OC’s Taxpayer-Funded Think Tank

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Most of the time, lobbyists channel campaign funds to elected officials to gain access. But a slew of Orange County cities have turned that notion around.

At the Association of California Cities – Orange County (ACC-OC), cities pay annual fees totaling nearly a half million in tax dollars for membership to a public policy think tank and networking group for elected officials and the business community.

One of the benefits: regular meetings of the board and association committees, both of which include seats for city council members, business lobbyists, corporation officers and the Disneyland Resort.

There are no seats for other interests, like labor or environmental groups.

The association's mission is to protect cities' local control, but its current 501(c)(3) federal nonprofit tax designation limits advocacy efforts. Instead, supporters say, the association is more an impartial, diverse fraternity that devises innovative policies for issues like pension reform and economic development that can be applied countywide.

“We're getting great traction with state leaders who like the fresh model,” said association CEO Lacy Kelly. “They like that we don't come as an interest group of cities or an interest group of business or an interest group of the county. We come as a community, and it carries weight.”

Yet the association's harshest critics point to its board and committees as proof that it’s little more than a taxpayer-funded business lobby.

City membership dues for the League of California Cities, the lobbying group established in 1898, and ACC-OC are virtually the same. And most of the association's 25 member-cities are also members of the league, raising questions from critics about redundant costs.

For example, Irvine, which joined earlier this month, will pay membership dues of nearly $33,000 annually, with a discount rate of $24,511 the first year. The city pays virtually the same amount for membership in the league, according to city officials.

Beyond questions of redundancy and partisanship, Irvine City Council members' debate on the issue revived a sobering conversation about the challenges a heavily Republican county faces in the primarily Democratic state Capitol — and the role a breakaway organization like the association could play in that icy relationship.

Playing Nice in the Sandbox

The association filed for incorporation Dec. 20, 2010, after leaders in the county's cities felt they were ignored when the League of Cities decided to back environmental legislation that critics say controls cities' land use choices.

Just last week, Laguna Niguel council members decided to drop membership in the league for that very reason.

“They felt like their voice didn't matter,” said Kelly, who previously headed the league's Orange County division.

Irvine Councilman Jeffrey Lalloway said he has also been unimpressed with the league's ability to influence the state Capitol.

“I was underwhelmed by the league’s response to the redevelopment issue, having lost at basically every level,” Lalloway said, referring to the failed efforts to lobby and file lawsuits to save the state's redevelopment program.

Chris McKenzie, executive director of the League of California Cities, disputes the notion that leaders of Orange County cities were ignored. The process on the environmental legislation, which Orange County cities' officials wanted postponed until the economy improved, included votes by both the league's board and general membership, he said.

By a margin of two to one, the league's membership chose not to make that request, McKenzie said. “We have a very open, bottom-up deliberative process,” he said.

Regarding the redevelopment battle, McKenzie acknowledged disappointing losses.

But he pointed out that the lead litigant on the redevelopment lawsuit was the California Redevelopment Association. He noted that the ACC-OC filed arguments with the court supporting the league's position.

“We didn't win, but we fought to the bitter end, and we're still fighting,” McKenzie said.

During this month’s Irvine City Council debate, Councilwoman Beth Krom questioned whether the ACC-OC would further isolate the county in Sacramento.

Krom argued that the association could be redundant and competes with the league, possibly adding to the perception in Sacramento that the county “doesn't play nice in the sandbox.”

That perception could prove critical. One of the consequences of Proposition 13, which in 1978 eliminated counties' ability to raise property taxes, was that it made local governments dependent on the state Capitol for tax revenue.

It also set up a formula that placed Orange County — then largely citrus groves and suburban subdivisions — at the bottom of the list when it comes to getting back a slice of property tax dollars. That disparity is felt in virtually every statewide funding decision made from Sacramento affecting counties.

That means persuading Sacramento Democrats that Republican Orange County should get its fair share is a hard task not made easier by the county's politics of disengagement, Krom argued.

“When we are defined as a donor county because we don't get our fair share back from Sacramento, it's usually because we're not at the table in Sacramento,” Krom said.

Kelly said that the ACC-OC is not regarded as a black sheep in Sacramento. Orange County elected officials have been treated that way only by the League of California Cities, she said.

“I don't see what [Krom] sees. I don't see that at all. I see Orange County as collaborative,” Kelly said. “We're seen as entrepreneurial.”

A Taxpayer-Funded Business Lobby?

The irony that dozens of supposed fiscally conservative elected leaders across Orange County spend, according to Kelly, $430,000 annually to be association members is not lost on Jennifer Muir, a spokeswoman for the Orange County Employees Association.

“On one hand you advocate to shrink spending. … On the other hand you spend money to advocate your political position. That seems at odds,” Muir said.

Cities' membership also means they are spending public money to provide business lobbyists regular access to elected officials.

For example, with association membership, council members get an annual Sacramento trip to meet with state legislators and other state officials, but with members of the Orange County Business Council as escorts.

The group also hosted a city leadership reception at the Disneyland Resort and a holiday party with the business council and the Building Industry Association, according to ACC-OC's public calendar.

Muir said that recent ACC-OC public presentations on outsourcing reflect the composition of its board, which is pro-outsourcing with no discussion about the risks of potential favoritism or other shortcomings.

“When cities and counties outsource, there are lobbyists who make money on all of it,” Muir said. “The business interests in the community get rich.”

While the union was invited to a symposium on outsourcing, Muir said, it was not included in discussions about pension reform. And the union hasn't been offered a seat on the board, she said.

“It certainly does seem to be unfair that taxpayer money is being used to support an organization that advocates for a specific point of view,” Muir said.

Take for example, the video on the association’s webpage promoting a controversial tax-subsidy favored by the group's pro-business board members without providing any opposing viewpoint.

The video — an episode of the association's TV series called Cox Government Spotlight that promotes cities' “innovative ideas” — shows Anaheim Councilwoman Kris Murray trumpeting the $158-million room tax subsidy for a hotel developer that caused a contentious community split in Anaheim.

In the episode, Murray describes the subsidy as “reducing the tax burden” on the developer.

However, the subsidy actually steers hotel taxes directly to the developer as a means of hiking cash flow for the project. Noted hotel finance experts also say it could soon be unnecessary to kickstart construction.

No counter viewpoint is offered in the show.

Kelly dismissed concerns about partisanship, saying that in policy discussions association leaders try to include all segments of the community and that the committees have healthy public policy debates.

The association hasn't taken a position on the subsidy, Kelly said.

At the Irvine council meeting, Kelly pointed out that the association's sponsors also include nonprofits like the Children and Families Commission of Orange County.

ACC-OC's Successor Agency Taskforce committee, which tackles issues surrounding the winding down of redevelopment agencies, has a member from the nonprofit Orange County Housing Trust, according to a roster posted online.

“A lot of our business leaders will say we don't expect policy to bend our way; we just want more than three minutes to make our case,” Kelly said.

Three minutes is the typical time limit for public speakers at council meetings.

“I would worry if we ever came out of a committee meeting and agreed all the time,” she said.

Lucy Dunn, president and CEO of the business council, has a nonvoting seat on the ACC-OC board. She said the association aspires to be more well-rounded.

But Dunn also pointed out that the association's like-minded membership is also on some level a result of human nature.

“Birds of a feather flock together. … Environmental groups like NRDOC [National Resources Defense Council] don't invite [the business council] to sit at their table,” Dunn said. “Interest groups that have common interests work like that.”

Lalloway also acknowledged the imbalance of the board but said that as the organization grows, it would likely welcome representatives of other interests on the board.

And although Irvine's Democratic council members voted to join only after assurances that the move wasn't a planned precursor to withdrawing from the League of California Cities, Lalloway said city leaders could look at the potentially redundant cost of membership in both groups.

A council majority in Lake Forest decided in 2011 to drop membership from the ACC-OC partly because, they argued, membership in both the league and the association was wasteful and redundant, among other reasons.

“We can have a discussion around budget time about the city's membership and benefits of staying in the League of Cities,” Lalloway said.

Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: twitter.com/adamelmahrek.

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