If Jim Brannon’s firing on Wednesday from his position as executive director of Habitat for Humanity of North Idaho was politically motivated, the 11 members of the Habitat for Humanity of North Idaho Board of Directors will have intentionally and recklessly inflicted serious damage. The damage, however, will not be limited to Brannon’s campaign for Coeur d’Alene City Council. The damage will spill over to Habitat for Humanity of North Idaho.
Habitat for Humanity is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code.
Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. The prohibition applies to federal, state, and local elections. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.
Usually, violations of the prohibition include:
- Directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.
- Making contributions to political campaign funds. (Note: This violation refers to illegal contributions by the organization, not by individuals who are members of the organization but exercising their right to contribute personally)
- Making public statements (verbal or written) in favor of or in opposition to any candidate for public office.
- Engaging in activities that may be beneficial for or detrimental to any particular candidate. These activities may constitute intervention, even if they do not expressly call for the election or defeat of a particular candidate, if the activity contains reasonably overt communication that the organization supports or opposes a particular candidate.
It is the fourth bullet point that would seem to most closely apply to Brannon’s firing. If an investigation by the Internal Revenue Service determined the actions taken by the Habitat for Humanity of North Idaho Board of Directors were intended to interfere with Brannon’s ability to campaign for elected public office, it would arguably constitute prohibited intervention. The totality of the circumstances would determine what action, if any, the Internal Revenue Service would take. In the most benign finding, it is likely the Internal Revenue Service would simply counsel Habitat for Humanity of North Idaho that their actions, while not in clear violation of the prohibition against campaign political activity, gave the appearance of violation of the prohibition.
It could get much worse, however.
For example, if during the course of an investigation someone volunteering information or being interviewed gave false information (other than a proclamation of innocence or denial of guilt) to a federal agent, s/he could be subject to criminal prosecution under 18 USC 1001. If any participants took almost any action to falsify statements, alter documentary evidence or create false documentary evidence, or generally interfere with the course of an Internal Revenue Service investigation, they could find themselves in violation of various statutes under Title 18, Chapter 73 – Obstruction of Justice. If two or more participants agreed to take some action that they knew would obstruct the investigation, they may be in violation of 18 USC 371 and other criminal conspiracy statutes as well.
And as noted earlier, a finding by the Internal Revenue Service that Habitat for Humanity of North Idaho violated the prohibition against political campaign activity could result in revocation of tax-exempt status and imposition of excise taxes.
The circumstances and timing of events reported in Mary Souza’s October 9, 2009, post titled Run for Council, Lose Your Job raise enough questions about Jim Brannon’s firing to warrant an Internal Revenue Service inquiry. The public needs to know the results to have trust and confidence in their candidates and in their charitable organizations.
Bill, as I see this, the problem would be proving intent. That is “knowing” the state of mind of the board. Very difficult from a strictly legal standpoint. In court, an objection would be sustained. How can one/many, know for an absolute provable certainty, what is in the mind of another. Now we all know what is going on here. Talk about flunking the smell test. But proving it is another story. As So, once again, I suspect “they” will get away with their…uhhh, questionable behavior. Of course the Jims offer to work for free is a huge hurdle for the HH board and could constitute proof that the firing was a case of political motivation. As whats his face has stated that Jim did a great job, I would push for an explanation as to why they didn’t accept his offer. The real recourse in this situation is voting. Also, as I am doing, witholding donations to Habitat. And the beat goes on…….
Comment by Faringdon — October 11, 2009 @ 10:12 am
Faringdon,
The first step would be for the IRS to conduct a thorough investigation to gather the facts. Its investigation would be to determine compliance with Title 26, not necessarily to establish criminal conduct under Title 18. Regardless, they would go where the evidence leads them.
Comment by Bill — October 11, 2009 @ 10:29 am
Sorry Bill, verbose I can be, clear not so much. 🙂 An IRS investigation was what I was talking about. Same situation, how to prove intent. I guess the most salient point would be, why not let Jim remain for free as he offered. Of course, the IRS needs to know about this situation before anything can happen. It has been my observation that, in actuality, it takes a great deal to get the IRS moving. They survive with compliance by the masses based on “fear” of audit. Most IRS agents will tell you exactly that. And, nationwide, HH carries a great deal of clout. Was it Mary who said this story has been picked up by the national news media? Cool!
Comment by Faringdon — October 11, 2009 @ 10:42 am
Great info, Bill. I wouldn’t advocate that anyone withhold donations to Habitat. There are so many people here in North Idaho that need help, and Habitat is one of the best at giving them a hand up, not just a hand out. Those that are selected to receive a house must put in a large number of hours volunteering on Habitat houses first. The money is carefully spent, with only a very small percentage for administrative expenses. Jim was only making $44,000/year as Exec. Director. Compare that to the salary of LCDC urban renewal’s Exec. Director, Tony Berns, who makes about $120,000.
LCDC doesn’t want Jim to win his bid for city council because Jim promises detailed oversight of LCDC and greater fiscal accountability. Don’t underestimate the power of LCDC in our community. They are the only group with money, and they have lots of it. Their own information states they will receive $5.2 million in property tax increment money this year. That’s $5.2 million that will NOT be going to the city, county and others as it should be. We taxpayers pay more to make up the difference, all of us in the whole county.
Comment by mary — October 11, 2009 @ 10:42 am
Faringdon,
No apology needed. The IRS does have criminal investigative jurisdiction and authority through IRS-Criminal Investigation (CI). Usually the people you or I would deal with when we go to an IRS office for guidance, forms, audits, etc., are not CI Special Agents. In very broad terms, the CI Special Agents become involved when noncompliance crosses the line into criminal conduct (that’s where criminal intent enters the picture). The CI SAs also do internal integrity investigations involving IRS employees.
Comment by Bill — October 11, 2009 @ 11:50 am
Mary,
Thanks.
The point you made, though, is exactly why the allegations against the Habitat for Humanity of North Idaho Board of Directors need to be thoroughly and impartially investigated, and the results need to be made public. It’s because Habitat is such a great organization providing such a valuable and important service that its public reputation must remain unsullied. If the present Directors did nothing wrong, the public needs to know that. If they did wrong, especially if they did it intentionally, they need to be removed and replaced. The public needs to know if that happens, too.
(By the way, I used the same photo you did from Library, but mine turned out redder. I don’t know why.)
Comment by Bill — October 11, 2009 @ 11:55 am
Some in the CDA Press comments section on this story are connecting the dots between members of the Habitat board and Jim Brannon’s opponent. Some of the claims include donations to past Kennedy campaigns and acting as fundraisers or hosts for fundraising events by members of the Board.
First, has anyone documented any of this? Second, has anyone seen, heard or have documented evidence that anyone at City Hall, the LCDC, the Library Board or the opposition campaign solicited, encouraged or aided the dismissal?
Inquiring minds want to know!
Comment by Pariah — October 11, 2009 @ 1:06 pm
I agree that HH concept of hand up-not out, is excellent. Exactly why I have supported them. That being said, there are many charities here that, basically, do the same thing. Those I will continue to support along with my pet charities. However, as long as this board behaves as they do, and as long as they are another of the LCDC puppets, I cannot support HH. If the local program suffers, it is the board to blame. There is simply no other way to make a point. And perhaps the national HH board will get a heads up and do a bit of investigating on their own. One would hope that the national HH would want to clean house rather than suffer this blot on their copy book.
Comment by Faringdon — October 11, 2009 @ 2:57 pm
It will be interesting to see if national Habitat for Humanity weighs in on this local situation. I agree it does give the organization a negative mark that they don’t deserve.
Comment by mary — October 11, 2009 @ 3:21 pm
In my humble opinion the only way to clean up this corruption is to “stop feeding the beast.” Unfortunately, Habitat for Humanity has become part of the beast. If people stop sending them money then perhaps the national organization will investigate and help clean up a piece of the CdA corruption. The powers in CdA are a disgrace! They are the ones to be held accountable for declines in donorship. Acorn doesn’t get my money so why should the CdA Habitat for Humanity get my money?
Comment by citizen — October 12, 2009 @ 8:04 am
“feed the beast”…love it! If only we could withold that portion of property tax that funds LCDC. With schools suffering along with other important groups, that $5 plus million going to “feed” LCDC is downright obscene! I all gets back to compliance. If absolutely everybody did it, there is nothing that could be done about it. Non compliance to bad law is exactly how this country was born. Apparently, I’m fomenting revolution..whoo hoo!
Comment by Faringdon — October 12, 2009 @ 9:29 am
citizen and Faringdon,
As I indicated in my post, I believe that as a IRC Section 501(c)(3) tax-exempt organization, Habitat for Humanity-North Idaho needs to be examined by the IRS to determine if it directly or indirectly participated in or intervened in any political campaign on behalf of or in opposition to any candidate for elective public office in Coeur d’Alene. That is the best way to determine if there was a problem. If there was, then it needs to be fixed so the public’s trust and confidence in HFH-NI is restored. Obviously the Press article generated some concerns, and rightfully so. There are simply no local authorities with the authority, legal jurisdiction, or the credibility to conduct an inquiry and compel any needed corrections. The most important outcome is for any problems with HFH-NI to be corrected.
Comment by Bill — October 12, 2009 @ 10:21 am
I understand that the LCDC portion of the tax bill is not broken out on the tax bill. Is this true? This makes it harder not to “feed the beast”.
Comment by citizen — October 12, 2009 @ 7:12 pm
citizen,
If you live inside one of Coeur d’Alene’s two urban renewal projects (the Lake District and the River District), your assessment notice will show it.
If you live outside one of two projects, you will not be told (because the treasurer cannot precisely calculate) how much of your tax assessment goes toward making up for what the LCDC skims off.
The abuse of urban renewal in Idaho is the ultimate scheme: Out of one side of their mouths they tell you it doesn’t add to your tax payments, yet out of the other side they say “it depends” on some assumptions about the future value of the property after consultation with Madam Olga and her ouija board.
Comment by Bill — October 12, 2009 @ 7:28 pm
Pressure needs to be put on the Kootenai County Commissioners to help clean up this mess of rising taxing on us in the county for the short fall to county taxes due to LCDC. Instead of taking the forgone taxes, our County Commissioners should be screaming to the state about the tax shortfall due to LCDC. Currie, Piazza and Tondee need to work for us and stick their necks out on this issue. This has been a long time frustration of mine and I have told each one of them my feelings on the subject. Perhaps, they are afraid of losing city voters.
Comment by citizen — October 12, 2009 @ 8:22 pm
Citizen raises a very legitimate point about the county commissioners getting involved on the questions raised about urban renewal tax diversions. Most all of the critical analysis of the impact on county taxpayers has been directed towards the appointed board members of LCDC and the elected officials of the City of Coeur d’Alene. It’s time for the county commissioners to get involved. It’s time to hold their feet to the fire, as well.
Comment by Gary Ingram — October 13, 2009 @ 9:10 am
Bill, isn’t the portion of the PT that goes to LCDC a percentage of the total? If you live outside of CDA and it doesn’t show on your bill, couldn’t you figure the amount by using that percentage figure? My Ouija board isn’t talking.
Under the “didn’t see that coming” heading, Mikey Kennedy leads in contributions…big surprise…not! I find it interesting that Steve Meyer and St. Charlie the Nipp are not show as contributors. Call me a cynic, that just doesn’t pass the smell test. On the lighter side, his in-laws made a substantial contribution. Clearly, they don’t want to end up supporting those 7 children.
Comment by Faringdon — October 13, 2009 @ 9:29 am
Faringdon,
If you live inside one of the two LCDC projects, it does show up on your tax bill.
If you live outside one of the two LCDC projects, you (or the county assessor or county treasurer) should be able to tell you by what amount or percentage your taxes have increased to compensate for what the LCDC skims off. They should be able to, but they can’t — unless they make some assumptions that may or may not be valid. That’s the beauty of the scheme the LCDC is running on the taxpayers of Kootenai County.
Here’s a link to Kennedy’s first campaign finance statement. There will be three more filed. On 09/25/09 Charlie and Susan Nipp gave his campaign $300. On 09/03/09, Ryan and Teri Nipp gave $100.
There was something else interesting. Clearly Kennedy’s trip to Boise on August 20 to collect campaign money from the folks there was productive. Note the contributions on 08/20/09, roughly just over $1,000. Note, too, his expenditure for $234.20 to Southwest Airlines on 08/20/09.
Comment by Bill — October 13, 2009 @ 9:59 am
Gary: “…the treasurer cannot precisely calculate how much of your tax assessment goes toward making up for what the LCDC skims off.”
That’s because it would be purely theoretical in nature for the Treasurer to know that amount. It is a fact that the increment going to LCDC might not have been created in the first place without their participation in the District’s projects. Clearly, there would be little or (more likely) no development on the old mill site that is now Riverstone. The cost to acquire and clean up the site (over $9/square foot) made it prohibitive to develop without incentives from LCDC.
So, a strong case can be made that the taxing agencies not currently getting the revenues likely would be getting little or none of them now anyway. As it is, the County and other taxing districts will in a few years see several million dollars annually added to their budgets when LCDC’s districts are retired.
I believe firmly that it will have been worth the wait.
Comment by JohnA — October 13, 2009 @ 10:06 am
Bill…my convoluted mind is in overdrive. Exactly how can it be “theorectical” for the treasurer to know the amount? If that is so, then exactly how is the amount, given to LCDC, “calculated” after the collection of property tax. It is an impossibility for the treasurer NOT to be able to explain to the taxee how much of the tax revenue goes to LCDC…and then be able to apportion than money to LCDC. The explanation is nonsense.
Comment by Faringdon — October 13, 2009 @ 10:18 am
I’ll answer, Faringdon. It’s theoretical because only new construction created in the urban renewal districts goes to LCDC. Without knowing LCDC’s impact on new construction, it would be impossible to calculate how much other entities would be or would not be getting today. In any event. those entities are guaranteed to receive those new dollars once LCDC’s Districts end.
Urban renewal is nothing more than an investment in the future, an investment that will be as lucrative to local governments in the future as it is to cities all over Idaho today.
Comment by JohnA — October 13, 2009 @ 10:44 am
“the County and other taxing districts will in a few years see several million dollars annually added to their budgets when LCDC’s districts are retired”.
Comment by JohnA — October 13, 2009 @ 10:06 am
The Lake and River Urban Renewal Districts will last a maximum of:24 years each.I think that’s far too long IMO.Post Falls retired the district that Harpers was in after 10 years.Why does CDA’s districts have to last 24 years?
Comment by kageman — October 13, 2009 @ 11:52 am
I don’t believe that LCDC or any Urban Renewal Agency should be in the business of:helping to finance residential construction projects;
like condos for part-time residents etc.Why?Because,it gentrifies CDA and other areas;as LCDC helps to raise property values significantly.
The Idaho State Legislature needs to
revisit some Urban Renewal laws IMO.
Comment by kageman — October 13, 2009 @ 12:07 pm
Kage, URDs don’t have to last 24 years. They only have to last until their debt service is retired. A City Council can end a URD whenever that happens, which is what occurred in Post Falls with Harpers.
It’s not uncommon for URDs to be established for the full 24 years, with the hope that all of the projects to be funded in the urban renewal plan are paid for prior to the full term.
Comment by JohnA — October 13, 2009 @ 1:29 pm
John, Re post 24…And if they are not paid for prior to the full term? Then what?
Also if a new project within the URD, say at year 20, needs more than five years to retire debt, then what?
Comment by Gary Ingram — October 13, 2009 @ 8:09 pm
Gary, my understanding is that a city cannot occur additional debt after 24 years but can extend the life of the district beyond the 24 years until existing debt is paid off. I believe this provision is in place in case revenues do not allow for debt retirement within the maximum life of the district. I would never encourage any of my clients to incur debt beyond the life approved by a City Council, and I doubt investors could be found that would feel comfortable with such an arrangement.
Comment by JohnA — October 13, 2009 @ 10:11 pm
So John, the 24 year term for a URD provided in the law is in reality, as I suspected, a myth. I understand that payments on the huge debt load at Riverstone is interest only. How will that arrangement retire the debt in 24 years?
Comment by Gary Ingram — October 14, 2009 @ 12:43 pm
Gary, a URD should be debt-free at the end its stated life, in this case 24 years. The issue of extending until debt is paid off is only if the URD has incurred the debt through bonds. The better way, as Scott Reed writes on the other thread, is requiring the developer to incur the debt via an Owner Participation Agreement. OPAs generally state that the developer’s debt will not be paid off if there is insufficient tax increment to do so. This is crucial so URAs are not stuck with infrastructure costs after the life of the URD is complete. So, it’s clearly in the interest of the developer to ensure there are enough revenues to retire debt he has incurred on behalf of the URA.
I’m not sure about the Riverstone debt structure since I was not involved with it. I would rest assured, however, that the LCDC Board would not put themselves in a position to leave any of their debt service unpaid when their districts are retired.
Comment by JohnA — October 18, 2009 @ 7:55 am