Play at work, or more at play?

Pub date September 7, 2010
WriterRebecca Bowe

There’s a long-standing perception in San Francisco that certain development firms are treated more favorably than others thanks to insider politics. And while supporters of Mayor Gavin Newsom say he’s cleaned up the pay-to-play culture, a look at the list of contributors to Newsom’s run for lieutenant governor at the very least raises questions.

For example, according to campaign filings, Newsom received $6,500 from a business called 706 Mission Street Co. LLC, which was formed to construct a condo high-rise at Yerba Buena Center. The building would also be a new permanent home for the city’s Mexican Museum. The 706 Mission project, which has been in the works for several years, is a joint venture between developer Millennium Partners and JMA Ventures, a San Francisco-based real estate investment firm. JMA Ventures contributed $5,000 to Newsom, campaign finance records show, and the firm’s president and CEO, Todd Chapman, also made a generous donation of $1,000. Effectively, Newsom’s campaign received a total of $12,500 from individuals or firms associated with 706 Mission.

The project has been under the jurisdiction of the San Francisco Redevelopment Agency since 2008, when the Redevelopment Commission authorized an exclusive negotiations agreement with the developer for the mixed-use high-rise and museum, to be partially constructed on a parcel owned by Redevelopment and later included plans to integrate the landmark Mercantile Building. The project went dormant in the face of the economic downturn, but it’s now moving forward again, and the environmental review of the proposed 600-foot tower falls under the purview of the city’s Planning Department. On Sept. 1, Newsom mentioned 706 Mission, a “new, world-class facility,” in a press release announcing a new director for the Mexican Museum.

“The Redevelopment Agency and the city are fully committed to the public/private/nonprofit partnership that will eventually bring the Mexican Museum to a new home in the heart of Yerba Buena Center, San Francisco’s premier cultural district,” Redevelopment Agency executive director Fred Blackwell proclaimed.

Another contributor that demonstrated strong financial support for Newsom’s bid is a global technical firm that has a hand in several major infrastructure and development projects throughout San Francisco. AECOM contributed $13,000 to Newsom’s campaign, and a handful of people who work for AECOM chipped in smaller amounts totaling $3,600, according to campaign-finance records. In an April 15 news release for investors, AECOM noted that it had been awarded a $26 million contract for construction management of the San Francisco Public Utilities Commission’s Water Improvement Infrastructure Project. As the San Francisco Chronicle reported in May, the firm was also awarded a five-year, $147 million contract with the San Francisco Metropolitan Transportation Agency for construction management on the Central Subway project. AECOM is also playing a role in a number of major developments currently under review in city planning. It is the prime environmental impact report consultant for the California Pacific Medical Center proposal for a giant new hospital on Van Ness Avenue. It’s also completing a traffic corridor analysis for 19th Avenue on behalf of the developers of Parkmerced, a renovation and in-fill project on track to be one of the largest new residential developments in the city.



The Parkmerced developers have helped Newsom’s campaign along too. Craig Hartman, an internationally renowned architect with Skidmore, Owings & Merrill who is a design partner for the project, dropped $1,000 into Newsom’s hat. Two executives associated with Parkmerced each pitched in another $1,000.

A smaller project that has been in the works for years also seems close to home for Newsom. Michael Yarne, of the Mayor’s Office of Economic and Workforce Development, is a former director of development of the Martin Building Co., the lead developer on mixed-use residential project located in Central Waterfront at 2235 Third St. The project has commendable features such as a reuse of an existing industrial building, proximity to transit, and 39 below-market-rate units — and the project developer managed to secure an incredible deal with the city.

This past April, the Planning Commission approved an unprecedented in-kind agreement with Martin Building Co. that waived nearly $2 million in development fees, including about $1.2 million for 2235 Third St. and the rest for a second Martin Building Co. project on Townsend Street, in exchange for the developer’s commitment to construct a space for a day-care facility on the Third Street site and lease that portion of the property to a childcare provider for free for 55 years. The provider would have to operate the facility without profit and would be required to have low-income child-care slots, so this bargain would serve to create affordable day care.

Yarne’s close ties to the mayor and the developer — plus a $2,000 campaign contribution to Newsom from the head of the project’s general contractor, a building company called Nibbi Bros. — could raise a few eyebrows in light of this unprecedented deal, especially given the city’s gaping deficit and the question of how else that $2 million might have been put to use. The project was also awarded more than $1.6 million in American Recovery and Reinvestment Act funds to excavate lead-contaminated soil from the property and transport it away for off-site disposal. The project, which has already been approved and moved to the Department of Building Inspection phase, also incorporates a City CarShare space. Yarne’s on the board of City CarShare, too.

It’s always possible that there is no connection between Newsom’s campaign contributions, his personal staff, and contributors’ connections to the myriad development projects in the hopper — but that doesn’t stop observers from asking questions. Developers who are anxious about the economic downturn may be motivated do everything in their power to speed a project along, and it’s possible that throwing money at a political campaign is just one tool among many.

Or maybe they just think Newsom would make a great lieutenant governor.



Nonetheless, the perception that certain developers get special treatment is shared by at least two former planners in the city’s Planning Department — one of whom is facing termination in the wake of a recent investigation surrounding porn email.

Following an internal shake-up at the planning department triggered by the discovery that some staffers shared pornographic e-mails, messages started flying about what was behind the crackdown. “Porn is not the real story,” Lois Scott, a retired planner and former president of International Federation of Professional and Technical Engineers Local 21 wrote in an e-mail to the Guardian.

After the porn scandal broke, the hammer came down. Five people were terminated effective this past May, and another 20 or more reportedly faced some form of disciplinary action.

Some have interpreted the move as a signal that Planning Director John Rahaim, a Newsom appointee, won’t stand for inappropriate conduct on his watch. At the same time, others have contacted the Guardian to voice concerns that the firings and internal shakeup were connected to something deeper than dirty emails.

Although speculative theories abound and there is a paucity of official comments on the firings due to privacy laws, one point is abundantly clear. In a city where powerful developers will go to great lengths to secure approval for lucrative projects, there’s a great deal of wariness surrounding city planning. San Francisco is host to leagues of developers, real estate investment groups, prestigious law firms specializing in land use, technical consultants, and politically powerful associations of residential builders, building owners, and building-trade unions — all with a huge financial stake in seeing projects make it past the approval finish line and onto groundbreaking.

When it comes to a major project that will transform a city block in San Francisco, the planning department (which relies on development fees to pay the bills) inevitably encounters pressure from two sides: well-connected development teams with economic interests on the one hand, and neighborhood groups or historic preservationists who aren’t shy about hurling criticism on the other.

So it’s no surprise than anything affecting the planning staff in a major way would not pass quietly.

One of the planners affected by the firings told the Guardian that the porn investigation went on for months. There were one-on-one interviews, and some 70 staff members were called in and questioned, some two or three times. Contents of computer hard drives and city e-mail accounts were analyzed. Later, huge posters went up, displaying questions like, “How Are You Going to Make a Better Planning Department?”

“It was bizarre,” the former planner said.

According to Leigh Kienker — a former planner who recently retired and was not implicated in the computer misuse investigation — the result of all this was to create a sort of chilling effect on the planning staff, especially since she said two of the five individuals who lost their jobs had been more likely to question management and speak up when they didn’t think a project was being handled properly. When it comes to ensuring that projects conform to the planning code, “We need to be able to speak up,” she said. “This is our expertise.”

Jim Miller, who had been with the department for more than 32 years and is regarded by his peers as very outspoken, discussed his own termination in an e-mail to a number of supporters. “I was given a loose-leaf binder indicating the reasons for the firing,” he wrote. “The information contained therein was decidedly very thin. This, plus the fact that others who had a greater role in the ‘wrongdoing’ received job suspension rather than termination, leads me to believe that there is some other reason for the action taken. This reason is heretofore unbeknownst to me.”

Cynthia Servetnick, shop steward for IFPTE Local 21 planner’s chapter and a historic preservation advocate, voiced concerns about how the department dealt with the porn problem in an e-mail to Rahaim. “Frankly, the firing of so many senior Planning Department staff members not only seems like a ‘witch hunt,’ but smacks of age discrimination against a class of union-represented employees for the purpose of shoring-up budget deficits and intimidating less senior employees,” she charged. In response, Rahaim dismissed her comments as baseless accusations.



At a Feb. 18 Planning Commission meeting, when the department’s proposed budget came under review, commissioners noted that Rahaim was in the unenviable position of having to lay off four to six staffers in order to balance the budget. Noting that a great deal of effort had gone into attracting fresh talent and hiring younger planners, several commissioners expressed hope that they wouldn’t be the first to go. Rahaim responded that, given the union’s seniority rules, his hands were tied to an extent. In light of that conversation, Servetnick suggested that the porn e-mails presented a convenient solution for a director faced with a thinly stretched budget. All of the five who were fired were 50 or older.

At the same time, others who closely follow city planning rejected the idea of any ulterior motive. Sue Hestor, a land-use attorney who seems to have her finger firmly on the pulse of San Francisco development, told the Guardian that she’d heard plenty of rumors, but wasn’t necessarily buying the hype. Charles Marsteller, a former director of Common Cause and a keen observer of the planning process, said he had little reason to suspect that what had happened was anything more than responding to inappropriate conduct.

Zoning Administrator Larry Badiner, a 28-year veteran of the department who critics say was friendly to high-end developers, was fired in the wake of the porn investigation along with three lower-level staffers — but he appeared to walk away with a better deal than his subordinates.

A Guardian sunshine request revealed that Badiner received a six-month severance package amounting to $82,500, plus benefits he was eligible for that could have amounted to more than $57,000 (but may be significantly less). In exchange, he agreed not to sue the city. None of the other planning staffers who were terminated appear to have received such a payout.

Meanwhile, Badiner may not have been the highest-ranking city employee to be snagged in the porn investigation. An e-mail address of dlmacris[at] was included on an e-mail provided to the Guardian that contained a rather tame pornographic image.

The planner who sent the e-mail was fired after the porn investigation, and so were three of the recipients. Former Planning Director Dean Macris, who more recently served as a special advisor to Newsom, stopped working for the city around the same time Badiner and the others were terminated. Mayoral spokesperson Tony Winnicker told the Guardian he could not discuss anything related to how or why Macris left city service.

Rahaim said he had no choice in the Badiner severance. “The issue with Larry Badiner was required as part of a MEA labor contract. It requires a payout in any situation where a person is terminated or laid off.” He added that the firings were “strictly because of inappropriate use of city resources and also because of the type of material” that was being viewed. There was “absolutely no other reason.”

And he insisted that no developers get favoritism: “I have no idea who’s contributing to whose campaign.”

At least one response to the rash of firings commended the planning director for taking action. “I applaud your efforts to address hostile working conditions related to gender and sexual preference, which have long existed in the Planning Department,” a retired senior planner wrote to Rahaim shortly after the firings. “There is, perhaps as you have realized, a deep undercurrent of unresolved and unpleasant practices which perhaps finally led to the present complaints.”

Does the planning department shake-up indicate a move away from the bad old days of quid pro quo dealings and hostile working conditions, thanks to a director who’s standing strong against inappropriate conduct — or is it a move to consolidate power in a department led by a mayoral appointee at a time when the development community is particularly hungry to move new projects forward? Given the knock-down, drag-out fights that have unfolded over planning in the city’s history, and the high sums of money that are gushing into project proposals and campaign coffers, it’s no wonder the question is being posed.

“The bottom line is, the public is not being served,” Servetnick said. “Developers shouldn’t be able to come in and say, ‘Just for me!’ If everybody who pays to play gets away with that, we’re going to end up with a really ugly city.”