Follow-Up: McDonough Trying to Game In-Kind Contribution

In a follow-up to Saturday’s story regarding Pat McDonough’s campaign finance comes this report from Pamela Wood in this afternoon’s Baltimore Sun:

Del. Pat McDonough plans to amend his campaign finance reports to reflect that he receives free office space from a major Baltimore-based developer.

McDonough said he receives free office space in the Carroll Island Shopping Center, which he uses as both a district office and a campaign office. McDonough, a Republican representing Baltimore and Harford counties, is running for Baltimore County executive this year.

“We do not use one penny of state taxpayers’ money. That office is a gift. It is for free,” McDonough said in an interview.

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The conservative media outlet Red Maryland questioned who was paying for the office, noting that McDonough did not list rent payments or donations for the space on his campaign finance reports.

McDonough said Tuesday that he would amend his most recent report to reflect that he received donated office space. He plans to list the value of the space as zero dollars.

The space lacks heat and air conditioning, McDonough said, “so it has zero value.”

So McDonough is going to amend his campaign finance report to say that he received a donation from the Cordish Company, the owner of the property, of space. But McDonough is going to report the value as $0.

Let’s go take a look at the campaign finance law, Chapter 8, Section 4:

8.4 In-Kind Contributions and Independent Expenditures
1. In-Kind Contributions
A. Generally
An in-kind contribution is a contribution given to a political committee in a form other than money. Normally, there are two types of transaction that may be considered an in-kind contribution: (1) a contribution given to a political committee in non-monetary form (e.g. services or property); or (2) a coordinated expenditure made on behalf of the candidate where the candidate knows of and consents to the expenditures.

In-kind contributions include items, services, goods, and anything of value provided to the political committee. The amount of an in-kind contribution is the fair market value of the good or service provided (at the time of the contribution).

Example: A person may contribute bumper stickers to a candidate’s committee. The amount of the contribution equals the fair market value of the bumper stickers or, in this case, what the individual paid for the bumper stickers. It is important to remember that an in-kind contribution counts toward the donor’s contribution limits.

So according to the campaign finance law, McDonough is required to note that the in-kind contribution is required to be counted as the fair market value of the property if McDonough was to rent the property. McDonough claims that the fair market value is $0.

Some research leads to indicate that the real fair market value is more than $0.

A search on Loopnet, a heavily used commercial real estate site, lists the 136 Carroll Island Road suite as both available and as costing between $10 and $16 a square foot.

If you assume the lowest possible value to rent the suite according to this site, then the “fair market value” of the property would be $15,000 per year, exceeding the in-kind contribution limit of $6,000 per election cycle.

It appears McDonough is trying to game the system by claiming that the fair market value is free when it appears that the fair market value is a lot higher than $0.

Wood’s story in the Sun did not address McDonough’s Cadillac or cell phone bills.

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