A political committee set up in 2016 to raise and spend money for the passage of a sales tax increase for transportation improvements is now helping bankroll the re-elections of incumbent Atlanta City Council members loyal to Mayor Kasim Reed, The Atlanta Journal-Constitution has found.
State law says campaign committees may only spend money for the purpose for which they were created, and directs unused money to be repaid to contributors — or donated to educational, charitable and nonprofit organizations recognized by the Internal Revenue Service.
Robert Highsmith, Reed’s attorney and a close ally who was the mayor’s colleague at Holland & Knight, is treasurer of Citizens for Better Transportation 2016. He is also a registered lobbyist with a long client list includes the city of Atlanta, the Beltline and the Atlanta Development Authority.
Highsmith said the transportation committee’s donations to seven City Council members this year are permissible because those campaigns are considered “nonprofits.”
Political campaigns “are by definition nonprofit entities,” Highsmith said. “And that’s what makes it legal for committees like this to give.”
But the state ethics commission told the AJC Thursday that the legality of such contributions is not clear cut. When asked if the donations to council members is permissible, Robert S. Lane, the commission’s deputy executive secretary, replied: “Generally speaking, no.”
“In defining a nonprofit organization which can accept excess contributions … the legislature specifically omitted any reference to candidates and candidates’ campaign committees,” Lane said. “In the Commission staff’s view it is clear that the legislature was aware of the distinctions that it was drawing between candidates, their committees and other types of organizations.”
Lane also said the ethics commission is auditing the transportation committee’s filings.
According to its Oct. 6, 2017, disclosure filing, the committee still has $528,313 — after giving maximum contributions to the council candidates, paying consultants and funding other expenses.
Mayoral candidates who have sparred with Reed were sharply critical of the committee holding on to the transportation ballot money and using it for the benefit of individual candidates. Some said they also worry it will be used to support councilwoman Keisha Lance Bottoms, who Reed has endorsed for mayor.
“That’s called a slush fund,” said former state senator Vincent Fort, who has raised $482,000 for his entire campaign. “Something rotten is in the cotton.”
Peter Aman, who worked as chief operating officer in Reed’s first term and has exchanged jabs with the mayor in recent weeks, said he is “appalled that money raised in 2016 for an important cause … was spent in 2017 on things outside of campaign finance law.”
Mayoral candidate Cathy Woolard said use of the committee’s money for individual campaigns violates “the clear intent of the law,” if not the letter of it.
Reed has taken an unusually active role in the race to choose his successor, and the donations are seen by some as his latest attempt to secure the future of those council members who have regularly supported his agenda.
Reed formally endorsed Bottoms for mayor Oct. 11, after informally supporting her campaign most of the year by attacking most of the other major candidates running against her.
Reed’s communication staff confirmed that the mayor recommended to whom the transportation committee should give money. The statement from the mayor’s office says none of the money will be going to Bottoms.
“Given that Keisha Lance Bottoms has surged in the polls and is now in a statistical dead heat for first place, she seems to be doing well enough on her own,” the statement says.
Former mayor Shirley Franklin issued a sharply worded statement Thursday condemning the committee’s donations.
“The latest scandal involving a slush fund from the Citizens for a Better Transportation Committee is another example of the rampant, systemic corruption that is running through city government and the political process,” Franklin said.
More than $1.2 million raised from influential businesses
In 2016, Citizens for Better Transportation raised more than $1.2 million from some of the city’s most influential businesses for the purpose of convincing Atlanta voters to support last November’s ballot measure that raised the city-wide sales tax.
The ballot measure passed by a wide margin, and promises to fund local road projects and the purchase of right-of-way land for Beltline development.
But the committee didn’t use all of the money it collected. In fact, it had a balance of $600,000 at the end of January, after it paid off what appears to be the last of the consulting fees tied to the 2016 election.
The committee decided to start writing checks again June 30, giving maximum campaign contributions of $2,600 on the same day to each selected council member: Natalyn Archibong; Carla Smith; Ivory Lee Young; Michael Julian Bond; Cleta Winslow; Joyce Sheperd; and C.T. Martin, who is running for council president. The seven checks totaled $18,200.
Cox Enterprises, parent company of the AJC, was among three businesses that each contributed $150,000 to the committee in 2016. Sonji Jacobs, a spokeswoman for Cox, said the company’s donation was made through the Atlanta Committee for Progress, which also donated $150,000 from other sources.
“The ballot committee was separately responsible for complying with all legal and disclosure requirements, as well as the proper expenditure of funds,” said a statement by Atlanta Committee for Progress chairman John Dyer, president and CEO of Cox. “The contributors expected those dollars to be spent in the right way, at the right time and for the right purpose.”
A spokeswoman for Arthur Blank, who contributed $50,000, said the Falcons’ owner was “not informed that the funds were not all spent on the transportation campaign, nor were we informed that they were subsequently used to support City Council member campaigns.”
Rick Thompson, who served as the Georgia ethics commission secretary in the 2000s, said committees created to influence the outcome of a county or municipal ballot question are supposed to close out their accounts by the end of the year in which the election occurred.
That would include deciding whether to give the money back to donors proportionally, or donate it to an nonprofit organization, Thompson said. The other option, he said, is to register the committee for a new ballot issue and start the campaign finance reporting process over again.
The transportation committee did none of those things, instead filing a report in January 2017 that lists net cash on hand as zero, when in reality the organization had $674,890 in the bank, according to its disclosures.
And it appears the committee still hasn’t closed out its fund, according to its Oct. 6 disclosure, which again reported a zero cash balance on the summary page.
The committee’s other expenditures
In addition to the campaign donations made to council members, the AJC questioned Hightower about other checks documented on the committee’s new disclosure.
Consulting firm J.S. Prisby received $25,000 for “consulting/development/fundraising” on Jan. 20. The company is owned by Jan Bryson, who Highsmith said was a consultant for the committee who prepares and signs checks for it.
Bryson didn’t return multiple messages from the AJC requesting an interview. But when asked if Bryson signed the check for her own company, Highsmith replied: “That wouldn’t be odd.”
Then there is a $31,000 check written July 20 to pay off a loan from another ballot committee, called Citizens for Clean Water 2016. The clean water committee was also formed by Highsmith and Bryson, according to its Feb. 16, 2016, disclosure. There is no record of a loan being made to the transportation committee from the water committee on the water committee’s disclosure filed with the city.
When asked about the loan, Highsmith said he isn’t sure why there is no record of it. “I’ll have to go back and look,” he said.
Newsroom data specialist Jennifer Peebles contributed to this report.
Following the money: from transportation ballot proposal to Atlanta City Council campaigns
Citizens for Better Transportation 2016 raised $1.2 million last year to pass a sales tax increase for citywide transportation improvements, collecting five- and six-figure checks from major Atlanta companies, including Delta Air Lines, SunTrust Bank and Cox Enterprises, which owns The Atlanta Journal-Constitution.
On June 30, the committee used left-over donations to make $2,600 campaign donations to these seven incumbent members of the Atlanta City Council: Natalyn Archibong, District 5; Michael Bond, Post 1 at-large; C.T. Martin, District 10; Joyce Sheperd, District 12; Carla Smith, District 1; Cleta Winslow, District 4; Ivory Young, District 2.
Notes: Maximum donation for general election is $2,600. Martin is running for City Council President.
Source: Citizens for Better Transportation 2016 expenditures, 10/6/17.
Georgia’s Campaign Finance Law
“Contributions received by a campaign committee … to bring about the approval or rejection by the voters of … a proposed question which is to appear on the ballot in any county or municipal election … shall be utilized only to defray ordinary and necessary expenses associated with influencing voters on such issue.
“All contributions received by a campaign committee … in excess of those necessary to defray expenses … may only be used as follows:
“Contributions to any charitable organizations described in (the Internal Revenue Code) … and which shall additionally include educational, (charitable), and nonprofit organizations; or
“For repayment on a pro rata basis to persons making such contributions.”
Source: O.C.G.A. 21-5-33