Knox's $5 million gift counters critics of loan

By pledging yesterday to turn his $5 million campaign loan into a gift, the millionaire in the mayor's race tried to deflect questions about his commitment to ending pay-to-play in City Hall.

Tom Knox's pledge also made him the biggest campaign donor in Philadelphia history. And he isn't done giving.

"That $5 million loan has been forgiven, and I'm not going to be able to get it back," Knox announced during yesterday's first debate among the five major Democrats running in the May 15 primary.

His decision to convert the loan ends a mild controversy that had been building for several weeks. With the loan outstanding, critics said, Knox could wind up soliciting big donations if elected - essentially steering money into his pocket from developers, lawyers, and others seeking city business.

That scenario has for now been stomped out.

"It was a loan because, if anything were to happen to me, I wanted my wife and children to have it," Knox said after the debate. What changed, he said, was that he spent every last dime of the $5 million, mostly on the television ads that have made him the front-runner.

The paperwork converting the loan to a gift hasn't been filed. Knox aides said that may happen tomorrow or, at the latest, by May 4, when the next campaign-finance reports are due.

The candidate told reporters that he had decided two months ago to convert the loan. But minutes later, campaign aide Josh Morrow said Knox had misspoken, and that the decision had been made less than two weeks ago.

As recently as 10 days ago, a Knox aide denied to an Inquirer reporter that such a plan was in the works. Asked why his campaign didn't announce this sooner, Knox said he had wanted to break the news himself on TV.

"This is a better forum," he said.

In addition to the $5 million, which he gave his campaign in late 2005, Knox said yesterday that he had contributed an additional $1 million - although a campaign aide had to clarify this point as well: Knox had donated an additional $2 million, not $1 million.

The loan conversion is "definitely a step forward," said Zack Stalberg, president of the campaign watchdog group the Committee of Seventy. Stalberg had urged Knox to do this in an Inquirer op-ed article published a week ago, and had called on the candidate to cap his spending.

Knox - who has said he will spend "whatever it takes" to win - has not agreed to rein himself in.

His rivals, meanwhile, are struggling to raise money. Without Knox's deep pockets, they are left to operate under the city's campaign-finance caps, which limit donations to $20,000 from political committees and $5,000 from individuals.

The resulting disparity between Knox and his rivals set off a short-lived effort in City Council this spring to undo the caps.

Although Knox is free under the law to spend what he wants, his doing so "has the ability to overwhelm the other candidates, and that concerns me," Stalberg said yesterday.