Two fair elections code decisions issued on Tuesday show the limits of Spokane city’s campaign finance laws, which, in theory, are meant to prevent corruption by limiting the political donations of people or companies who contract with the city from also donating to their current (or future) clients (the electeds). The citizen complaints were made against two mayoral candidates: incumbent Mayor Nadine Woodward and challenger Lisa Brown. In both cases, city lawyers found that despite the donors making far more than the legal limit of $50,000 in city contracts, the donors’ business with the city did not meet the definition of a “contractor” subject to city campaign finance laws.
The complaint against Mayor Nadine Woodward was based on a $1,400 donation from businessman Larry Stone, the owner of the warehouse location of Spokane’s largest homeless shelter, the Trent Resource and Assistance Center. The other complaint was lodged against Brown for accepting $500 from Michelle Hege, the owner of Desautel Hege, a Public Relations firm that has a marketing contract with the City Parks Department. According to a portal on the city’s fair elections website, Stone has made $330,062.79 leasing the Trent Shelter to the city and Desautel Hege has made $233,335.92 from an advertising contract with the city parks department.
Despite these contributions technically fitting the letter of the city law, both campaigns returned the donations, meaning that, in many cases the city’s campaign laws seem to be working on good faith, not legal force.
These laws only apply to direct campaign donations, and have no bearing on independent expenditures by outside political action groups, which are essentially unlimited because of the Supreme Court decision in Citizens United.
Why the donations aren’t regulated
Neither Stone’s nor Hege’s contract was subject to the city fair elections code because they did not go through a city competitive bid process that requires council and mayoral approval. So, they don’t meet the narrow definition of a “contractor” forbidden from donating to campaigns. RANGE covered this loophole, which was also used by Mayoral candidate Ben Stuckart in 2019, earlier this year.
The contract with Stone was not subject to a competitive bid process because the warehouse was chosen specifically by the Woodward administration as the site for a new homeless shelter. After the city selected the site, the property was acquired by Stone expressly for the city, according to testimony by city CFO Tonya Wallace yesterday. The city’s fair election law only covers competitively bid contracts approved by city council and the mayor. There was no competition for this contract, instead Stone acquired the building knowing the city planned to make it a shelter then shortly thereafter raised the listing price for the lease.
Read our history of the Trent Shelter acquisition
Donations made by Michelle Hege, the CEO of Desautel Hege, are also not subject to campaign finance rules because that company’s contract was not subject to Mayoral or City Council approval. The Desautel Hege advertising contract was with the Spokane Park Board, which was created in 1910 and under the city charter has independent procurement power.
“The City Council and the City administration had no involvement with this contract,” explained Assistant City Attorney Mike Piccolo.
Desautel Hege has done communications and marketing for the parks department since 2016, after winning a competitive bid. Hege said she was not aware of the campaign finance law when she made her donation to the Brown campaign and that she understood why her donation was returned even though she doesn’t think there’s a conflict of interest.
The company is involved in Brown’s campaign as the campaign’s marketing team. Brown’s campaign has paid nearly $73,000 to Desautel Hege’s marketing team this campaign season. That’s more than half of the money spent by the Brown campaign so far, according to public disclosures.
Giving back
Prior to this week’s rulings, all four candidates who got money from Larry Stone have returned it. That includes Mayor Woodward, Council member Michael Cathcart who is running for re-election in District 1, candidate Katey Treloar who is running for city council in District 2 and city council president candidate Kim Plese. The Woodward and Plese campaigns did not return requests for comment.
“I returned the donation to ensure that my campaign was following contribution regulations,” said council candidate Katey Treloar.
Council member Cathcart said that his decision to return the contribution wasn’t based on specific legal advice. “As I thought about it, and some of the conversations we’ve had at a policy level around the facility, I really got to thinking, ‘well, he is the owner, we’re renting from him,’” Cathcart said. “Even if it’s just a perception, I probably shouldn’t [accept the donation]. So, I just made that decision to return it.”
After the ruling that donations from Stone are legal, Cathcart said he still wouldn’t accept donations directly from Stone or Stone’s real estate company, LB Stone Properties, moving forward.
One of the challenges with knowing who a candidate can or cannot accept money from is that the list of city contractors making more than $50,000 in city contracts on the city’s fair election website doesn’t parse out who is or isn’t subject to campaign finance laws. Both Stone and Hege’s companies show up on the list.
The big money local laws can’t stop
While candidates have returned donations from contractors doing business with the city, there’s no stopping individuals from spending unlimited amounts of money on campaigns through Political Action Committees. And, big money is already rushing into Spokane elections from these outside expenditures.
According to the latest Washington State Public Disclosure Commission filings, the National Realtors Association Fund has spent more than $282,000 so far this election cycle. The PAC has spent nearly $100,000 each on candidates Woodward and Plese and over $40,000 each on Treloar and Moore.
The second highest spending PAC in Spokane elections this far, is the Spokane Good Government Alliance, which lists Stone as a top-5 contributor on mailers, having given the group $15,000 to date according to PDC filings. That PAC has spent more than $107,000 on a combination of ads in favor of conservative candidates Woodward, Council President candidate Kim Plese, District 2 City Council candidate Katey Treloar, District 3 Candidate Earl Moore and incumbent District 1 Candidate Michael Cathcart and against liberal candidate for Mayor Lisa Brown, and Council President candidate and current council member Betsy Wilkerson.
Liberal leaning candidates haven’t yet received the same kind of financial backing from outside PACs. The only PAC money reported this campaign season for liberal candidates has come from the progressive advocacy group Fuse Washington, not in cash but in in-kind staff time to create the organization’s Progressive Voter’s Guide, which covers statewide elections, amounted to $415.74 in support of Brown, Wilkerson, District 2 candidate Paul Dillon and District 1 candidate Lindsey Shaw.
In the 2019 mayoral and city council campaign set local records for spending, with $1.25 million spent on the mayoral race. This year, before the campaign has even passed the primary stage, spending in that race is already nearing $500,000 — foreshadowing another record-breaking year of campaign spending.
