Are Progressives Responsible for Our Homeless Inundation?

A review of Michael Shellenberger's “San Fransicko”

by Derek Kerr

“What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so.”   - Mark Twain

•••••••••• January 9, 2023 ••••••••••

Bureaucracies are guardians of the status quo, slow to adapt in the face of failure. Contrarians can bring fresh insights to problems that fester under existing orthodoxies. One such is Berkeley journalist Michael Shellenberger, whose bio includes progressive activism for environmentalism, affordable housing, decriminalizing drugs, and prison reform. Appalled at the spread of homeless encampments, drug overdoses and anti-social behaviors, he conducted a quixotic gubernatorial campaign and wrote “San Fran-sicko – Why Progressives Ruin Cities.”  The book is a carefully researched critique of how West Coast cities address homelessness, crime and civic disorder.

Shellenberger’s central tenet is that the plagues of addiction, homelessness and social disorder are worsening due to progressive ideology and policies. He argues that the phenomenal rise of street homelessness in San Francisco, Los Angeles and Seattle, is unique in the nation and cannot be explained by differences in climate, housing prices or poverty. Poor people in expensive cities seldom end up on the street. They can rely on family and friends for support. But, those in the throes of addiction and mental illness become “disaffiliated” from supporters – a key determinant of street homelessness.

Derailment of Frontier Culture

Like other frontier cities, San Francisco has long embraced bohemianism and libertarianism. But individual freedom was previously tied to a civic spirit. Shellenberger believes that changed in the 1960s “when the progressive left chose to replace the principle of gratitude for charity with an attitude of entitlement.” Defending freedom for victims of mental illness and addiction has brought misery and inhumanity to our streets. He wonders; “What kind of city regulates ice-cream stores more strictly than drug dealers who kill 713 of its citizens in a single year.”

Housing First Ideology

“Housing First” policies provide housing without preconditions – and without reducing overall homelessness. To Shellenberger, the term “homeless” is propaganda. “The word homeless not only makes us think of housing, it also makes us not think of mental illness, drugs and disaffiliation.” The term reflects victimology; “Victimology asserts that victims are inherently good because they have been victimized. It robs victims of their moral agency.”  Assigning victim status to homeless folks draws “rescuers” and even “pathological altruism” whereby rescue efforts enable self-destructive, anti-social ways.

Moreover, the progressive view of unhoused persons as victims of circumstances beyond their control doesn’t explain their widespread refusal of services. Shellenberger cites studies showing that few homeless persons accept shelter after the breakup of encampments. One reason is that it’s much easier to score and use drugs in encampments than in shelters. The City’s permissive attitude toward drug use makes encampments more appealing.

 An example of this phenomenon emerges from data collected at the City’s Tenderloin Linkage Center. Just 1,528 (2.4%) of 124,100 clients accepted shelter and housing services. Although 300 overdoses were reportedly reversed, fewer than 1% of all clients sought drug or mental health treatment. Instead, they sought meals, showers, laundry, food stamps and other basics. Part of the problem is that persons with addiction or mental disorders don’t recognize their impairments. The now-closed Tenderloin Center cost almost $22 million.

“San Fran-sicko” notes that we have more permanent supportive housing per capita than other major US cities. And, these housing sites are magnets for drug use and crime. Yet, our unsheltered population exploded compared to places like New York, Chicago and Miami. Why? Well, those cities provide more shelters. Because Housing First policies divert funds from shelters, there aren’t nearly enough shelters. Meanwhile, prohibitive housing costs guarantee that most homeless will stay unhoused. Shellenberger concludes; “San Francisco leaders have deliberately chosen to leave a significant portion of the homeless unsheltered…”

The flaw in the Housing First dogma is that it offers unconditional housing. It doesn’t require clients to address their mental or drug ailments. Chaos, overdoses and evictions ensue. For example, the City responded to the COVID crisis by unconditionally housing 3,700 homeless persons in vacant hotel rooms. It seemed like a win-win. However, hotels that experienced “extensive damage” from harboring these new guests are suing the City for millions of dollars. Shellenberger shows that when abstinence is required to get housing, success rates are much higher.

Another snag is the Homeless-Industrial-Complex that generates millions for itself, not just the homeless. Further, “Non-profit organizations, funded by taxpayers, turn around and advocate for taxpayer funds, a conflict of interests.” Homelessness keeps these programs going. Plus, non-profits can be problematic. For example, we saw the recent financial collapse of Positive Resource Center & Baker Places and the United Council for Human Services, coupled with double-dipping by a top DPH official.

Harmful Advocates

Shellenberger laments the inordinate influence of homeless advocates like the ACLU and the Coalition on Homelessness. Not only do they stifle alternate solutions but they castigate their proponents. In 2021, Supervisor Rafael Mandelman introduced legislation to require the homeless to stay in shelters or in tents at Safe Sleeping sites. Advocates denounced his plan as “criminalizing” the homeless.

“San Fran-sicko” faults the ACLU for viewing deranged street people as too mentally-ill to be responsible for their actions – but not ill enough to be hospitalized. Defending the right of homeless persons to lie on sidewalks and camp in public spaces, while providing them with tents, syringes, crack pipes and untrammeled access to drug dealers and cheap drugs, has led to more encampments, crime, and open drug use. The end result is that cities tolerate and then normalize anti-social behaviors. Pointing to this outcome triggers accusations of fomenting hatred — even violence — toward the homeless. Shellenberger counters that the violence experienced by unsheltered folks comes mostly from their peers and drug dealers, not from critics of City programs.

While conservatorships could be used to make decisions on behalf of gravely disabled persons, San Francisco has fewer people under conservatorship than neighboring counties – and the number is dropping. As the Westside Observer previously reported, SB-1045, the 2018 “Conservatorship: Serious Mental Illness and Substance Use Disorders” bill (revised by SB-40 in 2019), allowed conservatorship for persons - overwhelmingly meth users - undergoing 8 psychiatric holds per year. As of January 2023, after 3.5 years, just 3 among scores of drug-addled San Franciscans have been conserved, per DPH records. While conservatorships are routinely imposed on people with dementia, the ACLU opposes conserving the mentally ill on civil rights grounds. Shellenberger emphasizes;  “…understanding this, and the power of the ACLU in progressive cities…goes a long way toward understanding the addiction, untreated mental illness, and homelessness crisis.”

The War on the War on Drugs

Shellenberger warns that drug decriminalization, something he previously supported, lowers drug production and distribution costs. The upshot: more availability and use. Laws like Prop 36 from 2000 allowed non-violent drug users to receive probation and drug treatment. But it resulted in more recidivism compared to treatment mandated by drug courts. Similarly, Prop 47 of 2014 reduced penalties for petty crimes. Such crimes increased. In short, “People are not dying from drug overdose deaths in San Francisco because they’re being arrested. They’re dying because they aren’t being arrested.” 

“San Fran-sicko” challenges the progressive view that poverty, trauma and structural racism cause addiction, asking; “why did addiction worsen over the same time period that poverty, trauma and racism declined?” Meanwhile, anti-police sentiments drove legislation and policies that gradually “legalized crime.” Shellenberger notes that San Francisco gives away more needles to drug users than New York City, despite having one-tenth the population. While San Francisco clamps down on vaping, it is strangely permissive of drug and alcohol use in SRO hotels in the name of harm reduction.

Some may feel that Shellenberger is individualizing the drug problem, focusing on drug users while skirting systemic factors like an unregulated and contaminated drug market and the shortage of treatment programs. Not so. He describes in detail the social forces that led to the closure of state mental hospitals, the underfunding of community mental health services, loss of government-funded housing, as well as the decimation of hospital psychiatric beds and Board & Care Homes. Although the 2004 Mental Health Services Act raised $2.4 billion to treat and prevent serious mental illnesses, California has more mentally ill people in jails and on the streets than the nation as a whole. Similarly, San Francisco spends record amounts of money on homeless folks with mental illness and addiction. But the problems grow.

More Stick, Less Carrot

Notably, the money raised by the Mental Health Services Act cannot be used for involuntary treatment. Shellenberger maintains that Medicaid could be tapped to fund more psychiatric hospitalizations. But unlike other states, California doesn’t have a Mental Health Department that could negotiate with Medicaid. He favors the system developed in Portugal where drug possession is decriminalized but users are pressured into massively expanded treatment programs. Likewise, the Netherlands gave up on “helping” addicts. Now, police break up open air drug markets. Violators are fined - and arrested if they don’t pay. Next comes a choice – incarceration or monitored treatment. Because addicts prefer drugs to treatment, they need both “carrot” and “stick” to get clean.

Accordingly, Shellenberger wants a state-funded behavioral health program called “Cal-Psych.” This agency would expand shelters, provide supportive housing on a contingency basis and coordinate the break-up of drug markets. It would develop long-term residential psychiatric facilities, more psychiatric beds in local hospitals, robust conservatorship programs, assisted outpatient treatment, drug courts and diversion into psychiatric care. Funding would come from Medicaid, the Mental Health Act (Prop 63) and recouping money currently spent on non-profits.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer and a member of SPJ-NorCal. Contact: watchdogs@westsideobserver.com

January 2023

Has the City permanently lost another 120 skilled nursing beds?

Laguna Honda’s Settlement Agreement

by Dr. Derek Kerr

•••••••••• November, 2022 ••••••••••

On October 17th, the Gray Panthers and Supervisor Melgar’s Office arranged a ZOOM meeting with City Attorney David Chiu. There were questions about the October 12th announcement of a Laguna Honda Hospital (LHH) Settlement Agreement between the City, the federal Centers for Medicare & Medicaid Services (CMS) and the California Department of Public Health (CDPH). Prime among them was the loss of 120 LHH beds.

Because LHH was decertified by CMS, it must abide by current CMS rules to regain certification. In 2016, CMS mandated that shared rooms have no more than 2 beds. But the 2010 LHH rebuild installed 120 3-bed rooms. These are now forbidden. Converting 3-bed rooms to 2-beds has sacrificed 120 LHH beds.

When asked about recovering these essential Skilled Nursing beds, David Chiu explained; “the Settlement Agreement is silent on the 120 beds.” Why? Well, the matter was not discussed during negotiations with CMS! Chiu alluded that regaining the beds could be “up for discussion” in the future.  When doubts were raised, Chiu warned; “scuttling the Settlement over this (120-bed) issue would be wrong.”  Why “wrong”? Well, his staff had done their best through very tough negotiations.

Suspiciously, Chiu’s Deputy Attorneys, Henry Lifton and Julie Van Nostern declined to share a copy of the Settlement. Days later, in a self-exalting email titled “Great News for Laguna Honda!” - “Paid for by David Chiu for City Attorney 2022” - Chiu touted the favorable aspects of the Settlement. So, why withhold the actual document if it contains “great news?”

At the October 18th Health Commission meeting (at 0:8:25) Interim LHH CEO Roland Pickens shared selected items from the Settlement. Then the Commissioners resorted to a Closed Session with City Attorney Chiu before announcing their approval of the Settlement and its referral to the Board of Supervisors. Meaningful public input was impossible as no outsiders had seen the Settlement. And yet, section 41 of the Settlement declares; “All Parties consent to the public disclosure of this Agreement, and information about this Agreement.” Days later, through a public records request, the Westside Observer obtained a copy.

Money Exchanged for Obedience

The 23-page “Settlement and Systems Improvement Agreement” extends CMS payments to LHH until November 2023 - about $200 million over the year. Also, it halves the $408,000 in fines levied against the hospital to $204,000. Thankfully, it postpones mandatory patient discharges until February 2023. (Among 57 prior mandated discharges, 9 patients died within days or weeks, resulting in a pause and a CDPH investigation.) If LHH achieves recertification before February 2023, it won’t have to depopulate its wards. And if it makes progress in correcting its deficiencies, mandatory patient discharges may be postponed further by CMS. Apparently, CMS recognizes that LHH is too big to close and its patients too fragile to relocate. That’s the good news.

In exchange, the City will dismiss its lawsuit, appeals and forceful claims that CMS had “improperly” decertified LHH. The City will absorb City Attorney’s fees.

The bad news is that CMS did not modify any of its 26 deficiency citations against LHH. Further, LHH “will not admit new residents unless LHH obtains Medicare or Medicaid certification.” That’s a tighter yoke than CMS simply refusing to pay for new admissions, as it’s done for 7 months. Meanwhile, San Franciscans needing skilled nursing care at LHH are being denied.  Too, the DPH Flow Project, with its obligatory admission of unstable patients from SFGH, is blocked. As part of its Revised Closure Plan, “LHH will continue conducting thorough individual assessments of residents for the purpose of determining appropriateness of transfer or discharge.” But, mandatory transfers won’t happen before February, 2023. Beyond this smack-down, the Settlement wraps a compliance straightjacket around LHH. It demands “substantial improvements and…substantive personnel and resource investments” to meet regulatory requirements.

LHH’s Regulatory Straightjacket

LHH must continue cooperating with an onsite Federal Facilitator, appointed and paid by CMS, who intrusively monitors LHH’s compliance with regulatory requirements and the terms of the Settlement.

LHH must hire outside Quality Improvement Experts, experienced in assessing Skilled Nursing Facilities. Shamefully, LHH’s own “leaders” are deemed unfit and are barred.  Citing conflicts of interest, the Settlement states, “No one who currently or in the past 24 months has been an employee of LHH” can fulfill this function. Neither can the under-qualified, Flow Project executives who were hustled from SFGH and DPH to fix the LHH coop. Pathetically, they had to hire licensed Nursing Home Administrators to compensate for their dearth of knowledge. Fortuitously, LHH had already contracted with certification experts from the Health Services Advisory Group. CMS accepted them as Quality Improvement Experts. As my colleague Patrick Monette-Shaw reported, LHH boosted this group’s contract to a whopping $7 million!

Momentously, these Quality Improvement Experts must conduct a Root Cause Analysis for every deficiency identified in CMS and CDPH surveys since the near-fatal drug overdoses in July 2021. That includes in-depth analyses of staff training in identifying contraband, and protecting residents from contraband. Also to be analyzed are LHH’s interventions to keep residents safe from “illegal drug use”, possession of drugs, and other contraband. Moreover, behavioral health services must be examined for their management of “mental and substance use disorders.”

These analyses must generate recommendations that will cure LHH’s deficiencies. They must be reported to CMS by December 1st, 2022. CMS must OK them. From these recommendations, LHH must develop and fund an Action Plan by January 6th, 2023. Again, CMS must approve. LHH’s Action Plan must be “fully implemented by May 13, 2023” along with a “list of milestones and completion dates for each corrective action.” There’s scant wiggle room in this coercive framework. Indeed, “If LHH refuses to implement any material aspect of the Action Plan…it…shall be grounds for CMS to terminate the Agreement and to discontinue discretionary federal funding to LHH.”

Every month, LHH’s Quality Improvement Experts must submit detailed progress reports to CMS, including a “description of complaints received by LHH from any source.” Moreover, CMS and CDPH will conduct unannounced inspections every 3 months to ensure compliance with Medicare and Medicaid regulations. On top of these, CDPH will continue its routine surveys in response to complaints and facility-reported incidents. If these inspections find potentially harmful deficiencies, additional Root Cause Analyses and Action Plans will be required. If LHH fails to eliminate potentially harmful deficiencies by February 2023 - or if it breaches the terms of the Settlement - a Closure Plan will be imposed with mandatory patient evacuations. LHH’s only reprieve from this regulatory bondage is a complex “meet-and-confer and dispute escalation procedure” to hash out disagreements with CMS.

Perhaps, the analyses by the Quality Improvement Experts will reveal that LHH has been skirting its Admissions Policy - by accepting patients who endanger themselves and others by using and distributing drugs like fentanyl and methamphetamine. But the Health Services Advisory Group is hardly an independent agent as it is lavishly remunerated by LHH. Critiques by such consultants can doom future contracts. So, it’s unlikely that their Root Cause Analyses will challenge the damaging DPH Flow Project.

Settlement a Done Deal

Following an update on LHH’s recertification efforts ( at 2:22:39), the Board of Supervisors unanimously approved the Settlement on November 1st. A glimmer of hope came after Supervisor Rafael Mandelman asked about the “inappropriate mixing of folks who should not be in the facility.” In response, LHH CEO Roland Pickens said that proposals to “cohort and separate the two populations” were being considered. That would require “more resources either at LHH or somewhere else.” He also announced that LHH is keeping its license for the 120 beds currently banned by CMS. LHH “hopes to again occupy them” after future negotiations with CMS.

The Wages of Non-Compliance

The Settlement includes many other technical requirements that will severely challenge LHH managers and staff. Each of these requirements creates potential pitfalls and penalties. The intense scrutiny LHH faces is both stressful and threatening, not to mention disruptive to patient care. The Settlement falls short of “great news” for LHH. It shows that regulators do not trust LHH – at all. Essentially, it reminds LHH and the DPH who’s boss.

This October, LHH’s Chief Medical Officer, Dr. Wilmie Hathaway, bailed out. More departures are likely given the pressure-cooker that LHH has become. None of this would have happened had LHH abided by its own Admissions Policy and declined to admit patients for whom it could not provide adequate care.

In 2004, the DPH strained to justify the Flow Project amid public outcries. It fantasized a $1.7 million annual savings by scrapping LHH’s admission screening procedures and foisting SFGH’s unruly non-paying patients upon the hospital – without extra resources. Whatever the DPH Flow Project “saved” is being wiped out by; the cost of consultants (now totaling $14.3 million), the compelled hiring of more staff, additional training requirements, the blockade on admissions, increased security costs, legal fees, fines, onerous inspections, overtime expenses and reputational damage.

In 2004, zealous Health Commissioners viewed LHH as a "silo" because its Admissions Policy excluded dangerous patients. They wanted to "break silos" to facilitate patient flow from SFGH. Long-Term Care Ombudsman, Benson Nadell, warned them that “Laguna Honda is a regulatory silo.” Hopefully, today’s Commissioners understand what that means.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer and a member of SPJ-NorCal. Contact: watchdogs@westsideobserver.com

November, 2022

Showdown: Dennis Herrera v. Sunshine Ordinance Task Force

by Dr. Derek Kerr

•••••••••• September 27, 2022 ••••••••••

The City’s first Sunshine Ordinance was enacted in 1993. In 1999, 58% of voters approved an amended version.  Now enshrined in Section 67 of the Administrative Code it opens spectacularly; “Government’s duty is to serve the public, reaching its decisions in full view of the public...The people do not cede…the right to decide what the people should know about the operations of local government.”

While government officials profess allegiance to transparency, they also resist disclosing information about the inner workings (and failings) of their domains. So, a way to ensure compliance with the Sunshine Ordinance was needed. The Ordinance created a Sunshine Ordinance Task Force (SOTF) to promote public access to government records and meetings, adjudicate related disputes, and advise the Board of Supervisors on improving transparency. It’s comprised of 11 volunteer members, 3 of whom are nominated by the Nor-Cal chapter of the Society of Professional Journalists (SPJ). All SOTF applicants are interviewed and appointed by the Board of Supervisors.

 Since its inception, the SOTF has been a thorn in City Hall’s backside. Why? Well, there’s a gap between what citizens and City Hall view as transparency. Engaged citizens and journalists seek more information than officialdom likes to share. Tension and disputes are predictable. When the SOTF has interpreted the Sunshine Ordinance strictly, it has infuriated wayward City officials. Regrettably, such points of friction have previously triggered City Hall to retaliate against the “People’s Court.” Another point of friction is casting sparks.

Herrera’s “Brute Cudgel” Charge

As reported by the Examiner’s Jeff Elder, a showdown between SFPUC chief Dennis Herrera and the SOTF is escalating. On September 7th, the SOTF unanimously reproached Herrera for failing to maintain his official calendar, early in his tenure at the SFPUC. A similar violation occurred in 2020 when he was City Attorney. At the time, Herrera had vowed to fix the problem in exchange for dropping a second complaint. Department heads must keep and disclose informative business calendars per the Sunshine Ordinance. In 2015 the Board of Supervisors even voted to include themselves under the calendar requirement, despite opposition from then-Supervisor London Breed.

Interestingly, both of Herrera’s calendar lapses were exposed by sunshine advocate and stickler “Anonymoose” (aka Anonymous), recipient of a 2022 James Madison Freedom of Information award from SPJ-NorCal. His current sunshine complaint # 21153 can be viewed here.

Herrera’s apparent recidivism, despite his know-how as City Attorney, Supervisor of Records, and author of the Good Government Guide factored into the SOTF’s careful deliberations (at 3:20:00). SOTF members unanimously declared his omission a “willful violation” - a form of official misconduct. Accordingly, the case, bolstered by a “robust” letter from the SOTF, will be referred to the Ethics Commission. The gesture is mostly symbolic. The Ethics Commission has dismissed all, save one, willful sunshine violation cases submitted by the SOTF.

Herrera is furiously protesting the SOTF’s determination that he willfully failed to maintain his office calendar. In a September 13th letter to the SOTF – copied to the Ethics Commission, City Attorney, and Board of Supervisors – Herrera insisted his lapse was unintentional, due to the hectic pace of his first 2 days on the job. Therefore, he argued, the SOTF should not refer his inadvertent slip to the Ethics Commission as a willful violation. It was a reasonable objection. But, after raising other procedural objections, Herrera ended his letter ominously; “The Sunshine Ordinance was never intended to be a brute cudgel to redefine every oversight or omission, regardless of how minor, into an intentional obstruction.”

Bullying the Sunshine Task Force

Herrera’s “brute cudgel” metaphor revives old City Hall tropes about the SOTF. They portray a legally toothless, all-volunteer SOTF as a bloodthirsty ogre victimizing City officials. The deployment of menacing imagery has previously prefaced retaliation against SOTF members. Bruce Brugmann, formerly co-publisher of the SF Bay Guardian, was a founding member of the SOTF. He recalls how an exasperated Mayor Willie Brown sought to boot him off the Task Force. Mayor Brown’s animus impelled him to stay.

In March 2011 New York Times article, Matt Dorsey, whom Mayor Breed recently appointed as District 6 Supervisor, smeared the SOTF on behalf of then-City Attorney Herrera; “Matt Dorsey, spokesman for the city attorney’s office, said in an e-mail, ‘The task force has degenerated into a rogue, lawless jury that beats up on city departments and tries to get conscientious public employees fired.’ Mr. Dorsey and other city public information managers said they spent an extraordinary amount of time and resources complying with the ordinance. They described the task force hearings as a tedious kangaroo court.”

All this was quite genteel compared to the Board of Supervisors’ 2012 purge of the SOTF. This reprisal followed the SOTF’s determination that several Supervisors - including current City Attorney David Chiu - had violated the Sunshine Ordinance by hastily approving the Parkmerced development deal. At the last minute, Supervisors had slipped a 14-page amendment into a legislative package without proper notice or public review. Journalist and former SOTF member, Rick Knee, recounted in the Fog City Journal how and why the vendetta arose.

In brief, 5 incumbent SOTF members were denied reappointment. The Board of Supervisors blocked nominees from the Society of Professional Journalists (including Westside Observer editor Doug Comstock), New America Media and the League of Women Voters. Thus frozen for months without a quorum, the SOTF struggled to address a backlog of sunshine complaints. In a 2014 opinion piece in the SF Chronicle, Geoff King and Tom Peele, who co-chaired SPJ’s Freedom of Information Committee, decried the Supervisors’ blockade, warning that the SOTF “is now under attack by City Hall.” Eventually, the Board selected 5 inexperienced newcomers and toadies to fill the long-vacant SOTF seats.

Simultaneously, then-Supervisor Scott Wiener, a former Deputy City Attorney, had covertly asked the Budget & Legislative Analyst to survey City departments to assess the cost of adhering to the Sunshine Ordinance and maintaining the SOTF. The intent was to show that the SOTF was a burden to taxpayers. The 2012 B&LA survey estimated that the transparency requirements of the Ordinance cost the City $998,000/year. That included $355,000 for the SOTF. However, even if the Sunshine Ordinance were rescinded, some of the above costs “would continue to exist under current State law.” Further, “without the SOTF, some portion of complaints would be directed to other public bodies, such as the courts, which would in turn incur costs.” So, Wiener’s hit-job went nowhere. At the time, the City was spending about $3.3 million annually to abide by State public records and open meeting laws. The Sunshine Ordinance simply enhanced them.

City Hall Cancels Critics

Ganging up on critics isn’t a relic of City Hall’s past. As the Westside Observer reported in 2020, a group of offended Supervisors tried to blacklist the Marina Times from receiving funds to publish City notices. They were retaliating against the paper’s editor, Susan Dyer Reynolds, who had blasted their policies and antics in articles and tweets. It took a stern letter from First Amendment attorney Karl Olson to settle the dispute in favor of the Marina Times and freedom of speech.

The accusatory tone of Dennis Herrera’s latest denunciation of the SOTF could foreshadow another cycle of retribution. Herrera is an ally of Mayor London Breed who has a long-standing aversion to transparency, the SOTF, and even to treating SOTF applicants respectfully. Journalists and sunshine advocates should be vigilant - and ready to protect our “People’s Court.” 

Hat Tip: Thanks to Jeff Elder for thorough coverage of this conflict.

Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer and a member of SPJ-NorCal. Contact: watchdogs@westsideobserver.com

SEPTEMBER 27, 2022

Whistleblower's lawsuit noting misuse of public resources meets with retaliation and resulted in discharge from the Water Department

SFPUC‘s Shrinking Inventory

by Dr. Derek Kerr

•••••••••• September 13, 2022 ••••••••••

Employee theft is a persistent drain on private and public organizations. Recall the Public Utilities Commission’s (SFPUC) 2009 embezzlement, theft and fraud scandal involving workers at Treasure Island. That malfeasance was exposed by a whistleblower – not an audit. As reported in Matt Smith’s article “They Must Be Stealing” for the San Francisco Standard, current and former employees now allege widespread theft and misuse of SFPUC resources.

Anthony Travis, a former foreman at SFPUC’s main warehouse, the City Distribution Division, says he endured retaliation after reporting equipment misuse and pilfering. He has filed a whistleblower retaliation and racial discrimination lawsuit in SF Superior Court. In a February 2022 whistleblower retaliation lawsuit, Local 261 union members alleged corruption in SFPUC’s contracting — specifically in its troubled Community Benefits Program.

Long-Standing Problems

If the most recent whistleblower claims of plundered inventory are true, surely the many SFPUC audits would have shown something was amiss. A 2003 California Department of Finance audit identified weaknesses in SFPUC’s asset management that hobbled its ability to track the maintenance, inspection and repair of capital assets.

A series of audits by the City’s Budget & Legislative Analyst in 2004-2005 determined that money allocated to SFPUC for asset management wasn’t spent. Two of these audits recommended better materials management at SFPUC warehouses, including annual audits. At that time, SFPUC’s major warehouses, like the City Distribution Division, were “at varying points in the process of developing an inventory and recording assets in Maximo.” Maximo is an IBM asset management system that SFPUC purchased to track its inventory and maintain its assets. Although the SFPUC had received $980,000 to develop its asset management program, the audits concluded that; “The Public Utilities Commission has failed to move forward in developing the asset management program, due largely to lack of oversight by the executive management team…”

In 2011, the Controller’s City Services Auditor conducted an audit of the Water Enterprise’s warehouse inventory management. These warehouses store and distribute equipment needed to maintain SFPUC’s water infrastructure. Inventory controls reduce the risk of; theft or loss, unexpected shortages of critical equipment, and unnecessary purchases of items already on hand. The audit concluded that SFPUC had “mostly adequate processes and controls” but “does not fully utilize MAXIMO to track items issued from inventory.” By then, SFPUC had instituted annual inventory counts.

Yet, major flaws were noted in monitoring fuel reserves, despite spending $230,000 on a fuel monitoring system. A 21,000-gallon diesel fuel deficit recorded in MAXIMO was deemed “incorrect.” Moreover, the City Distribution Division warehouse struggled to track its $4.7 million stock of tools that weren’t placed in its inventory. Although the CSA auditors cited inventory count best practices, including “Set inventory record accuracy goals at 95% or better,” they omitted the discrepancy rate between the Maximo records and their test counts. Instead, they simply noted the value of the missing inventory. Among the “low dollar-error rates” uncovered, there was a 3.6% value deficit (then $50,400) at the City Distribution Division. Discrepancies were attributed to “miscounts”: Finance Staff had purportedly botched their inventory hand-counts and entered wrong numbers into MAXIMO. CSA’s 2014 follow-up survey found that 8 of its 13 recommendations had been implemented. However, the faulty tracking of gasoline and diesel fuels persisted after three years.

Outside Auditors Find Persistent Flaws

The Westside Observer obtained copies of contracts and 12 recent SFPUC inventory audits via public records requests and confidential sources.
 
From June 2015 through December 2020, Macias, Gini & O’Connell, LLP (MGO) received $122,500 to perform inventory audits. That averages to $22,272 per year. Subsequently, Crowe, LLP was hired to perform these audits, presumably at a comparable cost. These audits continue, year after year, due to persistent discrepancies, mostly negative, between SFPUC’s MAXIMO inventory system and audit hand-counts. Public concerns arise when audits find less equipment than what SFPUC reports. Such negative variances may be due to theft. Positive variances, when audits find more equipment than what is recorded, point to sloppy inventory supervision.
 
MGO conducted a 100% audit of Water Enterprise warehouse inventories in 2019. There were 591 discrepancies between the SFPUC’s MAXIMO records and the hand-count. That amounted to a 44% discrepancy rate. Most were negative variances, suggesting missing equipment. The potential loss amounted to $83,184, or 2% of the inventory’s value. MGO cited William Toman, SFPUC’s Materials Coordinator, who explained that “the reason for the discrepancies is due to warehouse staff miscounting items prior to MGO’s physical inventory count.”

If that is the case, undercounts should approximate the over-counts. Instead, the ratio was 2 to 1 in favor of finding less rather than more equipment than what was logged in MAXIMO. Prior and subsequent partial audits had shown similar negative trends attributed to “miscounts.” For example, MGO’s 2020 partial audit had found a 21% discrepancy rate, with a negative variance of $86,725, or 3% of the inventory value. What’s more, the auditors photographed rusty piles of steel equipment stored outdoors - directly exposed to the elements. The value of these deteriorating items was $126,754.

 Repetitive recommendations to more carefully track equipment and implement “corrective measures” failed to restrain discrepancies. Oddly, SFPUC’s Financial Officer, Nancy Hom, had reportedly congratulated staff for their good stewardship of City resources, despite the lopsided drift toward missing items.

The next full audit of the Water Enterprise’s main warehouses was conducted by Crowe, LLP in 2021. This time, the discrepancy rate was 27%, and the negative and positive variances were more balanced. However, positive variances were mistakenly boosted by counting equipment that was not part of the inventory (e.g., items temporarily stored for other units or that were project-related). Even so, the audit found that the value of the missing equipment exceeded the value of newly-found items. The resulting deficit was $161,134, or 3.3% of the $4.9 million inventory. Again, Maximo's records had overstated the actual inventory.

Notably, Crowe auditors found that the quantities of gasoline and diesel fuel stored on-site “were dramatically below those in the MAXIMO system.” The negative variance for fuels amounted to $118,125 or 75% of the total cost variance. That “reflected a significant amount of fuel dispensed which was not identified in the MAXIMO system”. The main explanation referenced a faulty interface between SFPUC’s automated fuel tracking system and its MAXIMO log. The auditors reckoned that without accurate fuel tracking, the agency “will have difficulty…identifying variances that are the result of missing fuel (e.g. theft), delivery errors, data entry errors, tank leaks, or shrinkage”. The same problem was identified 10 years earlier in the Controller’s CSA audit summarized above.

Some Warehouses Do a Good Job

It should be stated that the Water Enterprise’s smaller warehouses in Sunol and Millbrae have consistently shown negligible inventory variances. Similarly, the Hetch Hetchy Power Enterprise and the Wastewater Enterprise audits have shown minimal discrepancies, although a 2021 audit identified $24,596 of obsolete or broken equipment in the latter’s inventory. Most discrepancies arise in the Water Enterprise’s big warehouses.

Sometimes, the auditors get it wrong. For example, the 2020 audit of SFPUC’s Power Enterprise warehouses on Treasure Island and Bryant Street found an 82% discrepancy rate! The auditors thought they discovered many items that were not logged into MAXIMO, resulting in an unexpected positive variance of $214,100. It was too good to be true. SFPUC managers realized that the auditors had counted items that did not belong in the operating fund inventory. When they fixed this error, the discrepancy rate declined to a sterling 4.9%. But the variance had shifted to negative - with a shortage of $69,684. Awkwardly, the 2021 audit found a 39% discrepancy at the new Power Enterprise warehouse at Pier 23, perhaps because the inventory was still in flux. Still, the variance was negative, or $139,141 short.

Next Steps

 Frustratingly, expenditures for audits and inventory tracking systems haven’t prevented sizeable discrepancies in larger Water Enterprise warehouses. And the variances are almost always negative, meaning that there’s less inventory than what SFPUC’s tracking system shows. Warehouse employees allege that folks “must be stealing”. Managers insist that workers “miscount” the inventory.

Annual deficits in warehouse inventories may represent “low-dollar values” statistically. But these apparent shortfalls signify hundreds of thousands of ratepayer dollars. So, the audits must continue. Commendably, the SFPUC monitors its $5 million inventory and hires independent auditors to check the accuracy of its tracking systems. At some point, management must contend with habitually negative inventory variances that don’t get fixed.

Hat Tip: Thanks to concerned insiders who sent valuable leads.

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

SEPTEMBER 13, 2022

Laguna Honda: Denial, Complicity, Resistance

by Dr. Derek Kerr

•••••••••• August 2, 2022 ••••••••••

At the July 19th, 2022 Health Commission meeting (at 1:42:20), Laguna Honda Hospital (LHH) representatives summarized the results of a Mock Survey conducted in late June. Designed to mimic a Centers for Medicare and Medicaid Services (CMS) recertification survey, it was conducted by 16 consultants from Health Management Associates. LHH is to be commended for disclosing the deficiencies uncovered. 

The mock survey identified problems whose “…significant number, scope, and severity demonstrate systemic deficiencies in practice and care at Laguna Honda Hospital”. The consultants concluded that LHH would have failed a real recertification survey. LHH will fix the problems identified. Then, a second mock survey will be conducted before it applies for recertification and a formal CMS survey.

CMS decertified LHH this April for 2 major deficiencies; uncontrolled drug and contraband use, resulting in 2 drug overdoses, and substandard COVID infection control procedures. Yet, LHH’s mock survey still found; “…numerous failures to adhere to infection control policies and procedures…” Oddly, there’s no mention of illicit drugs and contraband. Likewise, this critical problem isn’t mentioned in the consultants’ June “preliminary assessment” of LHH. And, LHH skipped the drug use issue in its Health Commission presentation. Has the drug problem vanished, or is this denial?

The mock survey did find that LHH “did not provide behavioral/substance use disorder treatment during outbreaks of Covid”. Henceforth, support groups will not face COVID restrictions. Further, “Residents with active substance use disorder will be monitored to ensure they have proper referrals to behavioral health services". What these fixes disregard is that a Psychiatrist and a Nursing Director had admitted to regulators that they were incapable of controlling the spread of illicit drugs and paraphernalia. Denial is evident in the claim that; “Ongoing audits will ensure those individuals with Substance Use Disorder receive appropriate treatment.” Drug users had previously defied LHH rules, searches, monitoring and treatment.

Strangely, there’s no reference to LHH’s oft-skirted Admissions Policy that limits admissions to those patients; “For whom Laguna Honda can provide safe and adequate care. "How did LHH get into trouble with uncontrolled drug use when its Admissions Policy warns; “LHH cannot adequately care for prospective residents with…significant likelihood of unmanageable behavior…including…drug trafficking, possession or use of illegal drugs or drug paraphernalia”?

Responsibility for Post-Transfer Deaths

At the July 19th Health Commission meeting, LHH Chief Medical Officer, Dr. Wilmie Hathaway, reported three deaths among patients transferred to other nursing homes. Though "saddened by this news," she explained that, "Once transferred, we no longer have regular updates about them. "Doesn't LHH make follow-up calls to ensure smooth transfers? The seemingly inert Health Commissioners didn’t ask and offered no comments.

At the more animated and revealing Board of Supervisors’ July 21st Government Audits & Oversight (GA&O) Committee hearing (at 2:02:15), we heard that a fourth LHH patient died. That person died three weeks after being discharged to the City’s Medical Respite Center. No information about the causes of these deaths emerged, but finger-pointing ensued. Interim LHH CEO Roland Pickens’ presentation differed markedly from the one he produced for the Health Commission two days before. He revealed that CMS had rejected LHH's proposals to avoid patient relocations or to conduct them over 18 months. Instead, CMS wanted a 4-month process, with a possible 2-month extension. Continued federal funding was contingent on LHH’s progress in transferring patients. According to Pickens, CMS pressured LHH - without providing written progress metrics or quotas. Somehow, that lack of guidance "has been driving the processes that we have been going through” - and by implication, its adverse outcomes.

However, the LHH “Closure and Patient Transfer and Relocation Plan” that won CMS approval defines its intent as “…to ensure the safe, orderly, and clinically appropriate transfer or discharge of each patient with a minimum amount of stress." Also, “the medical assessment will include screening patients for risks of transfer trauma." Transfer trauma refers to the stress medically frail patients experience from abrupt or involuntary transfers from one residential facility to another. LHH added the caveat; "Laguna Honda shall use reasonable best efforts to achieve the time frames set forth herein. "Further, "If it appears that alternate placements are not available and a good faith effort to relocate has occurred, there is a shared commitment by all parties…to identify resources and solutions on how to best serve remaining patients." The agreed-upon Plan does not call for forced or unsafe transfers. Nor does it commit to completely evacuating LHH.

Despite these commitments to ensure safe and minimally-stressful transfers, CEO Pickens blamed CMS for pressuring LHH to discharge more patients, regardless of their condition. He portrayed CMS as rigid in its requirements and nebulous or lagging in responding to questions. Although CMS has surveyed LHH for decades, Pickens felt that it did not fully grasp the number and complexity of LHH patients. So, LHH was “pigeon-holed into rules applying to standard nursing homes."

Complicity and Conflicts of Interest

The Board’s GA&O Committee decried the plight of residents and families facing relocation. Essentially, the four patient deaths were ascribed to CMS’s “lack of due process” and unreasonable demands imposed upon LHH - a hapless victim, devoid of agency. However, Supervisor Myrna Melgar touched on two core issues; complicity and conflicts of interest; “We have been complicit in essentially sending patients to a death sentence by complying with these ludicrous demands." Supervisor Melgar asked LHH Chief Medical Officer, Dr. Hathaway, about the sometimes conflicting goals of patient welfare versus hospital sustainability. Dr. Hathaway responded, "We are the strongest advocates for our patients." Then, she acknowledged, "Ultimately, the goal is to save Laguna Honda so we can get recertified…so we can continue to provide services to the people of San Francisco."

Ethical Dilemma: Funding v. Patient Care

The threat posed by CMS is the loss of federal funding — not of revoking LHH's license or shutting it down. Accordingly, the relocation plan only applies to Medicare and Medicaid beneficiaries — those that CMS pays for. That group comprises 98.4% of LHH patients. CMS pays LHH around $550,000 per day or roughly $200 million yearly. CMS’ demands are leveraged by money. LHH could continue to operate without CMS payments — if the City paid $16 million or so per month. It's an economic issue.

We don’t know the cause of death of the three transfers and one discharge. But four deaths among 57 patients relocated or discharged yields a 7% mortality rate. If, as the Public Guardian’s Office told the Chronicle, two of the transferred patients were receiving Hospice Care, their deaths were likely expected. Still, transferring terminally-ill patients requires justification. Meanwhile, only 1.7% of patients remaining at LHH died during this period. However, 106 patients were sent to other hospitals for acute illnesses or interventions. Did some die off-site during their “Leave of Absence”? Nonetheless, the apparent excess mortality should have led LHH doctors to pause the relocations — and investigate the mortalities.

If transfer trauma contributed to these deaths, then LHH bears some responsibility. Safe patient transfers require providing instructive interdisciplinary Care Plans to the receiving facility. However, LHH’s own mock survey found that; “Resident care plans are generic and not resident-centered to each resident's care goals." That flaw could add to relocation stress. Mainly, ensuring safe transfers is the responsibility of attending physicians. Granted, there are regulatory and administrative pressures to discharge or transfer patients. But the buck stops with the physician. Patients cannot be discharged or transferred without a physician’s order. 

Medical Ethics

The American Medical Association’s Code of Ethics addresses “Physician Responsibilities for Safe Patient Discharges." While recognizing that physicians are stewards of hospital resources, it emphasizes that; "Physicians’ primary ethical obligation to promote the well-being of individual patients encompasses an obligation to collaborate in a safe discharge plan for the patient. As advocates for their patients, physicians should resist any discharge requests that are likely to compromise a patient's safety."

The AMA Code of Ethics provides guidance in navigating potential conflicts of interest between serving individual patients' well-being and the hospital's economic survival (and the MD's job). The "Conflicts of Interest in Patient Care" section advises, "Where the economic interests of the hospital, health care organization, or other entity are in conflict with patient welfare, patient welfare takes priority."

We now know that the City Attorney is appealing the drug-related citations that led to LHH’s decertification. The Mayor’s Office negotiated with CMS overseers to halt the relocations. On July 26th, the Board of Supervisors adopted Resolutions calling for the same. Community groups, patients and families lobbied to stop the transfers. What were LHH doctors doing?

Well, on July 28th, CMS issued a statement expressing concern about the post-transfer deaths. It emphasized that LHH was “required to perform thorough and adequate medical assessments of every resident before a transfer or discharge…." Further, CMS “expects that all transfers and discharges be paused while an assessment occurs over the coming weeks." CMS installed a "facilitator" at LHH for this purpose.

In 2004, LHH physicians opposed the fiscally-driven DPH Flow Project because it endangered patients. Today’s medical staff could have resisted a fiscally-driven agreement between CMS and LHH, if it imperiled patients. Instead of complying with potentially harmful administrative directives, physicians can abide by the Hippocratic precept; Primum non nocere – “First, do no harm."

Acknowledgement: Thanks to Patrick Monette-Shaw for sharing records of City appeals.

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

AUGUST 1, 2022

City’s Muffled Defense of Laguna Honda

by Dr. Derek Kerr

•••••••••• July 19, 2022 ••••••••••

When the Centers for Medicare and Medicaid Services (CMS) decertified Laguna Honda Hospital (LHH) on April 14, rhetoric flared from Health Director Grant Colfax and the Health Commission. They vowed to pursue “all available options." They enlisted Mayor Breed, US Senator Feinstein, and US Representative Pelosi to declare their support. Soon, the bravado petered out. The Department of Public Health (DPH) switched from combative to cooperative. It replaced LHH’s CEO and Chief Nursing Officer, agreed to a “Closure and Patient Transfer and Relocation Plan” to discharge all LHH patients by September, paid $5.6 million for consultants to help LHH get recertified, and did not appeal some $409,000 in fines. When CMS told LHH to convert its 3-bed rooms to 2-bed rooms, resulting in a loss of 120 beds, LHH and the DPH obeyed. Why isn’t the City fighting to preserve LHH?

Mystifying Compliance

Cooperation can soften regulators’ inclination to punish recalcitrant facilities. But cooperation is a departure from LHH’s reflexive appeals of citations and fines. Guided by the City Attorney, Mayor’s Office and pricey consultants, LHH’s capitulation has barely mollified CMS or blunted its penalties. Admittedly, CMS has agreed to pay for patient care until September, as long as LHH works toward recertification. The City’s compliance implies that LHH and the DPH messed up. Contesting penalties would draw more attention to LHH’s lapses, the flow of unmanageable patients from SFGH, and the 80 LHH patients who did not require skilled nursing services.

Interim LHH CEO Roland Pickens disclosed the latter finding to the Board of Supervisors after assessing just half of LHH residents. How many more ineligible patients will turn up once the entire LHH population is assessed? Why were these 80 kept at LHH while others, needing skilled nursing care, languished on the waiting list? Did their medical condition suddenly improve? Were they housed at LHH until suitable housing or placement options were found? Or did they have marginal skilled nursing needs when the DPH Flow Project flushed them out of SFGH? Such questions receive muffled responses.

The City’s strange compliance could indicate that downsizing LHH by 120 beds and transferring patients out of County is fiscally advantageous. LHH has always run a deficit, relying on General Fund subsidies. According to LHH’s 2020-21 Annual Report (page 39), the General Fund provided $67.9 million in 2019-20 and $33.6 million last year. This year’s revised budget lists $134 million in General Fund support. Reducing LHH’s census could save the City money — if staffing declines proportionately. Personnel costs comprise 76% of LHH’s operating budget. That may explain the uncontested slicing of LHH’s licensed beds from 769 to 649.

There are also legal pressures. City Hall hasn’t opposed the downsizing of LHH since the 1999 Supreme Court’s Olmstead decision required community-based services to avoid institutionalizing disabled persons. In 2005 then-Controller Ed Harrington justified downsizing LHH from 1200 to 780 beds in order to limit massive cost overruns and promote community-based care. The Health Commission adopted his plan. And it’s going along with the current reduction. In a July 12 admission of defeat, Commissioner Dr. Edward Chow lamented, "It’s a shame that we are losing beds – more than a shame."

The City may be playing it safe. If LHH fails its recertification survey, federal payments will stop, forcing the City to pay for the remaining patients. The more patients LHH discharges now, the less the risk that the City will be stuck with a $16 million/month bill and conducting mass discharges. That may explain the rising pace of discharges. As of July 11, just 623 patients remain at LHH, compared to 681 in May. Most have been transferred to San Mateo nursing homes. Three went to homeless shelters.

LHH Petition

LHH is in a crisis. CMS decertified the facility due to a handful of correctable issues forcing the relocation of around 700 vulnerable people.

We demand that HHS Sec. Xavier Becerra direct CMS suspend the relocation requirement currently being executed.

We demand that CMS provide assurance that LHH will be funded through the recertification process and at least 6 months after a rejection for recertification.

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SIGN THE PETITION

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It may be conceivable that the City is planning to transform LHH in some way that hasn't been made public. A July 12 presentation by CEO Pickens refers expansively to; “…long-term operational, institutional and cultural changes" while providing a few concrete examples. What else are the consultants recommending? Frustrating to observers, the DPH refuses to release the report from the Health Services Advisory Group. The DPH dubiously claimed confidentiality under California Evidence Code Sec: 1157. But that section applies to professional hospital staff committees that review quality of care — not to outside organizational consultants. Regardless, LHH’s downsizing may fit an undisclosed agenda. Never let a crisis go to waste. Lastly, the dearth of answers about LHH’s fate may simply mean that the City doesn’t know what to do after CMS’s tectonic smack-down.

CMS’s Unyielding Demands

The insistence on downsizing LHH isn’t a CMS quirk. Even the Biden White House has publicly called for phasing out 3-patient rooms, referring to infection prevention in the wake of COVID’s fatal spread in nursing homes. CMS has announced that it will push for single and 2-patient rooms to promote safety, privacy, and home-like settings. Still, CMS could exercise some flexibility. CMS’s State Operations Manual, section 7410.6, allows waivers when life-safety rules; “…if rigidly applied would result in unreasonable hardship upon a facility, but only if such waiver would not adversely affect the health and safety of the residents or personnel”. Section 7014.3 allows waivers for facilities with 3-bed rooms; "…if the facility demonstrates in writing that the variations are in accordance with the special needs of the residents and will not adversely affect their health and safety." Presumably, that hasn’t happened or didn’t work.

Perhaps CMS is making an example of LHH, a facility long-considered too big to fail. LHH repeatedly failed to control illicit drug use and contraband, despite repeatedly pledging to do so. When LHH transiently suppressed illicit drug distribution for its April 2022 survey, it did so at the expense of infection control procedures - on COVID-affected wards. CMS viewed these slips as recalcitrance and ineptitude in managing dangerous situations. LHH was forced to upgrade its infection control procedures – just as COVID resurged in the hospital. Since then, LHH has reported 64 new patient cases and 327 staff COVID infections, none fatal. Alas, CMS seems to believe that discharging patients from LHH is safer than allowing them to stay.

Community Resistance

In contrast to City leaders, community groups are challenging CMS’s harsh demands and LHH’s rush to discharge or transfer patients. The Gray Panthers, the California Advocates for Nursing Home Reform (CANHR), Legal Assistance to the Elderly, Bay Area Legal Aid and Disability Rights California (DRC) have held public meetings to protect LHH patient rights and LHH services. Along with Long-Term Care Ombudsman Benson Nadell, they emphasized that patients can decline or appeal inappropriate transfers. DRC provided this LHH Patient Rights Fact Sheet. CANHR shared its Discharge Rights Fact Sheet. Participating family members expressed distress and frustration. Some are circulating a petition calling on CMS to halt the “forced relocation” of LHH patients. LHH insists that all transfers are voluntary and that it follows up on those patients and that none have complained.

However, at a CDPH “Laguna Honda Stakeholders Meeting” a Public Guardian reported 2 deaths among conserved patients who were recently transferred out of LHH. CANHR Director, Patricia McGinnis, says several patients have complained about coerced discharges. Others are being referred to inferior facilities. She is lobbying CMS to extend LHH payments through December, in order to slow the flurry of transfers. CANHR attorney Tony Chicotel noted that LHH is “capable of playing dirty” by backdating some discharge notices, and mislead patients by warning that “an appeal will not result in restoration of financial benefits or coverage for your stay at Laguna Honda." There’s talk of a Class Action lawsuit against LHH. Check the CANHR website for more information.

Avoidant Machinations

On June 30, LHH Interim CEO Roland Pickens announced that CMS told LHH to convert its 3-bed rooms to 2-bed rooms in order to get recertified. However, records obtained by the Westside Observer show that DPH executives got CMS’s message on June 9. In it, CMS asserted; “Unfortunately, there is no latitude with the application of the requirement at CFR 483.90, and there is no waiver available." That section of the Code of Federal Regulations specifies; “For facilities that receive approval of construction or reconstruction…or are newly certified after November 28, 2016, bedrooms must accommodate no more than two residents." Further, shared bedrooms “must measure at least 80 square feet per resident." If LHH manages to get recertified, it will be treated as "newly certified," starting from scratch. Accordingly, LHH will be subject to all federal rules promulgated since 2010, when the new building opened.

Eerily, the DPH has known about this very consequential matter since, at least, June 9. Yet it escaped the Health Commission’s June 14, June 21, and July 5 meeting agendas. Why the blackout? According to Health Commission Secretary Mark Morewitz; "The Health Commission has moved its LHH recertification updates to its second meeting of the month, on the third Tuesdays of each month." So, the matter won’t be aired until July 19. However, on July 12, at a poorly-attended Commission subcommittee on LHH, the bed cut was noted in this power-point update. No intervention was proposed. On June 16, Supervisor Myrna Melgar wrote to Xavier Becerra, Secretary of the US Department of Health & Human Services that oversees CMS. She appealed the patient relocations without addressing the 120-bed loss — something DPH knew about a week before. 

As my colleague Patrick Monette-Shaw discovered, Supervisor Aaron Peskin had requested a Hearing on LHH on May 3. It was referred to the Board’s Government Audits and Oversight Committee. For some turf-related reason, it was scrubbed. Monette-Shaw’s complaints to City Hall seem to have gotten that hearing re-scheduled to July 21. Yes, the entire Board did hold a Hearing on LHH on June 14. However, the impending loss of 120 beds — something the DPH knew about since June 9 or earlier — never came up. This astounding lack of urgency is intriguing, even suspect, given the City’s acknowledged shortage of skilled nursing facilities.

Acknowledgment: Thanks to Dr. Teresa Palmer and an anonymous CMS whisperer for helpful tips.

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

JULY 19, 2022

Karma or Persecution: Laguna Honda’s Ordeal

by Dr. Derek Kerr

Staff received a jarring letter at Laguna Honda Hospital (LHH) from Interim CEO Roland Pickens on June 30th, 2022. It stated that the California Department of Public Health (CDPH) and the Centers for Medicare & Medicaid Services (CMS) “have informed us of current regulations that require…no more than two patients per room. This regulation is intended to increase the quality of the personalized care experience.” LHH must reduce all 3-patient rooms to 2-patient rooms, meaning a reduction of 120 beds. LHH’s licensed bed count will drop from 769 to 649, about 16%.

That's a major reduction in skilled nursing beds for San Francisco and a significant loss of future revenue for the hospital.

Closure and Patient Transfer Plan

Due to LHH’s decertification-mandated “Closure and Patient Transfer and Relocation Plan," ongoing discharges have reduced the census to 644. So there’s space for most patients culled from 3-bed rooms to be accommodated internally. But discharges will proceed, and readers can track those on this DPH Dashboard. At present, no staff layoffs are planned per Pickens’ letter.

Meanwhile, LHH is undergoing a "pilot reorganization" to match "high-performing skilled nursing homes nationwide," Pickens wrote. Besides boosting management support in each ward and "making leadership more accessible to frontline staff," LHH will hire a Licensed Nursing Home Administrator and an Assistant Nursing Home Administrator. The goal is to "increase expertise in regulatory compliance."

Since the DPH Flow Project decapitated LHH's executives in 2004, compliance with DPH dictates rather than state and federal regulations determined who was appointed to run the hospital. This new emphasis on compliance, alongside the 120-bed cut, will crimp the DPH Flow Project that has used LHH as a repository for non-paying, hard-to-place, and sometimes disruptive patients from San Francisco General Hospital.

Why Is This Happening?

LAGUNA HONDA CRISIS

July 12th
6 to 7:30 PM

Call to Action

How Do We Demand Honest Problem Solving Instead of Political Posturing?

Register

Or check the Gray Panthers’ website.

Why the regulators chose this moment to downsize LHH is unclear. Improving the “personalized care experience” seems a tenuous rationale for such a momentous reduction in capacity. It comes on top of the decertification ban on new admissions plus fines totaling $409,000. Is this a case of regulatory persecution? Or did the deficiencies recently uncovered at LHH trigger these harsh interventions?  

Seeking answers to these questions, the Westside Observer obtained records of recent LHH inspections. As previously reported, two near-fatal drug overdoses at LHH in July 2021 prompted a CDPH survey in October 2021. That survey reported extensive drug use and smuggling at the hospital, resulting in a decertification warning. LHH was given 6 months to correct its deficiencies. A follow-up March 2022 inspection found persistent - and seemingly worse - drug and contraband use, despite LHH’s Plan of Correction that had guaranteed to stop the problem. LHH’s final exam came in April 2022. It did not find drug problems but identified a series of unrelated deficiencies that set off the decertification process.

Unfortunately, that process involves a "Closure and Patient Transfer and Relocation Plan," now creating havoc for LHH residents, families, and staff.

State Inspections

Between the October 14th, 2021 survey and the fateful March 2022 surveys, there were 6 other inspections by CDPH surveyors. These provide faint clues about CMS’s crackdown.

On 10/15/21, CDPH investigated complaints from a stroke patient who reported the theft of a bag of lollipops and thank-you cards. She claimed that the staff had not taken her complaint seriously. Inspectors learned that the staff found some pilfered goods in another patient's possession. But the complainant was not told what happened, and the recovered lollipops were not returned to her. She was told to be careful with her belongings. No effort was made to reimburse her loss (although the hospital has a Patient Gift Fund that could have been tapped for this purpose). The CDPH viewed this minor incident as a violation of patient rights.

On 11/5/21, CDPH inspectors looked into a verbal altercation between two residents reported by LHH. However, LHH nurses reported the incident two days later instead of "within 2 hours" as required by LHH policy. Seems like a trivial lapse. However, LHH had promised the CDPH that it would report all such altercations promptly. That was LHH's commitment in 2019 after it delayed the reporting of staffers who had abused patients in a sexualized manner and sedated 5 patients with pilfered narcotics and sedatives, causing life-threatening overdoses. LHH was not abiding by its Plan of Correction.

On 12/21/21, CDPH found a Care Plan deficiency after a paraplegic patient who required bladder catheterizations endured two botched procedures. His nurse had not followed LHH policy that stipulated illuminating the genitals. This need for good lighting was missing from the Care Plan of another patient who required catheterizations. Those are minor deficiencies.

On 12/28/21, CDPH inspectors investigated a patient injury. A resident with dementia was not secured with a seatbelt in a transport vehicle. She fell inside the van and sustained a leg fracture. That deficiency is correctable with training. But, previously, LHH received an AA citation and a $100,000 fine in 2017 after a patient died falling from a wheelchair parked on an incline without setting the brakes. At the time, LHH promised to improve training for wheelchair safety in its Plan of Correction.

On 1/13/22, CDPH investigated another patient injury. The patient with dementia sustained a fractured finger and a bruised chest while being transferred from her bed to the bathroom. A solitary nursing assistant used a mechanical lift to transfer the patient. But the Care Plan specified that two staffers were needed to lift the patient. The patient tended to grab the bedrails during transfers. Therefore two-person transfers were required for safety.

Among this handful of deficiencies, none warranted decertification, especially in a 700-bed facility. But the following survey results are telling.

Recurring Drug-Related Deficiencies

On 1/21/22, just 3 months after the calamitous October survey, LHH pledged to control illicit drug use; CDPH surveyors discovered that three of ten sampled residents had been found in possession of contraband. Thus, LHH “failed to ensure a safe environment." The first patient had a baggie containing "white residue." It was confiscated. But nurses kept it in the medication storage room for 46 days – instead of disposing of it per LHH's policy. That created a risk of drug diversion.

Another resident harbored contraband on six separate occasions. Staff had variously found; a capsule containing "whitish-brown powder," multiple bits of foil with black residue, lighters, a pill-case with white powder plus two "white rocks," a baggie with white powder wrapped in silver foil. A third resident was caught with marijuana on three separate occasions.

The inspectors issued citations but took no further action. But during the March 2022 revisit, they documented uncontrolled contraband and drug use. They declared a state of "Immediate Jeopardy." In other words, LHH had failed to control or even properly handle its drug problem on two follow-up inspections. Yet, LHH had repeatedly promised to do so. Most likely, that caused LHH’s decertification debacle.

Flow Project Karma

Since 2004, the DPH Flow Project has forced LHH to admit younger, behaviorally-precarious patients from SFGH. Some could not be safely managed at LHH due to aggressive or volatile tendencies and drug use. “Abuse of a Civic Institution” is how the late journalist Warren Hinckle aptly described the impact. This patient-facility mismatch brought the calamitous penalties imposed by regulators in April 2022. By abusing LHH, the DPH Flow Project crippled itself.

Why the regulators also require eliminating 3-bed rooms, thereby cutting 120 LHH beds, is obscure. Besides the stated clinical rationale, political and financial agendas may be at play. The Westside Observer is probing for answers.

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

JULY 5, 2022

"Culture of Silence" and Cover-up Plagues LHH Management

Gray Panthers Pounce on Laguna Honda Crisis

by Dr. Derek Kerr

In the wake of the decertification crisis afflicting Laguna Honda Hospital (LHH), the SF Gray Panthers held a forum titled “Saving Laguna Honda.” The goal was to explore “what would be needed for Laguna Honda to return to its basic mission: to give safe and high-quality care for San Franciscans who need a skilled nursing facility.” The forum was moderated by Gray Panther board member, Art Persyko. Featured speakers were Teresa Palmer, MD, former LHH Geriatrician, Sasha Cuttler, RN, PhD, former San Francisco General Hospital/LHH nurse and Nursing Chair for SEIU 1021, and Derek Kerr, MD, former LHH Hospice doctor and now a columnist for The Westside Observer. Held on 6/21/22 via ZOOM, the in-depth discussion can be viewed via this link by entering the Access Passcode: t9UV!m*7.

Crises like COVID-19 and the one at LHH have “unmasked a society that does not value the aged and disabled.” Dr. Palmer noted after introductory remarks on the political and clinical history of LHH. She cited the inadequate community supportive services for these populations, understaffing, and the lack of nursing home and psychiatric beds. Accordingly, LHH has become the default option. Due to financial pressures, younger, behaviorally-complex patients from San Francisco General Hospital (SFGH) gained priority for admission to LHH resulting in the displacement of elders and women. Not admitting unmanageable patients into LHH would open up beds for those who need skilled nursing care but who are currently being sent to out-of-county nursing homes. She emphasized the need for an honest discussion about LHH’s unmanageable patients, the displacement of disabled elders, and whether LHH has been rushing to discharge patients inappropriately.

Nurse Cuttler said that the Department of Public Health doesn’t listen to staff. There’s “no desire to listen, communicate and make things better.” There’s a “culture of silence” that tends to hide or minimize problems and scandals. He recommended that LHH hold a “Listening Session,” something that SEIU-1021 successfully implemented at a Los Angeles hospital, resulting in improved accountability and even the dismissal of incompetent managers. We should demand that LHH and its consultants listen to staff – but not via a Board of Supervisors Hearing. Because employees are reluctant to voice concerns, LHH should foster a speak-out culture rather than punishing whistleblowers. He added that appointing a nurse to the Health Commission could improve its knowledge base and oversight.

Dr. Kerr highlighted the “DPH Flow Project” that has pressured LHH to quickly admit patients that SFGH wanted to discharge. Because LHH’s admissions screening process was dismantled, LHH has been admitting patients that it cannot safely manage, like those who overdose or smuggle drugs into the premises. That has resulted in the recent citations leading to the hospital’s decertification. In response to “What can we do as a community to keep LHH open and transition patients out of LHH?” Kerr said we need more information regarding the crux of the problems at LHH. Currently, the State surveys describing deficiencies at LHH are not readily available, nor are the assessment by consultants who are receiving $5.6 million to help LHH get recertified. We should demand greater transparency.

Several participants warned about the perils of pitting of different patient populations and interest groups against each other when confronted with inadequate services. In other words, an injury to one is an injury to all, so it’s best to work together to ensure everyone’s safety. For example, there’s a need for more nursing homes – as well as more options to receive care outside of places like LHH. A long-time observer asserted that “Laguna Honda is a symptom of chronic underfunding of public health.” Another participant saw a silver lining in the patient assessments that LHH was required to perform. That’s because 80 LHH patients had already been identified who did not need skilled nursing services. Those patients could be discharged if the City provided supportive housing services. That would open up beds for disabled San Franciscans who do need skilled nursing care at LHH.

Influential politicians as well as unions have been lobbying to preserve LHH and protect its many vulnerable residents. What can we do?

On July 12th from 6 to 7:30 PM the Gray Panthers will hold a second forum titled: “How Do We Demand Honest Problem Solving Instead of Political Posturing?” It will drill down on community actions and demands to keep LHH open. Readers can register for the event at; bit.ly/LHH-2 Check the Gray Panthers website for more information.

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

JUNE 22, 2022

DPH's "Flow Project" Comes Home to Roost

Laguna Honda Agonistes

by Dr. Derek Kerr

Laguna Honda Hospital’s (LHH) struggle for recertification intensified with the departure of CEO Michael Phillips around June 2nd, 2022. The Westside Observer requested a copy of his resignation letter from the Department of Public Health (DPH). There were “no responsive records.”That suggests that Phillips did not leave voluntarily.

We obtained the 6/2/22 letter from Roland Pickens to LHH staff, announcing that he was now the Interim CEO. Pickens oversees LHH as Director of DPH’s San Francisco Health Network. All he said about Phillip’s role and departure was; “I would like to thank Michael Phillips, who has served as Laguna Honda’s CEO for the past two years. During Michael’s tenure, Laguna Honda became a model for COVID response when the hospital experienced one of the lowest death rates and highest vaccinations rates anywhere in the country for a skilled nursing facility of its size. His work saved lives.”

No mention of Phillips’ efforts to uphold the DPH Flow Project that pressures LHH to admit non-paying, often disorderly patients from SFGH. Nothing about his attempts to manage unruly patients whose behaviors violate safety mandates. Caught between the conflicting demands of DPH executives and hospital regulators, it was a set-up for a fall-guy.

It probably didn’t help that in October 2021 Phillips told a State inspector that; “the facility’s goal is to reduce harm from illicit drug use and be selective in admitting residents that may play a role in contraband drug use and distribution.” After 2 near-fatal drug overdoses, the laissez-fare tone of that statement likely struck the inspectors as laxity. But for Flow Project proponents, it signaled heresy because selective admissions impede patient flow. Now that Roland Pickens and his DPH team are taking over LHH, how will they address the damage caused by the Flow Project - that they promoted?

Costly Emergency

Perhaps Phillips lacked the wherewithal to guide the hospital through the regulatory crack-down and recertification process imposed by the Centers for Medicare and Medicaid Services (CMS). But, nobody within the huge Health Department had that capability. That’s why the DPH awarded “Emergency Contracts” to two consulting firms to do the job. Competitive bidding wasn’t pursued. The City invoked section 21.15(c) of the Administrative Code to rush the contracts. However, these “Emergency Procurement Procedures” apply to; “extraordinary conditions created by war, epidemic, weather, fire, flood, earthquake or other catastrophe, or the breakdown of any plant equipment, structure, street or public work.” Including hospitals that get decertified for flunking inspections is novel.

This new emergency is costing plenty. The contract with Health Management Associates will cost taxpayers $3,782,365 over 14 months. This immense sum will bring a “comprehensive assessment” of LHH’s culture, leadership and governance plus assistance in passing the recertification process. The other contract with Health Services Advisory Group will cost $1,778,247 for 8 months’ work. This group will assess the hospital deficiencies that riled State and Federal surveyors, and recommend fixes. In total, these consultants will collect a cool $5,560,612. Such largesse warrants scrutiny.

Hidden costs abound. For example, LHH cannot admit new patients while decertified by CMS. In FY 2020-21 LHH averaged around 14 admissions per month. Those admissions generated revenue. Because admissions stopped this April, LHH’s census dwindled to 675 as of 6/12/22. Before the crack-down, LHH’s census hovered around 700. The patient count will keep dropping for the next 6 months or so. During this period, LHH will forego roughly 84 admissions. Meanwhile, patients will be discharged, as described below. Fewer patients means losing millions of dollars in potential revenue.

Ironically, the DPH Flow Project itself has been jammed, due to its heavy-handed dispatching of recalcitrant, anti-social patients into LHH. Now, SFGH must hustle to find venues for its discharge-ready patients. Had LHH been allowed to admit patients it could safely handle, rather than disruptive patients that SFGH wanted gone, this pricey mess wouldn’t be happening.

Fortunately, CMS will continue paying for the care of existing patients as long as LHH strives to regain recertification. CMS did approve LHH’s mandatory “Closure and Patient Transfer and Relocation Plan” on May 13, thereby guaranteeing payments for 4 months through September, with a possible 2-month extension.

The Closure, Transfer & Relocation Ordeal

In order to receive payments from CMS, LHH must compile and present plans for the transfer and relocation for all its patients. Care Teams must document the clinical needs of every patient - with family input, figure out placement options and the risks of transfer trauma, locate nursing homes that are equipped to meet resident’s needs, and devise relocation plans including transportation out of LHH. This is a grueling, Sisyphean task. And, it consumes a tremendous amount of staff time – another unintended cost, while alarming both patients and families.

As LHH Interim CEO Pickens described at the 6/14/22 Board of Supervisor’s meeting (at 3:23:45), LHH staff have reached out 15 nursing homes in San Francisco County, and hundreds more throughout the Bay Area and California. As of June 12, LHH staff made 4,507 phone calls to these facilities in search of suitable placement for LHH patients. After conducting 338 patient assessments, 178 patient/family meetings and submitting 349 referrals to other facilities, LHH only recorded 10 discharges. The tally is bleak: 4 patients were placed in other facilities, 2 returned to “the community,” 3 died and 1 fled AWOL. So, after one month, just 6 were planned discharges. That leaves 675 to go.

Incidentally, Pickens vowed to be “fully transparent.” He then showed the age, race and language distribution among LHH patients. But Pickens slyly omitted sex data: the number of women residing at LHH has dropped to an historical low of 37%. For decades, women comprised over 50% of LHH residents. The displacement of elderly women hasn’t triggered equity concerns.

The prognosis for relocating 675 patients is grim. Very few skilled nursing facilities have openings for Medi-Cal patients. In fact, no Medi-Cal beds were available at the end of May. Yet, last year, 96.5% of LHH patients were covered by Medi-Cal. Most private nursing homes cannot survive by solely serving Medi-Cal recipients due to the low reimbursement rates. Competition for nursing home beds is fierce, and LHH’s medically-complex Medi-Cal patients are among the least desirable both clinically and fiscally. Moreover, LHH patients have the right to appeal their discharges with the State. Therefore, transferring hundreds patients out of LHH is unworkable. But LHH is required to keep trying in order to get funded and recertified by CMS.

The Recertification Game

Alongside this fruitless relocation endeavor, LHH must pass several inspections. The aforementioned consultants will help with this task. They will orchestrate a “Mock Survey” at the end of June, designed to simulate an inspection by regulators. After reviewing and correcting any deficiencies, a second Mock Survey will be conducted in August. By September, LHH should be ready to apply for recertification. Then, CMS inspectors will conduct an initial survey. If LHH passes, CMS will return 90-120 days later for a final survey. This hiatus provides a “reasonable assurance period” to ensure that LHH doesn’t concoct fleeting fixes. If all goes well, LHH should be in the clear by January 2023.

Getting there will be arduous. In their 6/13/22 initial assessment, consultants from Health Management Associates warned; “if…surveyed immediately by CMS, Laguna Honda Hospital would not be found in substantial compliance and granted recertification.” Notably, 56% of LHH’s own Quality Assurance standards were not met: “The areas of greatest concern with demonstrated gaps were Abuse allegations (percent open and unresolved as well as the high total number reported), incomplete…care plans, and the gap in Substance Use Disorder programming engagement.”

No Surprise

As noted by the SF Examiner, many people have expressed surprise at the ferocity of the federal crackdown at LHH. Our Supervisors were also flabbergasted – except for Supervisor Ahsha Safai who zeroed in on the imprudent mixing of younger volatile drug-users with frail elders. Well, federal agencies sometimes act harshly when local officials fall short or look the other way. Recall how in 2019 the US Attorney for Northern California led an unprecedented crackdown on long-tolerated drug dealers in the Tenderloin. Many were surprised. Similarly, folks were stunned in 2020 when the feds assailed City Hall’s taken-for-granted corruption. The feds at CMS probably decided that the long-tolerated hazardous behaviors at LHH were actually intolerable. Everybody involved knew that the DPH Flow Project brought disarray and danger to Laguna Honda. Most folks just went along. Now they’re surprised. 

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

JUNE 22, 2022

Is City Hall Corruption a Cliché?

Living With Municipal Corruption

by Dr. Derek Kerr

This March, the Coalition for San Francisco Neighborhoods sponsored a discussion on “The Roots of City Hall Corruption.” Journalists Tim Redmond from 48 Hills, Susan Dyer Reynolds from The Marina Times, and I from The Westside Observer were invited. Joe Eskenazi from Mission Local couldn’t attend. That discussion prompted further thoughts.

Academic research defines corruption as “The abuse of public power for private gain. Derived from the Latin corrumpere, corruption is as old as civilization. In fact, corruption – and the reaction to it – has changed history. So it isn’t a trivial phenomenon. Lately, long-ignored municipal corruption has brought shame, outrage and cynicism to San Francisco.

To understand corruption, it’s helpful to categorize. Here’s a modified taxonomy; Petty Corruption refers to low-level pilfering by institutional gatekeepers. For example; a building inspector takes bribes to approve shady construction or a cop seeks payment to ignore a traffic violation. Administrative Corruption refers to organized self-dealing affecting an entire government agency. For example, access to jobs relies on patronage or nepotism while services and contracts come with pay-to-play conditions. Grand Corruption applies when City Hall officials conspire with a hidden network of special interests to advantage themselves at public expense. This type of self-dealing eventually gets normalized within the municipal culture, trickling down to lower levels of government.

Litany of Departmental Corruption

In August 2018, Health Director Barbara Garcia was forced to resign after a City Attorney investigation of a whistleblower tip found that she had steered contracts to an organization where her wife played a leading role. In February 2020, DPW Director Mohammed Nuru resigned after being arrested and charged with bribery and public corruption by the US Attorney. In March 2020, Tom Hui, Director of the Department of Building Inspections was forced to resign for taking prohibited gifts, favoritism in contract awards, and nepotism in hiring. In June 2020, Sandra Zuniga, former director of the Mayor’s Office of Neighborhood Services was fired for money laundering with Mr. Nuru. In November 2020, SFPUC General Manager Harlan Kelly was arrested for accepting bribes and resigned. His deputy, Juliet Ellis, resigned after her expense reports were subpoenaed. His wife, City Administrator Naomi Kelley, also resigned but was not charged for corruption. There’s more.

 In July 2021, Gerald Sanguinetti, former Bureau Manager at DPW, was charged with perjury for failing to disclose $263,000 his wife received from DPW contracts. In May 2021, then-DBI Senior Building Inspector Bernard Curran quit after being indicted for permit fraud by the US Attorney. In July 2021, Rodrigo Santos, a former Building Inspection Commissioner who was then a private contractor, was indicted for bank fraud and identity theft. In February 2022, Curran was also charged with perjury and accepting prohibited loans and payments from clients by DA Boudin. Then in April 2022, Debbie Raphael, Director of the Department of the Environment, resigned after City investigators found she had accepted gifts and solicited donations from Recology shortly before signing contracts with Recology.

Other rule-breakers haven’t been punished. Public Integrity Reports issued by the Controller and the Ethics Commission documented that Recreation and Parks, the Planning Department and the Airport, among others, solicited sizeable yet prohibited  donations from their own contractors to pay for parties and staff perks.

All this is more than Petty Corruption. With multiple City departments implicated, it exceeds simple Administrative Corruption. There’s a widespread culture of self-dealing infecting multiple agencies. Some of this self-dealing seems minor. But, small misdeeds are harbingers of bigger ones. As investigations proceed, larger sums tied to shady contracting may come to light - as in Recology’s $110 million over-billing scandal. So far, there isn’t enough evidence to diagnose Grand Corruption.

Some Causes

Administrative and Grand corruption depend on top-level and mid-level misconduct. When pay-to-play marks the “tone at the top,” it trickles downward, shaping the “mood in the middle.” Since tone at the top drives institutional corruption, recall that in August 2021, Mayor London Breed was fined $22,792 by the Ethics Commission. Why? She let her subordinate, Mohammed Nuru, pay $5,500 for her car repair and rental bills, and had previously hustled restaurateurs Nick Bovis/Lefty O’Doul’s and John Konstin/John’s Grill to each pay $1,250 for her Pride Parade float.

However, the original tone-setters for this generation of troubled City executives were former Mayor Willie Brown and his patronage army. At best, patronage systems tolerate corruption. At worst, they propagate it. Corruption is propagated when pay-to-play becomes a core value, as it apparently did in San Francisco. Mindset plays a role. Cronies who harbor deprivation or entitlement mindsets feel that they are owed more, or deserve more, than their wages. Both mindsets justify ill-gotten gains.

In San Francisco, the “City Family” paradigm fosters corruption. Allies are recruited via patronage and nepotism. A familial cabal is created where favors, gifts and freebies are exchanged. Professional boundaries dissolve. Since everyone’s “family” it’s easy to discount their errors, ethical lapses, and misconduct. Moreover, loyal family members don’t tell. They protect each other. In order to protect corrupt systems, honest employees are marginalized or driven out. Insiders who tackle corruption face retaliation. Joanne Hoeper, former Chief Trial Deputy for the City Attorney, and Dennis Richards, former Planning Commissioner, are recent examples. In their place, loyalists are often installed. Wrongdoing goes unchecked.

Commissions have failed to curtail departmental corruption. Too often, commissioners strive to ingratiate themselves with agency executives instead of reflecting public concerns. Some insiders contend that Commissioners are appointed based on the amount of cash they raise for the political establishment – much like US Ambassadors. Such Commissioners are beholden “team players” rather than public servants. It’s also problematic that many commissions are controlled by one person – the Mayor.

Consequences

In the short term, corruption renders institutions more guarded and opaque, for obvious reasons. Institutional competence erodes as conscientious employees get marginalized and lackeys are promoted. This consolidation promotes impunity. Betraying the public trust is normalized. Corruption begets corruption – until an expose’ cracks the scheme.

In the longer term, self-dealing erodes civic virtues like integrity and fairness. Once the corruption becomes apparent, trust in government falters. The citizenry feels betrayed and becomes alienated. Unraveling the social bonds between the public and government threatens the body politic and democracy.

Remedies

Given the importance of tone at the top, commissions should be more assertive in selecting ethical CEOs. Commissioners are more likely to serve the public when some are appointed by the Board of Supervisors as well as the Mayor. Addressing corruption should be part of their oversight duties. Troubled departments should have Compliance Officers who regularly report publicly to Commissions – not solely to management. A quarterly agenda item titled “Compliance & Ethics” could focus anti-corruption efforts and draw public comments. In addition to fostering a “speak out culture,” there should be a “duty to report” for employees who notice wrongdoing. Employee surveys must specifically ask about corruption within departments. Compliance Officers should review employee feedback and whistleblower complaints.

Perpetrators must be penalized - as well as those who are complicit or enable corruption. Enacting reforms is problematic as the folks who write the rules are often tainted by the corruption. Yet, they did not see, hear or speak of it. They may undercut reforms through omissions and loop-holes. Hiring independent organizational consultants to address corruption could help uncover City Hall’s blind spots and biases. So could electing a Public Advocate. However, both could fall under City Family control. An engaged citizenry working with local media can better expose sleaze and advance sound reforms.

City investigations will be calibrated to avoid destabilizing City Hall. Hence, Public Integrity Reports are likely to be “limited hang-outs.” They invariably propose more rules. But rules don’t enforce themselves. Rules are futile in a rule-breaking culture. Besides, too many rules can push good people to bend them just to get things done. Because corrupt cabals are resilient, they find ways to circumvent new constraints. And they form coalitions that help them weather exposures. One antidote is for civic groups to spotlight municipal corruption, as did the Coalition for San Francisco Neighborhoods. This inhibits the normalization of government corruption and raises citizen engagement.

 Transparency rations the secrecy that corruption craves. Most government activities are recorded. Journalists and civic watchdogs rely on public records to detect corruption. They often encounter willful obstruction. Improving access to City records by strengthening the Sunshine Ordinance is spearheaded by San Franciscans for Sunshine. They deserve support. Similarly, supporting journalists and publications that expose corruption is essential. Subscribing, sending tips or letters to the editor serve the cause. When vigilant citizens, whistleblowers and journalists are rebuffed, the FBI will listen.

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

MAY 2022

Mixing Behavioral and Substance Abuse Patients with the Vulnerable Elderly — What Could Possibly Go Wrong? Everything.

Turmoil and Crackdown at Laguna Honda

by Dr. Derek Kerr

Last month’s Westside Observer covered Laguna Honda Hospital’s (LHH) regulatory travails following 2 near-fatal patient drug overdoses onsite in 2021. In October 2021, California Department of Public Health (CDPH) inspectors reviewed these cases plus other incidents LHH had reported. They diagnosed “Substandard Quality of Care.” Records obtained by the Westside Observer showed the disarray was more dire than what LHH had publicly disclosed.

For example, 13 of 37 sampled patients had tested positive for illicit drugs. Among these were the 2 residents who overdosed on fentanyl and methamphetamine. One spent weeks hospitalized for drug-related seizures. The other ended up on a ventilator for respiratory failure. Another 2 patients were intoxicated due to meth and THC, the active ingredient in cannabis. Another 2 sustained falls related to alcohol and methadone. Another 4 showed abnormal behaviors due heroin, methadone and methamphetamine. None of these drugs had been prescribed.

There’s more. Of the 37 sampled patients, 23 possessed contraband, including syringes, drugs, drug paraphernalia, a knife, scissors, bottles of alcohol and lighters. Eleven had been inadequately monitored leading to unsafe use of lighters. Confiscated contraband was improperly stored for 16 of 37 sampled residents, raising the risk of diversion. Nurses lacked “the specific competencies and skill sets necessary to perform clinical searches,” thereby posing a risk to residents and staff. The State found; “A pattern of deficiencies that constitute actual harm that is not immediate jeopardy.”

LHH was given until April 14, 2022, to resolve all its deficiencies. Otherwise, State and Federal reimbursement would end. Meanwhile, the State would conduct follow-up inspections.

Persistent Violations & Immediate Jeopardy

In March 2022, State and Federal surveyors made 2 unannounced visits. They detected ongoing lapses in interdicting contraband and unsafe smoking. But LHH and DPH executives publicly downplayed the citations as; “a patient was smoking in a communal bathroom, while another patient on oxygen had a lighter.” However, CDPH survey reports show these violations were riskier and more frequent than what was conveyed to the Media and before the Health Commission. For example, the oxygen-dependent patient had repeatedly smoked in his room. Unmentioned were the following violations;

17 of 38 sampled smokers repeatedly possessed lighters contrary to hospital policy. Many of these patients were caught with prohibited lighters while State inspectors were at LHH! One patient under 24-hour/day supervision for “sexually-inappropriate behavior” and a positive fentanyl test was caught with 2 lighters - during the survey. Fentanyl can be smoked. A patient with kidney failure absconded from his dialysis treatments to purchase drugs and lighters, then smuggled them into LHH despite repeated confiscations. A patient who repeatedly harbored drugs and lighters began smoking fentanyl while being interviewed by his psychiatrist. That psychiatrist admitted that LHH could not manage this patient’s drug use. A Nursing Director confessed; “Our team have exhausted most options in helping eliminate or minimize the contraband and illicit substances…”  The surveyors’ verdict; “Ineffective system to eliminate source of contraband inside the facility.”

Further, LHH’s mandated annual Facility Assessment, a process that helps align resources with patient care needs, omitted behavioral and substance use disorders. Yet, the inspectors found that 12% of LHH patients carried diagnoses of substance use disorder alone. Also, 1 of 7 patients sampled lacked the federally-required pre-admission screening and review that protects patients with serious mental illness from being inappropriately placed or kept in nursing homes. Incidentally, LHH reported 17 cases of resident-to-resident altercations that month, although the surveyors did not review them. In sum, LHH’s “…failed practices placed all residents to unsafe living environment.” That’s why the CDPH declared a state of Immediate Jeopardy in March 2022. That designation halts new admissions and may invoke a penalty up to $100,000. Within a week, LHH formulated a Plan of Correction, vowing to clamp down on contraband and other deficiencies.

Moment of Truth

In mid-April, 11 inspectors from CDPH and the federal Centers for Medicare and Medicaid Services (CMS) surveyed the hospital. Such a large contingent meant the regulators weren’t playing. Fortunately, they didn’t identify violations related to drugs or contraband. Unfortunately, they found other violations - of LHH’s own policies.

For example, a cognitively impaired resident was self-administering 20 dietary supplements without a physician order. In 3 out of 9 sampled cases, there were significant discrepancies between physician orders and what nurses noted in patient Care Plans. In 2 instances, nurses missed doses of anti-diabetic and anti-seizure medications. Some doses were inappropriately delayed. A resident with impaired mobility did not receive prescribed range-of-motion exercises. One oxygen-dependent patient received lower amounts than what was ordered. A patient with chronic pain was not properly monitored for pain intensity and degree of relief. Several cognitively impaired patients kept scissors or wound cleansers at the bedside instead of in locked drawers, as required.

Moreover, multiple nurses disregarded Infection Control regulations. Lapses involving hand-washing, glove use, face masks, face shields and protective gowns occurred on “Amber Level” wards - with known exposures to COVID. An unvaccinated visitor was allowed to use a common bathroom and locker before completing his COVID test. Garbage bags and laundry hampers overflowing with trash and soiled linens were left exposed and unattended. Although LHH has worked heroically to vaccinate everyone against COVID, it has dealt with 136 patient cases with 6 deaths, plus 609 non-fatal employee cases. Therefore, adherence to infection control measures is essential. That proved elusive for an over-burdened staff. So, LHH flunked its key survey by focusing on contraband while overlooking other obligations.

Costly Penalties

On 4/14/22 CMS issued a draconian Termination Notice, cutting Laguna Honda’s federal reimbursement. Plus, payments were retroactively withheld for patients admitted since January 14, 2022. According to LHH’s FY2020-21 Annual Report, revenues were $250 million of which 96.5% came from Medicaid and 1.9% from Medicare. That year, the City’s General Fund contributed $33 million to LHH’s $296 budget. Losing federal income would cost the General Fund at least $16 million monthly.

Laguna Honda will not lose its license. Services will continue. But no new admissions are allowed until LHH re-applies to CMS and regains approval to receive federal funds. Zero patients were admitted this April and the census dwindled to 686 in May. CMS agreed to continue payments for 30 days while LHH applies for re-certification, according to a DPH Press Release. However, the re-accreditation process can take several months. Continued funding and hospital operations must be negotiated with CMS.

Strategic Panic

At the 4/19/22 Health Commission meeting, Health Director Dr. Grant Colfax minimized the damaging April survey findings as “unrelated and technical individual infractions.” There was talk of appealing the citations and “exploring all other available options.” That implied political leverage. House Speaker Nancy Pelosi was already tapped. She told CBS Bay Area News; “My office is working closely with Mayor Breed and the Biden Administration to support Laguna Honda’s devoted staff and ensure that the hospital can address its issues, come into full compliance and continue to serve our community…”

Bravado subsided as the gravity of the situation emerged at the 5/10/22 meeting of the Health Commission’s LHH Joint Conference Committee. There, LHH CEO Michael Phillips announced a “Transition Plan.” Two consulting firms, Health Management Associates and the Health Services Advisory Group, were urgently hired to help LHH regain its CMS certification and pass CDPH’s Annual Licensing Survey. A “top-to-bottom” analysis of hospital operations was promised. SFGH’s Chief Nursing Officer (CNO), Terry Dentoni, was drafted to serve as LHH’s Acting CNO. Presumably, LHH’s own CNO, Monica Biley, was displaced. SFGH Quality Management staffers were called in to assist. More nurses were recruited. More Sheriff’s patrols, “smoke patrols,” safety searches and visitor screenings were deployed. “Narcotic analyzers” will check patients after going out on pass. Much more was discussed in Closed Session – away from the public.

Kept hidden was that CMS had just demanded that LHH submit a contingency “Closure and Patient Transfer and Relocation Plan.” As reported by the SF Chronicle, all LHH residents received a notice from Health Director Colfax on 5/16/22 explaining how they could be relocated in 60 days. Imposing such a stressful burden on LHH administrators and residents suggests that regulators were fed up with the chaos and laxity at LHH.

Flow Project Side-Effects

The root of many unmanageable behaviors that jeopardize Laguna Honda’s operations is the notorious DPH Flow Project. Designed to flush non-paying, hard-to-place patients from SFGH into LHH, it dismantled LHH’s Admissions Screening process in 2004. Since then, patient flow became more important than patient safety laws. Now, the DPH is paying the price.

 There are hopeful signs that LHH’s survey fiasco could rectify the Flow Project. During the calamitous October 2021 CDPH survey, CEO Michael Phillips told inspectors that “the facility’s goal is to reduce harm from illicit drug use and be selective in admitting residents that may play a role in contraband drug use and distribution.” On 4/19/22 Health Director Colfax added “…improvements to…admissions, and discharges” to a litany of proposed fixes for LHH’s contraband scourge. These notions could yield safer admissions - and lessen LHH’s record-breaking AWOL departures.

But, screening out unsafe patients referred by SFGH flouts the raison d’etre of the Flow Project. Similarly, reducing AWOL cases - that open LHH beds for SFGH referrals - would inhibit flow. Ominously, LHH has empanelled a “Patient Flow Team” to decide who gets admitted. That job should be, and previously was, done by an Admissions Screening Committee. As long as patient flow is prioritized, LHH will deform to contain an anti-social minority rather than serve elderly and physically disabled San Franciscans.

Some behaviorally-challenged patients are better served by specialized drug treatment and psychiatric programs. These could be outside LHH, or in a separate carefully-monitored ward within. The City’s evolving Mental Heath SF program could help in that regard. But as long as LHH remains a Flow Project destination, more chaos and regulator entanglements are inevitable.

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

MAY 2022

Medicaid & Medicare threaten payments...

Overdoses at Laguna Honda

by Dr. Derek Kerr

Two Laguna Honda Hospital (LHH) patients overdosed on methamphetamine and fentanyl in July 2021. The drugs were self-administered and the patients survived. The hospital promptly reported these incidents to the California Department of Public Health (CDPH). Such diligent reporting was imposed after the drug scandal of July 2019. Then, it was rogue nursing staff that drugged patients with pilfered narcotics. Five patients suffered life-threatening overdoses. All told, 130 patients were abused physically and psychologically. LHH was fined $780,000 for these lapses, settled one lawsuit for $800,000 and faces several others from aggrieved residents and families.

In response to the 2 overdoses, CDPH inspectors surveyed Laguna Honda in October 2021. They determined that LHH was delivering “substandard quality of care.” LHH offered a Plan of Correction. It was accepted with the proviso that LHH had to pass follow-up inspections over the next 6 months. However, LHH’s federal Quality of Care rating dropped from a superior 4 Stars to a mediocre 2 Stars.

 Over several follow-up visits in 2022, State inspectors found persistent safety violations. An employee ignored procedures that LHH had promised to implement to control contraband. One patient was found smoking in the bathroom. Smoking is prohibited indoors. Another, who required oxygen, kept a lighter at the bedside. That’s a fire hazard. Inspectors were so alarmed that they declared a state of “Immediate Jeopardy” on March 22nd.

Unless immediately corrected, the CDPH can shut-down facilities that imminently jeopardize patient safety. Fortunately, LHH presented an acceptable fix involving tighter scrutiny of visitors and searches of patients. The inspectors lifted the Immediate Jeopardy designation, but will return in mid-April to make sure LHH adhered to its commitments. Ominously, on March 30th the federal Centers for Medicare and Medicaid Services threatened to stop payments to the hospital if it fails the follow-up survey. Since Medicaid or MediCal covers 96.5% of LHH patients, the City’s General Fund – aka tax-payers – would then foot the bill. LHH’s deadline to boost security, re-train staff and ban illegal drugs is April 14th.

Why Is This Happening?

Well, federal law requires that hospitals provide “adequate care.” If patients shoot dope and overdose, the hospital is deemed negligent. That’s why patients referred to LHH must be properly screened, preferably by a physician, to ensure that their medical needs can be adequately met. Apparently, LHH keeps admitting patients that cannot be safely managed. That includes some who are functional enough to procure and self-administer street drugs. Some are volatile, anti-social, confrontational and prone to altercations.

These restless patients also tend to flee the premises either “Absent Without Official Leave” (AWOL) or “Against Medical Advice” (AMA). Historically, AWOL/AMA discharges hovered around 13%. In recent years, these “unplanned discharges” have spiked.  The Westside Observer first reported on this “Exodus from Laguna Honda” and associated costs in 2015. Runaways routinely account for 25% to 30% of community discharges. In 5 months in mid-2021, 40% of patients discharged alive actually fled from LHH. One reason: “they did not want to be here.” So, why were they admitted? It’s due to the DPH Flow Project.

Flow Project Re-Visited

Years ago, elderly and disabled San Franciscans could count on Laguna Honda to provide long term nursing care when they could no longer care for themselves. LHH doctors would screen referrals to make sure LHH could meet their needs. Those who actively endangered themselves or others were not admitted. Recall how the emotional theme of the 1999 campaign to rebuild LHH was to serve our “Old Friends.” That ended with the notorious Flow Project of 2004.

 The Flow Project aimed to increase the flow of non-paying “hard-to-place” patients from San Francisco General Hospital (SFGH) into LHH. These were patients who had recovered from an acute illness. So SFGH no longer received full payment for their care. And, due to their disruptive behaviors, no Nursing Home would take them. Some could not be sent home because they were homeless, mentally unstable or unreliable in self-care.  So they occupied SFGH beds that could have been more profitably filled by acutely-ill patients, who were instead diverted to other hospitals. Importantly, flushing hard-to-place patients into LHH would also reduce street homelessness – a faltering goal of then-Mayor Newsom’s Care Not Cash program. To offset homelessness and justify the Flow Project, then-DPH Director, Dr. Mitch Katz, declared that Laguna Honda should provide “Psycho-Social Rehabilitation” – without additional resources.

In response to staff and community protests, Dr. Katz sacked LHH administrators and replaced them with SFGH loyalists. LHH screening doctors were replaced by a compliant nurse. The new CEO supplanted the Medical Director as the authority on admissions. A flood of younger, able-bodied, behaviorally aggressive male patients, many with criminal histories, overtook the hospital. Street-life invaded, with open drug use, drug dealing, disorder, intimidation and violence.  One agitated patient came from SFGH and set fire to a 30-bed ward, shutting it down for a year. He was rushed back to SFGH, but days later LHH was forced to re-admit him!

State and federal regulators swarmed over LHH and issued numerous serious citations. Thus pressured, Mayor Newsom halted the formal Flow Project in 2005. By then, Laguna Honda’s takeover by Flow Project acolytes had occurred. Community groups and LHH staff hurriedly organized a Ballot Initiative to bar the admission of patients who posed a danger to themselves or others. Proposition D of 2006 failed with 35,418 votes (26.3%). Subsequently, subtler versions of the Flow Project were pursued, but with additional resources to avoid further public opposition and regulatory interventions.  This policy background, along with the City’s fentanyl and meth plagues, explains why patients are overdosing at LHH.

Distorting a Civic Institution

In addition to costly regulatory entanglements and reputational damage, inappropriate admissions displace elderly San Franciscans, especially women who need long-term care but cannot get into LHH. They linger on waiting lists and may get shunted to Nursing Homes out of County. The table below shows how the 2004 Flow Project upended LHH demographics. For decades, female patients at LHH outnumbered males in accordance with local census patterns. As in 2010, the 2020 US Census shows that women comprise 49% of City residents. However, 55% of elders over age 65 are women. Beyond age 85, women outnumber men by a ratio of 2 to 1. Now, only 37% of LHH residents are women.

In order to sustain the Flow Project, LHH implemented increasingly restrictive measures to control the ensuing disorder.  LHH bolstered its contingent of Sheriff’s Deputies. Deputies guard entrances, photograph visitors and check their IDs. Additional staffers are paid as “coaches” to monitor unruly patients. Drug-sniffing dogs are deployed “to assist with resident safety.” Surveillance gear multiplies. Now there’s talk of installing scanning machines to detect contraband in care-packages that relatives bring for residents. None of this will keep street drugs out of LHH. But it will turn Laguna Honda into an inhospitable environment – in order to contain an antisocial minority.

Insiders say that a few years ago a new program allowed able-bodied patients to go out on pass. Two staffers were assigned to check returning patients for drugs and paraphernalia. But those employees left and reportedly weren’t replaced. Instead, nurses were told to conduct “safety searches” for contraband. Some nurses refused, fearing that patients would no longer trust them. Volunteers were then recruited to conduct searches, but LHH couldn’t enlist enough. When employees were again directed to frisk patients, they complained to their Union. Unions are reportedly negotiating with the DPH to resolve the issue. Compounding these burdens is a nursing shortage due to COVID-related illness and burn-out.

Misdiagnosis Means Poor Prognosis

LHH CEO Michael Phillips stated to The Chronicle that “We care for some of the most vulnerable residents in…San Francisco, many of whom have histories of substance abuse which may persist as they undergo treatment.” True, but among these “vulnerable residents” are unruly non-residents who compromise the care and safety of older, more vulnerable San Franciscans for whom Laguna Honda was rebuilt. Yet, no one is proposing a specialized ward with on-site psychiatric services and policing for patients who endanger themselves and others. Instead, the whole hospital is being transformed into a carceral complex. That impairs the quality of life of elderly and physically-disabled residents for whom optimal care requires maximal autonomy within a home-like environment.

At the April 5th Health Commission meeting (at 37 minutes), Health Director Dr. Grant Colfax, Health Network Director Roland Pickens, and LHH CEO Michael Phillips delivered trite reassurances about correcting the situation. Dr. Colfax’s written remarks can be viewed here. The Commissioners offered their usual praise of LHH - mostly for dealing with COVID – while dodging the drawbacks of hastily mixing younger, anti-social patients with the elderly and disabled.

Acknowledgement:  Thanks to Michael Lyon from SF Gray Panthers for helpful tips.  

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

APRIL 2022

Westside Public Safety Forum

Too Much Crime, Not Enough Cops?

by Dr. Derek Kerr

March 19, 2022 was a cold, rainy Saturday. Yet, some 40 people gathered at the historic Forest Hill Clubhouse for an in-person “Munch & Mingle” with District 7 Supervisor Myrna Melgar. Sponsored by SF SAFE, this Westside Public Safety Forum also featured Captain Eric Vintero from the Taraval Police Station and Kyra Worthy from SF SAFE.”

Though advertised as a forum on “crime and criminal justice.” the first batch of questions dealt with the closure of JFK Drive. Sentiments were hotly opposed to the “back-door” shut-down that denies some elders and disabled persons easy access to museums, gardens and other amenities in Golden Gate Park. Howard Chabner detailed these concerns - and their legal implications, in a recent Westside Observer article. Supervisor Melgar indicated that JFK Drive was in Supervisor Connie Chan’s district and that Chan was negotiating a compromise with various stake-holders. The JFK Drive issue would then be taken up by the Land Use and Transportation Committee, followed by the full Board of Supervisors. So, there should be 2 ½ months for public input before resolution of the controversy.

Surprisingly, safety concerns went beyond street crime. There were issues with storm-damaged trees, malfunctioning traffic lights, parking violations, hard-to-get parking stickers, dubious MTA surveys, and precarious intersections due to speeding cars. Eventually, someone asked whether Taraval Station only deployed 2 police cars on night patrol. Captain Vintero denied that rumor, insisting that each shift maintains minimal staffing standards. If staffing falls short, there are always volunteers for overtime assignments. Due to a citywide deficit of 400 police officers, and because the Taraval Police District is the city’s largest, the station does encounter difficulties in arranging “extra patrols.” Several participants commented about the toll on overworked officers and the collateral risks involved.

Supervisor Melgar acknowledged the staffing deficit within the SFPD – and other departments. She re-affirmed her commitment to adequately fund the SFPD and the Police Academy. Although she voted for 3 Police Academy classes, they are riddled with vacancies.

SFPD’s staffing deficit is due to declining applications rather than increased departures. Forum participants identified 2 potential causes; a perception that San Franciscan’s do not appreciate their cops – a rarity in District 7, and the City’s sky-high housing costs. SF-SAFE’s Kyra Worthy encouraged the public to express appreciation for cops when engaging with them or with the Board of Supervisors. Affordable housing for City employees wasn’t discussed.

What had Taraval Station done about the unprecedented rise in burglaries in 2021? There were 620 per SFPD’s CompStat log, representing a 29% increase over the previous year. Captain Vintero responded that the numbers had dropped substantially in 2022, given several arrests of key culprits and the deployment of extra patrols and plain-clothes teams to hotspots. CompStat data for the first 2 months of 2022 shows 66 burglaries compared to 128 for those months in 2021 - a 48% drop.

Kyra Worthy added that SF-SAFE also reaches out to burglary victims and provides free advice on securing their premises from future break-ins. One forum participant praised SF-SAFE’s free Residential Security Assessments. Another emphasized how forming the Forest Hill Neighborhood Watch Group had improved neighborhood security. Supervisor Melgar reminded the audience that her Participatory Budgeting Program wants to fund safety projects proposed by community groups. Here’s a brief video of how the process works.

Frank Noto from Stop Crime SF asked about catalytic converter registries used elsewhere to deter thefts by facilitating convictions. The concept is similar to SF-SAFE’s Bicycle Registry. Captain Vintero agreed that engraving these devices with an identification number would make it easier to prove they were stolen if recovered during a search. Another participant shared a common dilemma; what to do about an aggressive vagrant who had been loudly frightening and threatening neighborhood residents for months. Police encounters with agitated individuals have resulted in excessive violence. Because of the threatening behavior, Captain Vintero advised calling 911 so officers could assess the offender to determine what services or interventions are needed. Governor Newsom’s recent CARE Court proposal may provide – and impose - essential services for homeless/mentally-ill persons who display menacing behaviors.

Happily, participants were treated to a flavorful banquet prepared by Sunset29 BBQ’s grill-master Mike “GTO” Marcal.

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

MARCH 2022

Lawsuit Details Reveal “City Family” Backroom Manipulations

Labor Union Sues City for Corruption and Retaliation

by Dr. Derek Kerr

Why does the FBI manage to unearth City Hall corruption, while our watchdog agencies; the Controller’s Whistleblower Program, Ethics Commission and City Attorney’s Office cry “What happened?”

Clues emerge from a whistleblower retaliation lawsuit filed in Superior Court on behalf of the Laborers’ International Union, Local 261 (Case No. CGC-21-596956). The central claim is that the Public Utilities Commission (SFPUC), Department of Public Works (DPW) and the City Administrator’s Office had “engaged in a multi-year process to divert public funds and resources to enrich themselves and friends and family…”  And, City Hall knew about it.

At a 2/9/22 Press Conference hosted by attorneys Angela Alioto and Jordanna Thigpen, Alioto denounced the “chutzpah of stealing contracts from San Francisco and Local 261,” a union that represents “the working poor.” She hinted that the corruption “goes all the way up.” Former SFPUC Commission President and Local 261 officer, Vince Courtney, said that his concerns about shady nonprofit contracts met with disinterest or hostility. The Controller and City Attorney seemed to “turn a blind eye” to his reports. Lawsuit plaintiff, Theresa Foglio-Ramirez, Local 261’s Business Agent, said her complaints about dubious contracting and unsanitary work conditions set off reprisals from City officials.

The impression conveyed was that the City Family views reports of corruption as nonsense to be ignored - or threats to be obliterated. That may explain why Local 261 notified the FBI and decided to sue.  

Colliding Ideologies - Prelude to Lawsuit

Local 261, represents some 1,000 City workers. Most toil in construction, environmental services and other public jobs involving manual labor. Committed to workforce development and apprenticeship training, Local 261’s partnerships with the City have been contentious. For example, the union withdrew from a 2004 joint project with DPW. After co-creating lower-wage job classes to boost employment for unskilled workers, “the Department of Public Works took over the funds…to fill other positions that did not promote workplace development,” per the lawsuit.

The Union contends that former DPW Director Mohammed Nuru, and former SFPUC Assistant General Manager Juliet Ellis, hired cronies to “facilitate the flow of public funds to outside non-profit agencies.” Further, these favored nonprofits were paid to perform the same duties as City employees represented by Local 261. Nonprofit workforce development projects sometimes side-stepped the training standards used in union-run programs, thereby compromising workplace safety, quality standards, and career ladders, per Local 261.

Local 261 also chafed at the way SFPUC managed its Community Benefits Program, calling it “nothing more than a slush fund.” SFPUC contractors who pledged to donate money, equipment or volunteer hours to local non-profits received extra points for their proposals. However, the lawsuit alleges; “In many cases, contractors are advised by insiders at the SFPUC to hire an outside ‘consultant’ who will advise them how to draft the… proposal to ensure the SFPUC staff would accept the bid…These consultants in turn received their direction from SFPUC staff.” The Union dubbed this arrangement “the functional equivalent of being given the answers the night before a test.”

Friction between the SFPUC and Local 261 blazed during the tenure of Vince Courtney, a former Local 261 executive who served as SFPUC Commissioner from 2010 to 2019. In 2015, Courtney began probing then critiquing SFPUC’s non-profit workforce development programs. SFPUC managers viewed his trade union advocacy as interference and some of his votes as violating conflict of interest laws. They filed complaints with the Whistleblower Program, City Attorney and the Fair Political Practices Commission (FPPC). The City Attorney upheld the conflict of interest claim, but the FPPC dismissed it. Courtney filed his own whistleblower complaint, citing the SFPUC’s “granting out” of City jobs to nonprofits, favoritism in hiring - and retaliation. That complaint languished. Amid this acrimony, Union-SPUC relations frayed and Courtney resigned from the Commission.

In contrast, SFPUC’s Juliet Ellis was caught in a direct conflict of interests in 2014. The City Attorney was silent. Ellis kept her job despite being fined $8,500 by the Ethics Commission and the FPPC.

Meanwhile, Local 261 made inquiries “to understand SFPUC’s recalcitrance on workforce development.” Why were so many private non-profits engaged by the City for workforce development? Why did their apprenticeship programs hire “consultants” who did no apprentice work? Why did they enroll unqualified applicants? When Local 261 sought records about these City-funded programs, its requests were stone-walled.

In February 2019, Local 261’s Theresa Foglio-Ramirez complained to the SFPUC and the Mayor’s Office about “corruption in connection with SFPUC and DPW grants.” She named Harlan Kelly and Mohammed Nuru, and requested an investigation. Meanwhile, the union filed several grievances. Surprisingly, when Local 261 and the City met for arbitration, the City Attorney’s Office represented the City instead of Human Resources, as is customary.

In May 2019, Foglio-Ramirez notified the SFPUC that Local 261 had shared its corruption concerns with Supervisor Gordon Mar, and requested an audit. Her subsequent public records requests for data on SFPUC’s Community Benefits Programs were rebuffed. Eventually, Local 261 hired a private investigator to help in its corruption investigation.

When City records were eventually released, Local 261 concluded that job program “consultants” served as “conduits to outside non-profits to facilitate the award of public funds as grants (to) nonprofits with whom management shared an affiliation.” This practice of “granting-out” City services “represents a massive transfer of public wealth to nonprofits” according to the lawsuit. Notably, Bayview power-broker Dwayne Jones “was paid $7.1 million to work as a consultant on five large SFPUC projects, and also received a $900,000 consulting contract with the SFPUC to ‘advise’ on the Community Benefits Program.”

Allegedly, “the net result of this corruption has been the destruction of critical workforce development programs that were set up to provide Black residents of San Francisco with quality union jobs that are subject to the Minimum Compensation Ordinance, and replace them with ‘friends and family’ of those involved in the wide-ranging fraudulent scheme.”

Retaliation

Once Local 261’s leadership “blew the whistle on this wide-ranging corruption scandal, the City has targeted not just Local 261, but its members, in an effort to silence and destroy them.” For example, Juan Rivera, Local 261’s Chief Steward at DPW and a lawsuit plaintiff, was allegedly told by DPW supervisors that his union would “pay” for its complaints. In September, 2019 Rivera’s master key was confiscated, thereby curtailing his duties. In August 2021, Rivera was demoted with a 34% pay cut. When he asked why, DPW managers reportedly explained; “your Union and the Department are not seeing eye-to-eye.” The demotion wasn’t disciplinary. No other employee in DPW’s Apprenticeship Program was downgraded.

Retaliation intensified after the arrest of Mohammed Nuru in January 2020. Local 261 laborers felt the impact during the COVID pandemic. Reportedly, the City was “refusing to provide these employees with safe and sanitary facilities to perform basic hygiene and to take breaks.” Theresa Foglio-Ramirez complained publicly about the City’s failure to provide hand-washing facilities to workers exposed to hazardous materials from sewers and homeless encampments. In February, 2020, City Administrator Naomi Kelly contacted Local 261 executives, demanding that Foglio-Ramirez “stop using social media and stop criticizing the City.”

Yet, conditions worsened. Local 261 workers were reportedly not allowed to use City restrooms available to SFMTA workers. Instead, they were directed to use restrooms for homeless persons, often filthy and unsafe, especially for female employees. The Mayor’s Office and Human Resources reportedly refused to meet with the Union to address these safety concerns. So Local 261 filed Imminent Hazard complaints with Cal-OSHA. Subsequently, a Human Resources representative indicated that Union complaints to State regulators could trigger wage cuts in upcoming contracts.

If the City was slow to respond to Local 261’s complaints, the FBI was not. In June 2020, Local 261 notified the FBI about “ongoing corruption at the DPW and the SFPUC and requested an investigation.” In July 2020, the US Attorney served subpoenas to the SFPUC. City agencies soon realized that Local 261 was briefing the FBI. One General Services Administration manager scolded Foglio-Ramirez for calling the FBI. In August 2020, City Administrator Naomi Kelly reportedly asked Local 261 to fire Foglio-Ramirez. When the City decided to add pandemic-related enhancements to union contracts in late 2020, Local 261 says it was excluded.

Claims Against the City

So, Local 261 is suing the City for; jeopardizing the health and safety of its front-line workers, discriminating against its members by withholding access to sanitation facilities, misusing public funds and grants, running an unaccountable Community Benefits Program that diverted union jobs to favored nonprofits, dodging public records requests, retaliating against Union leaders who protested, and, by extension, deterring public workers from engaging in protected union activities. Predictably, the implicated City departments have denied that they retaliate against whistleblowers. 

At first glance, this dispute looks like a turf battle: Union versus City-funded nonprofits. But the documented sleaze permeating the DPW and SFPUC leadership adds credence to this lawsuit’s claims. Following its “limited hang-out” audit of SFPUC’s Community Benefits Program, the Controller’s Office intends to audit SFPUC’s overall contracting practices by April 2022. Detecting corruption is unlikely. That would fuel Local 261’s lawsuit. Fortunately for Local 261, the California Supreme Court recently decided to relax the standard for proving whistleblower retaliation. The Westside Observer awaits the City’s response to the above-noted allegations.

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

February 2022

Controller’s SFPUC Audit — A Limited Hangout

Integrity of the competitive bidding process compromised

by Dr. Derek Kerr

Aaccording to a former CIA official, a limited hangout is “spy jargon for a favorite and frequently used gimmick of the clandestine professionals. When their veil of secrecy is shredded and they can no longer rely on a phony cover story to misinform the public, they resort to admitting — sometimes even volunteering — some of the truth while still managing to withhold the key and damaging facts in the case. The public, however, is usually so intrigued by the new information that it never thinks to pursue the matter further.” That definition fits the carefully critical audit of one SFPUC community benefit initiative.

Auditing the Audit

The long-delayed Controller’s audit only assessed the Social Impact Partnership component of SFPUC’s controversial Community Benefits Program. Technically, the Community Benefits Program refers to the SFPUC’s own funding and support of community educational, job training, art and environmental programs. This program was not audited despite a Board of Supervisor’s motion to examine its workforce development projects. The related Social Impact Partnerships (SIP), the subject of the audit, refers to contractors who promise money, volunteer hours or in-kind donations to community non-profits in exchange for extra points awarded to their contract proposals.

Appropriately, the Controller engaged an outside auditor to do the job. That offsets self-serving bias and cover-ups. Even so, “independent” audits can dispense limited hangouts. As we learned from the 2008 global financial crisis, outside auditors can be so enmeshed with their clients that misconduct is overlooked. Auditors who rock the boat risk losing future contracts.

Sjoberg Evashenk Consulting, a reputable Sacramento firm with a $1.7 million multi-year contract with the City, was hired to conduct the audit. However, as the Westside Observer reported in April, former SFPUC officials with glaring conflicts of interest meddled with the scope and timing of the audit. Moreover, the audit floundered in bureaucratic shuffling between the Budget & Legislative Analyst and the Controller’s Office. All this parleying, amid FBI and COVID disruptions, foisted a 2.5 year delay between the Board of Supervisors’ call for the audit and its delivery.

Audit-hesitancy is expected when federal agents circle City Hall. If the audit digs up new dirt, the City’s exposure to liability grows. If it misses sleaze that the feds later uncover, the City’s credibility is damaged. Given this precarious context, the audit was likely to be constrained if not performative. Since the audit parameters and findings must be approved by the Controller’s Office (and probably reviewed by City Attorney), it isn’t really independent. The Controller’s oversight could promote a sound process — or a slanted one.

The audit, packaged as the Controller’s 8th Public Integrity Review, arose from a January 2019 whistleblower complaint, a February 2019 SF Labor Council Resolution that prompted the July 2019 Board motion, as well as a July 2020 federal probe of SFPUC contracting. Despite allegations of corruption, the Controller commissioned a Performance Audit rather than a Forensic Audit. Its objective was to “assess the appropriateness and effectiveness of SFPUC’s governance and oversight of the program.” Performance Audits seek to determine if agency policies and procedures are aligned and abide by accepted standards. Forensic Audits probe for corruption like fraud or bid-rigging, are more intrusive and rely on certified forensic accountants rather than regular CPAs. While Performance Audits can uncover skullduggery, they are not designed to do so.

The audit’s methodology section makes no mention of interviewing — or even reviewing the claims, of Union leaders, contractors and whistleblowers who criticized the program. According to the SF Labor Council’s Kim Tavaglione and the Building & Construction Trades Council’s Rudy Gonzalez, neither organization had been contacted by the auditors. No reference to program irregularities exposed by the Marina Times, Westside Observer, or NBC Bay Area. The audit was independent - of non-City sources.

Instead, interviews were limited to SFPUC and associated City officials, while acknowledging that; “Most of the SFPUC staff currently responsible for overseeing and managing the SIP Program have been in their current role for less than a year.” No indication that Juliet Ellis, the former Assistant Manager for External Affairs who oversaw the program, was contacted. Ellis and several subordinates had already bailed out, taking key information with them.

Audit Findings

That said, the audit provides a clearer accounting of the program than the SFPUC’s own reports. While it doesn’t touch on SFPUC’s promotion of non-Union workforce training programs — the crux of Labor complaints — it delivered a smoking...something; many community benefits promised by contractors vanished because SFPUC managers failed to monitor and enforce their delivery. As shown below, contractors often reneged on their commitments.

All told, 84 SFPUC contractors pledged $35 million in community benefits. Of 22 completed contracts, 7 or 30% defaulted on $685,000 in obligations. That is, they delivered just 68% of the value committed. The auditors concluded; “SFPUC’s lack of enforcement of commitments allows some contractors to default on them while others strive to meet them, placing contractors on unequal footing and jeopardizing the program’s long-term sustainability.” 

Most contractors lagged in delivering community benefits and submitting required progress reports. And, once a contract ended, undelivered benefits were not recoverable. Unlike other jurisdictions with similar programs, SFPUC had no policies to monitor compliance. Further, 85% of sampled contractors had modified their commitments, either shifting between volunteer hours, in-kind or financial commitments, or changing the total value of the commitment — after the contract was awarded. Allowing such alterations could “compromise the integrity of the competitive selection process.” That’s because contractors’ bids were scored on their oft-inflated initial pledges. In fact, one contractor would have lost a bid, had it been judged on what was furnished rather than promised.

SFPUC didn’t penalize contractors who previously defaulted on their community benefit commitments. Therefore, derelict contractors “may propose on future contracts, with commitments resulting in winning scores, and may again default on those commitments,” creating an unfair solicitation process. Additionally, while SFPUC stated that the community benefits portion of a contract proposal was worth 5% of the points awarded, in one-third of cases the points assigned fell between 3% and 4% - a potentially unfair variation.

Pay-to-Play Scenarios

The audit debunked the fallacy that offering community benefits in a contract proposal was “voluntary” as SFPUC long insisted. Notably; “a proposer who does not submit a (community benefit) proposal cannot receive a full score…they can only receive 95 percent of the total available points.” Only here does the audit deign to cite any outside criticism; “In at least one case, a contractor raised this concern, questioning the voluntary nature of the program and suggesting perceptions of ‘pay to play’.” That contractor, known to the Westside Observer, did not “suggest perceptions.” He ardently accused the SFPUC of pay-to-play, as have others.

Additional evidence “conflicted with SFPUC’s assertions that it cannot and does not guide or influence commitments, and that contractors’ commitments are fully voluntary.” For example, in 7 of 13 sampled contracts, “the contract language indicates that SFPUC could direct SIP commitments after contract award. Some contracts specifically state that contract commitments must be ‘aligned with, directed by, and driven by the SFPUC Assistant General Manager for External Affairs’ community benefits strategy…’”  As the Westside Observer previously reported, a post-contract revision by Juliet Ellis extracted an extra $125,000 from contractor AECOM/Parsons. Of that, $50,000 went to the Willie L. Brown Middle School.

Why were “voluntary” offerings “driven”? “Per SFPUC, ‘The purpose of affirmatively identifying the program areas or categories… was to reflect the priorities identified by the community…’.” No word on how the SFPUC dubiously gauged “community” priorities.

Potential conflicts of interests were identified among panelists who scored contract proposals. Starting in 2011, panelists had to attest they had no relationships with contractors who submitted proposals. It wasn’t until 2017 that they had to declare no interests in the community beneficiaries chosen by the contractors. For 6 years, some panelists may have harbored financial connections with these beneficiaries.

Nothing precluded contractors from switching their commitments — after the contract award — to a non-profit connected to a panelist. However, the auditors did not detect such collusion in the 10 cases they sampled. Unaddressed was whether SFPUC General Managers, who did not sit on community benefit panels, had urged contractors to add beneficiaries with whom these executives had gainful relationships.

In sum, the SFPUC’s Social Impact Partnership Program failed to enforce contract provisions resulting in lost community benefits. Inconsistent policies and procedures led to “confusion and a perception that practices are not fair nor transparent.”  Program performance disclosures, “necessary to gain public trust and ensure fair and equitable practices,” were lacking. These limited findings provided suitable targets for official opprobrium.

Conflicting Viewpoints

In a 12/9/21 Press Release, Controller Ben Rosenfield declared; “The lack of clear policies and controls also created an environment where conflicts of interest, inappropriate steering of funds, and other abuses could occur.” City Attorney David Chiu echoed; “The lack of clear policies and oversight in the Social Impact Partnership Program has left the program susceptible to favoritism and abuse.” SFPUC General Manager Dennis Herrera vowed; “No one at the SFPUC will tell contractors which organizations to make commitments to or how much to give them.” (bolding added) So, no actual corruption: just disembodied potential corruption due to…formerly weak policies. Responsible managers and the City Family’s culture of self-dealing got a pass.

Days later, the San Francisco Building and Construction Trades Council issued a response. It called for “a full investigation into the PUC because the recently released audit has only scratched the surface.” It cited “more than a decade of subterfuge, secrecy and potential money-laundering.” Again denouncing non-Union workforce training projects promoted by SFPUC’s Community Benefits Program and Social Impact Partnerships, it added; “Linking jobseekers to legitimate career paths and aligning those with registered apprenticeships is long overdue”.
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Dr. Derek Kerr is a San Francisco investigative reporter for the Westside Observer Contact: watchdogs@westsideobserver.com

January 2022

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.

                     --------------------------------------- 

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