October 31st, 2007

Ad firm gives to Muni measure, gets S.F. contract

By Robert Selna
San Francisco Chronicle

A committee controlled by Board of Supervisors President Aaron Peskin and set up to promote a Muni overhaul measure on the November ballot received a $20,000 campaign contribution from Clear Channel Outdoor Inc. just two days before Peskin and other supervisors voted to award the company a Muni advertising contract worth hundreds of millions of dollars over the next 20 years.

The contribution from Clear Channel to the San Franciscans for Clean Air & Better MUNI committee on Oct. 15 - two days before the supervisors’ 9-1 initial approval of the advertising deal between the company and the city Metropolitan Transportation Agency - appears to violate a city law meant to stamp out influence-buying by contractors seeking business deals with San Francisco government.

The law prohibits businesses negotiating or bidding on city contracts from making political donations to officials who will decide the contracts - or to committees controlled by those officials - and was enacted to ensure that business deals are awarded on their merits.

“Two days before the vote, it certainly appears that (Clear Channel) was trying to get Peskin’s attention,” said Bob Stern, a campaign finance expert who heads the nonpartisan Center for Governmental Studies in Los Angeles. “People give money for rational purposes, and the rational purpose here is that a vote on their contract was coming up.”

Peskin, who acknowledged that he controls the Muni campaign committee, said he had no knowledge of Clear Channel’s contribution to the Muni reform measure, Proposition A, campaign when he voted on the contract.

“Look, if any contribution violated any law, we will refund the money,” Peskin said. “But a contribution to Yes on A would not influence a piece of legislation voted on by the entire board ... nothing could be further from the truth.”

Representatives for Clear Channel did not return calls for comment.

Donors who violate the contribution law can be fined up to three times the amount of the illegal contribution, according to John St. Croix, the city Ethics Commission executive director.

Campaign disclosure reports show Clear Channel’s donation was the third largest and by no means the only one flowing into the Prop. A campaign from businesses and developers with an interest in securing approvals from the Board of Supervisors in the future.

Moreover, committees set up to pass or fight other ballot measures, such as the No on E campaign opposing a City Charter amendment that would require the mayor to make monthly appearances before the Board of Supervisors, have garnered contributions from firms interested in influencing City Hall.

But the Clear Channel contribution to Prop. A appears to be the one most directly addressed by the anti-influence buying law.

“No person who contracts with the city ... whenever such transaction would require approval of a city elective officer, or the board on which that city elective officer serves, shall make any contribution to such an officer, or candidate for such an office, or committee controlled by such officer or candidate at any time from the commencement of negotiations for such contract until (1) termination of negotiations for such contract; or (2) three months have elapsed from the date the contract is approved by the city elective officer,” the law states.

The Board of Supervisors gave its second and final approval to the city’s contract with Phoenix-based Clear Channel on a 7-2 vote on Oct. 23. Peskin voted in favor on both occasions. Voting against were Supervisors Ross Mirkarimi and Chris Daly.

Under the ad deal, the company has the sole advertising rights at transit shelters and freestanding sidewalk kiosks in exchange for at least $306 million over 20 years.

The company and city officials have refused to say how much Clear Channel stands to earn from the deal, saying the information is confidential because the company considers it proprietary.

Clear Channel was one of three bidders for the deal. It becomes responsible for replacing all 1,110 transit shelters around the city and could receive approval to install 400 more.

The company also is required to replace 39 advertising kiosks and could get permission to add 111. The company must maintain the shelters and streetcar boarding platforms.

Under the agreement, Muni would get $5 million up front and would be guaranteed minimum payments of almost $7 million in the first year and more than $35 million in each of the following years.

The existing shelter advertising contract, held by CBS Outdoor, expires in December. Under the current agreement, Muni receives about $300,000 a year from the contractor. Clear Channel beat out CBS Outdoor and another company, Cemusa, in the competition to negotiate the new transit shelter deal.

Mirkarimi, one of two supervisors to vote against the contract, said he was troubled by the timing of Clear Channel’s donation but did not believe it influenced Peskin’s vote or that of any of board members.

St. Croix, the Ethics Commission director, said city codes restricting contributions to political committees by companies contracting with the city are imprecise.

He said it is unclear whether the rules bar contributions only to committees intended to raise money to elect a particular official or whether they also cover ballot measure committees controlled by an official.

However, Stern, the campaign finance and ethics expert, said that although no court has ruled on that question, he believes the law applies in a case like the Clear Channel contribution.

Either way, St. Croix said, it is the responsibility of the donor to follow the rules, not the elected official.

In addition to Clear Channel, the Prop. A campaign received financial support from development and real estate companies such as Seven Hills Properties, Emerald Fund, Inc. and Trinity Management.

Developers and their lawyers have encountered difficulty in getting some projects approved by Peskin and his fellow progressives on the Board of Supervisors. The board’s authority over private development projects has grown in recent years. It is now frequently the last stop on zoning and other development permit matters and appoints three members of the seven-member city Planning Commission.

In August, Supervisor Jake McGoldrick raised eyebrows when he broke with his progressive colleagues and provided the swing vote for a controversial condominium project in the Mission District.

The night before the vote, McGoldrick attended a fundraiser sponsored by the lobbying firm that Seven Hills had hired to push the project through the Board of Supervisors.

Peskin said he worked to persuade developers to support Prop. A, arguing that it is in their best interests because new downtown development will require a strengthened public transportation system.

Peskin also noted that Clear Channel is part of the Committee on Jobs, a politically influential, pro-business group that donated $25,000 to No on E. Proposition E is strongly opposed by Mayor Gavin Newsom, and the campaign to defeat it is a high priority for Newsom’s backers in the business community.

Unlike Peskin’s relationship to the Prop. A campaign, Newsom doesn’t control the committee set up to defeat Prop. E.

Stern said it’s clear that companies try to curry favor with elected officials by donating to ballot measures that the officials support.

“They only reason (the companies) do it is because the politician controls something they’re interested in,” he said. “If you give money to something the official supports, you’re really giving money to them.”


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