Millions in Grants Raise Questions

When California was flush in surpluses a few years back, lawmakers gave away millions to politically connected private entities -- gifts that are now raising questions from auditors and others.

Investigators are looking into a grant to a San Francisco nonprofit group whose leader allegedly directed $200,000 in campaign donations to Secretary of State Kevin Shelley. As an assemblyman, he had helped arrange the grant. A review of state spending records shows that other lawmakers directed millions more to other nonprofit corporations.

Putting money into the state Department of Parks and Recreation, some of the most influential lawmakers in Sacramento secured nearly $25 million for more than 80 groups, which spent it with limited oversight. The money is a fraction of the more than $1 billion in “pork barrel” allocations made at the end of Gov. Pete Wilson’s tenure and the beginning of Gov. Gray Davis’.

The grants helped Eagle Rock shop owners spruce up their storefronts, paid for a roller coaster in Fresno and helped build a Jewish community center in San Francisco -- one backed by major campaign donors and by U.S. Sen. Dianne Feinstein and her husband, Richard Blum.

The state tax money helped the San Diego Maritime Museum stage a tall ships regatta, constructed facilities for boys and girls clubs, paid executives’ salaries and created an archive of gay history in Northern California.

The giveaways to nonprofit corporations occurred primarily in Davis’ first two years in office, when the high-tech stock bubble helped create a multibillion-dollar state budget surplus. Unlike most state spending, the “pork” came with few strings attached.There was, for example, no competitive process for receiving the grants. Nor did civil servants inspect the sites or investigate the recipients’ backgrounds before checks were issued.

“Our role was essentially to ferry the money from the legislator to the recipient,” Roy Stearns, state parks department spokesman, said Wednesday. “These are legislators’ grants, and our role in administering them was minimal.... The budget orders us to deliver money, and we do it.”

Former state Senate Leader David Roberti, a Los Angeles Democrat who helped craft several budgets during the 1990s and create a grant program for local parks, questioned the practice of making such grants. He said the parks department should retain oversight.

State grants “have to be picked based on need and not based on whether you have a legislator sitting in a powerful position at a given time,” Roberti said.

The grants came into focus recently when the San Francisco Chronicle found that a San Francisco group failed to spend a $492,500 grant to build a community center as promised, spurring state and federal audits and investigations. Shelley, when he was a San Francisco assemblyman, helped secure the grant. State auditors also have redoubled efforts to investigate all the grants.

The San Francisco Neighbors Assn. project was one of 84 grants to nonprofit entities between 1999 and 2002. A review of the Parks Department files on 24 of them shows that legislative leaders secured the bulk of the money. Many of the recipients had influential benefactors.

Some files are thick with documentation. A $485,605 grant to rebuild historic Camarillo Ranch included a $575 receipt for the removal of a beehive. Other files, such as the one on the San Francisco Neighbors Assn., contained scant detail.

At least some of the money went to projects that appear to have no connection to parks. In the Eagle Rock district of Los Angeles, much of a $295,500 parks grant was given to businesses like gas stations, liquor stores and auto body shops to redesign their storefronts.

Each business admitted into the Eagle Rock Downtown Storefront Improvement Program was given up to $10,000 in state money for such things as exterior remodeling, painting, cleaning, removal of outdated signs, new signs, landscaping and new doors. Recipients included a Shell gas station, Ray’s Auto Repair, an establishment called Fatty’s and Co. and an unidentified liquor store.

Program coordinator Linda Allen said the project has helped revive a blighted business district, and said she provided documentation to parks officials every step of the way. An auditor called her recently and will be making a site visit in the coming weeks, she said.

State Sen. Jack Scott (D-Altadena) secured the Eagle Rock money. “I was able to see with clarity the money was accounted for,” Scott said, “and the project was overseen by the historic and cultural preservation wing of the parks department.”

In San Francisco, the Jewish Community Center received $1.7 million in 2000 and 2001 to build a new facility, thanks to efforts of Shelley and former Assemblywoman Carole Migden (D-San Francisco), a Board of Equalization member who is running for a state Senate seat in November.

At the time the grant was made, Migden headed the Assembly Appropriations Committee and had a coveted seat on the joint Senate-Assembly budget committee. Private donors helped raise $85 million to build the center. Several of those contributors also have donated campaign money to Migden; she has received at least $48,000 from them since 2000.

Migden dismissed ties between the grant and campaign donations, and said the grant had plenty of oversight. Budget committees review all proposals, and the governor must sign off on them before checks are written.

“This was all done above board,” Migden said.

The bulk of the money went to Democrats; they control the Legislature. But Republicans, particularly those in leadership positions, got a share too. In 2000, George Runner of Lancaster was the lead Republican on the budget committee, and secured $200,000 for Grace Resource Center in Lancaster to open a food bank. Runner and Grace Director Steve Baker are members of the same congregation and have been friends for 35 years, Baker said.

Runner, seeking a state Senate seat in the year’s election, said Grace “has been a very effective organization,” feeding as many as 8,000 people a month. But Runner was taken aback by a grant to the Gay, Lesbian, Bisexual, Transgender Historical Society of Northern California to create an archive of the gay rights movement.

“With feeding the hungry, I think I can point to tangible benefits,” Runner said. “I’m not sure how tangible it is to archive a group’s history.”

Along with Migden, Assemblyman Mark Leno (D-San Francisco) helped secure the $250,000 for the historical society’s project.

“It is not our place to judge historical material,” Leno said. “It is our job to preserve historical material.”

“The controversy over sexuality is part of the history of California,” said Terence Kissack, the group’s executive director.

The archive includes some printed material from the North American Man Boy Love Assn. “By collecting material that some -- even most -- would find offensive,” Kissack said, “we’re not meaning to enter into the debate.”

Some other grants were:

* $172,375 to help build a new wing of the San Jose Children’s Discovery Museum. Much of that money was used to pay the executive director for fundraising meetings on the expansion, a project completed this year. The executive director, who billed $98.50 an hour for her time, reported meetings with state legislators, local officials, school administrators, a newspaper reporter and others. Assemblywoman Rebecca Cohn (D-Saratoga) and other Silicon Valley legislators arranged the grant.

* $147,750 to repair and construct amusement rides at Rotary Playland Storyland in Fresno. The money, secured by Assemblywoman Sarah Reyes (D-Fresno), was spent on, among other things, installing a roller coaster, purchasing a shade canopy for the helicopter ride and purchasing new paddle boats and other rides.

* $329,975 for exhibits in which children can touch animals at the Santa Barbara Zoological Gardens, and for a “zoomobile” to take animals out to schools, hospitals and nursing homes. It is unclear which lawmaker helped arrange the grant.