Capitol Alert

John Chiang helped award millions in tax breaks to his developer donors

California Treasurer John Chiang has helped award tens of millions in tax credits and bonds over the last decade to a handful of affordable housing developers who contributed to his political campaigns.

A review of their projects by The Sacramento Bee found that Chiang has accepted more than $100,000 from firms that gained tax perks or bond financing from his actions, sometimes within weeks of the votes.

As he prepares to run for governor next year, Chiang has used the companies and projects he supported to help promote himself – at taxpayer expense. He plans to carry a 2018 statewide ballot initiative to address the shortage of affordable housing in California.

Since 2013, for instance, Chiang voted to grant 9 percent tax breaks to three of Domus Development’s projects: Curtis Park Court, a senior community near Sacramento City College, as well as Sutter Place in Carmichael and Anchor Village in Stockton.

Beginning that year, the company’s top brass and its tax-credit equity syndicator contributed nearly $40,000 to Chiang’s campaign committees, including $7,500 toward his 2018 run for California governor.

Last year, he featured Curtis Park Court and a Domus representative in a 4 1/2-minute video posted to his government website under the title “Treasurer Tackles California’s Affordable Housing Crisis.”

A Chiang campaign spokeswoman declined to make him available for an interview. But in a prepared statement, Chiang said the contributions have no influence over his decisions.

“As someone who has spent a career exposing billions in government waste and corruption, protecting the integrity of my office is paramount to me,” he said. “Decisions by my office about where to invest public dollars are driven largely by mathematical formulas tied to getting taxpayers the most bang for their buck. The evaluation and scoring are done by professional staff who have nothing to do with or any knowledge as to who supports my campaigns.”

Treasurer’s Office officials stressed that the affordable housing firms included in The Bee’s tally began working with California before Chiang assumed his first statewide post, state controller, in 2007. But campaign finance records show they have been far more generous to Chiang than others who have served as treasurer or controller.

Chiang supported the perks to Domus through the California Tax Credit Allocation Committee, whose three voting members administer federal and state low-income housing tax credits. The bonds were green-lighted by the three-member California Debt Limit Allocation Committee, a board that like the other includes voting representatives for the treasurer, controller and governor.

Chiang said he does not have a policy of screening certain tax and bond applicants for campaign contributions, arguing that “everyday citizens who don’t have country club memberships have to be able to raise money to be competitive.”

Such activities normally don’t run afoul of the law unless there is an explicit agreement or understanding that it was made as a quid pro quo for an official action, said Ken Gross, a campaign finance expert in Washington.

“Beyond that, it’s a political decision for the electorate,” Gross said.

Chiang is campaigning on a platform of fiscal responsibility and empowering the public to hold government officials accountable. Experts said the activity could undercut his credibility with voters and give ammunition to his better-known Democratic opponents. Among those Chiang is running alongside are former Los Angeles Mayor Antonio Villaraigosa and California Lt. Gov. Gavin Newsom.

“He’s in this weird place where he says ‘I know I don’t have the star wattage of my opponents, ‘but you can trust me with the (state’s) checkbook,’ ” said Jessica Levinson, a professor at Loyola Law School and president of the Los Angeles Ethics Commission.

Donations and votes in close succession, she said, can raise questions and potentially some red flags. “The question becomes, was the donation given for a vote, or to say ‘thank you’ for a vote?” Levinson asked.

Still, she laid much of the blame on a campaign finance system that allows such examples to proliferate in politics.

“People give to get something,” Levinson said. “And you give to those in power, and to those with power over your destiny.”

‘We sharpened our pencils’

The types of tax perks Chiang supported for firms such as Domus, the developer of Curtis Park Court, are difficult to obtain.

After a June 2010 vote granting credits to Domus’s La Valentina on 12th Street in Alkali Flats, Meea Kang, then president of the development company, told The Bee that Domus tried to secure them the previous year, but lost out “because they’re so competitive.”

“We sharpened our pencils, applied again, and were successful,” Kang said at the time.

Maurice Ramirez, Domus’ new president, said in an interview that the company never appealed to Chiang “to ask him to vote in favor a project.”

“I get it,” he said of the implication, “but in terms of trying to connect donations to the selection of projects – that’s definitely not the case.”

The treasurer’s video featuring Domus and Kang includes clips of Chiang sitting at a desk talking about his role in improving the scarcity of affordable housing.

“I sit on three of the state’s four housing authorities,” he says in the video. “I chair the two state housing authorities that did the first rewrite of affordable housing regulations in over a decade. We’ve had in the early months of this year, after last year’s rewrites, an increase by about 72 percent of affordable housing construction in California.”

The Treasurer’s Office paid a vendor $4,968.69 to produce the video, a Chiang spokesman said.

Ramirez said he doesn’t think appearing in Chiang’s video helps Domus. “For us, it’s nice. But I am not sure that it does us any great benefit,” he said.

Marc Lifsher, a spokesman for Chiang, said the purpose of the videos is to help promote the programs administered by the Treasurer’s Office, not Chiang.

‘1,000 new affordable homes’

Chiang received campaign contributions from other companies for which he voted to approve tax breaks.

Caleb J. Roope, president and chief executive of The Pacific Companies, develops low-income housing through its subsidiary, Pacific West Communities, and received tax breaks from the Tax Credit Allocation Committee.

The Bee determined that Chiang voted to approve the vast majority of Pacific West Communities’ more than six dozen applications beginning in 2007.

His votes helped steer more than $100 million in state and nearly $60 million in federal tax credits to Roope and Pacific West Communities projects. The company made its first contribution in 2009. To date, it has given $37,000 to Chiang, including the maximum $28,200 for governor late last year.

In an October 2015 news release from the Treasurer’s Office, Roope is quoted crediting Chiang with providing more incentives to developers to build more affordable housing.

“With the implementation of his administration’s regulatory reforms, our company can immediately produce over 1,000 new affordable homes that otherwise would not have been possible,” Roope said in the release.

Roope, a Republican who lives in Idaho, told The Bee his company never gave money to Chiang to win his backing on projects. Roope said he’s watched the treasurer speak, and likes his stances on housing and his “fiscal discipline.”

“The policies matter and I want to support somebody who cares about housing,” he said.

‘He would make a wonderful governor’

Chiang supported a series of multimillion dollar tax breaks and tens of millions in bonds for Affirmed Housing Group projects beginning in 2007, when he was state controller.

Starting the year before, Affirmed and its management company, Solari Enterprises, cut checks to Chiang’s campaigns totaling nearly $40,000, sponsoring or co-sponsoring fundraisers in June 2016, October 2014 and October 2013, when it reported an event at Bertrand at Mister A’s, an upscale restaurant whose wraparound balcony offers sweeping views of San Diego’s skyline.

Contributions came shortly before and after votes. After Chiang supported Affirmed tax credits on May 18, 2016 and June 8, 2016, he received contributions from the firm on June 10 and June 16 of the same year.

Two years before, he voted for tax credits for the company on Nov. 12, 2014 and Dec. 10, 2014. Checks came in just ahead on Oct. 8, 2014.

In September 2013, Chiang and the debt limit committee backed a bond for Affirmed. Contributions flowed to his campaign on Oct. 7 and Oct. 22 of that year.

The company and Solari combined to contribute to Chiang, giving $12,500 for his campaign for governor as recently as June 29.

Two days later, Chiang toured Affirmed’s affordable housing project: Cypress Apartments in San Diego’s East Village. In June 2015, Chiang voted to approve $1.27 million in federal credits annually for a decade for Cypress.

Jim Silverwood, president and chief executive of Affirmed Housing, was quoted lauding Chiang in a June 22 news release issued by his gubernatorial campaign.

Chiang reached out to Affirmed to schedule the campaign stop at Cypress, Silverwood said in an interview. He said the project was built to serve the city’s spiraling homeless population. Affirmed never received preferential treatment from the Treasurer’s Office under Chiang, Silverwood said. “Any contributions that might be made around any time of year are totally coincidental,” he said.

Silverwood called Chiang a “great guy,” and said he deeply understands affordable housing and smart-growth concepts.

“He would make a wonderful governor,” he said.

‘I wanted to get a first-hand view’

Chiang is not the first treasurer to face questions about benefiting those who financed their political ambitions.

Former Treasurer Matt Fong collected more than $177,000 from contributors who had a range of business before his office, the San Francisco Chronicle reported during his 1998 campaign for U.S. Senate. Fong used the money from developers, contractors and lawyers – some with pending tax credit applications such as the few The Bee reviewed in Chiang’s case – to build out his campaign early on.

Democrats Jesse Unruh and Kathleen Brown and Republican Tom Hayes, who all held the office before Fong, raised much of their contributions from what the newspaper described as a “narrow and specialized constituency” of the Treasurer’s Office.

Other donors appearing in taxpayer-funded promotional materials successfully sought help from Chiang, the Bee analysis found.

Blue Line Transfer, a solid waste and recycling company in South San Francisco, contributed to Chiang – $1,000 in 2008, $1,500 in 2014 and $2,000 for governor this year.

Efforts to help Blue Line and related companies began in 2007. Chiang’s California Pollution Control Financing Authority authorized $10.2 million in bonds for Blue Line in 2012. That was extended to $17.6 million in 2014; and then $22.7 million the next year.

Blue Line also received a sales tax exclusion from the California Alternative Energy and Advanced Transportation Financing Authority in 2013. Company officials did not return calls seeking comment.

Chiang included Blue Line in a news release and 6-minute video last year spotlighting Douglas Button, the president and chief executive, as well as himself, wearing a neon yellow safety vest.

“Blue Line is actually at the very front of creating biogas using waste products to create greater environmental results ...” Chiang says in the video. “I wanted to get a first-hand view of what was transpiring here, and it’s very, very exciting.”

Christopher Cadelago: 916-326-5538, @ccadelago

John Chiang, Democrat

State Treasurer, 2015-present

State Controller, 2007-2015

The treasurer and controller sit on a variety of financial boards. Each of these three boards also includes a representative of the governor’s administration for three voting members. The elected officials often send others from their office to cast votes as the officials direct.

  • California Tax Credit Allocation Committee – Considers federal and state tax credits for qualifying low-income housing projects.
  • Debt Limit Allocation Committee – Considers bond financing for affordable housing developments and solid waste disposal and waste recycling facilities.
  • Pollution Control Financing Authority – Considers financing for a variety of businesses, including those aimed at improving the environment.

Source: California Treasurer’s Office website