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Santa Monica Building at Center of Gov’s Latest Financial Controversy

By Lookout Staff

July 21 -- Whether Gov. Arnold Schwarzenegger is sidestepping campaign finance laws by possibly pocketing rent on a Santa Monica building is at the center of the second ethics controversy the governor has faced this month.

As reported Wednesday in the San Francisco Chronicle, during the past three years, political action committees controlled by the governor have paid nearly $167,000 in rent to Main Street Plaza, a building near the city’s border that is owned by Schwarzenegger.

The building on Main Street has been home for several years to Schwarzenegger’s production company, as well as to Schatzi on Main, the restaurant founded by the governor.

The governor's press secretary has denied any wrongdoing, saying the state's Fair Political Practices Commission (FPPC) was aware of the arrangement, according to the Chronicle.

An FPPC spokesman contacted by The Lookout declined to comment

Bob Stern, a campaign finance law expert who helped author California’s Political Reform Act of 1974, told the Chronicle that the governor was "taking advantage of a ridiculous loophole" in the act.

The law allows Schwarzenegger to accept the rent because Main Street Plaza is the property owner and not the governor as an individual, Stern said.

The latest ethics controversy comes in the wake of a disclosure that the governor had a multimillion-dollar consulting and editing agreement with two body building magazines.

On Tuesday, a complaint alleging that the deal violated state ethics laws was filed with the FPPC by the state Democratic Party.

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