- Associated Press - Monday, August 14, 2017

SACRAMENTO, Calif. (AP) - State Treasurer John Chiang is defending campaign contributions he has received from developers that won tax credits and bond financing from state committees he oversees, saying the tax breaks are based on a formula and not political favors.

Chiang, a Democrat, has received more than $100,000 in donations to his campaigns over the years from donors affiliated with three affordable housing developers that were awarded tax breaks and other financial perks from the state, the Sacramento Bee reported Sunday . The chief executive of one company, the Pacific Companies, already gave the maximum $28,200 to Chiang’s 2018 gubernatorial run.

Leaders of the companies in question denied to the Bee any improper connections between their giving and the credits they won. Such donations would only raise legal concerns if there were direct evidence of a quid pro quo, campaign finance experts said. But the companies have given more to Chiang than past elected officials in his role, the Bee reported.

Chiang said the donations aren’t evidence of corruption because the tax credits are allocated based on a formula calculated by non-political staff members. The three-member board Chiang chairs, which includes Controller Betty Yee and a representative for Gov. Jerry Brown, then votes based on the committee recommendations. Chiang said the Tax Credit Allocation Committee has never voted on a tie breaker or gone against staff recommendations in his two and a half years as treasurer.

“It’s strictly scoring that comes from staff,” Chiang told the Associated Press on Monday. “If there was any hint of scandal, everybody in this system would be up in arms that there was corruption.”

Chiang was elected treasurer in 2014 after serving as controller since 2007. As treasurer, he’s the state’s chief banker and investment manager, and he chairs dozens of boards and committees. He’s running to be California’s next governor against fellow Democrats Gavin Newsom, the lieutenant governor, and Antonio Villaraigosa, a former Los Angeles mayor.

The Bee highlighted three major development companies that received breaks or bond financing from the state whose executives or affiliates later contributed to Chiang.

Domus Development received 9 percent federal tax breaks for projects in Sacramento, Carmichael and Stockton. The company’s executives and affiliates have donated nearly $40,000 to Chiang’s campaign committees, including $7,500 to his gubernatorial run.

The Pacific Companies, another low-income housing developer, has won approval on nearly six dozen of its tax credit applications since 2007, with Chiang voting in favor of most of them, the Bee reported. The company has won more than $100 million in state and $60 million in federal tax credits for its projects.

Caleb Roope, the company’s chief executive, gave $28,200 to Chiang’s gubernatorial account, and he’s quoted on the state treasurer’s website praising Chiang for advocating housing regulatory reform.

“The policies matter and I want to support somebody who cares about housing,” Roope told the Bee.

Affirmed Housing Group has also received tax breaks and bonds from the state. Affirmed and its management company, Solari Enterprises, have donated nearly $40,000 to Chiang since 2013, with the money sometimes coming in just before or after a project was approved for credits, the paper reported.

Affirmed was sanctioned by the committee in 2016 for failing to build a children’s park with one of its housing projects, which it had committed to in its application, said Mark Stivers, executive director of the Tax Credit Allocation Committee. That effectively forced them to sit out the application process for a year, which Stivers pointed to as evidence that certain developers aren’t receiving preferential treatment.

The committee has awarded nearly 200 competitive tax credits since Chiang took office, all unanimously and based on staff recommendations, he said.

Jessica Levinson, an ethics expert at Loyola Law School, told the Bee the donations are emblematic of problems with the campaign finance system.

“People give to get something,” she said. “And you give to those in power and to those with power over your destiny.”


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