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Is city soda tax contract a returned political favor?

When former city solicitor Ken Trujillo dropped out of the mayor's race last January, then-Councilman Jim Kenney jumped right in and hired Trujillo's campaign staff.

When former city solicitor Ken Trujillo dropped out of the mayor's race last January, then-Councilman Jim Kenney jumped right in and hired Trujillo's campaign staff.

Kenney ended up winning the mayoral race by large margins in the primary and general elections. Throughout the campaign, Trujillo supported Kenney with money and an endorsement. Afterward, he helped with Kenney's transition to mayor.

Last month, the Kenney administration awarded an $800,000 no-bid contract to the firm Trujillo works for to help the city defend its sweetened beverage tax in court. Trujillo will handle the work.

"Most of the big law firms in the city were conflicted out by the soda companies who not only want to sue us over pre-K and community schools and parks and recreation centers but want to keep us from having adequate lawyers to take care of defending ourselves," Kenney said last week, referencing some of the programs that the sweetened beverage tax will help fund. "Ken Trujillo is a great lawyer, his firm has great experience with taxation and he wasn't conflicted out by the soda issue."

Some experts on pay-to-play law say, however, that it doesn't look good for the city to be giving a contract to such a big supporter.

"It does fly against the spirit of the pay-to-play law," Craig Holman, of the Washington-based nonpartisan watchdog group Public Citizen and a national expert on pay-to-play, said.

The city's pay-to-play rules were established in 2006 as a way to deter big city firms from influencing local elections with large checks and expecting contracts in return. Maximum campaign contributions were set and any firm or person who exceeded those limits would not be awarded a no-bid city contract.

Trujillo defended his contract.

"I have not made a single contribution," to the Kenney campaign, he said. Nor has his current firm.

In February 2015, the Friends of Ken Trujillo political action committee gave the Kenney campaign Trujillo's research book, valued at $4,200 as an in-kind contribution.

The Friends of Ken Trujillo PAC also donated $10,000 in March 2015 to Building a Better Philadelphia, a political action committee that supported Kenney during the mayor's race.

The following month, Schnader Harrison Segal and Lewis, the law firm where Trujillo was a partner at the time, contributed $5,000. The firm gave another $5,000 days before the general election.

Just a few days before the May primary, Trujillo's former firm - Trujillo Rodriguez Richards LLC - where he still has ownership interest, donated $2,500 to Kenney.

Trujillo endorsed Kenney, wrote an op-ed explaining his decision to back Kenney, and sat on the steering committee for Kenney's transition team.

Kenney, however, said that hiring Trujillo was not a returned political favor.

"I didn't choose him," Kenney said. "Our law department chose him based on conversations with other law firms." City officials said at least two of the other law firms, Dechert LLP and Pepper Hamilton, had conflicts of interest.

On Sep. 14, the day the beverage tax opponents filed a lawsuit against the city, the mayor's office announced that it had hired Trujillo, now a shareholder at Chamberlain Hrdlicka law firm, and Mark Aronchick, of Hangley Aronchick Segal Pudlin and Schiller law firm, to help defend the city in the suit. The city will pay an hourly rate of $430 for Trujillo and for Aronchick , a reduced rate for what each lawyer is normally paid but much more than the standard $225 an hour the city pays for outside counsel. The city has capped each contract at $800,000 for a total of $1.6 million.

"Both Ken Trujillo and Mark Aronchick were selected because, as former City Solicitors, they are extremely familiar with the relevant state and local law, including Council's authority to tax, which is the basis of the lawsuit," city spokeswoman Lauren Hitt said, adding that the sweetened beverage tax lawsuit is the most "high-stakes litigation the City has faced in recent memory."

If either firm had donated more than $11,500 last year to a successful candidate for city office , the firm would not be eligible to apply for a no-bid contract.

Both firms were required to disclose "all contributions of money or in-kind assistance" made by the applicant during the two years prior, per city law.

The disclosures are supposed to include any contributions made by any "affiliated entity" of the business and any "officer, director, controlling shareholder or partner of the business or affiliate."

Also, if any officer, director, controlling shareholder or partner of the applying business or affiliate "controlled" a political action committee, donations from that PAC must also be disclosed.

Chamberlain disclosed donations from partner Stewart Weintraub but it did not disclose Trujillo's donations.

The chief administrative officer, and prior to January the finance department, in consultation with the law department, interprets and enforces the campaign finance attribution rules for all of the city's no-bid contracts. There are no formal regulations that define how the law is to be applied.

In Trujillo and Chamberlain's case, T. David Williams, the city's deputy chief administrative officer who oversees professional contracts, determined that Trujillo's prior contributions do not count toward the $11,500 threshold in the pay-to-play law because Trujillo is not a "true" shareholder at the law firm, meaning he does not share the profits of the firm.

"Nothing should be counted for the firm because of him," Williams said.

Holman disagrees.

If Trujillo was involved in the fundraising, solicitation or donation of any contribution, "It follows him," to the new law firm, Holman said.

"It also matters not whether the partner has any equity in the firm," Holgan said.

David Thornburgh, president of the watchdog group Committee of Seventy, said it is not entirely clear what would apply to Trujillo.

"In handling this, are they [the Kenney administration] leaving citizens more or less confident that they intend to follow not just the letter of the law but the spirit of the law?" Thornburgh said.


City Board of Ethics Executive Director J. Shane Creamer Jr. said his office only has authority to enforce material misstatements or omissions in the required disclosures. However, only the finance director can determine whether any misstatement or omission would disqualify a business, Creamer said.

Ultimately, Thornburgh said, the contract has to go to someone.

"It's a relatively small town, everyone knows somebody," he said.

cvargas@phillynews.com

215-854-5520

@InqCVargas