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Mayor dodges own rules in accepting campaign gifts By Jeff Coen and John Chase, Chicago Tribune reporters 8:10 a.m. CDT, May 16, 2013 Leaders of a tech firm seeking a city contract donated $15,000 to Mayor Rahm Emanuel's campaign fund, despite Emanuel's own executive order banning contributions from vendors trying to get city business. The donations linked to a company that uses digital mapping to find illegal billboards are the latest example of a political tie-in to the mayor's billboard initiative, rolled out last fall with a no-bid contract to another Emanuel campaign donor. The circumstances of the contributions also provide new insight into the limitations of Emanuel's pledges to "promote public confidence in government and its decision-making." Those pledges were embodied in a series of executive orders Emanuel signed the day he took office, including key provisions prohibiting donations to the mayor from people seeking or holding a city contract, as well as any donation from a lobbyist hired to influence city decisions. In response to Tribune inquiries, Emanuel's spokeswoman Sarah Hamilton said in a statement late Wednesday the donations had been returned because "we believe these individuals may have violated the executive order." "The city will remove them from the list of qualified vendors for the municipal marketing opportunity, and their contributions have been returned," she said. The recent donations from three businessmen behind the tech startup CityScan came months after Emanuel officials added the firm to a shortlist of companies qualified to seek city contracts under the mayor's municipal marketing program. The city's invitation to interested companies spells out the ban on political contributions and warns that violators may have their proposals rejected. The men's connections to CityScan — formerly known as Government Enhancement Services — are not apparent in the campaign disclosure reports filed with the state by Emanuel's political operation; all three have broader business interests and are listed in the disclosures by their associations to other companies. CityScan Chief Operating Officer Orlando Saez declined to discuss the circumstances of his $5,000 contribution to the Chicago for Rahm Emanuel fund, including whether it violated the mayor's prohibition against donations from anyone seeking city contracts. "I guess that's for the lawyers to decide," Saez said. "You have what you have from what's available publicly and that's perfectly OK." Saez's contribution was recorded March 26, the same day as a $5,000 check from Barry Schain, a Chicago real estate broker listed as a CityScan director in federal documents. Schain did not return phone calls. In January, Emanuel's campaign fund reported a $5,000 donation from CityScan co-founder and venture capitalist Christopher Bissonnette, who said he owns about 20 percent of CityScan. Bissonnette said he didn't make the donation as the firm's co-founder, but rather while wearing the hat of a venture capitalist who supports the mayor's initiatives. "I did it unrelated to CityScan," Bissonnette said. CityScan offers to help governments more efficiently target permit violations, including illegal billboards. The men who gave to the mayor did not answer questions about the specifics of their contact with City Hall, but a company spokesman later said CityScan had responded to Chicago's municipal marketing invitation "as a way to potentially pursue business with the city." Conversations with city officials were not fruitful, however, said CityScan spokesman Troy Corder. He added that company officials do not think their numerous conversations with city officials makes CityScan a bidder covered by the mayor's ban. David Morrison, head of the Illinois Campaign for Political Reform, said the "plain text" of Emanuel's order is clear: "It appears to be a violation." "We commended Mayor Emanuel for those executive orders and it was a fine way to set a tone for his administration, but now we need to see how those rules are made in practice," Morrison said. The newspaper's inquiry also casts a new light on a $10,000 donation to Emanuel from Michael Alvarez, an elected Cook County water commissioner. Alvarez is also a top City Hall lobbyist, and CityScan was among his clients at the time the contribution was recorded in December. The donation was made as a transfer from Alvarez's political fund to Emanuel's fund — an arrangement that avoids the mayor's lobbyist ban as well as state limits that restrict the size of contributions from individuals. Alvarez did not return calls seeking comment. Corder said CityScan stopped employing Alvarez as a lobbyist in March. The CityScan donations are just the latest examples of recent contributions to Emanuel's two political committees from people seeking help from his administration, highlighting the limits of the mayor's ethics decrees. Emanuel collected more than $1 million from city contractors during his run for mayor. Then on the day he took office, he issued a series of executive orders that included a renewal of his predecessor's ban on contributions to the mayor from those seeking or holding city contracts. In April, Emanuel defended receiving donations from developers seeking his administration's approval for high-profile hotel projects, which are not covered by the mayor's executive orders. Executives from investment firm Madison Dearborn Partners also donated to the mayor even though the firm owns a 48 percent stake in CDW-Government Inc., which has a $6 million city contract. An Emanuel spokeswoman suggested those donations were not a violation because the city contract piggybacked on a state contract. The billboard push has unfolded similarly to other Emanuel projects, with weeks or months of behind-the-scenes discussions involving private business interests before an announcement that gives the public and the Chicago City Council little time to react. The proposal for new billboards is part of the municipal marketing program Emanuel unveiled early in his tenure, aimed at raising revenue by selecting companies willing to pay for the privilege of advertising on city property. Emanuel officials opted to ask potential vendors to come up with their own ideas under the broad umbrella of a "request for qualifications" that bypasses the standard competitive bidding process, which could have provided the public with more details on specific proposals. The mayor's idea seemed to be dormant until October, when Emanuel unveiled his 2013 budget that included $18 million in "municipal marketing" cash, only to disclose a few weeks later that most of that money would come from a billboard plan he had already set into motion. The city even had a company already picked out to oversee the biggest piece of the plan — installing 34 massive billboards on city property alongside the Kennedy, Dan Ryan and other expressways. Emanuel's office announced it had awarded the prime advertising opportunity to a newly created billboard company: Interstate-JCDecaux LLC, a conglomerate of two politically connected sign companies, in return for at least $154 million in payments over 20 years. Executives with Interstate donated $10,000 to Emanuel's mayoral campaign, the Tribune reported last fall. Emanuel's office said then that five companies came up with digital billboard plans but the Interstate-JCDecaux plan was the best. The mayor's office refused to provide details about the other plans and denied the newspaper's Freedom of Information Act request for any communication between the administration and the winners of the no-bid deal. During Emanuel's successful push for City Council approval of the expressway billboards, he vowed to crack down on illegal signs that clutter the landscape and cost the city millions of dollars in uncollected fees each year. By the time Emanuel was discussing his billboard plans, his administration had put CityScan on the marketing shortlist, where it is still listed under its old name, Government Enhancement Services. Through an arrangement with Nokia-owned map developer NAVTEQ, CityScan takes street-level pictures and cross references that information with data from city permits to spot potential permit violations involving not just billboards but construction work, scaffolding and even awnings. CityScan is seeking similar work in cities across the nation and aims to make government more efficient by replacing human code inspectors, Saez said. "We are inspectors on steroids," he said. "Instead of people, we use technology." The firm is currently being run out of 1871, a tech incubator on the 12th floor of the Merchandise Mart that business leaders and Emanuel are promoting as a hotbed for Chicago startups. CityScan has reported raising nearly $1.5 million in "seed funding," Saez said. The firm has about a dozen investors, including angel investors, institutions and CEOs of large corporations, but he declined to identify most of them, saying it is not required unless the firm gets a government contract. Because of that lack of disclosure, it is unclear whether other CityScan investors are also donors to Emanuel's campaign fund. "Unfortunately we don't have any contracts yet, and we are optimistic that we will. When we do, you will know it," he said. "If there's a contract with any city, you will get names of investors." CityScan's methods could have helped make more room for legitimate outdoor advertising — which in turn could have increased business for another company that two of the CityScan players are behind. Bissonnette and Schain are also principals in Digital GreenSigns, a growing Chicago firm that is placing roughly 100-square-foot LED billboards throughout the city on the sides of privately owned buildings in Chicago's neighborhoods, downtown and in the suburbs. An alternative to big billboards, the smaller LED signs don't have to go through as many hoops at City Hall. Saez declined to say whether he was an investor in Digital GreenSigns. But the venture does have the backing of Bruce Rauner, a wealthy venture capitalist and private Emanuel adviser who is considering a Republican run for Illinois governor. A spokesman for Rauner said he is not a CityScan investor. It is common for billboard companies to target illegal advertising as a way of cutting back on competition. When asked if there was any coordination between CityScan and Digital GreenSigns, Saez said, "that is just your interpretation." jcoen@tribune.com jchase@tribune.com |