Hotels Switch Funding from Prop KK to Council Race

By Jorge Casuso

The major contributors to a hotel-backed living wage initiative that would strip the City Council of its ability to pass any wage measure have mounted a last-ditch effort to defeat the three council incumbents, according to a campaign finance disclosure statement submitted to the City Clerk Friday afternoon.

The switch coincides with a statement released by Edward Thomas Management Company president Tim Dubois Friday announcing that the hotels -- which are the target of a pioneering living wage proposal being studied by the council -- had ceased campaign activities for Proposition KK on the November ballot.

According to the campaign statement, the Santa Monica Hospitality Industry Coalition -- sponsored by Edward Thomas and the Loews Santa Monica Beach Hotel -- spent $47,295 last week to print and distribute flyers backing challengers Herb Katz and Robert Ross, according to the campaign statement.

The flyers also attack incumbent Mayor Ken Genser and fellow Santa Monicans for Renters' Rights Councilmen Richard Bloom and Michael Feinstein.

Sources close to the Prop KK campaign said the shift in focus did not necessarily signal a sudden switch in strategy.

"I'm not sure that it's a switch in strategy," the source said. "There's always been discussion about supporting Herb (Katz) and Rob (Ross). They (the hotels) have donated to their campaigns. Changing the makeup of the council is part of a long-range plan."

But another source close to the campaign said the decision was made after polls showed the nation's first business-backed living wage measure was bound for defeat.

"The polling showed we couldn't win," the source said. "Edward Thomas made a business decision."

The sudden influx of funds just days before the election could help narrow the wide funding gap between the two challengers and the incumbents, who can count on their own campaign funds as well as Santa Monicans for Renters' Rights hefty war chest. According to the most recent campaign finance disclosure statement, the powerful grassroots tenants group had raised $119,751 and spent $99,555 as of October 21.

The Prop KK campaign raised a total of $922,779 and spent $918,098, with the lion's share of the contributions coming from Edward Thomas -- which owns the Shutters on the Beach and Casa del Mar hotels -- and Loews, which is engaged in a bitter union organizing drive.

The Santa Monica Hospitality Industry Coalition -- which as a general purpose political action committee can receive unlimited contributions -- used its initial funds to hire canvassers and print and distribute four separate campaign flyers and brochures. According to sources close to the campaign, the pieces were produced by the Dolphin Group, the powerful conservative political consulting firm that helped elect governors Ronald Reagan and Pete Wilson.

The Dolphin Group also was the focus of national attention during the 1998 presidential campaign, when it produced a video for George Bush showing Willie Horton's victims describing the paroled murderer and rapist's vicious attacks.

One of the pieces that hit mailboxes Friday shows a black-clad man, a knife in his gloved hand, peering in a window at night. The ad supporting Katz and Ross attacks the three incumbents as being weak on crime. "The City Council needs to do a better job protecting our community," the ad reads. (The incumbents, along with Katz, were endorsed by the Santa Monica Police Officers Association.)

Katz and Ross said they had never heard of the group or knew anything about the mailer.

"I have no idea who did it or why," said Katz, who served on the council from 1984 to 1992. "It's not mine. No one consulted with me. My first observance of it was in my mailbox."

"Your guess is as good as mine," said Ross. "I don't know who it is nor have I talked to anyone about it."

Opponents of Prop KK -- who back a living wage proposal being studied by the council that targets non union hotels along the coast -- questioned the timing and message of the campaign flyer.

"I think they just morphed into another organization," said Vivian Rothstein, a lead organizer for Santa Monicans Allied for Responsible Tourism (SMART), the group behind the proposal before the council. "They're just switching their tactics based on the polls. I think they're just switching their tactics out of weakness."

"They're clearly saying, 'We're not going to spend more money on KK, we're going to spend it on the council,'" said Sandi Richards, pastor of the Church in Ocean Park and a leader of SMART.

"I think their intent has always been to go after the City Council," Richards said. "I am deeply concerned that what this signals is a deeper shift to hunker down and infiltrate city politics on a long-term basis by reprehensible fear tactics."

The incumbents also expressed similar concerns.

"It seems they are just redirecting their money to attack candidates," Genser said. The mayor added that it was ironic for the hospitality industry to point out crime as a major problem.

"The appearances are that the money has just moved from KK to the council campaign," Feinstein said. "If that's true, they're just trying to accomplish the same ends through different means. The timing was interesting. The piece hits the same day as the press release."

Bloom said he was "disappointed" by the developments, especially after the council took into account many of the concerns expressed by the hotels when it directed staff to study the proposed ordinance further.

"This letter is more lies, more deceit," said Bloom referring to Dubois' announcement that campaign activities for Prop KK had ceased. "But as an attorney I know that when someone is dishonest in one part of their testimony, they are dishonest in others."

Sources close to the Prop KK campaign said the council members were naive not to expect the hotels to fight a proposal that would make Santa Monica the nation's first municipality to mandate that businesses with no city contracts pay their workers a minimum wage, in this case $10.75 an hour.

"What Ken (Genser) and the others have to understand is that they push these buttons," the source said. "You don't declare war and then not expect something. I'm absolutely amazed these guys are surprised."