‘Promise zone’ grantee with ties to Obama failed to disclose lobbying

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Chuck Ross Investigative Reporter
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A California nonprofit involved in the Obama administration’s “promise zone” initiative failed to disclose that it spent $140,000 lobbying the White House and other federal agencies.

Records show that in 2009 and 2010 Youth Policy Institute (YPI), which provides training and education services to low-income Los Angeles residents, hired Bryan Cave LLC to lobby the executive office of the president and federal agencies such as the Department of Education and the Department of Housing and Urban Development for “Federal Support for social services for the Los Angeles Metro Area.”

That lobbying, which was not reported by YPI, comes to light as Los Angeles area politicians have expressed concern over the lack of transparency in the awards process for Obama’s promise zone initiative.

Cause of Action, a nonpartisan government accountability organization, reviewed YPI’s 990s and its single audit forms on behalf of TheDCNF. The group determined that YPI is liable to the IRS for $24,000 in penalties and may have violated federal lobbying laws.

“They are required to disclose their lobbying activities to the IRS,” said Dan Epstein, executive director for Cause of Action. “Unfortunately, it appears that taxpayer backed nonprofits are engaging in lobbying activities without disclosing those activities.”

Under federal law, non-profit organizations are allowed to lobby politicians. But they must report the activities on their 990 forms.

On its IRS 990 forms for the period, YPI answered “No” to the question in Part IV of the form that asked “Did the organization engage in lobbying activities?” YPI also did not file Schedule C forms which are required of lobbying 501(c)3 organizations.

“Nonprofits are legally prohibited from using the federal funds they receive to lobby,” said Epstein.

Since YPI receives around 80 percent of its revenues from federal grants, there is a “rebuttable presumption” that the funds YPI used for lobbying commingled with the money it received through those grants.

Mixing finances in such a way is illegal, though the presumption can be rebutted if the organization can show that it keeps its funds separate.

“The fact that the organization failed to disclose its lobbying or political activities may be circumstantial evidence that it may have used federal dollars for impermissible purposes,” said Epstein.

“Disclosure prevents our tax dollars from being given to politically-connected nonprofits that may use those funds for impermissible activities.”

TheDCNF reached out to YPI more than a dozen times for comment and clarification without response.

YPI and its executive director Dixon Slingerland have direct ties to President Obama in two main ways.

YPI executive director Dixon Slingerland raised nearly $750,000 for Obama’s 2008 and 2012 campaigns as a bundler, records show. Visitor logs also show that Slingerland has visited the White House a dozen times since 2009. Some of those visits were for social engagements such as holiday parties, while on other occasions Slingerland met with Obama staffers. (RELATED: Organization led by Obama bundler wins ‘promise zone’)

In January, Obama designated five areas as promise zones, including Los Angeles. Philadelphia, San Antonio, the Choctaw Nation of Oklahoma, and southeastern Kentucky also earned the designation.

YPI is designated as the lead agency for Los Angeles’ promise zone and will coordinate its operation along with the city.

Similar to the enterprise zones proposed by Republican Jack Kemp in the 1980s and ’90s,  promise zones offer no new funding. Rather, designated areas are awarded bonus points in competition for hundreds of millions of dollars in grants from federal agencies.

The most in grants that Los Angeles will receive is $500 million over ten years.

The Obama administration says a total of twenty areas will be designated promise zones, with the goal of reducing poverty, increasing educational attainment and reducing crime in the areas.

The Department of Housing and Urban Development required that urban promise zones — as opposed to those awarded to rural or tribal areas — encompass contiguous swaths of territory with populations between 10,000 and 200,000 and with poverty rates of greater than 20 percent.

Designated areas also had to have previously been awarded at least one of three other grants — the Promise Neighborhoods, Choice Neighborhoods, or the Byrne Criminal Justice Innovation implementation grants.

YPI has received all three of those grants, including a $30 million Promise Neighborhoods grant in 2012.

Some Los Angeles politicians have wondered how YPI and the area encompassed in its promise zone — the neighborhoods of Pico-Union, Little Armenia, Koreatown, Westlake, West Hollywood, and Hollywood — was awarded the prize while other areas of the city were left out.

“I just don’t think there’s any other greater need in Los Angeles than the communities surrounding Watts,” California Democratic Rep. Janice Hahn told TheDCNF.

In February, Hahn, who represents Watts, submitted a letter along with California Democratic Rep. Karen Bass asking Obama to consider designating more than one area of Los Angeles as a promise zone. They also requested greater emphasis on poverty for future promise zone awards.

“It was almost like those who already had got more, and those who never had didn’t get a chance,” said Hahn.

But the lawmaker and her constituents were frustrated again last week when the Jordan Downs housing project in her district was bypassed during the latest round of Choice Neighborhoods Implementation grants.

“At this point, I have no clear answer as to why Jordan Downs was denied the CNI grant. Was it because they got their application in late? Did they not meet the eligibility criteria or was it that they did not hire the right lobbyist?” asked Hahn, in a letter addressed to Secretary of Housing and Urban Development Shaun Donovan. Hahn’s office shared the letter with TheDCNF.

Confusion of the entire awards process was also expressed by Los Angeles city councilman Bernard Parks, a former chief of the Los Angeles police department.

“I’m not aware of any of the nonprofits outside of this [designated] area that were contacted,” said Parks during a radio interview with activist Earl Ofari Hutchinson last month.

“This did not, to my knowledge, come through [city] council,” said Parks of the promise zones, adding that he thought the city would have issued a request for proposal, or an RFP,  to select a lead agency for the project.

Instead, Parks said he only heard about promise zones the day before the awards were announced. He also only learned after the fact that promise zone grants depend on the three other pre-requisite grants.

“How did this all transpire without a whole lot of public scrutiny?” wondered Parks, who is an Obama supporter.

In a statement to TheDCNF, Parks said “it is very unfortunate that the Youth Policy Institute (YPI) which received over $30M in grants to apply, in behalf, of the City of Los Angeles did not take a broader approach.”

There are ties between Slingerland and Los Angeles Mayor Eric Garcetti, whose backing of YPI was necessary for the procurement of the promise zone award.

Slingerland and his wife, Suzanne Steinke, have donated a total of $8,600 to Garcetti’s successful campaigns for city council and mayor, records show. And last year, Garcetti appointed Steinke to a spot on the Board of Civil Service Commissioners.

Though Garcetti told a Los Angeles newspaper that he had nothing to do with the designation of YPI or the territory encompassing the promise zone — he said that the qualifying grants were awarded when he was a city councilman — YPI’s implementation plan for the Promise Neighborhoods grant shows that Garcetti submitted a letter of recommendation on behalf of the organization.

Garcetti’s office and the Department of Housing and Urban Development did not respond to multiple requests from TheDCNF for comment and clarification.

YPI has fared well over the past decade, especially during Obama’s term. The organization’s 990s show an increase in revenue from around $2 million in fiscal year 2007 to just over $20 million in fiscal year 2012. In fiscal year 2010 its revenues reached $25 million. The 990s also show that Slingerland’s pay has increased nearly sevenfold during that span, from a $45,000 salary in 2002 to $295,000 for 2012.

TheDCNF has numerous Freedom of Information Act requests pending on the promise zone planning process.

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