Wednesday, September 5, 2012

Mayor Johnson's arena task force funded largely by Sacramento Kings - Sacramento Bee

As a task force formed by Sacramento Mayor Kevin Johnson engaged in a public relations crusade last year to develop a financing plan for a new basketball arena, its effort was funded in large part by one of the parties with whom city officials would end up negotiating: the Sacramento Kings.

That funding stemmed from an arrangement worked out by Johnson, and agreed to by the Kings, that stipulated that 10 percent of the millions of dollars in corporate sponsorships the mayor helped raise for the franchise last spring would be funneled into his Think Big committee.

None of the donations â€" designated on official forms as being from the Kings to a foundation created by the mayor â€" were revealed until months after negotiations between the city and the Kings owners had collapsed. That is well beyond the state deadline for local officials to report such donations, according to newly released documents filed with the Sacramento city clerk. As a result, the state Fair Political Practices Commission is examining Johnson's network of nonprofits.

Those nonprofits, including Think Big, operate under an umbrella organization founded by Johnson called the Sacramento Public Policy Foundation. Since 2010, the group has raised more than $1.3 million in donations known as "behests," records show.

Since first running for office in 2008, Johnson has shown he is capable of raising money at levels never seen before in Sacramento city politics. That fundraising prowess has extended to his network of nonprofits dedicated to the arts, green technology and homelessness, all of which operate outside the traditional City Hall framework.

Other Sacramento council members also use behests to fund nonprofit organizations, and the practice has long been in place at the state Capitol. Johnson's fundraising, however, dwarfs similar efforts at City Hall.

The largest benefactor of Johnson's fundraising over the past 15 months has been his arena task force, records show. And the biggest supporter of that cause has been the Sacramento Kings.

Between June 2011 and March 2012, the Kings made $379,923 in donations to the Sacramento Public Policy Foundation, according to documents filed with the Sacramento city clerk. All of that money went to Think Big, officials with the task force said.

The money represented a cut of the $10 million in corporate sponsorships Johnson helped raise in spring 2011 to keep the Kings in town. Some companies made their payments directly to the mayor's arena task force, while others paid the Kings the full share of their sponsorship deals and agreed to have the franchise transfer a 10 percent cut to Think Big, according to team and task force officials.

The Kings organization then made donations to the mayor's foundation in the form of behests, according to city clerk records. Johnson's name appears in the records as the elected officer overseeing every behest made by the Kings.

Funding raises questions

The behests were made as Johnson led the charge for a new arena.

A tentative agreement on an arena financing plan was reached in February, with the Kings initially agreeing to contribute $73 million toward the project in the form of loans and gifts from the NBA. The city, in turn, was poised to contribute more than $250 million by leveraging its downtown parking operations.

The deal eventually collapsed after the Kings backed out, citing dissatisfaction with the terms of the deal and questioning the city's projections for how much revenue a downtown arena would generate.

Johnson and city officials have refused to renegotiate, contending the projections were accurate and the terms fair for both the city and the Kings.

Derek Cressman, the Western regional director for Common Cause and a candidate for the city's elected charter commission, said the donations from the Kings create the perception there was "an important public policy decision that was unfortunately somewhat beholden to the interest that has the most to gain or lose."

"On the one hand, the mayor has this project he thinks is good for the city and a lot of voters agree with him," Cressman said. "The concern and the flip side is when those worthwhile projects are getting funded by an entity that has a huge financial stake in the city's decision and the mayor's decision. Does that alter the decision-making process? The risk is that it does."

The Bee asked the mayor's office whether the arrangement presented a conflict for Johnson. The mayor's spokesman, Joaquin McPeek, said the mayor was in Charlotte, N.C., attending the Democratic National Convention and unavailable for comment.

Kunal Merchant, the mayor's chief of staff when the behests were made and now executive director of Think Big, said in an emailed statement that the arena task force "protected taxpayers, maximized public participation and put the city's best interests first."

"Think Big is proud of the broad range of supporters who have rallied behind our singular focus on bringing jobs and economic development to Sacramento," he wrote.

While the deal was being crafted, Think Big spent its money developing reports on the economic impact of a new arena and public meetings on the project. Its executive director, political consultant Chris Lehane, helped guide the city during arena financing negotiations in Orlando, Fla., in February.

Chris Clark, a Kings spokesman, said the team made its donations at the direction of its corporate sponsors. "We received letters from certain sponsors directing 10 percent of the funds be allocated to fund SPPF (the Public Policy Foundation) and we acted accordingly," Clark said.

Filing deadlines missed

At least two companies refused to have their sponsorship deals fund Think Big. One of those was Thunder Valley Casino, which provided one of the Kings' largest sponsorships at $1 million.

"The commitment that the tribe (that operates Thunder Valley) made was for an advertising sponsorship arrangement for Thunder Valley to have a prominent place in Power Balance Pavilion," said Doug Elmets, a spokesman for the casino. "We were not interested in funding a consultant-driven effort to fund studies about the potential for a new arena."

Many companies did agree to the terms. The supporters included some of the region's largest corporations, such as Sleep Train Mattress Centers, which is in negotiations with the Kings over a naming rights deal for the existing arena; vision health care provider VSP; and Western Health Advantage.

Alex Sigua, a spokesman for VSP, said the company "remains committed to supporting the Sacramento region and doing what we can to create a world-class region with world-class amenities."

The behests from the Kings are being examined by the FPPC, after The Bee raised questions about whether they were reported in a timely fashion. The donations were filed with the city clerk well after the 30-day reporting deadline outlined by state regulations.

Four of the donations were reported on Aug. 23, even though the mayor received them in the summer of 2011, according to city records. A fifth, filed in July, had been made in March, records show.

Merchant said the late filings were due to a "clerical error" that was discovered as the Public Policy Foundation was wrapping up its 2011 tax documents.

Robert Stern, president of the Center for Governmental Studies in Los Angeles, said the funding arrangement did not create a direct conflict of interest for the mayor because Johnson did not personally benefit from the team's donations. However, he said, "any time money is being transferred to a task force he set up, he's benefiting politically."

"Clearly that gives him more power," Stern said. "It doesn't mean it's a conflict of interest. It just shows he has clout."

© Copyright The Sacramento Bee. All rights reserved.

Call The Bee's Ryan Lillis, (916) 321-1085

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