Lobbyists Play Outsize Role as Political Fund-Raisers in San Francisco

By Gerry Shih

In late March, Supervisor Ross Mirkarimi of San Francisco met with lobbyists from Zynga, the online gaming giant, and agreed to introduce a bill to eliminate the city’s unusual tax on corporate stock options.

Mr. Mirkarimi’s legislation, which was signed into law June 3, could save Zynga $30 million to $50 million in local taxes in the first year alone if, as expected, the company goes public at a multibillion-dollar valuation. Other San Francisco start-ups on the verge of initial public offerings, including Yelp and Twitter, had also sought a repeal of the tax.

On May 20, three days after the Board of Supervisors passed the bill, a lobbyist from Platinum Advisors, the firm representing Zynga, organized a breakfast fund-raiser for Mr. Mirkarimi’s campaign for sheriff at a bistro in the Ferry Building. The event brought in about $3,000, Mr. Mirkarimi’s aides said.

The fund-raiser does not appear to violate San Francisco’s intricate but erratically enforced lobbying laws, and political operatives say such events are common. Still, the breakfast and its timing offer a glimpse into the confusing intersection of politics and government in San Francisco, a system dominated by a few powerful lobbying firms that provide elected officials with the cash and connections they need to survive politically.

In an interview, Mr. Mirkarimi rejected the notion that the fund-raiser influenced his decision to push legislation proposed by Platinum Advisors.

“I haven’t received any contributions from Zynga or them,” he said, referring to Platinum. “I don’t see a problem.”

Chris Gruwell, the president of Platinum’s San Francisco office, said he paid for the breakfast out-of-pocket as a private Mirkarimi supporter. The fund-raiser was not related to the tax legislation, he said, and Zynga played no role in organizing the breakfast.

Ethics questions surrounding lobbyists’ relationships with candidates have become a major issue in the early months of this year’s mayoral election. In May, Alex Tourk, a political consultant, resigned from the mayoral campaign of City Attorney Dennis Herrera after disclosures that he had lobbied Mr. Herrera while managing his campaign, which is prohibited by city law.

Several days later, The Bay Citizen reported that Mr. Herrera had been lobbied by Samuel Lauter, a lobbyist from his remaining campaign consultant, Barnes Mosher Whitehurst Lauter and Partners, on behalf of a Georgia energy company in 2009 while Mr. Lauter’s business partner, John Whitehurst, ran Mr. Herrera’s re-election campaign for city attorney.

Mr. Whitehurst has since said that the apparent violation was due to a clerical error and that his firm kept its lobbying and campaign practices strictly separate. Mr. Lauter has continued to raise money for Mr. Herrera as he now runs for mayor, The San Francisco Examiner reported.

While lobbyists moonlighting as fund-raisers are a fact of political life from Washington to Honolulu, they play an outsized role in San Francisco, a small-town political fishbowl with a concentration of big-money interests.

“Political fund-raising is something that is regularly done by almost all interested parties in politics in San Francisco,” said Alex Clemens, the founder of Barbary Coast Consulting and an active fund-raiser for public officials. “In our town, elected officials, candidates and political consultants all know the rules, report their activities and keep things transparent.”

Platinum Advisors is among the city’s four most influential lobbying outfits, insiders say, an elite circle that also includes Barnes Mosher Whitehurst Lauter, HMS Associates and Barbary Coast Consulting. City ethics filings show that Platinum lobbyists have for many years taken in the most fees, with A-list corporate clients like AT&T.

Mr. Gruwell, who was finance chairman for Gavin Newsom’s 2003 mayoral campaign, has distinguished himself as a fund-raiser. He connects his clients not just with moderates aligned with Mr. Newsom but also with the influential bloc of left-leaning progressives who count Mr. Mirkarimi among their leaders.

In fact, Mr. Gruwell has organized events for almost every member of the sitting Board of Supervisors, according to people with knowledge of Platinum’s activities. In recent years, observers have been impressed with his ability to pull in business-sector money to help staunch progressives like John Avalos.

“The reason they’re such effective fund-raisers is because they basically get individuals from the companies they represent to donate to candidates who are running for office,” said Jim Ross, a Bay Area political consultant. “They’re connectors.”

This spring, Mr. Mirkarimi introduced his tax legislation while public debate over a temporary payroll tax exemption devised for the central Market Street neighborhood — and specifically Twitter — reached fever pitch. Many technology industry executives and financiers warned that if the city’s 1.5 percent payroll tax continued to apply to stock options, San Francisco’s start-up culture would be strangled. But the city’s restive political left attacked the legislation as a giveaway to Twitter, which had threatened to move out of the city.

As the Twitter controversy unfolded, Zynga executives became aware that the stock options tax would apply to their anticipated I.P.O. as well. The company retained Platinum — at a cost of $10,000 a month, records show — to ensure that Zynga would also get an exemption, said Eric Potashner, a Platinum lobbyist.

Mr. Potashner said that he and Mr. Gruwell met with supervisors to explain Zynga’s situation, and that it was Mr. Mirkarimi who agreed to sponsor legislation that would put a citywide moratorium on the stock option tax.

Mr. Mirkarimi said his legislation was objectively fairer and more equitable than the Twitter bill. “It doesn’t just target one company or one neighborhood over others,” he said. “We should not penalize companies that want to mature in San Francisco.”

After several amendments, Mr. Mirkarimi’s bill was finally passed by the board, 8 to 3, on May 17.

One City Hall official said Platinum did a great job for its client.

“I don’t think a moderate would’ve touched this with a 10-foot pole,” the official said. “Not only were they able to get a progressive to take it, they were able to build a coalition of progressives to either support it or stay on the sidelines because when the time came they were able to call in the chips.”

While Mr. Gruwell sends invitations and pays for the events, which can range from breakfasts to casual meet-and-greets over drinks at Platinum’s plush Spear Street offices, there are always campaign workers present who collect the checks. The only scraps of evidence of Platinum’s involvement are invitations, like the ones sent from Mr. Gruwell’s company e-mail account on May 16 for a “Breakfast With Ross.”

On May 20, about 40 guests ate eggs soft-scrambled with mushroom escabeche and goat cheese, apple-mascarpone crepes and grilled asparagus with speck, said David Garza, general manager of Market Bar.

Mr. Garza estimated the value of the meal to be about $25 a person. Mr. Gruwell disputed the figure, saying the total cost was just $500 — the legal limit for individuals’ political contributions.

He most likely received a deal from the restaurant, Mr. Gruwell added, because he held fund-raisers there so often.