Sports arena redevelopment team is fined $5,000 for not disclosing indirect lobbying activities on time
In what it described as a mistake, Midway Rising missed deadlines by as many as 226 days for filing legally required forms.
The development team selected to lease and redo the city of San Diego’s 48-acre sports arena site in the Midway District did not properly report all of its lobbying activities, as required by law, according to an investigation by staff members with San Diego’s Ethics Commission.
Last week, the Ethics Commission approved a stipulation order fining the Midway Rising team $5,000 for failing to file on time what’s known as expenditure lobbyist disclosure reports, which are required when an entity spends $5,000 or more in a calendar quarter to indirectly influence municipal decisions.
The order, which amounts to a settlement agreement, was first reported by Voice of San Diego.
From hockey to basketball to music and a lot more, the old Midway District venue was, and remains, a local icon even as redevelopment looms.
The disclosure forms in question, which are distinct from those required for direct lobbying of city officials, apply to expenses for a broad range of activities, including spending on public relations and outreach, advertising and research. They are, however, rarely filed.
“The public has a right to know who is behind the scenes spending money to try to influence city decisions,” said Sharon Spivak, executive director of the Ethics Commission. “Here you have a winning bidder of a huge city project that filed the required disclosure forms after the selection was made.”
She declined to speak directly about the specific terms of the settlement, citing legal reasons.
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The Ethics Commission is an independent city department that does not report to the mayor or City Council and has the authority to monitor and administer the city’s ethics, campaign finance and lobbying laws. The department consists of six staff members who report to a seven-member board of volunteers appointed by the mayor. The commission investigates allegations of violations and can impose fees up to $5,000 per violation.
In 2022, staff processed 75 complaints that resulted in 11 investigations and two stipulation orders, according to the department’s annual report.
Midway Rising includes sports and entertainment venue operator Legends, market-rate housing developer Zephyr and affordable-housing builder Chelsea Investment Corp. The team was selected by City Council members in September to lease and redevelop the city’s land at 3220, 3240, 3250 and 3500 Sports Arena Blvd. The group’s plan calls for 4,250 apartment homes, a new 16,000-seat arena, a 200-room hotel and 20 acres of plaza and park space.
At first community meeting, Midway Rising’s sports arena redevelopment plan is met with cheers and jeers
The development team fields questions about traffic, parking and other project logistics.
At issue is the timing of Midway Rising’s expenditure lobbyist disclosure reports. The forms are due a month after a reporting period ends.
Midway Rising filed three of the required expenditure lobbyist forms Sept. 13, the same day the City Council selected the group as the winning bidder in the sometimes-contentious sports arena real estate competition. The forms were 226, 137 and 45 days late, according to the order.
The late reports documented a total of $118,000 in payments made to a political consultant who worked on public outreach for Midway Rising between Oct. 1, 2021, and June 30, 2022.
The development team self-reported the violations to the commission upon discovery, according to the stipulation order.
“[Midway Rising] did a self-evaluation to make sure they were doing everything right. They determined they were not and they decided to do the right thing,” said Gil Cabrera, a lawyer and former member of the Ethics Commission who was hired in August by the development team to audit regulatory compliance. “I’m nearly certain everybody [in the sports arena site competition] spent indirect [lobbying] funds. Midway Rising is the only party that actually ultimately filed something showing it.”
Specifically, the funds in question reflect the monthly retainer that Zephyr Acquisitions Group paid to political consultant Dan Rottenstreich’s firm, Amplify Campaigns, which conducted public outreach, set up a project website and put together presentations for community leaders, Cabrera said. Cabrera also noted, and the stipulation order confirmed, that he tried to submit the past-due forms Sept. 12, before the council selection, but encountered technical issues with the city’s reporting portal.
The filing oversight for this specific type of form appears to be common. Only one other entity has filed an expenditure lobbyist disclosure report between Jan. 1, 2021, and Feb. 13 this year, according to records available on the city’s online database of lobbyist reports.
“The whole point of expenditure lobbying is documenting what you’re doing to try to move the needle, [other than] directly talking to city officials,” Cabrera said. “The reality is nobody complies with this law.”
It’s unclear whether the late filings or stipulation order will complicate Midway Rising’s negotiations with the city, though Cabrera said he doesn’t believe the mistake opens the door to a legal challenge.
Still, the matter has not gone unnoticed by critics of the city’s selection process.
At a mid-December City Council meeting where staff presented an update on the sports arena project, Lori Saldaña, a former state Assembly member who recently ran unsuccessfully to unseat District 2 member Jennifer Campbell on the council, warned of complications ahead.
“This council voted ... without full knowledge of lobbying activities that had been taking place for the prior year,” Saldaña said during the public comment period of the meeting. “This project is doomed to fail because it started out on illegal lobbying activities that were not disclosed.”
City Council members are expected to receive an update on the Midway Rising project from the city’s real estate department on Tuesday, March 7.