The massive real estate developer that is a key player in Santa Clara politics has failed to report more than $40,000 in campaign contributions. While Related Companies has reported $49,000 in contributions to its independent expenditure committee, according to its financial reports, it has spent $90,000.
Although a drop in the bucket compared to spending by the 49ers, the lag in reporting seemingly violates the city’s dark money ordinance.
California law requires that committees report expenditures of $1,000 or more within 24 hours. However, disclosure forms show that the company reported spending between two and 15 days after getting money.
Related filed its financial forms Oct. 15 but indicated that it sent a mailer for each candidate on Sept. 30 and another on Oct. 7 and posted online ads Oct. 4.
Related’s spending has been trending up while its contributions have remained static since its initial $49,000 contribution in late September. That money went to support District 5 candidate David Kertes, District 4 candidate Teresa O’Neill, District 1 candidate Satish Chandra and District 6 candidate Kelly Cox.
Now that the real estate juggernaut’s spending has eclipsed its initial contribution, where is the money is coming from and what will the city do about it?
Violation of the dark money ordinance is a misdemeanor, but the ordinance doesn’t specify whether the city would fine the company and, if so, who pays the fine. It only says that a resident can pursue civil action for damages, including attorneys’ fees.
Not only is failing to report expenditures a crime, according to the city’s dark money ordinance, it has broader implications for the developer.
If the city finds Related failed to properly disclose spending, it could jeopardize its contracts for Related Santa Clara. According to the city ordinance, “… violation of these regulations by any contractor doing business with the City will be considered a material breach of contract and grounds for termination of the contract.”
Inquiries to the city clerk’s office as to whether the dark money ordinance applies and whether the city plans to penalize Related for the violation went unanswered 24 hours later. A similar inquiry with the same time constraints to Related’s treasurer, Stacy Owens, asking for an explanation also went unanswered.
We will update this story if we get responses after publication.
City Clerk Hosam Haggag previously told The Weekly that “the city does take these reports seriously” when referring to claims that an organization has violated the city’s dark money ordinance.
In addition to penalties for Related, according to the ordinance, candidates that benefited from the spending can be barred from voting on matters in which Related has a financial interest.
Considering the candidates Related has spent money supporting have signed an ethics pledge vowing to adhere to the law, it is curious the lot haven’t already denounced the company’s support. Perhaps they will speak up before election day.
View Comments (6)
It is obvious to me that the SVV is biased. SC politics have become really ugly this year. I hope regardless of your opinion on the who is spending or how much that you VOTE. Otherwise your opinions are meaningless. I am hopeful that we can actually read the city’s Code of Ethics after this election without shaking our heads at the hypocrisy.
What are the chances Pat Nikolai or Lisa Gillmor draft a letter to DA Jeff Rosen asking his office to investigate the misdemeanor with Ms. Owens? Current Council Members need to remember the police chief isn’t the only elected official who can request misdemeanor inquiry by the DA’s Office.
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“… violation of these regulations by any contractor doing business with the City will be considered a material breach of contract and grounds for termination of the contract.” If Related has violated the law, they should be fully held accountable. Termination of the development contract may benefit city residents as the massive empty lot that use to generate revenue has yielded nothing in the past 10 years and there is no movement by Related indicating economic promise in the next few years.
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Again, Haggag is on his way out the door. No skin in the game, he won’t respond despite still holding title of City Clerk and presumably the responsibility.
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“it is curious the lot (Kertes, O’Neill, Chandra, Cox) haven’t already denounced the company’s support. Perhaps they will speak up before election day.” Highly unlikely. They didn’t on a local blog that’s accessible and friendly to them, instead Shanks came to their rescue with a disparaging representation of the facts and redirected blame elsewhere. Besides, Cox and O’Neill don’t even want to be on Council, they’re lending minimal effort here. Chandra’s maladroit capacity requires SCPOA to hand him a reply.
From the article: "Inquiries to the city clerk’s office as to whether the dark money ordinance applies and whether the city plans to penalize Related for the violation went unanswered 24 hours later."
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From CSC: "Again, Haggag is on his way out the door. No skin in the game, he won’t respond despite still holding title of City Clerk and presumably the responsibility."
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The article is extremely misleading. Mr. Alexander sent an email Tuesday afternoon inquiring about Related's filings. I responded promptly within 2 hours of his inquiry stating I'd look into the issue and get back to him as soon as I had more information. I immediately forwarded the questions from Mr. Alexander to our Assistant City Clerk and Assistant City Attorney. After the cursory review did not indicate a violation as framed by Mr. Alexander, and that the filings were possibly in order, I requested on Wednesday evening that the City reach out to the Campaign Committee to confirm as an additional precaution. I have not yet heard back from our follow-up with the campaign committee. All of this is documented in email and you're more than welcome to submit a PRA request to verify.
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Given the comment from Related's spokesperson below, and the Editor's response back, it appears that the entire premise of the article is out the window.
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I do take my role seriously and will continue to do so until my last day in office. The way the article is framed, and the comment from CSC, both attempt to smear my name as giving a pass or turning a blind eye. Which is par for the course when it comes to articles from the SVVoice and San Jose Spotlight (like the time they published an entire article based on a rumor propagated by Councilmembers Becker and Jain that I was living in Washington State, and to this date have not retracted that bogus article despite multiple requests to them).
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And we wonder why good people don't want to run for office (or stay in office once they're there)...
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Hosam Haggag
Your City Clerk
This story is inaccurate and misleading. There are no missing donations. Your article mistakenly identifies expenses Related Companies’ Independent Expenditure Committee has incurred, and some the Committee anticipates but hasn’t yet received an invoice for. Campaign laws require expenses to be reported within 24 hours of either being paid or a communication being disseminated. Expenses must also be reported when they are accrued. As the law requires, we have transparently reported expected costs but haven’t yet paid. When we receive vendor receipts, the Committee will pay its bills and report the final contributions and expenses. To suggest anything illegal or unethical has transpired is just plain wrong. - Evette Davis, spokesperson, Related Companies
Ms. Davis,
You are correct. The article mistakenly says the law requires that campaign contributions need to be reported within 24 hours. We will correct the story to note that the law requires Related to report when it spends the money it receives within 24 hours. That was an oversight and we apologize.
While every mistake is regrettable, this is why we contact sources for clarification. As noted in the story, we contacted your treasurer, Stacy Owens, for a comment. While we accept responsibility for mistakenly writing “contributions” instead of “expenditures,” this could have been avoided had Related prioritized financial transparency and responded to our request to explain this gap between money received and money spent.
There is no reason your explanation couldn’t have appeared in the body of the story instead of the comments, given how promptly you responded to our story.
We gave Ms. Owens more than 24 hours to specify that Related is exploiting a loophole that allows it to avoid reporting the money it gets until it spends it. But you are right. It would be more accurate to note that Related is simply acting that it hasn’t gotten $41,000 in contributions until it spends them. Since nobody at your company deemed responding to us important enough to explain why that is, we couldn’t offer the public a reason for it.
Thank you for the comment Evette, the people at this publication need to be held accountable for publishing clearly misleading and false trash like this...such a waste of time. Anyone with an ability to think critically should know this...a company the size of related is not going to try to hide $41K...Come'on David Alexander...publish something real and informative for once.