S.F. MAYOR’S RACE: Funding Tactics Raise Concern

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Is lavish spending at state level padding the profiles of major players?

Democratic state Sen. Leland Yee wasn't officially running to be the next mayor of San Francisco when he spent an eye-popping $1.1 million in one year on his 2010 re-election bid – a race where he faced no primary battle and no serious general election competition.

A Chronicle analysis of Yee's financial disclosure forms shows that he paid more than $471,000 in the 2010 election cycle to his San Francisco-based political consultant, Jim Stearns, now his strategist in the mayor's race. That is nearly 15 times what Stearns earned for handling another uncompetitive race in the same city, that of Sen. Tom Ammiano.

Yee also paid almost $121,000 to San Francisco pollster Ben Tulchin in 2010. That's nearly as much as former Mayor Gavin Newsom paid to the same firm for work on his vigorously contested statewide bid for lieutenant governor, records show. Yee's controversial spending is unparalleled among the eight serious contenders to become San Francisco's next mayor. His tactics – while apparently legal – effectively circumvented tougher local campaign finance laws, watchdog groups and critics say. Other mayoral hopefuls – City Attorney Dennis Herrera, Assessor-Recorder Phil Ting and Board of Supervisors President David Chiu – have also drawn questions over campaign funding.

San Francisco bans contributions from corporations to mayoral candidates, caps individual donations at $500 apiece, and forbids city officials from accepting donations from entities with contracts of $50,000 or more before that official for approval or within six months of the contract being signed.

State law has much higher caps on donations to candidates and no ban on corporate donors, allowing candidates to lay the groundwork for their mayoral campaigns by tapping companies and political action committees for large donations that are barred under San Francisco's rules, analysts said.

"The city of San Francisco banned big contributions to prevent exactly that type of influence peddling," said Jamie Court, head of Santa Monica-based Consumer Watchdog, a bipartisan nonprofit that monitors campaign issues and political donations.

'A robust campaign'

Records show that Yee upped his spending in the 2010 state Senate race to $1.3 million over two years. He spent almost $754,000 in the general election, nearly 500 percent more than the $151,000 he spent in his 2006 general election. In both cases, he came away with nearly 80 percent of the vote.

Stearns, Yee's campaign consultant, said the senator's fundraising and expenditures in both his Senate campaign and mayoral race were "completely legitimate" and followed the law.

"We certainly ran a robust campaign for Sen. Yee – grass roots, door to door, phones, all that stuff – entirely in his Senate district, San Mateo County and San Francisco," he said. "His philosophy was, people elected him, and he's going to tell them what he did."

The spending was largely designed to deter a primary challenge and avoid a fight like the one that led to then-state Sen. Carole Migden's defeat in 2008 at the hands of fellow Democrat Mark Leno, Stearns said.

Yee isn't the only one who paid funds in an uncompetitive race to political consultants now working on his mayoral campaign.

City Attorney Dennis Herrera spent $672,634 over a two-year period from 2009 and 2010 on his uncontested re-election campaign and on two committees for statewide ballot measures that he controlled.

At least $473,000 of that went to consultants now working on his mayoral bid, including $279,000 to campaign strategist John Whitehurst, campaign finance records show.

Analysts say that Herrera's involvement in two statewide ballot measures – No on 17, opposing an auto insurance rate proposal largely viewed as anti-consumer, and No on 23, opposing suspension of the state's landmark law reducing greenhouse gas emissions – could be seen as an attempt to raise his political profile. There are no donation caps on committees for state or local ballot measures.

In May, $100,000 flowed through Whitehurst's firm to produce and pay for a cable television ad that featured Herrera outlining the case against Proposition 17 while driving around in a yellow AMC Pacer declaring "It's a lemon!"

The ad ran only in San Francisco, even though the measure faced strong opposition here and was defeated in the city by 69 percent of voters.

The decision of where to run the ad came from the statewide campaign against Prop. 17, said Jill Nelson, a Herrera mayoral campaign staffer.

"Dennis is a huge consumer advocate," Nelson said. "They said the way he could help the campaign was to push the issue in San Francisco, which he did."

Herrera's camp said the almost $673,000 in expenditures were very reasonable given they covered three campaigns over two years. Yee spent almost double that in the same time frame on one re-election.

Familiar faces

Assessor-Recorder Phil Ting, who spent more than $208,000 on his re-election in November in an uncompetitive race, channeled almost $89,000 through political consultant Eric Jaye, including money used to set up a website – Reset San Francisco – that was the centerpiece of his re-election and now his mayoral run.

Board of Supervisors President David Chiu expanded his political profile and got access to deep-pocketed donors as a main proponent of two recent city ballot measures – a budget reform measure and a bond to retrofit firefighting infrastructure. Neither had the same campaign finance limitations that cover individual races.

Using ballot measures to boost a bid for citywide office is not new.

Gavin Newsom, who made addressing homelessness a central theme of his first mayoral run in 2003, benefited from almost $800,000 in spending for an aggressive-panhandling measure on the same ballot. Newsom's face was splashed across the measure's mailers.

Now, candidates in the mayor's race can get public financing, a system devised in part to blunt the perception that special interests influence office-holders. Herrera has already received $270,000 in public financing. Yee will apply shortly, Stearns said.

Herrera, Yee and Chiu have accepted donations at the state level or to ballot measure committees that would not be allowed in the mayor's race, where candidates are barred from accepting money from corporations or amounts over $500.

The dozens of contributions of over $1,000 to Herrera's state ballot measure committee included $10,000 from AECOM Technology Corp., which has two city contracts worth a combined $173 million, one to work on the Central Subway and another to upgrade the city's water system.

Yee took donations of as much as $3,900 per donor and $7,800 per committee per race in his Senate re-election, including $3,900 from Pacific Gas & Electric Co. He also drew large donations from statewide and national special interest groups like the California Nurses Association – which gave him $11,500 and recently endorsed him.

"The rules are a lot more liberal in state races in California," where "the back-slapping and favors go on," said Court, of Consumer Watchdog.

Pushing ethical envelope

California Fair Political Practices Commission regulations require campaign donations be used for political, legal and governmental purposes. That broad mandate allows candidates to push the ethical envelope, observers say.

"It's a very common practice – but that doesn't make it right," said Dan Schnur, former chair of the state FPPC.

He said, in cases like Yee's, a "ridiculous amount of heavy polling" and TV ads can be used to bolster a candidate's overall image – and his future political career.

Beyond burnishing his own image, Yee also paid $11,000 to HSC Inc., an opposition research firm, in November after his re-election was over, records show.

Such work is often designed to get discrediting information about an opponent. Stearns said the work dated from the year before; while he insisted it did not cover any mayoral candidates or hopefuls, Stearns declined to specify the nature of the research because Yee ran unopposed.

"If he's doing research on potential mayoral candidates, that's a problem," Schnur said. "But if he's just dramatically overspending within the confines of his own district, it raises eyebrows – but there's no smoking gun."

Lowering state campaign contributions limits to San Francisco levels would make the system more fair, said Katie Fleming, a policy advocate for the good-government group California Common Cause.

While the candidates appear to be walking the line of legality, Court said, local voters should also consider that "the real issue is who's paying for the high profile."

"If you look at a litany of wealthy corporations who are footing the bill to help a politician, you can bet they will come knocking to collect," he said, "regardless of what post is held."

John St. Croix, director of San Francisco's Ethics Commission, acknowledged "it does not look completely kosher."

"Campaigns make judgment calls," he said, "and then the voters make judgment calls."

Matier & Ross: Exit package for BART general manager, who is on her way out, could reach seven figures.C1

Following the money
    ·    State campaign finance laws are much more liberal than those that must be followed by candidates running for San Francisco mayor. Here's a snapshot of how some of the mayoral hopefuls have legally used and raised other campaign funds in ways that could help raise their profile at the local level.
    ·    Donations to 2010 Senate re-election bid primary and general elections: $4,500 from Pfizer Inc.; $5,000 from the Clorox Co.; $6,300 from Time Warner Cable; $3,900 from PG&E; $2,500 from Waste Management and affiliates.
    ·    Amount spent over two years on uncompetitive re-election: $1.3 million.
    ·    Senate campaign payments from 2009-2010 to consultants now on mayor's race: $549,000 to Jim Stearns; $121,000 to pollster Tulchin Research; $48,000 to Theo Yedinsky/Social Stream Consulting Inc.
    ·    Donations to his state committee opposing Prop. 17 and Prop. 23: $10,000 from Moscone Public Affairs, Inc.; $10,000 from AECOM Technology Corp.; $10,000 from Proven Management Inc.; $12,500 from the Gold Club strip club.
    ·    Amount spent on unopposed re-election: $440,000.
    ·    Campaign payments from 2009-2010 to consultants now on mayor's race: $279,000 to John Whitehurst; $106,000 to Alex Tourk; $88,000 to Integrated Fundraising Strategies Corp.
    ·    Donations to committees supporting local ballot Measures A in November 2009 and B in June 2010: $19,000 from architecture firm HOK Inc.; $5,000 from AECOM Technology Corp.; $5,000 from PG&E; $5,000 from Webcor Construction LP; $2,500 from Recology Inc.
    ·    Amount spent on uncompetitive re-election: Not applicable.
    ·    Campaign payments from 2009-2010 to consultants now on mayor's race: None.
    ·    Donations to state committee: Not applicable.
    ·    Amount spent on uncompetitive re-election: More than $208,000.
    ·    Campaign payments from 2009-2010 to consultants now on mayor's race: $89,000 to Eric Jaye.
    ·    Source: Chronicle research and analysis of campaign finance records from California Secretary of State and San Francisco Ethics Commission.

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