Anaheim’s Shadow Government Exposed
SACRAMENTO — After a shocking city hall scandal led to the resignation of Anaheim Mayor Harry Sidhu last year, the city commissioned an investigative report detailing what went wrong. The results — a remarkably thorough page-turner — were released this week. It’s a must-read for anyone interested in seeing how political operatives can pull the strings in local government. It should serve as a blueprint for municipal reform not only in Anaheim but also in other major cities.
The report alleges that the former mayor was at the center of a “cabal” of lobbyists, politicians, and business leaders “who were seemingly united in some close association with a collective aim of promoting their private, political, and financial interests, while acting as a shadow government.” This dynamic was often whispered about throughout Orange County, but last year’s scandal prompted a closer look at the goings-on in its largest city.
The scandal centered on the controversial deal to sell the city-owned stadium to the Angels. As the Voice of OC reported last May, an FBI affidavit “alleged that Sidhu shared city information with the Angels in an effort to get at least $1 million in campaign spending from Angels executives.” No charges have been filed against Sidhu, and he denies the allegations, but an Orange County judge subsequently canceled the sale.
The report finally provided the backstory for how a placid suburban city best known for Disneyland turned into something reminiscent of early 20th-century Chicago. The details are hard to untangle, but it’s easy to focus on a simple theme. As the Orange County Register has opined, the city’s crony capitalistic system — including its showering of subsidies on Resort Area businesses — created the climate where such behavior festered.
Per the report:
Overall, we observed that Sidhu had a close connection to [former Anaheim Chamber of Commerce CEO Todd] Ament and … engaged in what could only be described as influence-peddling through Ament … The evidence pointed to the fact that individuals who wanted to meet with the mayor had to first go through Ament and then pay some form of tribute in order to reach Mayor Sidhu. This could include donations to political organizations, joining the Anaheim Chamber, or participating in other pet projects favored by then Mayor Sidhu.
The Register’s Teri Sforza described what this system meant for average business owners in a column about “small-town tyranny … through the plight of one wee gas station.” According to allegations in the report:
It is our belief that then-Mayor Sidhu, considering these political contributions and using his power over the majority of the City Council, went about wrongfully denying … development plans due primarily to the competing gas station owner’s political contributions to Sidhu’s campaign.
It remains to be seen whether Anaheim’s system can be dismantled. It’s one where council members have routinely subsidized the Chamber and its affiliated groups in return for “vague and amorphous” work, provided hotel subsidies, and even used city funds to build a parking garage for the Disneyland resort. After the high-profile news about the scandal, Anaheim voters sent a mixed message by electing a couple of reformers as well as two big-business-allied council members.
The report left me disheartened. It didn’t need to be this way. In the early 2000s, Anaheim had actually made national attention for taking a truly free-market approach to city business. Dubbed “Freedom Friendly Anaheim,” then-Mayor Curt Pringle and Councilman Tom Tait (who later became mayor) built a bipartisan political coalition that tried to reduce the role of grubby politics in land use and business operations.
Instead of using eminent domain and the state’s often-abusive and now-defunct redevelopment agencies to promote urban renewal, Anaheim instead up-zoned properties, thus giving property owners more latitude in what they could build on their sites. The result was a booming new area of offices, retail, and housing known as the Platinum Triangle. It took shape mainly through market forces, without taxpayer subsidies and the obliteration of property rights.
This is from my column in the Wall Street Journal in 2006:
The council waived fees for homeowners undertaking renovations, on the grounds that the city would gain in the long run by the increase in property taxes. Anaheim also waived fees for business start-ups for three months; some 2,000 new businesses formed in 2005, an increase of one-third from the previous year. It also passed a tax amnesty and eliminated business taxes altogether for home-based businesses.… Anaheim has eliminated most hurdles for approving new churches. Its housing plan also avoids “inclusionary zoning” — an increasingly popular approach to mandate that builders set aside certain amounts of “affordable” housing.
Thanks in part to the political influence of major Resort Area companies that dump serious dollars into local campaigns, voters eventually elected politicians with a more, well, transactional view of conducting business. Council members quickly and rightly distanced themselves from Sidhu after the scandal broke, but it seems obvious that a system whereby politicians pick winners and losers is more apt to lead to scandal than one that serves as a neutral actor.
As a Register editorial concluded after the scandal broke:
In reading the reactions from Anaheim’s political establishment, we hear echoes from the movie Casablanca’s Captain Renault, who was shocked to find gambling in a gambling den. We’re not suggesting Sidhu’s allies suspected alleged illegalities, but we’ve all known that Anaheim’s leaders have hardly been beacons of public spiritedness.
It’s naïve to expect voters to always ensure the election of public-spirited politicians, which is why it’s imperative to dismantle crony capitalism at the local level. Oddly enough, Anaheim remains the national model for what to do (the freedom-friendly model) and what not to do (read the city’s investigative report). The right choice seems pretty clear.