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Ethics New Plan: Repeal Key Ethics Safeguards

by Larry Bush on 03/22/2011

in Paper Trails

[This is the second part in a series looking at the San Francisco Ethics Commission as the Board of Supervisors decides who will be appointed to a six-year term]

Key ethics safeguards against corruption in city contracts and grants should be repealed, according to the San Francisco Ethics Commission. Their recommendations are slated to be forwarded to the Board of Supervisors this year where the Rules Committee, chaired by Supervisor Jane Kim, will first hear them.

A reform-minded Board of Supervisors passed the anti-corruption measures in 2006 after former Mayor Gavin Newsom’s fundraisers exploited loopholes intended to prevent those seeking contracts from contributing to the officials who will approve the contracts.

The changes could possibly open the door for candidates and officeholders to accept contributions in time for the November 2011 election or to retire post-election debts from last November’s election.

Among the corporations and donors that would be affected by lifting the ban are Lennar, Darius Anderson’s and Ron Burkle’s Treasure Island Enterprises, Forest City, the San Francisco Giants, the San Francisco 49ners and others seeking contracts with the Redevelopment Agency, Treasure Island Development Authority, the Parking Authority, the Housing Authority and a half dozen other agencies.

Termed “state agencies,” they are established under state law rather than by the City charter or under the City’s ordinances. All are led by commissioners appointed by the mayor or the Board of Supervisors.

City elective officers who appoint members to serve on state agencies usually do not have any influence on, much less have knowledge of, the contracts that the state agency enters,” wrote Ethics Commission Executive Director John St. Croix to the Ethics Commissioners.

St. Croix concluded,  “For that reason, staff believes allowing parties contracting with those agencies to make contributions to local elected officials poses little or no potential for corruption of the contracting process,” concluded St. Croix.

The proposed repeal passed the Commission on a 4-1 vote with Eileen Hansen the only dissenting vote. Hansen’s term ended in February. The Board of Supervisors now will fill her seat.

St. Croix also told Commissioners that he and his staff had never found anyone guilty of violating the contractor ban since the law was passed. Removing the prohibition and the requirements for filing, reviews and reports, St. Croix noted, would reduce the “onerous” Ethics Commission workload.

The impetus for creating the ban came after then Mayor Gavin Newsom raised money to pay off campaign debts at a fundraiser hosted Darius Anderson and others bidding on the Treasure Island marina. Newsom’s campaign attorney, James Sutton, argued at that time that the existing ban on contributions from those seeking city contracts did not apply to Treasure Island because it is a “state agency.”

Ethics Commission Executive Director St. Croix’s view that mayors are not knowledgeable about contracts at Redevelopment, Treasure Island Development Authority, the Parking Authority, Housing Authority and other “state” agencies is at odds with the what mayors themselves say.

“Some of my most proud work as mayor was the redevelopment work we did in Bayview Hunters Point, the work we did to get the Treasure Island deal done, the Transbay Terminal done, the work we’re doing on mid-Market to revitalize mid-Market and recruit companies like Twitter and others and capturing that increment in that mid-Market corridor,” claimed Gavin Newsom in a KGO7 broadcast March 10, 2011 arguing against the proposal to phase out local Redevelopment Agencies.

A year after Darius Anderson and Ron Burkle’s fundraiser for Newsom, Newsom wrote to the Treasure Island Development Authority, made up of his appointees, that his office would negotiate all Treasure Island contracts, according to a story broadcast by KGO7’s Dan Noyes.

Anderson and Burkle were awarded the contract.

The issue of political influence on big-ticket city contracts has been a staple of local newspaper coverage for the past 15 years.

The history of Treasure Island contract bids was a roadmap of what to expect.  As the Treasure Island bidding process began in 1998, the San Francisco Examiner reported on the relationship between the top bidders and then-mayor Willie Brown. Ron Burkle and Darius Anderson had put together a proposal to run a profitable marina at Treasure Island. “The idea was small pieces first,” Burkle told the Examiner, “and, if it goes well, we’ll be involved in the rest of the stuff.”

“But [Darius] Anderson, who held high-level fund-raising posts for the Democratic National Committee in 1993, was a bigger player than Brown let on, according to Burkle and others who worked on the campaign,” the story continued.

“When Willie went to New York, Chicago or Detroit, Darius went with him as his lone aide,” Burkle said, San Francisco Examiner reporter Chuck Finnie wrote.

“Indeed, one out-of-town fund-raiser that Anderson organized was at a Burkle residence in Los Angeles, Burkle said, adding, “I think it did pretty well,” the article quoted Burkle saying.”

Public skepticism of then-mayor Brown’s influence over the Treasure Island Development Authority was so deep that voters passed an agency reform measure the restricting the mayor’s direct involvement. In a 1998 article, Examiner reporter Chuck Finnie wrote “The ballot measure, Proposition K, called for dissolving the mayor-controlled development authority, and setting competitive bidding and conflict of interest standards that Prop. K’s proponents argued are needed to keep the mayor honest.”

The Board of Supervisors several of whom had been appointed by Brown deemed the measure to be advisory and never implemented its provisions.

In 1999, a contract before the Parking Authority, another “state” agency, was the focus of charges that the bid was being rigged to aid a supporter of Mayor Brown.

Former Commissioner Sharon Bretz claimed that the contract award recommended by staff was being changed by Brown’s appointees to the Commission in order to alter the terms to favor a losing bidder tied to Brown. Bretz was fired from the Commission. Board budget analyst Harvey Rose reported to the Board of Supervisors when the contract came up for review that the reconfigured contract would cost the City “millions of dollars” and recommended a provision that its costs not exceed the benefits to the City.

At the Housing Authority, longtime Sacramento Brown aide Billy Rutland who established a San Francisco lobbying office after Brown became mayor, reported he was lobbying the San Francisco Housing Authority, another “state” agency.

The involvement of a mayor in contracts at Redevelopment the airport and port of San Francisco and other agencies is not unusual and is expected. Those agencies are the centerpieces of much of the economic opportunities for private industry and for generating city revenues.

Ethics: Too Many Would-Be Political Donors Are Banned

St. Croix also wants the Board of Supervisors to repeal the ban on contributions from members of board of directors of nonprofit organizations that receive city grants.

Lifting the ban would allow candidate campaign contributions from board members of such organizations as the Convention and Visitors Bureau, the San Francisco Opera, the San Francisco Ballet, the San Francisco Symphony and smaller nonprofits such as the Chinese New Year’s Parade committee, which receives funds from the Grants for the Arts. It impacts some of the city’s wealthiest individuals often sought for support of political and civic causes.

Commissioners questioned St. Croix’ claim that no conflict existed because Board members do not personally profit from grants to the nonprofits. As one commissioner noted, many nonprofit organization Board members have a strong interest in ensuring projects move forward and that staff is compensated. In fact, not all nonprofit organizations have conflict of interest policies that would prevent a Board member from entering into a contract with the nonprofit or having a family member take a paid position.

St. Croix, according to the Ethics Commission records, informed his commissioners that “I understand that staff and officers of some local nonprofits are very concerned” that the ban will make it difficult to recruit board members capable of fundraising for the nonprofit.

The existing law bans hundreds of people from making political contributions, St. Croix said, expressing alarm at the extent of work required by the Ethics Commission staff. St. Croix also said that only an average of one person each quarter reviewed the list of banned contributors. However, the information is not available online. It can only be accessed in paper records at the Ethics Commission office.

The prohibition, St. Croix told the Commission, has never been enforced since it became law in 2006.

Ethics: Too Many Contracts Have To Be Reported?

Currently all contracts of $50,000 or more approved by elected officials must be reported to the Ethics Commission. The Ethics Commission will ask that this figure be raised to $100,000, requiring action by the Board of Supervisors.

The Ethics Commission also wants the notification to be made public ten days after the contract is signed instead of before it is signed.

On December 31, 2008, Ethics Commission Executive Director John St. Croix notified all city department heads that he no longer would require that the Ethics Commission be notified when contracts are negotiated. CitiReport has learned that St. Croix did not tell the Commissioners that he was, in effect, nullifying the requirements of the law with his action.

Many of the contracts that no longer would be subject to monitoring at the Ethics Commission under St. Croix’s current proposal involve personal services, and Ethics Commission Executive Director John St. Croix cites as examples the contracts entered into by the City Attorney for outside counsel. The language of the amendment was drafted by the City Attorney’s office.

Drop Voter OK on Rewrites of Political Consultant Law?

The Ethics Commission can make most of the changes it wants by winning approval from the Board of Supervisors.

The city’s law governing political consultants, however, was passed in a citywide vote and a change to its requirements requires a new ballot approval.

The Ethics Commission would like the authority to change the law without voter approval, and will ask the Board of Supervisors to put a measure on the November 2011 ballot granting them that authority. It could then make what changes it sees fit without fear of a public vote.

In 1997, voters overwhelming approved then-supervisor Tom Ammiano’s proposal requiring political consultants to register with the Ethics Commission, publicly report their clients and contracts, how often to file disclosure reports and also set a definition of political consultant.

Ammiano’s desire to force political consultants into the open was strongly opposed by City Hall’s most powerful figures. Then-mayor Willie Brown made Ammiano’s measure his first veto. A second version also failed with his Board colleagues, including those who had first supported disclosure, after Brown again indicated he did not want the measure back on his desk.

Ammiano convinced four colleagues to join him in placing the measure on the ballot. Political consultants then formed a committee and raised hundreds of thousands of dollars to try to defeat it.

The result was that voters approved Ammiano’s measure with 61 percent of the vote.

A grant of authority to the Ethics Commission to rewrite the measure without voter oversight could well result in the same outcome as the 2009 Ethics Commission’s rewrite of the city’s lobbyist law. In a little noticed clause, the Ethics Commission redefined lobbyist so that some of the City’s most influential City Hall players no longer have to disclose their contacts or issues.

{Coming next: Other City Ethics Bodies Do More]




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