Campaign finance

Hobbled IRS can’t stem ‘dark money’ flow

July 15, 2014

Julie Patel, Center for Public Integrity

When federal election lawyers decided the nonprofit Crossroads Grassroots Policy Strategies likely violated political spending limits, campaign finance watchdogs were certain the Internal Revenue Service would take action.

After all, lawyers for the Federal Election Commission argued that Crossroads GPS, co-founded by Republican operatives Karl Rove and Ed Gillespie, spent more on politics than anything else leading up to the 2010 election.

Then the IRS tea party scandal exploded.

Republicans in Congress began waylaying the IRS over what they said was the systematic and inexcusable targeting of tea party and conservative groups. And the Treasury Inspector General for Tax Administration declared that the agency had employed “inappropriate criteria” in heavily scrutinizing some groups’ tax-exemption applications.

The scandal has persisted with the recent revelation over missing agency emails, which the IRS has blamed on a computer hard drive crash in 2011.

The IRS’ nonprofit division, grappling with a decimated staff and limited resources, effectively lost whatever nerve it had left. Notably, it came to a near standstill on deciding whether it should grant “social welfare” nonprofit status to Crossroads GPS and other conservative groups. It likewise balked at denying or revoking nonprofit status for a growing constellation of politically driven, big-spending liberal nonprofits such as Patriot Majority USA and Priorities USA.

The IRS knew that many of these groups were highly political. But “nobody wanted to say ‘no, you’re not exempt,’” said an IRS exempt organizations division staffer who asked not to be identified for fear of losing his job.

“We stalled so we wouldn’t have to say no,” he added.

The paralysis allowed organizations waiting for IRS approval to continue to spend freely on elections while keeping the names of their donors secret.

The tea party scandal, combined with Congress systematically stripping the IRS of resources and clout over decades, has led to an exempt organizations division that has all but quit regulating politically active nonprofits in any consistent, demonstrable way, a six-month Center for Public Integrity investigation reveals.

Read the more at the Center for Public Integrity’s website.

How to fix the IRS nonprofit division

IRS rarely audits nonprofits for politicking

Super PAC leaders score perks from political donations

Political committees’ expenses include golf fees, steakhouse dinners and payments to organizers’ firms

April 15, 2014

By Julie Patel

The People’s Majority super PAC advertises itself with lofty goals.

“We are the only super PAC dedicated to the research, development and enhancement of motivating conservatives to the polls,” it proclaims on its website. “No dinners, no pictures with VIPs, no shirts or yard signs here. People’s Majority uses every penny of your contribution to identify and motivate low-turnout voters on Election Day.”

Well, not every penny. The super PAC, which registered with the Federal Election Commission with the express purpose of advocating for and against political candidates, spent nearly ten grand on meals alone last year, including eye-popping bills at restaurants including Sorellina in Boston, Manny’s Steakhouse in Minneapolis, Henri in Chicago and Michael’s on the Hill in Vermont.

And even though it is an “independent expenditure-only committee” — the formal name for a super PAC — it didn’t spend a cent on independent expenditures, the activities that help elect or defeat candidates, such as political advertisements and targeted get-out-the-vote efforts.

People’s Majority isn’t alone.

Fewer than one in seven of the roughly 300 super PACs and “hybrid” PACs that spent money in 2013 put funds toward calling for the election or defeat of a federal candidate, according to the Center for Public Integrity’s analysis of recent FEC filings.

Given that 2013 was not a regular election year, it’s not surprising that super PACs weren’t out buying ads. But critics say the groups could have used 2013 to stockpile cash ahead of midterm elections this November. Instead, they collectively burned through more than half of the $143 million they raised last year. Nearly two-thirds of super PACs and hybrid PACs spent more than they saved.

Many of these committees operated as piggy banks for golf expenses and steakhouse soirees or vehicles for filling the bank accounts of consulting firms and super PAC executives. Others have grown so big and sophisticated that they operate more like political party committees than independent outfits.

Read more at the Center for Public Integrity’s website.

Nonprofits spend money on campaigns despite benefactors’ warnings

Spending may run afoul of IRS rules, lawyers say

Feb. 27. 2014

By Julie Patel, Center for Public Integrity

Two of the tightest races for U.S. Senate in 2012 were in Nevada and Arizona. Republican candidates eked out wins in both states with help from four so-called “dark money” nonprofits.

Then-Rep. Jeff Flake of Arizona and incumbent Sen. Dean Heller of Nevada benefited from $3.1 million in spending by the groups. Voters in the states had no idea who was funding the attacks because the organizations were not required to reveal their donors.

Adding insult to injury for the Democratic contenders, Shelley Berkley in Nevada and Richard Carmona in Arizona, it turns out one of the groups’ nonprofit benefactors explicitly warned them not to spend the money on that sort of politicking.

The fact that the four nonprofits — Americans for Responsible Leadership, American Future Fund, American Commitment and Americans for Tax Reform — did so anyway, without suffering any apparent harm, shows how little oversight a new wave of political nonprofits have received in the wake of the 2010 U.S. Supreme Court decision that has allowed them to flourish.

The group that supplied some of the funds for the four groups’ political spending was the Center to Protect Patient Rights — which is basically a mailbox and a bank account. The group, effectively financed by billionaire brothers Charles and David Koch and like-minded conservatives, has acted as a sort of bank distributing cash to political nonprofits.

Campaign spending not allowed

In its tax return, the nonprofit Center to Protect Patient Rights notes that it “carefully evaluates the missions and activities of recipient organizations prior to making any grants to ensure that funds are used only for tax-exempt education and social welfare purposes.”

It adds: “Grants are accompanied by a letter of transmittal indicating how grant funds may be used.”

But a Center for Public Integrity review of Internal Revenue Service and Federal Election Commission documents shows that the four groups involved in the Nevada and Arizona races received almost $79 million, or most of the $112 million the Center to Protect Patient Rights doled out. What’s more, they spent some of the non-political grants they received on political campaigning. Yet there are no known repercussions.

Lax IRS rules and weak oversight may be to blame, according to interviews in December with a half-dozen nonprofit attorneys.

Meanwhile, the Center for Public Integrity also identified three other nonprofits that reported political spending to the FEC in 2012 but denied to the IRS that they spent any money on politics.

Read more at the Center for Public Integrity’s website.

Nonprofits fail to report political activity
Grants allow nonprofits to maximize political contributions

Deals for Developers, Cash for Campaigns

May 20, 2013

By Julie Patel and Patrick Madden, WAMU

Construction cranes can be seen throughout the District. Less visible are the symbiotic relationships between land developers and city officials awarding tax breaks and discounted land deals. Those government subsidies are meant to revive neighborhoods, and to create jobs and affordable housing. But in some cases, the benefits never materialized, or the subsidies simply weren’t needed.

And what began as a targeted economic development tool now looks to some like government handouts that could have paid for other city services.

Half a dozen news outlets wrote about or cited the 5-part series, and the project won or was a finalist for nine journalism honors.

Read the series on NPR’s website. 

Empty Promises: Developers Often Don’t Deliver

May 22, 2013

By Julie Patel, WAMU


Developers made a lot of promises when they wanted to redevelop the Capper Carrollsburg complex in Southeast DC and get taxpayer money to do it.

The project’s 700 public housing units would be replaced, 50 low-income residents would actually get to buy homes, and there’d be a state-of the-art rec center.

[One, two, three…yeah! Cheering from the ribbon cutting]

Kivette Abraham stood proudly with a hard hat and shovel at a 2007 groundbreaking ceremony. There were lots of reasons to celebrate.

“I was on top of the world. I was very excited.”

This is how Abraham feels now:

“Used, abused – like I wasn’t worthy”

Eleven years. That’s how long it’s been since the redevelopment was approved. There’s no rec center. Only half of the public housing units have been replaced, and just a fraction of the former families are back. What is there now, among other things, are million-dollar homes and three parking lots for the baseball stadium nearby.

Key requirements haven’t materialized — despite the fact that the project was given ninety million dollars in government subsidies, including fifty five million from D.C.

Ronald Jackson is one of the nearly 200 families waiting to come home.

“When they boarded that place up they said you all are the first people to come back here but that’s not true…You call them up: ‘sorry you’re on the waiting list.’ It’s not right or fair.”

It isn’t just Capper Carrollsburg.

WAMU examined 110 developments receiving city subsidies, and found flaws with half: A third hadn’t met requirements on hiring local contractors, or the city was missing paperwork. And fifth downsized, delayed or flat-out broke their promises.

Read or listen to the full story at

State agencies

Regulators exchanged dozens of phone calls and instant messages with utility representatives

Oct. 8, 2009

By Julie Patel, Sun Sentinel

One Public Service Commissioner and five agency employees exchanged phone calls or instant messages with employees and lobbyists of utilities they regulate.

Some of those calls and messages between agency and utility staff members involved issues pending before the commission. While state law says commissioners can’t have those conversations, it’s unclear whether the same rules apply to their chief advisers.

The state’s appointed advocate for utility customers thinks they should. “The same things that apply to PSC commissioners should apply to their aides,” said Public Counsel J.R. Kelly.

The Sun Sentinel obtained more than 2,900 instant messages sent by commissioners and their chief advisers over the past two years on their state-issued smart phones. Most were between regulators about issues facing the commission, exchanges peppered with gossip and jokes.

Commissioner Nancy Argenziano exchanged the most – more than 2,400 – with her chief adviser on utility matters. Other PSC officials chatted with utility employees, some on pending utility matters.

Office and state cell phone records also obtained by the newspaper between February to September show one PSC employee exchanged more than 130 calls with utility representatives, and four others exchanged anywhere from seven to 47.

The revelations come as the commission has been slammed over what some say are its close ties to utilities. Commission members have said they will discuss in the next few months proposed rules on communication and ethics for themselves and their staffs.

Read more on the Sun Sentinel’s website.

Backers of FPL often have ties to utility

Sept. 12, 2009

By Julie Patel, Sun Sentinel

More than a third of the customers, politicians and business leaders who praised Florida Power & Light at three South Florida forums on a proposed $1.3 billion rate hike have financial or family ties to the company and its employees, a Sun Sentinel analysis found.

Read more on the Sun Sentinel’s website.

Meet some of the FPL cheerleaders

Despite lobbying rules, FPL blurs line

April 23, 2010

Julie Patel, South Florida Sun-Sentinel

Florida Power & Light Co. employs three lobbyists in Tallahassee, has 22 more who were paid at least $221,000 combined in the last quarter of 2009 and donates to state political parties – more than $670,000 in the past 15 months

But critics of Florida’s largest utility are concerned that those figures don’t tell the whole story of FPL’s lobbying efforts. They point to the activities of an FPL executive who is meeting with powerful state lawmakers without registering as a lobbyist.

Eric Silagy, an FPL vice president and chief development officer, has discussed energy and utility matters with key state officials, according to legislative staff.

The officials include Senate President-designate Mike Haridopolos, R-Indialantic; Sen. Mike Bennett, R-Bradenton; and Department of Environmental Protection Secretary Mike Sole.

Silagy, who leads the utility’s renewable energy efforts, also has dropped off booklets to legislators describing the benefits of solar power plants.

FPL denies that Silagy is lobbying for the utility. Paul Hamilton, FPL’s vice president for state legislative affairs, leads the lobbying efforts, said utility spokeswoman Jackie Anderson. He and FPL’s 24 other lobbyists are registered, she said.

The utility did not respond to questions about how many legislators Silagy met with and who requested the meetings.

Lobbyists are required to register so that Florida residents know who is trying to influence policies.

The Legislature is debating laws that could affect how much customers pay for electricity and the quality of the service.

Read more of the story at

FPL hires former state regulators

By Julie Patel, Sun Sentinel

Sept. 19, 2009

Four former top state utility regulators now work for Florida Power & Light as lobbyists.

Three are former Public Service Commissioners, once holding the power to approve or deny FPL fees. One is a former commissioner’s top aide.

In addition, at least seven other government officials have been hired by the power company, some as lobbyists.

All are part of what one consumer advocate calls the revolving door from government to the utility’s payroll.

By hiring former regulators, FPL taps their expertise, a utility spokesman said.

“Former public officials bring a broader perspective about the impact of policy decisions,” said Mark Bubriski, the spokesman.

Critics say the power company buys insight into the state’s oversight strategy and access to the former regulators’ colleagues.

The Public Service Commission has come under fire for its ties to FPL in the past few months as the agency weighs the company’s largest rate hike request. Two agency employees stepped down from their jobs and two others were put on administrative leave for having private conversations with utility employees. One commissioner’s re-appointment is in question after she admitted attending a dinner with a group that included an FPL executive. The state’s law enforcement agency is investigating the commission.

Since the revelations, commissioners have taken steps to limit private interactions with employees of the companies they regulate. But none of those steps close the door on the utility’s practice of hiring former regulators and government officials with political connections.


Regulators, utility reps are socializing again

March 4, 2011

By Julie Patel, Sun Sentinel

Officials at the state’s Public Service Commission, which sets your utility rates, may be back to a practice they were criticized for less than two years ago: Mingling with employees of the companies they regulate.

Two commissioners spoke at length with utility officials at a conference in Washington D.C. last month. Three commissioners’ top policy advisers exchanged about 70 calls with utilities during the past six months, according to state phone records obtained by the Sun Sentinel.

State law requires the five-member panel to maintain an appearance of objectivity and independence. That’s why commissioners are barred from talking to utility representatives about pending issues without inviting consumer advocates and others to join the discussion. The two commissioners at the conference said they followed the law and didn’t touch on pending matters. As for their aides, they aren’t barred from talking to utilities in Florida, unlike some other states.

Critics say regulators should avoid socializing with utility representatives to promote the public’s trust in its fairness. “You would think that with everything happening last year, the PSC down to the staff would be extra careful…they’d do everything they can to avoid the appearance of impropriety or favoritism,” said Brad Ashwell, a consumer advocate with the Florida Public Interest Research Group.


State phone records show PSC employee talked to utility attorney

Utility customer asks to disqualify regulator

Citizens contracts raising questions

Aug. 3, 2010

By Julie Patel, Sun Sentinel

State-backed Citizens Property Insurance did not shop around for the best deal on at least 33 current contracts worth more than $25,000 each.

That’s more than a quarter of the contracts on which Citizens is required by law to seek competitive bids unless one of more than a dozen exemptions apply.

A Sun Sentinel examination of the contracts worth more than $25,000 showed that the insurer claimed it was dealing with emergencies in 14 contracts, that only one company provided the needed service 12 times and that other exemptions applied in seven instances. Together, the 33 unbid contracts were worth up to $49 million.

Whether the state’s largest insurer gets the best deals matters to all Floridians. All property insurance policyholders pay fees to cover Citizens’ deficits from the 2005 hurricane season. Citizens’ nearly 1.2 million policies face premium increases of up to 12 percent this year and next to cover rising costs. More increases are expected in coming years.


Follow up: Citizens Property Insurance seeks office space bids fourth time in two years
Follow up: Citizens rethinks no-bid contracts

Citizens adds employees as number of policies drops

Jan. 25, 2010

By Julie Patel, Sun Sentinel

Citizens Property Insurance Corp., the state-run insurer of last resort, has trimmed more than 26 percent of its customers since late 2007.

But the number of employees has grown by 17 percent.

“There isn’t a company in the state who could sustain those kind of cost increases at the same time as it’s losing [more than] 20 percent of its business,” said Sen. Mike Bennett, R-Bradenton. He’s so concerned, he said he plans to speed up legislation to put Citizens out of business if it doesn’t meet set financial goals.

A Sun Sentinel review of Citizens budgets, travel records and salaries found:

  • Costs for salaries, benefits and payroll taxes rose 50 percent, from $57 million in 2007 to about $86 million last year, an estimate based on actual expenses through October. This year, the company plans to spend $95 million in compensation, according to the budget approved by its board last month.
  • 49 Citizens employees were paid more than $100,000 before taxes in 2009, five more than the previous year. Citizens President Scott Wallace was paid $343,608 last year, about 5 percent more than the previous year.
  • Citizens employees dined at some of South Florida’s finest restaurants while in town for customer forums in late 2008.
  • Administrative expenses rose 24 percent over the two years to an estimated $122 million in 2009, up from $119 million and $98 million in the two previous years. This includes salaries, rent, maintenance and subscriptions. This year, the company plans to spend $148 million.
  • Payroll grew to 1,169 employees in 2009 from 1,000 in 2007.

Meanwhile, the number of policies with Citizens fell from a peak of 1.4 million in October 2007 to just over 1 million now.

Citizens was formed in 2002 as a last resort for homeowners who couldn’t find coverage when insurers scaled back. After the busy 2004 and 2005 hurricane seasons, the insurer provided an alternative for policyholders whose private insurance premiums doubled or tripled, in some cases.

All Florida residents with insurance are affected by Citizens’ spending: Homeowners are paying an annual fee of 1.4 percent of premiums until 2017 to cover the company’s shortfalls after the 2005 hurricanes. If a hurricane strikes and causes major damage, all automobile and property insurance policyholders could pay fees to offset Citizens’ shortfalls.

Questions about the insurer are resurfacing as it starts boosting its premium prices by as much as 10 percent a year for the first time since 2007, when premiums were frozen by the legislature.


-By the numbers

Stadium proposal

Matters of heart vs. finances

Santa Clara taxpayers, 49ers fans torn over stadium proposal

May 29, 2007

Julie Patel, Mercury News

On a recent afternoon on the north side of Santa Clara, Anna Moreno’s three kids are plopped on a couch covered by a scarlet sheet and pillows that match the San Francisco 49ers paraphernalia all over their cozy two-bedroom apartment. Moreno’s boyfriend, Gilbert Ortiz, asks whether the children want the team to come to town.

Their reply? Yes. Shrieks of delight. “They rule,” the whole family agrees.

But others say the city needs a lot of other things, things such as sewer and street repairs, more police and better libraries. Their concerns come as city leaders weigh next year’s budget along with a proposal for an $854 million football stadium – including at least a $160 million city investment – echoing a national debate about whether taxpayer money should be spent on professional sports stadiums.

Should cities spend money pumping up basic needs? Or should they gamble on a venture that could lead to even more money for those basic services in the future?

For some, like Ortiz and Moreno, the issue is a matter of the heart.

Four generations of their families root for the team, they say. What they earn from her job at a Safeway deli and his as an electrician, goes to paying bills and the rent on their two-bedroom apartment, in a peach, motel-style building with broken concrete instead of a backyard lawn. What little money they have left over goes to goodies for the kids, baseball games and – when they can afford it – the occasional football game.


Economists find fault with 49ers’ offer to city

Experts: Santa Clara plan may be overly optimistic

By Julie Patel, Mercury News

Nov. 18, 2007

A year after the San Francisco 49ers began courting Santa Clara as the next home of the franchise, questions linger about the team’s promise to limit the city’s financial burden, according to a review of revenue statements obtained for the team’s current stadium, Monster Park.

Although details about how much the 49ers earn from Monster Park could shed light on the merits of the Santa Clara proposal, team officials and city leaders have struck a pact not to share that kind of information, arguing it’s confidential. The Mercury News instead obtained the records from the city of San Francisco and asked four economists familiar with stadium financing to review their contents.

Among the findings:

  • The team appears to have overstated how much cash will come from ticket surcharges, seat licenses, corporate partners and naming and pouring rights at the new stadium, according to the economists. Although construction and unknown finance costs are expected to eat up most of that revenue, the team still expects to have more than $8 million a year left over for operating costs. Economists say that may be too optimistic.
  • After paying for costs such as security, cashiers and insurance, the team predicts revenue from food, drinks and parking at the new stadium will add up to $6.5 million – about half of the $11 million in gross revenues generated from parking in San Francisco.

Economists say the estimate is reasonable.

  • Santa Clara appears to be getting a worse deal than San Francisco on the rent. While San Francisco receives 10 percent of the hefty ticket sales and luxury suite revenues, neither Santa Clara nor its stadium authority would see any of that money. Also, San Francisco’s rent is tied to team revenues, meaning if revenues rise, so does the payment to the city. Last year, that amounted to about $6 million. Santa Clara, in contrast, is guaranteed only $5 million each year.


49ers donated to some Santa Clara Co. public officials

Mayor treated to game, got campaign money; County Assessor accepted ticket discount

By Julie Patel, Mercury News

Dec. 1, 2006

The San Francisco 49ers offered tickets to some Santa Clara City Council members and gave $1,000 to Mayor Patricia Mahan’s re-election campaign last month, shortly before the team named the city as the front-runner for a new stadium.

Santa Clara County Assessor Larry Stone also accepted tickets worth $350 from the team in August 2005 while he was exploring possible South Bay relocation sites on the 49ers’ behalf. The Mercury News discovered that Stone listed the tickets among gifts he received on an economic disclosure form, despite his statement in the San Francisco Chronicle on Thursday that he “paid for everything that I got from the 49ers.”

Stone, vacationing in London, told the Mercury News in a telephone interview that he bought a group of tickets in August 2005, before the football season. He accepted $350 of the tickets as a gift and paid the balance of roughly $900 himself. Elected officials can’t receive more than $360 from one source, according to regulations outlined by the California Fair Political Practices Commission.

“I report what I’m supposed to report and I abide by the limits of the law,” Stone said.

Stone, an avid sports fan who has worked for years to lure the Giants, A’s and 49ers to the South Bay, also received a $60 ticket from a team official in 2004. Stone said he was one of several community leaders who had been invited to that game.


City treads fine line in Niners meetings

No private deals made, council members say

By Julie Patel, Mercury News

Dec. 21, 2006

As Santa Clara explores the idea of the San Francisco 49ers building a football stadium to boost the city’s entertainment district, some legal experts caution that officials could be close to violating open meeting rules.

In question are a series of informal, private meetings team officials recently had with council members.

“Well-intentioned people can get themselves in trouble because they’re not being sufficiently attentive to requirements of the Brown Act and it would appear the council members involved have come very close to the line,” said Peter Scheer, executive director of the California First Amendment.

“Whether they crossed it yet is not obvious. If they continue these informal, closed meetings with selected board members, they’re going to get themselves into trouble.”

City officials say the discussions weren’t aimed at building consensus about the project, so don’t violate the Brown Act, which requires public notice of meetings, or a series of conversations, where a council quorum is present. But experts on open meeting laws say that’s hard to confirm because the meetings were behind closed doors.

“That’s the quandary,” Scheer said. “If we knew exactly what was discussed, we wouldn’t care so much.”

Some officials are taking the concerns to heart.

“I think it reflects poorly on city and 49ers when there’s a perception of a smoke-filled room where talks are going on,” McLeod said.

In earlier meetings, four of the city’s seven council members attended at least one of two meetings in November about the stadium.

Several others on the council have had informal phone conversations about the idea.



Teachers’ perk: Bottled water

Friday, August 26, 2005


By Julie Patel, Mercury News

When it comes to quenching the thirst of teachers and administrators in the Ravenswood City School District, drinking fountains just won’t do.

The East Palo Alto and east Menlo Park district outspent four bigger, nearby districts combined on mineral water during the last four months of the 2004-05 school year, according to a Mercury News sampling. Its $9,150 bottled water bill was more than twice that of San Jose Unified — which has more than five times as many staff members — and more than 80 times what Sunnyvale School District spent.

When the Mercury News pointed out that Ravenswood was paying double what the Cupertino Union School District paid to rent its water dispensers, the district called its main supplier, Alhambra, and got a better deal.

Money is so tight at Ravenswood that administrators have slashed the school supplies budget by 15 percent for the past three years, and students at some schools must copy passages for assignments in class because there are not enough textbooks to take home.

Still, bottled water flows so plentifully in teachers’ lounges, school offices and meetings that there’s enough to supply each teacher, administrator and student services employee with more than seven eight-ounce glasses of water each school day.

It’s money down the drain, say some parents who question why staff members can’t drink from the fountain just like their kids.

”Why are they so special?” asked Vince Johnson, whose two daughters attend Willow Oaks Elementary School.

Ravenswood’s acting superintendent, Maria Meza-De La Vega, defends the expense as a ”small token” to show teachers the district cares.

”Our teachers are the lowest paid in the county,” she said. Actually, according to the state’s Education Data Partnership Web site, Ravenswood teachers are the second-lowest paid in San Mateo County, just behind La Honda-Pescadero Unified. ”The least we can do is give them some water.”

Belle Haven Elementary School literacy coach Martha Hanks appreciates that she can fill up her water bottle from the cooler in her school’s teachers lounge.

”It’s great and it’s not that big of a deal,” she said.

Like other districts, Ravenswood occasionally provides staff members with snacks and coffee at meetings, Meza-De La Vega said. But wealthier districts such as Cupertino and Sunnyvale often rely on PTAs to donate drinks and food.

San Jose Unified PTAs also often donate refreshments for meetings, said Lourdes Ibarra, the district’s food services administrator. District and school officials order food from the cafeteria for meetings about three or four times a year, she said.

Ravenswood officials and teachers say the bottled water expenses are minor compared to the district’s financial turmoil of the past but are still a symbol of what’s been slow to change.

In some areas, there’s a lot of progress, said Akur Varadarajan, the district’s chief financial officer. To cut gas costs for buses and district cars, Varadarajan worked with his staff to get a contract recently that saved the district about $20,000.

Bottled water suppliers don’t compete in a bidding process for Ravenswood’s business. The state requires public agencies to go out to bid for contracts over $62,400, but Ravenswood’s yearly expense for bottled water is about $25,000.

”Cutting water money is not going to do much, I understand,” said Aaron Williamson, a seventh-grade math and science teacher at Cesar Chavez Academy. ”But the district needs to sit down and evaluate more closely how to cut as much of the fat as we can.”

Small cuts add up, said Nellie Hungerford, Sunnyvale School District’s director of fiscal services. She said district officials trimmed bottled water — and other expenses that weren’t ”absolutely necessary” — three years ago as the economy soured. Sunnyvale spent $111.30 on bottled water during the last four months of last school year. The district eliminated dozens of positions through layoffs and attrition over the last three years.

”When you’re having to cut positions, things like bottled water are the first to go,” she said.

Ravenswood has been strapped recently, too. Williamson said a few years ago, Cesar Chavez teachers couldn’t print materials because there wasn’t money to order print cartridges.

”Any teacher here knows they’re going to have to bring in supplies and we don’t have that much at our disposal,” he said. ”We learn to scrape.”

Teachers undoubtedly appreciate the water provided at meetings, he said, but he would appreciate his students having the tools to succeed even more.

”We don’t get a lot of privileges or perks in this district so it’s nice,” he said. ”But the bigger question is how can we look at how we allocate money more closely and perhaps cut back in some areas so we can do better for the kids?”


Late school buses lead to missed opportunities

October 8, 2007

By Julie Patel, Mercury News

Carlmont High School freshman Joshua Brass was kicked out of a morning advanced English class after walking in late or missing almost every class the first few weeks of school.

But it’s not because he skipped class or hit his alarm clock’s “snooze” button too many times. It’s because for the first month of school, buses to his school were as much as one hour late three-quarters of the time. Joshua and the hundreds of other East Palo Alto students who are bused 10 miles to Carlmont in Belmont have missed many hours of lectures and class work – time that’s especially precious for East Palo Alto students, whose dropout rate is double the district average.

Sequoia Union High School District leaders blamed the tardy buses on traffic and drivers calling in sick. They’ve hired more bus drivers and allowed Joshua to re-enroll in the class. But parents and community leaders say the problem runs deeper and requires an attitude change that means putting East Palo Alto students on par with other district students. That’s why they’re holding a forum on the issue today.

“The worst part is that many kids are so conditioned that the bus comes late, they don’t have a sense of urgency about getting to school,” said Larry Moody, a board member of the Ravenswood City elementary school district, who is helping to organize the forum. “There is just a tremendous disconnect between how East Palo Alto students are cared for compared to other students there.”

Students from East Palo Alto and east Menlo Park, who are predominantly black and Latino, are the only Sequoia students bused to school. About 450 from East Palo Alto attend Carlmont and about 300 from both cities attend Woodside High School.

This year, the bus to Carlmont was late 14 out of the first 19 days of school, according to a report by Principal Andrea Jenoff.

Read the rest on the Mercury News’ website.

Your taxes

Santa Clara mansion’s muddy politics

City’s possible bid for historic home raises questions of conflict of interest

By Julie Patel, San Jose Mercury News

Aug. 6, 2007

The pale gray Morse Mansion, with its twin gables, stained-glass windows and lacelike woodwork, is one of only a few Queen Anne Victorians left in Santa Clara – so it’s no surprise some city council members think the city should consider buying it, possibly to use as a museum.

The question is: What’s really propelling their interest – historic preservation or city politics?

The mansion is one of the first things Councilman Dominic Caserta sees when he walks out of his Spanish Mission-style home across the street, potentially putting him afoul of state conflict-of-interest rules if he supports a mansion purchase. The same goes for Mayor Patricia Mahan; the Morse Mansion is around the corner from her own stately Victorian.

And Caserta, along with Councilman Kevin Moore, occasionally works in the real estate firm run by former Mayor Gary Gillmor, who happens to own the $3 million house. Further muddying the picture, Gillmor and his family – longtime Santa Clara power brokers – have given campaign donations to six of the seven council members.

Screen Shot 2015-12-23 at 11.15.15 PM

Charles Copeland Morse Mansion in Santa Clara on July 25, 2007. (Josie Lepe/Mercury News)

Gillmor and two friends, Nick Livak and Jon Campisi, bought the mansion in 1981 for about $300,000, later investing roughly $800,000 in improvements. It was used as offices for Livak and Campisi’s law firm, but when Campisi retired last April, they decided to sell the house. It’s been on the market for eight months.

In mid-December, Gillmor approached Assistant City Manager Ron Garratt about whether the city would want to consider buying it, at market price. Garratt said the city probably doesn’t have the money. But the idea didn’t die there. Mahan caught wind of it and recalled thinking, “God, this has to belong to the city if there’s any way possible.”


Mountain View’s Shoreline sees rising tide of prosperity

Tax district’s proceeds stay at home
By Julie Patel, Mercury News
[NOTE: Within weeks of the story, city officials voted to share $800,000 a year in tax revenue from Shoreline with local schools.]
It’s home to about 100 of Mountain View’s 70,000 residents and some of Silicon Valley’s hottest companies, such as Google, Microsoft and Intuit. Its outdoor amphitheater attracts music’s top acts, and its man-made lake is a magnet for wind-surfers.

And now the city’s Shoreline district is pumping $3.4 million into its municipal golf course, including a high-tech garage to juice up electronic carts; bigger, brighter offices; and a revamped pro shop for golfers to size up the latest clubs.

Not bad for a one-time destination for garbage and junked-out cars.

What most Mountain View residents don’t realize is just how wealthy the other side of Highway 101 has become while four-fifths of the city struggles to make do on dwindling revenues. A unique funding structure that revived Mountain View’s Shoreline has helped divide the city into haves and have-fewers – fewer librarians, fewer code enforcers, fewer public works crews – and some are beginning to ask why.

Shoreline is home to eight of the city’s Top 10 property taxpayers, and the district gets to keep almost all of that tax money for improvements and to pay back bonds. This year, only $350,000 of the $17 million it generates in property taxes – about 2 percent – will go to the other side of the freeway to be split by the city, county and schools.

That means while Shoreline gets upgrades at the golf course, a new recycled water system, new landscaping and roads, the rest of Mountain View competes for less. Mountain View-Whisman School District is closing one of its seven elementary schools next year. The city cut 13 public works positions this year, 2.5 librarians, and increased sewer and water fees. Last year, it nixed plans to build a new $15.5 million community center to replace one built in the 1960s that serves some of the city’s most underprivileged neighborhoods. Last week, the council approved squeezing up to $3.5 million out of the budget to build a badly needed child-care center, but not without reservations over its costs.

Golf’s priority questioned

Still, residents like Tammy Allen don’t get it.

“How can they spend so much money on a golf course when people everywhere else in the city are going hungry or really struggling?” said Allen, 39, who just moved along with her husband and three kids into her mother’s Mountain View home because she could no longer pay the rent.

“It seems pretty silly,” she said. “Who cares about golf?”

It’s not a conspiracy or favoritism at work. It’s a funding structure passed in 1969 by state lawmakers to clean up the Shoreline area’s junkyards and slaughterhouse into a regional park to benefit wildlife and recreation lovers. The law that created the Shoreline taxing district also envisioned homes in the area to meet the state’s housing shortage, but the city long ago determined chemicals from previous uses made the land uninhabitable, said city Finance Director Bob Locke.

State lawmakers felt the need for housing and park space was so urgent that they decided to let Shoreline keep its property taxes, similar to a redevelopment district.

With Shoreline, though, there was an additional bonus. Redevelopment districts only have 30 years to get back on their feet, Locke said. But as far as city leaders can tell, Shoreline is the only district in the state that can keep its property taxes forever.

“It’s the jewel of the city,” said Mountain View City Manager Kevin Duggan. “But it’s a two-edged sword because some revenue that normally would go to the general fund goes to Shoreline.”

Last year, the Shoreline area outspent the rest of Mountain View on capital projects by $4.4 million. This fiscal year, Shoreline is scheduled to spend $9.2 million, about two-thirds of what the rest of Mountain View will spend on improvements.

The city doesn’t just invest in recreation at Shoreline, Duggan said. The district pays about $5 million a year on bonds that helped redevelop the area. It pays for its own street improvements, landscaping and police and fire personnel. It also pays to make sure decomposing garbage from the landfill doesn’t taint the city’s groundwater or air. And without the taxing district, Duggan said, the city wouldn’t have a way to help restore wetlands and other habitats.

Trash served a purpose

In order to raise the land 20 feet to prevent flooding in the planned park, the city continued dumping trash in the area until the early 1980s. But that made closing the landfill and restoring it – a process that usually takes several decades – even more difficult. The city of Mountain View will probably continue spending money to make sure the landfill doesn’t leach toxic chemicals for another 10 years, said Public Works Director Cathy Lazarus. But even with those costs, it still has millions to spend on amenities at Shoreline, as well as sponsoring concerts at the amphitheater.

Meanwhile, the city has had to make major cuts elsewhere. It trimmed more than 10 percent of its workforce – roughly 60 jobs – in the past three years. Cutbacks in code enforcement mean inspectors only visit buildings for complaints. Fewer workers to fix cracking streets mean more expensive repairs down the road.

Shoreline’s golf course was a money-loser until two years ago, but the $250,000 it made last year helped fund recreational programs on the other side of Highway 101.

Victoria Paz, like most Mountain View residents, didn’t know about Shoreline’s funding structure, but when she learned of it she questioned the arrangement.

“Why can’t city council members or the mayor try doing something about it?” she asked.

She said she enjoys a stroll on Shoreline’s trails now and then, but she can’t understand why the city’s bay front is more valuable than a community center at Rengstorff Park that her grandson, Cameron, would use much more often.

Mountain View council members, who double as board members for the Shoreline district, are responsible for overseeing it, said state Assembly member and former Mountain View Mayor Sally Lieber.

“The reality is that if that district weren’t there some additional funding would be going to the schools, some funding would be going to the county,” Lieber said. “I think the council has to be constantly re-evaluating whether that district is still needed.”

Councilwoman Mary Lou Zoglin said she would like to see some of Shoreline’s revenue used elsewhere, but changing state rules that created the district could turn out to be a worse deal for the city with the state so hungry for cash.

“We might end up the losers,” she said.

City officials point out that they wouldn’t be able to attract some of the tech world’s most sought-after companies and keep them in Mountain View without Shoreline’s recreational facilities.

And with limited open space on the Peninsula, the area benefits the entire community, not just Mountain View residents, attracting about 1 million visitors a year, Duggan said. Businesses in the district provide about $1 million in sales taxes and other revenue to the rest of the city, but more importantly provide jobs, and those employees often eat or shop on the other side of Highway 101, Locke said.

Given that three decades ago the now-booming area had a landfill, a hog farm and auto-wrecking yards, the funding structure seems to be working, Locke said. “It’s come a long way.”

A unique funding structure created in 1969 to help redevelop the area of Mountain View east of Highway 101 has made the Shoreline the wealthiest part of the city.  Instead of contributing its property tax revenue to the city, county and local schools, the district gets to keep its property taxes to invest it in its streets, trails, golf course, amphitheater and other amenities.  Below is a look at how Shoreline and the rest of Mountain View compare on capital projects and property taxes.  Tax revenues recently dipped in Shoreline because property values declined during recent assessments.
CAPITOL PROJECTS In millions of dollars
Rest of Mountain View   Shoreline taxing district   Total
’00-’01      $39.9                   $3.5                        $43.4
’01-’02        20                       4.4                          24.4
’02-’03        16.5                    4.5                          21
’03-’04        8.8                    13.2                          22
’04-’05       14.2                    9.1                          23.3
PROPERTY TAX REVENUE In millions of dollars
’00-’01      $15                     $20.7                       $35.7
’01-’02       16.9                    23.1                        40
’02-’03       14.1                    22                           36.1
’03-’04       19.1                    19.3                        38.4
’04-’05       18.3                    17                           35.3
Source: Mountain View budget reports

Debate over flat rate in school tax increase

Measure A on Tuesday’s ballot would raise the levy to $493 per parcel regardless of lot size, while neighboring Mtn. View uses a tiered system

June 2, 2005

By Julie Patel, Mercury News

Liza Julian lives on one of Palo Alto’s smallest lots, in a 640-square-foot, one-bedroom home that’s so small she had to move furniture into the garage when two friends came to visit over Memorial Day weekend.

But when the tax bill arrives, the 58-year-old homeowner pays the exact same amount for Palo Alto Unified School District’s annual parcel tax as some of the city’s biggest landowners. Stanford University, Hewlett-Packard, Agilent Technologies and Loral Space Systems all own or hold long-term leases on parcels that are far larger than any homeowner’s lot.

With a measure on the ballot Tuesday to renew the district’s parcel tax and increase it to $493 annually for six years, some residents — including some of the measure’s supporters — are asking why the district went with the one-size-fits-all parcel tax. Just next door in Mountain View and in towns such as Emeryville and Berkeley, property owners pay a tiered tax that supporters say is fairer across the board — the bigger the parcel, the bigger the tax.

Palo Alto’s decision represents a still-unsettled question about whether tiered taxes are legal under California law. District leaders didn’t want to gamble on a tiered tax, similar to Mountain View-Whisman’s, that could be contested in court.

“Even if we wanted to, we simply can’t,” said Palo Alto Unified Associate Superintendent Gerry Matranga.

California code says that special taxes must “apply uniformly to all taxpayers or all real property within the school district.” However, parcel taxes can offer an exemption to taxpayers who are 65 or older, which Palo Alto does.

That won’t help Julian for another seven years.

“I really want to support the schools and pay my share, but I have a tiny house,” said Julian, an administrative associate at Stanford who lives alone after raising two daughters who attended Palo Alto schools. “Why am I paying the same as a brand new house many times the size of mine?

“I’m lucky to have a reasonable mortgage, but this is getting to be too much.”

Small homeowners like Julian are exactly who inspired Mountain View-Whisman School District leaders to consider tiering their parcel tax.

“We felt it would be too large of a burden” on small homeowners, said Rebecca Wright, the district’s chief financial officer.

Mountain View’s biggest properties — more than 44,000 square feet — such as that owned by Lockheed Martin, pay $600 per parcel. The smallest — 8,000 square feet and below — pay $75. There are four other tiers in between.

“People here felt it would be fairer this way. If you own a huge lot, that’s different from owning 8,000 square feet,” Wright said.

mapHewlett-Packard, for example, pays $600 to the Mountain View-Whisman district for its 15.6-acre parcel in Mountain View — about $38 per acre. But if Palo Alto passes its parcel tax hike, the company would pay a flat $493 for its 36.4-acre world headquarters — about $13.50 per acre.

HP and other members of the Silicon Valley Leadership Group oppose a tiered parcel tax, also known as a split-roll tax, because they say it could impede the valley’s economic recovery and cost jobs.

Palo Alto’s biggest landowner, Stanford University, owns hundreds of parcels, ranging in size from the 580 acres that comprise the campus’s athletic facilities and football stadium, to residential lots for faculty housing to the occasional sliver of greenbelt that’s less than a third of an acre. Yet each parcel gets the same size bill.

Staunch supporters of Palo Alto Unified’s proposal, Measure A, say the bigger problem is Proposition 13, the landmark measure that California voters passed in 1978 to cap property taxes at 1 percent of a property’s purchase price with a 2 percent maximum annual increase in a property’s assessed value.

“It dwarfs any other inequity in the taxing structure,” said Palo Alto Unified school board member Mandy Lowell.

Eric Hahn has two children in the district, and his wife, Elaine, is active in the Parent Teacher Student Association.

“It seems like a horrible injustice that the schools are so underfunded given the relative prosperity of Silicon Valley and California in general,” said Hahn, founding partner of Inventures Group and former chief technical officer for Netscape.

Despite his support for Measure A, Hahn said he would be willing to pay more than Julian because his lot is 50 times bigger than hers.

“Next time around, I think we can think about coming up with something better,” he said. “For now, this is a good start.”



$75 0-8,000 SQUARE FEET

$150 8,001-14,000 SQUARE FEET

$200 14,001-22,000 SQUARE FEET

$300 22,001-28,000 SQUARE FEET

$400 28,001-44,000 SQUARE FEET