Builder Money Floods Dana Point

For the second time in two years, developers are pouring money into the city elections in Dana Point, where low-key campaigning and modest political war chests had been the norm.

This year, two South County developers have formed independent expenditure committees to buy campaign signs and banners in support of two incumbent council candidates and mail brochures attacking a third.

In the 2002 council race, the same developers -- Sanford Edwards of Dana Point and Makallon Resorts of Newport Beach -- gave $70,000 out of a total $125,000 in contributions to four independent campaign committees. The money helped elect James V. Lacy and Russ Chilton.

Spending such sums of money on behalf of candidates is legal, even in cities with contribution limits. Dana Point’s contribution limit is $540. Thirteen other Orange County cities -- and the county itself -- restrict campaign donations.

Critics claim a 2002 federal ruling that allowed unlimited contributions by independent committees further threatened to swamp small-town elections. Prior to that ruling, four Orange County cities and the county had limited donations to those committees.

The 2002 federal court decision ruled that any attempt to limit contributions to these committees restricted free speech. The committees have become increasingly popular in recent years.

Dana Point’s spending has irked some residents, who say developers are trying to buy council seats. Five candidates -- only one an incumbent -- are running.

“The whole thing has gotten really nasty,” said Pat Fairbanks, president of the Dana Point Civic Assn., which does not endorse candidates. “This is a nice little town, and we feel like we’re being hijacked.”

Edwards has been a lightning rod in the coastal community because of his plan to develop the Headlands, a majestic bluff above the ocean in Dana Point. In January, he won approval from the California Coastal Commission to build 125 homes, a 90-room beachside inn and a 35,000 square-foot shopping mall on 53 acres of the promontory. An additional 68 acres will remain open space, with 28 acres set aside as a conservation area.

Edwards said he has been upfront about his spending. He noted that his largess to independent committees -- about $60,000 in 2002 -- accounted for about one quarter of what was spent by all sides in that election. That amount also represents about one quarter of his donations to local charities and civic causes in Dana Point, he said.

“The idea that special interests can come in and control the community, that’s a Hollywood sound bite,” said Edwards, who lives in Newport Beach. “All I’ve ever asked is that we have five reasonably intelligent people on the council. The people who don’t like it are the ones I’m not giving my support.”

Over the last two weeks, mailers backing incumbent Joe Snyder and candidate April O’Connor, a city planning commissioner, were sent by two committees that were supported last year by Edwards and Makallon, which developed the St. Regis Resort in Dana Point. Makallon’s owners, who couldn’t be reached Tuesday for comment, bought the Dana Point Marina Mobile Home Park last year and announced that they will close it in June.

Financial reports were due Oct. 5 from Taxpayers for a Better Dana Point and the Clean Beaches Coalition, which sent the mailers, but hadn’t been received by late Tuesday. Edwards said the reports will show he contributed $10,000 to the groups.

A third committee, Edwards’ Headlands Reserve, reported spending $7,377 for campaign signs and banners backing Snyder and O’Connor.

Two brochures attacking candidate Diane Harkey were sent by a fourth committee, the League of Independent Voters. The league received $10,100 from Edwards and $10,000 from Makallon Resorts. A portion of the money -- $7,328 -- went toward one of two brochures mailed by the group that labeled Harkey as untrustworthy and listing business liens and lawsuits filed against her husband’s investment company. One of the mailers also attacked Harkey for wanting to “buy a City Council seat.”

Harkey said she has lent her campaign $40,000 in part for her own brochures to deflect the mailers criticizing her. Her reports showed $31,411 in contributions, $40,000 lent to her campaign and $79,000 in expenses.

“They’re criticizing me for spending money, but they attacked me first and I had to defend myself,” she said.

Harkey said she decided to run after meeting with Edwards to seek his support. He told her that he had already picked his candidates, she said, and offered to help her land a seat on the planning commission if she didn’t run -- a contention Edwards denied.

“I guess I didn’t realize until then how controlled the city was,” said Harkey, a retired banking executive who worked with Security Pacific, Bank of America and Guaranty Bank, based in Texas.

Harkey has spent the most by far in the council race, which also includes businesswoman Lara Anderson and planning commissioner Greg Powers.

Snyder reported $9,314 in contributions since Jan. 1, with most of his money spent on a campaign consultant and graphics; O’Connor raised nearly $12,000 and lent herself $30,000, with most of her money spent on consultants.

The fact that neither candidate bought campaign signs or banners on their own could be seen as an indication that the independent committees are essentially serving as de-facto campaigns, said longtime government watchdog Shirley Grindle of Orange, who wrote most of the county’s campaign reform laws.

“This allows moneyed interests to control these elections and takes the campaigns out of the control of candidates,” she said. “They make a mockery of contribution limits.”