Gardena Law Wins Praise : Campaign Financing Rules Among Best in U.S., Panel Says

The city of Gardena’s campaign finance ordinance was praised as one of the most innovative in the country in a report released today by the California Commission on Campaign Financing.

A provision of the ordinance that prohibits city contractors from donating to political campaigns “has apparently helped to relieve elected officials from political pressures regarding contracts and has improved residents’ perception of city government,” the report found. “A law similar to Gardena’s might be an appropriate addition in every city, regardless of size.”

But elsewhere in the ordinance, the study said, Gardena needs to clarify one provision and close a loophole in another that threatens to undermine the effectiveness of the 1976 ordinance.

The 373-page report, the first in the country to examine campaign finance practices at the state and city level, is the result of a three-year study of campaign financing in Los Angeles County. The commission is a nonprofit, bipartisan political watchdog group that is not affiliated with state government.

Other cities examined in the study include Los Angeles, Long Beach, Santa Monica, Pasadena, Signal Hill, Agoura Hills and West Covina. Los Angeles County was also studied.

The 12-page chapter on Gardena covers the history of campaign finances in the city, from the political influence of the card clubs beginning in the 1930s, to the decline of the gambling industry and the adoption in 1976 of the current ground-breaking campaign finance ordinance.

Candidates Receive List

The report lauded the provision of the ordinance that prohibits contributions from city contractors as the first of its kind in California. Only four other California cities--Poway, South San Francisco, Belmont and Rancho Mirage--have since adopted similar restrictions, the report found. Gardena broadly defines contractors to include all vendors whose contracts require City Council approval.

In enforcing the ordinance in Gardena, the city issues a list of contractors who are prohibited from making donations. “When we become candidates, we’re given a list to know who not to accept funds from,” said Mayor Donald Dear.

But the report found that a loophole in the ordinance allows candidates to circumvent a $500 limit on individual contributions and receive loans far greater than that amount.

As an example, the study cited a $10,000 loan Councilman James Cragin received in 1984.

Cragin’s campaign statements from the 1984 election show that he received a $10,000 loan from his campaign manager, Gardena businessman Tom Spears, and Carol Ann Howz, whose occupation is listed as housewife. He also loaned himself $1,800, campaign statements indicate.

Cragin was unavailable for comment. Spears declined to comment, saying he had not seen the commission report.

Gardena officials said loans to candidates have never been an issue in city elections.

“I don’t think there’s a problem with it,” said City Manager Kenneth Landau. Candidates’ practice of borrowing campaign funds from themselves or other sources is “fairly common,” he said.

City Atty. Michael Karger said it is “perfectly legal under our ordinance to give loans in excess of $500 because it’s not a contribution if the loan is paid back.” If a loan is not paid back, however, the amount of the loan exceeding $500 would be considered a contribution and would be illegal under the Gardena ordinance, he said.

City officials said Cragin had paid off both of the 1984 loans.

Dear, who said he serves as his own campaign treasurer, acknowledged that there is “a loophole on the loans that I wasn’t aware of.”

The commission recommended that Gardena broaden its contribution limit to apply to such loans, although it did not specify what the limit on the loans should be.

The report also found the ordinance ambiguous as to whether candidates must disclose contributions of $50 or more, or whether they need to disclose only contributions of $100 or more, as required by the state.

“The commission urges that the ordinance be clarified,” the report read. “The $50 limit is in tune with the city’s existing contribution patterns.”

The ordinance bans “individual anonymous contributions of $50 or more.”

Bob Stern, a spokesman for the commission, said in an interview that the provision could be interpreted to allow a candidate to accept a donation larger than $50 and call it anonymous even if he knows who the donor is.

However, Karger said the $50 disclosure limit is made clear to candidates in election-year seminars he leads along with City Clerk May Doi. Candidates are advised to disclose all contributions of more than $50 to the city and to disclose contributions greater than $100 to the state, he said.

However, Karger said he would study the report’s recommendations. “If it warrants a change, I’ll bring it up before the council,” he said.

Attention on Fukai

Elsewhere in the report, Councilman Mas Fukai is a focus of attention.

The report cites Fukai, chief deputy to Los Angeles County Supervisor Kenneth Hahn, for his “tremendous fund-raising resources” and his influence on Gardena politics.

The report said Fukai “has gained a reputation as a consummate fund-raiser and supporter of local Asian political candidates. . . . Although his proteges have not yet been successful in Gardena, his fund-raising muscle appears to have threatened his peers on the City Council.”

Fukai declined to be interviewed by the commission, the report said.

“We called him many times and even talked to him once, and he said he’d get back to us but he never did,” said commission spokesman Stern.

But Fukai said he did not recall being contacted by the commission.

“Really, why would I refuse?” Fukai asked. “I would be happy to talk to them about it.”

Fukai, who introduced Gardena’s landmark campaign finance ordinance, acknowledged that he is a strong presence in Gardena politics and that he has campaigned for Asian-American and other candidates in the Los Angeles area.

In his most recent council race, in 1986, Fukai raised more than $57,000. Incumbents in Gardena typically raise about half that amount. Fukai said substantial funding was necessary to fight off a strong challenge by Terry Kennedy, a community activist who won 18.7% of the vote that year, placing third in the race for two seats. Councilwoman Gwen Duffy was the biggest vote-getter with 31.1%, and Fukai was reelected with 28.9%.

“I do question whether (my) fund raising is a threat” to other Gardena council members, Fukai said. “I think the council gets along so well in Gardena, including the mayor, that I don’t think there’s any threat.”

Fukai said he has met many of his political supporters through his work as Hahn’s deputy. “Certainly being with Mr. Hahn has not hurt me when it comes to raising funds,” he said.

In general, the report characterized the city of about 51,000 as a place where political campaigning is “low-tech, home-style, grass-roots.” Incumbents are usually heavily favored, political newcomers must run repeatedly to win a seat and campaign expenditures “reflect the old-fashioned nature of local politics,” the report said.

For example, individual political contributions make up 61% of all contributions in Gardena, compared to 45% for other small cities, the report found. Most of that money is spent on a mix of newspaper and outdoor advertising, with about 69% going toward literature such as political mailers. In other small cities, candidates spend about 85% of their funds on literature, the report said.

2 Changes Recommended

The chapter concludes by recommending two changes to the Gardena ordinance: limiting the amount of loans candidates can receive, and clarifying the minimum disclosure amount for campaign contributions.

Overall, city officials said, the assessment of Gardena seemed fair.

“I’m pleased Gardena is put in a positive vein,” Dear said.

Landau said the city would study the report. “Obviously there are some areas (in the ordinance) we want to look at,” he said.

The city administrative staff “may be making some recommendations to the council in the future” based on the report, he said.

CAMPAIGN FINANCING IN GARDENA

CONTRIBUTIONS (1982-1984)

Gardena Small All jurisdictions* jurisdictions Business 23% 40% 52% Individual 61% 45% 33% Labor 0% 2% 4% Political 2% 5% 6% Candidate 14% 8% 5% Non-election year 0% 6% 42% Election year 100% 94% 58%

* Under 150,000 population

CONTRIBUTIONS TO INCUMBENTS VS. CHALLENGERS (1982-1984)

Business Individual Labor Political Candidate Incumbents 79% 82% 0% 84% 39% Challengers 21% 18% 0% 16% 61%

SOURCE: California Commission on Campaign Financing data analysis

GARDENA FACTS

* Local government structure: Charter drafted in 1930; weak mayor system; four city council members elected at-large to four-year terms; mayor elected citywide to two-year terms; city clerk elected; city attorney apointed by council.

* City budget: $30 million (fiscal year 1988-1989)

* City facts: Population (1989): 50,900; area: 5.36 square miles; registered voters (April 1989): 20,535; voter turnout (April 1988): 27%