By Steve Miller
Florida Center for Investigative Reporting
U.S. Rep. Steve Southerland (R-Fla.) used campaign funds to improve and maintain a Panama City home he inherited in 2005. Southerland used the home for his headquarters during two campaigns before selling it for $550,000 in June, records show.
Although the payments and money Southerland made off the sale of the home may seem questionable to a layman, they are in line with campaign finance rules, experts in election laws tell the Florida Center for Investigative Reporting.
Between 2010 and June 2013, when the property was sold, Southerland’s congressional campaign paid him $42,000 in rent and owes him another $36,000. The campaign also covered at least $6,273 in maintenance and upkeep on the West Baldwin Road home, including fees for lawn services, trash removal, repair of the home’s air conditioning and water filter service and repairs. It also paid utilities for the home.
The home had been dormant since 2005. Southerland secured a $414,000 home equity loan on the property in 2007. In 2010, as he made his first bid for Congress, the 4,300-square foot home was the primary headquarters for his 12-person campaign staff. In 2012, Southerland used the home, which was up for sale, as one of two campaign headquarters.
Southerland’s spokesman, Matt McCullough, declined to talk on the record. But in an emailed statement, McCullough said Southerland has followed campaign finance laws in regards to the headquarters.
“There are zero violations or compliance issues whatsoever, and Rep. Southerland is proud of a campaign that he’s run in a responsible, transparent manner,” McCullough wrote.
Using campaign money to fund and fix a headquarters, even if it is owned by the candidate, is permissible under campaign finance law, provided the expenditures are in line with local rental rates, said Paul Ryan, senior counsel at the D.C.-based Campaign Legal Center, a campaign finance and analysis group..
Southerland paid his campaign $2,000 a month for rent for 21 months between January 2010 and September 2011, listed on his campaign finance forms as in-kind money. Between October 2011 and October 2012, that arrangement changed, as Southerland reported that the campaign owed him a debt that reached $36,000 by the end of the period. Because campaigns are considered to be active year round, expenditures are determined to be valid even in off election years.
In April 2012, Southerland opened a second campaign office in Tallahassee, maintaining two offices for the 2012 primary and election. He won both contests. His current campaign headquarters is on College Avenue in Tallahassee.
According to records, Southerland and his campaign stopped paying rent on the property in October 2012. The campaign continued to pay utility bills at the house as it had since 2010.
A Southerland aide, though, contended the rent payments never stopped, as the house was used for campaign activities through June 2013. “When a clerical error mistakenly recorded the rent on a single quarterly report, the campaign promptly consulted with our campaign finance advisor, and as many campaigns do, applied the overage to future rent payments to ensure the monthly rate remained exactly the same,” McCullough wrote in his emailed response.
If the campaign had stopped using the property as a headquarters, any payments would violate campaign finance rules, Ryan said. “And if the campaign was still using the property, but not paying rent, then the campaign would be required under federal campaign finance law to report its receipt of an in-kind contribution from (or debt to) the candidate/owner in the amount of the fair market value of the property usage,” Ryan said.
McCullough wrote that “when Rep. Southerland inherited the family home, he was diligent in ensuring the home’s valuation and the campaign’s monthly rent were fair and representative of the local market. He worked with a certified real estate broker to tour other properties and requested a comparative market analysis before the rates were set.”
The congressman, who operates a funeral home in Panama City, used campaign funds to pay utility bills on the Baldwin Road home up to three weeks before selling it to a local dentist, who is converting it into an office.
Southerland told the National Review in 2010 that his grandfather died in 2005 and the home was closed down. The four bedroom, 3-½ bath home sits on 3.1 acres fronted on Baldwin Road, a main thoroughfare in Panama City. On his 2010 financial disclosure form, Southerland reported the home as an asset worth between $1 million and $5 million. McCullough explained that the home was listed at $1.2 million “as recently as April 2009,” but the value fell when a proposed nearby development didn’t materialize.
Federal election laws and legal opinions caution lawmakers about using personal property as a base for campaign committees. But the rules only prohibit a candidate from paying rent in excess of the fair market value. Past FEC rulings have been relatively permissive in the use of personal property for campaign use, relying heavily on the payment of fair market value for rental space.
Former Federal Election Commissioner Trevor Potter wrote in a 1995 advisory on using personal space for a campaign, “This Opinion demonstrates the inadvisability of candidates entering into rental arrangements with their campaign committees for their own personal property.”
Below is the complete statement from Matt McCullough:
When Rep. Southerland inherited the family home, he was diligent in ensuring the home’s valuation and the campaign’s monthly rent were fair and representative of the local market. He worked with a certified real estate broker to tour other properties and requested a comparative market analysis before the rates were set. When a clerical error mistakenly recorded the rent on a single quarterly report, the campaign promptly consulted with our campaign finance advisor, and as many campaigns do, applied the overage to future rent payments to ensure the monthly rate remained exactly the same. Utilities and maintenance were paid in full by the campaign and accounted for on every quarterly report. There are zero violations or compliance issues whatsoever, and Rep. Southerland is proud of a campaign that he’s run in a responsible, transparent manner.”