Is $200K to boost parks vote legal?

The Cincinnati Board of Park Commissioners gave $200,000 to the park levy initiative in July, a move whose legality is being questioned, an Enquirer investigation found.

The money went to a nonprofit organization, Great Parks Great Neighborhoods, that's organized under U.S. tax code in a manner that allows it to accept donations without disclosing its sources.

The nonprofit was created by former Mayor Charlie Luken in June, two months before petition signatures enabled the park levy to be placed on the ballot, records show.

The nonprofit exists "to promote the common good and general welfare of the people of the Cincinnati community by bringing civic betterments and social improvements in the community's parks and neighborhoods," according to the filing with the Ohio Secretary of State's office.

The legality of the Park Board donation issued to Great Parks Great Neighborhoods is a matter of some dispute.

A check with officials at the state offices that enforce fair elections and financial regulations for government entities shows the donation falls into a gray area for both oversight and jurisdiction.

The crux of the issue is whether or not the money, which came from a private endowment designated to the Park Board, constitutes public dollars.

Elected and appointed officials such as the park commissioners "are prohibited from using public funds in support of or against a ballot issue," said Philip Richter, executive director of the Ohio Elections Commission, formed in 1974 in the aftermath of the Watergate scandal to enforce Ohio's campaign finance and fair campaigning laws.

He said he wasn't sure whether the act of a government body spending private endowment money would redefine the dollars as public. In Richter's 20 years working for the elections commission, he said he has never heard of a case raising this question.

The Park Board took the $200,000 from the Meyer Fund, one of the nine private endowments it manages.

This particular fund, which carries a market value of about $4.5 million, is designated "for general park purposes and beautification." Fifth Third Bank is the fund's trustee.

"This is absolutely not public money," said Manager Marijane Klug, in charge of the parks department's finance division. "It was not given to the campaign, it was given to a separate 501(c)(4) called Great Parks Great Neighborhoods." She was referring to a nonprofit designation created in U.S. tax code.

Yet the Park Board's minutes from its July 16 meeting clearly state the money was going to support the levy.

"President (Otto) Budig stated that the Board of Park Commissioners unanimously approved $200,000 towards the Parks Levy initiative. President Budig stated that if the levy passes it will create a new generation of support for the park system," the minutes state.

The Enquirer put a further call out to Klug on Tuesday night to reconcile the matter.

Existence of the donation came to light at an Enquirer-sponsored debate Monday on the parks levy. Opinion Editor Cindi Andrews asked levy backer Brewster Rhoads about the donation, which had been uncovered in The Enquirer's review of Park Board minutes.

Rhoads said he had no knowledge of the donation and therefore could not say whether or not the donation was appropriate.

Opponents of the permanent parks levy, which will appear before Cincinnati voters as Issue 22 on Nov. 3, are demanding that the $200,000 be returned immediately.

"The public funds entrusted to the board belong equally to the proponents and opponents of the proposition, and the use of the funds ... to persuade the voters that only one side has merit, gives the dissenters just cause for complaint," Tim Mara, an attorney heading up the anti-levy movement, wrote in a letter delivered to Parks Director Willie Carden Jr. on Tuesday, citing a New Jersey legal case.

Even if there is an answer on the legality of the donation, it won't likely arrive until after Election Day.

If the dollars are at some point determined to be public, the Ohio Elections Commission doesn't currently have jurisdiction over this part of Ohio law. There is an effort to give the commission that authority in Senate Bill 186, introduced in part by a local politician, Sen. Bill Seitz, R-Green Township.

The office of Ohio Auditor Dave Yost reviews finances of public entities to be sure money isn't misspent. Press Secretary Brittany Halpin said any determination on the $200,000 donation probably couldn't be made until the city's next audit. Cincinnati's finances are audited once a year.

A spokesman for the Ohio Attorney General's Office said it would only look into the issue if a complaint were filed. Nonetheless, the money was given to a 501(c)(4) organization, making this likely an issue for the IRS, spokesman Dan Tierney said.

City Solicitor Paula Boggs Muething, Cincinnati's head legal counsel, said her office has not been involved in the matter.

Mayor John Cranley said he was happy to hear about the donation.

"I think it's great," Cranley said. "I think it's a testimony to how much they believe it will be transformative for the parks. It's not taxpayer money."

The Great Parks Great Neighborhoods nonprofit came into being on June 4 in a form allowing it to make political contributions.

Luken, a Cranley adviser, is listed as the sole official for the nonprofit on state incorporation papers. In an interview with The Enquirer, he said creation of Great Parks Great Neighborhoods and the donation of the $200,000 to that nonprofit by the Park Board underwent a thorough legal review.

“I’ve read the law and seen the opinion, and this is perfectly legal,” Luken said. “This is private money given by people who love the parks and why this money is there. And there is no better way to spend money on the future of the parks than on this levy campaign.”

Luken also “guaranteed" the donation would be used for the levy campaign. The nonprofit is allowed to send money to the official campaign committee in favor of the levy, he said.

“We are very careful about these things," Luken said.

In 2012, a ban on political donations by government entities was given new enforcement teeth after a state audit found the Toledo region's transit authority illegally gave money to a levy campaign for the bus system in 2007 and 2008. Officials who illegally spend public funds on campaign activities now face first-degree misdemeanor charges, which carry up to six months in jail and fines up to $1,000 for a conviction.

Reporter James Pilcher contributed.

WHERE THE MONEY WENT

Cincinnati Parks officials say the $200,000 the park board voted to spend on the parks levy went to the nonprofit Great Parks Great Neighborhoods.

The group was incorporated on June 4 at the law firm of Manley Burke, a block away from City Hall, documents filed with the Ohio Secretary of State's office show. 

The nonprofit does not have 501(c)(3) tax-exempt status, which would preclude it from any political activity. A 501(c)(4) can make political contributions and endorse candidates. It also may "educate" voters about issues; in this case, extolling the virtues of the proposed tax levy, as long as it doesn't advocate a yes for the levy also called Issue 22.

Donations to 501(c)(4)s are not tax-deductible, but the names of contributors to such groups are not disclosed. Campaign finance experts say that confidentially allows unlimited amounts of "dark money" to be funneled to candidates and causes without disclosure of the donors.

Following the IRS scandal involving scrutiny of right-leaning 501(c)(4) organizations two years ago, the IRS said that any group applying for nonprofit status is provisionally approved pending review. The Great Parks Great Neighborhoods group formed in June, although it is not yet on the IRS's official list of approved nonprofits.

The sole incorporator listed on the state incorporation documents is former Cincinnati mayor Charlie Luken, a Cranley adviser who has been campaigning for the levy. 

The registered agent for the nonprofit is Manley Burke lawyer Micah Kamrass, whose brother Jared is the pro-levy campaign's manager. The law firm is named in part for Tim Burke, the Hamilton County Democratic Party chairman.