Advisory Opinion 2001-6¹ (June 14, 2001)

SUMMARY

Separate limited liability companies or separate limited partnerships, together with a common managing member or general partner, will be considered a single source pursuant to Rule 1-04(h) for the purposes of calculating contribution limits, unless the specific operating agreement or partnership agreement limits the authority of the managing member or general partner to make such contributions.

 

 

FULL TEXT

Re: Administrative Code §3-703(1)(f); Campaign Finance Board Rule 1-04(h); Advisory Opinion No. 1999-4; Op. No. 2001-6.

The Campaign Finance Board (the “Board”) has received a request for guidance on the following question²:

Pursuant to Board Rule 1-04(h), will separate limited liability companies³ (“LLCs”) controlled by a common managing member or separate limited partnerships (“LPs,” collectively with LLCs, “Limited Liability Entities”) controlled by a common general partner be considered single sources for the purposes of calculating the contribution limits contained in New York City Administrative Code (“Administrative Code”) §3-703(1)(f)?

Rule 1-04(h) provides in pertinent part that a single source includes “any person, persons in combination, or entity who or which establishes, maintains, or controls another entity and every entity so established, maintained, or controlled...” Rule 1-04(h) goes on to provide factors for determining whether one party establishes, maintains, or controls another, including “whether the person or entity makes decisions or establishes policy for the other entity, including determinations of the recipients of its contributions and the purposes of its expenditures...”

The terms of a particular operating agreement or partnership agreement for a Limited Liability Entity that makes specific contributions may vary, and the Board cannot opine as to each particular arrangement without knowing the specifics of a given agreement. However, under common management practices for Limited Liability Entities, the managing member or general partner, as the case may be, not only makes decisions and establishes policies for the Limited Liability Entity it manages, but also controls all non-material transactions conducted by such Limited Liability Entity. Contributions to political candidates would generally be considered non-material transactions.

Consequently, pursuant to Rule 1-04(h), unless a particular operating agreement or partnership agreement does not conform to common management practices, a common managing member or general partner, together with each Limited Liability Entity it controls, will be considered a single source for the purposes of calculating the contribution limits contained in Administrative Code §3-703(1)(f).⁴ It is the obligation of the participant and his or her political committee to determine whether accepting a contribution will violate these contribution limits.

 

NEW YORK CITY
CAMPAIGN FINANCE BOARD

¹MODIFIED AND CODIFIED BY AMENDMENTS TO RULE 1-04(h).

²John Siegal of Proskauer Rose LLP posed this question to the Board in letters dated April 20, 2001 and May 17, 2001.

³Advisory Opinion No. 1999-4 (January 15, 1999) provides that limited liability companies are not subject to the ban on corporate contributions contained in Charter §1052(a)(12).

⁴This advisory opinion does not apply to registered limited liability partnerships established pursuant to Article 8-B of the New York State Partnership Law.

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