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News + PoliticsEthics Commission tries to figure out nonprofit lobbying --...

Ethics Commission tries to figure out nonprofit lobbying — and pushes steep Farrell fine

Supervisor refuses to pay $190K. Nonprofits worry about getting caught in corporate lobbying net

The San Francisco Ethics Commission took on two fascinating items tonight involving campaign finance and lobbying.

Sup. Mark Farrell disputes a $190,000 forfeiture for campaign finance violations
Sup. Mark Farrell disputes a $190,000 forfeiture for campaign finance violations

Sup. Mark Farrell is refusing to pay $190,000 that the that commission says he has to forfeit from 2010 campaign finance irregularities. And a series of controversial draft regulations stemming from the passage of Prop. C last November were up for discussion.

The regulations on Prop. C, which is aimed at astroturf lobbying, could wind up creating a nightmare for small community-based nonprofits.

Farrell’s obligation is the result of a decision by the state’s Fair Political Practices Commission that a campaign consultant working for the Farrell for Supervisor campaign coordinated illegally with a supposedly independent expenditure committee.

The IE, called Common Sense Voters, spent $43,000 supporting Farrell and $148,000 attacking his main rival, Janet Reilly. Much of that money came from real-estate investor Thomas Coates, who has made a career out of trying to block rent control in California.


After Farrell narrowly won the election, Reilly complained to the FPPC, which concluded that Farrell’s campaign manager, Chris Lee, helped set up the IE and worked with its staff on strategy.

That’s a serious problem in San Francisco: This city limits individual contributions to $500 each, and Coates gave $140,000.

Under city law, if a campaign committee improperly coordinates with an IE, that IE immediately becomes a candidate committee, and the $500 limits apply. Any amount above those limits has to be forfeited to the city.

Since pretty much all of the money that went in to the Farrell IE (around $192,000) came in chunks of more than $500, most of that money would have to be given back to the city.

Of course, the IE is essentially gone now, and has no money. The FPPC fined Chris Lee $14,500, but said that none of the improper coordination was Farrell’s fault.

That may be true under state law, but under city law, a candidate is responsible for a campaign committee – and since the FPPC ruled that the IE was, in fact, a coordinated committee, the Ethics Commission says Farrell is personally responsible.

Farrell has consistently refused to pay, and Ethics referred the matter to the City Treasurer’s Bureau of Delinquent Revenue – essentially, the local bill collector

Now it’s back to Ethics because Farrell’s lawyer, Jim Sutton, has written to the treasurer saying, in essence, this bill is bogus and there’s no way we’re going to pay.

Sutton argues two basic points, and one is that the FPPC cleared Farrell. “The amount the city demands that Farrell forfeit was never received or spent by him or his 2010 campaign committee,” the letter states. “After an extensive investigation spanning over three years …. [the FPPC completely exonerated Supervisor Farrell and the Farrell committee of any wrongdoing.”

No dispute there – but city law still could hold him responsible.

The improper use of IEs, and illegal coordination, is a big deal, happens way too often, and in this case, could have made the difference in a very close election. Ethics has been long accused of waiting until an election is long over before pursuing (by then meaningless) small fines and penalties. This one would send a very strong message.

The other is more technical, and has to do with the Statute of Limitations, and whether Ethics waited too long to file the charges in this case. That’s for the lawyers to sort out. But the commission shows no signs of backing down.

The panel voted last summer 5-0 to approve the forfeiture. Tonight, the issue was whether the commission was willing to discuss the matter further.

Commissioner Peter Keane made it very clear that he had no interest in reconsidering the issue. “These arguments have been made, and in effect he is asking for a new trial, and I think this should be off the calendar. … I see no reason to go into closed session. We have already told them how to proceed. I think we should tell [the treasurer] to collect the debt.”

As Larry Bush of Friends of Ethics noted, the city treasurer doesn’t normally come back to departments to ask if a debt should be pursued.

Keane moved to reject the whole request and send it back to the Treasurer. That went down 4-1. Then he asked to continue the item to another day; that lost 3-2 as the board voted to meet secretly. And after that closed session, Chair Paul Renne said that he and his colleagues had agreed to tell the treasurer to pursue the claim.



Then there are the Prop. C regs.

The measure was designed to tighten up the rules around what are called “expenditure lobbyists” – organizations that spend money to get others to contact City Hall around administrative or political issues.

A classic example: Airbnb spends money organizing its hosts to testify against stricter rules on short-term rentals. When the company hires a professional lobbyist to meet with and try to influence the mayor or the supervisors, that person has to register with Ethics and file disclosure documents. But the money spent to create real, or in some cases, bogus, grassroots-appearing activity remains secret.

Fair enough, and Prop. C passed overwhelmingly. But a lot of small nonprofits and labor groups are seriously concerned about the way it could be implemented.

The regs would apply not just to Airbnb but to a wide range of labor and community groups, who say it would be expensive and time-consuming to comply – especially since almost anything that some groups do would be considered “expenditure lobbying.”

It’s a challenge: How do you force astroturf lobbing out of the shadows, without in the process making it harder for legit community groups do advocacy work? Is there a difference between corporations that are trying to hide what they are doing – and community advocacy and labor groups that are very open about who they are and what they are doing?

When labor union members come to City Hall to lobby on an issue, there’s no secret about who’s really behind that effort. Is that different from Airbnb’s hidden spending?

I spoke today to LeeAnn Pelham, the new (and very highly regarded) executive director of the Ethics Commission, who already seems a vast improvement over her predecessor. She was happy to talk and very open about the challenges the commission faces.

My understanding of the rules, I said, is this:

“Expenditure lobbying” that needs to be reported by a nonprofit or labor group would include all staff time devoted to any activity that might encourage others to engage in legislative or administrative activity in the next 12 months. I asked her: Did I get it wrong?

No, Pelham said. That’s what the new draft rules would say.

Would that include, for example, the Hotel Workers Union researching the hotel industry, which they do all the time, if that research might be used in the next year to, say, get the members out on an Airbnb issue?,

It might, Pelham said. “That’s a decision point for the Commission. The key thing is that the regulations are treating expenditure lobbyists akin to contract lobbyists, and the question is where do those things make sense.”

At the meeting, a number of commissioners pointed out problems. “This strikes me as an incredible burden for nonprofits,” Commissioner Ben Hur said. “My main concern [when Ethics put this on the ballot] was these [big corporate] campaigns paying people to show up for a meeting.”

Commissioner Brent Andrews said “it feels as if we are shooting every chicken in the coop to get one chicken that’s good to eat. This will have unintended consequences.”

Debbi Lehrman, who runs the Human Services Network, warned that an organization could be doing research that “not in our wildest dreams did we think would be about lobbying” but later becomes relevant to some political effort, “you could find yourself having to register.”

Gen Fujioka, an attorney and policy director at the Chinatown Community Development Center, noted that his organization does research all the time. “We have no idea if this will turn into legislation later, because that legislation doesn’t exist.” So does that have to be disclosed, or not?

Bruce Wolfe, a longtime community activist, noted that Prop. C was aimed at corporate front groups. “The nonprofit groups here tonight are not front groups with nefarious motives,” he said.

The proposed regs only came out last Friday. So a lot of speakers asked the commission to hold off for a while to let nonprofits and labor groups have some time to figure this all out.

Ethics Chair Paul Renne said he had no intention of adopting regulations until the Feb. 22 meeting. So the matter is put off for the moment.


During the budget discussion, Commissioner Peter Keane made a critical point. “San Francisco has demonstrated over the past 20 years a widespread system of soft corruption.” If the mayor really is serious about fighting that, Keane said, he ought to fully fund Ethics.

Full disclosure: Gen Fujioka is on the board of the San Francisco Progressive Media Center, which publishes 48hills.

48 Hills welcomes comments in the form of letters to the editor, which you can submit here. We also invite you to join the conversation on our FacebookTwitter, and Instagram

Tim Redmond
Tim Redmond
Tim Redmond has been a political and investigative reporter in San Francisco for more than 30 years. He spent much of that time as executive editor of the Bay Guardian. He is the founder of 48hills.

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