‘Dark money’ arises in local race
Secret donors raise big cash for Woodlands board elections
The political ad begins with a forest lit by slices of sunlight. Then dark clouds roll over the tall pines of The Woodlands, and a narrator, in an ominous tone, warns of “something scary” looming.
That something is a soaring property tax rate if the unincorporated master-planned community becomes a full-fledged city, asserts the commercial by a nonprofit group, The Woodlands Concerned Taxpayers.
The hard-hitting spot landed on cable television and social media in the middle of October, a few days before early voting began for four of the seven seats on the township’s governing board. A second ad targets Gordy Bunch, accusing the tea partybacked incumbent of pushing a “whirlwind tax increase” by supporting incorporation.
Together, they are the brash centerpieces of an unparalleled campaign in this usually peaceful enclave. The Woodlands Concerned Taxpayers has bankrolled at least $244,000 on ads and voter outreach to influence the election, records show. The amount is more than double what all nine candidates have spent, combined.
While the organization has put its name on every ad, billboard and mailing, it’s not clear who is paying for its efforts. That’s because the organization, which was created two months ago as a social welfare nonprofit, isn’t required to disclose its donors while raising and spending unlimited sums of money.
These so-called “dark
money” groups have emerged as the favored vehicle for corporations, unions and wealthy individuals to set the political agenda since the Supreme Court’s 2010 “Citizens United” ruling, which struck down limits on independent spending in election campaigns. And as the use of a non-disclosing group in The Woodlands shows, secret spending isn’t only for presidential and high-profile Senate and House races.
‘Social welfare’ group
“There’s an explosion of these dark-money groups at the state and local level when before it was seen as a federal phenomenon,” said Chisun Lee, senior counsel at the Brennan Center for Justice at New York University.
Lee, who has analyzed outside spending, said dark money is flowing down the ballot because companies and others can shape the outcomes of local races in which they have a direct stake at a relatively low cost.
Hidden interests in the San Francisco Bay area, for example, pumped roughly $90,000 through a nonprofit group called the Neighborhood Empowerment Coalition into a 2014 city council election that was focused on housing policy. Only after they cast ballots did voters learn the money’s source: a group of landlords opposed to rent control.
“It’s especially harmful at the local level because political advertising is more influential,” Lee said. “Voters deserve to know who is trying to win their vote and why.”
The Woodlands group was formed in September by Bruce Tough, a lawyer who spent 15 years on the township board, including five as chairman. He lost his seat a year ago to an ally of Bunch after he supported a Montgomery County bond proposal that included a hotly debated extension of Woodlands Parkway.
The Concerned Taxpayers group is backing a slate that includes one of Bunch’s challengers while using the specter of higher property taxes because of future incorporation as a wedge. Bunch and his supporters, meanwhile, are reminding voters at every turn that immediate incorporation isn’t on Tuesday’s ballot. He says he only wants the community, which has some 110,000 residents, to start meaningful planning for cityhood.
The Woodlands operates with an unusual “township” form of government, which is a hybrid between a private corporation and elected municipal government. If it becomes a real city, responsible for law enforcement and roads, among other services, the local property tax rate could rise by 70 percent, Tough said. The tax rate is now 23 cents per $100 of valuation.
But township officials said that they haven’t conducted an official tax rate study to determine how incorporation would affect taxes.
Tough defended the move to keep donors’ names private, saying the group is for educational purposes that go beyond the election.
“This entity is to inform and educate the residents,” Tough said. “I see a rush to incorporate, and that would be a huge mistake.”
Tough organized The Woodlands Concerned Taxpayers under the tax code as a “social welfare” group, not unlike civic leagues or volunteer fire departments. Known to the IRS as 501(c)(4)s, the groups are exempt from revealing donors so long as politics don’t become their primary focus. That means less than half of their money can be used to sway elections.
Although the interest groups don’t pay taxes, their donors aren’t allowed to claim a deduction.
Developers suspected
Since September, The Woodlands Concerned Taxpayers has spent $83,287 to print and mail brochures, $72,220 to produce videos and buy time on cable TV, $30,000 to canvass voters and $18,810 to put up outdoor signs, according to campaign finance reports filed with the state.
Most of the money went to the Austin-based Iron Group, whose
president is Chris Keffer, son of state Rep. Jim Keffer, an Eastland Republican. The group also spent $33,000 for online strategy from The Prosper Group, an Indiana-based firm that has worked on campaigns for Republican governors and senators.
The big spending has fueled speculation that the money was provided by developers, like The Woodlands Development Co., which owns all of the undeveloped land in the nearly built-out master-planned community.
Company representatives declined to answer questions about whether it’s involved with the group. In a statement, the developer said, “We are concerned about our community. Like many other businesses in The Woodlands, we oppose an increase in taxes.”
Bunch, meanwhile, has spent $27,832 to hold onto his seat. Records show more than $20,000 came from his own pocket — a move he said he made to combat spending by a group funded by unknown donors.
“You expect to see it in a congressional race, but you don’t expect it in a race for a volunteer position,” said Bunch, president and CEO of a financial services company. “We’re going to spend one-tenth of what they will and depend on the grassroots to win the election.”
Real estate agent Amy Lampman, who received the endorsement of The Woodlands Concerned Taxpayers for Bunch’s
seat, has spent $6,484 on her campaign. The group’s help has included a mobile billboard with Lampman’s picture that has rolled through the township over the past week.
The group also has endorsed incumbent Mike Bass, Chris Grice and Stuart Schroeder.
‘Hardball politics’
Bunch has received help from the Texas Patriots, the Woodlands-based tea party group, which has spent $7,591 to print and mail slate cards to voters. It also backs Brian Boniface, John Anthony Brown and Bruce Rieser.
Unlike The Woodlands Concerned Taxpayers, the Texas Patriots PAC is required to reveal its donors. Records show the group has raised about $12,000 since March, mostly from people giving no more than $250.
Outgoing Woodlands board chairman Ed Robb said the rise of political groups, starting with the Texas Patriots, has turned running for local office into “hardball politics” that require significant money to compete.
“What I’ve come to realize is, it’s not about policy,” said Robb, a local pastor who has been on the board since 2010. “It’s about power.”
“It’s especially harmful at the local level because political advertising is more influential. Voters deserve to know who is trying to win their vote and why.” Chisun Lee, senior counsel, Brennan Center for Justice at New York University