – nor is there any indication that this will occur in the future. I believe you talked to Clint who probably said he had never heard of Clean Focus. Also there is absolutely no business connection between Clean Focus and Clear Spot – the only connection is either a friendship or acquantience between Claude and Matt Coleman. I also know that you talked to Gary Banta who verified that he has never heard of Clean Focus.
As a last note, I am again going to refer to my frustration in this whole thing. The City of Hollister faces enormous challenges in the next few years. I am sure that this issue was raised by Marty and I find myself having to demand past actions rather than focusing on what the hell we are going to do to survive something no ne has ever seen before (but I Do have some ideas).
So, the end result – yes I got a trip to Bejing which was part gift and part expense reimbursalbe. Clean Focus secured 6-7 million dollars in foreign investement in projects that will creat US jobs.
Doug Emerson
Hollister City Council Member
District 4
(831) 637 – 8399
375 Fifth Street
Hollister CA 95023
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From: Kollin Kosmicki
To: Douglas Emerson <(redacted) Sent: Sun, July 22, 2012 1:39:10 PM Subject: Examination of FPPC rules Hi Doug, I was hoping for further thoughts on the FPPC travel regulations. Taking a closer look at the law – the FPPC said pages 10 and 11 are the relevant provisions to examine for a case like yours – it becomes evident that the $4,650 reimbursement does not meet the requirements for "travel payments," as outlined in the FPPC rules. Therefore, the gift limit would be $420 and would have been exceeded. http://www.fppc.ca.gov/factsheets/LocalGiftFactSheet2012.pdf Under "Exceptions," it states admission to an event for a speech, transportation, lodging, food, beverages and nominal non-cash benefits are not subject to the limit or reportable "so long as:: a. The speech is for official agency business and the official is representing his or her government agency in the course and scope of his or her official duties; and b. The payment is a lawful expenditure made only by a federal, state, or local government agency for purposes related to conducting that agency’s official business. The exception does not apply to state or local elected officers and officials specified in Section 87200. Neither of those apply, being it was not official agency business or paid for by the city. Under "Reportable Payments Not Subject to Limit," it states that the following travel payments are not subject to the gift limit but may be reportable on a Form 700: Travel that is reasonably necessary in connection with a bona fide business, trade, or profession, and which satisfies the criteria for federal income tax deductions for business expenses specified in Sections 162 and 274 of the Internal Revenue Code. It is my understanding you do not have a connection with a bona fide business – or trade or profession – related to the solar industry. Therefore it would not apply, unless I am unaware of a connection. Additionally, it appears that your wife's portion of the reimbursement would fall under "gifts" and would have exceeded the $420 limit. If you have time to respond, I would appreciate it. I want to give you every opportunity to respond and let me know your perspective on the rules. You can reach me by cell anytime or respond by email. I figured it was best to explain this part in writing.
