Big bucks

Last week The New Yorker ran a piece suggesting the lesson to be learned from the Enron collapse is that this country needs campaign finance reform, not just because of what big contributors get for their generous donations to politicians, but for what they don’t get, as well. What Enron didn’t get was help when it contacted the White House soon before the bottom fell out of its Ponzi scheme accounting practices and asked for some help. This was not an unprecedented request, coming as it did from the nation’s seventh-largest corporation. The government has bailed out big business before—remember when the Chrysler Corp. got help in the late ‘80s? The idea is that the collapse of such a big business creates harmful ripple effects that register throughout the economy. But in this case Enron was so deeply connected to the White House by financial and personal relations that any help offered would have looked bad to the American public. So nothing was done, and Bush was purposely kept out of the loop to protect him from any political fallout. This is why campaign reform is desperately needed, not just to stop the purchase of political influence, but also to allow government officials to do the right thing when needed. Ask all those Enron workers who lost their retirement savings.

This brings me to an interesting local angle on campaign financing. A company out of Houston, Sterling University Housing, wants to build a huge student complex—the first phase would be 216 units—on Highway 32 between Lindo Channel and Eighth Avenue. The prospect has the neighbors in the area panicky over the traffic problems they believe will come with all these students driving to school and then home. To get approval, the land on which the apartment complex would sit needs to be rezoned from manufacturing and warehousing to medium-high-density residential. That means it will come before the Chico City Council in the next few months. Sterling has given $1,000 each to Chico City Councilmembers Rick Keene and Steve Bertagna. Keene is running for state Assembly, and Bertagna is running for county supervisor, which means their stays on the council (they hope) are limited. Receiving campaign funding from development interests is nothing new—we’ve written about it many times over the years. Defenders of the practice say the developers are not asking for specific paybacks for their investments. Instead, they are simply helping to elect those candidates who over the long run will be more sympathetic to developers’ needs.

But in this case, with two candidates whose time on the council may be very limited, it sure looks like Sterling, which also calls itself Chico Student Apartments and Student Apartments L.P., is trying to buy approval from these two for this project before they go on to other offices. I asked Bertagna about it, and he said there’s nothing illegal about it as long as neither the contribution itself nor the vote in question provide him with any personal financial gain. Still, maybe these guys will react like the White House did with Enron and do nothing to help Sterling because it might look bad. But somehow I doubt it.

Another note on the Sterling apartment deal. Initially, the project was slated to be built along Eighth Avenue close to Thomas Hydraulic, which is owned by Doug Dauterman, a major contributor to conservative politicians like Keene and Bertagna. Going to bat for Dauterman, who didn’t want the students living right next to his business, was Jim Mann, executive director of the local chapter of the Building Industry Association and owner of Rural Consulting Associates, which normally lobbies on behalf of developers. Mann’s efforts worked, and the project was moved away from the Thomas Hydraulic property, to the other end of the parcel Sterling owns. Now, with that bit of business out of the way, Mann is representing Sterling in its efforts to build the massive complex. The lesson here is, it pays to be flexible.