How Marketplace cash helped (and hurt) local politicians 

In the final week before the November 2004 elections, three San Luis Obispo politicians got a nice gift from the developers behind the Marketplace project: $17,870 worth of advertising.

To get around a city-imposed $100 donation cap, the developers didn't actually give any money to the politicians. Instead, they
funneled money through other political groups.

In the mayoral race, developers Ernie Dalidio and Bill Bird's group spent about $1,700 for mailers and telemarketing that supported Marketplace advocate Dave Romero. The same group, SLO Marketplace Associates, spent $2,700 on mailed advertisements criticizing Romero's closest opponent, David Booker.

In the City Council race, the group
paid for $3,500 worth of advertising for candidates Paul Brown and Andrew Carter, and $2,200 for ads against Christine Mulholland.

Dalidio and Bird's group wasn't the only one fighting Mulholland: Eight days before the election, a group calling itself "SLO Associates" wrote a $7,500 check to the SLO-based Homebuilders Association of the Central Coast. The homebuilders association revived a dormant political committee - called Citizens For Affordable Housing - and spent the money on an anti-Mulholland ad, which was mailed to thousands of city residents.

"Whenever somebody mails out something on your behalf as a candidate, you cringe. A lot of people have the best intentions but they often do as much damage as good, especially with an issue this divisive."

Paul Brown, SLO City Council member

Who is "SLO Associates"? Jennifer Phillips, executive officer of the Homebuilders Association, described the group as a coalition of people who are concerned about local housing issues. According to the check the group wrote, they're a corporation from Texas. But the Texas secretary of state has no record of a corporation by that name, nor do California state officials.

"SLO Associates'" address offers some clues: It's the same address as Scott Dabney - a wealthy Dallas developer/philanthropist who owns more than 20 businesses. He's also a financial backer of the local Marketplace project. Dabney's office didn't return calls for this story.

So did all that money help the politicians it was supposed to?

Surprisingly, Council member Brown said no: "People were trying to hurt Christine and they actually helped her
by solidifying her base," he said, laughing. "A lot of times when money is spent
from outside the area, they don't understand how people [here] think. They
don't understand what's going to hit home."

Brown said that while he supports the Marketplace, he actually wishes the developers hadn't stumped for him.

"Whenever somebody mails out something on your behalf as a candidate, you cringe. People think they're helping you and they're not. A lot of people have the best intentions but they often do as much damage as good, especially with an issue this divisive," he said.

Mulholland disagreed with Brown. She characterized the last-minute mailer as "a hit piece" that was strategically sent so she wouldn't have time to respond. She called the tactic "dirty pool" supported by "big outside money," adding that it's too bad this happens in SLO.

Mayor Romero, whose campaign was supported by positive mailers sent by SLO Marketplace Associates, said the city attorney has been instructed to investigate the campaign loophole.

According to a memo City Attorney Jonathan Lowell prepared for the City Council, the last-minute contributions were perfectly legitimate.

Lowell wrote: "[The] expenditure report also reflects the receipt of a contribution in the amount of $7,500 from SLO Associates, LP in Dallas, Texas. The address for this entity is the same as that for developer Bill Bird's financial backer, Scott Dabney in Texas. No violation is evident in this situation because, as Citizens for Affordable Housing operates on a regional level, it is regulated by state rather than local law."

Lowell explained the justification for the loophole like this: The money that these political groups spend is not going directly to politicians, so politicians are not influenced in the same way as they would be by a large independent
contribution.

"I'm not sure whether [the loophole is] correctable or not," said Mayor Romero. "Outside agencies give support to whatever candidate they feel entitled to." City campaign laws govern city donations but outside agencies are exempt from city laws, added Mayor Romero.

Lowell said the city has a plan to
create a citizens' committee that will review local campaign donations laws. The laws will be revisited for the 2006 election.

According to Lowell, the loophole is
the reason for the ugly side of campaigning. "This explains why we have so much negative campaigning," he said.