Lavish Dinning on the Public Dime

SFPUC’s Posh Tours, Parking Perks and Executive Churn

by Dr. Derek Kerr

Government agencies tend to become loyal to themselves rather than to their proclaimed mission or the taxpaying public. Hence, we rely on internal whistleblowers and external watchdogs to expose organizational deviance. The Westside Observer has seen a surge in tips since the City’s corruption scandal detonated in 2020.

Lavish Tours

Pursuant to a tip about lavish spending on SFPUC tours, we obtained records about an expansive “business tour” in May 2019. As we previously reported, many such tours and retreats are scheduled every year, so the costs mount. Among the 15 such tours in 2019, a “General Manager Convening Group” was arranged for May 1st and 2nd by Juliet Ellis, SFPUC’s then-Assistant General Manager for External Affairs. Harlan Kelly was then General Manager.

The itinerary covered SFPUC headquarters, Moccasin Reservoir and Powerhouse, Hetch Hetchy Recreational Area, O’Shaughnessy Dam, City Hall, and a banquet at the Old Skool Café. Among the 23 guests (21 attended) were SFPUC Commissioner Sophie Maxwell, former Planning Commissioner Myrna Melgar (now D-7 Supervisor) and SFPUC executives Harlan Kelly, Juliet Ellis, Barbara Hale, Steve Ritchie, Emily Lam, David Gray, and Ronnie Versher. The other 12 guests represented non-profits, government agencies, foundations and consulting firms.

Records show that this tour cost the SFPUC $10,123, about $424/person. It included $2,603 for bus fare, $800 for lodging, $1,752 for 3 catered meals, $351 for a “specialty lunch,” plus a whopping $4,617 for the Old Skool Café dinner. The SFPUC explained; “Please note that the SFPUC owns the facilities at Hetch Hetchy and utilizes them for tours and businesses purposes, such as for this tour. The SFPUC does not charge the attendees of its tours for use of the accommodations and meals.” So, these provisions were gifts – subsidized by taxpayers.

The SFPUC routinely provides a breakdown of the costs of the goods and services for tour guests who are required to disclose the value of gifts received. Many government officials are required to file an annual Form 700 Statement of Economic Interests, with the Ethics Commission and the state Fair Political Practices Commission (FPPC). These income disclosures serve to identify and deter potential conflicts of interest, pay-to-play deals and bribes. For this tour, the value of the freebies were compiled in an SFPUC file titled; “FPPC Form 700 Calculation.” When given this data, each guest knows how much to report. But something was omitted – the lavish cost of the banquet at the Old Skool Café.

Shindig at the Old Skool Café

Located in the Bayview, the Old Skool Café is a laudably creative and altruistic non-profit restaurant. It hires and trains at-risk, disadvantaged and formerly incarcerated youth to cook and serve American comfort food. Some of the menu is derived from their own families’ recipes. These young people also manage the premises and provide musical entertainment to complete the ambiance of a 1940s supper club. The Old Skool Café’s program has drastically reduced recidivism, reportedly keeping 90% of its employees out of trouble. Also, the Café is one of the beneficiaries of SFPUC’s controversial Community Benefits Program that “invites” SFPUC contractors to donate 1% or so of their contract awards to preferred community charities and nonprofits – a pay-to-play hazard.

For the Old Skool Café shindig, the SFPUC splurged on a “full restaurant buyout,” for its 25-member tour group. Although, the SFPUC informed the Westside Observer that: “…we were unable to locate a record with the names of the guests that attended the dinner at Old Skool Café,” they were the same folks who took the tour, give or take.

Invoices show that the SFPUC was billed $3,500 for food, $150 for a jazz trio, plus an 18% service charge and 8.5% tax. No discount noted, except for waiving an “admin fee,” thereby saving $146. The grand total was $4,617 for 25 guests or $185/person. That was pricey. Currently, the same 3-course meal plus beverage, including 18% service charge plus tax, would cost between $34 and $58. So, 25 people could be charged $850 for the least expensive menu options, up to $1,450 for the most costly, averaging $1,150. But the Café’s bill tripled that amount. That’s because the SFPUC reserved the entire 65-seat restaurant rather than seats for 25 guests.

Gift Disclosures and Omissions

Intriguingly – the cost of the Old Skool banquet was excluded from SFPUC’s Form 700 gift calculations for the tour – even though that dinner was on the tour itinerary. The reason for this omission is unclear. Perhaps disclosing the steep cost of this banquet to the guests would have drawn queries. In 2019, government officials were prohibited from accepting more than $500 in gifts from a single source. The whole tour bestowed $424/person, close to the forbidden limit.

Omitting the $185/person Old Skool banquet from SFPUC’s Form 700 calculations made it likely that some guests would also omit it from their Form 700 gift disclosures. For example, SFPUC Commissioner Sophie Maxwell’s Form 700, viewed on the SF Ethics Commission website, shows no gifts for 2019. Similarly, Myrna Melgar, then-President of the Planning Commission, reported no gifts for 2019.

Although a business tour could be considered “informational material” rather than a gift, the cost of any associated meals and lodging, and sometimes transportation are reportable. Since this tour was sponsored by a City agency, the attendees were not getting a prohibited gift from a restricted non-City entity. Importantly however, the City’s Conflict of Interest Code specifies that Commissioners and department heads are in “Disclosure Category 1” and that “Persons in this category shall disclose income (including gifts) from any source…” Note the “any source.”

A bountiful tour provided by the SFPUC General Manager could influence decisions by a Commissioner who oversees the SFPUC, or by a Planning Commissioner who makes decisions relevant to the SFPUC. As the Westside Observer recently reported, the Ethics Commission has identified many lapses in gift disclosures. This may be another one.

Parking Perks

Another tipster reports that SFPUC executives get tremendous parking discounts, not available to other employees. In January 2011, the SFPUC and the Rec & Park Department signed a Memorandum of Understanding whereby the PUC would get 60 parking spaces for its fleet at the Civic Center Garage. Rec & Parks owns the garage and it’s administered by the SFMTA. SFPUC paid $6,274,166 for a 75 year lease.

Some of these parking slots are allotted to SFPUC executives’ personal vehicles. Nowadays, the monthly parking fees are $91/month for SFPUC brass, while a regular monthly pass costs $300/month. The discrepancy was explained in a SFPUC file titled “Perquisite-Parking-Packet.” Parking fees for SFPUC senior staff equal “The price of a Municipal Railway monthly pass plus $10.00” in accordance with Administrative Code Section 4.24. A monthly Muni Clipper pass costs $81. In sum, the SFPUC subsidizes parking costs for its most highly-paid employees.

Such perks are common for top executives, but regular employees wonder about “equity.” They point to the Mayor’s Office Policy Instructions & Controller’s Technical Instructions for the 2021 Budget. Page 26 recommends that fees be “analyzed through an equity model.” For example, does the fee “impact some people harder than others” or “exacerbate existing racial or socioeconomic disparities” and “is it an equitable means to achieve the policy goal?”

Herrera Era Shake-Up

When new directors are installed in troubled City departments, they often bring in their own team to replace the old regime. That’s happening now that former City Attorney Dennis Herrera runs the SFPUC. He brought in Ronald Flynn, his former Chief Deputy City Attorney, to serve as Chief of Staff. John Coté, the City Attorney’s former Communications Director, now serves in that role at the SFPUC. Brittany Feitelberg, formerly the City Attorney’s Director of Executive Affairs, is now a Special Assistant at the SFPUC. Tyrone Jue, the Mayor’s Senior Advisor on the Environment, is now Herrera’s Associate Deputy General Manager.

On October 5th, SFPUC Chief Financial Officer Eric Sandler announced he was retiring “at the end of this calendar year.” On October 29th, the axe fell on the agency’s Human Resources Division; “Chief People Person,” Justine Hinderliter, and her deputy, Derek Kim, both left suddenly.

Interestingly, as the Westside Observer reported this May, Eric Sandler and Justine Hinderliter had decamped to Michigan and Minnesota respectively, working remotely from out of state. Their sojourns were condemned by rank and file employees who were stuck in the City with extra tasks as Disaster Service Workers. More churn is expected as more SFPUC job openings are posted. Besides replacing executives, Herrera could install an internal Whistleblower Hotline to investigate employee complaints now flooding local media outlets.

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Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

November 2021

Today’s Meth Fuels Homelessness

by Dr. Derek Kerr

A fascinating article by The Atlantic’s Sam Quinones posits that today’s methamphetamine is chemically different from prior versions, resulting in severe mental illness and worsening homelessness. In other words, the alarming increase in homelessness nationwide may be fueled by refinements to an omnipresent drug - not just a lack of housing.

Just as law enforcement agencies devise new prohibitions against drugs deemed harmful, black-market entrepreneurs develop new variants and distribution channels. These adaptations generate additional complications. That’s been the case with alcohol, marijuana, heroin, and methamphetamine.”

Evolution of Methamphetamine

Japanese chemists synthesized methamphetamine from ephedrine, a plant-derived stimulant, in 1893 and streamlined the process in 1919. The drug was deployed by Axis and Allied military forces during WW-II to keep weary soldiers energized. It was distributed for obesity, asthma, congestion and depression from the 1940s to the 1960s. Abuse and toxicity emerged, so methamphetamine was restricted to prescription only. The meth scourge of the 1960s was largely due to underground chemists and biker gangs who cooked meth from phenyl-2-propanone. However, that resulting meth was an impure mixture with limited psychoactive effects.

Meth purity was achieved in the 1980s when the formula for producing meth from ephedrine was rediscovered by underground chemists in Southern California. Ephedrine, then available in over-the-counter decongestants, was a convenient source for small-time meth-makers. Soon, Mexican traffickers purchased tons of ephedrine from global chemical companies and pumped refined meth into the US. Eventually, Mexico banned the importation of ephedrine. Ephedrine and its cousin pseudoephedrine were also restricted in the US. Customers had to provide an ID and signature at pharmacy counters to buy these products, or settle for alternate over-the-counter cold remedies. Accordingly, meth production from ephedrine receded.

To the surprise of the Drug Enforcement Agency (DEA), by 2006 criminals had revived the old phenyl-2-propanone (P2P) method of meth production – with a startling twist. They had devised a way to purify the product so that it was entirely psychoactive. Importantly, the chemicals needed to make P2P could not be banned since they are essential to key industries. So, criminals had an unlimited supply of the substrates for making P2P meth, and a way to produce a purer, more potent product. These breakthroughs prompted Mexican cartels to build industrial-scale labs that churned out tons of meth. In turn, this bonanza spawned an ecosystem of independent brokers, traffickers and dealers who amplified distribution beyond what cartels could do.

By 2012, massive Meth shipments flooded California. And, 96% of samples tested by the DEA had been manufactured from P2P. With surging supplies, meth prices plummeted, making it more affordable than ever. To compensate for the drop in price, meth manufacturers boosted production and enhanced its purity. The purer the meth, the more addictive it became. Demand soared as meth’s availability, cost and quality improved. Eerily, as this new meth swept through the country, mental illness and homelessness haunted, then occupied, city streets.

Neurotoxicity of Meth

Quinones interviewed DEA agents and drug treatment professionals who insist that today’s P2P meth is far more toxic to the brain than the earlier ephedrine-based meth. That notion is confirmed by former UCLA Professor and methamphetamine expert, Dr. Richard Rawson. These sources report far more violent paranoia, psychotic delusions, self-isolation, amnesia and cognitive impairment. More users are being diagnosed with schizophrenia and bipolar disorder. Families are ravaged by domestic violence, criminality and the casting children into foster care.

Frontline physicians worry that psychoses caused by P2P meth are straining their mental health systems. Worse, meth patients develop severe and persistent cognitive impairments, making it difficult to establish a therapeutic alliance and provide treatment. Quinones concluded; “Methamphetamine is a neurotoxin – no matter how it is derived. But P2P meth seems to create a higher order of cerebral catastrophe.”

Why P2P meth may trigger more severe mental deterioration is unclear. The evidence is largely anecdotal and observational. There are no studies comparing the toxicity of P2P meth versus ephedrine-based meth. Drawn by meth’s affordability and availability, users can take bigger, more frequent doses over longer periods of time — all known to impair brain functions. Toxic contaminants may be at play. Nowadays, meth is being adulterated with fentanyl, increasing its lethality.

The Meth-Homelessness Connection

San Francisco has devoted hundreds of millions of dollars and tremendous efforts to combat homelessness, yet the crisis has worsened. There are many reasons why people become homeless. But chronic homelessness is tied to addictions. And increasingly, meth users stay homeless.

In 2019, San Francisco’s Methamphetamine Task Force reported an 8-fold increase in meth-related overdose deaths between 2008 and 2018. By 2019, the number had doubled to 258 per DPH data, although half of these involved fentanyl as well. The Task Force found that meth entwines the opioid crisis. Among the City’s 24,500 injection drug users, 39% also injected meth and 41% smoked or snorted it. Further, 47% of Psychiatric Emergency visits were related to methamphetamine toxicity. Among individuals subjected to 8 or more 5150 psychiatric holds, an astounding 87% were meth users.

 A 2019 DPH study found that among homeless decedents, meth was the most commonly detected drug. In the first 9 months of 2021, the Medical Examiner reported a total of 511 overdose deaths - mostly due to fentanyl. But meth was detected in 57% of these cases. Only one-quarter of these persons had “no fixed address.” But how many more were quasi-homeless, with temporary addresses in City-funded hotels and supportive housing?

Given the prevalence of trauma among the homeless, it’s understandable that many will seek respite in chemical euphoria. Homelessness itself is so grueling that getting high brings welcome relief. But meth surpasses all other street drugs in raising dopamine levels in the brain’s pleasure centers. When the high wears off, a dysphoric “crash” ensues along with a craving for more meth. Once meth becomes the prime source of pleasure and relief - and its use is reinforced by the drug-using community - treatment becomes daunting.

No Easy Treatment

Unlike heroin addiction that can be controlled with prescribed methadone or Suboxone, there is no comparable substitution therapy for methamphetamine use disorder. At best, we get an 11% therapeutic effect with a fairly demanding drug regimen. The most effective approach is contingency management – paying meth users to stay clean. Cash rewards can displace the pleasure conferred by meth. Payment for abstinence increases motivation. Implementing such programs requires untangling federal laws that prohibit financial “inducements” for services. Senate Bill 110, authored by Senator Scott Wiener to allow contingency management, was vetoed as “premature” by Governor Newsom this October. Because outpatient treatment is thwarted by high drop-out rates, success may require inducting meth users into inpatient communities where peer acceptance is not drug-based.

San Francisco’s Response

 Meth’s role in driving the behavioral wreckage of street homelessness deserves more attention. Understandably, City officials — and the non-profits that address homelessness — do not want to further stigmatize unhoused persons or blame them for their predicament. In 2019, the City created a Methamphetamine Task Force then enacted Mental Health SF to improve access to mental health and drug treatment programs. An Implementation Working Group will present its plan for Mental Health SF in mid-2022. Meanwhile, the phenomenon of severely impaired, hard-to-treat meth users, enabling each other in drug-saturated encampments persists.

 Senator Scott Wiener’s SB-1045, the “Conservatorship: serious mental illness and substance use disorders” bill, was enacted in September 2018. It provides a path to conservatorship for persons - overwhelmingly meth users, undergoing 8 psychiatric holds per year. Three years later, just 2 out of scores of gravely disabled persons have been conserved per SB-1045. The Westside Observer requested an update from the Conservator’s Office and awaits a response. In Mallory Moench’s Chronicle report on conservatorship barriers, Sen. Wiener explained; “There has to be a commitment by the county to actually conserve people who need it. San Francisco has not shown that commitment for a long time and has been way too conservative and cautious in using even the tools it has.”

The Methamphetamine Task Force offered comprehensive recommendations – without explaining why the meth plague has grown so dramatically. Is it due to an increase in drug supply? Is there a rising demand due to socio-economic despair - or an influx of homeless drug users? Could the City’s progressive ideology and permissive policies be responsible?

Issued 2 years ago, the Meth Task Force report does not address current concerns about meth’s augmented neurotoxicity. The top recommendation was for a Meth Sobering Center that provides harm-reduction services to active users.

Unfortunately, the COVID-19 pandemic prevented its opening. Now the plan is to combine it with a long-stalled “safe consumption site.” In addition to strengthening behavioral health crisis services, the Task Force emphasized the need to prioritize and protect housing for meth users seeking treatment.

Though reasoned and compassionate, San Francisco’s approach to its meth epidemic portends meager outcomes due to much carrot and little stick. Why are public health mandates, like those used against COVID-19, not employed for crippling drug use? The City’s laudable social tolerance may now be normalizing lawlessness, social disorder and self-harm.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

November 2021

Ethics Commission Revisits City’s Pay-to-Play Culture

by Dr. Derek Kerr

Awakened by federal prosecutions of City officials and contractors for corruption, the Ethics Commission (Ethics) has once-again been digging into governmental pay-to-play culture. Ethics cannot easily lead this endeavor because it’s dependent upon the same officials it supposedly oversees. For example, Ethics’ budget is subject to approval by the Mayor and the Board of Supervisors. Its 5 Commissioners are appointed by the Mayor, Board of Supervisors, District Attorney, City Attorney and Assessor. It’s all in the City Family.

 As described in the June 2019 Westside Observer, the Ethics Commission had previously fractured when it came to independently fighting pay-to-play corruption. Commissioners Yvonne Lee and Daina Chiu torpedoed an “Anti-Corruption and Accountability Ordinance” that Ethics staff and then-Commissioners Peter Keane, Quentin Kopp and Paul Renne wanted to bring to the voters. Commissioner Lee had dismissed the “perception of corruption,” calling it “anecdotal.” Dismayed, Commissioners Keane and Kopp resigned. City Family interests seemed secure.

However, 2020 saw the FBI and the US Attorney’s Office probing every City Hall orifice, and the Media avidly pursuing federal findings and related tips. Evidence of corruption was no longer “anecdotal.” So, the Ethics Commission has been forced to act. In September 2020, Ethics embarked on a review of government ethics laws to better restrain pay-to-play machinations. 

Another Crack at Behested Payments

In November 2020, Ethics released a report on behested payments whereby City officials solicit donations to favored charities and non-profits. When such donations are sought from entities doing business with the City it becomes a “shakedown” – of money for official support. Worse, those funds may go to non-profit accounts that are controlled by a City official. That was the case with Mohammed Nuru who asked DPW contractors like Recology to donate to a Parks Alliance account from which $980,000 was accessed over 5 years for holiday parties and the like.

The report includes a set of damning attachments showing how much money flowed through behested payments and how abuses ensued. To curb the pay-to-play dynamic of behested donations, Ethics offered recommendations and a proposed Ordinance. One year later, legislation based on these recommendations (File no. 201132) awaits approval from the Board of Supervisors’ Rules Committee.

The Give and Take of Gifts

In August 2021, Ethics issued a ”Report on Gift Laws: Gifts to Individuals.” It found that some City officials — not just Mohammed Nuru and Harlan Kelly — enjoyed gifts from entities that did or sought business with their departments. Moreover, Mayor London Breed accepted $5,528 for car repairs and rental fees from her subordinate Mohammed Nuru. The City prohibits this practice to prevent bosses from extorting their underlings. Such workplace extortion has plagued City janitors, as reported in the March 2017 Westside Observer.

In a Stipulation partly related to misbegotten gifts, Mayor Breed agreed to pay a $22,792 fine levied by the Ethics Commission. Here, we learn that in 2015, then-Supervisor Breed had “requested” that Nick Bovis, owner of Lefty O’Doul’s, and John Konstin of John’s Grill each contribute $1,250 toward her Pride Parade float, and failed to disclose the gifts as campaign contributions.

Ethics found that from 2013 through 2020, City officials using electronic Form 700 filings reported receiving 1,839 gifts valued at $899,991. Gifts of travel accounted for $649,931 or 72% of the total. Most of the remainder was for tickets, meals and events. However, this survey did not cover all gifts received, estimated to be $1 million – roughly $125,000 annually. Ethics then sampled 65 e-filers within the 6 City departments undergoing federal investigations. Six or almost 10% had accepted impermissible gifts from persons who had a financial connection to them. Ethics recommended closing loop-holes that allow tainted gifting, regardless of friendly or romantic relationships.

Gift Laundering

This September, the Ethics Commission released a fascinating report on “Gifts to City Departments." It details the crafty distribution of gifts through departments and other intermediaries, rather than directly to individuals. This report complements the September 2020 Controller’s Office report on indirect donations titled; “Gifts to Departments Through Non-City Organizations Lack Transparency and Create Pay-to-Play Risk.”

City officials and employees are prohibited from accepting gifts from restricted sources, like contractors working for their department, or lobbyists that seek their approvals. That keeps government impartial and focused on public interests. But Ethics investigators found that gifts from restricted sources were being accepted by City departments - then distributed to its officials and employees. Alternately, such gifts were passed through some allied non-profit, then transmitted to the department – and to its officials and staff. Here are graphics illustrating the laundering mechanisms;

Gifts that facilitate official departmental functions, like a copying machine, are generally OK. But when gifts from restricted sources slide through departments and confer personal benefits upon agency officials, reciprocal favors and conflicts of interest emerge. To curb undue influence, the City’s Sunshine Ordinance requires that departments disclose gifts on their websites. Also, the gift-giving entities must disclose their own donors on their websites. Departments, boards and commissions must also report gifts received to the Controller and the Board of Supervisors. However, these disclosures may not reveal the true beneficiaries or the true sources of gifts when they are laundered through a department or non-City intermediary.

Partying with Laundered Funds

In 2019, the Planning Department held a retirement party for an employee. The 220 attendees were asked to buy tickets; $25 for employees and $125 for outsiders. Among these outsiders were lobbyists, contractors and law firms that did business with or influenced the Planning Department. They ended up paying $15,000 or 85% of the cost of the event, thereby regaling Planning officials and employees. Planning staff are prohibited from accepting food and drink directly from such restricted sources. But because the department let a relative of the feted retiree collect the money, nobody objected to the latent quid pro quo.

Similarly, in 2019 the Airport organized opening celebrations for the Harvey Milk Terminal and the Grand Hyatt at SFO. To pay for these events, the Airport accepted $1,018,000 in gifts – 86% of which came from Airport contractors and tenants. City officials and employees relished free food, drink and entertainment presented by the Airport. But these treats were indirectly furnished by sources that were barred from directly gifting City officials.

Likewise, the Entertainment Commission’s 2019 Holiday Party cost $10,979 – of which 86% came from 4 companies that received entertainment permits from the Commission. As for the Port’s 150th Anniversary Gala, funding came through the non-profit “Friends of the Port” that extracted $97,000 from Port tenants.  

Institutionalized Payola

From 2015 through 2019, the Recreation & Parks Department distributed free tickets worth $430,950 for the Outside Lands Music Festival in Golden Gate Park. Of these 1,855 tickets, 78% went to City officials. And of those, most went to Rec & Park employees – including Commissioners, as shown below;

Outside Lands Tickets Distributed by Rec & Park (2015‐2019)

Source: SF Ethics Commission

What’s troubling is that the tickets were donated by Another Planet Entertainment, the company that stages the Outside Lands event — and has a contract with Rec & Parks. That should forbid Rec & Park employees from accepting gifts from Another Planet Entertainment. Although Another Planet donated tickets to the department, Rec & Park’s staff got the goods anyway. A regular one-day ticket costs $155, so this perk is substantial.

Weirdly, Another Planet’s permit agreement with Rec & Parks mandates that free tickets be given to the department. That institutionalizes the quid pro quo. The Ethics report notes; “This practice can create a culture of expectation that is the basis of a pay‐to‐play system: entities doing business with the department may come to believe…that gifts are…necessary in order to secure favorable outcomes from the City.” 

Rec & Parks is not alone in fomenting a culture of expectation. The War Memorial and Performing Arts Center is the City’s venue-keeper for the Opera, Symphony and Ballet. These clients purchase leases that oblige them to provide free tickets to the 11- member War Memorial Board of Trustees. The Trustees, appointed by the Mayor, approve the leases. So they shouldn’t be receiving kick-backs from their clients. Yet, since 2012 the War Memorial has received and distributed 3,392 free tickets worth $516,031. The lucky recipients were War Memorial Trustees and employees – even Supervisors Norman Yee and Catherine Stefani. Needless to say, some of these folks could afford to buy their own tickets. Conflicts of interest abound, not just for the Trustees but for Supervisors who approve the rates for leases issued by the War Memorial.

When tickets are donated to City departments rather than directly to individuals, the ultimate recipients are not required to disclose them as gifts. Astoundingly, Ethics found that free tickets surpassed the value of all other gifts reported by City officials. While departments are required to report their gifted tickets, they do so haphazardly, and without noting to whom they are bestowed.

Ethics staff concluded that current gift disclosure mechanisms are “ineffective”. They proposed remedies to deter pay-to-play transactions. Their thoughtful analyses and recommendations must weather the appeals of gift recipients and the sausage-making of their Commissioners and City Hall. If the end-product is baloney, concerned citizens can still get results by reporting governmental corruption to the FBI or the Media.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

October 2021

City’s Retirement System Funds Newspaper Looters

by Dr. Derek Kerr

Update

Attentive Westside Observer readers indicated that some financial information relayed in the 9/15/21 article titled; “City’s Retirement System Funds Newspaper Looters” was outdated.

Specifically, the article noted that the San Francisco Employee Retirement System’s (SFERS) was just 83% funded, representing a shortfall of $5.4 billion. That information came from SFERS’s 2020 annual report – the latest one then available.

However, on 9/8/21 SFERS CEO Jay Huish submitted a memo and financial analysis to the Retirement Board, indicating that due to “excess earnings” of $6.4 billion as of June 2021, SFERS was now 113% funded. Accordingly, City retirees will enjoy a boost (at 2:55:00) to their Cost of Living Allowance.

This unprecedented windfall does not negate the fact that SFERS has for years grappled with unfunded liabilities. Such deficits generate pressure to increase earnings and could lead to undesirable investments in firms like Cerberus Capital Management that fund the dismantling of struggling newspapers.   

Thanks to Lois Scott and Patrick Monette-Shaw for prompting this update.

With a trail of "News Deserts" left behind, Cerberus rakes in profits from SF Taxpayers

Public employee pensions are of public concern. While employees pay into retirement plans like the San Francisco Employee Retirement System (SFERS), the bulk of the contributions come from the employer – the taxpayers. The third source of revenue is income from investments recommended by SFERS’ Chief Investment Officer and approved by the 7-member Retirement Board.

When investment returns decline, contributions from the employer, and to a lesser extent the employees must make up the deficit. Much attention has been focused on this expanding “unfunded liability” as the number of retirees grows, benefits are boosted, and investment income declines. As of 2020, SFERS is just 83% funded, representing a shortfall of $5.4 billion. Ultimately, the City’s General Fund will have to cover the deficit. In other words, when pension funds are underwater, taxpayers get soaked. Several SF Civil Grand Juries have addressed this precarity; 2008-09 “Pensions Beyond Our Ability to Pay”, 2009-10 “Pension Tsunami: The Billion Dollar Bubble”, and 2016-17 “The San Francisco Retirement System: Increasing Understanding and Voter Oversight.”

Unfunded liabilities impose performance pressure on most pension funds, including SFERS. That pressure to earn more can lead to undue risk-taking and moral hazard. Some of those risks and hazards are social, not just financial.

Socially Responsible Investments

Hence, another important public interest is the nature of the investments secured by public employee retirement plans. SFERS abides by an “Environmental, Social and Governance Policy” that guides socially-responsible investing practices. That policy requires SFERS officers to monitor their investments to ensure that “they deliver positive environmental or social impacts.” So, SFERS has divested from tobacco, Sudan, firearms and thermal coal. In a nod to climate change, it aims for a “net zero emissions” portfolio by 2050. The 2020 SFERS Annual Report also cites an intention to “increase racial and gender diversity on corporate boards.”

Deviating from Social Responsibility

However, SFERS  invests in private equity firms and hedge funds that may not be socially responsible - and may even be predatory, grasping revenues regardless of social impacts. No qualms about making a fortune from the misfortune of others.

In 2014, outrage flared because the financial advisors SFERS had hired to provide advice on hedge fund investments were themselves operating a hedge fund – a potential conflict of interests. That same year, the International Business Times also reported that Retirement Board member Wendy Paskin-Jordan placed her own money into a private fund that managed SFERS money – an apparent violation of SFERS rules and another potential conflict of interests. Patrick Monette-Shaw probed her other investments which included hedge funds.

In 2017 City employees and retirees protested SFERS’ plan to invest 15% of its holdings in hedge funds. Opposition to hedge funds centered on their opacity, rapacity, high fees and modest returns. At the time, the huge California Public Employees Retirement System or CalPERS had divested from hedge funds. In response to public pressure, the SFERS Retirement Board offered to cut its hedge fund investments to 5%. One long-time Retirement Board member, Herb Meiberger, a CPA and university Finance Professor, valiantly opposed any hedge fund investments. But he lost his seat to retired police officer Al Casciato, who backed hedge funds along with several City unions. Subsequently, SFERS’ Chief Investment Officer William Coaker, Jr., who earned $703,000 in pay and benefits in 2019, boosted hedge fund investments. He also increased private equity assets at the expense of public equities.

According to the 2020 SFERS Annual Report, SFERS holds $26 Billion in assets. Of these, 21.3% or $5.5 billion are invested in Private Equity while 14.2% or $3.7 billion are allocated to a murky “Hedge Funds/Absolute Return” category.  Interestingly, in fiscal year 2019-20, SFERS’ private equity investments earned just 6% compared to 7.9% from its public equity holdings. Meanwhile, its Hedge Fund/Absolute Return portfolio lost 3.2%.

Although SFERS discloses the returns from these investment categories, its annual reports do not reveal what private equity firms and hedge funds did with the money SFERS allocated to them. The identities of these private companies can only be obtained by requesting SFERS’ biannual investment reports.

SFERS Feeds Vulture Funds

In a must-read piece by investigative journalist Julie Reynolds, she notes that the private equity firm Cerberus Capital Management has received “tens of millions” from SFERS. Records obtained by the Westside Observer show that SFERS has committed $570 million to Cerberus since 2006. Somewhat less, but still hundreds of millions has actually been transferred from SFERS to Cerberus as of December 2020.  Why is that a problem? Well, Reynolds found that Cerberus owns Tier 1 Group, the company that trained 4 of the assassins who dismembered Washington Post journalist Jamal Khashoggi.

 Further, Cerberus specializes in acquiring distressed businesses and has partnered with - and financed - the notorious hedge fund, Alden Global Capital.

Alden is widely reviled as a “vulture hedge fund” that gobbles up distressed newspapers, saddles them with the debt Alden incurs to buy them, draws out management fees, sells off their assets, decimates their newsrooms, cuts salaries and ramps up workloads. While claiming to salvage insolvent newspapers, Alden tries to extract 20% in profit margins from newspapers that had managed with 10%. If that fails, Alden shuts down the paper and sells off its real estate and property. Plus, Alden fights off bids from philanthropic buyers who want to preserve struggling newspapers rather than strip them for parts.

All this pillaging eviscerates the news gathering and distribution functions of acquired newspapers. By draining the lifeblood of hundreds of community newspapers, Alden creates “news deserts” across the nation. Locally, Alden bought and butchered the venerable but bankrupt Oakland Tribune in 2016, reducing it to a weekly insert in the consolidated East Bay Times. Ongoing staffing cuts precipitated a 2018 protest by Pulitzer Prize-winning journalists from Alden’s consolidated Bay Area News Group.  Alden also owns the San Jose Mercury News.

Resistance from members of The NewsGuild – Communications Workers of America has focused on exposing and petitioning against Alden’s parasitic enterprise. But other hedge funds are joining the feeding frenzy. For example, Chatham Asset Management bought the Sacramento Bee last year. As newspapers struggle with financial reversals, hedge funds are taking over the industry and sacrificing Journalism on the altars of profit and greed.

Shadow Banks Fuel Predation

Vulture funds like Alden are enabled by loans from “shadow banks” like Cerberus. Shadow banks are largely unregulated finance companies that offer loans and credit outside of the constraints of the commercial banking system. Beyond fueling leveraged buyouts, shadow banks sparked the 2008 Financial Crisis by taking on outrageously-leveraged debts. Taxpayers bailed them out. So it’s jarring that SFERS has invested so much in Cerberus. However, SFERS informed the Westside Observer that it has not invested directly in Alden Global Capital.

SFERS’s investment policy is to “maximize the expected return of the fund at an acceptable level of risk.” While collecting returns from its investments with Cerberus, SFERS is sponsoring social harms that conflict with its Environmental, Social & Governance Policy. Dismembering newsrooms and depriving communities of critical information is a risk that should be unacceptable in San Francisco. SFERS should assess the ethics of Cerberus’ funding of Alden Global Capital - and divest from firms driven by a “greed-is-good” mindset.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

September 2021

SFMTA: Culture of Silence and Racial Disparities

by Dr. Derek Kerr

The Municipal Transportation Agency (SFMTA), with 6,000 employees, has been a hotspot for complaints about workplace bullying, sexual harassment and racial discrimination. These complaints were rarely substantiated by Human Resources investigations and occasionally bungled spectacularly, leading to protests and a flurry of lawsuits.

The Black Employees Alliance (BEA) sunshined records of SFMTA disciplinary actions from July 2020 through June 2021 and found that 49% of disciplinary actions targeted Black employees who comprised just 28% of the workforce. All other racial groups experienced fewer disciplinary actions than their proportion of the workforce. Blacks – including women, bore most of the severe penalties like dismissals and lengthy suspensions. In some cases, Black employees seemed to receive harsher discipline than others for similar violations. The Westside Observer examined these records.

In an email to City Hall and local Unions, the BEA concluded; “These results reflect a culture that is rooted in, and is comfortable functioning in a White supremacist, and anti-Black…mindset. It reflects an obsessive preoccupation, hyper-surveillance, over-scrutinizing, and over-enforcement of rules and policies against Black employees…while offenses for White employees are addressed with much less severity.” Further, SFMTA’s disciplinary practices were deemed “eerily similar” to the post-Emancipation Black Codes and the Peonage system wherein “laws were enacted which specifically targeted Black people.” Included was this link to the documentary “Slavery by Another Name.” Frustrated by persistent disparities, the BEA filed a discrimination complaint with the federal Equal Employment Opportunity Commission in July.

The Gathering Storm

Before the SFMTA shot to the forefront, citywide concerns about racial inequities had roiled City Hall. Then-Supervisor London Breed sponsored a 5/17/17 Government Audit & Oversight Committee Hearing on “the glaring disparity between African-American employment and the rest of the City.” Thanks to lobbying by SEIU 1021, “Workplace Discrimination and Complaints” was the subject of a packed 9/19/18 Board of Supervisor’s Hearing (Item 6, at 58:30). Then-DHR Director Mickie Callahan proudly reported that 15% of City employees were Black – exceeding the 4.6% regional labor market availability. Unaccounted for in those figures was the out-migration of Black residents due to soaring housing prices discrimination and other hardships. Booing filled the chamber when she noted that 15% of Black City employees accounted for 36% of terminations. Worse, out of 416 racial discrimination claims over 3 years, merely 5 (or 1.2%) were substantiated. That day, Mayor London Breed issued an Executive Directive for the City’s Department of Human Resources to boost diversity recruitment, expand implicit bias training, and check the fairness of all disciplinary actions.

 Weeks later, Breed responded to employee appeals by appointing retired HR specialist, Dolores Blanding, as “ombudsman” to assess complaints of discrimination, the levels of discipline administered, and SFMTA’s “inadequate” Human Resources division. That happened during the crumbling tenure of former SFMTA Director Ed Reiskin. Blanding’s January 2019 report diagnosed a “culture of silence”; “You see bad behavior but you do not say anything or get involved because you do not want to be seen as a troublemaker or limit your own career opportunities.” Poor communication between SFMTA’s HR department and the City’s Equal Employment Opportunity division, where discrimination claims are adjudicated, left employees frustrated; “Meanwhile, real toxic workplace and hostile work environment issues were not addressed quickly.” Blanding recommended improving; HR communications and visibility, diversity recruitment, the tracking of complaints and disciplinary actions, and “Respectful Workplace” training so that managers would “say something, do something” about improper conduct. She urged hiring an ombudsperson – independent from HR – to monitor complaints and upgrade the work culture.

Toward Reconstruction

From April 2019 through October 2020, HR expert Dante King served as SFMTA’s ombudsperson, struggling solo to advance diversity and equity. Momentum for this task accelerated in July 2019 when City legislation documented the City’s history of structural racism. The text noted that while Black employees comprised 15% of the workforce, they accounted for “36% of dismissals, 24% of probationary releases and 38% of medical releases.” The Ordinance founded the Office of Racial Equity under the Human Rights Commission. This new agency mandated that City departments develop Racial Equity Action Plans to address racial disparities.

On 10/15/20 the Board of Supervisors’ Government Audit & Oversight Committee held hearings on “African-American Economic Mobility” and “Advancement of Racial Equity.” Several department heads were interrogated. SFMTA’s current Director, Jeffrey Tumlin (at 2:16:00) vowed to “collect data fearlessly and present it transparently” to help “dismantle systemic racism.” Tumlin explained that 97% of all discipline cases involve transit operators, 40% of whom are Black. Interestingly, by focusing on that population - rather than the 28% of Blacks within the whole SFMTA - the disparities were less prominent. For example, the 40% of Black transit operators received 49% of disciplinary actions for safety violations and 46% of non-safety reprimands. Unlike other SFMTA employees, transit operators are subject to safety, attendance and service delivery standards set by the State and the City Charter. Those rules increase the likelihood of penalties for infractions.

However, bias tended to creep in with customer complaints. Although Blacks were underrepresented at higher levels of management, 3 out of 16 members (19%) of Tumlin’s Executive Team identified as Black. Two months later, the SFMTA issued its comprehensive Racial Equity Action Plan.

Quarterly reports on SFMTA’s progress toward racial equity are presented to the SFMTA Board of Directors. At the 11/17/20 SFMTA Board meeting (Items #11, #12) Director Tumlin sought to defy a key recommendation of the Blanding Report by placing the Ombudsperson under the HR department. Employee representatives from the Black, Asian, Latinx and allied-White Affinity Groups objected. They emphasized that the Ombudsperson was designated to be independent from HR, reporting directly to him. Tumlin conceded. Presentations revealed that; Whites comprised 14% of the workers versus 50% of senior managers, job satisfaction scores among line staff averaged 3.2/5 versus 4/5 for managers, and that 12% of Black women transit workers received 20% of discipline. Then, in December 2020, the Board of Directors issued a lengthy Resolution condemning anti-Black racism - without detailing SFMTA’s current disparities.

 At the 8/3/21 SFMTA Board meeting (Item #15 at 5:34:25) the impressive scope of SFMTA’s equity commitment emerged. Recommendations from the Gould Report, a July 2021 independent review of Equal Employment Opportunity procedures by Stanford professor William Gould, were being incorporated. In addition to recruiting a new Ombudsperson and boosting HR staffing, an Office of Race, Equity & Inclusion had been created under Josephine Ayankoya - with a $3.9 million budget. Employee Affinity Groups were granted $372,000.

Potential Pitfalls

Among SFMTA’s many excellent equity initiatives, one is potentially precarious – loosening minimum job requirements to increase diversity. Unless carefully calibrated, such barrier-removals could yield under-performing and demoralized employees.

SFMTA’s reckoning with racial inequities has spawned lots of deliberative groups, both institutional and employee-driven. Among the latter are a #MeToo group, the BEA and several racial Affinity Groups. Such assemblies provide support, solidarity and mobilization. However, group deliberations can devolve into “Group Polarization” whereby the members move toward positions more extreme than their initial inclinations. This phenomenon can generate divisive tensions that impede institutional consensus-building. Polarization and alienation can be mitigated by information-sharing and engagement by management. SFMTA intends to apply the feminist “Margin to Center Theory” to draw the most marginalized groups toward centers of decision-making. However, decisions are bedeviled by different data sets, numbers and denominators, resulting in disparate interpretations - and disputes. Reaching consensus will require mutually-adopted statistics.  

Disparities are not always due to bias. Variations in interest, ability or effort can also produce different outcomes. Uprooting racial discrimination is imperative. And, there’s room for more restorative and corrective measures instead of punitive ones. In order to maintain quality services, discriminating between competent and inept employees should not be based upon - or stifled by - their identities. 

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

August 2021

The Fix Is In: Herrera’s SFPUC

by Dr. Derek Kerr

“It's Your Choice:” Behind the Scenes—the Blow by Blow—of a Public Farce

Consternation! That was the general reaction to Mayor London Breed’s April 26, 2021 “nomination” of City Attorney Dennis Herrera to succeed Harlan Kelly as General Manager of the SFPUC. While vowing to provide “clean, innovative and decisive leadership,” Herrera has no experience managing a complex water, power and sewer utility with a $1.5 billion budget. Few doubted that political intrigue propelled their deal. Less well known is how the SFPUC’s own search for a new General Manager (GM) was upended.

Former GM Harlan Kelly resigned in late November 2020 after being charged by the US Attorney for corrupt practices. Michael Carlin became Acting GM in December. By January, the SFPUC had asked the City’s Department of Human Resources (DHR) to solicit proposals from executive search firms and select capable outfits. That was done to avoid conflicts of interest since SFPUC’s own managers would likely apply for the GM position. DHR labored to identify 4 suitable firms out of 9 applicants and presented an 8-step Executive Recruitment Process at the January 26th SFPUC meeting (Item 7).

At the February 23, 2021 SFPUC meeting, Commission President Sophie Maxwell indicated that The Hawkins Company “seems more diverse with women and people of color” although their professional fee was the priciest at $50,000. The Commissioners voted to hire Hawkins at a cost “not to exceed $100,000.” So far, so good.

Wresting Control of the Process

Trouble surfaced at the May 11th SFPUC meeting (Item 9 at 2:00:34). President Maxwell prefaced her update on the search for a General Manager with a jarring oration on “leadership;” “Colleagues, I want to say that I am very proud to be a part of the leadership of this agency. The leadership starts at the top of course, with the Mayor.” Her ominous pep-talk referenced “leadership” 7 more times. Then came the point; the Mayor really wanted Herrera.

Once the Mayor announced her choice, the City Attorney’s Office recused itself from advising the SFPUC on the recruitment process. Again, this avoided a conflict of interests since City Attorney Herrera, was in the running. Robert Coelho, a Santa Clara County attorney was inducted to tell the commissioners that the City Charter authorizes them to “nominate” candidates, but the Mayor makes the selection. Laughably, the 5 Commissioners – all of whom are appointed by the Mayor – were assured that they were free to choose the next steps. Despite Commissioner Maxwell’s glorification of leadership, the commissioners’ sunken faces conveyed disempowerment.

The Mayor’s public announcement of her preferred candidate sabotaged the recruitment process and deterred qualified candidates from applying. It was a done deal. The efforts to avoid conflicts of interest were for naught. Worse, a bigger conflict of interests emerged since Herrera was investigating corruption swirling through the Mayor’s entourage. On this glaring complication, the commissioners kept mum. After noting the “political reality” involved, outside attorney Coelho comforted the commissioners with a fallacy; “You control the process.” That “control” simply meant that the Mayor had to choose a winner from names submitted by the Commission. So, would the commissioners nominate Herrera or risk seeing their non-Herrera nominees rebuffed by the Mayor – along with their own re-appointments to the Commission? “The choice is yours” intoned Coelho.

Complying with a Rigged Process

Had the executive search proceeded without the Mayor’s meddling, it’s unlikely that Dennis Herrera would have been deemed a viable candidate. Nevertheless, the Commission gamely decided to conduct a Kabuki selection process. After all, many hours of professional time had already been expended plus fees for The Hawkins Company. So, the Commission told Hawkins to continue gathering feedback from stakeholders to determine the qualifications, experience and vision of the “ideal candidate.” But the die had been cast and the SFPUC cast aside. Candor vanished - except for a dozen public comments at the May 25th SFPUC meeting (Item 10) that challenged the selection process and Herrera’s installation.

One month after Mayor Breed nominated Herrera, the SFPUC distributed the Hawkins survey to its 2,300 employees. The memo asked for “input about the qualities and priorities of the new General Manager.” Many workers viewed the survey as pointless. Only 398 (17%) responded. The Hawkins Company also interviewed the commissioners, SFPUC executives, and outside stakeholders. The results of this “Stakeholder Engagement Process” were presented by Ms. Brett Byers on 6/8/21 (Item 17).

It began with a feel-good recitation of SFPUC’s “Outstanding Reputation & Amazing Staff.” As for “Opportunities,” the SFPUC was “in a position to rebuild public trust.” Due to executive longevity and “insularity,” “the SFPUC could benefit from having a different perspective joining the Executive Leadership level.” One finding presaged a sinking ship scenario; “upcoming retirements in senior management positions could lead to a talent deficit.” Slyly, nothing was reported about the desired qualifications, experience and priorities of the next GM – a key goal of the Hawkins contract. The fee charged for this skimpy product – minus the actual recruitment of candidates – awaits a response to the Westside Observer’s records request.

Finally, on 6/13/21 the Commission disclosed that after a Closed Session interview, it had “unanimously voted to forward the name of Mr. Dennis Herrera for the position of SFPUC General Manager.” So much for “leadership.” As for transparency, the commissioners did not disclose whether anyone else applied or was considered for the job. In a bombastic June 17 Press Release, Mayor Breed praised the “thorough work” in the review process “led by the 5-member oversight commission.” Next, Herrera must sign a contract with the SFPUC, resign as City Attorney, get officially appointed by Breed and confirmed by the Commission.

Why Herrera?

Dennis Herrera is a savvy manager. Unlike true outsiders, he won’t face a harrowing learning curve in the midst of a scandal or get easily bamboozled by the old guard. Unlike SFPUC insiders he’s untainted by the current corruption and at little risk of future prosecution.

Herrera has been a key player in the “Our City, Our Power” campaign to buy out PG&E and develop a City-owned electrical grid. His heading the SFPUC could advance that agenda without delay. Though touted by the Mayor as a “great champion in…protecting our environment,” his appointment is vehemently opposed by prominent environmental organizations. They argue that his May 13th, 2021 lawsuit against the State Water Resources Control Board pushes “irresponsible” water management that endangers the Tuolumne River, its fish and wildlife. Further, some decry Herrera’s failure to consult with environmental groups before filing his lawsuit – and before deciding to run the SFPUC. Herrera sought to justify his lawsuit in a Press Release and Chronicle Op-Ed. Peter Drekmeier, from the Tuolumne River Trust, penned Counter-arguments in the June 2021 Westside Observer.

Darker Perspectives

It's important to note that the downfall of the SFPUC’s Harlan Kelly and other City department heads was not solely due to the FBI and the US Attorney. The feds relied on whistleblowers who repeatedly reported misconduct. Now there’s a firestorm of scandals, one of which is destabilizing the SFPUC. Herrera has been tapped to put out the fire. Essentially, there are 3 ways to stabilize the agency; 1) root out corruption, or 2) contain the investigations, and 3) root out whistleblowers.

The City Attorney has aggressively defended officials who retaliate against whistleblowers. Herrera has demonstrated ardor, albeit costly, with this task. Recall the $7.3 million awarded to “sewer-gate” whistleblower Joanne Hoeper, Herrera’s former Chief Trial Attorney.

Herrera recently reveled in “putting the city’s top watchdog at the head of the PUC.” But as Jo Hoeper warned in a February 2020 Letter to the Editor; “who will watch the watchdog.” Our “top watchdog” has trailed the FBI in investigating municipal corruption. Such investigations are awkward for insiders because corruption permeates the City Family. With Herrera atop the SFPUC while his former subordinate attorneys probe SFPUC corruption, the intensity of the investigation could be modulated (i.e. skeletons kept interred). Supervisor Dean Preston has formally inquired (see page 9) about this potential conflict of interests. By yielding his elected position and agreeing to work under the Mayor and 5 commissioners, how likely is it that Herrera will expose mayoral or Commission lapses? Similarly, coaxing Herrera out of his legal post and into the SFPUC allows Breed to appoint a new City Attorney. Whomever she appoints will be disinclined to bite her hand – even if they prevail in the election that is required to keep the job.

Multi-level machinations could be at play. Astute observers like Tim Redmond of 48 Hills, Joe Eskenazi of Mission Local, and City Hall insiders have speculated about a cascade of political rearrangements depending on whom Mayor Breed appoints as City Attorney.

Unfortunately, hinky maneuvers have implanted SFPUC’s next General Manager. Fortunately, so many eyes and ears now converge on the agency, from the FBI to whistleblowers and journalists, that Dennis Herrera’s performance will be closely monitored - and reported.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

July 2021

Perks, Privileges and Mistrust in the City Family

by Dr. Derek Kerr

The Westside Observer recently received a trove of City documents that shine a light on SFPUC’s Executive Retreats, Employee Appreciation Events and its Hetch Hetchy recreational facilities.

Happy Campers

The SFPUC owns a recreational area with cottages for overnight stays at the Hetch Hetchy Reservoir. The facilities are made available to SFPUC staff, elected officials and officers from agencies that work with the SFPUC. Each quarter, the SFPUC issues an “O’Shaughnessy Dam Recreation Report” identifying who reserved cabins, for how long, and how much they paid. Surprisingly, these pre-COVID records show that a minority of reservations were for “official business.” Most were for recreation - enjoyed by SFPUC managers and commissioners as well as current - and even former City officials. These coddled campers brought entourages of friends and family to bask in nature for very modest fees. However, rank and file workers say it was “next to impossible” to get reservations and that “cronyism was a status symbol.”

Interestingly, SFPUC’s quarterly reports show that some of these privileged vacationers had “NOT PAID” their fees by the time the tallies were compiled. They included; Rec. & Parks Director Phil Ginsburg + 11 guests owing $950 for a two-night stay in June 2018, SFPUC Asst. General Manager Barbara Hale + 8 guests owing $1,800 for a stay in May 2019, SFPUC Commissioner Ann Moller Caen + 15 guests owing $930 for three nights in June 2019, retired Senator Art Torres + 2 guests owing $500 for two nights in June 2019, SFPUC Engineer Joan Ryan +14 guests owing $1,050 for three nights in June 2019, and Ed Harrington + 19 guests owing $2,100 for a stay in June 2019. Hopefully, these easy-going debts were eventually paid.

Plentiful Executive Retreats – Persistent Mistrust

The Hetch Hetchy cottages are occasionally used for official business, like SFPUC’s annual Executive Retreats. Managers use Executive Retreats to keep up with trends, wrestle with emerging challenges and reset priorities while boosting team cohesion. They hire contractors to organize and facilitate these gatherings. The June 2018 Retreat, whose theme was “What does it means to be an innovative utility leader?,” incurred an $11,931 bill from RMC Water & Environment-Lotus JV for “SFPUC Strategic Plan Implementation.” The June 2019 Retreat, dedicated to “prioritizing a framework for both current and emerging policy issues,” was facilitated by Ashton 212, LLC for $9,745.

But 2019 was unusual because SFPUC had already held 2 Executive Retreats, in January and March. In part, these earlier meetings dealt with the troubling results of a 2018 “Employee Engagement Survey.” This survey, newly-designed to “create a culture of listening and feedback,” was enthusiastically described to the SFPUC on March 13, 2018 (agenda item #8). But the 1,400 employee responses were mortifying. “Trust in Leadership” received the lowest score - a dismal 42%. Within that domain, just 47% of workers believed that; “The senior leaders of the SFPUC demonstrate integrity.” The statement; “senior leaders…value people as their most important resource” garnered a meager 34%.” How would the SFPUC – and the City – deal with this level of mistrust? Well, the survey results were not publicly disclosed. (The Westside Observer obtained them via a public records request.)

However, in January 2019, SFPUC’s top 9 executives did meet at Pier 1 to ponder “decision-making and accountability.” A key topic was the critical 2018 Employee Engagement Survey. That signal of worker discontent – and harbinger of mismanagement - was reformulated into the agenda item; “Moving Forward the Executive Team Brand.” A follow-up Retreat in March 2019 was deemed necessary to “create operating agreements.” These efforts to refurbish the aura of leadership failed to alleviate worker discontent. When the survey was repeated in 2019, the “Trust in Leadership” score fell to 39%. Further, just 28% of employees “noticed positive change” as a result of the 2018 survey.

The January and March 2019 Executive Retreats were facilitated by the Piras Group whose proposed fee was $15,750. Months later, another bill for $6,000 arrived. Bi-Rite Catering received $1,969 for food. None of it was pizza, the staple of most work-place meetings. Then-Assistant General Manager for External Affairs, Juliet Ellis, who earned $251,758 in 2019 ($304,910 with benefits), stood out by charging the City $124 for parking expenses. Total cost – around $23,843. Judging by the results of the above-noted employee surveys, little was gained for this price. Remedies for the executive team’s “decision-making and accountability” surfaced after the US Attorney filed subpoenas and criminal charges the following year.

Yet, the SFPUC held a 4th Executive Retreat - within 13 months. On February 21, 2020 the top brass assembled for “Diversity, Equity & Inclusion Training” at the Sunnyside Conservatory. Forefront Cultures, Inc. charged $15,000 for teaching “intercultural competence.” ReadySet, Inc. received $8,500 in facilitation fees. Bi-Rite Catering collected $464 for food. All told - $24,000.

Mitigating Employee Discontent

One way to win hearts and minds and to convey managerial benevolence is to throw a party.  In August 2019, Harlan Kelly announced the “First Team SFPUC & Employee Appreciation Picnic.” It was logistically challenging, being held at 4 separate SFPUC sites. Some 993 employees and guests signed up for the festivities. Participants were regaled with free swag, food and entertainment - except it wasn’t really free.

Spotlight Promotions, Inc. charged $3,734 for 200 “Sport-Caps - embroidered front and back,” plus $9,890 for 1,325 “Black T-shirts - 4-color front and back.” Walter Wong Construction charged $8,391 for tents, tables and chairs. Abbey Party Rents charged $12,074 for similar services while United Site Services collected $543 for restrooms and clean-up. Then came the food; Bi-Rite Catering submitted 6 bills totaling $51,699. Power Plant Supply catered BBQ and desert for $4,963, provided “custom DJ entertainment” for $1,250, plus games for $400. Arguello Catering got $3,046. Oddly, the engineering firm Woodard & Curran received $32,303 to help manage the Employee Picnics by partnering with the firm Katz & Associates that also furnished a Bounce House, Photo Booth and other amusements.  An apparent late charge from Woodard and Curran, submitted in January 2020, amounted to $6,742. In sum, the employee jamboree cost around $135,037.

Former City Attorney Dennis Herrera now runs an SFPUC immersed in mistrust. His challenge will be to impose fiscal and ethical discipline upon a branch of the City Family accustomed to perks, privileges and alleged self-dealing.

Juneteenth Inequities

The City’s Juneteenth holiday celebrations bypassed hundreds of City employees whose history was supposedly being recognized. In a June 21st email, the Black Employees’ Alliance (BEA) notified City Hall that it had received “a substantial number of complaints about most Black employees being required to work and not able to celebrate the holiday as stated in the Mayor’s memo.” That’s because many Black employees are considered Essential Workers. Accordingly, they were not granted time off on June 18th. Worse, dozens reported not receiving holiday wages.

Here’s the unintended inequity; “…the Juneteenth holiday commemorating the end of enslavement (forced free labor) of Black people, and the benefit of taking time off, is being primarily afforded to, and celebrated by, White and non-Black employees.”  The BEA is requesting overtime/holiday pay or another paid day off for those who had to work. In her June 19th bulletin, Mayor London Breed proclaimed; “We must demand justice and work to change the systems that have kept so many of our friends and family members pinned down….” .Having reported that the City’s benevolence was unevenly allocated – pinning some workers down without holiday benefits, the BEA awaits a response from the Mayor’s Office and the nascent Office of Racial Equity.

Acknowledgement: Thanks to the unnamed City insiders who provided guidance via tips and documents.  

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

July 2021

Crime, Use of Force and Defunding: Taraval Police District

by Dr. Derek Kerr

Data in hand, Captain Nicholas Rainsford bravely faced a crowd…of 2…then 3 people. It was Taraval Station’s first in-person Community Meeting since the COVID shutdown. Fortunately, the June 17th meeting allowed more Westsiders to participate via ZOOM. Police use-of-force and crime trends topped the agenda, followed by a generous Q&A session. Every question was answered.

The Westside Observer attended to learn more about burglaries that have increasingly plagued the Westside since the pandemic began. Cpt. Rainsford explained that “criminals adapt.” With the COVID shutdown, tourism declined and local folks stayed home. With fewer cars circulating, auto break-ins were no longer profitable. So criminals adapted by turning to burglaries. Similarly, when car break-ins were rampant, tech-savvy thieves used smart-phone apps that detect Blue-Tooth signals from nearby electronics. That made it easier to target cars containing valuable devices.

Cunning methodology also undergirds the surge in garage burglaries. First, thieves are aware that bicycles can be luxury items costing thousands of dollars. They know these high-end bikes are often kept in garages. So are expensive tools. Burglars often stake-out promising houses, streets and neighborhoods. Using battery-operated drills, they carve an opening in a promising garage door. A hooked wire is threaded through the hole. By snagging the door’s release latch, they gain entry. The pillaging takes a few minutes. Data compiled by Taraval Station shows that most burglaries occur between 2 and 6 AM. In the dark of night, residents are fast asleep and security cameras can’t capture clear images - unless aided by motion-activated lighting. By the time victims realize their valuables are gone, the culprits are long-gone - and celebrating.

Commercial burglaries have also proliferated. Businesses without alarms, security cameras and motion-lighting are especially vulnerable. Some have been burglarized several times in one night, once the thieves realize the low risk of detection. A representative from the DA’s Office, attending the meeting remotely, disclosed that burglary prosecutions are hampered by staff shortages and record-high caseloads - 230 cases per attorney!

What is Taraval Station Doing to Curb Burglaries?

Pointing to crime prevention through public education, Cpt. Rainsford recommended checking the Taraval Station website (www.taraval.org). His weekly newsletter provides data on prevalent crimes and how to foil them. Tips and alerts are also delivered via Twitter. Taraval officers advise residents and businesses about security measures. They promote the SAFE Program (Safety Awareness For Everyone) that offers free security assessments and recommendations. Importantly, crime data is continually analyzed to identify hot-spots and recalibrate interventions. Investigators scour crime scenes for videos. If images of suspects are available, they are distributed among officers and other precincts, raising the odds that someone will identify an offender. Citizens can help by sharing their video recordings. To counter surreptitious night-time criminals, Rainsford deploys “stealth patrols” aka “Recon 101” - Marine-speak for covert reconnaissance tactics. Otherwise, maintaining a visible police presence in vulnerable locations deters criminals.

Shoplifting, of the most brazen sort, is also being tackled. A wave of Walgreen’s closures led to meetings with Walgreen executives and a paralegal firm to figure out how to prepare cases for prosecution. Rainsford attributed some of the shoplifting scourge to California Prop 47. That law rendered rip-offs below $950 into petty thefts – misdemeanor offenses. That means the perpetrators, if caught, get a citation rather than jail time. So, “If there are no consequences, why should they stop.”

Because these thefts are hit-and-run, perpetrators are seldom apprehended. Thieves who spend an afternoon stealing $700 of merchandise here, $500 there, and $800 in a third location merely commit 3 misdemeanors. SFPD is working with the DA’s Office to bundle separate misdemeanor cases into one felony violation that throws serial shoplifters behind bars. To succeed, police need reports and good suspect descriptions, as described in every Taraval Station newsletter. While some victims feel that notifying the police is useless, Cpt. Rainsford emphasized that “knowing what’s going on” drives police work. For example, he hinted that reports of window smashings on Ocean Avenue would likely generate arrests.

Police Services Require Staffing

Cpt. Rainsford repeatedly cited how staffing and budgetary constraints impede the delivery of expected police services. Fully staffing the 3 beats on West Portal, Irving Street and Ocean Avenue as well as the 6 sector cars is sometimes thwarted by workforce shortages. He highlighted the City-commissioned but independently-conducted “Police Department Staffing Study.” This comprehensive analysis concluded that SFPD’s “patrol staffing is severely inadequate” and recommended adding 200 more officers to rectify “extraordinarily long response times to low priority calls for service.” Reassuringly, Taraval Station’s response to Priority C calls is SFPD’s speediest, at 37 minutes.

In the June Westside Observer, Patrick Monette-Shaw explored the controversy surrounding police funding and challenged the notion that the SFPD is under-staffed. Nonetheless, Cpt. Rainsford worries that the “Defund the Police” demands of a vocal minority are skewing the discussion away from what most citizens want. Because staffing and funding for community policing has reached a “critical juncture,” he encouraged more public participation as the Board of Supervisors addresses SFPD funding.

Unwarranted Deadly Force Triggers Police Budget Cuts

The excessive use of lethal force nationwide has animated mass protests, the Black Lives Matter movement, and calls to slash police budgets. Mayor Breed initially signaled her intent to shift funds from the SFPD to social programs that address the roots of crime, and to alternatives to armed policing. Alongside the “Dream Keeper Initiative” and Street Crisis Response Teams, violent crime intensified. So, her proposed $13.1 billion budget for FY 2021-22 only cut $6.2 million from SFPD’s account – less than 1% - leaving $661.7 million. This cut is attributed to replacing Airport police with Sheriff’s deputies. Next year’s SFPD budget is currently granted $689.1 million – a 4% increase. However, through July, the Board of Supervisors will be grinding out the final budget under a flurry of “Defund the Police” demands. That may be why Cpt. Rainsford came prepared to explain how police use of force is now carefully applied, supervised and investigated - all documented in a detailed 18-page handout.
 
The chart below shows that Taraval Station is among the lowest users of force, accounting for less than 5% of such incidents.

Citywide, there has been a steady, 68% decline in SFPD’s use of force since 2016 when the US Department of Justice recommended reforms. Meanwhile, crime mounts. That may be why concerns raised during Taraval Station’s Community Meeting tended toward the use of force - by criminals.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

June 23, 2021

Black Employees Slam White Privileged Telecommuting

by Dr. Derek Kerr

This February, the Westside Observer reported on Black employees who are suing the City for racial discrimination. Now, Black workers allege that some managers are being granted exorbitant telecommuting or “work-from-home” privileges. Unlike rank and file workers who must stay put and risk their health by providing direct services during the COVID-19 emergency, some executives have been working remotely and safely—from out of state.

On April 24, the Black Employees Alliance (BEA) wrote to SFMTA Director Jeffrey Tumlin, Human Resources Director Carol Isen, the Civil Service Commission, Mayor London Breed and the Board of Supervisors, complaining that; “Kimberly Ackerman, SFMTA Human Resources Director, has relocated back to the state of Virginia (her home state) to care for one of her family members who suffered illness, and has been working remotely from there since mid-2020.  Put another way, the SFMTA Human Resources Director has been allowed to work out of state for more than seven months …”

The BEA’s concern is that Ms. Ackerman’s remote work deviates from the City’s telecommuting  program. That policy does not allow caring for a dependent during work hours. Moving out of state is barred because employees “must be available to work at the regular worksite on telecommuting days if needed.” Neither does Ackerman’s work arrangement fit the federal  Family and Medical Leave Act, whereby employees are granted 3 month-leaves to care for a child or ill relative, or 6 ½ months to care for a disabled military relative. California’s Paid Family Leave program is limited to 2 months. In either case, employees on leave do not continue working.

City’s Telecommuting Scandal

The City has a long-standing work-from-home program. Following the declaration of a COVID-19 Emergency in March 2020, the Department of Human Resources (DHR) issued an “Interim COVID-19 Telecommuting Program Policy.” This emergency addendum increased remote work options in order to facilitate workplace social distancing per public health guidelines. However, some managers apparently took advantage of the relaxed telecommuting policy—by moving out of state. That spares them from serving as Disaster Service Workers – a City employee requirement. It also defiles the “leadership by example” mantra and “leadership competencies” promulgated by City departments. Frontline workers noticed and grumbled.

Accordingly, on 4/23/21 the DHR updated the Interim COVID-19 Telecommuting Policy with a key revision; “Employees may not remotely perform their City job from outside of the State of California … There may be limited circumstances where an employee may receive approval to work remotely from out-of-state for a brief, defined period of time; however, such remote out-of-state telecommuting requires approval by both the employee’s Appointing Officer or designee and the City’s Human Resources Director or designee, and the request must be supported by compelling business reasons, an explanation of limited family health circumstances, or other critical need. Any employee currently working remotely from out-of-state must return to performing all remote work from within the State of California by no later than September 1, 2021.”

The next day, the BEA reported that Ms. Ackerman’s prolonged relocation to Virginia countered City policy. The BEA sought disclosure of her Telecommuting Agreement—and pointedly asked if such expansive accommodations were available to other employees.

Then on May 5th, DHR director Carol Isen sent an intriguing “Revised COVID-19 Interim Telecommute Policy” to all employees. It seemed to respond to the BEA complaint by re-iterating the out-of-state prohibition; “Over the last year, some employees relocated and are now performing City work remotely from outside of the State of California. This practice will be expressly disallowed for several reasons, including the proper and legal collection of taxes, ability to respond as a DSW (Disaster Services Worker), and the City’s basic operational needs.” What seemed like a crack-down preserved the September 1st return-to-office deadline, thereby extending out-of-state work privileges by 4 months.

That same day, SFMTA’s absentee HR Director Kimberly Ackerman devised her own “Workplace Re-Entry Update” memo, announcing in part; “The SFMTA is planning for onsite returns for specific work functions starting September 2021 but there is no established goal to have all telecommuting SFMTA staff fully back onsite by September 2021.” Seemingly, wiggle-room was added.

Challenging Unfair Telecommuting Privileges

The Black Employee Alliance pounced on Ackerman’s message. In a May 7th email to SFMTA brass and City Hall, it declared; “City leaders have violated City policy and abused their power.” The BEA asserted that other City executives were working out-of-state, including; Justine Hinderliter, the Public Utilities Commission HR-Director (Minnesota), Trent Rhorer, Human Services Agency Director, and Jonathan Rewers, Acting SFMTA CFO (New York). Another source confided that Eric Sandler, SFPUC’s CFO, has been telecommuting from Michigan since mid-2020.

The Westside Observer contacted each named manager for comments. Only HSA’s Trent Rhorer responded; “I have NOT traveled out of state” during the pandemic, but spend “3 days every 8 weeks” in Los Angeles. In response to our inquiry about the absenteeism of HR Director Ackerman and CFO Rewers, the SFMTA Media Office wrote; “Like other City employees, most SFMTA office workers have been required to work remotely throughout the pandemic. There was no ban on out of state work. Some employees, for various reasons, may have been out of state and working remotely. The City did not affirmatively ask where employees were working or centrally collect that information. Now, as we prepare to return to the workplace, the City has affirmatively decided to prohibit out of state remote work, and set a date of September 1, 2021 for employees to come into compliance. SFMTA managers are, and will continue to be, in compliance with the City’s telecommute policy.” Similarly, the SFPUC confirmed that “some employees are working remotely from out of the state”—including CFO Sandler and HR Director Hinderliter. The SFPUC has tightened its telecommuting policy, stressing the mandate to serve during local disasters.

The Westside Observer asked the Department of Human Resources for records showing the number of telecommuters outside California, the duration of their remote work, and their Telecommuting Agreements. Astoundingly, DHR replied “No responsive records.” Perhaps this lack of monitoring enabled a telecommuting free-for-all.

Black Employee Alliance Objections

The BEA’s objections to out-of-state telecommuting arrangements are informative; “These leaders have modeled behavior that is contrary to City policy and the commitment they made … as Disaster Service Workers. If one does not live in the state, one cannot be deployed in the case of actual emergencies. These leaders have been unavailable to participate in, or respond to Disaster Service Worker requirement efforts; and have actually circumvented it by moving out of state.”

“DHR Director Carol Isen has in turn legitimized bad behavior by creating a policy now, that allows for these leaders to return to the state of California, by September 1st, 2021. This provides these leaders with the optimal benefit of remaining out of state for another four months. We are appalled that the City would allow most of its leadership, who are predominantly White, and again are the highest paid, to vacate residency in California, and work from other states for more than 6 months. We believe this is the epitome of White privilege, and it reinforces the reality that White people do not have to follow the rules, because the rules are made by White people predominantly, who break the rules, and then create policies to legitimize poor judgment, and egregious behavior. It also underscores the … scarcity of corrective and disciplinary actions taken against White, and non-Black employees who violate city policy. We want to amplify the point that this benefit has not been widely available to … predominantly BIPOC (Black, Indigenous, People of Color) employees … who have been in the trenches during the entire pandemic.”

Entitled Managers of All Stripes

Viewed solely through a racial lens, these cases could be attributed to White privilege. Another view is that folks at the top of organizations, regardless of race, feel entitled to harvest perks not available to their subordinates. This broader perspective advances multi-racial solidarity. The ongoing corruption scandal roiling City Hall shows that grasping misconduct transcends ethnicity.

The City’s standard Telecommuting Policy clearly states; “Telecommuting is a privilege, not a right.” Eligible employees must be self-motivated with independent, knowledge-based jobs that aren’t location-bound. That does not necessarily mean the policy is unfair, even though employees of color tend to be under-represented in jobs that can be performed remotely. What is unjust is if already-privileged managers exploit telecommuting to dodge their Disaster Service obligations. Therefore, these revelations and inquiries by Black employees are important and should be addressed in good faith - without retaliation.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

May 21, 2021

Surging Westside Burglaries

by Dr. Derek Kerr

Among the few blessings emerging from the COVID-19 shutdown has been a drop in auto break-ins. That’s because tourists stayed away and fewer residents were driving around town. Unfortunately, criminals adapted by shifting to residential and commercial burglaries. Plus, they even improvised cunning techniques for garage intrusions. With so many people hunkered down at home, the risk of “hot prowls”, wherein burglars invade occupied premises, increased. Citywide, burglaries in 2020 rose by 52% compared to 2019. Worse, just 13% of burglaries were solved in 2020, falling to 9% this year.

The 2020 burglary rate on the Westside seemed to ascend similarly, increasing by 38% since 2019. But that rise is misleading because the 2019 burglary rate had been unusually low. In fact, Taraval Police District data show that fewer burglaries were reported in 2020 than in 2017 or 2018. So 2020 didn’t bring a record torrent of burglaries to the Westside as auto break-ins receded.

Despite these fluctuations, Westside residents have been steaming about the unabated burden of property crimes. As the Westside Observer reported, Sunset residents launched an anti-crime uprising back in May 2019, when the burglary rate was relatively low. This year, however, we have a true and alarming surge in residential and commercial burglaries. The Taraval Police Station recorded 210 burglaries in the first 4 months of 2021 compared to 110 cases for the same period last year. At this near-doubling rate, we could see well over 600 burglaries this year. Worse, the 2021 clearance rate for Taraval District burglaries is merely 6%.

Community Battles Burglaries and Law-Breaking
The Taraval Police Station, under Captain Nicholas Rainsford, has an excellent website. It provides relevant crime statistics and expert advice for preventing burglaries, garage intrusions, bicycle thefts, auto break-ins and package thefts. A new section, with Chinese translation, explains hate crimes and how to report them. Available on request is a newsletter – in 100 languages, with updated crime reports and crime-fighting tips.

Stop Crime SF, is a volunteer-based non-profit dedicated to reducing crime, victim advocacy, and holding the criminal justice system as well as public officials accountable. Helmed by Westside residents Joel Engardio and Frank Noto, Stop Crime SF has 1200 members and is affiliated with neighborhood associations across the City. Signing up is easy, yielding an informative newsletter and various opportunities to contribute to public safety and criminal justice reform.

On May 13th, Westside neighborhood groups including SHARP (Sunset Heights Association of Responsible People) and the Golden Gates Heights Neighborhood Association sponsored a virtual meeting (start at 18 minutes) on residential burglaries. The audio-only version is available here. Moderated by Sally Stephens, the speakers included Furlishous Wyatt, Security Service Manager for SF-SAFE (Safety Awareness for Everyone), Lt. Clayton Harmston from the Taraval Police Station, Attorney Nancy Tung from Stop Crime SF, and D-7 Supervisor Myrna Melgar.

Mr. Wyatt shared a shocker: half of residential burglaries are enabled by unlocked doors and windows. He reviewed security enhancements like motion-sensitive lighting, alarm systems, covered garage door releases, solid-core doors with dead-bolt locks and 180 degree viewers, and video surveillance. He recommended keeping address signs visible to assist first responders. SF-SAFE provides free residential security assessments on request.

Lt. Harmston reported a 91% increase in burglaries compared to the first 4 months of 2020. Meanwhile, auto-break-ins dropped by 32%. Taraval Station’s 86 patrol officers are deployed according to crime trends in the district. Plain clothes officers are using bait cars and bikes to counter break-ins and thefts.

Supervisor Melgar said that her aide, Lila (Lila.Carrillo@sfgov.org), handles public safety issues and welcomes community input. As part of the Participatory Budget Program, her office offers grants from $10,000 to $25,000 to community organizations working to improve public safety. Money is available to purchase items like security cameras and for volunteer training.

Ms. Tung emphasized the importance of keeping the police, DA, Public Defender and judges accountable. Stop Crime SF volunteers provide a “Court Watch” service to ensure that victim rights are respected. She advocated for neighborhood cameras and adequate investment in the SFPD.

During the Q&A session, the panelists discussed the logistics of garage door break-ins, the influx of burglars from the East Bay, the DA’s focus on diversion rather than just prosecution, hate-crimes, and the handling of low-level antisocial crimes. As for police reform, the panelists backed the recommendations from the Department of Justice in 2016 and the Mayor’s reform roadmap. Ms. Tung recommended more community engagement and cultural competency as well as ensuring accountability for violent offenders who target vulnerable populations like elderly Asian-Americans. Lt. Harmston described the SFPD’s focus on de-escalation, and the need for a guardian mindset to balance the warrior mindset that emerged during the War on Drugs. Supervisor Melgar favored more funding to restore the Police Academy, updated SFPD technology and evidence-based reforms.

Nobody wanted to defund the police. All supported the deployment of Street Crisis Response Teams to address behavioral disturbances that do not require armed officers. The consensus was that community organizing is essential to deter crime and maintain safety. That was also the plan 2 years ago when Sunset neighborhoods rose up to organize against crime. The pandemic jammed their momentum. Yet again, Westside residents are mobilizing to restore security.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

May 21, 2021

Secrets of SFPUC’s Community Benefits Program

by Dr. Derek Kerr

Confidential sources sent the Westside Observer a long-sought and long-buried document related to the SFPUC’s Community Benefits Program. Shown above and available here, it’s marked “Sensitive” and “Confidential JV Board of Control Meeting Minutes – for Distribution to JV Board Members Only.” The remaining 2 pages are completely redacted. The mystery is why such records are secret.

The 2/26/19 document summarizes a meeting between officials running SFPUC’s Community Benefits Program and officers from AECOM/Parsons. The latter is a joint venture of 2 major infrastructure consulting firms with a $150 million contract to manage the City’s $6.9 billion Sewer System Improvement Program from 2011 through 2026. This “JV” or Joint Venture Board meets with SFPUC brass at SFPUC headquarters on Golden Gate Avenue - essentially an SFPUC meeting.

Dark Venture Board Meetings

Yet, when SFPUC watchdogs, the SF Labor Council and the Marina Times requested these meeting records, they were stone-walled, told that the SFPUC did not have them, or that AECOM/Parsons said “no.” The Sunshine Ordinance Task Force was notified in February 2019, but no formal complaint or hearing materialized. Representatives from the Building and Construction Trades Council approached Supervisor Gordon Mar, alleging that SFPUC’s Community Benefit Programs “use construction industry workforce training agendas…for the primary purpose of administering ‘slush-funds’ via ‘pay-to-play’ contract bidding arrangements.” After Mar sent a Letter of Inquiry, SFPUC’s Acting General Manager, Michael Carlin, asked AECOM/Parsons for the minutes of one 2019 meeting. The just-released, heavily-redacted copy has folks wondering what’s being concealed?

Encouraging Community Benefit Plans

When the SFPUC requests bids for contracts worth $5 million or more, applicants are encouraged to submit a Community Benefits Plan along with the usual technical and financial data. That’s because SFPUC’s Community Benefits Policy adopts a “triple bottom line,” balancing economic, environmental, and social equity goals. Submitting such plans show that bidders intend to be “good neighbors” to the communities impacted by their proposed construction projects. For example, contractors can promise to give money to community non-profits, donate volunteer hours to schools, support pre-apprenticeship training programs, or furnish technical assistance to small businesses. For AECOM/Parsons, its $150 million contract included a $1.5 million donation toward community benefits.

 Community Benefit Plans are worth 5% of the points in the SFPUC’s scoring system for evaluating bids. Interestingly, the SFPUC uses 2 separate panels to assess bids; technical experts award up to 85 points for the technical presentation while “social impact experts” award up to 5 points for the good neighbor proposals. The remaining 10 points relate to cost controls assessed by top executives.

This system was described at the SFPUC meeting of 11/10/20 (Item 8 at 1:52). Former SFPUC General Manager, Harlan Kelly, opened with an impassioned defense of the Community Benefits Program. Program Manager Tracy Zhu reported amassing $35 million in pledges from 84 contractors who were “invited” to provide community give-backs. Ivy Fine, Director of the Project Administration Bureau, emphasized that offering community benefits is “optional.” However, bidders who don’t offer them lose 5 points.

Fine highlighted “checks and balances to prevent undue influence.” For example, General Managers do not sit on Community Benefit review panels and “no contributions go to the SFPUC, its employees, or other City departments.” Further; “Proposers independently find and solicit the non-profit organizations and schools that they will utilize to deliver their social impact commitment.”  Plus, proposers “independently decide their…internal systems to track, report and hold themselves accountable.” Uh…maybe.

SFPUC Influences Community Benefit Plans

SFPUC’s detailed Community Benefits Program Policy (page 10) shows that it exercises considerable control over the proposers’ and contractors’ community benefit pledges. The SFPUC’s External Affairs Division, formerly led by Juliet Ellis, now under Masood Ordikhani, determines the community benefits goals, submits contract language on community benefits, participates in pre-bid discussions with proposers, selects the community benefit review panel, “orients” the panelists, reviews the proposals, “finalizes” the community benefit language in the contract, then meets with the successful contractor to “discuss” its community benefits plan, timeline and reporting. Mandated for AECOM/Parsons, were quarterly reports, quarterly in-person meetings with Community Benefit overseers, plus “stand-alone annual reports.” The Westside Observer requested copies of these reports and awaits SFPUC’s response.

Further deriding the professed “independence” of involved contractors is an 11/28/12 memo from Juliet Ellis to AECOM/Parsons, cc’d to Harlan Kelly. Titled “Scope of Services for Community Benefit Commitments,” it mandates; “AECOM/Parsons JV shall develop the Community Benefits Plan and Timeline in collaboration with the Assistant General Manager for External Affairs (then Juliet Ellis) to ensure that all of the deliverables…are aligned with SFPUC’s priorities and broader Agency-wide community benefits strategy.” Some SFPUC insiders believe this exacting process ensures profits for politically-connected non-profits.

Art of the Deal or Pay-to-Play

Misgivings surround the way community beneficiaries are chosen and how contractors recoup their donation expenses or get rewarded for them.

SFPUC emails obtained by the Westside Observer show that Juliet Ellis and her subordinates prepared a 15-minute presentation for the AECOM/Parsons Joint Venture Board. Their pitch endorsed the SF Housing Development Corporation, a Bayview non-profit that works to prevent foreclosures. SFPUC’s then Community Benefits Director, David Gray and its Manager, Tracy Zhu “answered questions” about this intended beneficiary. “After discussion” the secretive Joint Venture Board “approved” a $100,000 donation. There’s more. 

In 2015, AECOM/Parsons surpassed its $1.5 million community benefit pact by adding another $125,000. Of that amount, $50,000 went to the Willie L. Brown Middle School.  Perhaps this 8.3% supplement reflected AECOM’s generous embrace of social equity. If so, why was the deal carved into a contract amendment as; “AECOM shall increase AECOM’s current Community Benefit obligations in the minimum amount of $125,000…in addition to the prior commitment.” The “shall” and the $125,000 stipulation suggests that the add-on was extracted rather than gifted. What did AECOM/Parsons get in return?

 A clue appears in the role-blurring between contractors and SFPUC Community Benefit officials. This phenomenon is embodied in Julie Labonte, a former SFPUC Manager who became a Senior VP with AECOM. She was hired as “Program Advisor,” serving as liaison between SFPUC and AECOM/Parsons. Labonte had an SFPUC office and email - plus an AECOM email address. Her Linked-In profile extolled how her SFPUC affiliation “guided contract pursuits that resulted in…wins worth nearly $70 million in consulting fees.” In 2018, AECOM/Parsons executives asked SFPUC to boost her billing rate to $318/hour. The SFPUC harbors many such “dual representatives.” What do taxpayers “win” in these cozy collaborations?

Nothing here prevents SFPUC’s favored community groups from reaping the spoils of community benefit arrangements. And nothing prevents contractors from compensating themselves, or being recompensed for going along. Indeed, with all the mutual back-scratching recently exposed within City agencies, it’s unlikely that successful contractors operate “independently” or altruistically.

Deeper Layers of Influence

SFPUC’s Community Benefits strategy and priorities emerge from community engagements. For example, records indicate that SFPUC’s former Community Benefits chief, David Gray, consults weekly with R. Dwayne Jones, founder of RDJ Enterprises and a horde of Bayview entities. Jones’ non-profit Southeast Consortium for Equitable Partnerships received $612,725 from SFPUC’s Community Benefit Program between July 2017 and January 2020. In turn, Jones furnished “administrative support” and “community engagement” staff.

Jones’ newsletters assert that he co-created SFPUC’s 2011 Community Benefits Policy. Previously, he had directed Mayor Newsom’s well-funded but “unfocused” and opaque Communities of Opportunity project. Subsequently, he was implicated in alleged bid-rigging at the SF Housing Authority. Yet, Juliet Ellis praised Jones as her “closest partner in the Southeast community” and a “point of pride for the SFPUC.” As the Marina Times demonstrated, this relationship influenced contractors and Joint Venture Board deliberations.  

Will the Controller’s Audit Drill for Collusion?

As the Westside Observer previously reported, the Controller’s Office has unhurriedly assigned an outside firm to audit SFPUC’s Community Benefits Program. Deputy Controller Todd Rydstrom should recuse himself from supervising this audit since he formerly served as SFPUC’s Chief Financial Officer. Unfortunately, in a 11/17/20 email titled; “Community Benefits Audit – Researchable Questions” the Controller’s lead auditor, Mark de la Rosa, thanks his staff for compiling audit questions and states; “ I’ll add to my 1:1 agenda with TLR (Todd L. Rydstrom) today and loop back on next steps.”  So Rydstrom kept a conflicted finger in the audit.

Other fingers inserted themselves. As the Controller’s Office was organizing the audit, SFPUC boss Harlan Kelly pre-emptively requested that same audit. That’s one way to control an audit’s trajectory. Similarly, Juliet Ellis, who oversaw the Community Benefits Program, chimed in to limit the audit’s “confusing” scope. That prompted Controller Ben Rosenfield to “discuss” with Rydstrom.

Could Rosenfield’s oversight eliminate Rydstrom’s potential conflict of interests? Maybe not. Records show that in 2018 alone, Harlan Kelly invited Rosenfield and family to at least 3 exclusive events; the “Black American History Gala,”  whose Treasurer was Dwayne Jones, at the SF Marriott Marquis, then a “leisurely weekend at Hetchy,” assuring that “Costs are very minimal,” and a screening of the “Black Panther” movie with a feast at the Academy of Sciences. The Rosenfields reserved 4 seats for this “awesome” movie offer.  No gifts are reported in Rosenfield’s 2018 Form-700.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

April 21, 2021

Slow-Walking the SFPUC Audit

by Dr. Derek Kerr

In a March 24 letter from the Controller’s Office, Mark de la Rosa, Acting Director of Audits, notified SFPUC’s Acting General Manager, Michael Carlin, of an impending audit. This audit will target “SFPUC’s Community Benefit/Social Impact Partnership Program” and “assess the appropriateness and effectiveness of SFPUC’s governance and oversight of the program, including social impact partners’ program outcomes.” Although the Board of Supervisors had requested this audit back in July 2019, bureaucratic shuffling and delays almost turned it into a spectral fantasy.

The PUC’s Community Benefits Program “invites” would-be contractors to donate money and services to community charities and non-profits. To incentivize this philanthropy, contract bids that pledge community give-backs receive extra points. Championed by former Assistant General Manager for External Affairs, Juliet Ellis, the program has been roiled by pay-to-play allegations.

Following the departure of her boss Harlan Kelley, Ellis bailed out of the PUC this January - as their travel, expense and reimbursement reports came under federal scrutiny. She has since found refuge with PromisePay, a financial technology start-up that creates payment plans for folks who struggle to pay utility bills, traffic fines, child support and the like. Ironically, Ellis herself may have left the PUC with unpaid bills. Several catering outfits are reportedly clamoring to get paid for gourmet dishes that Ellis previously ordered. If confirmed, these lapses, like Ellis’s lavish $900 brunch in October 2019, reflect poorly on PUC Finance Officials who approve such expenditures.
 
Finally, the Controller’s Office has responded to the fall-out from an FBI/US Attorney investigation of the SFPUC, plus Marina Times articles like “Friends with Community Benefits,” reporting by the Westside Observer and NBC Bay Area television , as well as a whistleblower complaint dating back to January 2018, protests by the SF Labor Council, and calls for an audit by Supervisor Gordon Mar. However, this long-stalled audit entails further delays and constraints that may convert it into an archeological dig for ancient antics of long-gone culprits.

Contractual Delays and Constraints

Via a public records request, the WSO obtained a copy of the contract that awarded the SFPUC audit to Sjoberg Evashenk Consulting (SEC). The Controller’s Office indicated that it sought a “performance audit” whose “scope and objectives will be finalized at the end of the audit’s survey phase, when all of the program’s relevant risks have been identified.” What that means is unclear. Identifying “relevant risks” could impose accounting rigor or allow wiggle-room.

The SFPUC audit is one small part of a $1,737,300 multi-year, multi-audit contract issued to SEC in July 2019 - recommended and signed by Deputy Controller Todd Rydstrom. The portion allotted to the SFPUC audit – scheduled for fiscal year 2021-22 - comprises 500 hours of work, at a cost not to exceed $82,500. The final report is due by 9/30/22. That’s a year and a half away.

The contract curtails the independence of the SEC auditors. For example, section 8.1.1 states; “City shall have the option, in its sole discretion, to terminate this Agreement, at any time during the term hereof, for convenience and without cause.” As for oversight; “the Contractor’s Team shall report on its progress… tasks and deliverables for review, input, decision-making, and approval by the Controller’s Project Lead.” Specifically; “The deliverables review process may be iterative and may, at the City’s discretion, require face to face meetings of the City’s and Contractor’s Teams prior to the City’s final approval of work products and deliverables. The Contractor is responsible for submitting draft materials to the City’s Team for review and incorporating City feedback.” Another clause states; “The audit projects and scope may change, at the City’s sole and absolute discretion…” Finally; “The Contractor shall provide a draft report to CSA Audits for review and approval. CSA Audits may suggest revisions to the Contractor.” It’s perfectly reasonable oversight – and potentially censorious meddling – especially if Todd Rydstrom stays on the “City’s Team.”

  Potential Conflicts of Interest 

As the Westside Observer previously reported, any audit of the SFPUC by the Controller’s Office could be tainted by a conflict of interests. That’s because Deputy Controller Todd Rydstrom, who oversees the Audits Division, served as SFPUC’s Assistant General Manager and Chief Financial Officer from 2008 to 2014. The audit may well probe some of his past decision-making involving the SFPUC Community Benefits Program.

 Appropriately, the audit will be conducted by a qualified 3rd party. Outsourcing the SFPUC audit seems to side-step Rydstrom’s potential conflict of interests. But there are reasons to worry. For one, City consultants often serve as hired guns rather than truth seekers. Those who unearth smelly skeletons risk losing future contracts. As detailed above, the Controller’s Office is keeping a tight leash on this audit. Lastly, Todd Rydstrom’s name appears on the audit notice to the SFPUC, suggesting that he has yet to recuse himself.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

April 8, 2021

Peacekeeping without Peace Officers

The Street Crisis Response Team

by Dr. Derek Kerr

There was a time when unsettling public disturbances were addressed by calling the cops. Peace Officers kept communal peace. That formula no longer works.

 The public arena is now plagued by escalating disorder related to surging homelessness, free-wheeling mental illness and blatant substance abuse. Police precincts have been besieged by 911 call-center referrals related to homelessness and disruptive street behaviors. At the same time, policing has shifted toward a warrior mindset, becoming more militarized. Police engagements with unruly unarmed citizens too frequently end violently, sometimes with maiming or death. Nationwide, people with mental illness comprise at least 25% of police shooting fatalities despite de-escalation trainings. Accordingly, San Francisco is deploying unarmed peacekeepers to respond to 911 calls about non-violent disturbances.

Shifting Away From Policing

In December 2019, the Board of Supervisors unanimously approved “Mental Health SF,” legislation to overhaul the City’s mental health services. The primary goal was to provide “targeted services to those who are experiencing homelessness, mental illness, and substance use disorder.” A key component of this ordinance was a “Crisis Response Street Team” of behavioral health workers to respond to low-level, non-violent offenses that the Department of Emergency Management previously dispatched to the Police Department. The City’s General Fund - not the SFPD budget, pays for this program.

In June 2020, Mayor London Breed announced a set of reforms that would; “fundamentally change the nature of policing in San Francisco.” Among these was “reducing the need for police to be the first responders for non-criminal situations.” That spurred the formation of the “Street Crisis Response Team.”

Guided by these directives, the Human Rights Commission sponsored a 14-member “Alternatives to Policing Steering Committee” to gather input from City departments and community stakeholders. Its webpage compiles informative presentations from the DPH and Fire Department, Behavioral Health Services, the Coalition on Homelessness, the Department of Homelessness and Supportive Housing, and the Department of Emergency Management. The Steering Committee meetings are open to the public via ZOOM.

The Street Crisis Response Team

In a 3/16/21 presentation to the Health Commission, Angelica Almeida, PhD, Director of Forensic/Justice Involved Behavioral Health Services described the Street Crisis Response Team’s (SCRT) role. Its goal is to; “Provide rapid, trauma-informed response to calls for service to people experiencing crisis in public spaces in order to reduce law enforcement encounters and unnecessary emergency room use.” SCRTs arrive in emergency services vehicles, carrying a Fire Department paramedic, a behavioral health clinician and a peer counselor who provide immediate care and referral to medical or social services. Importantly, a multi-disciplinary team then provides follow-up support and stabilizing services.

The first team deployed in the Tenderloin in November, 2020. In February 2021, a second team covered the Castro-Mission area. By April, 6 teams will provide citywide services 24/7. The cost for part of FY 2020-21 was $6.2 million. Next year, the bill will be around $13.5 million. What’s unclear is how the cost of SCRT services will compare to the cost of police interventions. However, a forthcoming independent evaluation of the SCRT Project may answer this question, among others.

Preliminary data show that the SCRT accepted 199 calls to 911 over 2 months (December 2020 and January 2021). Disappointingly, only 110 clients (55%) were located. Of those, 96% were homeless, either unsheltered or partially housed. Out of 110 clients, 81 were treated in the community, 19 received emergency transportation, while 10 were taken to social or behavioral settings. None of these encounters required police back-up.

The CAHOOTS Model and Other Precedents

Mobile street crisis services are not new. The pioneering CAHOOTS or “Crisis Assistance Helping Out on the Streets” program has served Eugene, Oregon for 30 years. Funded by the Eugene’s Police Department, the cost for 2 teams and vehicles is just over $1 million for FY 2020-21. A police department analysis for 2019 showed that CAHOOTS alone responded to 13,851 calls, thereby reducing police dispatches by 5% to 8%. To glimpse what San Francisco’s SCRT project may look like, see this CBS video on the CAHOOTS program.

San Francisco already provides street outreach services like the DPH Street Medicine program, the Mobile Crisis 5150 for adults, and the Crisis Intervention Team that helps the SFPD to de-escalate conflict situations and render support after traumatic crimes. Since 2004, the DPH has partnered with the Human Services Agency and the Public Library to mobilize the Homeless Outreach Team (SFHOT) that engages and supports at-risk homeless persons. But the magnitude and complexity of the chaotic street-scene has overwhelmed the City’s resources.

In 2018, the City launched its Healthy Streets Operations Center to coordinate multi-departmental responses and outreach directed at homeless encampments and unhealthy street behaviors and conditions. That collaborative effort faced many challenges. However, per the Mental Health SF ordinance, the current panoply of behavioral outreach services will now be overseen by a new Office of Coordinated Care. Hopefully, reinforcing and re-coordinating these services will make a difference.

So, the next time you see some poor soul screaming at the sky or crumpled in your doorway, don’t be surprised if civilians rather than cops respond to your 911 call.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

March 25, 2021

San Francisco's Drug Crisis

Could Legalization Help Our Overdose Epidemic?

by Dr. Derek Kerr

T he Tenderloin has become a scary drug bazaar. Street drugs are adulterated with fentanyl and other potentially lethal opioids. Some 697 souls died from drug overdoses last year, compared to 441 in 2019 and 259 in 2018, per the Medical Examiner’s data. The prognosis for 2021 looks grim with 61 overdose deaths this January. Emergency rooms are flooded with drug-induced psychoses, infections, traumas and non-lethal overdoses. The cityscape is marred by raving or stuporous drug users, thefts and discarded syringes. This wreckage is reminiscent of Zurich’s 1987 “Needle Park” fiasco due to laissez-faire drug policies.

Destructive too is the War on Drugs, perhaps cynically launched by the Nixon Administration to stifle the Black Power and Anti-Vietnam War movements. Like Prohibition in the 1920s, it has done more harm than good; criminalized hundreds of thousands — especially Black and brown persons, spawned violent police raids and gang battles, endangered public health, enriched crime syndicates and street gangs, corrupted public officials and cops, packed jails, diverted public funds into militarized police and prisons, and fueled calls to “defund the police.”  

Meanwhile, drug prosecutions detract from tackling more serious crimes. National data compiled by the ACLU shows that in 2018, there were 693,000 marijuana arrests – 90% for possession only — exceeding the arrests for all violent crimes combined. As Professor Carl Hart, a neuroscientist and drug addiction expert at Columbia University pointed out, most drug-related arrests are for simple possession. Further,”80% to 90% of people who use illegal drugs are not addicts. They don’t have a drug problem. Most are responsible members of our society…And in some cases they even become president of the United States.”

Admittedly, San Francisco fairs better. In 2006, the Board of Supervisors passed Ordinance 297-06 giving adult possession of marijuana the “lowest law-enforcement priority.” Since then, arrests for misdemeanor marijuana possession have been negligible and secondary to other charges. In 2019, former DA George Gascon expunged more than 9,000 marijuana conviction records, setting a US precedent. However, possession of other recreational drugs remains illegal. Records of those arrests endure with potentially ruinous effects. 

A Two-Pronged Intervention
This March, Supervisor Matt Haney proposed (at hour 2:52) a Supplemental Budget Appropriation to stop both the influx of fentanyl and the associated casualties. Funding would create a District Attorney-led Fentanyl Task Force and boost DPH outreach and treatment services. This two-pronged proposal indicates that the 2008 voter-approved Prop T for “Free and Low-Cost Substance Abuse Treatment Programs” hasn’t met expectations.  That was evident even before the COVID pandemic. Similarly, the “New Program” of 2019, launched by the Mayor’s Office and the DPH to “fight overdoses and deaths” has fallen short. Since 2019, the City has funded a 12-member “Street-Level Drug Dealing Task Force” that struggles to find solutions. One obstacle to providing treatment is the shortage of drug counselors, something Assembly-member David Chiu’s aims to mend through legislative funds and incentives. Will paying for more of the same services and task forces yield different outcomes?

Public Defender Mano Raju opposes a Chesa Boudin “Fentanyl Task Force” stating; “…more drug prosecutions do not result in a reduction in drug supply and demand…nor the prevention of drug use.” Given the mounting misery and demand for intoxicants, targeting the fentanyl pipeline will induce drug purveyors to find new avenues and alternate opioids to maintain their enormous profits. The Internet and its Dark Web will still facilitate illicit drug production, sales and marketing.

Further, San Francisco’s drug crisis may reflect one facet of a nationwide surge in mortality from drug overdoses, alcoholism and suicide. According to Princeton University economists, these “deaths of despair” are symptoms of a precarious economy, something that drug programs cannot fix. Moreover, San Francisco’s casualties are exacerbated by intractable homelessness and rampant mental illness. Deaths of despair are expected to rise given the socio-economic ravages of the COVID-19 pandemic. What can be done, besides a 1930’s-type national New Deal?

Consider California’s 2016 “Control, Regulate and Tax Adult Use of Marijuana Act” that added marijuana to alcohol and tobacco as legal, regulated drugs. Amid the COVID-19 pandemic, once-stigmatized cannabis dispensaries are now deemed “essential businesses” !  Since the sky hasn’t fallen, the personal use of other prohibited drugs could be rendered safer, both medically and legally, by legalization or decriminalization. (Decriminalization removes criminal penalties from an offense but retains civil penalties. These typically involve small fines, confiscation of drugs and referrals to drug treatment - without a criminal record.)
 
Decriminalizing Psychedelics
In February 2021, Senator Scott Wiener introduced Senate Bill-519 that would decriminalize the personal use and possession of LSD, psilocybin aka “magic mushrooms”, MDMA or “ecstasy”, mescaline, DMT the active ingredient in ayahuasca, ketamine and ibogaine for persons 21 years of age or older. Peyote is omitted as it’s a threatened species reserved for Native American spiritual practices.

Also, the bill would expunge prior convictions for possessing these psychedelics, like the 2018 law that clears records for marijuana possession. Wiener declared  “Let’s embrace science & move past the failed war on drugs. Drug use is a health issue, not a criminal issue. And, psychedelics have tremendous health benefits.” Racing ahead, the biotech sector has inserted psychedelics in patent applications for Philip Morris e-cigarettes, periodontal disease, hair-loss, obesity and food allergies.

Oregon’s Drug Decriminalization and Other Precedents
Wiener’s Bill is modest compared to Oregon’s Measure 110 that decriminalized the possession of small amounts of all illegal drugs in October 2020. Holding less than the amounts listed below results in a $100 fine that is dropped if users agree to a health assessment and drug counseling;

Drug possession above these amounts, as well as manufacturing, sales and delivery remain criminal offenses. Oregon will use tax revenue from marijuana sales to expand drug treatment services.  Largely funded by the Drug Policy Alliance and the Chan-Zuckerberg Initiative, Measure 110 was approved by 58% of voters.

Other notable precedents occurred in 2019 when Denver and Oakland became the first US cities to decriminalize psilocybin mushrooms and peyote. Santa Cruz followed suit in 2020.

Oregon’s law mirrors Portugal’s 2001 doctor-led, ground-breaking decriminalization of all drugs. Robust treatment programs were implemented. Since then, rates of drug abuse, overdoses and HIV infections have declined, along with prison caseloads for drug charges. And, drug treatment enrollments soared by 60%. A Cato Institute study found that fear of arrest had been the main barrier to seeking treatment. These benefits have upended the dire predictions of uncontrolled drug abuse. In 2009, Mexico also decriminalized the possession of small amounts of cocaine, heroin, LSD and methamphetamine, among other drugs. The Law Library of Congress provides summaries of laws in countries that have decriminalized "narcotics."”

Toward Legalization

The first step is to address drug use from a public health rather than a crime-based perspective. A feasible starting point is the “Comprehensive Drug Decriminalization Framework”, developed by the Drug Policy Alliance. Unlike legalization, however, decriminalization doesn’t supplant the black market.

The main obstacles to legalization (and decriminalization) have been law enforcement, citing risks to public safety, and the private prison industry that profits from incarcerating drug users. There are also public concerns about normalizing and promoting potentially destructive drug use. Proponents have effectively countered these arguments by emphasizing the therapeutic benefits of marijuana, and of psychedelics for PTSD, intractable depression and anxiety disorders. Legalizing presciption heroin and perhaps methamphetamine for refractory addiction would rely on cost-benefit calculations.  Across the political spectrum, spending to treat non-violent drug users is now preferred to the enormous costs of incarceration and policing.

Another fear is that drug availability and marketing will increase drug usage and addiction. But availability persists despite decades of costly interdictions. And drug marketing flourishes because street dealers entice their clients with menus of illegal products. Reassuringly, cannabis legalization in Colorado, Washington, Oregon and Alaska has not increased usage among youths or adults. Decriminalizing all drugs in Portugal hasn’t increased use or addiction.

Accordingly, legalization combined with regulation, education, advertizing bans, and robust treatment options mitigates drug abuse and addiction. It’s also the safest way to put drug dealers and cartels out of business. Taxing sales would generate funding for treatment programs. Critically, legalization would impose quality controls for dosing and purity, eliminating lethal adulterants like fentanyl.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

March 2021

Inside the Fight Against Racial Discrimination Lawsuits 

Herrera's Curious Union-Busting Law Firm Choice

by Dr. Derek Kerr

S an Francisco has steadily rolled-back racial discrimination.  Anti-discrimination policies and programs are pervasive. Ethnic minorities serve in leadership positions. Yet, a surge in racial discrimination claims has rattled several City departments. Recent lawsuits alleging discrimination against Black employees are startling in egalitarian San Francisco. Doubling the consternation is the City Attorney’s paying a Union-busting law firm to fight these claims.

City’s Expanding Anti-Discrimination Programs

In 1964 the City set up its Human Rights Commission to root out racial discrimination. The HRC promotes non-discrimination and investigates violations. Ironically, one of its straight Black employees sued for race and sex discrimination in 2012, resulting in a $210,000 settlement. Similar critiques followed.  A May 2019 survey by the Budget & Legislative Analyst found that 45 City departments provide 610 programs and initiatives to address inequities based on race, gender, ethnicity, etc. Among these are the Mayor’s Task Force on Diversity and Inclusion, and long-standing Equal Employment Opportunity programs now being independently reviewed. Further, 20 city departments participate in the national “Government Action on Race and Equity” program that provides tools to assess racial disparities and deliver implicit bias training.

Slow Progress Deemed Window-Dressing

 Yet, in July 2019, the Office of Racial Equity was founded - “in response to the City’s growing racial disparities.” Disparities aren’t growing, but concerns are. As the vanguard for the Human Rights Commission, this new agency mandated that each City department produce a Racial Equity Action Plan in 2020. Meanwhile, Black workers, who comprise 15% of the City workforce, filed 32% of complaints alleging unfair treatment, staged protests against racial discrimination, and filed lawsuits alleging same. In October 2020, Angela Alioto sued the DPH on behalf of 8 Black employees.  In November, the Municipal Transportation Agency, Health Department and Public Utilities Commission were named in a Class Action racial discrimination lawsuit. (SF Superior Court; Case No. CGC-20-588012).

Though imbued with good intentions, personnel programs tend to serve management more than employees. One example; less than 1% of Equal Employment Opportunity complaints are sustained. Further, anti-racism interventions like Implicit Bias Training have not been proven effective.  In a December Press Release, the two law firms representing these Black plaintiffs declared; “Rather than address the sources of racism in the City’s workforce, the City has prioritized its image by employing an army of high-paid public relations people, and implementing window-dressing working groups, committees, reports, and hearings. In essence, all talk, no action.”

As Racism Subsides Complaints Mount

Why are employee complaints about racism soaring despite the obvious decline and widespread condemnation of racist practices? Well, racial disparities and covert racism have been endured - until now. The 2020 Annual Workforce Report compiled by the Department of Human Resources highlights disparities; “Most notably, in comparison to those of other races, our Black employees have lower-paying jobs, are less likely to be promoted, and are disciplined and fired more frequently.” For example, Blacks comprise 15% of City workers but receive 37% of disciplinary actions; Whites represent 29% of workers but get just 19% of disciplinary actions. However, the relative role of discrimination versus performance issues and qualifications hasn’t been fully untangled.

Importantly, the Black Lives Matter movement has fomented much soul-searching and awareness. So has Critical Race Theory which posits that racism is omnipresent regardless of intent. Racial disparities signify racism. One is either “racist” or “anti-racist,” disallowing the “non-racist.” With heightened sensitivity, a broadened definition of racism, plus “woke” activism, it’s more likely that disparate outcomes are ascribed to racism while other factors are overlooked. Per the Dunning Kruger effect, employees who are blind to their own deficiencies may view reprimands as identity-based affronts in this time of cultural awakening.

Relevant also is a fascinating psychological study showing that people respond to the decreasing prevalence of a stimulus by increasing their concept of it. For example, subjects were shown an array of faces, some of which were threatening. When the number of threatening faces was reduced, the subjects began interpreting neutral faces as threatening. Similarly, subjects were asked to rate research proposals, some of which were unethical. As the proportion of unethical proposals diminished, the reviewers started labeling innocuous ones as unethical. The researchers concluded; “Social problems may seem intractable in part because reductions in their prevalence lead people to see more of them.”

This phenomenon, plus confirmation bias, may partly explain the rise in racism complaints, as well as the “mission creep” in military campaigns, the emergence of “micro-aggressions” in social interactions, and the tendency for political purges and conspiracy theories to spiral uncontrollably. Nonetheless, incidents of racist oppression still occur, so rectifying them starts by valuing the Black tradition of defending Democracy against racism.

City Attorney’s Response

With 200+ attorneys among 338 FTE employees, the City Attorney’s Office should be equipped to refute claims of racial discrimination in a City devoted to inclusion, diversity and equity. Instead, Dennis Herrera hired a law firm with a long, notorious history of “union-busting,” namely Jackson Lewis. This national behemoth with 950+ attorneys was initially hired in August 2019. Its contract, obtained by the Westside Observer, specifies dealing with a sexual harassment claim and negotiating collective bargaining agreements. In November 2020 - just as the aforementioned high-profile discrimination lawsuits were launched – the Jackson Lewis contract was extended through June, 2022.

Googling “Jackson Lewis + Union Busting” generates scores of entries about the firm’s anti-union activities on behalf of corporate employers. Among the most revealing are those in CounterPunch,  Daily Beast,  In These Times and the Village Voice.  Jackson Lewis openly advertises its drive for “union free” workplaces. However, the firm also recommends positive practices that reduce workplace stress and discontent.

Why would Herrera hire Jackson Lewis?  There are no union uprisings. So it’s likely for its expertise in labor law and fending off damaging discrimination claims. Atypically, the current racial discrimination charges aren’t coming solely from aggrieved employees. They also derive from the City’s own reports - and mea culpas. At the 11/17/20 SFMTA  Board meeting (at 1:50), Director Jeffrey Tumlin publicly admitted to; “a long, well-documented history of racism…against our own workforce. Those problems continue today.” At the 7/14/20 PUC meeting, (at 2:13) a Workforce Equity analysis showed Black workers under-represented in high-paying jobs and over-represented in disciplinary actions. Not surprisingly, the recent Class Action lawsuit points to; “…what the City admits is a longstanding practice of systemic racism against Black employees,” as well as violated laws.

Defending the City will require contesting City studies and confessions, not just plaintiff’s claims. City Attorneys would imperil themselves by challenging City Family messages and colleagues. Plus, they could be vilified as apologists for racism by distraught workers. An outside law firm can more easily challenge the City’s incriminating admissions - and withstand employee resentment.

Plus, Jackson Lewis proclaims; “We share our clients’ goals to emphasize diversity, inclusion, integrity and respect for the contribution of every employee.” Its “Diversity Counseling Group” helps clients to “enhance diversity programs” while providing “Crisis Mitigation.” So, its anti-union lawyers can’t be easily dismissed as racially uncouth. Karl Olson, one of the lawyers representing Black workers in the Class Action lawsuit, disagrees; “Hiring a law firm with a long history of union-busting and defending racist employers to represent the City is the legal equivalent of flying a Confederate flag in City Hall.”

Hiring Without Competitive Bidding

Other powerful firms defend employers from discrimination claims. How was Jackson Lewis selected? In response to our inquiry, the City Attorney’s Office indicated that Herrera picked Jackson Lewis without competitive bidding. Interestingly, Jackson Lewis’s principal litigator, Gina Roccanova, was a Civil Service Commissioner during employee protests against “favoritism, nepotism and cronyism” that the Westside Observer covered in 2016. Roccanova also contributed $375 to Herrera’s 2011 mayoral campaign and $100 to his re-election in 2013, per Ethics Commission records. However, that was before she joined Jackson Lewis in 2019. No Jackson Lewis contributions appear in Herrera’s campaign disclosures.

As the Westside Observer reported in 2016, Herrera had similarly selected – without competitive bidding - the pricey, campaign-contributing firm of Keker & Van Nest. It was paid $850/hour to fight whistleblower Joanne Hoeper’s retaliation claim. All told, that decision cost taxpayers $12.2 million. Of that, Keker & Van Nest collected $4.2 million, despite losing the unduly prolonged case.

Herrera’s renewed contract with Jackson Lewis pays Roccanova $395/hour, somewhat less to 6 other lawyers, for a total not to exceed $700,000 in fees plus expenses. Notably, this contract includes many more cost-controls than the Keker & Van Nest give-away. Costs still need scrutiny; Jackson Lewis was described as; “part of an industry that profits from promoting conflict in labor-management relations,” by Professor John Logan, Director of Labor and Employment Studies at SF State University.

Racial Equity plans and the paradoxical rise in racial discrimination lawsuits may bring just and productive changes. They could also propel identity-based divisions in the workforce. The challenge will be to unify the internal factions to better serve the external public. 
                                                                                                                                  

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

February 2021

SFPUC: Audits Vanish Amidst Corruption Pandemic

by Dr. Derek Kerr

I n May 2019, Supervisor Gordon Mar introduced legislation to set the audit work-plan for the Board’s Budget and Legislative Analyst (BLA). That plan, FY 2019-20 , included an audit of the City’s Workforce Development and Community Benefit Programs. These “good neighbor” programs, designed to benefit communities impacted by City construction projects, have been roiled by pay-to-play allegations.

Notably, since January, 2011 the Public Utilities Commission (PUC) has promoted its Community Benefits Policy by awarding workforce-training grants and forming “Social Impact Partnerships.” Through such partnerships, private firms receiving contracts valued at $5 million or more are expected to contribute about 1% to community non-profits and charities. As incentives, contractors are given extra points for bids that include community benefit commitments. This well-intended policy sparks “pay-to-play” concerns when contractors are steered to support non-profits favored by PUC executives.

On 7/9/19 the Board of Supervisors approved Mar’s audit Motion. Around 9/5/19 the BLA requested and soon obtained 10 years-worth of records related to the PUC’s Community Benefits Program, grants and contracts. Sources say that interviews were conducted. Then…nothing. The PUC audit evaporated as City Hall, DPW and the PUC were rocked by federal corruption investigations and charges.

What Triggered the PUC Audit?

The impetus for assessing Workforce Development and Community Benefit Programs came from Local 261, a construction workers union, and a February 2019 SF Labor Council Resolution.  Since 2016, labor representatives have protested that these programs, especially under the PUC, support politically-connected non-union non-profits that develop and train workers - without meeting union or civil service standards. The opening salvo came at the 12/13/16 PUC meeting (at 21:15 minutes).

The PUC provides direct workforce development grants. Plus, 36% of PUC Community Benefit Program funds (slide 20) go to workforce training projects. Weirdly, these funds go to both union and non-union entities. Labor unions like Local 361 are affiliated with unionized workforce training programs– funded by PUC grants. So they resent PUC’s enabling less rigorous non-union programs. Unions argue that non-union programs produce under-qualified workers and dead-end jobs. Further, they construe PUC’s delegation of workforce training to favored non-union outfits as political patronage. Misgivings intensify due to the lack of transparency and oversight in PUC’s Community Benefit deals.

When Local 261 leaders sought records about these PUC programs and grantees, some of their inquiries were rebuffed as being “...unduly burdensome and oppressive.”  Some labor reps wondered “if we have another Mohammed Nuru/Lefty O’Doul’s Foundation situation on our hands.” Given the lack of information and audits, PUC employees, contractors, and civic watchdogs among others, contacted the City’s Whistleblower Program, federal agencies, then local newspapers like the Marina Times and the Westside Observer, as a last resort.

 Why the Audits Dematerialized

A partial explanation came in a truncated 8/3/20 BLA report; “…the initial scope of the audit included an evaluation of the community benefits programs at the San Francisco Public Utilities Commission. The audit team initiated this evaluation, but in conjunction with the Board of Supervisors, ultimately determined that the assessment would be redundant with an upcoming audit by the Controller’s Office.” That “upcoming audit” has yet to materialize. Still, BLA auditors managed to compile some data. They revealed that PUC’s Community Benefits Program had gleaned $34.2 million from 75 contracts worth $2.2 billion, as of October 2019. For the first time, the magnitude of PUC’s opaque Community Benefits Program had come to light. But, no word on whether the $34 million went to productive community services or self-serving PUC cronies.

 Some Union sources felt that the Controller’s Office had “seized” or “high-jacked” the PUC portion of the audit. So the Westside Observer asked the BLA for records about its decision to abort the PUC audit. These records show that on 8/7/19 the BLA initiated talks to avoid overlaps with a planned Controller’s audit of the PUC Community Benefits Program. Discussions focused on averting duplication – and ensuring that nothing was omitted. Notably, both groups wanted a whistleblower complaint about the PUC’s “Social Impact Partnerships” covered. The Controller’s Office agreed to do so. What these documents don’t reveal is that this explosive whistleblower complaint, filed in January 2019, had been kept in limbo after reviews by the Controller and the City Attorney.

 A year and a half after the whistleblower complaint, this explanation appeared in a 7/19/20 BLA email; “…specific allegations appeared to us as a whistleblower complaint and we, in consultation with Board staff, determined that it should be referred to the Controller’s Office whistleblower program for appropriate investigation.”  However, as previously reported, once the Controller investigates a whistleblower complaint, the results are obfuscated. If based on a whistleblower tip, any follow-up audit by the Controller could be similarly clouded - or delayed.

Because audits by both the BLA and the Controller’s Office sank mid-stream, suspicions arose. In a must-see 12/24/20 NBC Bay Area News story, Supervisor Mar asserted that…“in light of the still unfolding corruption scandal” an audit was “more important than ever” - without mentioning that the Board had approved it 18 months before. So what happened to the Controller’s PUC audit? The Controller’s Office told the Westside Observer; “…this planned audit has been delayed to devote critical resources in response to the COVID-19 cost recovery efforts. CSA-Audits plans to initiate this SFPUC Community Benefits Program audit before the end of March 2021.” That will be more than 2 years after the instigating whistleblower complaint.

“City Family” Harbors Conflicts of Interest

Perhaps “redundancy” or a “whistleblower complaint” aborted BLA’s audit. Maybe “COVID-19” alone stymied the Controller’s audit. Or, was City Hall reluctant to air dirty laundry? Nonetheless, the audit should be conducted - by the BLA rather than the Controller. Recall that Deputy Controller, Todd Rydstrom was the PUC’s Assistant General Manager and Chief Financial Officer from 2008 through 2014. He worked under Ed Harrington, who is now a PUC Commissioner. Harrington was PUC’s General Manager when its Community Benefits Policy was implemented, after serving 17-years as City Controller.

Can the Controller’s Office impartially audit the PUC’s deals and grants given these familial ties? Will the Controller’s auditors pore through 10 years of records – as the BLA planned - or will they limit the audit’s scope given COVID’s ongoing “cost-recovery” demands? As for the City Attorney’s ongoing investigation of PUC contracts, there’s a dual-loyalty problem. The City Attorney is geared to defend City officials, discredit whistleblowers and contain liabilities, as well as to uphold laws. It may not matter. The FBI and the US Attorney’s Office are hot on the PUC’s case. That may be the only way to see if Community Benefit Programs benefit communities as much as City Family insiders.

 This sorry state could fuel Supervisor Mar’s drive for a Public Advocate Office to root out government corruption.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

January 2021

City Controller’s Secrecy Shields Corruption

by Dr. Derek Kerr

San Francisco’s Sunshine Ordinance, mandated by the voters, declares;

 “The right of the people to know what their government and those acting on behalf of their government are doing is fundamental to democracy, and with very few exceptions, that right supersedes any other policy interest government officials may use to prevent public access to information. Only in rare and unusual circumstances does the public benefit from allowing the business of government to be conducted in secret, and those circumstances should be carefully and narrowly defined to prevent public officials from abusing their authority.” (Sec. 67 of the Administrative Code)

Openness applies not just to what government is doing, but to wrongdoing as well. When taxes pay for investigations into waste fraud and abuse of City resources, taxpayers deserve to know which City agencies break rules or flub their duties. A welcome example of investigative transparency is the series of “Public Integrity Reports” recently issued by the Controller’s Office. There, embarrassing facts are laid out, with names named.

In stark contrast are the Controller’s Whistleblower Program Reports. These too are “public integrity reports” but their results are cagily masked, leaving the public in the dark as to which City agencies violated policies, regulations or laws. Even whistleblowers who submit department-specific tips cannot discern if their complaints were resolved by reading these texts.

Fogged-Up Investigations

For example, the most recent Whistleblower Program Report provides 2 typically opaque investigation summaries on pages 18-19;

Case #1: Allegation:  A department head organized a series of employee appreciation events that cost the department thousands of dollars and a significant amount of staff time. Department managers instructed employees to bill their time spent at these events as vacation or other personal time, but did not do so themselves. A vendor used at the events was selected due to personal connections to a departmental leader.

                Resolution: The investigation substantiated that these events cost the department tens of thousands of dollars and hundreds of hours of staff time. It also substantiated that department managers recorded their hours to work (non-leave) codes after instructing staff to use personal time for these events. The investigation did not substantiate that the vendor the department used (and paid for goods and/or services provided) at the events was selected due to its relationship with any departmental leader.

Case #2:  Allegation: A manager spent more than $900 in city funds to cater breakfast and lunch for seven employees at their home.

                Resolution:  The investigation found that the manager spent $900 of city funds on seven employees, or approximately $64 per meal. Although limited policy and guidance requires city employees to conduct the City’s business in a fair and cost-efficient manner, the City does not have a policy on allowable costs when providing food and beverages at work-related events. Therefore, the department developed its own policy based on the U.S. General Services Agency’s per diem expense guidelines for federal agencies.

In neither case is the department identified. Why not? Why should the public not know? This level of secrecy exceeds the confidentiality granted to Whistleblower Programs by California Code 53087.6(e)(2). While the identities of individual whistleblowers, witnesses and subjects are protected, State law allows programs “to issue any report of an investigation that has been substantiated, or to release any findings resulting from a completed investigation that are deemed necessary to serve the interests of the public.”

Curiously, the “resolution” in case #1 dodges any restitution or discipline for executives whose picnicking was logged as “work” while staff had to sacrifice vacation time. Hidden is how many “tens of thousands of dollars” were spent. In case #2, no comparison is drawn between the plentiful $128/employee spent for breakfast plus lunch versus what federal guidelines recommend. In fact, the federal 2019 meal allowances for San Francisco were $18 for breakfast and $19 for lunch - just $37/employee. That’s $259 for 7 people – not $900. Small potatoes, but as a cultural plague infecting many City departments over many years, it turns into big money, wasted.

An easy assumption is that these 2 cases refer to former DPW boss, Mohammed Nuru, who staged lavish employee appreciation events and hired cronies for catering services. Indeed, the cases are strikingly similar to the DPW shin-digs documented on pages 39-40 in the 2nd Controller's "Public Integrity Report.” However, a knowledgeable insider (not identified to prevent retaliation) explained that these cases pertain to the Public Utilities Commission (PUC), its former General Manager Harlan Kelly, and his then-deputy, Juliet Ellis.

A Whistleblower Provides Clarity

Our reliable source tells us; “there was an uproar when Harlan and his Executive Team told us to use vacation time to attend the picnics” in his July 2019 emails to all staff. There were 4 staff picnics, starting at Crocker Amazon Park on 8/16/19. Others occurred in Millbrae and Hetch Hetchy. The PUC hired “Spice It Up, LLC” to cater the Crocker Amazon and Millbrae events. The picnics also featured hat and T-shirt giveaways, entertainment, and rented games for kids, likely provided by other vendors. Records show that the PUC paid $64,576 to Spice It Up in FY 2019-20, compared to $14,441 the year before.

As for the $900 feast for 7 employees; our source asserts it was another PUC extravaganza that stirred an “uproar.” Reportedly, in October 2019, Juliet Ellis invited 6 subordinates to her home for breakfast and lunch. The double-buffet was likely provided by “BiRite Catering, LLC.” Observers were outraged that platters advertised as serving 15 people were ordered for 7. Further, this lavish expenditure was approved by PUC’s Financial Officers, thereby calling into question the agency’s financial ethics. Records show that the PUC paid BiRite Catering $26,321 in FY 2019-20, surpassing the $17,767 paid out the previous year. The Westside Observer requested copies of the luncheon invoices from the PUC, and awaits a response.

Barriers to Transparency

Getting the Controller’s Office to fairly examine PUC’s expenditures could be hampered by “City Family” dynamics and conflicts of interest. It’s tough — and perilous — to investigate powerful friends and colleagues. Controller Ben Rosenfield is a multi-generational ”City Family” stalwart. And, from 2008 through 2014, Deputy Controller Todd Rydstrom served as PUC’s Assistant General Manager and Chief Financial Officer — alongside, then under Harlan Kelly. Will Rydstrom recuse himself from overseeing PUC-related audits, performance reports and whistleblower complaint investigations?

Weirdly, neighborhood newspapers deliver truer accounts of whistleblower tips than those transmitted by the Controller’s intentionally-obscured Whistleblower Program Reports. Nobody can tell what agency was involved, so everyone speculates about possible offenders. Miscreant City agencies are thus shielded from public awareness – and inquiries. It’s laughable that this secrecy is justified as a way to protect whistleblowers. Why must we read US Attorney Press Releases and local newspapers for critical information derived from whistleblowers, when we already pay for a program that supposedly resolves whistleblower complaints? City employees who want action on their corruption complaints now contact the FBI or the media, while the Whistleblower Program mainly shuffles nickel-and-dime grievances.

Obfuscation Breeds Mistrust

One reason that whistleblowers do not trust the Whistleblower Program is that the outcomes of investigations are veiled in secrecy. Identifying Departments where misconduct occurs – or is unsubstantiated - would show that the Whistleblower Program is independent - and serious about cracking down on waste, fraud and abuse. Withholding the names of City Departments where violations occur conceals mismanagement and corruption while denying information and accountability to taxpayers and tipsters. There is no legal obligation to continue this cozy secrecy. In fact, the Whistleblower Program had previously identified investigated Departments, and other county Whistleblower Programs do so, as the Westside Observer reported in 2012.

Given the widespread exposure of corrupt practices in publicly identified City Departments, the suffocating secrecy imposed by the Controller’s Whistleblower Program undermines trust in its investigations and conveys complicity with wrongdoing.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

December 29, 2020

Supervisors' Attempt to Blacklist Neighborhood Newspaper Foiled

by Dr. Derek Kerr

In November 1994, San Franciscans approved the hotly-contested “Official Newspaper” ballot initiative, known as Proposition J. It amended the selection process whereby the City paid local newspapers to publish official City notices. Instead of issuing contracts solely on the basis of the lowest bid, Prop. J also awarded points for a paper’s circulation, cost, and local/minority/woman-ownership. Enshrined under Article IX of the Administrative Code, this Official Newspaper law strengthened an earlier Charter provision authored by then-Supervisor Quentin Kopp. The City Charter, Article XVII, states; “Notice shall mean publication in an official newspaper (as defined by ordinance)…” Accordingly, publication in a newspaper signifies public disclosure.

Currently, the Examiner is the City’s official newspaper. Because some communities are not adequately served by one newspaper, smaller “Outreach Newspapers” are selected by the Office of Contract Administration. Eleven such newspapers were granted contracts for $3,636/year apiece, for a total of $40,000 annually, to publish City notices by Community and Neighborhood Outreach Advertising. Community Outreach refers to ethnic communities while Neighborhood Outreach serves mixed neighborhoods. These include; Small Business Exchange for the Black community; El Reportero for the Hispanic community; World Journal SF and Sing Tao Daily for the Chinese community; Bay Area Reporter and San Francisco Bay Times for the LGBT community; Marina Times for the Marina/Cow Hollow/North Beach/Chinatown neighborhoods; Potrero View fr the Potrero Hill/Dogpatch/Mission Bay/Eastern SoMa neighborhoods; Richmond Review for the Richmond District; Sunset Beacon for the Sunset District; and Noe Valley Voice for the Noe Valley/Diamond Heights neighborhoods. Their contracts must be approved by the Board of Supervisors.

Cancel Culture Strikes the Marina Times

At the 12/1/20 Board of Supervisors meeting (at 51 minutes), the routine approval of these contracts was upended when Supervisor Dean Preston made a Motion to strike the Marina Times from the approved vendors. Why? Preston accused the Marina Times of being “an entity that has proven time and again that they are a mouthpiece for disinformation, doxxing public officials, and personal attacks. I consider them on par with the likes of Breitbart News and Tucker Carlson in serving to the public fact-free and often hate-filled propaganda.” Preston cited this 6/8/20 Marina Times tweet;
"Do you have a child @DeanPreston? If so, suppose that’s child was kidnapped, raped, and killed like Polly Klaas. Would you want the police to respond to your call? Would you want your child’s killer in prison? If you abolish prisons you’re OK with that killer doing it again?"

This was a retweet from Marina Times editor Susan Dyer Reynolds to Preston’s “Defund police. Abolish prisons.” tweet. Preston complained that Reynolds also issued the hashtag “PrestonsPurge” that he took “as a threat to my family.” Reynolds states she was merely referring to the dystopian film “The Purge” where policing stops and mayhem ensues. Coloring this kerfuffle was Reynolds’ November article “Horror in the Haight,” amiably subtitled; “Supervisor Dean Preston has made life in the Haight a living hell.”

Supervisor Hillary Ronen chimed in; “My basic standard for journalism is a respect for truth and facts. Sadly, there have been several instances where the Marina Times has been presented with facts that prove their politically-based assertions as incorrect and they refused to retract their statements…the Marina Times is doing a disservice to those neighborhoods by becoming a purely propaganda outfit that presents lies as facts.” Ronen does not represent the “disserviced” Marina District, and did not specify the purported lies at issue. The Westside Observer requested relevant examples from Ronen, and awaits her response. Ronen also asserted that the Marina Times “goes beyond the pale” because it “attacks specific groups based on their identification or based on their politics” - without examples. Notably, the Marina Times had critiqued Ronen as a “hypocrite” for buying into a TIC from which the previous tenants had been evicted or bought out, then writing legislation to prohibit such evictions.

Supervisor Aaron Peskin, who pens a column for the Marina Times, realized that “a much larger issue of public policy” was at play, as well as the First Amendment. Peskin advocated for a revision of Prop J, and asking an unbiased 3rd party to weigh in on contract cancelations for “not OK speech,” rather than doing so based on the displeasure of elected officials. Supervisor Ahsha Safai similarly grasped the policy and freedom of speech implications of penalizing the editorial views of contracted publications. He added that the roster of publications did not meet the City’s “racial equity” goals, and also favored revising Prop J.

Supervisor Catherine Stefani, who represents the Marina District and also writes monthly column for the paper, vehemently opposed the contract cancelation as a violation of the First Amendment, and a “knee-capping of local journalism” in a time of intense economic distress that would deprive Marina residents of access to City notices. She argued that the Board should “protect local journalism even if we don’t like what they say.”

Supervisor Walton countered that refusing to dispense taxpayer funds to a newspaper did not prevent it from publishing or expressing First Amendment speech. Incidentally, he too was scorched in this Marina Times tweet;

"Oh it gets much worse. Tips rolling in from people who say Walton is “100% about kickbacks.” And that’s what the @SFWater Community Benefits program is all about. @AECOMgets a big contract and then writes millions in checks to “nonprofits” like YDC run by Harlan’s cronies."

Ultimately, only Supervisors Peskin, Safai, Stefani and Mandleman voted against dumping the Marina Times contract. Its fate was continued to the December 8th meeting.

Meanwhile, the Board received a cautionary letter from First Amendment attorney Karl Olson on behalf of the Marina Times. It reminded the Supervisors of the 1964 landmark New York Times v. Sullivan Supreme Court decision that emphasized our; ”profound national commitment to the principle that debate on public issues should be uninhibited, robust, wide-open, and that it may well include vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials.” It was a helpful warning because retaliators tend to justify their reprisals as remedies to eradicate pathogens.

 At the December 8 meeting (at 31 minutes), Supervisor Preston selectively cited portions of the Society of Professional Journalists’ Code of Ethics then claimed that the Marina Times had “repeatedly degraded unhoused populations (as) drug-addicted, sexual predators, child molesters; much of it is really gross.” Hyperbole aside, Preston failed to mention the Marina Times’ investigation and promotion of innovative housing for the homeless. Nonetheless, the 7 censorious Supervisors capitulated and a unanimous vote approved the Marina Times contract.

Griping about a Muck-Raking Editor

The target of the Board’s ire is Susan Dyer Reynolds, the feisty editor of the Marina Times since 2002, and co-owner since 2006. She studied Journalism at San Jose State University and has pursued Investigative Journalism since 2009. Along with articles on food and animals, she authors an aptly-titled “Reynolds Rap” column. These “raps” are always interesting, adequately substantiated, and sometimes fiery, within the bounds of adversarial journalism. Importantly, she boldly criticizes failing progressive policies and City Family players of all stripes. Because she is outspoken and willing to channel the outrage of her sources, she draws tips. Her fearlessness attracts whistleblowers whose complaints to City agencies are often met with retaliation - or burial in coffins of confidentiality. Her seemingly inflammatory articles about the corruption surrounding former DPW boss Mohammed Nuru and SFPUC’s Harlan Kelly now seem prescient. Apart from her monthly column, the Marina Times’ content runs from staid to demure.

However, Reynolds also helms the Marina Times’ Twitter account. That’s where her critiques become more edgy - without the context and substantiation of her print articles. For example, her tweet about the aforementioned Board meeting portrayed Supervisor Ronen as “a hysterical drama queen at pretty much every meeting, crying her crocodile tears,” adding “They’re all hypocrites.” Such jabs could be delivered via a personal Twitter account rather than using the Marina Times banner.

Why it Matters

A majority of our Supervisors sought to be the arbiters of Journalism, truth, and facts. They almost blacklisted a neighborhood paper - one that most did not read - because they disliked its editor’s views. A similar dynamic fueled the Board’s shameful 2012 purge of the Sunshine Ordinance Task Force. Speech that hurts feelings or contradicts beliefs is not the same as illegal threats to life and limb. The conflation of these affronts in today’s Cancel Culture - and by our Board of Supervisors - magnifies personal or political slights into existential threats.

Determining what publications get paid to distribute City notices should be based on voter-approved criteria set forth in the Administrative Code and applied by the Office of Contract Administration. If the Board wants to add undesirable journalistic practices to those criteria, let them go back to the voters with a legally-vetted revision of Prop J, then alter the newspaper contracts accordingly. Otherwise, dumping qualified but disfavored Outreach Newspapers is not only a breach of contract but also a type of collective punishment. The irritating newspaper loses City funds, but the community it serves loses access to City notices.

The danger is that challenges to official narratives get labeled “hate-filled propaganda,” thereby shutting down complaints about, and inquiries into, government corruption and incompetence. After the Marina Times called out City Hall sleaze and lapses, it faced a vendetta for views considered rude or wrong by some Supervisors. Hence, the Board’s plan to update Prop J by excluding icky journalism is worrisome. Besides, Supervisors already have bully pulpits from which they can gainsay disagreeable claims. Obviously, local newspapers do not have a right to libel or to receive taxpayer funds. But they are entitled to contract decisions grounded in policy and budgetary imperatives. Basing these decisions on Supervisors’ preferences is perilous for press freedom. Diagnosing journalistic malpractice is best left to journalists and courts - not politicians.

Acknowledgement: Thanks to Joe Kokura at SFist for thorough, breaking coverage of this story.  

Editor's Note Supervisors Preston and Ronen have, since the incident, issued a Joint Statement from Supervisors Preston and Ronen on City Advertising in The Marina Times.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

December 20, 2020

Who Benefits from Green “Benefit” Districts? 

GBDs — privatizing basic City services

by John Hooper and Mark Sullivan 

Property owners in San Francisco are generally under the impression that their property taxes pay for basic government services such as public safety (Police and Fire Departments); clean streets and sidewalks (Public Works); maintenance of our parks (Recreation and Park Department) and services to help homeless people (Department of Homelessness and Supportive Housing).  

In spite of an enormous budget ($13.7 Billion this fiscal year), the City has sought to hand off many of these responsibilities to the private sector for several years. A key mechanism whereby City officials “privatize” basic government functions is to fund the promotion of Commercial Benefit Districts (CBDs), Business Improvement Districts (BIDs) and, more recently, Green Benefit Districts (GBDs). San Francisco residents who have been following DPW’s Mohammed Nuru corruption scandal and SF Parks Alliance’s questionable tactics should give special scrutiny to this intentionally obscure scheme that promotes GBDs.

Establishing GBDs requires special elections and special campaigns.

First, the Mayor's Office of Economic and Workforce Development (OEWD) and the Department of Public Works (DPW) fund aggressive campaigns to convince business and residential property owners to assess themselves by establishing “benefit” districts to pay extra for basic services. The City’s message is that San Francisco can no longer be counted on to provide basic government functions. These benefit district campaigns, paid for with tax dollars, undermine the public's faith in the City's ability to perform even the most basic government functions, and they confuse the lines of responsibility and accountability. There is still no plausible explanation why local crytocurrency billionaire Chris Larsen has distributed hundreds of surveillance cameras to Benefit Districts without City oversight and perhaps contrary to City ordinance. A New York Times report concluded: "San Francisco is unique in that the cameras are not being installed and monitored by the police but by private citizens, and it is unique in that one person is paying for so much of it."

Grants and Contracts Second, to convince residential property owners to set up GBDs, public funding via OEWD grants and contracts flows to non-profits SF Parks Alliance and Build Public which conduct the day-to-day campaigns. Working through a non-profit is a convenient way to hide the details of how public funds are spent.

Weighted Voting And third, the City uses weighted voting in the required special elections to set up “benefit” districts. Large property owners have greater voting power than small homeowners. And the City often owns enough property in a given neighborhood to tilt the election outcome.

Pay-to-Play: Let the Games Begin!

Once a “benefit” district is formed and the assessments pour in, private firms are hired to provide security, clean the sidewalks and serve as homeless “ambassadors.” These contracts create opportunities for cronyism. The disgraced former head of DPW, Mohammed Nuru, was personally involved in promoting the GBD concept in various neighborhoods. Early on, a selling point was that Benefit District managers would gain better access to DPW and City services. Access turns up because Benefit District managers tend to be former City employees and political staffers. Former unsuccessful Supervisorial candidate Julie Christiansen became Director of the Dogpatch GBD, the only GBD in existence. Public Works also pays a full-time employee - Jonathan Goldberg – as its Green Benefit District Program Manager. Goldberg assists in the startup of benefit districts and persuades residential property owners that they need a surcharge on their property tax if they want “enhanced” basic services.

City employees are forbidden by the Campaign & Government Conduct Code from influencing elections. In reality, City agencies place their thumbs heavily on the scale, using taxpayer dollars to fund City staffers to promote benefit districts, and by funding non-profits to influence the election process while obscuring the City's role. The City Attorney was alerted to this problem in April 2019, but showed zero interest. Finally, after Mohammed Nuru was arrested by the FBI on federal corruption charges, City Attorney Herrera subpoenaed the SF Parks Alliance, and organizations that donated to the Parks Alliance, seeking the very information concerned citizens have been requesting for almost two years.

GBDs defeated in residential neighborhoods

Public funding to promote GBDs originally came through Public Works and, more recently, via the Mayor's OEWD and was then contracted out to SF Parks Alliance. Yet, GBDs have been defeated in almost every residential neighborhood where they have been promoted, including the Inner Sunset, Golden Gate Heights, the Haight, and most recently in the Dolores Park neighborhood where a divisive two-year effort has been suspended.It appears that DPW and OEWD paid Parks Alliance some portion of a $156,984 contract to serve as foot soldiers in the most recent failed campaign. Property owners in these areas have questioned the City-funded lobbying; "Don't we already pay property taxes to provide for policing, street cleaning and park maintenance?” But the City and SF Parks Alliance have blocked all citizen attempts to get invoices through public record requests, so the exact amount of public money spent is not known. Citizens have a right to know how their dollars are spent, a right protected by California's Brown Act and San Francisco's Sunshine Ordinance.

SF Parks Alliance a Central Participant

SF Parks Alliance has been at the center of recent undemocratic efforts to form GBDs and has been paid by the City to run these campaigns to privatize City services.The contract between the City and Parks Alliance for the failed effort in the Haight (known as the Greater Buena Vista GBD), came to $221,000. The total cost of the effort in the Dolores Park area is at least $156,000. SF Parks Alliance routinely used taxpayer dollars to set up websites, conduct biased public meetings, pay for promotional mailers, and run petition drives without a time limit in preparation for special elections. Since votes are weighted by the size of the property owned, large property owners, often City-owned properties in targeted neighborhoods, can force less wealthy neighbors to join a "benefit" district.

Developers PAC? Of special interest, real estate developer Michael Yarne of Build Inc. originally convinced the City to authorize GBDs while he worked at OEWD under Mayor Newsom. Yarne later started a non-profit called Build Public, doing business as Place Lab, and which then merged with SF Parks Alliance where he sits on the Board. The SF Parks Alliance Board now includes another major real estate developer, Emerald Fund's Oz Erickson. At the same time, City funding amounting to millions of dollars started pouring into Alliance coffers

Sunshine Please!

For the past two years, neighbors from different areas of the City have testified before the Sunshine Ordinance Task Force (SOTF) to obtain records about the relationship between DPW, OEWD and SF Parks Alliance in promoting residential assessment districts using taxpayer dollars. Detailed information about these attempts can be obtained by searching the SOTF website for Files 19061, 19062, and 19032. The SOTF has been repeatedly stonewalled by OEWD and DPW, yet has taken little action on this issue. Non-government organizations like the SF Parks Alliance assert that they are not bound by the Sunshine Ordinance. Now that Public Works and the SF Parks Alliance find themselves at the center of a government corruption probe, there may be hope that the SOTF will find a way to help concerned citizens get to the bottom of this matter.

Drew Becher, CEO of the San Francisco Parks Alliance, expressed shock at the Controller's findings. "Like everyone, we were outraged to learn of the public corruption in our local government,” Becher said, in a statement. “We did not benefit in any way nor had any control over the donations that Nuru and Public Works solicited and directed to the sub-account, as the report states. We are a trusted partner to many community groups and city departments and welcome any and all actions that bring more transparency and oversight to ensure the public’s trust."

This deployment of public funds and City employees to set up assessment districts which pay private companies to carry our basic government services has not yet been fully exposed.

Think your taxes pay for City services? That was then — this is now.

San Francisco activists John Hooper and Mark Sullivan were assisted by Dr. Kerr in this report.

November 20, 2020

Persistent Sleaze in the “City Family’s” Contracting Schemes

“You pay to play here…We’re the best at this game.”

So boasted Zula Jones, a Human Rights Commission (HRC) Compliance Officer in 2012. Fortunately, she solicited an FBI agent posing as a developer. Her advice was echoed by former HRC Commissioner Nazly Mohajer who upped the recorded brag; “I’m …uh…Chair of Local Business Enterprise, which basically oversees about 8 billion dollars of contracts that the City gives out.”

The City Family’s contracting oversight has a troubled history. Back in 2000, a White-owned firm paid a Black subcontractor to serve as a front, a phony partner, in order to get a City job that required minority participation. Zula Jones was then indicted for corrupting the HRC’s certificaton of sketchy minority contractors, but those charges were dropped. Tellingly, Jones’ retirement party was held at the home of Harlan and Naomi Kelly; the Public Utilities Commission (PUC) chief and City Administrator, respectively. Contracting sleaze persists, per the latest federal investigation of the Department of Public Works (DPW) - and now the PUC. Recently, recycling company owner Florence Kong pled guilty to bribing DPW’s Mohammed Nuru for contracts. As her lawyer explained; “She learned how to be successful from local leaders who advised her ‘how things worked in San Francisco’.”

The cost of corruption extends beyond self-enrichment at public expense. Because corruption is risky, corrupt persons protect themselves by marginalizing or driving out ethical employees. For safety, lackeys are recruited and rewarded instead. Similarly, because competent employees pose threats to the unqualified, they face displacement. A self-reinforcing cycle takes hold: honesty and proficiency deteriorate as self-dealing and ineptitude flourish. The bad drive out the good. In the realm of City contracting, grubby practices repulse ethical vendors, thereby depriving the public of quality, fairly-priced services. As corruption becomes the norm, not practicing corruption becomes a liability, thus selecting for unethical vendors.

Civil Grand Jury Forewarnings

This corrosive dynamic wasn’t addressed in the Controller’s follow-up report on the tainted DPW contracting practices unearthed by the FBI. However, the 2014-15 Civil Grand Jury report titled “San Francisco’s City Construction Program: It Needs Work” did. And, it identified “inconsistent controls” and “a lack of independent oversight” - now rediscovered by the Controller. The Jury warned about contractors being selected solely on the basis of lowest bids – without considering past performance. Poor performers would low-ball their bids, beat the competition, then file “lucrative contract change orders” to recoup their profits. The Jury found that; “…some major construction firms will not participate in…a process where the client does not choose a contractor based on past performance or the quality of the contractor’s work.”

The Jury also looked at the City’s Local Business Enterprise (LBE) Ordinance. The precursor to this affirmative action program, the “Minority/Women/Local Business Enterprise Ordinance” was launched in 1984 to counter discrimination that had virtually excluded minorities and women from City contracts. Abuses soon emerged. In 1984, Charlie Walker aka “The Mayor of Hunter’s Point” was convicted of defrauding  the program and served 3 years in prison. Years later, his trucking firm was recertified by the program he had bilked.

 While helping minority contractors, the earlier LBE Ordinances side-lined non-minority firms, prompting a lawsuit. In the 2004 Coral Construction v. CCSF case (Sup. Ct. No. 421249), the Court ruled that the race and sex-based preferences resulted in a “denial of equal treatment.” That violated California Proposition 209. The State Supreme Court agreed. (Note: This November’s Prop 16 aims to overturn Prop 209).

The current LBE program, enshrined in section 14(B) of the Administrative Code, muted the race and sex-based preferences but the affirmative action intent remains. It provides bid discounts, set-asides as well as financial and technical assistance for small, minority and women-owned businesses. It also mandates LBE participation in some City contracts. This helps small disadvantaged businesses compete effectively while also boosting the local economy.

These laudable diversity goals still had down-sides. The Jury found that LBE regulations were frustratingly complex and discouraged quality contractors. “Some contractors are daunted by the City’s LBE requirements, since some LBE firms…lack construction management and administrative skills.” To obtain City jobs, they felt obliged to use LBE subcontractors whose competence was sometimes marginal. When LBE subcontractors failed to deliver, the resulting delays and cost overruns damaged the primary contractors’ reputations. The Jury concluded; “This has led to a reduction in the number of contractors willing to bid on City business.”

Yet, bad actors weren’t penalized. The Jury quoted an audit by the City Services Auditor; “…because the City does not require evaluations of contractors’ performance…poor performing contractors – even contractors incapable of performing the work on which they bid – can secure additional City contracts.” For example, one subcontractor received 59 non-compliant notices for shoddy work on a $14 million bridge contract at the Airport – but wasn’t debarred. Debarments remain exceedingly rare. One reason is that the City addresses failings by education rather than enforcement. Another is that the LBE Ordinance doesn’t require performance metrics. And it’s run by the City Family.

Construction Management Free-for-All

Nowadays, the Contract Monitoring Division (CMD) of the General Services Agency certifies LBEs and ensures compliance with LBE hiring goals. That compliance function previously resided with the disgraced Human Rights Commission. The current CMD Director, Romulus Asenloo, had worked at the HRC and replaced Zula Jones as HRC’s Compliance Officer after the 1999 FBI crack-down. When oversight of the LBE was removed from the HRC, Asenloo was assigned to continue it under the CMD. City Administrator Naomi Kelly oversees the CMD. As of July 2020, there were 1,409 LBE’s in its database. Last year, LBE’s received $247 million in City contracts, or 25% of the total awarded. The CMD highlights its “comprehensive wrap-around Contractor Development Program,” saying little about performance standards.  

Some City contractors (not named to prevent reprisals) say that the LBE program’s certification and enforcement operations favor City Family insiders. For example, although LBE contractors are limited as to how much they can earn from City work, some LBE outfits are allegedly allowed to exceed those income limits. That deprives non-LBE contractors. Some view the LBE program as a patronage network that recycles retiring City employees - including former Willie Brown “special assistants” - into post-career sinecures with, or as, City contractors. In return, these former City employees provide access to City department managers.  

Local Business Enterprise Construction Managers

A pointed concern involves the qualifications of LBEs in the Construction Management Field. These businesses provide coordination, planning and public relations services for big construction projects. It’s a profitable field that seems to attract politically-connected individuals who get certified with minimal construction credentials. However, per Government Code Section 4525(e), Construction Managers for public works projects must be licensed architects, engineers or general contractors. Surprisingly, most who work for the City lack those required licenses. For example, the City’s database shows 82 certified LBE Construction Management firms. Of these, just 21 have active licenses per the Contractors State License Board. Another 5 have expired licenses, 1 was canceled and 1 is inactive. So, 54 out of 82 (66%) skipped State licensing altogether. We asked the CMD for an explanation and await a response. Meanwhile, some non-LBE Construction Management firms with solid credentials and performance records say they are passed over. What’s needed is an independent review of the qualifications and performance of LBE Construction Management outfits - and whether capable, licensed non-LBE firms are unfairly kept out.

SFPUC’s Community Benefits Program

As the August 2020 Westside Observerreported, complaints of PUC skullduggery spurred the US Attorney to issue subpoenas for all contracts approved by PUC boss Harlan Kelly - and his deputy Juliet Ellis. Ellis pioneered the Community Benefits Program (CBP) that induces contractors to donate a percentage of their contract revenues to community service non-profits. Some qualified contractors object to participating as a matter of principle. They want to be judged on their professional qualifications and track record, not for complying with what they view as pay-to-play philanthropy. 

On October 2nd, Juliet Ellis announced the departure of 3 top executives. It was spun “In the spirit of embracing change.” Ronak Okoye, Director of the Community Benefits Program quit for a job with SPUR in Oakland. Yolanda Manzone, her Deputy Assistant General Manager and a former Community Benefits Program director, resigned. Another “retired.” No mention of the FBI investigation roiling the PUC - and its Community Benefits Program.

The Community Benefits Program may suffer if the “tone at the top” allows favoritism. In 2014, Juliet Ellis was fined $5,000 by the Ethics Commission for steering a no-bid PUC contract to a non-profit where she was employed. In a January 2018 email titled “Fwd: Pumps from China”, Harlan Kelly personally notified fraud-charged contractor Walter Wong about a water pump needed at Treasure Island. Kelly disclosed the technical specifications for the pump. Why would a busy CEO get involved in such mundane tasks? A former City engineering contractor insists that such pumps are readily available on the open market from local vendors. If so, why order one from China through Wong?  SFPUC sources previously informed the Westside Observer that Kelly circumvented his own compliance staff and payment protocols by enabling a City contractor to install grease traps for 3 Chinese restaurants, owned by a politically-connected individual who persistently violated PUC environmental regulations. In October 2018, that claim was investigated by the Whistleblower Program…and “closed.” 

Lastly, emails from April 2019, viewed by the Westside Observer, show that Kelly urged SFMTA’s then-Director Ed Reiskin to consider hiring Lance Jackson to manage the Van Ness Improvement Project. By July 2019, Jackson was hired. Jackson is an executive with the Pasadena-based Construction Management firm SGI that was embroiled in a pay-to-play scandal in San Diego. Jackson had also been featured in a 2015 conflict-of-interest controversy due to his dual role of working for both the Oakland School District and for SGI. It’s unclear whether Jackson’s expertise in managing school construction projects applies to major infrastructure projects like the Van Ness venture. Hopefully, Kelly’s referral of Jackson for an SFMTA job complied with the open selection process required for federally-funded projects.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

October 20, 2020

Déjà vu: Controlling Pay-to-Play Donations

by Dr. Derek Kerr

The 9/24/20 “Public Integrity Review” issued by the Controller’s Office examined the pay-to-play underside of non-profits that collect donations for City departments. As summarized in the October Westside Observer, some 33 of the 56 City departments rely on such “Friends of…” organizations to raise funds for unbudgeted expenses. The scandal-plagued Department of Public Works (DPW) under former Director Mohammed Nuru used the SF Parks Alliance as its non-profit benefactor. Nuru asked DPW contractors and permit holders to donate money to DPW accounts held by the Parks Alliance.

 Virtually all the nearly $1 million raised came from 15 entities that did business with DPW. Nuru then directed how that money was spent – mostly on staff appreciation events and services delivered by his friends and associates. To prevent pay-to-play dynamics, the Controller recommended, in that September Public Integrity Review, that the City prohibit department heads and employees from soliciting donations from those they regulate or do business with unless authorized by the Board of Supervisors. That recommendation triggered a case of déjà vu.

In October 2009, former Supervisor Chris Daly proposed an Ordinance that prohibited department heads and employees from steering donations to “Friends of…” non-profits that raised funds for their departments – if the donors had business with their department. The impetus for Daly’s proposal was that officials in the Mayor’s Office allegedly steered donations to “Friends of Planning” from entities that had business before the Planning Department.

Daly’s bill faced opposition from several City departments that used their ”Friends of…” allies to offset budget cuts imposed after the 2008 Recession. The non-profits themselves also objected. They feared that Daly’s plan would have a chilling effect on donations and public-private partnerships. Interestingly, the moderate wing of the Board, then-represented by supervisors Elsbernd, Alioto-Piers, Dufty, Chu , Chiu and Maxwell tabled the proposal by voting 6 to 5 against Campos, Avalos, Mirkarimi, Mar and Daly. Eleven years later, the Controller has recommended what Daly wanted.

Dr. Derek Kerr is a San Francisco investigative reporter Contact: watchdogs@westsideobserver.com

October 20, 2020

Inside City Hall’s Web of Corruption

by Dr. Derek Kerr

Self-dealing, influence-peddling, cronyism and pay-to-play transactions have long-sustained the upper echelons of the City Family. Now that the FBI and US Attorney’s Office are targeting shady City departments, the City’s legal, ethical and financial guardians are scrambling to conduct damage-control investigations.

Early warnings from City whistleblowers and civic watchdogs were usually dismissed or interred. Nothing happened after the Bay Guardian published Friends in the Shadows in 2013, sounding the alarm about conflicted non-profits pouring dark money into receptive City agencies. Even official efforts to tackle soft corruption were repeatedly thwarted. As described in the June 2019 Westside Observer’s Struggle for Sunlight on Dark Money, Commissioners Daina Chiu and Yvonne Lee torpedoed the Ethics Commission’s plan to bring its ‘‘Anti-Corruption and Accountability Ordinance” to the voters.

Controller’s Public Integrity Reviews

On 6/29/20 the Controller’s Office, with City Attorney input, issued its first public integrity review looking at Department of Public Works (DPW) contracting practices. From July 2017 through March 2020, DPW awarded 366 contracts at a cost of $676 million. These contracts are being scrutinized but amazingly, the Controller found that; ‘’No entity is charged with full oversight over citywide procurement.”

Intriguingly, DPW is the only City department that issues construction contracts – without a Commission to approve them. Why is that? Well, the Controller found that when Mayor Ed Lee installed Mohammed Nuru atop DPW in 2011, he uniquely empowered Nuru to approve construction contracts solo. Though known as a rule-bender, Nuru was a reliable team-player. While loyalty trumps integrity at City Hall, someone eventually broke ranks. That enabled the FBI to report that Nuru et al accepted and offered bribes and rewarded cronies with City business.

The Controller’s second policy review focused on the relationship between the DPW and the non-profit SF Parks Alliance. The Parks Alliance functions like the many ‘‘Friends of…’’ outfits that financially support 33 out of 56 City departments. Essentially, these non-City entities are private-sector branches of City agencies. True, they raise philanthropic money for public interest projects that aren’t funded by department budgets. But, they often lack the controls to prevent pay-to-play or money-laundering schemes by private interests. The City can’t impose its own stringent gift requirements on non-City organizations. So, Nuru and company solicited private donations for DPW accounts held by the Parks Alliance then directed how those donations were spent. It was a slush fund, unmoored from City controls.

In the 4.5 years between July 2015 and January 2020, DPW’s subaccounts at the Parks Alliance amassed $990,000 and spent $980,000 – about $18,000 per month. Interestingly, $966,000 of that money was donated by 8 contractors who had received $572 million from DPW plus 7 companies that obtained 218 building permits from the Department of Building Inspection (DBI). One hand washed the other.

Of the $980,000 expended, $720,000 went to selected vendors who provided goods and services largely for DPW employee appreciation events. One such vendor, SDL Merchandising – owned by a DPW employee – received $164,885 for “shirts, caps and merchandise.” There’s no record of the quantities provided for this phenomenal expense. Other Nuru associates benefitted. Restaurateur Nick Bovis got $25,327 for catering while permit-expediter and contractor Walter Wong collected $41,673 for event set ups.

The other $260,000 of the $980,000 spent went to 164 individuals, mostly City employees. They were reimbursed by the Parks Alliance for their out-of-pocket expenses at DPW events. For example, Sandra Zuniga, Nuru’s partner and former director of the Mayor’s Office of Neighborhood Services, was reimbursed $10,464 for her employee appreciation and team building efforts. Three other DPW employees received more than $10,000, one of whom collected almost $60,000. This largesse spread upward to City Administrator Naomi Kelly who oversees DPW, and downward to rank and file workers. The 2019 holiday party for 350 DPW and City Administrator staff cost $40,000, of which $33,000 was solicited from folks doing business with DPW.

Isn’t it Illegal?

The Administrative Code requires City departments to report gifts to the Controller, obtain Board of Supervisors’ approval to accept and spend gifts worth more than $10,000, and annually publish the donor names, the types of gifts and their disposition. The Sunshine Ordinance requires disclosure of the true source of outside funds worth more than $100, as well as any financial interest the donor has with the City. DPW’s Statement of Incompatible Activities prohibits employees from accepting gifts in exchange for doing their jobs. Trouble is, laws don’t enforce themselves and “loyal” employees don’t report violations.

Unlike elected officials and commissioners, appointed department heads were not required to report “behested payments.” They could covertly ask contractors to donate to non-City organizations that supported their departments. Further, department heads were not required to disclose when donors to their non-City affiliates had contracts or permits from their departments. The Controller’s report identified these loopholes and on 9/24/20 the Mayor issued an Executive Order imposing gift reporting requirements on department heads. Yet the Controller’s report admits that the core failure was “the tone at the top,” namely management’s “disregarding of ethics and gift laws.” When bosses and their entourages are outlaws, tighter regulations are weak remedies.

As private entities, non-profit “Friends of…” organizations operate beyond the City’s purview – even though some receive City funding. For example, the Parks Alliance received $11.9 million from the City between 2015 and 2020. The Controller’s report emphasizes that if funds are spent for City purposes, non-profits that don’t publicly report donations, or that accept anonymous donations, are violating the Sunshine Ordinance. So what? While the City has a Sunshine Ordinance Task Force to adjudicate complaints, it cannot enforce compliance. That responsibility lies with the Ethics Commission. And Ethics habitually dismisses Sunshine violations referred for enforcement by the Task Force.

When did the City Guardians Know?

Now that the Feds have pounced on the City Family, the Controller pleads for better rules and enforcement .The Ethics Commission appeals for virtual public input to find “ways to strengthen San Francisco’s government ethics laws.” The City Attorney’s Office vows to “lead when it comes to clean government” as it follows the course set by the Feds by; canceling a $171,000 contract for portable toilets unfairly awarded to a Nick Bovis company, barring former DPW manager Balmore Hernandez’s engineering firm AzulWorks, Inc. from City work for 5 years for bribery, releasing 4 city employees and officials including DBI Director Tom Hui and DPW boss Mohammed Nuru, and issuing 24 subpoenas to companies implicated in schemes - uncovered by the FBI. Better late than never, some say. To be fair, this January Dennis Herrera did sue former Building Inspection Commission President, Rodrigo Santos, for a $420,000 check fraud scheme without apparent FBI guidance.

Still, the public needs to know why our own watchdog agencies missed the rot. Tips pertaining to the scandal have flooded into the offices of the Controller and the City Attorney since the Feds announced their charges in January. What about corruption tips submitted before the scandal broke?

The Controller’s Whistleblower Program, the Ethics Commission’s Enforcement Division and the City Attorney’s Public Integrity Team should audit all the complaints they received over the past 5 years. Then, disclose how many pointed to the corruption that festered undisturbed until the FBI and the US Attorney led the clean-up.

Dr. Derek Kerr is a San Francisco investigative reporter Contact: watchdogs@westsideobserver.com

October 2020

Audit's Unanswered Questions:

Does the Ethics Commission Fight Corruption?

by Dr. Derek Kerr

Expectations ran high after voters approved Prop K in 1993, launching the City’s Ethics Commission (Ethics). Finally: an official agency to counter corruption in government and political campaigns. But between intent and execution lurks a shadow – human nature. So, the quest for good government has vied with the pursuit of self-interest. Scandals and failings have repeatedly dashed public expectations. Civil Grand Juries pushed to strengthen Ethics in 2005, 2011 and 2014. Lapses prompted initiatives by the public, the Board of Supervisors, and the Commission itself to amend the Campaign & Governmental Conduct Code and redefine Ethics’ responsibilities.  

Curiously Coincidental Timing

One way that governments blunt the impact of scandals is to show that remedial measures were already underway. On 11/5/19 Supervisor Norman Yee introduced a Motion (File No. 191133) requesting a performance audit of the Ethics Commission by the Board’s Budget & Legislative Analyst (BLA) – “as a priority.”  No explanation for the “priority.” Meanwhile, the FBI had been investigating corruption at City Hall.

On 1/15/20, the FBI filed a sealed Criminal Complaint in US District Court alleging that former DPW chief Mohammed Nuru had pursued 5 corrupt “schemes” since 2018. The following day, on 1/16/20, the Board’s Government Audits & Oversight Committee approved Supervisor Yee’s audit request. The rationale, as stated by Supervisor Gordon Mar, was to check if recent changes in campaign finance and lobbying laws were being addressed and to improve the timeliness of investigations and enforcements, given “a political landscape like the one we are in.” He added that “it seems as though the lowest hanging fruit are the targets of investigation rather than the more sophisticated operations.” Neither the “more sophisticated operations” nor the current “political landscape” were described.

 On 1/21/20 the FBI arrested Nuru. After promising to keep mum about the FBI’s ongoing probe, Nuru alerted his boss, City Administrator Naomi Kelly. Soon, everyone knew – including FBI wire-tappers. On 1/28/20, the full Board unanimously adopted Supervisor Yee’s Motion, without mentioning the explosive scandal then rattling City Hall. The Motion cites extraneous and anodyne reasons for the audit, plus the Board’s policy that each City program “be the subject of a performance audit at least once every eight years.”  True, the Buget and Legislative Aanalyst last reviewed Ethics Commission practices in 2012. Still, the audit’s urgency and timing makes one wonder if Supervisor Yee was clairvoyant or tipped off.  

Audit Findings

The BLA’s 81-page “Performance Audit of the Ethics Commission” was released on 8/10/20. It contains 5 findings and 16 recommendations. The recommendations are largely directed at Executive Director LeeAnn Pelham who introduced many upgrades since January 2016. The findings are summarized below;

Assessing Effectiveness and Risks

The Ethics Commission needs to improve the way it assesses its own performance. For example, it hasn’t produced an Annual Report since 2014-15 and lacks consistent performance metrics. While Ethics has set priorities, it hasn’t adequately tracked and reported progress toward reaching its goals.

The risk of violating ethics laws varies among City officials and employees, depending on their jobs. However, Ethics does not tailor its training programs based on risk assessments. Doing so would promote compliance and reduce the need for enforcement measures.

Staffing

Ethics “has never been fully staffed.” Since 2016, it has struggled with a “high vacancy rate” - 19% or about 4.5 vacancies annually. Meanwhile, there have been 15 changes to the Campaign & Governmental Conduct Code that required additional administration and programming. Understaffing is largely due to slow hiring; it takes 6 months to hire a new Ethics employee. Ethics relies on the City’s Department of Human Resources to conduct its hiring – at a cost of $90/hour. Because Ethics lacks the funds to optimize DHR’s hiring, staff shortages persist and impede every program.

Audits

Audits of election campaign committees have taken almost 2 years to complete, thereby reducing their public relevance and hindering enforcement within the statute of limitations. Investigators lack audit training and the Audit Manual is way out of date. Also, Ethics has yet to conduct mandated lobbyist audits.

Investigations

Investigations of ethics violations take “more than two years on average” - actually 29 months. The “preliminary review” of complaints takes 6 months. Then, just 1/3 of complaints receive formal investigations. Because the Enforcement Division opens more cases than it resolves, there’s a mounting backlog.  Long-lingering investigations erode public confidence and the deterrent effect of enforcement.

Whistleblower Protection

The Enforcement Division is responsible for investigating whistleblower retaliation claims. On average, these claims have taken 32 months to resolve. Such delays impair the gathering of evidence and witness testimony as well as the integrity of investigations. Further, Enforcement Division staff lack training in whistleblower retaliation investigations since these involve employment law rather than ethics law.

Ethics veils the outcomes of retaliation investigations. When the BLA reviewed 34 retaliation claims filed over 3 years from 2017 through 2019, it found that 20 were dismissed due to “insufficient evidence”, 2 were withdrawn, and 12 were pending. None were substantiated. Importantly, the BLA recommended that staff “…report on whistleblower retaliation case outcomes to the Ethics Commission on an annual basis, including reasons for dismissals and case closures, to enhance transparency of these investigations.”  

Unmentionables

The audit fails to mention that no retaliation claims have ever been sustained by the Ethics Commission. That startling fact has been hidden by reporting only that cases are “dismissed” or “closed.” The public is never told if a case was substantiated, partially-substantiated or not substantiated. Yet the substantiation rate is an important indicator. It reflects the effectiveness of investigative processes as well as quality of the complaints submitted.  Per the 2020 Hotline Benchmark Report by NAVEX Global, a risk and compliance management firm serving 3,255 organizations, the global substantiation rate for whistleblower retaliation claims was 23% in 2019. And in the 9 years from 2011 through 2019, the average substantiation rate was 20%. Compare that with 0% for more than 100 retaliation claims handled by our Ethics Commission since 1995.

The Westside Observer analyzed Ethics’ shifty history of dismissing all whistleblower retaliation complaints back in June, September and October of 2013. Sadly, Ethics remains a dead-end for mistreated whistleblowers. Still germane is former Ethics Commissioner Joe Lynn’s 5/7/09 Fog City Journal revelation that Ethics investigations of Sunshine Ordinance complaints “uncover willful violations only if the respondent decides to confess.” That also explains why retaliation claims are DOA. This failure to enforce the City’s Whistleblower Protection Ordinance renders it meaningless. It also makes it deceptive – a trap for naive complainants. Non-enforcement gives retaliators a green light to pursue whistleblowers without consequences. Ultimately, taxpayers foot the bill when ineffective Ethics investigations force whistleblowers to sue the City.

After the BLA’s call for reporting whistleblower retaliation case outcomes, LeeAnn Pelham produced a table on page 13 of the draft Annual Report.  It lists some outcomes – but not how many cases were substantiated. Withholding that number conceals a zero substantiation rate. Ethics hasn’t explained this shady track record, apart from implying that every retaliation claim is unfounded. More likely, Ethics investigations are superficial and deficient. Too, investigations are tainted when under-trained and over-worked Ethics staff seek counsel or coaching from City Attorneys who are sent copies of complaints.

Whistleblower claims are often denied after consulting with City Attorneys. This practice arouses conflicts of interests. City Attorneys strive to minimize the City’s exposure to civil liability – no matter how damning the facts. They have a duty to defend officials and employees accused of retaliation. They justify their work as protecting taxpayer funds from greedy plaintiffs. Invariably, protecting City officials and the public purse takes priority over protecting whistleblowers. In retaliation cases, relying on advice from City Attorneys favors respondents over complainants - and abets reprisals.     

Also absent from the audit is how Ethics must annually bow and scrape before the Mayor’s Office and the Board of Supervisors to fund its budget. Ethics is thus beholden to, if not controlled by, the very folks it supposedly monitors for unethical conduct. Instead of being independent, Ethics is captured. One solution is to fund Ethics the same way the Controller’s City Services Auditor is financed – by a set portion of the City budget. For example, Ethics’ operating budget of $4.6 million could be covered by an automatic 0.04% cut of the City’s $13.7 billion budget, thereby reducing its fiscal dependency on City Hall.

September 2020