The sometimes-controversial role of nonprofit influence in San Diego politics has gained a new level of prominence with word that the state’s Fair Political Practices Commission has cleared a Solana Beach councilman to vote on a real estate project undertaken by a major San Diego State University benefactor.
The case involves Peter Zahn, a business attorney and president of the Moxie Foundation, a nonprofit founded by Irwin Zahn, the charity’s chairman.
“Irwin Zahn founded General Staple Company in 1954 in the garment district of New York City,” says the foundation’s website. The business “grew into a global electronic interconnect company, later named Autosplice, Inc. and moved to San Diego, California. In 2011, after 57 years, Irwin sold the business and started a new venture — the Moxie Foundation.”
Among its other causes, Moxie is a financial supporter of SDSU’s Zahn Center for Innovation, “a commercial and social incubator that supports San Diego State University innovators and aspiring entrepreneurs — students, faculty and staff from any major or department on campus — as they transform their ideas into companies,” according to the university’s website.
Besides Moxie, which has kicked in $725,000 for the Zahn Center, according to an opinion letter from FPPC assistant counsel John Wallace, “H.G. Fenton Company made a donation to the Campanile Foundation (SDSU) for the establishment of the H.G. Fenton Idea Lab, a prototyping facility that is part of the Zahn Innovation Center.”
Fenton’s contribution to Zahn’s cause, the amount of which was not disclosed in Wallace’s February 4 letter, raised a conflict-of-interest question for Zahn in his city council role.
“H.G. Fenton Company is an applicant for discretionary land use permits to develop its property, Solana Highlands Apartments, located within the jurisdiction of the City of Solana Beach,” wrote Wallace to Solana Beach city attorney Johanna N. Canlas.
“The President and CEO of H.G. Fenton Company, Mike Neal, and Councilmember Zahn serve together on the Advisory Board of the Zahn Center for Innovation at San Diego State University.”
Noting that the Zahn center board members are not paid, the opinion goes on to say, “Councilmember Zahn is not employed by H.G. Fenton Company and has not received any income from H.G. Fenton Company. Councilmember Zahn does not hold any stock or hold any positions with H.G. Fenton Company. Moreover, the project area is not within 500 feet of any real property owned by Councilmember Zahn.”
Thus, concludes Wallace, there is no legal conflict of interest barring Zahn from voting on Fenton’s project.
Reached by phone today, Peter Zahn said that despite the Fair Political Practices Commission opinion, he could still decide to recuse himself from voting on the matter, but currently, “I’m not seeing any issue. It’s premature to make an evaluation.” He said he sought the state’s opinion as a “precautionary step."
Legal or not, the practice of mutual backscratching between San Diego’s nonprofit and political spheres has burgeoned as the role of foundations in funding state universities and related activities has increased, while tax dollars grow scarcer.
As previously reported here, San Diego State’s $1.5 billion fundraising drive, called the Campaign for SDSU, has created a galaxy of opportunities for big-dollar donors to offer legally permitted favors to those they wish to influence.
“With the success of the recent campaign, SDSU has established itself as a legitimate and competitive big-gift target among local philanthropists,” wrote Mary Ruth Carleton, the school’s vice president of university relations and development.
Carleton’s October 14 memo added that the cash had “transformed traditional understandings of the role that fundraising could play at San Diego State and greatly impacted the philanthropic landscape of the region.”
Billionaire Obama and Clinton Democrat Irwin Jacobs of La Jolla has long been a major donor to SDSU, funding its public broadcasting television and radio stations, spawning charges by some that the operation has played politics with its coverage.
Another nonprofit news operation tied to the school, Inewsource.org, is financially backed by some of the city’s most noted developer interests, including ex–city manager Jack McGrory, who gave $10,000, and the Price Family Charitable Fund, run by Robert Price, heir to the discount store fortune, which came up with $25,000.
Nita Van Der Werff, daughter of late San Diego real estate titan James Dallas Clark, gave $125,000, the largest single contribution in 2011. Karin Winner, chairperson of the nonprofit’s board and ex-editor of the former Union-Tribune during the paper’s Copley Press ownership, gave $27,500, according to the charity’s disclosure to the Internal Revenue Service for 2011.
The nonprofit, formerly known as the Watchdog Institute, made those numbers public in error, according to its executive director and editor Lorie Hearn, Winner’s former associate at the Union-Tribune. Following coverage here, the group has begun to disclose its donors grouped by their monetary level of support.
Among those currently listed as giving $5000 and greater are Herbert Kulchin, a wealthy retired executive for Navy contractors General Dynamics and Cubic Corporation; venture capitalist Martha Dennis; and temporary worker mavens Phil Blair and Mel Katz.
Former Union-Tribune executive Harold Fuson gave between $1000 and $5000, as did ex–Los Angeles Times reporter and current city-council hopeful Barbara Bry, according to the nonprofit’s website.
Listed in the same category was Guylyn Cummins, an Inewsource boardmember and lawyer with the downtown law and lobbying firm of Sheppard Mullin Richter & Hampton, which has a long list of developer clients with business at San Diego’s city hall.
“The relationship between the Institute and San Diego State University will be mutually beneficial,” says a document from a July 15, 2009, meeting of the SDSU’s Academic Deans’ Council regarding the collaboration.
“Work produced by the Institute will further the University President’s goal of having the University be a leader in setting the agenda for a regional ‘civic society.'”