Monday, June 27, 2011
I thought it was news but there are at least five tax exempt organizations designed to pay the housing costs of state chief executives, according to Guidestar. The Los Angeles Times reports in its June 24, 2011 issue that the Governor's Residence Foundation of California exists and is tax exempt for the sole purpose of paying the California governor's rent. At first, the story seems sensational -- that donors make tax deductible contributions to benefit a specific individual but I suppose it can be explained that the donor's are not exactly doing that. Instead, they are making donations to assist the state in providing a residence for an executive officer. But apparently these sorts of organizations perpetuate themselves by people who want to support a particular state chief executive. In other words, after Governor Jerry Brown's term, the organization's insiders will leave (assuming they do not support his successor in office) and will be replaced by insiders who support his successor. This might all be consistent with 501(c)(3)'s purpose of relieving the burdens of government, but I gotta agree with the article's implicit assertion that it just doesn't smell right!
Gov. Jerry Brown will look to a group of private donors — presently refusing to reveal their identities — to pay his rent at the luxury loft in downtown Sacramento where Brown and his wife live while in town. Donors are contributing to a nonprofit formed specifically to cover the costs of Brown's $3,000-a-month, 1,450-square-foot apartment. In the past, the practice of having private donors pay for the governor's residence has alarmed ethics watchdogs. Under former Gov. Arnold Schwarzenegger, those who funded his Sacramento hotel penthouse had business before the state. Critics of the practice say the contributions afford those interests undue access and influence. California is one of only a handful of states that does not provide an official governor's residence. Brown's office referred questions to George Kieffer, who is president of the nonprofit, known as the Governor's Residence Foundation. Kieffer said his group would release the names of donors and the amount they have contributed in January 2012. He said the group was raising money to pay Brown's rent, as well as his utility bills.
"We're budgeting some additional money assuming that, from time to time, there'll be entertainment there of legislators and others, as you'd expect in connection with a governor's residence, that are government-related," Kieffer said. That could push the annual sum raised by the foundation close to $50,000 — all money that Brown would not have to spend. Kieffer, a lawyer at the law firm Manatt, Phelps & Phillips, was head of the same nonprofit when it paid for Schwarzenegger's stays in the 1,800-square-foot suite at the Hyatt hotel, across the street from the Capitol. Ethics groups accused Schwarzenegger of using the nonprofits that paid for the residence and other expenses to make an end run around campaign finance laws intended to limit the amount of money corporations and individuals can donate to a candidate. One of Kieffer's fellow foundation directors then was Bob White, who runs a Sacramento consulting firm, California Strategies, that has substantial business before the state. Donors to the fund included Lewis Investment, one of the country's largest private developers; the Western Growers Assn., which represents big farms in California; and developer Tejon Ranch, also a White client. Kieffer's law firm has a lobbying arm in Sacramento and represents blue-chip clients such as Intel Corp., AT&T Inc., Toyota Motor North America and Xerox Corp. Kieffer said he saw no conflict raising money for the governor's capital city housing. "Almost every law firm in the state deals at some time with the government," he said.
Kieffer is one of three board members who will govern the residence foundation, he said. The others are John Protopappas, a developer who is president and chief executive of Madison Park Financial Corp. in Oakland, and Zack Wasserman, a lawyer with the firm Wendel, Rosen, Black & Dean, also in Oakland. All three have long ties to Brown. Kieffer served as general counsel to Brown's 1976 presidential campaign. Protopappas served as treasurer when Brown ran for mayor of Oakland. Wasserman has served as Brown's attorney.