Former South Bend, Indiana Mayor Pete Buttigieg, U.S. President-elect Joe Biden’s nominee to be secretary of transportation, reacts to his nomination as Biden looks on during a news conference at Biden’s transition headquarters in Wilmington, Delaware, U.S., December 16, 2020.
Kevin Lemarque | Reuters
Pete Buttigieg, President-elect Joe Biden’s choice for Transportation secretary and the former mayor of South Bend, Indiana, received presidential campaign donations from executives at companies that had public works contracts with the city while he led it.
A CNBC review of dozens of the city’s infrastructure contracts during his second term as mayor, from 2016 into 2020, shows that under Buttigieg, a portion of the city’s spending went toward contractors who later became donors to his campaign for president, which he launched in 2019.
If he is confirmed by the U.S. Senate, Buttigieg, as head of the Department of Transportation, would be responsible for pushing forward the incoming administration’s infrastructure proposals.
Buttigieg is 38 years old and is considered a rising star in the national Democratic Party. His role as Transportation secretary could boost him if he seeks to run for higher office again.
Several of the contractors produced new roads, bridges and buildings for the city. South Bend’s most recent budget is over $350 million. The Department of Transportation will be going into the new year with a budget of over $80 billion. Buttigieg proposed a $1 trillion infrastructure plan when he ran for president.
Data from the nonpartisan Center for Responsive Politics shows Buttigieg finished raising nearly $100 million during his presidential campaign. About $2 million came from donors in the real estate industry.
A report by the Center for Public Integrity and the progressive media outlet The Young Turks shows that Buttigieg received similar contributions from city contractors when he initially ran for mayor in 2011. In that case, potential contractors gave to his political organization and they then received financial agreements from the city after submitting competitive bids. Those bids were then approved by the Board of Public Works.
The Buttigieg team responds
After CNBC laid out most of the contracts and the ensuing contributions to the Biden transition team, a Buttigieg spokesperson sent CNBC a lengthy response. The representative declined to be named in this story.
The spokesperson said Buttigieg wasn’t involved in the projects, while noting that the companies had done business with the city before Buttigieg was mayor. The spokesperson also said the executives had a history of giving to other Democratic presidential campaigns, including Biden’s, Hillary Clinton’s and Barack Obama’s. Some also gave to Republicans.
“Pete avoided getting involved in who got these contracts for exactly this reason. And I would also point out that on Pete’s first day as mayor he established a Code of Ethics, and in 2018 signed a responsible bidder ordinance aimed to ensure taxpayers’ dollars were spent efficiently by responsible contractors,” the Buttigieg spokesperson said.
The spokesperson noted that Buttigieg signed an executive order in 2012 that stated a government employee, including himself, will not knowingly solicit or accept any gifts or favors from a person who has a business relationship or seeks a business relationship from any city agency.
“You link to contracts that were approved by the Board of Public Works, which meets in public, does its business in public, and approved these contracts through an open and transparent procurement process that goes through a bidding process and — as I said before — has little involvement from the mayor,” the representative said.
CNBC laid out to the city of South Bend details about most of the contracts that were approved by the Board of Public Works and the executives who later contributed to Buttigieg’s campaign for president. A spokesman defended the companies.
“Each of these firms are well-respected and have a reputation locally for delivering high quality services for the city and South Bend residents,” Caleb Bauer, the mayor’s office press secretary, told CNBC. “Each of these contracts also went through a professional procurement process that is public and transparent before being approved by the Board of Public Works, which is governed by state law.”
Still, some Democrats anticipate that Republicans will make a big deal out of the contributions Buttigieg received from contractors.
“He will be accused of conflicts of interest and if the Republicans hold the Senate he will undergo a very, very tough confirmation process,” veteran Democratic strategist Hank Sheinkopf said.
Companies and contracts
In 2017, construction company Walsh & Kelly signed a contract with South Bend for over $600,000 for a job around the site of a future Courtyard Marriott hotel. Two years later the company was awarded subsequent contracts by South Bend worth just over $2.4 million. The hotel opened in 2018.
Walsh & Kelly’s president, Kevin Kelly, contributed $2,700 to Buttigieg’s campaign for president, CRP data says. That’s nearly the maximum contribution an individual can legally give a campaign.
Walsh & Kelly did not return calls seeking comment.
Arne Sorenson, Marriott’s CEO, gave $2,800, the max amount, to Buttigieg’s campaign, records show.
A Marriott spokeswoman defended Sorenson’s donation to Buttigieg’s political organization.
“Arne Sorenson gave to Pete Buttigieg’s presidential campaign personally because his wife and kids were inspired by his campaign,” Elynsey Price, a spokesman for the hotel chain, told CNBC. “Whatever was underway, around or involving the South Bend hotels would have been the responsibility of our franchisees or owners, not Marriott.”
South Bend real estate development company JSK Hospitality struck one of its biggest deals in 2018, when a subsidiary of the firm bought the former College Football Hall of Fame building in the city for over $525,000, according to the South Bend Tribune. The CEO, A.J. Patel, gave $1,000 to the Buttigieg campaign. The Courtyard Marriott is listed as part of the firm’s hotel portfolio.
CNBC was unable to leave a message in JSK Hospitality’s general voice mailbox on Tuesday because its voicemail was full. The same was true for Patel’s line. Instead, CNBC left a message for the company’s chief financial officer, who did not respond to a request for comment.
In 2017, the city came to an agreement with Epoch Architecture to help build a new South Bend fire station. The company agreed to over $280,000 in payments from the city for the project. The principal of the engineering and architecture company, Kyle Copelin, later gave $500 to the Buttigieg campaign, records show.
Copelin did not respond to a request for comment.
In 2017, the city signed at least three contracts with Jones Petrie Rafinski, an architecture and engineering firm with offices in South Bend. The firm saw over $200,000 in deals with the city that year. Two years later, the company’s vice president, David Rafinski, contributed $500 to Buttigieg’s campaign for president. His company also had other deals with South Bend throughout 2019.
Rafinski told CNBC that he had no interaction with Buttigieg’s executive team while his company worked for South Bend.
“The City of South Bend has been a client of ours since Pete was in high school,” Rafinski said. “The work that we do is through the Board of Public Works. We didn’t have any interaction with Pete with our work at all. It was all through the Board of Public Works.” Rafinski said he gave to Buttigieg’s presidential campaign because he thought the former mayor’s “compassion” was needed in national politics.
South Bend also came to a consulting agreement in 2017 with Canada-based Stantec. The contract was worth over $105,000. The agreement with the designing and engineering company appeared to go through their nearby Chicago offices. Later, Michael Toolis, who, according to his LinkedIn, is a Stantec vice president, gave $2,000 to Buttigieg’s presidential campaign. Toolis was once employed by VOA Associates, a Midwestern design firm that previously did work on the University of Notre Dame. VOA was acquired by Stantec in 2016.
“The company does not permit political contributions to candidates on its behalf,” Stantec spokeswoman Laura Leopold said in a one-line email in response to CNBC’s questions.
American Structurepoint, an engineering company with headquarters in Indianapolis, received at least seven contracts in 2018 for over $300,000 to do consulting and other services for South Bend. Greg Henneke, the senior executive vice president, gave the Buttigieg presidential campaign $2,700 a year later.
Both Stantec and American Structurepoint had contracts with the city in 2019.
A spokeswoman for American Structurepoint did not respond to a request for comment.
