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New: FCPC Meeting to Discuss Possible Violations by Landlord-Financed TUFF Rent Board Candidates
On Thursday, Berkeley’s Fair Campaign Practices Commission (FCPC) will consider possible violations of the Berkeley Election Reform Act by Berkeley Tenants United For Fairness (TUFF) rent board candidates.
Also before them are possible violations by Diablo Holdings and Premium Property Management who gave $5000 and $1000 respectively to TUFF’s Slate Mailer Organization (SMO).
The Commission could determine that there is probable cause to set hearings or take other action on these possible violations. A crucial question, which the Commission could direct staff to investigate further, is whether the TUFF SMO was also a candidate controlled committee, in which case it would fall within the Commission’s purview.
The TUFF SMO
Most of the money spent in support of the four rent board candidates on the TUFF slate was spent by the TUFF Slate Mailer Organization (SMO), which produced and mailed five mailers to Berkeley voters. The four candidates were incumbent Nicole Drake, and Judy Hunt, Kiran Shenoy and Jay James. Only Judy Hunt was elected on November 6.
The TUFF SMO provided a way to fund a campaign for this slate of candidates that circumvents Berkeley’s $250 limit on contributions to candidates. There is no limit on contributions to oppose or support ballot measures. The TUFF SMO produced slate mailers that supported the four TUFF rent board candidates, but which also opposed Measure U.
The TUFF SMO raised a total of $44,920. After Berkeley resident Patti Dacey filed a complaint with the FCPC on October 25 pointing to the TUFF SMOs receipt of prohibited contributions from business entities, three contributions totaling $1,440 were returned. These contributions were from Stuart Street Properties, Lower Carleton Properties and Ellis Street Properties.
With the return of these prohibited contributions, TUFF SMO’s total receipts amount to $43,480. Of this, $6,050 was reported, in the TUFF SMO’s campaign filings (Forms 401 and 498), to have been given to support the four rent board candidates. That’s 14% of the TUFF SMO’s total.
$37,000, or 85% of the total, was reported as received to oppose Measure U, the “Sunshine Ordinance”, which was defeated by a 77% to 23% margin. 1% was in contributions of less than $100, which weren’t itemized.
While 85% of the money raised to pay for the mailers was reportedly received to oppose Measure U, only about 15% of the space in the mailers was devoted to Measure U. In the first two mailers, there were some bullet points and text against Measure U. But total Measure U space amounted to about one quarter of one side of the mailers, with the other side devoted only to the rent board candidates.
In the last three mailers, there were only two small “Vote No on U” logos, one on each side, one of them measuring only .5” by 1”, with no accompanying text or bullet points related to the Measure. The rest of the space was devoted to the rent board candidates.
So the candidates got far more space and reached far more voters than would have been possible with the $6050 given to the TUFF SMO to support the slate of four candidates. State law does not require that allocation of space in slate mailers be related to the proportion of funds received for each candidate or measure included in the mailer.
Where the money came from
Apart from $1600 received from the TUFF rent board candidate’s own campaign committees, virtually all of the money received by the TUFF SMO came from landlords, or people involved in property management or real estate.
The East Bay Rental Housing Association PAC gave $32,000 to the TUFF SMO, $31,000 of it ostensibly to oppose Measure U. That’s fully 74% of TUFF SMO’s total. A further $5000 came from Diablo Holdings, a property and asset management company, with an office on Center Street in Berkeley.
In addition to its contributions to the SMO, the East Bay Rental Housing Association PAC filed with the City Clerk Independent Expenditure Reports (Form 496) reporting independent expenditures of $9950.26 for “advertising” to support the TUFF candidates.
Use of a slate mailer organization and independent expenditures allowed landlords to put large sums to work for the TUFF slate, sums much greater than what they could have contributed directly to the candidate’s own committees, where the $250 limit set by Berkeley’s election law applies.
There have been 15 elections for Berkeley Rent Board held since 1984 when rent board commissioner first became an elective office. There has never been an election where one slate received such a high percentage of its funding from landlords and related real estate interests. Over 95% of the money raised and spent to support the TUFF slate candidates came from those sources.
The large sums of rental property owner money channeled to the support of the TUFF candidates via the SMO and independent expenditures gave the TUFF candidates a major advantage over their opponents, who were not able to send as much mail to voters.
The opposing slate consisting of Judy Shelton, Igor Tregub, Asa Dodsworth, and Alejandro Soto-Vigil, received a combined total of $24,038.67 in contributions according to the campaign statements filed with the City Clerk. Filings can be viewed here on the City’s Web site.
Issues Before the FCPC
In preparation for tomorrow’s FCPC meeting, Deputy City Attorney Kristy Van Herick, the secretary of the FCPC put together a twenty page initial staff investigative report. That report reviews and responds to the complaints received from Patti Dacey, both her original complaint of October 25 and a November 30 amendment.
The staff report reveals some interesting details about some of the contributions received by the TUFF SMO.
Staff talked to John Lineweaver, president of Diablo Holdings, about Diablo Holdings donation of $5000 to the TUFF SMO. The report says that Lineweaver stated on the phone that he “made the $5000 payment to support the mailer for the rent board slate, and that he knew the mailer included other items, but off the top of head he did not know what they were.”
The TUFF SMO Form 465 filing, however, says that the Diablo Holdings contribution was a contribution against Measure U.
The staff report says that Lineweaver clarified, via an e-mail sent later the same day, that it was a contribution to the rent board candidates and against Measure U.
The issue for the FCPC is that any portion of the contribution from Diablo Holdings to rent board candidates constitutes a contribution from a prohibited source since Diablo Holdings is a business entity and such contributions violate Berkeley’s election law unless made by an independent expenditure committee.
Mr Lineweaver told staff that his contribution was not an independent expenditure. If it had been an independent expenditure, it would have had to have been reported within 24 hours, and that did not happen.
When contacted again by staff, Mr. Lineweaver said that the contribution was solicited by Sid Lakireddy on September 27. Lakireddy is president of the Berkeley Property Owners Association (BPOA). It seems clear from the staff report that the primary reason that his business made a contribution was to aid rent board candidates.
Premium Property Management, with an office on Telegraph Avenue in Oakland, may also have violated the law as it also failed to file an independent expenditure report. If it was not an independent expenditure committee, its contribution of $1000 would, like Diablo Holdings’ contribution, be a prohibited contribution by a business entity. It did not respond to a letter from FCPC staff.
The BPOA sent a fundraising email, cited in Patti Dacey’s complaint to FCPC, encouraging donations to Berkeley TUFF. They were told that they could “donate to each candidate or you can send your check made out to Berkeley TUFF to 2437 Shattuck Ave, St. 17, Berkeley, CA 94704.” That is the address listed for rent board candidate Jay James’ campaign committee.
The Staff report notes that “it is difficult to ascertain who made the decision as to how to allocate the donations, the party writing the checks or Berkeley TUFF’s officer or treasurer upon receipt of the funds.”
The “primary officer” of the TUFF SMO is Jay James, who was himself a candidate. This raises the issue of whether TUFF SMO was a de facto local candidate controlled committee that would fall within the FCPC’s purview. If Jay James and perhaps his fellow candidates did not control the TUFF SMO, then who did?
The staff report raises the question of whether Jay James’ role in the committee violates state election laws. The California Fair Political Practices Commission (FPPC) adopts regulations and investigates alleged violations of those laws.
The report states: “The more active position taken by Jay James as Officer of the SMO, including use of his personal address for receipt of contributions to the SMO and presumably making decisions about how to earmark certain contributions, appears to be prohibited by the FPPC.”
In addition to directing staff to further investigate whether TUFF SMO was candidate controlled, the commission could direct staff to forward the matter to the FPPC.
Staff also found possible violations by the candidate committees for the four rent board candidates, James, Hunt, Drake and Shenoy. The violations include “receipt of contributions from a prohibited business source”, “receipt of contributions in excess of $250 from a single source” and “failure to timely disclose nonmonetary contributions.”
The staff report notes that “none of the four candidates timely disclosed the contributions allocated to them on the Berkeley TUFF SMO filings on either their first or second pre-election statements. The candidates therefore did not comply with the BERA.”
Judy Hunt is the only member of the TUFF slate who was elected. On Thursday night while the FCPC considers whether her campaign committee violated BERA, she will be the featured speaker at the BPOA Winter Dinner and Award Presentation at King Tsin Restaurant on Solano Avenue in Berkeley.
