It appears that Newport Beach City Clerk Leilani Brown misstated an important city election rule.
The issue is about the rights of minority owners of businesses to donate to city council campaigns once their company makes a maximum donation, or vice versa.
Four owners of Woody’s Wharf made maximum donations of $1,100 to Newport Beach City Council reform candidate Scott Peotter (a former Newport Beach Independent writer).
Woody’s Wharf (the corporation) also donated $1,100 to Peotter’s campaign.
City Clerk Brown sent Peotter a letter dated August 1 demanding that Peotter return the $1,100 contribution from Woody’s Wharf and threatening criminal prosecution if he didn’t.
Brown claimed, “The Political Reform Act of 1974 requires campaign donations to be aggregated when donations are made by a person(s) and an entity that is controlled by that person(s)” and cited California Government Code Section 85311. Brown borrowed the plural tense from another rule. The relevant law is, “The contributions of an entity whose contributions are directed and controlled by any individual shall be aggregated with contributions made by that individual and any other entity whose contributions are directed and controlled by the same individual.”
The term “individual” is used in the singular tense. A majority owner can “direct and control” a company. A minority owner does not “direct and control” a company.
A fair reading of this law is that campaign contributions of an owner owning the majority of a company would be aggregated with that company’s contributions, but not a minority owner’s contributions. Apparently Woody’s Wharf doesn’t have one person who owns the majority of the company. If so, Brown’s accusations aren’t supported by applicable law.
Why does this matter?
City officials can’t change state election law. Brown’s misinterpretation limits donations beyond the legal limits and creates confusion.
Brown misstated the law in her August 1 letter by muddling language from different parts of the statute, changing its meaning.
I sent Brown a very detailed email asking for clarification of the rule. I reviewed the statute, regulation and Newport Beach Municipal Code, quoted her August 1 letter extensively and asked for guidance on the alleged violations because I don’t see them. Brown’s terse response was, “I have no comments beyond what is in the letter.”
Her refusal seems unnecessarily uncooperative for someone paid a total annual salary and benefits of $170,960 of taxpayer money.
City Manager Dave Kiff told me that the City Clerk is the elections officer of Newport Beach. So Brown abdicated her responsibility to clarify these rules. Kiff and City Attorney Aaron Harp also refused to discuss the matter.
Right in the middle of campaign season, city officials overseeing a $300 million total budget are refusing to clarify the rights of minority owners in businesses to make campaign contributions if the company has already made a maximum $1,100 contribution.
Woody’s Wharf is reportedly in a dispute with the city over indoor dancing or music at the famous restaurant. Many of us who listened to music or danced at Woody’s Wharf over the years hope that Woody’s decades old tradition continues.
Critics of the way the city has been managed in recent years are concerned that citizens and businesses like Woody’s Wharf and candidates like Peotter are being targeted unfairly by a city that doesn’t like criticism.
Citizens have a right to, and city officials have an obligation to provide, clear bright line rules about when owners and their businesses may contribute to city council races.
City officials owe the citizens clarifying discussions on important campaign contribution rules so people and candidates can coordinate legal campaign contributions in advance, rather than being threatened with criminal prosecution after the fact.
Bullying, gotcha government is bad government.