PART TWO
Brown-Lee Partnership Spells Money, Also Trouble
As Mayor, Brown was viewed by many – including federal investigators – as playing fast and loose with city contracts going to contributors and allies.
This March, Brown’s controversial handling of city contracts came back to put Mayor Ed Lee in the news – and in a courtroom witness stand — as Brown’s factotum in approving a contractor alleged to be “fraudulent from Day One.”
According to a sworn deposition by the lead official in the process, the company went directly to Brown after failing to qualify. After Brown’s meeting, which was facilitated by Terrance Goggin later to be part of Brown’s team in pitching the Rapid Rail contract bid, Lee directed that the firm was to be allowed to bid.
According to a Chronicle story on the case, Lee was hit with a bout of forgetfulness when it came to the details of how that happened.
“Lee, when asked in his deposition whether he had a role in approving Government Computer Sales as a vendor, replied: “I’m unclear about that. I can’t recall a lot of details about that.”
The most extensive examination came in 2000 by the Chronicle’s investigative reporters, Lance Williams and Chuck Finnie, headlined “Willie Brown, Inc.”
“Corporations and people with close ties to the mayor have received hundreds of millions of dollars in city contracts, development deals, subsidies and grants, records show,” the paper reported.
“In deal after deal, bidders who are associates of the mayor — or who have retained Brown’s associates as lobbyists or consultants — have won out over others with less political clout, sometimes after intervention by the mayor or his aides.”
“During the FBI’s corruption investigation, court records show, agents made inquiries regarding contracts worth more than $1 billion and 63 different companies, people and other entities, many with connections to Brown.”
Brown Re-Invented (lol)
Now out of office for close to a decade. Brown has reinvented himself, according to the Chronicle, which hired him as a star columnist.
In an August 2011 Chronicle article that dismissed the likelihood that Brown’s association would harm Ed Lee, the paper helped ease Brown into his new persona by failing to quote a single Brown critic and treating Brown’s way of doing business as an irrelevant past.
“Part of the reason is that the FBI probes, patronage and allegations of pay-to-play politics that swirled around Brown’s administration a decade ago have largely faded from memory — or were never known by voters who weren’t here then, analysts said.
“Brown left under “more than a cloud — a thunderstorm,” said University of San Francisco political scientist Corey Cook. But now Brown, a Chronicle columnist, is a tremendously popular figure in the city, viewed by many as an avuncular man-about-town, elder statesman and a uniquely San Franciscan character.”
“It’s not the same electorate it was a decade ago,” Cook said. “The Willie Brown they know is the Willie Brown giving them movie reviews and restaurant tips. He sort of transcends his last years in office.”
But if the Chronicle has aided in Willie Brown’s reinvention, by no means does it follow that Willie Brown no longer does business exactly as before.
Out of office, Brown now enjoys the luxury of secrecy denied to officials and lobbyists who must disclose contracts, finances and contacts.
A hedge on Brown when he was in office was the necessity to meet the expectations of voters. He needed to deliver – or adjust – to meet the varied demands of San Francisco’s political microclimates. When he went too far in one direction the voters would push him back, as they famously did in rejecting his appointees to the Board of Supervisors in the 2000 election.
Ed Lee: The Inside Man
Ed Lee became Willie Brown’s Inside Man almost two decades ago, when Brown turned to him to approve minority contracts for his backers. Lee went on to hold positions where he could tweak the requirements for contractors, order “re-evaluations” where necessary, even reverse his staff and his own earlier findings on behalf of contractors tied to Brown.
Some of those instances were reported during the 2011 mayoral campaign or were seized on by Lee’s opponents. They ranged from contracts awarded for computer services later determined to be fraudulent to contracts at the airport to a bidder that twice failed to get top ratings to a “nonprofit” that didn’t actually exist and that federal official ordered its grant returned to the city.
By 2011, when Ed Lee became the Interim Mayor, many of the economic engines that powered Willie Brown’s machine had peaked or soon would.
Brown had been mayor during economic golden years for the city, including the opportunity to become the master developer for the richest, untapped city acreage that wrapped around San Francisco’s edge — Treasure Island, the Hunters Point shipyard and Mission Bay. The opportunities were unparalleled
One by one, the winners of the leases and options went to Willie Brown’s former clients or partners – Mission Bay to the University of California, Hunters Point to Lennar, Treasure Island to Darius Anderson and Ron Burkle.
Each time, the decisions were made by city officials who reported to Willie Brown or were approved by a Board of Supervisors dominated by Brown’s own appointees.
The city, like the rest of the nation, hit an economic slump by the end of Gavin Newsom’s term as mayor. The easy route to riches was gone.
At the same time, it was critical to protect the gains already made when Governor Jerry Brown managed to close down redevelopment agencies statewide. New projects were off the table, but existing projects like Treasure Island and Hunters Points could continue under the auspices of a “successor agency.”
Mayor Lee asked that the state legislature exempt San Francisco from the requirements of other jurisdictions, where appointments are shared with the local city council or Board of Supervisors, to allow the mayor to make appointments for the city. The result is that the new Oversight Board includes the mayor’s Planning Director, Housing Director, and his Public Finance Director. There are no appointees from the Board of Supervisors.
Under the requirements, BART has one seat; Lynette Sweet, an unsuccessful Brown backed candidate for the Board of Supervisors and former treasurer of the nonprofit Third Street Economic Development Corporation found to have failed to meet its financial responsibilities, holds that seat. The main activity of the nonprofit appears to have been to hold annual birthday celebrations for then-mayor Willie L. Brown, Jr. Later she was named to the Redevelopment Commission where she cast the deciding vote for Lennar to control the Hunters Point projects.
A New Day, A New Door to Open
With those projects secured, the hunt was on for new economic opportunities. What hadn’t changed was the formula that relied on San Francisco’s City Hall to help accomplish their goals.
And no one knew City Hall, so it seemed, like Willie Brown.
“You’re seeing a generational shift,” said Mark Mosher, a political and policy consultant who once led the Committee on Jobs, which advocated on behalf of the city’s largest companies. “Who is going to lead this new era? The good news is that San Francisco is a place that is always going to attract the best and the brightest,” observed a Chronicle columnist.
Faster than a high speed Internet connection, Willie Brown was showing up with a Silicon Valley “angel investor,” Ron Conway. By August, when Lee announced he would change his mind and run for a full term, Conway had launched an independent expenditure campaign that would raise more than $600,000. One of the speakers at a Conway fundraiser was Willie Brown.
In turn, Conway became an advisor to Ed Lee, who told reporters that he was listening to Conway on how San Francisco could launch a new boom with tax incentives aimed at high tech industries.
Lee urged approval of a special tax district on Market Street, encouraging Twitter to move its headquarters to mid-Market. To do that, the owner of the Market Square sold the building to Shorenstein Properties, a longtime Brown ally. Twitter got the tax break and moved into the building facilitated by Brown.
Later the companies estimated their savings at more than $30 million.
Lee, in a moment of irrational exuberance, then announced he would seek to replace the short-term tax holiday with a permanent one. The boom was on.
Lee’s election night victory party was hosted by Willie Brown, according to the invite, but the man writing the checks was Ron Conway and the tech industry leaders he had brought on board. The evening included a replay of a video ad for Lee “2 Legit 2 Quit” that featured MC Hammer – and Willie Brown.
It also was underwritten by Conway.
The night before Lee’s Inauguration, Brown held an invite-only dinner for 300 at the Palace’s Garden Court, and once again, there was no disclosure of who paid for the fete.
The next day, Lee’s Inaugural Host Committee included Ron Conway, once a man in the shadows and now on the City Hall grand staircase.
Two years earlier, Conway, in a reference to Progressives who populated the Board of Supervisors, had famously told a business group “We have to take back our city.” Now he was climbing the steps with the new mayor and the former mayor.
The New Partnership
On Friday after the Inaugural, Conway launched “San Francisco Citizens Initiative for Technology and Innovation” with the intention “to improve civic life and the city’s technology section”
Mayor Lee pledged his support.
The San Francisco Business Times gave more specifics.
“Surging technology companies have become some of the fastest-growing employers and commercial tenants in San Francisco. Now they’re poised to become an organized force at City Hall.
“Republican Silicon Valley “angel investor” Ron Conway will announce today that he and roughly 80 high-tech firms – including microblogging service Twitter, cloud-computing company Salesforce.com and social-game designer Zynga – have formed an interest group to engage city officials on public policies that affect them.
“It starts with job training and lending tech expertise to government problems, but city officials expect the focus to expand to issues like overhauling the city’s payroll tax and improving Muni funding.”
The following week, Lee got himself named to lead a U.S. Conference of Mayor’s task force “on the role technology and innovation can play in fostering jobs and government efficiency and transparency.”
Lee’s statement was a virtual echo of Conway’s announcement the previous week.
“Cities must be laboratories for innovation across the nation to create new jobs, improve government transparency and efficiency and build new public-private partnerships,” read Lee’s statement.
“Lee said among other things the task force will address tax reform in an effort to treat business sectors equally, promote training of local residents for high tech jobs and look for ways to increase access to public data.”
Once again, any obstacles such as regulatory rules appear to be giving way to political pressure from the mayor’s office, as the Bay Citizen recently reported.
A plan to allow one high tech company to offer its services to allow customers to pay taxi fares ran into objections that the collected fares were not reported in the city’s system, allowing for an unacceptable leeway between actual receipts and recorded ones, according to the Matt Smith article.
Mayor Lee knew just how to handle this hiccup.
“We’ve been in discussion with people in the Municipal Transportation Agency’s taxi division to get off of initial positions that were held out of fear, and embrace what could be a technology that benefits everybody,” Lee told the Bay Citizen.
The company is one of those where Ron Conway has put his money.
Another is Airbnb which would like to be exempted from paying the city’s hotel tax when rooms are rented through its services. That too now is the subject of City Hall discussion, the Bay Citizen reports.
If these serve as reminders of the way City Hall operated under Willie Brown, it’s not likely at this point to present any real problems for Lee.
If anything, the prospects may get even rosier. City Assessor Phil Ting is a favorite to win an open seat in the state assembly, and if he wins, so does Ed Lee who then can appoint a new city assessor. That’s the spigot for all property tax assessments notably when properties change hands – and the current boom in commercial property hinges on the tech industry.
As San Francisco turns to implementing this tech agenda, Willie Brown’s money machine is ready. The Department of Technology’s spokesperson is Brown’s former press secretary and frequent companion at movie showings. The contracts themselves will go through the Chief Administrative Officer, Naomi Kelly.
The Chronicle, home to Brown’s column, can be counted to play its supportive role. It has been converting space at its historic Fifth and Mission Building into a farm for tech start-ups and owners of companies now enlisted in Conway’s group.
In a cheery note, the Chronicle weighed in on this bright future.
“As Conway noted, if the result is that San Francisco residents end up landing the high-paying jobs anticipated at Twitter, Zynga, Square, Dropbox, Yelp and other city-headquartered companies that are doubling their workforces every year, then “just the taxes we all pay will make a massive difference.”
All this is well and good – and for the betterment of the businesses and the city.”
The Willie Brown Money Machine is up and running.
The Best of the Net is a monthly feature of the Observer in which we present an outstanding journalistic effort of particular local interest in our effort to assure that our readers are the best informed citizens of San Francisco. Our featured story is from www.citireport.com. If you have a suggestion for our “Best” feature, email: editor@westsideobserver.com
June 2012
Inside the Willie L. Brown Money Machine
By Larry Bush (in Paper Trails) citireport.com
For several generations of San Franciscans, the mention of a political machine meant one thing: the Burton Machine. Under the auspices of Phil Burton, a loose coalition of liberals united on issues as diverse as opposition to the Viet Nam war and urban poverty, along with environmentalists and disenfranchised minorities, began to cooperate on an agenda to wrest power away from San Francisco’s traditional Republican establishment.
It gained control of the city’s Democratic County Central Committee, helped launch careers for George Moscone, Willie Brown, Art Agnos and sent Phil’s brother John first to the state legislature and then to congress to serve alongside Phil.
Phil Burton’s signature statement is inscribed on his statue, where a paper peeks out of his pocket with the scrawl, “Terrorize the Bastards.” They were fearless in taking on powerful interests (in Congress Phil Burton’s Democratic Study Group used the same tactics to move the House against a Democratic President over the Vietnam War).
There was one other recognizable feature of the Burton Machine: it was about empowering people who had little or no say in the decisions that affected them.
And it certainly wasn’t about helping the rich get richer.”
But what made the Burton machine recognizable to all was its issue-driven agenda: human rights, health care, the environment, unions with job protection and decent working conditions, and an urban renaissance in the face of a decline affecting many cities.
There was one other recognizable feature of the Burton Machine: it was about empowering people who had little or no say in the decisions that affected them.
And it certainly wasn’t about helping the rich get richer.
While elder John Burton continues the tradition, Willie Brown left the machine and started a new one…the Willie Brown Money Machine.
Helping the rich get richer, primarily in order to make oneself richer, is exactly what the Willie Brown Money Machine is all about. In the classic words of Walt Kelly’s Pogo, “We have met the enemy and it is us.”
Brown’s money machine, like his mayoralty and his career in public or private life, relies on personal relationships and owed loyalty. Mayors at their best have an array of skills that make them effective. They combine an ability to see an opportunity with a vision that sets the pace and direction for change. They know what will be required and they learn to see in people things even their own mother never saw and how to use that. Sometimes they know the rules and where the advantages can be gained through them.
Above all, the asset that makes those elements come together is a relationship built on a singular loyalty to the person at the top of the machine. More than a title or an office, that is the power that can keep a machine producing results in or out of office.
The network of former Brown aides and campaign workers now populate top positions in city agencies or have moved on to posts with major city contractors or as lobbyists.
They include Tiffany Bohee, new head of the “Redevelopment Successor Agency,” Linda Richardson, new President of the Treasure Island Development Authority, Naomi Kelly, newly named Chief Administrative officer overseeing all city contracts, Kelly’s husband Harlan Kelly in charge of the multi-billion dollars PUC infrastructure program, the reappointments of Eleanor Johns, Brown’s former chief aide and current Executive Director of the Willie L. Brown Institute, to the Airport Commission, her husband Richard Johns to the Historic Preservation Commission with the power to open doors to tax benefits, as well as others at the Public Utilities Commission, Recreation and Park Commission, and down the list.
Mohammed Nuru is only the latest in a list that also includes Supervisor Malia Cohen, Ron Vinson, a senior official with the Department of Technology, Bevan Dufty, Lee’s new homeless coordinator and seeking to be elected chair of the San Francisco Democratic Party, among many others.
Add to the list of former staffers and their partners those who have signed on either directly or through proxies like Rose Pak, and up comes Doreen Ho, newly elected President of the Port Commission with a hands-on role for the America’s Cup.
The most important, of course, is Ed Lee, the mayor Brown shoehorned into office and who has done favors for Brown by retaining or naming Brown allies to key posts where they can continue to do favors for Brown clients and allies.
Brown made sure that he had a virtual army of loyalists when he increased the number of mayoral “special assistants” – hired and fired at will outside civil service – from the 119 he inherited to 521 with a request in the 2000 budget for an additional 100 special assistants.
The Corporate Boardroom Meeting
It’s a room where none of us are invited.
But on May 4, 2004, a dozen corporate leaders gathered around a conference table on the 25th floor of a downtown San Francisco office building.
They had been invited by Willie L. Brown, Jr. to hear his proposal for using his decades of government contacts to do them favors that would net multimillion dollar contracts and put a half million dollars in his own pocket to start.
Just four months earlier Brown had left the San Francisco mayor’s office, ousted by term limits.
Brown told the corporate leaders – each had a potential financial interest in a proposed California high-speed rail effort – that he had the contacts to get the Legislature to start the approvals.
Among those gathered were the Parsons Brinkerhoff’s CEO and three top officials of the California High Speed Rail Authority.
Brown, according to the Oakland Tribune’s account at the time, took his seat at the head of the table to propose that he, and his former colleagues former Los Angeles Assemblymember and Transportation Chair Richard Katz and former Assembly member – attorney Terence Goggin, a fixture in Brown’s money machine, be paid $1 million. Each of the dozen firms would provide $100,000 to start.
“In return, they would steer a favorable budget into law by lobbying all the key state politicians. Then they’d launch a campaign to convince California voters to pass a $10 billion rail bond,” the paper reported.
Brown, Katz and Goggin followed three days later with a memo repeating the proposal.
“The memo, obtained by ANG Newspapers, confirms a picture that emerges from interviews with more than half of the participants and dozens of transportation sources familiar with high-speed rail,” the paper told its readers.
“Over the next 60 days we propose to concentrate our considerable political resources and campaign experience,” the memo states. “This will require a substantial initial consultant retainer for our fees and expenses of $400,000.”
“Another $600,000 was needed to start the bond campaign, the memo said. Overall, Brown would get half of the $1 million, while Katz and Goggin would split the rest.”
According to the article, at least some of the industry representatives viewed the proposal as a “classic shakedown” although trolling for money from potential beneficiaries of government spending is not illegal.
Brown called the group “Friends of California High Speed Rail,” and the meeting and memo appear to be its only event. The organization never registered nor did Brown, Katz or Goggin register as lobbyists. At that time, Brown’s proposal appeared to be shelved.
In May 2010, a photograph of the groundbreaking for the first Bullet Train terminal showed that one of those wielding a shovel was Willie L. Brown, Jr. By then the Parsons Brinckerhoff government relations director was Stuart Sunshine, formerly Willie Brown’s Director of Parking and Traffic.
One indication that this took place almost a decade ago comes from the report that Brown’s cut was to be $500,000. According to sources approached by Brown recently, his asking price is now double to $1 million.
Brown’s effort to make a handsome living from the contacts he developed as an elected official is nothing new in the world of post-politics.
Nor is it unusual for companies that might gain from public works projects to bankroll measures to first earmark public funds for those projects.
Funding a campaign to convince voters to put money into a project that in turn holds the promise of contracts is very much the way business is done. It was true of the November bond measure for street repair, where just over $150,000 in campaign contributions set the stage for more than $250 million in spending. It was true for the BART extensions to the airport, and for the city of San Francisco’s other bond measures. Unions whose members are most likely to get work also are among the campaign contributors. No law restricts donors to ballot measures, only to candidates for office.
Still, it surprised some to find that Brown was using his considerable network of contacts in the state legislature where he served for 16 years as Speaker of the Assembly and self proclaimed “ Ayatolla” against the interests of San Francisco, the city he once led.
In 2009, Brown reportedly turned to the state legislature to overturn a San Francisco law that prevented Parsons from bidding on a city contract with terms it wrote. Parsons then sought to share in the $26 million Public Utilities Commission contract.
Brown went behind the city’s legislators to have the measure introduced by another members of the Assembly. Not satisfied with proposing that the San Francisco law be overturned, Brown had the measure written to take effect retroactively to allow Parsons to bid.
San Francisco’s City Attorney already had deemed Parson’s attempt to bid on the project to be a violation of state law.
Brown’s end-run came as a surprise to the Board of Supervisors, where Brown’s actions were viewed as an “attempt to strong-arm the city on behalf of a global conglomerate,” according to a San Francisco Weekly article that first broke the news. A resolution opposing Brown’s play quickly was introduced.
The Chronicle took a swing at the measure in an editorial.
“There is something inherently unfair about going back to rewrite a law after a possible infraction.
“AB746 is more than a technical clarification to the law. It’s the type of special-interest lawmaking for the well-connected that gives Sacramento a bad name,” opined the Chronicle.
The Chronicle noted that the “well-connected” in this case was their own columnist, but also admitted that the paper was unable to get its columnist to return calls.
“Brown, who writes a weekly column in The Chronicle, did not reply to messages seeking comment,” stated the June 30, 2009 editorial.
The next day, the state senate pulled the bill for the year.
Today, the way into the office of the mayor handpicked by Brown to warm the seat until a new mayor could be elected, and then for a full four-year term, is out the elevator and through the atrium that now holds a bust of Willie Brown. It was moved up outside the mayor’s door from its previous place in the basement.
City officials claim the move was necessitated by nothing more that a repair needed at the former location.
Brown does not register as a lobbyist or disclose his consulting contracts, hiding behind the attorney client loop hole, but in the past two years, he played a role in the sale of the Market Street building that now is Twitter’s new offices, has ties to AECOM, the company involved in the Transbay Terminal, the Central Subway, the new Public Utilities Commission headquarters, with Recology and more.
San Francisco’s lobbyist law, unlike Los Angeles and other jurisdictions, only counts those who directly contact city officials and not those paid to be “big game hunters.” They help bag city contracts and permits by advising whom to contact, what persuasion to offer, how to work around any rules and to loom in the background as available muscle.
(San Francisco also leaves a loophole allowing contributions from those seeking development and other permits, banning only contractors from making contributions).
In fact, Brown maintains a higher profile than Mayor Lee as the go-to guy in San Francisco through his San Francisco Chronicle column of name-dropping and insider gossip featuring himself.
Raffling Hunters Point to Asian Investors
Last fall, as Brown protégé Ed Lee nailed down a four-year term as mayor, Willie Brown was also stepping into a new role.
He became a broker for pay-to-play overseas investors to obtain visas in exchange for funding projects, aimed first at Hunters Point and then at Treasure Island.
Brown became a principal in Golden State Renaissance Ventures that simultaneously launched the San Francisco Bay Area Regional Center approved by Washington to facilitate EB-5 visas for those willing to invest $500,000 in disadvantage communities and $1 million in other locales.
Brown’s venture, headed by his longtime attorney Steven Kay, intends to generate $300 million in its first five years.
“The first fund, which also will be marketed to potential investors in India and Russia, will seek $27 million from 54 investors for the Hunters Point project’s infrastructure,” the San Francisco Business Times reported in its March 16 edition. “The next fund will support the residential phase of the project…[the] center also could get involved with the Treasure Island redevelopment project and a life sciences incubator, but those plans aren’t yet solid,” the Business Times reported.
Participation in the program through a Center like Brown’s carries one huge advantage, in addition to Brown’s contacts. The program requires that the investment create 10 new jobs, but if it is arranged through a Center, the job count can be based on a real estate model rather than an actual job count so that things like taxi business and restaurant increases far from the disadvantaged neighborhood would count.
It’s a loophole that would make Willie Brown proud.
Applicants will pay around $40,000 each to Brown’s Center for their work facilitating the match up on investment opportunities and the government paperwork for the visas. After two years, the investor can apply for a green card for permanent residency for themselves and their families, including children they hope can enter American universities. Best of all, they go to the head of the line while poor and middle class applicants for visas wait.
Brown’s connections to Bohee and Linda Richardson are like money in the bank.
The Best of the Net is a monthly feature of the Observer in which we present an outstanding journalistic effort of particular local interest in our effort to assure that our readers are the best informed citizens of San Francisco. Our featured story is from www.citireport.com. If you have a suggestion for our “Best” feature, email: editor@westsideobserver.com
May 2012
