Ethics board auditing Iowa House Republican's campaign

Iowa Ethics and Campaign Disclosure Board staff are examining campaign expenditures by State Representative Mike Sexton, the board’s executive director Megan Tooker confirmed on August 22.

Tooker initiated the audit after Bleeding Heartland raised questions last month about the campaign committee paying $11,200 since 2016 to a real estate company controlled by the candidate’s wife, Rebecca Sexton.

Sexton, a former state senator, came out of political retirement in 2014 to run for Iowa House district 10. He had no Democratic opponent in this strongly Republican district and won more than 80 percent of the vote against a Libertarian. His campaign’s financial disclosures show no spending on office rent before the 2014 election or during the following year.

Sexton and his wife purchased two commercial buildings in Manson (Calhoun County) in November 2015, paying $15,000 for 1106 10th St (close to the appraisal value) and receiving title to the building next door at no additional cost.

Shortly after Rebecca Sexton registered Tall Corn Property, LLC in June 2016, Mike Sexton’s campaign began spending $400 per month on “office rent” or “HQ expenses.”

Having scanned hundreds of financial disclosure forms for legislative candidates over the past decade, I can’t recall anyone spending significant sums on rent for a headquarters. Most state lawmakers and legislative hopefuls run their campaigns out of their homes to save money. Moreover, Sexton was unopposed for re-election in 2016, the year he started spending heavily on rent. The payments continued throughout 2017 and this year, totaling $11,200 to Tall Corn Property as of last month.

A trucking company currently rents the storefront part of 1106 10th Avenue. A sign on the exterior wall facing the street declares that the building is Sexton’s district office.

When I stopped by in July and asked to see Sexton, an employee of the trucking company told me the building’s owner is rarely there.

Iowa law allows the use of campaign funds for expenses related to running for office, a elected official’s duties, or constituency services. An administrative rule specifically permits the “purchase or lease of campaign office space, parking lots or storage space and the payment for campaign office utilities and maintenance.”

By the same token, the law forbids the use of campaign funds for “personal benefit” or for payments “clearly in excess of the fair market value of the item or service purchased.” Spouses may not receive a “salary, gratuity, or other compensation” from a campaign committee, but they may be reimbursed for expenses.

I brought the matter to Tooker because $400 per month is an unusually large amount for an Iowa legislative campaign to spend on rent. Moreover, directing $4,800 per year to Rebecca Sexton’s company could be construed as a personal benefit, either supplementing the household income or covering part of a mortgage on the couple’s real estate investment.

In a telephone interview last month, Sexton confirmed Tall Corn Property does no business other than managing the two buildings in Manson. At present, the trucking company uses about half of the building, and his campaign occupies the other half (a garage, a work office, a reception area, and bathroom with smaller storage room). He uses the space primarily to store campaign materials. He doesn’t hold regular office hours but has a desk and occasionally meets with constituents in the reception area. That said, most people who want to see him come to his home in Rockwell City or to his wife’s office, across the street from the Sexton home. (That building houses Twin Lakes Environmental Services, LLC, which Rebecca Sexton registered in 2005.)

Sexton said he sought guidance from the ethics board after buying the Manson property on how he should handle its use for campaign-related activity. He was told to declare the rent either as an expenditure or as an in-kind donation from himself and his wife. “I don’t know if it’s right or if it’s wrong,” he said. “All I know is, somehow we had to show that we were utilizing that building for the campaign.”

Since Iowa candidates are allowed to use campaign funds for rent and are not required to spend any particular amount of time in an office, the key question is whether $400 per month represents a reasonable rental fee. Tooker said her staff would review whether the payments are “clearly in excess of fair market value.”

A knowledgeable local source related that a commercial storefront space in nearby Rockwell City might go for around $150 per month. Renting a storage space without a window facing the street might cost as little as $50 per month. I called several storage companies in neighboring counties and was quoted prices of $55 per month for spaces ranging from 160 to 200 square feet, or in one case $61 per month for 250 square feet.

In follow-up e-mail correspondence, Sexton said his campaign pays “$300.00 in rent for 1218 square feet or .25 cents per square foot. I share utilizes with the trucking company we both pay $100.00 or .08 cents per square foot. Which is where the $400.00 comes from. Rent and utilities together is .33 cents per square foot for my rent.” He added that the employees in the other part of the building rarely see him because he has his own parking area and entrance, is “seldom there for more than an hour at a time,” and typically meets with constituents in the evening. Finally, Sexton noted,

Before we bought the Manson office I had campaign materials in our house our basement in Becky’s work office and in a storage unit we rented at Twin Lakes and I did not have anywhere to meet constituents that wanted to meet in private. Except my kitchen which is not very professional.

This district is 48 miles across and 48.5 miles long. It consists of 1805 square miles. It is not uncommon for us to travel over 500 miles in a weekend campaigning. When you add all my travel for official and campaigning most weeks we average 800 miles a week. I do not claim any reimbursement for travel, by looking at reports I see a lot of legislators do. If I added all my miles up in a year I’m sure I could get reimbursed for $8,000 to $10,000 for mileage.

That’s a fair point. Many Iowa candidates do reimburse themselves for mileage, and I didn’t see any such expenditures on Sexton’s filings, which are linked below.

I’ll update this post as needed, once the ethics board has completed the audit and determined whether the campaign’s rental payments exceeded fair market value.

Appendix 1: Relevant language from Iowa Code Chapter 68A.302:

Uses of campaign funds.

1. A candidate and the candidate’s committee shall use campaign funds only for campaign purposes, educational and other expenses associated with the duties of office, or constituency services, and shall not use campaign funds for personal expenses or personal benefit. […]

2. Campaign funds shall not be used for any of the following purposes: […]

j. Payments clearly in excess of the fair market value of the item or service purchased.

k. Payment to a candidate or the candidate’s immediate family member as a salary, gratuity, or other compensation. However, reimbursement of expenses as otherwise authorized in this section is permitted. For purposes of this paragraph, “immediate family member” means the spouse or dependent child of a candidate. […]

Appendix 2: Links to Mike Sexton’s disclosures of campaign spending since he became a candidate in House district 10 in 2014

• Expenditures from the July 2018 filing show two $400 payments to Tall Corn Property for “HQ Expenses”: May 30 and June 29.

• Sexton’s pre-primary filing from June 2018 showed no expenditures on rent.

• Expenditures on the May 2018 filing show five $400 payments to Tall Corn Property for “HQ Expenses”: January 4, January 31, February 27, March 27, and April 26.

• Expenditures on January 2018 filing, covering activity during the 2017 calendar year, show twelve $400 payments for rent or “HQ Expenses”: January 5, January 27, March 2, April 28, May 24, June 29, July 10, July 24, August 28, September 27, October 31, and November 28.

• The expenditures on the January 2017 filing, covering the remainder of 2016, showed a $400 payment for rent on December 27.

• Expenditures on the last filing before the 2016 election showed a $400 payment for rent on November 1.

• The expenditures for Sexton’s October 2016 filing showed a $1,600 payment on August 18 to Tall Corn Property for rent, apparently covering several earlier months in the year. Additional $400 payments to Rebecca Sexton’s LLC were made on September 10 and October 14.

• On the July 2016 filing (the first after Rebecca Sexton established Tall Corn Properties) the sole expenditure listed was $400 for office rent.

• Expenditures from May 2016 filing: no rent

• Expenditures from January 2016 filing: no rent

• Expenditures from January 2015 filing: no rent

• Expenditures from last filing before 2014 general election: no rent

• Expenditures from October 2014 filing: no rent

• Expenditures from July 2014 filing: no rent

• Expenditures from May 2014 filing: no rent

Appendix 3: Map of Iowa House district 10.

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  • Stinks

    This stinks about as much as the manure management plans that come from Sexton’s other office. A family can live in twelve hundred square feet. That is a lot of storage for a man who never had an opponent until this year. Wasn’t it convenient that his wife could rent space to him!!! I wonder what they have been storing in there.

    • Thank you, I did wonder...

      …what Twin Lakes Environmental Services does. And I should have known. It would be nice if so many Iowa farmers were putting in cover crops, wetlands, bioreactors, saturated buffers, and other kinds of state-of-the-art water-quality conservation that there were lots of growing rural environmental-service businesses, enough that it would be hard to keep track of them all. But Iowa isn’t there, and at the current rate of farm conservation progress, won’t be there for fifty years at least.

    • I assume

      The storage area contains yard signs, stationery and envelopes, and other campaign gear (things they would use for parade floats, for instance).

      To be clear, he is allowed to rent space for an office and storage. Iowa law gives candidates a lot of leeway on how they spend campaign funds. But before they purchased this building, Sexton stored all this gear in their home at no charge. I doubt he would be paying $400 a month if his wife’s company didn’t collect the rental checks for the property.