San Diego — After the Republican Party of San Diego County endorsed Steve Francis for mayor on June 13, it wasted little time in turning its endorsement into campaign action.

As of election eve, public election filings showed that the local GOP had collected $158,000 from a small group of donors and spent it quickly. Expenditures for Francis were reported at $86,342, including $76,059 for mailers, $8595 for door hangers, and $1688 for precinct maps.

Relying on a legal loophole that allows donors to ignore San Diego's campaign restrictions, local business leaders who had a major stake in the election's outcome made big contributions. Donations to the party from June 21 through July 21 included $50,000 from Manchester Resorts, owned by hotel magnate Doug Manchester, an early supporter of the Francis candidacy; $40,000 from real estate developer Macey McMillin, Jr.; $10,000 from McMillin Management Services; $25,000 from the EastLake Company, which develops in south San Diego; $10,000 from Reno Contracting, Inc., of San Diego; $7000 from Atlas Hotels, which owns the Town and Country in Mission Valley; $5000 from developer Barrett-American; $5000 from Ace Parking; $5000 from San Diego GOP chair Ron Nehring; and $1000 from Collins Development Company.

San Diego's Election Campaign Control Ordinance limits individual contributions to $300 per candidate, but Proposition 34, passed by California voters in 2000, created a new category called "member communications," a category the city's ordinance does not address. Under state law, individuals and businesses can make unlimited contributions to political parties, and under Prop 34, political parties, in turn, can make unlimited expenditures on member communications. The one restriction is that the party must direct its efforts only to the party's members, in this case, registered Republicans.

According to April Boling, San Diego's ubiquitous campaign treasurer, whose clients include the San Diego Republican Party, the San Diego Police Officers Association, recently resigned Mayor Dick Murphy, and Councilman Brian Maienschein, the "type of communication cannot be bumper stickers, yard signs, TV, and radio. This is because the message [in those instances] is being communicated beyond the [party] membership."

Public disclosure records show that in the 2004 election cycle, the San Diego Republican Party spent hundreds of thousands of dollars on behalf of GOP candidates, mostly for state legislative seats, but it also targeted Republican voters in nonpartisan races. For example, the party spent $61,096 in mailers for city attorney candidate Leslie Devaney, $127,786 in mailers for Mayor Dick Murphy, $16,625 in phone banks for businessman Phil Thalheimer in his unsuccessful attempt to defeat Councilman Scott Peters, and $57,537 in a mailer attacking Democratic mayoral candidate Donna Frye.

Nothing in Prop 34, says Boling, precludes coordination between candidates and party officials.

One GOP consultant concurred. "My [Republican] clients and I work directly with the party. We decide what we want the party to do, such as a direct mail piece. We line up the funds, design it, print it, mail it, and the party essentially rubber stamps it and gets a commission for being a political laundromat."

But candidates aren't the only ones to profit from the loophole. The local GOP and its chosen consultants also make big money. Ronald Nehring, an East County resident, chairs the San Diego County Republican Party. Nehring requires that Republican candidates benefiting from member communications sign a memorandum that allows the party to keep 18.5 percent off the top for administration and overhead.

"I do not know what they do with the 18.5 percent," said one political consultant who has worked closely with the Republican Party's member communication efforts.

Nehring would not disclose the percentage charged the Francis campaign. "How funds are allocated is an internal decision made by the party," said Nehring.

However, public records dated July 22 show that of the $158,000 collected, $86,342 was spent on behalf of Francis and $9403 to support Prop A, the Mt. Soledad cross ballot measure. The remaining $62,255, or 39 percent of the funds collected, was spent on GOP consultants and Republican Party overhead costs.

Will Hutson, political director of the Orange County Republican Party, said his organization does not have a similar procedure or charge candidates overhead fees. "I do not know if we have done it in the past. We do not [currently] have a built-in procedure on that."

And last year in San Bernardino County, Republican Party chairman Bill Postmus raised and spent over $200,000 for member communication without requiring a memorandum with GOP candidates or including any "overhead" provisions.

Boling, who did not know how much the party was charging Francis, said the San Diego GOP held back 18.5 percent of the funds because "there are overhead costs related to these projects...related to maintaining the party apparatus."

Local GOP sources indicate that the party spends about $15,000 a month on staff and overhead costs.

Several Republican Party activists claim Nehring pushed to get the party to endorse Steve Francis in the mayoral primary.

"You know why Ron pushed this through?" said a senior GOP leader who agreed to comment on the condition of anonymity. "The party had $40,000 in the bank, and overhead is $15,000 a month. They are moving office locations, and that will cost them. So if they did not endorse Steve Francis, they would shut down. This election is essentially saving Ron's ass."

Was money the motive? Nehring denied it. "The financial health of the party is unaffected whether a candidate is endorsed or not. It does mean significant party resources are committed for the candidates."

Besides Francis, San Diego's Republican mayoral hopefuls included former police chief Jerry Sanders, Mt. Soledad cross activist "New York" Myke Shelby, and attorney Pat Shea.

One mailer sent out by the San Diego GOP not only endorsed Steve Francis but attacked Republican Jerry Sanders for supporting tax increases. (The same mailer also attacked Democrat Donna Frye.) This may have been the first ever "attack" mailer by a local Republican central committee on a fellow Republican candidate.

Traditionally, the local GOP has stayed out of most contested Republican contests, including nonpartisan races, according to public records. Races with incumbent Republicans running, such as Mayor Murphy's reelection campaign, are the most notable exception.

Nehring disputed that. "We endorsed over 400 Republicans in the last election," he said. When asked how many of those endorsements involved contested GOP races in which no incumbent Republican was running, Nehring said, "I do not have statistics on that."

Shelby put up a strong effort to block the party's endorsement of Francis, whom one Shelby supporter called "a squish" on social issues, referring to Francis's pro-choice views.

Nehring denied that the endorsement process had been fixed in any way. "The endorsement was considered in the identical manner as any endorsement we have done in the past. We do this by the book. No special consideration was given to any candidate. All candidates were invited to speak."

But according to one central committee member, "Ron [Nehring] steamrolled the endorsement through. He even pushed through special quorum rules so Francis could be endorsed by two-thirds of central committee members present at the meeting instead of the membership as a whole." GOP insiders who supported Shelby said they were afraid to speak on the record for fear of retribution.

Nehring agreed that the July 26 mayoral election was a special case. "Normally we do not go through the exec committee." But this time, Nehring said, the executive committee "adopted a procedure to govern the endorsement process, and that rule was drafted and circulated to the entire central committee prior [to the executive committee meeting] and subsequently adopted unanimously by the full central committee."

Another Shelby supporter claimed there was a second reason that Nehring wanted the party to endorse Francis.

"Nehring wanted the money for the party and to help Jen," referring to Nehring's longtime girlfriend, Jennifer Jacobs. Jacobs, who said she and Nehring are no longer dating -- "I am single now" -- was raised in San Diego. She cut her political teeth in Sacramento, where she was a legislative chief of staff and also worked extensively in Central Valley GOP politics. Upon returning to San Diego, she served as executive director of the San Diego Lincoln Club, a GOP political action committee. She has worked closely with Nehring since his ascension as GOP chair in July 2001, using that connection to help generate mostly East County political clients.

In La Mesa's 2002 mayoral election, Jacobs ran Councilman Dave Allan's campaign. The party supported Allan instead of the Republican incumbent, Art Madrid.

Jacobs's current firm, Coronado Communications, was retained to work for Steve Francis's mayoral campaign. Central committee insiders say that her relationship with Nehring resulted in special access to party functions and key political information.

"Ron even allowed Jen to sit in on the [mayoral] endorsement discussion at the party's executive committee meeting. Not only is she not a member [of the executive committee], but everyone knew she was working for Francis," said the Shelby supporter.

Nehring said that other central committee members were also in attendance, including the San Diego Republican Party's most recent executive director, Jerry Van de Weghe, whom one Republican elected official called, "Ron's protégé."

Nehring said that unlike Jennifer Jacobs, Van de Weghe did not make his client relationship known. "Jerry spoke [at the meeting]. He is a member of the central committee. The difference was that the next day it was reported in the newspaper that Jerry was working for Myke Shelby," said Nehring.

"That is a flat lie," said Van de Weghe when told of the comment. "I did not make that decision [to work for Shelby] until that night after the meeting and signed the contract the next day. I offered to show them the contract. The news article did not come out until a couple days later. Ron knows this."

Regarding Jacobs's influence on the endorsement process, Nehring said that he and the executive committee were aware that Jacobs was working for Francis but that he had "no authority to exclude the members of the central committee. All members were given the opportunity to attend."

Jacobs agreed. "I am a member of the central committee and completely forthright that I am involved with the Francis campaign. I have not done anything wrong or unethical."

GOP insiders say that in 2004, Jacobs was initially given the nod to raise funds for GOP-endorsed municipal candidates.

But public disclosure records show that the San Diego Republican Party paid $27,000 in fund-raising "consulting" fees to Democratic activist Ray Drew. Drew, who has long been active in liberal causes, was past executive director of the Family Pride Coalition. Drew raised about $1 million for Dick Murphy and was fund-raiser for Bonnie Dumanis in her 2002 upset victory over District Attorney Paul Pfingst.

"Jacobs was a lousy fund-raiser," said a GOP insider. "She collected only a few thousand for Murphy over several months." The party apparently had no option but to turn to Drew, who refused comment for this article. Insiders said that "Nehring was embarrassed, and he was motivated by the [18.5 percent] commission. So he had no choice."

"This is ludicrous and irresponsible gossip from an anonymous source," said Nehring. "Jen Jacobs is a professional who is a former finance chairman for the party and volunteers in numerous ways. I am not going to comment anymore on this."

When asked about being called a "lousy fund-raiser," Jacobs laughed and said it was "pure silliness. I was a volunteer aiding in fund-raising for Murphy. I never got paid for any Murphy activities."

Public records disclose that Jacobs's Coronado Communications was paid $2025 by the Republican Party in late February 2004 and Drew started receiving his commissions from the GOP the following month, just as Jacobs received her final payment.

When asked if Jacobs raised funds for the party earlier in the 2004 election cycle, Nehring said, "Of course."

Jacobs said she "was being paid for doing a Republican mail piece for Councilman Jim Madaffer for the March 2004 election, not for fund-raising activities, which were always voluntary."

However public records show that in fact the San Diego GOP paid the Monaco Group, not Jacobs, $7956 for producing Republican member communication "campaign mailers for Jim Madaffer" in late February 2004.

Most Republican candidates and insiders contacted seemed unaware that the party gets a cut of funds raised and spent on behalf of candidates.

"Wow, 18 percent," said a GOP political activist. "I assumed the party used its healthy membership dues to cover its overhead. I expected the fund-raisers were paid the usual 15 percent [commission], but add the party's cut in, and that leaves even less for getting our Republican candidates elected."

Contact Scott Barnett at [email protected]