At least two South Bay public safety PACs have operated as “gray money” PACs in recent elections: Santa Clara Police Officers Association (POA) PAC and Silicon Valley Fraternal Order of Police PAC. In both cases the money came from developers and financed independent expenditures.
Gray money is independent expenditure money that travels through nesting PACs to make it more difficult to identify the sources of money. Sometimes that’s just one step. Sometimes it’s multiple steps, requiring another step back to find out who the PAC’s donors are.
This kind of money funneling is becoming more common nationally, but it’s a recent development in Santa Clara.
The Santa Clara Police Officers Association (POA) PAC spent $102,000 the 2016 election, and $85,000 of it came from developers and the California Apartment Association, according to financial reports filed in 2016 and 2017.
That was unprecedented for the PAC, which spent a mere $4,000 in 2014 to support the campaigns of former Mayor Jamie Matthews and former Council Member Dominic Caserta and Council Member Patrick Kolstad. Like 2018, 2016 was a POA contract negotiation year for the police.
In 2016 the PAC spent the developer money on the vicious “Letter from Your Mayor” black/white direct mail campaign attacking Police Chief Mike Sellers, Council Member Patricia Mahan, and losing Council candidates Ahmad Rafah, John McLemore and Mohammad Nadeem.
The POA PAC’s big donors were: De Anza Properties (John Vidovitch): $20,000; Prometheus Real Estate Group: $15,000; Citation Homes/SCS Development: $10,000; Summerhill Homes: $10,000; and the California Apartment Association PAC: $10,000. The developers all have had projects before the Council in the last four years.
The Apartment Assoication donation does double duty for developers. They can give twice or give without being seen because the nested spending isn’t visible without peeling another layer off the money onion.
For example, Irvine didn’t donate to the POA PAC in 2016, but is the single largest donor to Apartment Association PACs — $250,000 between 2016 and 2018. Prometheus is the second largest Apartment Association PAC donor — $202,000 between 2016 and 2018. Other big Apartment Association PAC donors that are operating in Santa Clara include Sares Regis ($166,000) and Essex Property Trust ($156,000).
The Apartment Association PAC has spent in Santa Clara elections before: $21,000 in 2014 to support Caserta, Kolstad and former Mayor Matthews.
Although it wasn’t on the Santa Clara ballot that year, the Apartment Association’s big issue in 2016 was rent control, and its Issues PAC collected $1.2 million from property owners and developers in 2016 to defeat rent control in California cities, according to state financial reports. Prometheus donated $50,000 specifically to fight a rent control measure in Mountain View.
Santa Clara’s POA PAC money funneling operation isn’t unique. The practice has been employed by another South Bay police PAC: The Silicon Valley Fraternal Order of Police (SVFOP) PAC.
In 2014 the SVFOP PAC made independent expenditures supporting Magdalena Carrasco and attacking her opponent Xavier Campos in San José’s 2014 City Council campaign. The PAC filed its financial reports in San José, while the NEC and the Apartment Association filed theirs with the California Secretary of State.
A sampling of police PAC spending from other California cities shows that while police union PACs spend big on political campaigns, their money appears to come almost exclusively from member dues.
Calls to the Santa Clara POA PAC for an explanation of its unprecedented political spending were not returned. The SVFOP PAC doesn’t appear to be active anymore.
Editor’s Note: In an earlier version of this story we said that another organization, the Association of Retired San José Police Officers and Firefighters PAC, was also involved in gray money activities with an East Bay real estate PAC.
The information was retrieved from the San José campaign finance reporting system under the Association’s ID, and we have screen captures showing the search results from the campaign system.
However, the Association has never been associated with the real estate PAC and has no connection of any kind to it. We apologize for saying otherwise.
After being alerted by the Association PAC that our information was incorrect, we checked with San José City Clerk Teresa Lewis. She researched the filings and found that both groups used the same treasurer, who had filed both PACs’ reports under the same ID. The City of San José’s filing has now been corrected.
In an unusual step, we decided to revise the story rather than keep it online with a correction and explanation.
Even though courts have ruled that online newspaper content is considered the same as printed newspaper content — every copy of the paper isn’t a separate instance of publishing — we think that the realities of our online search engine age sometimes demand flexibility. This is an exceptional action taken in an exceptional circumstance.