O.C. Law Can’t Stop Powerful PACs : Politics: Committees skirt a conflict-of-interest ordinance and fatten supervisors’ war chests.

For the past 12 years, powerful special interests have taken advantage of a gaping loophole in Orange County’s campaign reform ordinance to pour hundreds of thousands of dollars into the political war chests of county supervisors.

By passing the money through unregulated political action committees, the groups have found ways to avoid registration requirements and sidestep a local conflict-of-interest ordinance known as TINCUP.

Members of the Board of Supervisors have been able to take that PAC money while, time after time, approving projects and contracts favored by the groups that made the donations. By contrast, a supervisor can only take $1,944 from any individual or company before having to declare a conflict and stop voting on issues concerning that contributor for four years.

Nevertheless, in 1990, two supervisors received a total of $7,500 from a PAC under the wing of Orange County’s largest home builder--yet joined their colleagues in voting for a $1.4-million rebate sought by that company. The five supervisors also have taken a total of $9,400 from a PAC created by a county lobbyist--yet voted to award lucrative contracts to the lobbyist’s clients.

And among the most regular and generous contributors to the supervisors are PACs set up by unions representing the county’s 16,000 employees. Yet the supervisors routinely have voted on pay raises for the members of those unions.

“In Orange County, PACs are the way to get around the law,” said Robert Stern, general counsel of the nonprofit California Commission on Campaign Financing and the man who drafted the comprehensive state campaign law that became the Political Reform Act. “That’s something to be very concerned about.”

But the supervisors themselves defend their contributions with vigor. “If it’s legal, then I have no problem with it,” said Supervisor Don R. Roth, who has collected a total of $140,326 from PACs since he first threw his hat in the ring for a board seat in 1985. “I’m not troubled provided that it’s within the law.”

An investigation by the Times Orange County Edition, which for the first time used a computer to analyze more than a decade’s worth of supervisorial fund raising, shows that since early 1977, candidates for the board have accepted 1,040 contributions--totaling $821,532--from more than 200 special interest committees and associations. Many financial supporters of those same PACs have regularly brought projects, contracts and other matters to the board for approval.

Yet, because PACs were not mentioned in the county’s TINCUP reforms, no county supervisor has ever been obliged to abstain from a vote because of a PAC contribution.

Among the Times’ other key findings:

* Since 1977, the year before TINCUP went into effect, PACs have increased their annual giving to supervisors and board candidates by 684%, and their percentage of the total political contributions received by those politicians has more than tripled. The growth has been particularly striking in recent years, as the number of PACs that qualify as “major campaign contributors” has leaped from six in 1985 to 39 today.

* PACs provide sophisticated contributors--most notably developers, other businesses and unions--with a way to funnel thousands of dollars to the campaign coffers of board members without the supervisors ever having to abstain from the developers’ projects or the union contracts.

* PACs give individual county lobbyists a way to enhance their own influence by acting as conduits for developer contributions to the board.

* Because they give almost exclusively to incumbents, PACs fortify a political environment in which it is nearly impossible to mount an effective challenge to a sitting supervisor. No incumbent has been defeated since 1980.

Even though contributions by PACs today only represent about one-eighth of total donations to supervisorial campaigns, the growth of PACs has been striking, leading critics to charge that they are eroding the landmark campaign reforms and threatening to rekindle the corruption that engulfed the Orange County board in the 1970s.

Even Supervisor Thomas F. Riley, the board’s senior member, acknowledges that PAC contributions have sometimes left an embarrassing misimpression of impropriety. “It can be perceived badly,” he said. “And if it’s going to cause problems, I’m all for changing it.”

Political action committees are not limited to Orange County, and in fact are much bigger players in state and federal races. They emerged nationally as serious fund-raisers in the past decade or so, and many observers credit them with broadening the political base by giving citizens a way of getting the most for their money--in the areas of abortion or gun ownership, for instance, PACs on both sides of the issue have poured millions into federal races.

Critics of PACs

But as PACs have grown in popularity, they have found critics on both ends of the political spectrum.

Common Cause, the nation’s leading campaign reform organization, has long deplored PACs, saying that they skew decision-making toward special interests. In his 1991 State of the Union address, President Bush joined the field of critics, calling on Congress to “put the national interest above the special interest” and “totally eliminate” PACs.

Local PACs have proved no less controversial. And TINCUP, which is an acronym for Time Is Now, Clean Up Politics, makes the issue particularly acute in Orange County.

Enacted in response to a series of scandals that rocked Orange County politics in the 1970s, TINCUP originally required that a supervisor who received more than $1,000 in any four-year period from any source must abstain from matters involving that source for four years. Although an escalator clause allowed the threshold to grow--it now stands at $1,944--the abstention requirement was at the heart of TINCUP.

The ordinance--which carries a maximum penalty of six months in jail and a $1,000 fine for those who violate it--attempted to thwart what many of its backers saw as the most troubling developments in county government: Developers giving to supervisors and the board approving their projects; architects giving to supervisors and then winning county contracts; lobbyists giving to supervisors and then representing clients before the board.

TINCUP has not proved difficult for most supervisors to live with. Abstentions are rare, and tend to involve only a few of the thousands of companies and individuals who bring matters before the supervisors.

But TINCUP is silent when it comes to PACs.

“I don’t think PACs were a big issue in those days,” said Ralph Benson, TINCUP’s principal author and now general counsel for the San Francisco-based Trust for Public Land. “Part of our theme was to keep it simple. We just said: ‘Look, there are a lot of things, but we can’t solve them all at once.’ ”

As a result, PACs that give more than the TINCUP threshold are added to the county’s list of major campaign contributors, just like companies or individuals. But PACs do not bring projects to the board, so PAC contributions--no matter where the money originated--never trigger the ordinance.

After TINCUP took effect, PAC contributions in Orange County began to grow. Unions, including those representing county workers, were among the first to make regular contributions. Developer-backed groups such as the Building Industry Assn. and the California Board of Realtors also contributed consistently.

In the early years, the contributions were relatively small: In 1979, the first full year after TINCUP was adopted, total PAC contributions came to $11,869--or 5.2% of the all supervisorial fund raising. The average PAC contribution was $383.

Since then, the numbers have grown considerably, based on the Times’ investigation of all 19,150 itemized contributions made to supervisors and their challengers since 1977. As a percentage of total contributions, PAC donations peaked in 1988, when 17.5% of all supervisorial fund raising came from committees. Last year, the total was $94,489, the percentage was 13.4%, and the average contribution had nearly tripled from 1979.

The average PAC contribution today is $926, more than twice the size of the average contribution from an individual or a corporation.

“PACs became more prominent following TINCUP,” said Riley, the board’s senior member and the only current supervisor who was in office when TINCUP was approved. “I think you saw that people wanted new ways to contribute, and PACs caught on.”

Some of the increase was simply coincidental. Because more companies were forming PACs to give to state and federal campaigns, they found it convenient to give to local races out of the same source. And much of the giving was--and still is--in small amounts, well below the TINCUP threshold.

Other groups have topped the limit, however, and in the process have touched off storms of controversy.

In particular, a few contributions by PACs under the wings of local development firms have drawn flak. That issue exploded with a bang in Orange County after a 1988 contribution by the Irvine Co. Employees PAC, known as ICEPAC.

Company PACs

Supervisor Harriett M. Wieder accepted a $2,500 contribution from ICEPAC in 1988, when she was campaigning for a congressional seat. A month after receiving the contribution, she voted in favor of the company’s politically charged Laguna Laurel housing project, breaking a 2-2 tie on the board.

Some critics objected, but the Orange County district attorney ruled that Wieder’s vote was legal because the contribution was to her congressional campaign--federal law supersedes the county ordinance--and because the contribution came from the PAC, not from the company.

“I had tried to be so careful to follow the letter of the law,” Wieder said in 1988. “It is so hard to have these allegations impugn your motives.”

Company officials responded in much the same way.

“We were very careful before we made” the contribution, said company spokesman Michael Stockstill. “We got the opinion of our attorneys that it was OK. Ultimately it was extraordinarily clear in federal law that it was OK. But we all know what happened.”

Despite the furor over that transaction, other development firms have formed their own local PACs and--unlike ICEPAC, which only contributes to campaigns for federal office--some of them have contributed to supervisorial races.

Of those, three recent contributions from the William Lyon Co. PAC to Roth and Wieder have been the most controversial. Wieder received two $2,500 contributions from the company PAC in 1990, and Roth accepted $2,500. On Dec. 4, 1990, both supervisors voted in favor of a $1.4-million settlement claim by the William Lyon Co. against the county.

“I didn’t give it another thought,” Roth said. “I look at the legal aspect, and if it’s legal, I vote.”

The ICEPAC and Lyon Co. PAC contributions have been noteworthy because they represent rare cases of company PACs whose contributions exceed the conflict-of-interest threshold in the county ordinance. Other firms have recently formed their own PACs but so far have voluntarily stayed under the limits.

Other PACs have been less circumspect.

FORMA Design Inc., based in Costa Mesa, is a design firm that has worked with some of the county’s best-known developers. Because one of the firm’s principals, Van J. Stephens, occasionally appears at Planning Commission meetings to lobby on behalf of projects, he is bound by legal limits on lobbyists contributing to board members.

But rather than limit his contributions, Stephens and another FORMA Design principal formed and funded FORMA PAC in 1989. Days after Stephens and his colleague contributed to the PAC, it passed the money along to Supervisors Roth and Riley.

Had Stephens made the contributions himself, he would have had to register as a “county influence broker” and disclose his clients. By funneling his money through his own PAC, however, he avoided that requirement. He also escaped the cap on influence broker contributions.

“It’s cases like this that explain why a lot of places have tried to limit PAC contributions,” said Lisa Foster, executive director of California Common Cause.

Stephens did not respond to several requests for an interview.

Industrywide PACs

Company PACs provoke the most direct accusations of conflict of interest, but there is another, more commonly used, approach. Firms band together and give through industrywide PACs. It’s another way that companies can contribute toward supervisorial elections without triggering the TINCUP abstention requirement.

The Lincoln Club of Orange County, a powerful Republican organization that receives much of its funding from developers and development companies, is one major contributor: In 1987, its political action arm gave $10,000 to Supervisor Gaddi H. Vasquez, whose PAC contributions otherwise are mostly modest ones of a few hundred dollars each.

Another significant PAC is the Committee for Improved Public Policy, a group whose statement of organization says it was founded to “dilute the influence of . . . public employee unions, anti-development organizations and extremely large corporations.”

The committee, which has donated $9,400 to supervisors since it was formed in 1986, receives its contributions from an array of development companies, including many that bring projects before the board. The committee’s founder and treasurer is Lyle A. Overby, one of the county’s most respected lobbyists.

Even though every board member has received contributions from Overby’s political action committee--and Roth and Wieder have received more than the TINCUP limit--none has ever been required to abstain from a vote involving one of Overby’s clients or one of the committee’s financial backers.

Among those backers are such developers as Shapell Industries Inc., the William Lyon Co. and the Santa Margarita Joint Venture. Each of those companies or their affiliates have brought millions of dollars worth of development projects to the county for approval--and received it.

Overby’s clients have included Leason Pomeroy Associates, an architectural firm, and McDonald’s Restaurants. In 1987, the board awarded Leason Pomeroy Associates the contract to design the Thomas F. Riley Terminal at John Wayne Airport. In 1989, the supervisors picked McDonald’s to run a fast-food airport concession at the newly expanded facility.

Those clients have not contributed to the committee, according to disclosure statements filed by the lobbyist.

Overby declined to discuss the Committee for Improved Public Policy’s business.

“I don’t set out to undermine TINCUP,” he said in a brief telephone interview March 7. “None of the board members would do anything but look out for the public interest, and that’s why we support them. If you feel the need to take inventory of these nickels and dimes, that’s your business, but I don’t have any opinions on it.”

Others do.

“This is a way of laundering money,” said Mark Petracca, a UC Irvine professor of political science. “If I’m receiving money from this Committee for Improved Public Policy, and I’m (a county supervisor), and I haven’t even bothered to ask them where they got their money from, and then I vote on a project which directly affects one of the committee’s direct and big contributors, then have I behaved in a knowledgeable and responsible fashion? The answer is no.”

Two other PACs, Southern California Caucus and Supervisors’ Reception, operate very much like the Committee for Improved Public Policy, though they are not headed by a lobbyist. The two groups take donations from developers and other firms, some with an interest in county government business, and they pass it on to the supervisors and other candidates for public office.

Cary Davidson, the treasurer for both Southern California Caucus and Supervisors’ Reception--which also share the same mailing address and telephone number--did not return several phone calls requesting an interview.

Public records, however, indicate that Southern California Caucus’ money comes from a variety of sources, including the William Lyon Co., developer Kathryn G. Thompson, the J.M. Peters Co., the Mission Viejo Co. and Taylor Woodrow Homes California Ltd. The contributions usually amount to a few hundred or a few thousand dollars at a time.

Those firms and individuals already contribute significant sums to board members directly. During the past four years, the William Lyon Co. has contributed $1,550 to Wieder, for instance; the J.M. Peters Co. has given Roth $1,874; and Kathryn G. Thompson has donated $1,300 to Riley. All of those firms and individuals are prominent in the Orange County development industry and all have brought projects to the supervisors for approval.

In each case, their contributions to supervisors put them within a few hundred dollars of the TINCUP limit, so giving much more directly would force the supervisor to abstain from projects involving the companies. By giving to political action committees and letting them give to the supervisors, the companies escape that requirement.

Taylor Woodrow’s heavy-construction affiliate was the prime contractor for the John Wayne Airport expansion--which still requires occasional action by the board as change orders for the project are processed--while Taylor Woodrow Homes was the major residential developer of Laguna Niguel. The Mission Viejo Co. is developing Aliso Viejo, a major South County project that the Kathryn G. Thompson Development Co. is helping to build.

Western Waste Industries, a garbage collection firm that was seeking to become the residential waste hauler for Laguna Hills and El Toro, contributed $6,500 to Southern California Caucus in 1990. Western Waste also directly gave Vasquez $1,750 over the past four years, as well as $1,500 to Wieder in 1990.

Both Southern California Caucus and Supervisors’ Reception have aided incumbent Orange County supervisors in the past year. Supervisors’ Reception gave $1,000 to Wieder on Oct. 30.

Also in 1990, Southern California Caucus reported $999 in “independent expenditures,” which are spent on a candidate’s behalf but without the candidate’s knowledge, on Riley and the same amount on Roth. It spent another $2,999 on Wieder. The money, according to disclosure statements filed by the group, was used to help pay for $16,490 worth of “slate mailers” for a host of candidates, including Riley, Roth and Wieder.

In an interview, Wieder at first disdained independent expenditures, suggesting that they were thinly disguised efforts to funnel money to candidates without public disclosure.

“Are you trying to tell me they didn’t know they were getting that?” she asked. “That some ad was in the paper, and they didn’t know where it came from?”

She retreated, however, when shown documents indicating that Southern California Caucus had reported thousands of dollars of independent expenditures on her behalf. “This comes as a surprise to me,” Wieder said. “I had no idea that was there.”

Despite the modest expenditures on their behalf, Roth and Riley voted on a garbage collection matter in 1991 involving Western Waste, one of Southern California Caucus’ large contributors--although they voted against the firm’s interests. Wieder abstained, but not because of Western Waste’s involvement. She was worried that she had topped the TINCUP limit with a rival firm.

Wieder has declined to abstain from other matters involving Southern California Caucus backers, even after being informed of the expenditures. On March 26, for instance, she joined other board members in approving a zoning change requested by the Mission Viejo Co.

Incumbents Favored

As PACs increase their political activity in Orange County, they also are exacting a political price, subtly altering the choices that voters have when they go to the polls.

That’s because PACs, like other sophisticated contributors, overwhelmingly favor incumbents. PAC directors understand that incumbents almost always win and there’s little to be gained by angering a county supervisor, especially if you’re in a business that requires you to seek county approval for your projects or contracts.

Out of $821,532 in PAC contributions found in The Times’ investigation, $620,759 was spent on incumbents, compared to $54,075 donated to challengers trying to unseat officeholders. That’s better than a 10-to-1 advantage for incumbents. The rest of the money was spent in 1986, when three challengers vied for the vacated 3rd District seat that was won by Roth.

“You cannot beat an incumbent,” said Dana Reed, a Costa Mesa lawyer who specializes in campaign law and who ran for the state Senate earlier this year. “The contributors know that, so why would a contributor support a challenger even if a challenger is clearly more qualified?”

So by the time a citizen gets a chance to cast a ballot, PACs have already helped weed out potential candidates, narrowing the field of contenders to those that big money will rally behind.

As PACs grow in Orange County, many political observers--including professors, campaign law specialists, activists and some supervisors--believe the time has come to update Orange County’s 12-year-old campaign ordinance.

Many solutions are offered, and many come with baggage of their own. But nearly everyone agrees that changes might improve the way Orange County elects its leaders.

“TINCUP is 12 years old, and it hasn’t been changed,” said Stern, whose state Political Reform Act has been amended time and again since he first wrote it in 1974. “It’s not perfect. It was good when it was written, and it’s good now, but people have found ways around it. You have to keep up with the times, and TINCUP hasn’t.”

This article was reported and written by Newton. Landsbaum provided the computer research with clerical assistance from Darren Tass.

PAC Contributions Total contributions from all special interest committees and associations, 1977-90 To challengers: $54,075, 8% To supervisors: $620,759, 92% Note: PAC contributions in 1986, when there waas no incumbent on the ballot, are not included.

How a PAC Works: The Southern California Caucus: Contributors anxious to maximize the political impact of their money pool it in a political action committee, which then doles it out to candidates. Unlike individual or corporate contributions, the PAC donations to supervisors do not trigger the local conflict-of-interest ordinance.. The Caucus contributors: In 1990, scores of companies and individuals, including some who had business before the Orange County Board of Supervisors, donated to the Southern California Caucus. Among them: William Lyon Co.: $6,500 Mission Viejo Co.: $2,500 Southern California Caucus 1990 political contributions: $110,200 * Supervisor Thomas F. Riley Caucus spends $999 on May 20, 1990 * Supervisor Don R. Roth Caucus spends $999 on May 20, 1990 * Supervisor Harriett M. Wieder Caucus spends $999 on May 20, 1990 and spends another $2,000 on Oct. 30, 1990 Board of Supervisors’ action: Dec. 4, 1990: On a 5-0 vote, the board approves $1.4 million rebate sought by the William Lyon Co. for road construction work performed on Santa Margarita and Alicia parkways. March 26, 1991: Board approves zoning change requested by the Mission Viejo Co. to allow construction of a gas station, mini-mart, restaurant in Aliso Viejo. Source: Disclosure statements filed by Southern California Caucus, individual contributors.

TOP ORANGE COUNTY PACs Leading special interest contrivbutors to county supervisorial campaigns, 1977-90

of money Name contributions contributed Firefighters Local 1014 27 $68,299 Building Industry Assn. 47 $47,255 Orange County Sheriff’s 25 $44,700 Deputies Orange County Apartment PACs 38 $41,062 (includes 3 PACs) Orange County Employees Assn. 35 $35,928 Mobile home PACs 50 $31,255 The Lincoln Club 4 $31,000 UAW Region 6 PAC 28 $30,454 Orange County Medical Assn. 20 $29,390 Let’s Reelect Ross Johnson 5 $27,125 So. Cal. Edison PACs 59 $26,580 Realtor PACs (includes 46 $25,824 several community boards of realtors)

Source Campaign disclosure statements for supervisorial candidates

PAC Contributions to Orange County Supervisors, 1977-90 THOMAS F. RILEY 1977-90 Non-PAC: 94% PAC: 6% Total PAC contributions: $60,358 GADDI H. VASQUEZ 1985-90 Non-PAC: 88% PAC: 12% Total PAC contributions: $61,342 ROGER R. STANTON 1980-90 Non-PAC: 83% PAC: 17% Total PAC contributions: $98,527 DON R. ROTH 1985-90 Non-PAC: 89% PAC: 11% Total PAC contributions: $140,326 HARRIETT M. WIEDER 1978-90 Non-PAC: 89% PAC: 11% Total PAC contributions: $166,319 Source: County supervisors’ campaign disclosure statements, 1977-90

GLOSSARY OF TERMS * Major Campaign Contributor: Under the original TINCUP ordinance, any contributor who gave more than $1,000 in a 48-month period to a county supervisor or the supervisor’s political action committee. The amount increases every year to account for inflation. It now stands at $1,944. Once a firm or individual is labeled a “major campaign contributor,” the supervisor who receives the money must abstain from all matters affecting that contributor for four years. * County Influence Broker: Under the original ordinance, any person who had contributed more than $250 to any or all board members during a one-year period and who is a paid lobbyist. The contribution limit under this section now stands at $468. Once a person qualifies as an influence broker, he or she must register with the county and submit a list of all his or her clients. Total contributions also are limited to $972 for all five supervisors combined-up from the original $500. * Controlled Political Action Committee: A political action committee controlled by an officeholder or candidate. * Company-Sponsored Political Action Committee: A political action committee that is funded by contributions from employees-or family members of employees-of a single company. The company provides overhead and administrative support for the committee. * Worker-Sponsored Political Action Committee: A committee that is funded by contributions from members of an employee representation group. The worker organization provides overhead and administrative support for the committee. For purposes of this study, all employee organizations are considered committees. * Organization Political Action Committees: A committee that receives contributions from a variety of sources and doles it out to candidates. Typically, the committee’s backers share an industrywide common interest+the Building Industry Assn. or the California Board of Realtors, for instance.