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SF’s political watchdog agency proposes sweeping reforms, nonprofits cry foul

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Two men watch crowds below from the fourth floor of San Francisco City Hall on Friday, September 1, 2017. (Jessica Christian/S.F. Examiner)
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San Francisco’s reinvigorated political watchdog agency is taking on the notorious pay-to-play culture at City Hall with proposed sweeping reforms.

The Ethics Commission’s proposed “2017 San Francisco Anti-Corruption and Accountability Ordinance” is intended to crack down on pay-to-play politics or the appearance of it. But some of the provisions have drawn the ire of nonprofits that warn it will deal a significant blow to their fundraising.

Those concerns prompted the commission to postpone its vote on the proposal last week.

The crackdown on pay-to-play comes after public corruption shook City Hall as a result of a sweeping FBI probe that brought down Chinatown gangster Raymond “Shrimp Boy” Chow.

As part of that federal investigation, a former city commissioner, Nazly Mohajer, and a former city employee, Zula Jones, are facing charges of bribery and money laundering. In wiretapped conversations, they allegedly solicited $20,000 in bribes from an undercover FBI agent posing as a businessman to retire Mayor Ed Lee’s campaign debt in exchange for political favors and would use straw donors to break up money to get around the $500-per-contributor limit.

One provision being discussed in the reform package takes a page out of Los Angeles’ law. That provision would prohibit city commissioners from helping to raise political contributions for candidates, which would have outright banned Mohajer from fundraising for Lee’s campaign in the first place.

Mohajer and Jones even brainstormed fundraising strategies in emails obtained and previously reported on by the San Francisco Examiner about a campaign fundraising event tied to the mayor’s 60th birthday on May 5, 2012. Los Angeles says that restriction is “to avoid any appearance that city decisions are tied to political fundraising.”

The proposed restrictions also come as deep-pocketed tech moguls are pouring money into San Francisco’s politics like never before while they seek to do business in the town and as The City is in the throes of a development boom.

While the Ethics Commission was expected to vote on the proposal last week — the fourth hearing the commission has held on the proposal — many nonprofit leaders blasted a portion of the sweeping reforms that would restrict behested payments, contributions made to groups or causes at the request of elected officials.

Following the more than three-hour meeting, the opposition prompted a postponement of a vote until Sept. 25. If the commission ultimately approves the proposal, the Board of Supervisors would next decide whether to make it law.

Behested payments are targeted because they “are a common method for skirting contribution limits,” according to the Aug. 24 memo by Kyle Kundert, the Ethics Commission’s senior policy analyst.

To try and gain favor from an official a person can give to a cause upon the official’s request, which often promotes that official’s political career. “Behested payments have become a channel for political payments that is immune from traditional contribution limits,” the memo reads.

The Ethics Commission seeks to prohibit those behested payments by those with city contracts, those with pending land use matters and those seeking other public benefits.

For example, for those with pending land use decisions, “persons would be prohibited from making contributions to (or making payments at the behest of) the mayor, a member of the Board of Supervisors, the city attorney, or a candidate for any of these offices,” the memo reads.

“Contributions to a committee controlled by any of these officials or candidates would likewise be prohibited.” The ban would remain in place until 12 months after a final decision was rendered.

A man walks through the third floor rotunda at San Francisco City Hall on Friday, September 1, 2017. (Jessica Christian/S.F. Examiner)

FUNDRAISING CHILL
Nonprofits that contract with The City said the restrictions would decimate their fundraising abilities. Elected officials would lose their power to fundraise for them, such as at annual fundraising, by “making it illegal for a wide sector of our community to respond and contribute,” according to an Aug. 23 letter from the San Francisco Human Services Network and other nonprofit groups.

One example cited in the letter is that the restriction would “bar tech companies that provide IT support to the library from contributing software to the schools if members of the school board appealed for support.”

Debbi Lerman, an administrator of the San Francisco Human Services Network, a group of 80 health and human services nonprofits, told the commission last week that the proposal “goes too far.”

“There is not a corruption boogeyman around every single corner,” Lerman said.

She added, “The City would basically be cutting off an arm from our nonprofit sector.”

But Ethics Commission Chair Peter Keane defended the proposal, arguing “it addresses corruption” and the “kind of quid pro quos that mayors” get when people seek favors.

Ethics Commissioner Quentin Kopp added, “It’s one of the oldest games in The City, and I’ve seen it for over 50 years, of nonprofits being able to bet on the winner in a race for elected office.”

On Friday, Keane said that nonprofits were misinterpreting the intent of the proposal, but he intended to work on the language to address their concerns.

“We got to sharpen it up and give comfort to the nonprofits,” Keane said. He added that he wouldn’t want their opposition to derail the total package of comprehensive reforms “addressing corruption in San Francisco.”

Peter Cohen, co-director of the Council of Community Housing Organizations, a group of nonprofit affordable housing developers, said Friday he would continue to argue for a nonprofit exemption or reliance on disclosure.

Kathie Lowry, formerly of Larkin Street Youth Services, said last week that prohibiting those with city contracts from responding to calls from elected officials to contribute at a fundraiser event could mean the loss of “hundreds of thousands of dollars.”

The proposal would require more disclosure for requested contributions to ballot measures. When a contributor makes behested payments to a ballot measure or an independent expenditure committee, the contributor would have to report to the Ethics Commission who made the behest.

REPORTED BEHESTS
Under current reporting requirements, there were 21 disclosed contributions made at the behest of elected officials reported to the Ethics Commission so far this year.

Sixteen of those payments, totaling $135,000, were reported for Supervisor Mark Farrell’s Shared Schoolyards effort in partnership with the San Francisco Parks Alliance, which keeps open school yards after school hours for residents to use. Contributors included tech investor Ron Conway, the San Francisco Association of Realtors, Pacific Gas & Electric Company and lobbyist Lighthouse Public Affairs.

A $5,000 payment at the behest of Mayor Ed Lee was made by the Municipal Executives Association, a union representing city managers, to the pro-development think-tank nonprofit SPUR for a “Good Government” awards event for city managers.

Developer Maximus, which is behind the “Monster in the Mission” project at 16th and Mission streets, made a $5,000 contribution at the behest of Supervisor Norman Yee to the Greater West Portal Neighborhood Association for a movie night.

PG&E made a $5,000 contribution at the behest of Supervisor Malia Cohen to Economic Development on Third, a group promoting business on Third Street in the Bayview, as part of the Pride parade weekend.

REFORM BEFORE ELECTION
There are a number of other reform provisions being discussed, such as a private right of action clause to encourage residents to file lawsuits for suspected violation of campaign finance laws.

Another provision proposed is a new campaign disclosure requiring reporting by those persons who “bundle” contributions for a candidate.

These new restrictions could become effective in time for the November 2018 election, when five seats on the Board of Supervisors are up for election, and the November 2019 mayor’s race.

Keane said Friday that if the board doesn’t approve the proposal he would ask the commission to vote to put it on the ballot. The next scheduled election is June 2018.

“The public likes ethical legislation,” Keane said.

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