A gut-and-amend state Senate bill that would restrict nonprofits from spending taxpayer cash for political purposes has elicited opposition from K-12 and community college associations, various local governments—including San Jose—and the nonprofits that get money from them. That and more at Wednesday’s Rules and Open Government Committee meeting.

County supervisor candidate and labor organizer Cindy Chavez has not always been the biggest fan of San Jose Inside and Metro‘s coverage of local politics. In fact, she was so perturbed by a report in March about the political activities of the Santa Clara Family Health Foundation, on which she was previously a board member, that she suggested a lawsuit.

A public agency created the Santa Clara Family Health Foundation more than a decade ago to fund the county’s groundbreaking children’s health care initiative, one that would guarantee that every child who needed a doctor’s attention would be seen. For the past three years, however, low income kids’ health insurance premiums have taken a backseat to personal ambition as Health Foundation officers ran for office, funded their $200k annual compensation packages and diverted money to pay for political consultants, mailings, public opinion polls, phone banks and ballot initiatives. All this transpired behind a shroud of secrecy that was lifted last week by Judge Carol Overton, who rejected SCFHF’s hard-fought legal battle to keep its activities out of the public’s view. Documents obtained as a result of last Friday’s superior court ruling show clearly that the Health Foundation repeatedly broke state laws by using a public agency’s funds and property to operate political campaigns in close coordination with local labor leaders.

On March 24, Metro/San Jose Inside reported that Santa Clara Family Health Foundation (SCFHF) executive board member and officer Cindy Chavez participated in a board decision to provide $250,000 in funding to the Yes on A committee, on which she and Kathleen King—CEO of SCFHF—constituted a majority of the three-member committee. The committee subsequently turned over a large portion of the funds to the South Bay Labor Council Issues PAC and Democratic Central Committee’s PAC. Because of Chavez’s obvious conflicts of interest—she headed up the SBLC at the time—and the importance of a countywide sales tax increase, which will be paid by all residents, Metro/San Jose Inside felt this was a matter of public interest.

On Friday, nine nonprofit executives wrote a letter to express their thoughts on recent articles. They worry that investigative reporting could make nonprofits “the target of unfounded accusations and public reproach.” Because we feel this is a useful debate to have, and because we want to give differing points of view the proper attention they deserve, we are running below the letter in full, in addition to its appearance in the comments section where it was submitted. —Editor

Parts of City Hall, left a bit empty after layoffs and the Redevelopment Agency’s closure, may soon be open to anyone looking to lease a slice of the swanky 18-story downtown centerpiece. Proceeds from the market-rate rents will go right to the city’s general fund, according to a memo going before the Rules and Open Government Committee on Wednesday. Other items include the Pete Constant-Johnny Khamis memo asking the city to investigate how public funds were used to fund a county sales tax measure carried out by organized labor.

Two members of the San Jose City Council are calling for an investigation into whether city funds were illegally used in local campaigns. Councilmembers Pete Constant and Johnny Khamis are asking the city manager and city attorney to “investigate whether any city funds that were provided to either Santa Clara Family Health Foundation or VMC Foundation were used to fund any campaign activities in any manner,” according to a memo released Thursday. The memo notes that the city has given the foundations more than $6 million in the last three years.

Funds from two local non-profit health care foundations made their way to phone banks and mail campaigns of the South Bay Labor Council in 2012 after routing the money through a Measure A’s campaign committee. Both the VMC Foundation and the Santa Clara Family Health Foundation gave more than a quarter-million dollars each—a total of $539,000—to support an 1/8th cent county sales tax measure, Measure A. At least $90,000 of those monies were transferred to the South Bay Labor Council. An incestuous tangle of organizations, directors and consultants characterized the transactions, with common decision-makers on both the giving and receiving ends. None of the organization are willing to discuss how the funds were used and how decisions were made. Former San Jose vice mayor and South Bay Labor Council CEO Cindy Chavez currently heads up the nonprofit SBLC-linked Working Partnerships USA (WPUSA) and sits on the board for the Health Trust and Santa Clara Family Health Foundation.