Post image for City Hall Dodge Ball

City Hall Dodge Ball

by Larry Bush on 03/06/2013

in Paper Trails

San Francisco lobbyists took in $6,055,756 in fees from vendors relying on their help to win contracts worth $372,601,824 in 2012, according to filings at the Ethics Commission.

Lobbyists in turn contributed $111,557 to political campaigns last year, with half that total ($61,920) from the San Francisco Apartment Association. San Francisco is one of the few California jurisdictions that doesn’t prohibit lobbyists from making political contributions to officials who decide the outcome of decisions urged by lobbyists.

The reports, a requirement under city law for more than two decades, is intended to open to public scrutiny the influences brought to bear on city policy makers.

Better than one in three dollars in lobbying payments went to Platnium Advisor’s Chris Gruwell who was paid $2,376,350 from 58 clients. Client payments ranged from a high of $225,000 from Recology to zero from a number of clients who remained on his books.

Marcia Smollens ranked second in client payments with a total of $1,034,000 including $216,000 for the America’s Cup and $150,000 for Waterfront Partners, the main figure for the proposed controversial 8 Washington project.

The top vendor whose City Hall business involved the services of a lobbyist was Webcor, with contracts totaling $152,328,741 in 2012/13. Aecom came in second at $39,359.436.

San Francisco’s parking meters were a profit center for Serco, Inc., with contracts totaling $15,549,451. The company, headquartered in Reston, Virginia, has as its primary business work on national security.

CitiReport’s Data Results

CitiReport created a special report for readers listing all contractors ranked by contract amount, and for each contractor identifying the lobbyist, the fee paid to the lobbyists, and which public officials were contracted on behalf of the client by the lobbyist. That report can be accessed here:

CitiReport created a second special report for readers that lists all lobbyists ranked by their payments and listing their clients and payments from each client. That list can be accessed here:

CitiReport created a third special report for readers that lists all city departments in alphabetical order and the amount of contracts they approved. That list can be accessed here.

CitiReport created a fourth special report for our readers listing in rank order by value the 2012 political contributions by lobbyists showing the recipient and amount by lobbyist.  That list can be accessed here.

Because some contracts are multi-year, the total comes to over $5 billion awarded in 2012 – making City Hall one of the city’s most important sources for business in San Francisco.

The report underscores that nearly one of every two contract dollars came from city departments headed by the husband and wife team of Harlan Kelly (PUC) and Naomi Kelly (City Administrator, aka, General Services). Together they accounted for about $2.5 billion in contracts. Both were appointed this past year by Mayor Ed Lee and both began their careers as promising employees of then-mayor Willie Brown who now plays a behind-the-scenes role.

The picture of City Hall influence-for-pay is far from complete, partly because San Francisco’s Ethics Commission has failed to act to close loopholes even when brought to their attention and partly because the Ethics staff fails to enforce even the current lobbying disclosure laws.

It is the ultimate game of City Hall Dodgeball as policy makers legally benefit politically from contractor payments to nonprofit groups, as nonprofit groups funnel money into favored campaigns without identifying the donors, and – most of all – as San Francisco’s Ethics Commission has failed to act on any major lobbyist in its twenty year existence.

Lobbyists Pursued — elsewhere

The FPPC has put a sharp focus on lobbyist violations in the past year at the state level.

“The FPPC prosecuted 14 lobbyists in 2012 for violations of the California Political Reform Act, up from just one lobbyist prosecuted two years earlier, says the commission’s year-end report. The FPPC also sent 54 warning letters to lobbyists who violated the law in 2012, said the FPPC’s enforcement chief, Gary Winuk,” reported the Sacramento Bee in a February 21 article.Read more here:

In San Francisco lobbyists are required to report the city officials they contact on behalf of paying clients; few actually report their contacts.

Chris Gruwell, the city’s top earner for lobbying activity, reports making no contacts for his clients in literally dozens of cases – including such top clients as Recology, Aecom, and Webcor. Yet those clients obtained contracts worth hundreds of millions of dollars during the period that Gruwell was paid as their lobbyist.

An even more significant “black hole” of lobbyist spending is “activity expenses” which are virtually never reported and where former city officials can be paid for “strategic advice” short of contacting their former employees or colleagues.

The failure to specify who is paid under “activity expenses” now has drawn the attention of the state’s Fair Political Practices Commission that has assigned a working group to take on the issue.

The failure to disclose those expenses has “allowed interest groups to hire former politicians as consultants and launch ad campaigns to push their agenda with virtually no financial disclosure,” wrote the Sacramento Bee in a February 1 article.

The Bee noted that the unreported expenses can pay for “hiring former legislators not formally registered as lobbyists to pull strings inside the Capitol.” The paper named “former Assembly Speaker Willie Brown” as among those with no disclosure.Read more here.

San Francisco’s Ethics Commission crafted a “wild west” provision where anything goes — and goes unreported — when it eliminated the lobbying category of “expenditure lobbyists” who may not directly lobby but spend money seeking to influence the city’s administrative and legislative decisions. The former “expenditure lobbyists” were required to report how much they spent and how they spent it. Under the “amended” city lobbying law crafted by Ethics and later passed by the Board, there are no longer any reports and it has become San Francisco’s biggest black hole. Consider as just one example the spending by opponents to the Clean Energy program for television ads and mailers designed to overturn the city’s contract with Shell and paid for by utility company union workers.

Next week the Fair Political Practices Commission will be recognized by the Society of Professional Journalists with a James Madison award for its efforts to open records to public scrutiny.

San Francisco’s definition of lobbyist opened a new loophole when the city’s Ethics Commission won Board approval for a rewrite that changed the threshold of when an entity qualified as lobbying.

A notable result is that the San Francisco Chamber of Commerce no longer has to disclose its efforts to influence city policy and rewrite city laws or how much it spends on that effort.

This month the Chamber announced its proposed agenda for City Hall action, none of which it will have to disclose in terms of who they contact or what is spent to galvanize public support for their goals as the current law now is written.

One San Francisco law designed to curb the influence of money on elected officials and candidates bans contributions from city contractors.

Mayor Lee Circumvents Law

This year Mayor Lee drove a Brinks Truck loaded with contractor funds through that prohibition by establishing a “General Purpose” committee to support ballot and other measures that he wanted.

The ban applies only to committees that are established by candidates for their own election and leaves open the ability of a candidate to create a committee for other purposes not specifically intended to support him or herself. Mayor Lee appears to be the first city official to exploit this loophole.

In early 2012, Lee established the Mayor Ed Lee Committee for San Francisco that ultimately raised over $400,000, nearly all coming from those seeking his approval for their policies or projects.

The first check came on May 11 from Ron Conway for $25,000 three weeks after Lee announcing appointing Conway to a task force to rewrite the city tax laws to benefit companies owned by Conway.

Just over two months later Lee announced his support for the new tax law that implemented Conway’s agenda.

Others who contributed to Lee’s committee included Lennar with $35,000, Committee on Jobs for $30,000, Aliphon for $25,000, San Francisco Association of Realtors for $20,000, and BOMA for $10,000.

Lee spent the money helping to pass the ballot measure for the tax rewrite as well as for a parks bond and other city measures.

While some Supervisors established committees for their campaign for the Democratic County Central Committee and accepted contributions from city contractors as well as contributions in excess of the $500 limit, those committees are a different legal creature operating under state not local law. Those funds can be used for the election of the official and spent on behalf of other campaigns but state law may set a cap on what percentage can be spent for other campaigns. After the cap is reached, it appears that these state committees would have to refile as “general purpose” committees.

If Lee succeeds with his circumvention of the law, it will open the door for every city official to follow suit and effectively destroy San Francisco’s laws aiming at preventing pay-to-play politics.

The success of some groups in covering their contributors has drawn a strong reaction from the state Fair Political Practices Commission that sued in court to force the books to open.

Parks Alliance “Dark Money”

San Francisco saw the equivalent in the November parks bond measure as money flowed through the Parks Alliance into the bond campaign without disclosing the Parks Alliance donors.

Moreover, the Parks Alliance so far has failed to file reports for the most critical portion of the campaign season, including a year-end report of its spending.

“Even a brief review of the 2012 reports filed by Parks Alliance, as provided on the SF Ethics Commission website, readily shows that they have committed multiple reporting violations and are liable for many thousands of dollars in fines,” former Ethics fines officer Oliver Luby told CitiReport.

“None of their reporting for the June 2012 election was electronically filed, in violation of the law.  Their reporting of independent spending against the spring Coit Tower ballot measure is incomplete, omitting even the basic information of who they paid for television ads, in violation of the law.  Their August spending for ballot arguments in support of the November Parks Bond measure triggered disclosure obligations for the remainder of 2012, even if they spent no further funds on the election after August, yet they submitted no reporting regarding what they did during the period of October to December, in violation of the law,” observed Luby in a review of the group’s filings.

“Moreover, the incomplete independent spending disclosures submitted by the Parks Alliance state that they received thousands of dollars in contributions, including large contributions from political committees, which conflicts with the fact that most of their reporting was structured in way that tells the public that they had no campaign contributors to disclose,” continued Luby. “Their incomplete contribution reporting strongly suggests that they should have formed a recipient committee and completely disclosed contributors, vendors, sub-vendors, and their ongoing cash balance.”

“If you factor in the years of other large donations to them disclosed by Behest reports filed by elected officials, they present a compelling case for needing to be investigated and audited” said Luby.

Luby noted that the Ethics Commission itself may be at fault for failing to review the filings.

“The main campaign filing delinquency review that the SF Ethics Commission regularly conducts applies only to candidates and recipient committees, not to entities like the Parks Alliance, nor for critically important independent expenditure reporting.  When I was on the Ethics Commission staff, I pointed out those omissions to Ethics management and subsequently administered specialized canvasses for each election to ensure that independent spending and groups like the Parks Alliance were properly reporting based on the information made available to the agency.  After I left in June of 2010, my guess is that Ethics discontinued the specialized canvasses and no longer police when groups like Parks fail to file, except when citizens do the legwork and file complaints, maybe,” said Luby.

The Ethics Commission staff told CitiReport that they would contact the Parks Alliance and remind them that they need to file.

Behested Payments Raise Flag

The disclosure of payments made at the behest of city officials to nonprofits raises further questions on whether the Parks Alliance became a funnel for contributions that could count as a tax write-off, something that is not permitted for direct political contributions.

Virtually all the “behested payments” made last year at the request of city officials went to the Parks Alliance, including $100,000 from Zynga weeks before the November election – a period that the Parks Alliance has yet to disclose. Zynga was appointed by Mayor Lee to work on the rewrite of the city’s tax law that ended up benefitting social media companies.

Such contributions are legal and a regular feature in state and city life. When the contributions come from businesses seeking City Hall approvals for their plans, however, their filing in a relatively obscure part of the Ethics web page makes it difficult for the public to gain the transparency that is promised.

Currently Mayor Lee has said he is making calls for contributions to close the gap in funding for the America’s Cup, with payments going to the nonprofit established to channel those funds. To date he has not filed any reports of contributions to that effort made at his behest. The filings are required monthly.

During this same period, Lee can expect that the expenses for his upcoming trips to China and later for his trip to Paris to celebrate Willie Brown’s 80th birthday will be picked up by lobbyists and contractors, operating through the Sister City nonprofit that also does not report donors.

Leave a Comment

Previous post:

Next post: