Chamber of Commerce

Why are Harris, Newsom, and other pols silent on the federal pot crackdown?

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UPDATED BELOW As I worked on this week’s story about the federal crackdown on California’s marijuana industry, I tried to get a statement from California Attorney General Kamala Harris. After all, it’s her job to defend California’s medical marijuana laws, which she was fairly supportive of as our district attorney. And she was an early Barack Obama backer who could probably get him or U.S. Attorney General Eric Holder on the phone to say, “What the hell are you guys doing? Please, for your own sake and California’s, just back off.”

After all, as I reported, this multi-agency federal crackdown could destroy a thriving industry that is pumping billions of dollars into California’s economy and employing tens of thousands of people – at a cost of many millions of dollars in enforcement costs to simply destroy the state’s top cash crop, ruin the lives of people working in the industry, and strain our already overtaxed court and prison systems.

“It’s a policy with no upsides and all downsides,” Steve DeAngelo of Harborside Health Center correctly told me.

But when I finally got Harris’ Press Secretary Lynda Gledhill on the phone, she said Harris had nothing to say on the issue. “Nothing?” I asked, “Really?” What about off-the-record, I asked, how does she feel about it and might she make some statement in the future. Again, nothing to say, no comment.

So I tried Lieutenant Governor Gavin Newsom, another San Franciscan who as mayor helped oversee the creation of the city’s widely lauded system for regulating the dispensaries, which by all accounts has made it a legitimate and thriving member of the business community. Given Newsom’s current obession with job creation and how hungry he’s been for attention, surely he’d have something to say in defense of the good jobs that this sustainable industry has created in California. Again, nothing. I haven’t even gotten a call back yet from his press secretary, Francisco Castillo.

Also, no public statements have been issued by Mayor Ed Lee, David Chiu, or most other mayoral candidates who have put “jobs” at the center of their agendas – or from the SF Chamber of Commerce or other business groups that regularly deride bad government actions as “job killers – despite this move by the Obama Administration to destroy an important industry in California.

The only major politician from San Francisco (SEE UPDATE BELOW) to come out strongly against the federal crackdown was Assemblymember Tom Ammiano, author of measures to legalize and tax marijuana, who put out the following statement: “I am bitterly disappointed in the Obama Administration for this unwarranted and destructive attack on medical marijuana and patients’ rights to medicine.  Today’s announcement by the Department of Justice means that Obama’s medical marijuana policies are worse than Bush and Clinton.  It’s a tragic return to failed policies that will cost the state millions in tax revenue and harm countless lives. 16 states along with the District of Columbia have passed medical marijuana laws – whatever happened to the promises he made on the campaign trail to not prosecute medical marijuana or the 2009 DOJ memo saying that states with medical marijuana laws would not be prosecuted?  Change we can believe in?  Instead we get more of the same.”

But from most of the politicians who claim to support both jobs and the right of patients to access medical marijuana, we also get more of the same. They pander to people’s economic insecurities in order to give corporations and wealthy what they want – tax cuts, deregulation, union-busting, corporate welfare — but aren’t willing to risk any political capital defending the rest of us.

UPDATE (11/13): San Francisco’s other two representatives in the Legislature have also criticized the crackdown.

 

Sen. Leland Yee put out a statement saying: “Medical marijuana dispensaries are helping our economy, creating jobs, and most importantly, providing a necessary service for suffering patients. There are real issues and real problems that the US Attorney’s Office should be focused on rather than using their limited resources to prosecute legitimate businesses or newspapers. Like S-Comm, our law enforcement agencies – both state and local – should not assist in this unnecessary action. Shutting down state-authorized dispensaries will cost California billions of dollars and unfairly harm thousands of lives.”

Sen. Mark Leno, another medical marijuana support, also criticized the move. He told the Los Angeles Times, “”The concern here is that the intimidation factor will directly impact safe and affordable access for patients.” And he told Associated Press, “”I don’t understand the politics of it, and certainly if we haven’t learned anything over the past century, it’s that Prohibition does not work.”

On Guard!

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news@sfbg.com

ORACLE’S DIRTY SECRET

If wealth trickled down from Oracle’s OpenWorld conference in San Francisco last week, very little of it reached a small group of low-wage laborers hired from out of state to set up for a concert hosted as an event highlight on Treasure Island.

Oracle is a prominent Bay Area tech company helmed by Larry Ellison, the billionaire CEO who worked closely with top city officials to bring the America’s Cup sailing regatta to San Francisco.

The Oct. 5 Oracle OpenWorld concert on Treasure Island featured Sting and Tom Petty as headliners. Registration packages for the weeklong tech conference, which drew some 45,000 attendees to San Francisco, ranged from $1,395 to $2,595.

A member of the carpenters union contacted the San Francisco Office of Labor Standards & Enforcement (OLSE) Sept. 16 to formally complain that a construction crew assembling a large seating structure for the event was being paid less than the city-mandated minimum wage of $9.92 per hour, city documents show.

Josh Pastreich, an OLSE official, went to the worksite to interview crew members. Their names were redacted from public records, but Pastreich described them as monolingual Spanish speakers who travel from city to city building seating arrangements for major events.

“Everyone is being paid $8 an hour (except for the supervisors),” he reported in a city document. “Workers generally started at 6:30 am but there was a little confusion about quitting times.” At least one work day lasted 11 and a half hours, according to a timesheet. The workers were hired by subcontractors brought in by Hartmann Studios, an events management outfit working directly for Oracle.

“We made a phone call, and sent them some emails,” OLSE director Donna Levitt explained. “Nobody said, ‘we intended to pay them the [legal] rate,'” but the subcontractors increased workers’ hourly wages to comply with San Francisco minimum wage ordinance requirements, Levitt said. Since the company adjusted the rate immediately, no fines were issued. There were fewer than 20 workers on the project.

OLSE did not correspond with Oracle directly, but spoke to the subcontractors. One was T & B Equipment, a Virginia-based company. “We were not aware of the minimum wage there, but we fixed it before the payroll was done,” a T & B representative identified only as Mr. Waller told the Guardian. Lewmar, a Florida-based subcontractor, assisted with staffing for the job. Oracle, Hartmann Studios, and Lewmar did not respond to Guardian requests for comment.

Since the enforcement agency intervened, the laborers earned $9.92 per hour instead of $8 — still well below the average Bay Area payscale for similar work. Building bleachers is comparable to raising scaffolding for major construction projects, and the prevailing wage for unionized scaffolding erectors in California is $37.65 per hour, or $62.63 when benefits are factored in.

None of the workers were from San Francisco, which likely spurred the carpenters union complaint — Carpenters Local 22 has faced significant losses in membership since the economic downturn due to high levels of unemployment disproportionately impacting the construction sector. Represenatives from Local 22 did not return calls seeking comment.

Boosters of the America’s Cup have hailed the upcoming sailing event as an engine for local job creation, but Oracle’s use of low-wage, out-of-state laborers at its pricey, high-profile OpenWorld event raises questions. While the tech company is a separate outfit from the America’s Cup organizing team, Ellison holds leadership positions at both.

Ellison was named the world’s sixth wealthiest individual in a Forbes profile in 2010, with a net worth of $28 billion. His total compensation last year was listed as $70,143,075. That’s 3,399 times the amount a person earning $9.92 an hour would make in a year working 40 hours every week — before taxes, of course. (Rebecca Bowe)

 

LEE’S TELLING VETO

The Board of Supervisors approved legislation to close a gaping loophole in the city’s landmark Health Security Ordinance on Oct. 4, in the process forcing Mayor Ed Lee to promise his first veto and reveal his allegiance to business interests over labor and consumer groups.

Sup. David Campos sponsored legislation that would prevent SF businesses from pocketing money they are required to set aside for employee health care, seizures that totaled about $50 million last year. These health savings accounts are often used by restaurants who charge their customers a 3-5 percent surcharge, ostensibly for employee health care, instead simply keeping most of the money.

Despite aggressive lobbying against the measure by the San Francisco Chamber of Commerce — which went so far as to threaten to withdraw support for Prop. C, the pension reform measure it helped craft with Lee and labor unions — the Board of Supervisors approved the measure on a 6-5 vote on first reading (final approval was expected Oct. 11 after press time).

But then Lee announced that he would veto the measure, claiming it was about “protecting jobs,” a stand that was criticized in an Oct. 5 rally on the steps of City Hall featuring labor unions, consumer advocates, and mayoral candidates John Avalos, Leland Yee, Dennis Herrera, and Phil Ting.

Lee and Board President David Chiu — who voted against the Campos legislation, along with Sups. Sean Elsbernd, Mark Farrell, Carmen Chu, and Scott Wiener — have each offered alternative legislation that lets businesses keep the money but make some minor reforms, such as requiring businesses to notify employees that these funds exist.

Both Lee and Chiu talk about seeking “compromise” and “consensus” on the issue, but Campos and his allies say it’s simply wrong for businesses to take money that belongs to the employees, to gain a competitive advantage over rivals who actually offer health insurance or pay into the city’s Healthy San Francisco program, and to essentially commit fraud against restaurant customers.

“This money belongs to the workers and it’s something that consumers are paying for,” Campos said. “We have a fundamental disagreement.” (Steven T. Jones)

 

ET TU, DAVID CHIU?

In a press release on Oct. 6, mayoral candidate David Chiu stated his concerns over Mayor Ed Lee’s potentially illegal campaign contributions from employees of the GO Lorrie airport shuttle service. That company benefited from a decision by airport officials in September and then offered to reimburse employees for making $500 contributions to Lee, according to a Bay Citizen report.

“These revelations raise deeply troubling questions that merit a full investigation by state authorities. City Hall cannot be for sale. Pay-to-play politics has no place in San Francisco, and will have no place in a Chiu administration — you can count on that,” he said in the release.

But has Chiu — one of the top fundraisers in the mayoral field — been engaging in a little pay-to-play of his own? That was the question we had after we saw that he had received lots of donations from restaurant owners, whose side he took last week in opposing Sup. David Campos’ legislation to keep them from raiding their employee health care funds.

The Golden Gate Restaurant Association (GGRA) waged unsuccessful legal battles against the Health Care Security Ordinance and lobbied against Campos’ recent reforms of its loophole. And in the latest donation cycle, the GGRA donated the maximum $500 to the Chiu campaign. Other Bay Area food services contributed up to $5,950.

So the question remains, despite Chiu’s posturing against “pay-to play politics”— are these food service companies contributing to Chiu’s campaign because he’s doing their bidding in opposing the Campos measure and sponsoring an alternative that lets them keep most of the money?

When Liane Quan, co-owner of SF’s Lee’s Deli, was asked if the health care legislation was a reason she donated, she said, “Yes, that’s one reason.” She then hesitated to elaborate why. Members of the Quan family associated with Lee’s Deli contributed a total of $1,000 to the campaign.

Maurizio Florese, an Italian-speaking co-owner of Mona Lisa’s Restaurant who contributed $100, didn’t want to talk about his contribution or employee health care. Neither did his wife and co-owner, Filomena Florese, who is also President of Mona Lisa Inc., which manufactures chocolate and pastry products.

In fact, despite leaving messages at seven local restaurants who donated to Chiu, none wanted to talk. But we did finally get ahold of Chiu campaign manager Nicole Derse, who said Chiu has a broad array of supporters and his donations from restaurants had nothing to do with his stance on the Campos legislation.

“There definitely is no correlation at all,” she told us. “Any suggestion to the contrary is ludicrous.” (Christine Deakers)

Few surprises in Examiner endorsements

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The San Francisco Examiner – a paper with a generally conservative editorial stance, and one that endorsed John McCain for president in 2008 – has endorsed a slate of Establishment candidates for citywide office: Ed Lee for mayor, George Gascon for DA, and Chris Cunnie for sheriff.
That’s not really surprising, but its second and third choices for mayor were: Dennis Herrera second and Bevan Dufty third. Herrera was also the Guardian’s second choice and Dufty was someone we considered for third, choosing instead to go with Leland Yee. As the Examiner wrote, there are lots of qualified candidates in this race, and there were a lot more worrisome ones the paper could have picked.
For a newspaper that often takes ridiculous right-wing stances, such as its editorial last year denying global warming, the mayoral endorsement actually reads fairly reasonably. I don’t agree with its conclusion that Lee’s aversion to politics and business-friendly focus are good things, but I was happy to see the Examiner call out Lee’s cronyism and uncritical praise for bad corporate actors like PG&E.
“We do have some concerns about his ties to former power-brokers and off-the-cuff comments that are now being blasted in negative campaign ads. We implore Lee to work harder to separate himself from those who claim responsibility for his success, for they are just as likely to be responsible for any downfall. We ask that Lee, as we would any mayor to be open and honest about his relationships,” the paper wrote.
And its comments about the other candidates it liked were also pretty much on target. The only real criticism I would offer – and it is a significant one – is that progressive favorite John Avalos didn’t even get mentioned among the eight it discussed. WTF?
Now I’m sure they wouldn’t have had great things to say, given their conservative leanings. But to simply leave Avalos out shows the paper has a disregard and disdain for the left that is a big part of what’s wrong in San Francisco. It’s why our mayor and police chief can make this the first city in the country to launch an aggressive midnight raid on the Occupy Wall Street movement. It’s why the Chamber of Commerce can so shamelessly demand that businesses be allowed to drain the employee health funds that a hard-won city law requires them to provide.
San Francisco is not a progressive city, although a large number of San Franciscans are progressive and they have helped usher in a number of important progressive reforms, from worker and tenants protections to environmental initiatives, often through battles that Avalos helped wage on the people’s behalf.
So to ignore Avalos is to ignore progressives in this city. And they can steal our money or our tents, but we aren’t going away.

Lee seeks to lessen political damage from his promised veto

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Mayor Ed Lee says he will veto legislation that the Board of Supervisors approved yesterday that would have banned San Francisco businesses from keeping money they’re required to set aside for employee health care costs. But he seems to be worried about how that move will be seen by voters, touting his support for a “consensus strategy” that doesn’t yet exist and might not be possible given the fundamentally different way both sides see the issue.

The legislation by Sup. David Campos addresses the $50 million per year that businesses have been taking from their employees’ health savings accounts, which they set up to comply with city law requiring them to cover employee health care costs and which many restaurants subsidize by placing a 3-5 percent surcharge on their customers’ bills.

The San Francisco Chamber of Commerce and opponents of the Campos legislation defend the practice and cast efforts to reserve that money for employee health care as a job-killing loss to the business community, although some have finally come around to calling the practice a “loophole” that should be addressed with minor reforms. Yet labor groups and consumer advocates say businesses have no valid claim to that money, making it difficult to see where this elusive common ground might lie.

Supporters of the legislation – including mayoral candidates Leland Yee, Dennis Herrera, John Avalos, and Phil Ting, as well as Assemblymember Tom Ammiano, who authored the Health Care Security Ordinance as a supervisor – rallied on the steps of the City Hall today, calling for Lee to sign the legislation.

Shortly thereafter, the Mayor’s Office issued a press release with the headline “Mayor Lee Convenes Group to Improve Health Care Access & Protect Job,” announcing a “consensus building effort” that includes business groups and Campos and other supporters of the measure. Campos tells the Guardian that he did get a call from the Mayor’s Office today and he agreed to take part in the effort – just as he did in fruitless negotiations with Chamber officials – but he still has a fundamental disagreement with Lee and other Chamber allies over the issue.

“I talked to the Mayor’s Office about their proposal and I have indicated my concerns,” Campos said. He noted that both Lee’s proposal and another alternative by Board President David Chiu – who was quoted in Lee’s press release saying “I am committed to continuing the collaborative effort to ensure health care access to workers while protecting jobs.” – let businesses profit from money that’s supposed to be dedicated to employee health care

“So far, none of the proposals except for mine ensure that whatever consumers pay goes to health care,” Campos said, expressing confidence that public opinion is on his side. “It’s one of those issues that the more everyday San Franciscans hear what’s happening, the more outraged they are.”

But while Lee and Chiu each use the language of seeking compromise and trying to “close the loophole,” both rely on the basic Chamber paradigm that this money belongs to the businesses and setting it aside for employee health care as city law calls for would hurt “jobs.”

When Lee was asked about the issue by a group of reporters today, he said: “Next week, we’re forging a labor and management entities’ meeting with the Mayor’s Office and supervisors to try to forge changes to the Campos legislation. I cannot sign it the way it is now, because of two reasons. One, it does not focus on the healthcare needs of the employees; and two, it will force the employers to just keep millions of dollars lying around without any use and that will decrease the efforts to create more jobs. So both objectives have to be reflected in the ordinance, and I want to make the changes appropriate for that.”

The first reason seems to ignore the fact that the city is barred by federal ERISA law from telling businesses how to provide health coverage, which is why so many of them opted to create these health savings accounts – which are almost useless for people facing serious medical costs – rather than providing health insurance or paying into the city’s Healthy San Francisco program. And supporters of the legislation simply reject the validity of Lee’s second reason.

“That position is based on a false premise. This money belongs to the workers and it’s something that consumers are paying for,” Campos said. “We have a fundamental disagreement.”

Jerry Brown has lost his mind

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He’s all for “realignment” — giving counties more responsibility for public services. He’s all for environmental initiatives that decrease the state’s reliance on fossil fuels. But when a measure comes along that does both — at no harm to anyone in Sacramento, and has the support of just about everyone in San Francisco from the Chamber of Commerce to the Labor Council — he vetoes it.

Brown just announced that he won’t sign Sen. Mark Leno’s SB 223, which would have allowed San Francisco to bring in as much as $75 million a year in new revenue by raising license fees on cars.

Let’s look at this for a moment. New revenue to handle increased state mandates — without Brown having to raise anyone’s taxes. Local control (San Franciscans would have to vote to tax themselves on car use.) A rejection of his Republican predecessor’s unliateral decimation of the state budget. And someting that discourages car use in the process.

A winner on every account. A perfect piece of Jerry Brown legislation that fits in precisely with everything he’s been talking about as governor.

And yet, he vetoes the bil, issuing a ridculous statement calling Leno’s bill “piecemeal” and asking for “a broader revenue solution to the state’s fiscal crisis” — something he knows the Republicans won’t allow and thus will not happen any time soon.

I dunno. Looks to me like Jerry’s gone off the deep end.

Will Mayor Lee veto legislation that helps workers and protects consumers?

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After the Board of Supervisors today voted 6-5 to bar San Francisco businesses from pocketing money they and their patrons set aside for employee health care, Mayor Ed Lee faces a tough but telling choice: Whether to heed business community demands that he veto legislation that has wide labor and consumer support.
A veto is widely expected, but complicating that decision is the position that was staked out today by one of his main rivals as a mayoral candidate, Leland Yee, who issued a statement echoing supporters claims that this is an issue of workers’ rights and consumer protection versus corporate greed: “This is a defining issue of who we are as a city. If Ed Lee vetoes this legislation, one of my first acts as Mayor will be to reverse his veto and sign this legislation into law.”
Neither Lee’s mayoral nor campaign spokespersons answered a Guardian email about whether he will veto the measure, which would kill it unless two supervisors who opposed the measure (David Chiu, Sean Elsbernd, Mark Farrell, Carmen Chu, and Scott Wiener) break ranks, which is unlikely given the polarization on this measure. San Francisco Chamber of Commerce officials have made a top priority of killing the measure, even threatening to withdraw support from Prop. C, the pension reform measure that they helped create with Lee.
At issue is the roughly $50 million per year that San Francisco businesses have been taking from health savings accounts they create for employee health care – funds that are often subsidized by 3-5 percent surcharges that many restaurants have chosen to tack onto their customers bills – under legislation that then-Sup. Tom Ammiano created to require employers to provide health care coverage for their employees.
The position of the Chamber – which fought Ammiano’s legislation and supported years of unsuccessful lawsuits challenging it – is that this $50 million “loss” to city businesses would be a “job killer.” Chiu has also accepted that paradigm and introduced legislation that would let businesses use that money, but require them to let employees know they can tap into it and other reforms. But supporters of the legislation say these businesses are deceiving their customers, defying city law, and stealing from their employees.
“People have tried to complicate this issue, but it is a simple issue. It’s about the right of workers to have health care,” Sup. David Campos, the author of the legislation, said at today’s hearing.
Campos said he would limit his comments, given how widely the issue has already been discussed, and he announced a limitation on how long employees could tap the fund after their termination “in the spirit of compromise.” But then opposing supervisors attacked the measure, its timing, and supporters’ refusal to “compromise,” with Elsbernd chiding Campos that his legislation is “not the best way to encourage jobs.”
So Campos went into more detail about why his measure was needed, noting that Chiu’s alternative would cap an employee’s access to health care at just $4,300, far less than the cost of a night’s hospital stay and a small fraction of the cost of a serious ailment. “You’re looking at a situation where very little could be provided for them,” Campos said.
He also said how important it is to ban the fraudulent practice of restaurants charging customers for employee health care costs and then simply keeping the money, a practice that a recent Wall Street Journal investigation discovered was widespread. Campos said 80 percent of the money collected on diners’ bills is pocketed by the restaurants.
“When consumers are paying for this, the expectation is that workers will have basic coverage,” Campos said, noting that his legislation would guarantee that “every cent that that consumer pays is actually spent on health care…This is not just about workers, it’s about consumer protection.”
Even worse, Campos noted that these consumers are actually paying twice for restaurant employees’ health coverage, first on their dinner bills, and then again as taxpayers when those uninsured employees end up in General Hospital with their expenses paid for by the city.
Under the federal ERISA law – which was the basis for the failed lawsuit challenging the city program, brought primarily by the Golden Gate Restaurant Association – the city cannot tell employers how to provide health coverage, and so they have the option of providing health insurance, paying into the city’s Healthy San Francisco plan, or providing the medical savings accounts that this legislation addresses.
Sup. Jane Kim said she supported the legislation largely because of the horror stories she’s heard from employees who not only weren’t told of the existence of these accounts, but who were denied payment for medical procedures even after they learned about them. She also said the city could be vulnerable to another ERISA lawsuit if it took Chiu’s approach of directing how businesses used their funds, citing an earlier discussion of the board’s role in protecting the city from litigation.
On that issue, Kim today introduced an alternative to legislation by Farrell and Elsbernd that would end the city’s program of providing matching funds to publicly financed mayoral and supervisorial candidates once their privately financed competitors break the spending cap. The US Supreme Court recently ruled a similar program in Arizona to be unconstitutional.
The Chamber and other downtown groups – mostly supporters of Mayor Lee, who are close to breaking the spending limits – had signaled their intent to sue the city over the issue. The Farrell/Elsbernd legislation, which needed eight votes to change the voter-approved program, today failed on a 6-5 vote, with Sups. Campos, Kim, John Avalos, Eric Mar, and Ross Mirkarimi opposed.

Will Brown sign Leno’s VLF bill?

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We’re still waiting. A bill that could bring San Francisco another $75 million a year — just by restoring the vehicle license fee that people in this city paid before Arnold Schwarzenegger gutted it — is still sitting on Gov. Jerry Brown’s desk. And we have no idea what action he’s going to take on Sen. Mark Leno’s SB 223.

The good news is that he has already signed one bill that grants local governments in the East Bay to raise sales taxes with a vote of the people. So he’s clearly open to the idea. Leno told us he remains hopeful. “We’ve been working on this for eight years,” he told me. “And there’s never been a time when local government needs it more.”

Mayor Ed Lee has voiced his support; so has the Board of Supervisors. The SF Chamber of Commerce and the Labor Council are on board. “You can’t get much more broad-based support than we have in San Francisco,” Leno said.

There’s a form to email the governor here.

Progressives battle downtown over economic and political reforms

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Battles between progressive members of the Board of Supervisors and downtown power brokers such as the San Francisco Chamber of Commerce defined City Hall politics for much of the last decade, until the new politics of “civility” and compromise took hold this year, a dynamic that has favored downtown interests. But now, a pair of important, high-profile issues headed to the full board on Tuesday has revived the old dynamic. And in both cases, wealthy interests are putting enormous pressure on the board.

The first involves a proposal – put forward by Sups. Sean Elsbernd and Mark Farrell, the two most conservative supervisors – to gut the city’s system for publicly financing campaigns because downtown is threatening a lawsuit. They propose to end San Francisco’s program of giving publicly financed candidates more money when a privately funded candidate exceeds the spending cap because the Supreme Court recently struck down similar provisions in Arizona.

This week, after convening in closed session to discuss the threat of litigation by downtown groups, the board voted 7-3 – with Sups. David Campos, Jane Kim, and Eric Mar opposed, and Sup. Ross Mirkarimi absent because he rushed out to large structure fire in his district – for the Elsbernd/Farrell measure, one vote short of the supermajority needed to amend the current city law.

Campaign finance reform advocates such as Steven Hill argue that it’s unfair to modify the city program right in the middle of an election season in which Mayor Ed Lee and the wealthy independent expenditure groups supporting him are poised to spend millions of dollars to defeat a large field of mostly publicly funded mayoral candidates.

Hill and his allies are appealing to Mirkarimi – who told the Chronicle that he is leaning toward supporting the amendment when the measure returns to the board on Tuesday – not to support what they consider an overly broad capitulation to downtown’s threats. They’re also lobbying Sup. John Avalos to switch his vote, while downtown players are putting the screws to supervisors as well.

In an interview with the Guardian, Mirkarimi clarified his stance, noting that he was the sponsor of the original public financing law and his goal is to protect it, even if it needs to be modified to withstand a legal challenge. “I’m looking for alternatives to fortify San Francisco’s program,” he told us, noting that he missed some of this week’s discussion and he’s hoping something can be done to retain provisions that level the financial playing field with wealthy candidates.

Meanwhile, downtown forces are pulling out the stops to kill Sup. David Campos’ legislation that would prevent San Francisco businesses from pocketing money they set aside for their employees’ health care under a city mandate that they provide health coverage – totaling about $50 million last year – legislation that gets its first hearing tomorrow (Friday/30) at 10 am.

Board President David Chiu has put forward competing legislation that is more to the Chamber’s liking, letting businesses (mostly restaurants that are even placing surcharges of customers’ bills, ostensibly to subsidize their legal obligations) keep the money. But Campos and his labor allies believe they have the six votes they need to pass the legislation, thanks largely to moderate Sup. Malia Cohen’s pledge to support the measure.

While even some supporters have quibbled with the timing of this measure, Campos notes the urgency of keeping money intended for workers in their hands. “It’s an outrage and the longer we wait, the worse it gets,” Campos tells us, noting that the practice, “is what many of us consider fraud.”

Unfortunately, even if the board approves the measure this Tuesday, it will still need the signature of Mayor Lee to become law. While he hasn’t formally taken a position, given that his political base is the downtown crowd, he’s expected to veto the measure. But we’ll ask him about it tomorrow when he’s scheduled to meet with the Guardian for an endorsement interview at 2 pm.

Defy the business community’s shameless ultimatum

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On the same day that a Wall Street Journal investigation revealed that many San Francisco restaurants are scamming their customers by tacking an employee health care surcharge onto bills and them simply pocketing the money, the Examiner reports that San Francisco business leaders are threatening to withdraw support for pension reform and other measures if the Labor Council supports legislation that would regulate a similar scam.

So, because labor leaders and progressive Sup. David Campos think that employees should actually get health care benefits from the money that city law requires employers to set aside for that purpose — money that many restaurants are supplementing with surcharges on customers of up to 5 percent — the business community is pitching a fit.

We really shouldn’t be surprised that business leaders are acting in such a hostile manner to the city and their own employees. After all, the SF Chamber of Commerce and Golden Gate Restaurant Association bitterly fought the Healthy San Francisco plan created by Tom Ammiano, appealing it all the way to the Supreme Court and losing every step of way.

Then, rather than being gracious losers, they devised deceptive schemes to: 1) jack up people’s dinner bills and make it appear that the city was requiring such a surcharge; and 2) satisfy the letter of the law by creating difficult-to-access health savings accounts for employees, then pocketing what was left unclaimed at the end of the year, which amounted to $50 million last year.

And now, because labor supporters are trying to now, you know, support workers and their rights, the business community has turned on pension reform? Hilarious! I say, good, call their bluff, and let ‘em stop supporting Prop. C. Then next year, we can come around with a new pension reform plan that’s coupled with tax increases on big business, sharing the burden for reforming long-term city finances in a way that it should have been done in the first place.

C’mon, Labor Council, stay strong and show these greedy corporations what we all think of their attacks on their employees, customers, and the city.    

The real Leland Yee

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tredmond@sfbg.com

It’s early January 2011, and the Four Seas restaurant at Grant and Clay is packed. Everyone who is anyone in Chinatown is there — and for good reason. In a few days, the Board of Supervisors is expected to appoint the city’s first Asian mayor.

The rally is billed as a statement of support for Ed Lee, the mild-mannered bureaucrat and reluctant mayoral hopeful. But that’s not the entire — or even, perhaps, the central — agenda.

Rose Pak, who describes herself as a consultant to the Chinese Chamber of Commerce but who is more widely known as a Chinatown powerbroker, is the host of the event. She stands in front of the room, takes the microphone, and, in Cantonese, delivers a remarkable political speech.

According to people in the audience, she says, in essence, that the community has come out to celebrate and support Ed Lee — but that’s just the start. She also urges them not just to promote their candidate — but to do everything possible to prevent Leland Yee from becoming mayor.

She continues on for several minutes, lambasting Yee, the state Senator who lived in Chinatown as a child, accusing him of about every possible political sin — and turning the Lee rally into an anti-Yee crusade. And nobody in the crowd seems terribly surprised.

Across Chinatown, from the liberal nonprofits to the conservative Chamber of Commerce, there’s a palpable fear and distrust of the man who for years has been among San Francisco’s most prominent Asian politicians — and who, had Lee not changed his mind and decided to run for a full term this fall, was the odds-on favorite to become the city’s first elected Chinese mayor.

The reasons for that fear are complex and say a lot about the changing politics of Asian San Francisco, the power structure of a city where an old political machine is making a bold bid to recover its lucrative clout — and about the career of Yee himself.

Senator Leland Yee is a political puzzle. He’s a Chinese immigrant who has built a political base almost entirely outside of the traditional Chinatown community. He’s a politician who once represented a deeply conservative district, opposed tenant protections, voted against transgender health benefits and sided with Pacific Gas and Electric Co. on key environmental issues — and now has the support of some of the most progressive organizations in the city. He’s taken large sums of campaign money from some of the worst polluters in California, but gets high marks from the Sierra Club.

His roots are as a fiscal conservative — yet he’s been the only Democrat in Sacramento to reject budget compromises on the grounds that they required too many spending cuts.

He’s grown, changed, and developed his positions over time. Or he’s become an expert at political pandering, telling every group exactly what it wants to hear. He’s the best chance progressives have of keeping the corrupt old political machine out of City Hall — or he’s a chameleon who will be a nightmare for progressive San Francisco.

Or maybe he’s a little bit of all of that.

 

Leland Yin Yee was born in Taishan, a city in China’s Guangdong province on the South China Sea. The year was 1948; Mao Zedong’s Communist Party of China had taken control of much of the countryside and was moving rapidly to take the major cities. The nationalist army of General Chiang Kai-Shek was falling apart, and Yee’s father, who owned a store, decided it was time for the family to leave.

The Yees made it to Hong Kong, and since Mee G. Yee had previously lived in the United States and served in the U.S. Army during World War II, he was ultimately able to move the family to San Francisco. In 1951, the three-year-old Leland Yee arrived in Chinatown.

For four years, Yee lived with his sister and mother in a one-room apartment with a shared bathroom while his father worked as a sailor in the merchant marine. It was, Yee recalled in a recent interview, a tight, closed, and largely self-sufficient community.

“The movie theater, the shoe store, the barber shop, food — everything you needed you could get in Chinatown,” Yee said. “You never had to leave.”

Of course, after a while, Yee and his mom started to venture out, down Stockton Street to Market, where they’d shop at the Emporium, the venerable department store. “It was like walking into a different country,” he said. “If you didn’t know English, they didn’t have time for you.”

Yee, like a lot of young Chinese immigrants of his era, put much of his time into his studies — in the San Francisco public schools and in a local Chinese school. “My mom spoke a village dialect, and we had to learn Cantonese,” he said. “Every little kid had to go to Chinese school. We hated it.”

When Yee was eight, his parents managed to buy a four-unit building on Dolores Street, and the family moved to the Mission, where he would spend not only the rest of his childhood but much of his early adult life. He graduated from Mission High School, enrolled in City College, studied psychology and after two years won admission to UC Berkeley.

Berkeley in 1968 was a very different world from Chinatown and even the relatively controlled environment he’d experienced at home in the Mission. “You didn’t protest in school. You’d have been sent home, and your mother would kill you,” he said.

At Berekely, all hell was breaking loose, with the antiwar protests, the People’s Park demonstrations, the campaign to create a Third World College (which led to the first Ethnic Studies Department), and a general attitude of mistrust for authority. “I developed a sense of activism,” Yee said. “I realized I could speak out.”

That spirit quickly vanished when Yee lost faith in some of his fellow activists. “People would work with us, then get into positions of power and use that against you,” he recalled. “A lot of my friends said ‘forget it.’ I left the scene.”

Yee once again devoted his energy to school, earning a masters at San Francisco State University and a Ph.D in child psychology from the University of Hawaii. Along the way, he met his wife, Maxine.

With his new degree, the Yees moved back to San Francisco — and back in with his parents at the Dolores property, where he, Maxine and a family that would grow to four kids would live for more than a decade.

 

Yee worked as a child psychologist for the San Francisco Department of Public Health, starting the city’s first high school mental-health clinic. He went on to become a child psychologist at the Oakland Unified School District, then joined a nonprofit mental health program in San Jose.

In 1986, Yee decided to get active in politics for the first time since college, and ran for the San Francisco School Board. He lost — and that would be the only election he would ever lose. In 1988, he won a seat, and established himself as an advocate for students of color, fighting school closures in minority neighborhoods. He also tried to get the district to modify its harsh disciplinary rules, arguing against mandatory expulsions.

On fiscal issues, though, Yee was a conservative. For his first term, despite the brutal cutbacks of the recession of the late 1980s and early 1990s, he insisted that the district make do with the money it had. His solution to the red ink: Cut waste. Only in 1992, when he was up for re-election, did he acknowledge that the district needed more cash; at that point, he supported a statewide initiative to tax the rich to bring money to the schools.

The sense of fiscal conservatism — of holding the line on taxes, but mandating open and fair contracting procedures and tight financial controls — was a hallmark of much of his political career. When the Guardian endorsed him for re-election to the board in 1992, we wrote that “there’s real value in his continuing vigilance against administrative fat and favoritism in contracts.”

Over the next four years, Yee worked with then-Superintendent Waldemar “Bill” Rojas, a deeply polarizing figure who pushed his own personal theory of “reconstitution” — firing all the staff at low-performing schools — and later was enmeshed in a scandal that led to prison time for a contractor he’d hired. Yee told me he was the only board member to vote against hiring Rojas, but people who were watching the board closely back then say he didn’t always stand up to the superintendent.

He also became what some say was a bit too close with Tim Tronson, a consultant hired by the district as a $1,000-a-day facilities consultant. Tronson wound up getting indicted on 22 counts of grand theft, embezzlement, and conspiracy in a scheme to steal $850,000 from the schools, and was sentenced to four years in state prison.

In 1998, when some school board members wanted to build housing for teachers on property that the district owned in the Sunset, Yee led the opposition — with Tronson’s help. At one meeting at Sunset Elementary School, Yee went so far as to say, according to people present, that “Tim Tronson is my man, and I rely on him for advice.”

Yee acknowledged that he worked closely with Tronson to defeat that housing project. “He was the facilities manager,” Yee explained, “and I said that I trusted his judgment.”

 

Yee has either a great sense of political timing or exceptional luck. He ran for the Board of Supervisors in 1996, facing one of the weakest fields in modern San Francisco history. He was the only Chinese candidate and one of just two Asians (the other, appointed incumbent Michael Yaki, barely squeaked to re-election). In an at at-large election with the top five winning seats, Yee came in third, with 103,000 votes.

He was never a progressive supervisor. In 2000, the Guardian ranked the good votes of what we referred to as Willie Brown’s Board, and Yee scored only 43 percent. He was against campaign finance reform. He supported the brutal gentrification and community displacement represented by the Bryant Square development. He voted to kill a public-power feasibility study and opposed the Municipal Utility District initiative. He opposed a moratorium on uncontrolled live-work development.

In 2002, Yee was one of only three supervisors to oppose Proposition D, a crucial public-power measure that would have broken up PG&E’s monopoly in the city. He stood with PG&E (and then-Sups. Tony Hall and Gavin Newsom) in opposition to the measure, then signed a pro-PG&E ballot argument packed with PG&E lies.

When I asked him about that stand, Yee at first didn’t recall opposing Prop. D, but then said he “stood with labor” on the issue. In fact, the progressive unions didn’t oppose Prop. D at all; the opposition was led by PG&E’s house union, IBEW Local 1245.

Yee was particularly bad on tenant issues. He not only voted to deny city funding for the Eviction Defense Collaborative, which helped low-income tenants fight evictions; he actually tried to get the city to put up money for a free legal fund to help landlords evict their tenants. He opposed a ballot measure limiting condo conversions. He opposed a measure to limit the ability of landlords to pass improvement costs on to their tenants.

In 2001, Yee voted to uphold a Willie Brown veto of legislation to limit tenancies in common, a backdoor way to get around the city’s condo conversion ordinance. Only Hall and Newsom, then the most conservative supervisors on the board, joined Yee. At one point, he started asking whether the city should consider repealing rent control.

He opposed an affordable housing bond in 2002, joining the big landlord groups in arguing that it would raise property taxes. Every tenant group in town supported the measure, Proposition B; every landlord group opposed it.

I asked Yee about his tenant record, and he told me that he now supports rent control. But he said that he was always on the side of homeowners and small landlords, and that property ownership was central to Chinese culture. “I was responding to the Chinese community and the West Side,” he said.

He wasn’t much of an environmentalist, either — at least not in today’s terms. He was one of the only city officials to support a “Critical Car” rally in 1999, aimed at promoting the rights of vehicle drivers (and by implication, criticizing Critical Mass and the bicycle movement).

His record on LGBT issues was mixed. While he supported a counseling program for queer youth when he was on the school board, he also supported JROTC, angering queer leaders who didn’t want a program in the public schools run by, and used as a recruiting tool for, the military, which at that point open discriminated against gay and lesbian people.

 

 

Yee was also one of only two supervisors who voted in 2001 against extending city health benefits to transgender employees.

That was a dramatic moment in local politics. Nine votes were needed to pass the measure, and while eight of the supervisors were in favor, Yee and Hall balked. At one point, Board President Tom Ammiano had to direct the Sheriff’s Office to go roust Sup. Gerardo Sandoval, who was ducking the issue in his office, to provide the crucial ninth vote.

Yee didn’t just vote against the bill. According to one reliable source who was there at the time, Yee spoke to a community meeting out on Ulloa Street in the Sunset and berated his colleagues, quipping that the city should have better things to do than “spend taxpayer money on sex-change operations.”

It was a bit shocking to trans people — Yee had, over the years, befriended some of the most marginalized members of what was already a marginalized community. “There was one person at the rail crying, saying ‘Leland, how could you do this to us,'” Ammiano recalled.

The LGBT community was furious with Yee. “I didn’t speak to him for at least a year,” Gabriel Haaland, one of the city’s most prominent transgender activists, told me.

Yee now says the vote was a mistake — but at the time, he told me, he was under immense pressure. When he voted for the queer youth program, he said, “the elders of the Chinese community ripped me apart. They called my mother’s friends back in the village [where he was born] and said her son was embarrassing the Chinese community.”

That must have been difficult — and he said that “if I had known the pain I had caused, I wouldn’t have voted that way.” But it was hard to miss that pain his vote caused.

On the other hand, people learn from their experiences, attitudes evolve, we all grow up and get smarter, and the way Yee describes it, that’s what happened to him.

In 2006, when he was running for state Senate, Yee met with a group of trans leaders and formally — many now say sincerely — apologized. It was an important gesture that made a lot of his critics feel better about him.

“He didn’t have to do that,” Haaland said. “People change, and he paid for his crime, and that’s genuine enough for me.”

As a former school board member, Yee kept an interest in the schools — but not always a healthy one. At one point, he actually proposed splitting SFUSD into two districts, one on the (poorer) east side of town and one on the (richer) west. “We strongly opposed that,” recalled Margaret Brodkin, who at the time ran Coleman Advocates for Children and Youth. “Eventually he dropped the idea.”

For all the problems, in his time on the Board of Supervisors, Yee developed a reputation for independence from the Brown Machine, which utterly dominated much of city politics in the late 1990s. His weak 43 percent rating on the Guardian scorecard was actually third-best among the supervisors, after Ammiano and the late Sue Bierman.

In 1998, he was one of the leaders in a battle to prevent the owners of Sutro Tower from defying the city’s zoning administrator and placing hundreds of new antennas on Sutro Tower. He, Bierman, and Ammiano were the only supervisors opposing Brown’s crackdown on homeless people in Union Square.

When he ran in the first district elections, in 2000, against two opponents who had Brown’s support and big downtown money, the Guardian endorsed him, noting that while he “can’t be counted on to support worthy legislation … He’s one of only two board members who regularly buck the mayor on the big issues.”

(He never liked district elections, and used to take any opportunity to denounce the system, at times forcing Ammiano to use his position as president to tell Yee to quit dissing the electoral process and get to the point of his speech.)

 

In 2002, the westside state Assembly district seat opened up, and both Yee and his former school board colleague Dan Kelly ran in the Democratic primary. Yee won, and went on to win the general election with only token opposition.

His legislative record in the Assembly wasn’t terribly distinguished. Yee never chaired a policy committee — although he did win a leadership post as speaker pro tem. And he cast some surprisingly bad votes.

In 2003, for example, then-Assemblymember Mark Leno introduced a bill that would have exempted single-room occupancy hotels from the Ellis Act, which allows landlords to evict tenants for no reason. Yee refused to vote for the bill. Leno was furious — he was one vote short of a majority and Yee’s position would have doomed the bill. At the last minute, a conservative Republican who had grown up in an SRO hotel voted in favor.

When he ran for re-election in 2004, we noted: “What’s Leland Yee doing up in Sacramento? We can’t figure it out — and neither, as far as we can tell, can his colleagues or constituents. He’s introduced almost no significant bills — compared, for example, to Assemblymember Mark Leno’s record, Yee’s is an embarrassment. The only high-profile thing he’s done in the past several years is introduce a bill to urge state and local governments to allow feng shui principles in building codes.”

In 2006, Yee decided to move up to the state Senate, and he won handily, beating a weak opponent (San Mateo County Supervisor and former San Francisco cop Mike Nevin) by almost 2-1. His productivity increased significantly in the upper chamber — and in some ways, he moved to the left. He’s begun to support taxes — particularly, an oil severance tax — and when I’ve questioned him, he somewhat grudgingly admits that Prop. 13 deserves review.

He’s done some awful stuff, like trying to sell off the Cow Palace land to private developers. But he has consistently been one of the best voices in the Legislature on open government, and that’s brought him some national attention.

Yee has been a harsh critic of spending practices and secrecy at the University of California, and when UC Stanislaus refused in 2010 to release the documents that would show how much the school was paying Sarah Palin to speak at a fundraiser, Leland flew into action. He not only blasted the university and introduced legislation to force university foundations to abide by sunshine laws; he worked with two Stanislaus students who had found the contract in a dumpster and made headlines all over the country.

He’s fought for student free speech rights and this year pushed a bill mandating that corporations that get tax breaks for job creation prove that they’ve actually created jobs — or pay the tax money back. He’s also won immense plaudits from youth advocates and criminal justice reformers for his bill that would end life-without-parole sentences for offenders under 18.

Along the way, he compiled a 100 percent voting record from the major labor unions, including the California Nurses Association and SEIU, and with the Sierra Club. All three organizations have endorsed him for mayor.

Yee told me that he thinks he’s become more progressive over the years. “My philosophy has shifted,” he said.

Yet when you talk to his colleagues in Sacramento, including Democrats, they aren’t always happy with him. Yee has a tendency to be a bit of a loner — he’s never chaired a policy committee and in some of the most bitter budget fights, he’s refused to go along with the Democratic majority. Yee insists that he’s taken principled stands, declining to vote for budget bills that include deep service cuts. But the reality in Sacramento is that budget bills have until this year required a two-thirds vote, meaning two or three Republicans have had to accept the deal — and losing a Democratic vote has its cost.

“You have to give up all sorts of things, make terrible compromises, to get even two Republicans,” one legislative insider told me. “When a Democrat goes south, you have to find another Republican, and give up even more.”

In other words: It’s easy to take a principled stand, and make a lot of liberal constituencies happy, when you aren’t really trying to make the state budget work.

 

I met Rose Pak on a July afternoon at the Chinatown Hilton. She brought along her own loose tea, in a paper package; the waitress, who clearly knew the drill, took it back to the kitchen to brew. Pak and I have not been on the greatest of terms; she’s called the Guardian all kinds of names, and I’ve had my share of critical things to say about her. But on this day, she was polite and even at times charming.

After we got the niceties out of the way (she told me I was unfair to her, and I told her I didn’t like the way she and Willie Brown played politics), we started talking about Yee. And Pak (unlike some people I interviewed for this story) was happy to speak on the record.

She told me Yee had “no moral character.” She told me she couldn’t trust him. She told me a lot of stories and made a lot of allegations that we both knew neither she nor I could ever prove.

Then we got to talking about the politics of Chinatown and Asians in San Francisco, and a lot of the animosity toward Yee became more clear.

For decades, Chinatown and the institutions and people who live and work there have been the political center of the Chinese community. Nonprofits like the Chinatown Community Development Center have trained several generations of community organizers and leaders. The Chinese Chamber of Commerce, the Six Companies, and other business groups have represented the interests of Chinese merchants. And while the various players don’t always get along, there’s a sense of shared political culture.

“In Chinatown,” Gordon Chin, CCDC’s director, likes to say, “it’s all about personal connections.”

There’s a lively infrastructure of community-service programs, some of which get city money. There’s also a sense that any mayor or supervisor who wants to work with the Chinese community needs to at least touch base with the Chinatown establishment.

Yee doesn’t do that. “He doesn’t give a shit about them,” David Looman, a political consultant who has worked with many Chinese candidates over the years, told me.

Yee’s Asian political base is outside of Chinatown; he told me he sees himself representing more of the Chinese population of the Sunset and Richmond and the growing Asian community in Visitacion Valley and Bayview.

Pak is connected closely to Brown, who Yee often clashed with. For Pak, Brown, and their allies, strong connections to City Hall mean lucrative lobbying deals and public attention to the needs of Chinatown businesses. Then there’s the nonprofit sector.

CCDC and other nonprofits do important, sometimes crucial work, building and maintaining affordable housing, taking care of seniors, fighting for workers rights, and protecting the community safety net. Yee, Pak said, “has never shown any interest in our local nonprofits. We all work together here, and he doesn’t seem to care what we do.” Yee told me he has no desire to see funding cut for any critical social services in any part of town. But he has also made no secret of the fact that he questions the current model of delivering city services through a large network of nonprofits, some of which get millions of taxpayer dollars. And the way Pak sees it, all of that — the nonprofits, the business benefits, the contracts — are all at risk. “If Leland Yee is elected mayor,” she told me, “we are all dead.”

I ran into an old San Francisco political figure the other day, a man who has been around since the 1970s, inside and outside of City Hall, who remains an astute observer of the players and the power relationships in the local scene. At the time we talked, he wasn’t supporting any of the mayoral candidates, but he had a thought for me. “This town,” he said, “is being taken over by a syndicate. Willie Brown is the CEO, and Rose Pak is the COO, and it’s all about money and influence.”

That’s not a pleasant thought — I’ve lived through the era of political machine dominance in this town, and it was awful. In the days when Brown ran San Francisco, politics was a tightly controlled operation; only a small number of people managed to get elected to office without the support of the machine. Developers made land-use policy; gentrification and displacement were rampant; corruption at City Hall turned a lot of San Franciscans off, not only to the political process but to the whole notion that government could be a positive force in society.

A few years ago, I thought those days were over — and to a certain extent, district elections will always make machine politics more difficult. But when I see signs of the syndicate popping up — and I see a candidate like Ed Lee, who’s close friends with Brown, leading the Mayor’s Race — it makes me nervous. And for all his obvious flaws, at least Leland Yee isn’t part of that particular operation. If there’s a better reason to vote for him, I don’t know what it is.

YEE HOME PURCHASE RAISES SUSPICIONS

Rose Pak has a question about Leland Yee. “How,” she asked me, “did the guy manage to buy a million-dollar house on a $30,000 City Hall salary?”

Pak isn’t the only one asking — numerous media reports over the years have examined how Yee raised a family of four and bought a house in the Sunset on very little visible income. And while I’m not usually that interested in the personal finances of political candidates, I decided that it was worth a look.

Here’s what I found: Public records show that in July 1999, Yee and his wife, Maxine, purchased a house on 24th Avenue for $875,000 (it’s now assessed at slightly more than $1 million). At the time, Yee was a San Francisco supervisor, earning a little more than $30,000 a year. (The salary of the supervisors was raised dramatically shortly after Yee left the board and went to the state Assembly.) His wife wasn’t working. And his economic interest statements for that period show no other outside earnings. So the disposable, after-tax income of the entire Yee family couldn’t have been much more than $25,000.

That, by any normal standard, shouldn’t have been enough to float a mortgage that, records show, totaled $516,000. In fact, the interest payments alone on that mortgage alone would total $3,600 a month — more than Yee’s gross income.

Documents in the Assessor’s Office show another paper trail, too. In 1989, Jung H. Lee, Yee’s mother, transferred the deed on a four-unit Dolores St. building where the family had been living to Maxine and Leland Yee — for no money. And a few months before the Yees bought the Sunset house, they took out a $320,000 home-equity loan on that property. That was the down payment on the Sunset property.

Still: At that point, the Yees would have been paying off two mortgages, with a total nut of about $5,000 a month — and supporting four kids, in San Francisco. In 2002, Yee’s economic interest statement’s show some modest income from teaching at Lincoln University — but nowhere near enough to pay that level of expenses.

What happened? Yee explains it this way: “For more than 10 years, we were living rent-free in my parents’ property,” he told me I an interview. “We were a close Chinese family, and my parents provided the food and helped pay for the children’s clothing. So we had almost no expenses and we lived very frugally.”

During that period, Yee was working for the San Francisco Department of Public Health, the Oakland Unified School District, and a San Jose nonprofit, earning, he said, between $50,000 and $90,000 a year. If he saved almost all of that money, he would have had more than a half-million dollars in the bank when he bought the Sunset house.

There’s nothing on any of his economic disclosure forms showing any ownership of stocks or other reportable financial interests during that period, so he wasn’t investing the money. In fact, he says, it was, and is, all in simple savings accounts. A bit unusual for that large a sum of money.

How did he get a mortgage? “Back then,” he said, “banks were willing to lend a lot more freely than they do today.”

Starting in 2003, Yee was in the state Assembly, making a higher salary — but still not much in excess of $100,000 a year. After taxes, he was probably taking home about $75,000 — and $60,000 was going to the two mortgages.

How did he do it? “We have been supplementing our income with our savings,” he said. “We don’t take vacations, we are very careful with our money.” And they clearly aren’t desperate for cash — Yee’s daughter occupies two of the four units in the Dolores St. building they own, but the other two units are vacant.

It’s possible. It’s plausible. But I don’t blame people for wondering how he managed to pull it off. (Tim Redmond, with research assistance by Oona Robertson) 

 

 

 

BIG CORPORATIONS HAVE BACKED YEE

Yee became a prodigious fundraiser in Sacramento — and a lot of the money came from big corporations that had business in the Legislature. And while he has perfect scores from the Sierra Club and the big labor unions, he’s taken tens of thousands of dollars from some of the biggest corporations, agribusiness interests, and polluters in the state. And at times, he’s voted their way.

Since 1993, for example, campaign finance records show Yee has taken more than $20,000 from Chevron, ExxonMobil, Valero, Conoco Phillips, and BP. He’s received another $22,450 from the chemical industry (and industry employees). Most of it came from Clorox, Dow Chemical, and Dupont.

And while the Sierra Club may not have considered it a priority, Sen. Mark Leno has worked hard to pass a bill limiting chemical fire retardants in furniture. In 2008, Yee voted against Leno’s AB 706.

That year he also refused to support a bill that would prohibit the use of the chemical diacetyl in workplaces. The industries that opposed AB 514 (including Bayer, Abbott Laboratories, Pfizer, and Johnson & Johnson) have given Yee a total of more than $60,000.

In 2003, Yee voted against a crucial tenant bill, one that would have prevented the owners of single room occupancy hotels from using the Ellis Act to evict tenants. He received a campaign check for $2,500 from the San Francisco Apartment Association the next day. Landlords in general have given Yee close to $40,000.

Then there’s agribusiness. Yee gets a lot of money from the farming industry, despite the fact that there obviously aren’t many farms in his district. Why, for example, would the California Poultry Association, the California Cattlemen’s Association, and the California Farm Bureau give him money? The Poultry Association’s Bill Mattos told us that Yee “has taken a keen interest in California’s poultry industry.”

Yee also took immense flak from the San Francisco Chronicle and other papers over a 2003 vote against a bill to limit emissions from farm vehicles. In an editorial, the paper wrote that he was “doing dirty work for the lobbyists.” In the end, under immense public pressure, he switched positions and voted for the bill. I asked Yee about all that money from all those bad operators, and he told me — as most politicians will — that campaign cash has never influenced any of his votes.

So why do all these groups give him money? “It’s about whether you will sit down and listen,” Yee said. “I will talk to all sides and at least consider the arguments as a thoughtful human being. Then I vote my conscience.” (Tim Redmond, with research by Oona Robertson) 

Inside the V.I.P. cocktail party with Willie Brown

The Alliance for Jobs and Sustainable Growth hosted a V.I.P. reception just before a mayoral candidate forum held at UCSF Aug. 16, and former Mayor Willie Brown appeared to be the guest of honor. Although the theme of the event was technically “honoring San Francisco’s mayors” — former Mayor Frank Jordan was there, someone indicated that former Mayor Art Agnos was in the room, former Mayor Gavin Newsom was invited but didn’t show, and Mayor Ed Lee was of course in attendence — Brown seemed to be given more prominent recognition than any of the others.

The moment he strolled in, Sup. Mark Farrell, who was doing introductions for the the affair, scrambled onstage to announce Brown’s presence and deliver a warm welcome, and everyone applauded. Within minutes, the former mayor was seen chatting with a crowd that included Mayor Lee and several others. Soon after, Brown and former Mayor Frank Jordan were summoned to the stage to say a few words.

Once in the limelight, Brown cracked a few jokes. He said he felt for the 36 mayoral candidates, who are forced to campaign in an era when the Internet threatens to reveal videos and photos of them at any time to thousands of online viewers. “I’m glad they didn’t have that kind of communication system when I was running,” he said. “I can’t imagine the photographs you’d have of me floating around doing things I shouldn’t have been doing.”

As for his own time in Room 200, “I enjoyed every single solitary minute of it, and if I really thought I had great skills, I would be number 37,” he said, drawing more applause.

Then again, common wisdom says it isn’t necessary for Brown to bother campaigning in order to gain access to Room 200 these days. Later that same evening, during his own turn in the spotlight at the mayoral debate, Mayor Lee came under fire from Board President David Chiu, who revealed that Lee had privately confided to him about a week before he announced his candidacy that he was having a difficult time saying no to Brown and influential Chinatown business consultant Rose Pak when it came to launching a campaign for a full term.

Chiu’s pointed question for the mayor was what had changed in his mind since that conversation, but Lee referenced neither Brown nor Pak in his answer. Instead, he said he’d changed his mind after witnessing his success in changing the tone of government and getting things done in City Hall.

Back at the V.I.P. reception, Brown and Jordan were invited onstage again, this time to receive awards presented by the Alliance for Jobs and Sustainable Growth. But first Steve Falk, president and CEO of the San Francisco Chamber of Commerce, reminded the crowd that there was still time to buy a drink before the debate got underway. He said, “Debates are much more interesting after three drinks.”

Before Falk presented Brown with a commemorative plaque, he said, “It’s tough to put in a few sentences the life and times of Willie Brown,” and proceeded to note that, with his term in the California Assembly and time serving as mayor of San Francisco behind him, Brown “has now followed his friend Herb Caen into an honest line of work as a columnist for the San Francisco Chronicle.”

Being a newspaper columnist doesn’t mean Brown is always kind to members of the local media. While mixing through the crowd minutes after receiving his award, he fired some harsh words at a well-known City Hall reporter who had recently published some unflattering articles about the “Run, Ed, Run” effort to encourage Lee to seek a full term.

In recent months, Brown’s columns have provided the public at large with a rare glimpse into Mayor Lee’s dining experiences in San Francisco. In February, Brown wrote in one of his columns that he went out to North Beach Restaurant at sat at the window table with Lee, Brown’s “friend” Sonya Molodetskaya, and Jack Baylis, who serves as the US Group Executive of Strategic Development for AECOM, one of the city’s largest contractors and a sponsor of the Alliance for Jobs and Sustainable Growth Event. (Baylis was on the invite list for the V.I.P reception, too.)

Apparently, AECOM had something to celebrate that same day — according to an Aug. 16 press release, an AECOM joint venture was just awarded a $150 million contract for program management services for the San Francisco Public Utilities Commission’s wastewater improvement program.

The V.I.P. reception had representation from many key players in the downtown business community, with sponsorship from AT&T, AECOM, Pacific Gas & Electric Co., Wells Fargo, Motorola, California Pacific Medical Center, the San Francsico Chamber of Commerce, the Building Owners and Managers Association, the San Francisco Police Officer’s Association, Shorenstein Properties, and others. Several labor unions, including the United Association of Plumbers & Pipefitters Union Local 38, United Brotherhood of Carpenters and Joiners of America Local Union No. 22, and United Food and Commercial Workers Union Local 5 were also listed as sponsors. Guests included district supervisors, developers, lobbyists, business owners, mayoral candidates, media spokespeople, executives from the health care industry, and other political insiders.

Clearly, there were many people in the room who wanted to get on Brown’s good side.

You can’t trust Ethics

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By Larry Bush

OPINION Proposition F, a measure on the November ballot, is supposed to clean up some provisions of the law that requires political consultants to register and make disclosures about their clients and their work. It was approved by all 11 supervisors.

But Prop. F has some serious problems. For starters, it grants authority to the Ethics Commission to make any other changes it wants in the law.

As the Voter Handbook says:

“A yes vote means: You also want to allow the City to change any of the campaign consultant ordinance’s requirements without further voter approval.”

Why should you oppose that? Because the Ethics Commission can’t be trusted.

The reason San Francisco has a law forcing political consultants to register and make disclosures is because the voters demanded one. City Hall fought against it every step of the way.

Former Supervisor Tom Ammiano introduced the measure in 1996, and it won board approval. Then-Mayor Willie Brown vetoed it. Ammiano rewrote the measure 1997 to meet Mayor Brown’s objections. Brown vetoed it again. And the supervisors who had voted for the law refused to vote for it again and overturn the veto.

So Ammiano and several other supervisors put the measure on the ballot. The political consultants raised a war chest to defeat it and spent more than $100,000 in direct mail, billboards and other voter contacts.

It passed with 61 percent of the vote.

What kind of clean up does Ethics plan now on the political consultant law? You can bet it won’t come down on the side of greater disclosure.

In 2009, two years ago, the Ethics Commission decided to write a clean up of the city lobbyist law. Just like they want to do with the political consultant law now.

And what happened with that law?

It changed one little aspect that didn’t get any real attention. It changed what is defined as a lobbyist — a person or entity who seeks to influence administrative or legislative decisions.

And what is the result?

Now the San Francisco Chamber of Commerce no longer has to file and disclose its lobbying. Neither does Lennar. Neither does the America’s Cup or Larry Ellison.

All those groups had to file under the old rules.

The bottom line is that a sleeping watchdog that can’t be trusted wants the right to change the laws governing political consultants — without any further oversight or public vote.

The former Ethics Commissioners who also are opposing this measure are Paul Melbostad, who served on the commission when the political consultants act was passed; Bob Dockendorff; Joe Julian; Bob Planthold; and Eileen Hansen, who just completed her term and was the only commissioner who voted against the pay-to-play rewrite.

I urge you to join them in opposing this measure.

Larry Bush is the publisher of Citireport.com, a City Hall watchdog.

Taking out the trash

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sarah@sfbg.com

A controversial city waste disposal contract appeared primed for final approval by the Board of Supervisors on July 26 (after Guardian press time) — despite being challenged by a lawsuit and initiative campaign — after two progressive supervisors rescinded their initial vote in a July 20 committee hearing and supported awarding the contract to Recology.

City staff had recommended awarding the 10-year, $112-million landfill disposal and facilitation agreement to Recology (formerly NorCal Waste Systems, Inc.), which has grown from a locally based company to the 10th largest waste management firm in the US, with $652 million in annual revenue, according to Waste Age magazine.

If the full board follows the unanimous recommendation of its Budget & Finance Committee, the vote will authorize Recology to transport and dispose up to 5 million tons of the city’s solid waste at the company’s Ostrom Road landfill in Wheatland, Yuba County. The contract will take effect when San Francisco’s disposal agreement at Waste Management Inc.’s Altamont landfill in Livermore expires — estimated to occur in 2015.

The deal will cement Recology’s control, at least for a 10-year period, over all aspects of the city’s solid waste stream, at a cost of about $225 million per year, even as the company faces significant challenges, many related to the city’s 1932 refuse collection and disposal ordinance.

That law, approved during the Great Depression to prevent conflict between competing garbage haulers, has resulted in Recology’s exercising complete control over trash collection and transportation in San Francisco, without having to bid on those contracts or pay the city franchise fees.

During the negotiations over the city’s next landfill contract — the only aspect of San Francisco’s waste stream put out to bid — this 79-year-old law was invoked to explain why Recology has the sole authority to transport trash and compostables to Wheatland, which is 130 miles from San Francisco.

The move also comes as Yuba County is contemplating significantly increasing dumping fees at the landfill — from $4.40 per ton to $20 or $30 per ton — a hike that could erase the $100 million that the Department of the Environment (DoE) claims the Recology deal would save over a competing bid by Waste Management Inc. WM is the largest waste firm in the U.S., according to Waste Age, with about $12.5 billion in annual revenues.

On July 18, WM filed a lawsuit in San Francisco Superior Court to prevent the city from approving the agreements with Recology on the grounds that they violate the city’s competitive bid laws.

“The Department of the Environment inappropriately and unlawfully expanded the scope of its 2009 ‘request for proposal for landfill disposal capacity’ and, therefore, violated the city’s competitive procurement laws,” WM alleges in the suit.

WM has long held that DoE inappropriately issued a tentative contract award for both the transportation and disposal of solid waste to Recology without soliciting any other transportation bids. But DoE, which gleans $7 million annually (to operate recycling, green building, and environmental justice programs and long-term planning for waste disposal) from rates that Recology’s customers pay, ruled last year that WM’s objections are “without merit.”

Now WM is asking the court to require DoE to scrap its award to Recology and issue a new request for proposals to comply with competitive bidding requirements.

“There is ample time for the department to issue a new RFP,” WM stated July 18, noting that there is plenty of room at its Altamont landfill to accommodate the city’s waste after the contract expires.

That same week, a coalition led by retired Judge Quentin Kopp, community activist Tony Kelly, and Waste Solutions CEO David Gavrich announced that it had submitted enough signatures to qualify an initiative on the June 2012 ballot requiring competitive bidding and franchise fees from any company that seeks to win any aspect of the city’s solid waste business.

Kelly says his group was unable to collect enough signatures in time for the November election because Recology hired the city’s two biggest signature-gathering firms to circulate what he calls a “phony petition” in support of Recology’s performance in San Francisco. And signature gatherers say they were harassed by Recology boosters while trying to petition citywide.

“But I believe the question of whether candidates support competitive bidding will continue to be a defining issue this fall,” Kelly said.

The board’s decision on the landfill agreements has already been delayed several months, following a February 2011 Budget and Legislative Analyst report recommending that the board consider submitting a proposition to the voters to repeal the 1932 refuse ordinance so that future collection and transportation services be put to bid. The report also recommended that future residential and commercial refuse collection rates be subject to board approval.

But with two progressive supervisors running in citywide elections this fall, and with Recology exerting massive pressure on elected officials, the Kelly coalition could not find four supervisors to place such a charter amendment on the November ballot, forcing them to launch their own initiative.

And at the July 20 meeting of the board’s Budget and Finance Committee, Sup. Ross Mirkarimi, who is running for sheriff, and Sup. Jane Kim rescinded their initial decision to send the agreements to the full Board without recommendation. Instead, after the committee had moved on to other business, they joined Chair Carmen Chu, one of the most conservative supervisors, in forwarding the Recology agreements to the full board with unanimous support.

Mirkarimi interrupted the committee’s next discussion to rescind the landfill vote. “I think there was some misunderstanding a little bit in wrapping up the landfill agreements with Recology, ” Mirkarimi said. He said that he asked for the vote to be rescinded, “so we can accurately reflect some of the sentiments being articulated here. I think we just learned some things on the fly.”

In many respects, the switch by Kim and Mirkarimi made sense: prior to their initial vote, they made positive statements about the proposed agreements, but also stated an interest in exploring the appropriateness of the city’s 1932 law.

“Overall, I think this was a good contract,” Kim said. But she noted that, thanks to the 1932 ordinance, the city doesn’t get franchise fees. And she claimed that it only gets half of what other Bay Area cities get from their waste contractors. “So, I’m really interested in continuing that conversation, but I think it’s a separate conversation,” she said.

Mirkarimi said it was his concerns that led the committee to “put a pause” on the Recology agreements until it could “undertake more homework.” He also noted that his office “held a number of meetings” and he tried to “leverage this opportunity to reanimate activity at the Port.”

“I was hoping that we might be able to arrive at something much more deliverable,” Mirkarimi said, presumably referring to the fact that these efforts resulted in DoE unveiling an amendment to include two “possible changes” to operations and facilities at the Port of San Francisco in the agreements.

These changes involve utilizing other modes of transportation, including barges, as alternatives to the rail-haul plan proposed in the agreement. They also call for developing new facilities at the Port for handling waste, recyclables, organics, and other refuse. The cost of such alternatives would be passed onto the rate payers.

“I think that, cost-effectively, we may be able to insert the Port into this equation, but it’s not ready for prime-time yet,” Mirkarimi said. He concluded by saying that Recology has been innovative in reducing the city’s waste stream.

“This should be a front-burner conversation,” Mirkarimi said, noting that former Mayor Gavin Newsom focused on making San Francisco “the greenest city” in the United States. He added that San Francisco claims to have a 77 percent diversion rate, the highest in the U.S., and said, “That comes at a cost, it doesn’t come for free.”

After the meeting, DoE deputy director David Assmann said that the City Attorney’s Office is reviewing WM’s filing. “But it’s too soon to comment,” Assmann said.

He also claimed that, thanks to the 1932 ordinance, “there was no practical way” for another company to transport San Francisco’s waste to its designated landfill, “other than building a second transfer station outside the city.”

But Kelly continued to express concerns that the agreements are not competitive, and that the city lacks a contract and ensuing franchise fees. “They are running this as if it’s still the 1950s,” he said.

Kelly claimed that Recology Vice President John Legnitto, who is the 2011 chair of the SF Chamber of Commerce’s Board of Directors, recently told him that Recology has been in negotiations with City Hall around a $4 million franchise fee, but that the money would now be spent opposing Kelly’s competitive bidding initiative.

Kim removes homeless shelter reform measure from ballot

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Under pressure from the Mayor’s Office, Sup. Jane Kim today removed her sponsorship of the Fair Shelters Initiatives, effectively killing the measure that was set to appear on the November ballot, according to activists working on the issue. Sup. Eric Mar reportedly followed Kim’s lead and also removed his sponsorship, telling activists he was deferring to Kim’s decision.

“We hardly expected the supervisors would put a measure forward and then cave in before the campaign had even started,” said Bob Offer-Westort of the Coalition on Homelessness, which had asked Kim to be the lead sponsor of a measure that he said is the homeless community’s highest priority.

The measure would have removed shelter beds from the definition of housing under the city’s voter-approved Care Not Cash program, thus freeing up beds for the larger homeless population that is often denied space in shelters even as beds reserved for CNC recipients – who give up most of their welfare support in return for housing and services – often remain vacant.

The measure — which was sponsored by Sups. Ross Mirkarimi, David Campos, and John Avalos, in addition to Kim and Mar, giving it one more than the four votes it needed to make the ballot – had been harshly criticized by the San Francisco Chamber of Commerce and other downtown groups, as well as Mayor Ed Lee and other moderate politicians, who said it would somehow destroy CNC and attract more homeless people to the city.

In a recent email blast, Chamber head Steve Falk called the measure “alarming” and was “effectively dismantling the nationally-recognized program.” He tried to use the 100 nightly vacant shelter beds as a rationale against the measure (despite the fact that was the very problem the measure tried to correct), and wrote, “This measure is nothing more than pure politics to turn out progressive voters in a crowded mayoral race.”

Kim and her staffers haven’t returned Guardian calls for comments, and neither Mar nor Mirkarimi could be reached. But Offer-Westort said the arm-twisting by the Mayor’s Office shows just how little things have really changed at City Hall.

“It sets a really bad precedent when once again a mayor bullies members of the Board of Supervisors to get his way,” he said, noting that Kim still claimed to support the reform in her conversations with COH members. “It certainly wasn’t because she changed her mind about whether this was right or wrong. It had more to do with her concerns over the board’s relationship with Room 200.”

Will Kopp’s competitive bidding initiative derail Recology’s train to Yuba?

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Sponsors of an initiative to require competitive bidding on all aspects of the city’s multi-million-dollar garbage services say they plan to deliver their initiative petitions to the Department of Elections this afternoon. The petitions contain 12,000 signatures, far more than the 7,000-8,000 required, effectively signalling that, even after the city weeds out non-valid signatures, the initiative will qualify for the June 2012 election.

The move threatens to give the Board a political migraine, since the Board is set to vote July 26 on a Department of Environment resolution to expand Recology (formerly Norcal Waste System, Inc)’s monopoly on San Francisco’s garbage and recycling services.

In fact, the DoE resolution contains two separate agreements: a $112 million long-term landfill disposal agreement that was competitively bid, and a facilitation agreement that governs how waste is transported to the landfill and that was not competitively bid. As such, the city’s facilitation agreement is already the subject of a lawsuit that Waste Management Inc. filed in San Francisco Superior Court last week.

Sponsors of the competitive bidding ordinance, which include retired judge Quentin Kopp, community activist Tony Kelly and Waste Solutions CEO David Gavrich,believe the Board should delay voting on the landfill disposal and facilititation agreements until next summer, after voters have had a chance to weigh in on the bigger question of whether folks want competitive bidding on all the city’s garbage-related services, which are worth a quarter of a billion, each year. “

“It would be disrespectful to voters to accept a resolution while an initiative is pending,” Kopp stated.

“It would make sense if they severe the landfill disposal and facilitation agreements into two files,” Kelly added, referring to how the two separate agreements are currently lumped into one item on the Board’s July 26 agenda, under the section titled “recommendations of the Budget and Finance sub-committee.”

How the deal got filed in the B&F sub-committee’s recommended section is another story unto itself: Last Wednesday, after Sups. Ross Mirkarimi and Jane Kim, who sit on the Board’s Budget and Finance sub-committee, voted to send the deal to the Board with no recommendation, (a vote that suggested that they had some concerns with the deal) and after members of the public who came to testify about the item had left,  Mirkarimi asked to rescind the landfill vote.

“I think there was some misunderstanding a little bit in wrapping up the landfill agreements with Recology, “ Mirkarimi said, as he asked for the vote to be rescinded, “so we can accurately reflect some of the sentiments being articulated here.”
“I think we just learned some things on the fly,” Mirkarimi stated, as he and Kim joined committee chair Sup. Carmen Chu, one of the Board’s more conservative members, in sending the deal to the full Board “with recommendation.”

The Guardian learned of the vote switcheroo, after the DoE, which is apparently anxious to see the Recology agreements move forward, contacted us to say that our blog post about the Budget and Finance sub-committee, incorrectly stated that Mirkarimi and Kim had not given the deal their unmitigated thumbs-up. (The Guardian has since amended its blog post to accurately reflect what happened at the meeting, after this reporter and most members of the public, except the Chamber of Commerce’s Jim Lazarus, who supports the Recology agreements, had left the Board’s Chambers.)

Asked about the last-minute move to amend the vote Kelly said, “It was Ross at his Rossest.”

And in many ways, Mirkarimi’s move to rescind made sense: neither he nor Kim had registered any problems with the landfill disposal and facilitation agreements during the committee hearing, though a number of seemingly valid concerns were raised, including the observation by Yuba County supervisor Roger Abe that Yuba County is considering raising its host fees at Recology’’s Ostrom Road landfill in Wheatland from $4.40 a ton to $20- $30 a ton. If Yuba County does raise itsw fees, the move could wipe out the estimated $100 million in savings that DoE claims Recology’s proposal represents for San Francisco ratepayers. According to Abe, Yuba’s fees have not been raised for 14 years, and his county, which is one of the poorest in California, could use the additional income, especially if it is going to see its local landfill fill up faster than anticipated, thanks to San Francisco sending up to 5 million tons of trash over a 10-year period.

To be fair, Mirkarimi did warn that it would be unwise to dismiss Yuba County’s concerns , but he countered that any county can raise its fees. And DoE suggested that it was unlikely that Yuba County can raise its fees excessively, because those same fees would have to be paid by the other municipalities that use the Ostrom ROad dump, most of which are small towns that can’t afford to pay as much as relatively prosperous Bay Area cities like San Francicso.

Instead, Mirkarimi and Kim reserved most of their concerns for the bigger question of whether San Francisco ratepayers are best served by the city’s continuing lack of competitive bidding and franchise fee requirements on San Francisco’s remaining $225-million-a-year garbage collection related services–concerns that seem to bring us back full circle to Kopp and Kelly’s competitive bidding ordinance, which they had hoped to qualifty for

Asked how many supervisors he thought will stand up tomorrow and dig into the details of the DoE agreements and how they contradict with the requirements of the Kopp-Kelly-Gavrich competing bidding initiative, Kelly said, “Two.”

If so, that’s not likely to derail Recology’s train to Yuba, especially given that Mayor Ed Lee, who holds veto power over any item that less than eight supervisors support or oppose, told the Guardian in February that he believes Recology had earned its privilege.

But so far the City Attorney’s Office is remaining mum about the potential impact of WM’s lawsuit on Recology’s train to Yuba County, a silence that will give the Board the political cover they apparently so desperately need, if they vote tomorrow to haul San Francisco’s trash to Yuba County by rail, an arrangement that won’t start until after the city’s current contract at Waste Management’s Altamont landfill expires, something that is not anticipated to happen until 2015, based on the city’s current diversion rates.

 

Dick Meister: Workers gaining in fight for union rights

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This year marks the 76th anniversary of the National Labor Relations Act, the Depression-era law that was essential in building an American middle class – and which remains essential to the well-being of all working Americans. 

But you know what? Powerful corporate interests and their Republican buddies in Congress are nevertheless trying mightily to cripple what has so long been one of the most important U.S. laws of any kind.

Their main target currently is the National Labor Relations Board – the NLRB –which administers the National Labor Relations Act and takes seriously the act’s stated purpose of encouraging collective bargaining between workers and their employers.

The five-member labor board did very little to carry out its task of encouraging unionization during the notoriously anti-union Bush administration. But under President Obama, the NLRB has been doing its job – or has been trying to do its job — in the face of stiff Republican opposition.

The Republican opponents claim – what else? – that under Obama, the NLRB has become a tool of organized labor, Big Labor, as they like to call it.

It’s impossible to take those charges seriously. The labor board obviously has not been acting as an agent of unions, big or small. It’s merely been enforcing the law. But that, of course, means anti-labor forces no longer have the firm cooperation of the NLRB in their attempts to weaken unions as much as possible. They no longer have an ally in the White House. Bush is gone.

Imagine that. The National Labor Relations Board is actually doing what the law says it should do. And unions are actually getting a more or less even break vis-à-vis the corporate interests with whom they collectively bargain – or with whom they try to bargain.

What’s really got the anti-labor crowd sputtering lately is a ruling by the NLRB’s acting general counsel, Lafe Solomon,  against the Boeing Aircraft Company. Boeing was charged with breaking the labor law by moving a major assembly line from a unionized plant in Washington State to South Carolina, a notably anti-union state, in response to a machinist strike at the Washington plant. 

Moving the assembly line was done in violation of a provision in the National Labor Relations Act that bans companies from punishing striking unions by withholding or transferring jobs. Thus, said the NLRB’s Solomon, the assembly line should be moved back to Washington State.

Oh, boy, those union-hating Republicans in Congress didn’t like that at all. They threatened to defund the NLRB if it doesn’t withdraw its order to Boeing, trotting out their usual tired response to just about anything done in favor of unions these days. You’ve undoubtedly heard it – thousands of  times, maybe. Yes, that’s right. A ruling in favor of labor and labor law would be . . . Ah, yes, a job killer. Sure.

GOP House members have actually introduced something called – really – “The Protecting Jobs From Government Interference  Act.” that would void the NLRB order against Boeing  and prohibit future such orders. The proposed law undoubtedly has the approval of the union-hating U.S. Chamber of Commerce, which has led the right-wing charge against the NLRB. It complains that the labor board is “out of control.”

Actually, the NLRB is out of control  – out of control of the right-wingers who had  their way throughout Bush’s two terms and are miffed that, unlike Bush, Obama doesn’t think their way is the only way to handle labor-management relations.

Much to the chagrin of the right-wingers, the labor board has come back strong under Obama. One of the board’s most important steps has been to develop rules to streamline the workplace elections that are held to determine if workers want to unionize. 

The board has cut short the pre-election periods that employers have used to harass workers into voting against unionization, approaching them individually and in mass meetings, frequently threatening to fire or otherwise penalize workers who vote for union representation. Obama’s NLRB also has cut back the time for management to appeal the outcome of a vote for unionization.

The changes, as one union attorney noted, are “common sense changes that drag labor law into the 21st century.” 

Common sense often doesn’t mean much to anti-labor Republicans. Sensible or not, they plunge onward on the anti-labor path that’s always been theirs. According to a count by Politico.com’s Joseph Williams, House Republicans have convened oversight hearings on the NLRB or summoned board members to Capitol Hill 14 times since the midterm elections to answer harassing questions and have threatened to severely cut the NLRB’s budget to “bring the board to heel.”

So, it’s still not easy for unions and workers who want to join unions, despite the progressive change in the NLRB’s attitude and operations. 

But the situation is looking much better since the change has come, since the law that promises American workers the right of unionization – and the important benefits that come from it – -is now being enforced by people who believe that their mission is not to hamper unions, but to encourage their growth for the benefit of all Americans.

 

Dick Meister, former labor editor of the SF Chronicle and KQED-TV Newsroom, has covered labor and politics for more than a half-century. Contact him through his website, dickmeister.com, which includes more than 350 of his columns.

 

Recology president Mike Sangiacomo disses the Guardian as landfill agreements head to full Board

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Dressed in neon- yellow vests, a crowd of Recology employees filed into the Board’s Chambers to witness the Board’s Budget and Finance subcommittee, which Sup. Carmen Chu chairs, vote to forward the Department of Environment’s proposal to award the city’s landfill disposal and facilitation agreements to Recology (formerly NorCal Waste, Inc), to the full Board.

The B&F vote wasn’t exactly a surprise. In the past six months, Recology’s top brass have been exerting pressure on the committee members to approve the agreements, which got delayed after folks started raising questions about the lack of a franchise fee and competitive bidding on all other aspects of San Francisco’s multimillion dollar municipal solid waste stream. And lobbyist Alex Clemens reported $17, 134.25 in promised payments from Recology between January and June 2011 for services that included contact with B&F subcommittee vice-chair Ross Mirkarimi in mid-June.

If the full Board goes ahead and gives the green light July 26, that approval would authorize Recology, which Waste Age’s June 2011 issue named as the 10th largest waste management company in the U.S.,  to start transporting and disposing up to 5 million tons of municipal solid waste in its Ostrom Road Landfill in Wheatland, Yuba County, once the city’s agreement at Waste Management’s Altamont landfill in Livermore expires, which is expected to happen some time in 2014 or 2015.

The initial refusal of Mirkarimi and fellow B&F subcommittee member Sup. Jane Kim to agree to Chu’s suggestion that they forward the proposed agreements “with recommendation” appeared to be indications that both supervisors harbored some concerns about the deal. UPDATE: But According to DoE communications director Mark Westlund, before yesterday’s meeting was over, Mirkarimi called to rescind the vote on the landfill item asking for it to go to the full Board with recommendation. Jane Kim concurred, and so now it goes to the Board with unanimous committee support. 

“Overall, I think this was a good contract,” Kim said during the July 20 hearing.

Kim added that she thinks “We need to continue the dialogue,” about the city’s 1932 refuse collection and disposal ordinance, which resulted in Recology gaining a monopoly over every aspect of the city’s $225 million-a-year waste stream, except the $11-million-a-year landfill disposal agreement.

Kim noted that under the arrangement that grew out of the 1932 ordiance the city doesn’t get a  franchise fee. And she claimed that San Francisco is getting half of what other Bay Area cities, which all have franchise fees, get from their waste contractors. “So, I’m really interested in continuing that conversation, but I think it’s a separate conversation,” Kim said.

Mirkarimi, who is running for sheriff this fall, noted that he has been “the most outspoken member” of the committee on the Recology item, and that his concerns were what led the committee to “put a pause” on the deal, until the committee could “undertake more homework.”

Thanks to that pause, the city’s LAFCO committee was able to commission a report on what other jurisdictions do around transporting and disposing of their solid waste in landfills, and Mirkarimi noted that his office “held a number of meetings” and he tried to leverage this opportunity to “reanimate activity at the Port.”

“I was hoping we might be able to arrive at something much more deliverable,” Mirkarimi said, presumably referring to the fact that these efforts only resulted in DoE unveiling a last-minute amendment to include two “possible changes” to operations and facilities at the Port of San Francisco in the agreements.

These possible changes, which DoE director Melanie Nutter presented during the July 20 hearing, involve a) utilizing modes of transportation, including barges, other than, or in addition to, the rail haul plan proposed in the agreement, b) developing new facilities at the Port for the handling of waste, recyclables, organics and other refuse, meeting no later than the fifth anniversary of the agreement to discuss the feasibility of such changes, and c) incorporating into the rates, or otherwise financing, the cost of implementing such transportation alternatives and the cost of such facilities.

“I think that cost-effectively we may be able to insert the Port into this equation, but it’s not ready for prime-time yet,” Mirkarimi observed.

Mirkarimi concluded by noting the many innovative things Recology has done in terms of making the city’s waste disposal system more environmentally friendly. “This should be a front-burner conversation,” Mirkarimi said noting that Mayor Gavin Newsom made it a focus of his administration to make San Francisco the greenest city. Referring to the fact that San Francisco claims to have a 77 percent diversion rate—the highest in the U.S—Mirkarimi said, “That comes at a cost, it doesn’t come for free.”

Mirkarimi’s comments came in the wake of Nutter’s claims that Recology’s bid for the landfill disposal agreement will save ratepayers $130 million, over the 10-year course of the agreement, compared to the bid that Waste Management submitted. “This is the best deal for San Francisco,” Nutter said.

Nutter’s estimates were repeated by Jim Lazarus, who spoke on behalf of the SF Chamber of Commerce and the Alliance for Jobs and Sustainable Growth. “This is the right contract for the people of San Francisco,” Lazarus said.

But Nutter’s $130 million estimate was thrown into question by Yuba County Sup. Roger Abe, who had driven the 130 miles from Wheatland to alert San Francisco  that Recology’s bid is based on the assumption that Yuba County will only charge San Francisco a $4.40 per ton host fee.

As Abe pointed out, Yuba’s rates have not changed in 14 years, and his county is considering increasing them later this year by up to $20 or $30 a ton.
Such an increase, multiplied by the 5-million tons of garbage in the agreement, could dramatically increase the cost to San Francisco ratepayers over the course of 10 years, Abe observed..

[If Yuba County approves an increase, and diesel fuel prices also increase, it could eliminate much of the cost differential between Recology’s and WM’s bid: a recent Budget and Legislative Analyst report shows that Recology would charge $58.94 a ton, ($28.53 for tipping and other fees + $30.14 transportation cost per ton), while WM would charge $66.79 for tipping and other fees + $18.33 transportation costs per ton.). But if diesel rises above $2:30 a gallon, SF ratepayers could also get hit with a fuel surcharge.]

Also speaking at the hearing was former D10 supervisorial candidate Tony Kelly, who along with retired Judge Quentin Kopp, David Gavrich’s SF Bay Railroad, and other concerned citizens, recently gathered 12,000 signatures to qualify a petition to require all aspects of San Francisco’s $225-million-a-year waste services to be put out to bid, and to require the winning bidder to pay San Francisco an annual franchise fee.

Kelly et al were originally aiming to qualify their petition for the 2011 ballot, but they blame what Kelly described during public comment as, “a very expensive advertising campaign,” by Recology, plus harassment of petition gatherers and signers, as why they ultimately had to delay qualifying their initiative until the June 2012 election cycle.

Kelly urged the committee to probe the details of a $10 million Special Reserve fund, which Recology could access, under the terms of its facilitation agreement, to cover all its expenses that have not yet been reimbursed through rate hikes. “You’d think the Budget and Finance sub-committee would want to explore those things,” Kelly said.

David Gavrich, who is also President & CEO of Waste Solutions Group, which has hauled 6 million tons of waste in the last 20 years, said approving the landfill disposal agreement, without knowing what rates Yuba County are about to set, was tantamount to “opening up San Francisco’s check book to Yuba County.”

“Recology has never moved a single ton by rail,” Gavrich also asserted.

But while none of the supervisors asked for any clarification of details in the proposed agreements, including the last-minute amendment, during the hearing, Chu was quick to comment about Gavrich’s “blank check” comment, noting that any county can increase its rates. “Alameda County already charges a lot more, so there are no guarantees either way,” Chu said.

She also claimed that the agreements had been subjected to a “very extensive, competitive and open process, especially around tipping fees.” What Chu didn’t mention is that earlier this week, WM filed a writ of mandate with San Francisco Superior Court to prevent the final award of a new long-term solid waste transportation agreement and landfill disposal contract to Recology ordinances, on the grounds that the deal violates the City’s competitive procurement laws.

Instead, Chu urged moving on the deal as soon as possible, by invoking the specter of a disaster hitting San Francisco before a landfill agreement is reached.
“Imagine if we had to go to the open market,” Chu said, apparently ignoring the fact that WM has stated that it would take SF’s waste in an emergency.

After the vote, Kelly expressed concern that the agreements are not competitive, but cost-plus, which means all costs get passed along to ratepayers. And that the city continues to lack a contract and ensuing franchise fees. “They are running this as if it’s still the 1950s,” Kelly said.

Kelly claimed that Recology Vice President John Legnitto, who is the 2011 Chair of the SF Chamber of Commerce’s Board, told him that Recology had been in negotiations with City Hall around a $4 million franchise fee, but that the money would now be spent opposing Kelly et al’s competitive bidding initiative.
But when the Guardian approached Legnitto after the hearing, he refused to comment, telling me my questions should go to Recology’s Robert Reed.
And Recology President Mike Sangiacomo, who was speaking to Chronicle reporter Rachel Gordon rudely told me, “Not today thank you,” when I approached him seeking comment on the Board committee’s vote.

“What did you do to him?” Gordon asked, as she followed Sangiacomo into a corner of City Hall. Er, nothing. Except what any self-respecting reporter would do. Like ask questions, read documents, and challenge the spin.

But that something clearly has ruffled the feathers of Recology’s top brass.
 “It’s like Godzilla, it’s like Monster Island, they can’t help themselves,” Beyond Chron’s Eric Smith commented to me during the hearing. “I’m disgusted by how money, labor and all these different entities can influence what happens. They don’t care about the little people. They care about the bottom line.”

Smith, who ran for D10 supervisor in 2010, spoke to the huge pressure that has been exerted on those supervisors who have publicly raised questions about Recology’s monopoly over all other aspects of the city’s $225 million-per-year waste stream. “Big corporations like Recology throw big money around and intimidate the electeds,” Smith said.

Meanwhile, DoE deputy director David Assmann confirmed that the City Attorney’s Office is looking at WM’s writ of mandate. But Assmann added that it is too early to respond to questions about the implications of that legal action on the Recology agreements.

Assmann also responded to a number of questions I’d already raised on the Guardian’s blog about the juicy details buried in the Recology agreements, beginning with a special reserve fund that was established in 1988, as part of Recology’s facilitation agreement that governed the transportation of waste to WM’s Altamont landfill, which is where San Francisco has been depositing its trash since 1987, and that will be rolled over to form the basis of a new special reserve fund.

Assmann said the fund currently contains almost $29 million, but only needs a baseline of $15 million. The extra funds will be the subject of a hearing this fall, he said, to determine how to use the balance, including exploring the possibility of using the funds, which were collected through a 1.3 percent surcharge on ratepayers, to lower the garbage rates.

Assmann also noted that while there is no limit on how much Yuba County can theoretically increase its host fees, “there has to be a nexus with associated costs,” and that Yuba County supervisors would have to bring any such proposed increase, which would also apply to all their other landfill users, to their voters.

Assmann further noted that the idea behind developing new facilities relates to the city’s 2020 goal of zero waste is “to get to zero waste we need new methods of handling waste,” Assmann told me explaining that San Francisco wants to be able to take residual material and process it so it could be recycled and wouldn’t end up in the landfill.

Assmann said a consultant is comparing the feasibility of building those facilities on land next to Recology’s Tunnel Road facility in Brisbane, or on land the Port owns in San Francisco, and the report should be completed later this year. He also noted that the transportation amendment would allow the City to switch or improve its transportation mode, during the life of the agreement, should cleaner technologies be developed, “including trains that run on less polluting fuel.”

Assmann clarified that San Francisco ratepayers won’t be footing the cost of building a new rail spur in Yuba County. “We’re not paying capital costs. The rail spur is not a cost that Recology can charge because it’s out of county. And if San Francisco only produces 2 million tons during the life of the agreement, we are under no obligation beyond that.”

And he noted that a potential $10 million contingency payment would only go into play if the City gave Recology the green light, and the company incurred costs related to rail haul, and the City then reneged on its deal, at which point Recology could then use its incurred costs to justify why it needs up to $10 million to included in the garbage rates.

All interesting details as we approach the Board’s July 26 vote—with a lawsuit hanging over the City’s head. So stay tuned…

Chiu blocks health-care bill (for now)

22

Sup. David Chiu has blocked a health-care reform bill from advancing to the full Board of Supervisors. And it’s particularly ironic since he’s a cosponsor of the measure.


The bill, by Sup. David Campos, is a key labor priority this year. It modifies the Healthy San Francisco program, which requires businesses with more than 20 employees to either offer health insurance, pay about $1.09 an hour into a fund for the city’s own health-care system, or set aside money to reimburse workers for health-care expenses. The last option is the least effective; asthe Chron points out


Part of the problem, said Matt Goldberg of the city’s labor office, is that some individual employers tailor their plans so restrictively that it’s difficult for workers to tap into their accounts. At some businesses, he said, employees can’t get reimbursed for such expenses as dental work and health insurance premiums.


The other part of the problem: Employers set aside the money, and at the end of the year, if the workers haven’t used it, they simply take it back. The payments (which, frankly, are an alternative to benefits that an employee would consider part of his or her compensation) don’t roll over to the next year. Campos wants to change that (and in the process, perhaps, discourage businesses from using the benefits-account option, which doesn’t work very well for employees). The bill would require businesses to make the money they put aside in one year available for the next year.


The Chamber of Commerce hates it, of course, but Campos had six co-sponsors. Until July 14.


At the Government Audit and Oversight Committee, Campos — the committtee chair — sought to get the bill approved and sent on to the full board. Committee member Mark Farrell, of course, opposes it, so the swing vote was the third committee member, Chiu — who, to the surprise of Campos, insisted on holding it in committee.


Chiu told me that he still supports the idea of the legislation, but thinks it needs a little more work, and that it’s better to amend bills in committee than send them on to the full board with changes pending. His main concern, he said, was potential job loss.


The city’s economist, Ted Egan, concluded that there could be job loss — but not really. What he said was that the city could expect 20,000 new jobs next year, and 15,000 the year after — but this legislation might mean a loss of as many as 400. So instead of 20,000 new jobs, SF might wind up with 19,600. Since the 20,000 is clearly an estimate, the actual impact seems pretty minor. Chiu told me that 400 jobs lost out of 700 businesses wasn’t minor — but the reality is that this isn’t a huge economic deal for the businesses. Just for the employees.


Campos said he thinks Chiu “wants to water it down.”


Henoted: “from a public policy standpoint, the Health Care Security law was designed to relieve the burden on the taxpayers of coveirng the costs of uninsured employees, who wind up at the public hospital emergency room.” He noted that the health care accounts, which can amount to about $4,000 a year, are of only limited use for a lot of people — “that doesn’t even cover one night in the hospital.” (Tell me about it — when I broke my hand, I wasn’t even in the hospital overnight, but I had two surgeries, one to put pins in the bone and one to take them out, and the cost, before my insurance payments, was close to $20,000. I’d still be typing with one hand if I didn’t have real insurance.)


“I don’t know what the hesitation is,” Campos said. “That money is for the workers, it belongs to the workers, and in some restaurants, customers are being asked to pay extra fees to cover the cost of healthcare that isn’t being provided. The businesses that play by the rules are at a competitive disadvantage.”


It takes four votes to pull a measure out of committee and bring it to the board. Campos so far has three — himself, John Avalos and Eric Mar. I’ll keep you posted. 



 


 


 

Will Amazon be the next PG&E?

0

The giant retailer is pulling a Prop. 16, seeking to get the voters to overturn a measure forcing online retailers to collect sales tax. Of course, the law simply levels the playing field for smaller businesses and brick-and-mortar stores — but Amazon’s got plenty of cash, and anyone with enough cash can put anything on the California ballot.


Brian at Calitics points out that Amazon can campaign by asking people to vote against taxes — always a good strategy in this strange state where a majority of the populace seems to believe it can have it all for free:


Beating back such a referendum will be a very tough fight on some uphill terrain.  That isn’t to say that there won’t be those who will try.  Some of the biggest backers of the Amazon legislation in the first place have some pretty big pockets, like, um, Walmart, Barnes & Noble, and Best Buy.  And it is true that the legislation benefits big box stores, but it also benefits the few remaining small retailers. And while the big box stores are (very, very) far (extremely far) from perfect, at least they do provide jobs to local communities.


So we may have a campaign that puts some big, awful corporations on the side of every small business in California — all of them supporting a tax increase. I wonder where the California Chamber of Commerce will go on this one.


At any rate, it’s going to be a huge, expensive, bloody battle, one that will get national attention. And that may not be the best thing for Amazon. PG&E got hammered when it tried to do a blatant self-interested campaign. Amazon could get hammered, too. And there will be plenty of legislators in other cash-hungry states watching the result very carefully.

Awaiting consensus

5

news@sfbg.com

Mayor Ed Lee’s pension reform proposal was unveiled May 24 with support from some of those who helped develop it, including investment banker Warren Hellman, Rebecca Rhine from the Municipal Executives Association, San Francisco Chamber of Commerce head Steve Falk, and San Francisco Labor Council Executive Director Tim Paulson.

The plan would dramatically alter the way the city manages employee retirement benefits, starting July 2012, while exempting employees who earn less than $50,000. Lee described it as “serious,” “comprehensive,” and a plan that “reflects consensus.”

Already the legislation to place it on the fall ballot has secured the cosponsorship of Board President David Chiu and Sup. John Avalos, rival candidates for mayor. Other mayoral candidates also offered their support, including former Sup. Bevan Dufty and City Attorney Dennis Herrera.

But there is one notable exception to the support for this plan, a party that has been at the negotiating table where it was crafted: Service Employees International Union Local 1021, which represents about half of the city’s 26,000 employees. The union claims the plan disproportionately affects 500 SEIU members, who are mostly women and people of color and already took large pay cuts last year to avoid layoffs.

Avalos, who described Lee’s proposal as “a sensible approach” and “the right way to go,” has said that if SEIU’s concerns aren’t adequately addressed, he’ll withdraw his sponsorship.

“I’d like to get to a consensus, but if we don’t and 10,000 union workers don’t sign on, I’m going to take my name off as a sponsor,” Avalos said. “We have to find ways to pay for pension benefits without decimating jobs and social services.”

Lee’s measure also didn’t win over Public Defender Jeff Adachi, who claims the proposal won’t make deep enough or fast enough cost savings in the next few years, so he will continue gathering signatures to place a rival measure on the ballot.

So rather than the consensus product Lee hoped the whole city family would be able to convince voters to support, it’s looking like pension reform could again be a divisive issue and one that spills over into this year’s mayor’s race.

Chiu thanked “our brothers and sisters from the labor community” when Lee announced his pension measure, noting that “each city worker that makes more than $50,000 would have to give thousands every year.” He supports the pension deal and hopes SEIU will eventually back it. Avalos and Sen. Leland Yee, another mayoral candidate, seem to be waiting for SEIU to sign on before offering their full support.

Mayoral spokesperson Christine Falvey told us that Lee views SEIU’s concerns as separate from the pension reform proposal. “He appreciates SEIU’s input in the pension reform talks and has committed to sitting down with them and trying to resolve this issue.”

Then there’s Adachi, who helped qualify Measure B, a 2010 pension reform proposal that united labor and city leaders in opposition. He continues to gather signatures to qualify a competing pension measure, needing about 50,000 signatures by early July unless Lee amends his plan to secure greater cost savings in less time.

“My focus is on this issue,” Adachi said, praising Lee’s efforts at achieving consensus. “But is this going to solve this problem so we don’t have to come back within two to three years? It comes down to a math problem.”

Adachi says Lee’s plan doesn’t adequately address the city’s need to save money now.

“The stress period is really in the next four years, so my hope is that the mayor’s proposal could be strengthened,” Adachi said, noting that his proposal yields $90 to $144 million in annual savings, compared to $60 to $90 million annually under Lee’s plan.

“SEIU is right that Mayor Lee’s proposal is inequitable,” Adachi added, noting that Measure B was criticized for being unfair to lower-income workers. “That’s why my new proposal increases pension contribution rates in $10,000 graduations. But under Lee’s plan, a person who earns $100,000 contributes the same rate as someone who makes $50,000.”

He criticized Lee’s plan for requesting only modest increases from safety workers. “Police and fire cost two to three times as much as everyone else’s retirement. They pay 17 percent of what’s in the fund and take out 36 percent. So that means SEIU folks are subsidizing the costs of safety workers’ retirement.”

Adachi acknowledged it would be better to have one measure everyone can support. “But I don’t agree that we should put ineffective reform on the ballot,” he said.

Adachi took a lead role on the issue in 2010 when he qualified Measure B mostly with backing from a few wealthy sponsors, including venture capitalist Michael Moritz, a financial supporter of Republican Ohio Gov. John Kasich and the Ohio Republican Party. Adachi took lots of political heat for the move, but he shrugs off the criticisms.

“It comes down to making sure people understand the issue,” he said. “A year ago, no one was acknowledging that it was a problem, but now everyone does. I’m hoping the board strengthens the proposal. It’s going to take supervisors really looking at this to see if works, not just jumping on the bandwagon.”

According to the Department of Human Resources, Lee’s plan would yield an estimated savings of $800 million to $1 billion over 10 years, with the bulk coming from increased employee retirement fund contributions of up to 6 percent for future and current employees. The proposal raises the retirement age from 62 to 65 for most city workers and from 55 to 58 for public safety workers. It also imposes caps on pensions for new employees.

Lee’s proposal must now make its way through the Rules Committee and win the approval of the full board by July 12, the deadline for supervisors to submit charter amendments. According to the Department of Human Resources, 89 percent of San Francisco’s 26,000 city workers earn more than $50,000. That means only 3,000 city workers fall below the $50,000 cut-off that exempt them from paying extra, under Lee’s plan.

But Larry Bradshaw, a bargaining unit member of SEIU 1021, said that members who make slightly more than that threshold will face pay cuts under the plan, on top of the pay cuts they took last year to avoid being laid off by Mayor Gavin Newsom.

For certified nursing assistants, the shift would amount to a roughly $12,000 annual pay cut, Bradshaw said. Security guards would face an estimated $5,000 per year cut, and clerical workers could face anywhere from $1,000 to $11,000 per year.

These workers faced getting fired and rehired at lower-paid classifications to make up for a revenue shortfall, but the union reached an agreement to stave off the worst pay cuts for those “de-skilled” employees by imposing a one percent across-the-board cut for all members in order to restore the salary cuts.

As SEIU workers take the pay cut to fund pensions, he said union members won’t be able to continue subsidizing the salaries of these deskilled workers.

“So we’re not going to have that option of asking our members to keep funding these workers who have taken this 20 percent pay cut,” he said. “And these are primarily women and people of color.”

But Sup. Sean Elsbernd and other supporters of the pension deal say the plight of these workers is an unrelated issue. “They aren’t a pension issue, so wouldn’t it be more appropriate to discuss them in the collective bargaining context?”

Elsbernd believes Lee’s measure is “fair and equitable,” partly because employees’ pension contributions would be reduced in boom years when tax revenue and stock market gains swell the city’s coffers.

“But Jeff Adachi is throwing a big roll of the legal dice,” Elsbernd said. He noted that city employees have long paid 7.5 percent toward their pensions. “But now, along come two pension reform plans that both challenge that notion.

“And every case in California shows you have to provide a commensurate benefit to change that kind of right,” he continued, arguing that Lee’s proposal is more legally sound because it lowers employees’ contributions during boom years. “So the $60 million that our plan would save is a hell of a lot more secure than the $90 million Jeff claims his plan would save.”

Sup. David Campos has yet to take a position on Lee’s plan, but hopes there is a way to address legitimate concerns about lower-income workers. “There’s no question that we have to do something about pension reform,” he said. “I don’t know if there’s a perfect proposal. But I’m especially intrigued by Mayor Lee’s plan. It recognizes that low-wage workers should not be expected to contribute at a higher rate than higher-wage workers. But we have to put the mayor’s proposal in the context of what else is happening, which is why SEIU’s de-skilling concerns are legitimate.” Campos credited Adachi for highlighting pension reform. “My hope is that we can come up with something that we can all be supportive of, where the mayor and Jeff’s proposals are combined. And while we have to be careful that the balance that has been constructed is maintained, this allows for a dialogue at the board, and for Jeff to be involved, so we can come up with a unified proposal. Because if we are going to address pension reform, we need to do so with a united front.”

SEIU 1021 withholds support for newly unveiled pension proposal

San Francisco’s largest labor union, Service Employees International Union 1021, is not on board with a proposed charter amendment that would reform the city’s pension system for public employees.

The pension reform proposal was unveiled by a coalition of city officials, labor representatives, and business leaders at a press conference in the mayor’s office in City Hall this morning, May 24. The plan would yield an estimated savings of $800 million to $1 billion in savings over the course of a decade, the bulk of it coming from increased employee contributions to retirement funds of up to six percent for future and current employees. The proposal would raise the retirement ages from 62 to 65, or 55 to 58 for public-safety workers, and impose caps on pensionable salaries for new employees. Mayor Ed Lee described the plan as “a serious, comprehensive plan and one that reflects the consensus.” The proposed charter amendment must go through the Board of Supervisors’ Rules Committee and win the approval of the full board before it can be placed on the ballot in November.

Lee emphasized that the pension plan had been crafted with a consensus-building approach over the course of several months, which brought business, labor, and city officials together. Billionaire Warren Hellman delivered comments about the historic nature of the proposal, and Rebecca Rhine from the Municipal Executives Association and Steve Falk from the San Francisco Chamber of Commerce each voiced support for the plan.  Sups. Sean Elsbernd and Board President David Chiu spoke of the collaborative and democratic process that had brought everyone in the city family under one tent.

Well, almost everyone.

“We’re stuck on one issue,” noted SEIU 1021 Vice President Larry Bradshaw. Under the plan, a pay cut would go into effect for three groups of lower-paid workers on the same date that they would be responsible for making new pension contributions, July 1, 2012, he explained. The affected workers include nursing assistants, security guards, and clerical workers, he said. While the mayor’s proposal requiring new pension contributions builds in an exemption for city workers making less than $50,000 per year, many of these SEIU employees would fall just above that cutoff mark, Bradshaw said.

“We’ve got workers that are just about at the $50,000 threshold … so they’re going to be paying about $2,000 a year out of their pocket,” toward new pension contributions, he said. “So the mayor’s plan has these workers, who are our lowest-paid workers, taking this huge pay cut, and then they want us to agree to this increase in contributions. And the scale of these pay cuts are just enormous. For someone who’s making $50,000 a year, to ask them to take $2,000 or $3,000 on top of $12,000 in a pay cut, is impossible.”

The pay cut is a leftover from the administration of former Mayor Gavin Newsom. For certified nursing assistants, the shift would amount to a roughly $12,000 annual pay cut, Bradshaw said. Security guards would face an estimated $5,000 per year cut, and clerical workers could face anywhere from $1,000 to $11,000 per year. Bradshaw estimated that a total of about 570 city employees would be affected. The workers faced getting fired and re-hired at lower-paid classifications in a prior budget year to make up for a revenue shortfall, but the union reached an agreement to stave off the worst pay cuts for those “de-skilled” employees by imposing a one percent across-the-board cut for all members in order to restore the salary cuts.

“This was such a sore point with our membership, the membership would not allow us to turn our backs on these workers, and we couldn’t get the city to restore the pay cuts,” Bradshaw said. “So we voluntarily took a one percent pay cut for every member to make up the loss in pay that these workers suffered.”

This arrangement would no longer be possible under the pension reform proposal, he said, because most union members would be asked to contribute 3.5 to 5 percent toward their pensions. “We’re already paying one percent more, so we’re not going to have that option of asking our members to keep funding these workers who have taken this 20 percent pay cut,” he said. “So the same day this goes into effect, these people take this horrible hit in their pay. And these are primarily women and people of color. Our problem is, we can’t leave these workers behind.”

Until that issue is resolved, the union cannot get on board with the plan, he said. “We’ve been waiting three weeks to meet with the mayor, and we can’t fix the problem if we can’t sit down with the mayor and talk about it,” he said, noting that  union representatives had been able to sit down with mayoral chief of staff Steve Kawa. Restoring the pay cut would have an estimated financial impact of $5 to $6 million.

Bradshaw said SEIU 1021 had hoped to fix the problem in order to be able to get on board and voice their support during the announcement this morning. “We were at the table until 11:30 last night,” he said. “We called the mayor, we had Tim Paulson at the [San Francisco Labor Council] text the mayor, we asked the city team to ask the mayor to come in. The mayor was a no show.” The Guardian has placed calls to the mayor’s office seeking comment, but hasn’t yet heard back.

Asked what he thought the outcome might be, Bradshaw said, “We think this situation cries out for justice. We think there are lots of ways to solve this problem, and we keep putting ideas on the table that are rejected by the mayor’s office. We’re hopeful. But, until we sit down with the mayor, it’s kind of a big question mark.”

SEIU 1021 represents around 17,000 city workers, making it the largest and one of the most politically powerful labor unions in the city.

Pattie Tamura attended the press conference on behalf of SEIU 1021, but stopped short of voicing support for the proposal when reporters questioned whether the union was on board with the plan, saying only that negotiations were ongoing. Bradshaw said they sent a representative as a sign of respect for the collaborative process that had been spearheaded by coalition leaders, particularly Warren Hellman.

The secret life of Michael Peevey

11

rebeccab@sfbg.com

Inside a legislative hearing room at the state capitol, things were beginning to get uncomfortable. Roughly five weeks had passed since a Pacific Gas & Electric Co. pipeline explosion killed eight and leveled an entire San Bruno neighborhood, and this California Senate committee hearing was an early attempt to get answers.

San Bruno residents who lost loved ones in the deadly explosion huddled in the front row, their eyes fixed on company representatives and agency bureaucrats as they spoke. At the back of the room, a band of immaculately dressed PG&E executives and utility lawyers sat clustered together.

Richard Clark, director of the consumer protection and safety division of the California Public Utilities Commission (CPUC), fielded questions from visibly frustrated state legislators. Sen. Dean Florez (D-Shafter) wanted know why the CPUC hadn’t done anything when PG&E ignored an impaired section of the ruptured pipeline even after it was granted $5 million to fix it.

“Did the PUC do any accounting when you gave them $5 million?” Florez demanded. “Do we just give them money and cross our fingers and hope they fix it? Is that what we do? Until some terrible tragedy occurs?”

Sen. Mark Leno (D-San Francisco) said the CPUC needed to step it up and start practicing serious hands-on oversight. He recalled a tragedy that occurred in 2008 when a gas leak in Rancho Cordova triggered a pipeline explosion, killing one person and injuring several others. Although an investigation determined that PG&E was at fault, the CPUC hadn’t yet gotten around to fining the company.

“We’ve got a pattern here,” Leno said. “And we’re not doing anything differently.”

Less than three weeks after CPUC staff members were grilled in Sacramento, Michael Peevey — president of the CPUC and the top energy official in the state — boarded an airplane for Madrid. He was embarking on a 12-day travel-study excursion, with stops in Sevilla and Barcelona, sponsored by the California Foundation on the Environment and the Economy (CFEE).

Peevey’s wife, California Sen. Carol Liu (D-Glendale), was along for the trip. So were two other state senators, several members of the state Assembly, CPUC commissioner Nancy Ryan, and a host of representatives from the energy industry. The group included executives from Chevron, Mirant (now GenOn, the owner of the Potrero power plant), Covanta Energy Corporation, Shell Energy North America, and engineering giant AECOM. High-ranking executives of the state’s investor-owned utilities also participated, including Fong Wan, the senior vice president of energy procurement for PG&E.

Although strict rules normally govern commissioners’ interactions with parties that have a financial stake in the outcomes of commission rulings, there wasn’t anything especially unusual about Peevey traveling internationally with a group that included representatives from the same companies his regulatory commission oversees. CFEE trips happen every year. The nonprofit has footed the bill to fly groups of regulators, legislators, and utility executives to prime vacation destinations like Italy, Brazil, and South Africa in recent years, excursions organizers say are critical for educating top-level stakeholders about worldwide best practices for sustainable systems. However, groups such as The Utility Reform Network (TURN) have decried CFEE trips as “lobbying junkets.”

As PG&E and the CPUC both work to win back the public’s confidence after their latest deadly failure, it’s worth analyzing whether their relationship — shaped by vacations together at exotic locales — has grown too cozy.

 

THE BUDDY SYSTEM

CFEE isn’t the only nonprofit that regularly flies Peevey overseas for green travel tours with high-ranking utility executives, and the 12 days he spent in Spain wasn’t the only time he spent away from official duties and in the company of the corporations his commission regulates.

These controversial getaways are just a small part of Peevey’s involvement with private-sector interests. He also chairs the board of a nonprofit investment fund created as part of a $30 million settlement agreement with PG&E. Called the California Clean Energy Fund, it funnels money into private venture-capital funds that invest in green start-ups, plus a few companies in the fossil-fuel sector.

While legislators have voiced frustration that lax CPUC oversight of PG&E on pipeline-safety issues opened the door to disaster in San Bruno, inside observers are critical of the outright favors Peevey has granted utilities, such as guaranteeing an unprecedented, higher-than-ever profit margin for PG&E as part of the company’s 2004 bankruptcy settlement.

The CPUC is set up to perform as a watchdog agency, yet social and professional ties running deep within California’s insular energy community mean regulators sometimes run in the same circles as the executives who answer to them, making for cozier relationships than the general public might anticipate. It’s an old-fashioned insider game that one longtime observer wryly characterizes as “the buddy system.” But the buddy system can bring consequences.

As the public face of the CPUC, Peevey repeatedly has been thrust into the spotlight. He has absorbed advocates’ concerns about pipeline safety, rising electricity rates, SmartMeters, missed targets for energy efficiency, and municipalities’ David-vs.-Goliath battles with PG&E to implement community choice aggregation (CCA), to name a few. He’s a magnet for public scrutiny while occupying the center seat at commission meetings, but Peevey’s behind-the-scenes engagements with private-sector organizations bent on shaping statewide energy policy demonstrate how power is wielded in California’s energy world, a system in which regulators seem to be partnering with utilities rather than policing them.

Based at Pier 35 in San Francisco, CFEE’s board of directors is composed of a small group of officers, plus a long list of members who hail from some of the most prominent businesses nationwide. Shell, Chevron, J.P. Morgan, Goldman Sachs, AT&T, and PG&E all hold positions on CFEE’s membership board, and each entity chips in to fund the foundation’s activities and travel excursions.

The group also includes representatives from labor organizations like the International Brotherhood of Electrical Workers and mainstream environmental groups such as the Natural Resources Defense Council. Among the emeritus members of CFEE’s governing board are some high-ranking figures, such as CIA director-turned-Pentagon boss Leon Panetta. CFEE received $45,000 in donations from PG&E in 2009 (the most recent year available) and was granted similar amounts in prior years.

CFEE spokesperson P.J. Johnston, the son of former state senator and CFEE officer Patrick Johnston and the press secretary under former Mayor Willie Brown, described the trips as valuable opportunities for top-level stakeholders to gain insight on best practices and engage in noncombative dialogue on key issues.

“The idea for us was that it made sense to have someplace where it was nonconfrontational to engage in policy, work-type discussions,” Johnston explained. He added that the trips are “all about policy, on the 30,000-foot level,” and emphasized that discussions aren’t about specific decisions pending before the CPUC.

Loretta Lynch, a former president of the CPUC who brought a reformist spirit to the agency and was never shy about rebuking utilities, is skeptical of CFEE’s stated program goals. When she was first appointed to the commission, Lynch said, CFEE contacted her to ask where she wanted to travel. If the trips are arranged to fly regulators to destinations they’ve been itching to visit, she reasoned, must-see green innovations probably aren’t dictating the itineraries. “To me,” Lynch said, “they don’t have anything to study in mind.”

 

“PARTYING WITH THE JUDGE”

The CFEE trip to Spain included a briefing on developing wind energy from AES, a company working on wind and solar development in California that also operates polluting, gas-fired power plants in Huntington Beach, Long Beach, and Redondo Beach. There was a round table on solar energy featuring a presentation from the Independent Energy Producers Association, a trade group that regularly files petitions and comments on CPUC proceedings. The trip included a tour of a desalination plant, a talk from the president of the Madrid Chamber of Commerce, and discussions about California’s energy market. Scheduled activities ended by midafternoon on some days, and the itinerary left a Friday afternoon, Saturday, and Sunday in Sevilla wide open.

Asked to comment on concerns about inappropriate lobbying, Johnston said: “We’re not guarding against anyone’s potential behavior any more than we would be on the streets of Sacramento. We’re not setting ourselves up as the guardians. We’re not facilitating that, per se, either.” He added, “I realize there are critics of any kind of travel and any kind of commingling. But it is wise for us not to close our eyes to the rest of the world, and there’s not a great appetite for spending taxpayer money on these trips.”

Yet Lynch countered that there is an important distinction between the roles of Sacramento legislators and that of utility commissioners. “Regulators are not legislators,” Lynch said. “They’re more like judges. Their decisions have the power of a judge’s decision.” By inviting commissioners along on these lavish getaways, she said, “it’s as if you’re partying with the judge.”

Mindy Spatt, a spokesperson for TURN, echoed Lynch’s concerns. “These ostensibly educational trips are essentially lobbying junkets, where utilities … wine and dine legislators,” Spatt said. TURN raised the issue several years ago, she said, when Peevey joined a CFEE trip attended by a representative of Southern California Edison “just coincidentally at the exact same time that he was penning an alternate decision in Edison’s rate case.” She added: “In TURN’s perspective, the commissioners need to be more in touch with what actual utility customers are experiencing, rather than in touch with the top restaurants in Brazil.”

While Peevey is only one of a host of officials who attend CFEE trips, he has more than just a casual tie to the nonprofit. From 1973 to 1983, he served as president of the California Coalition for Environment and Economic Balance (CCEEB), an organization CFEE grew out of and whose membership shares some overlap with CFEE.

Based in San Francisco, CCEEB was founded by Edmund G. “Pat” Brown (Gov. Jerry Brown’s father) in 1973. CCEEB backed a late-1970s proposal to construct a series of nuclear power plants along the California coastline. More recently, the group honored BP with a 2009 award for environmental education — shortly before the company and lax federal regulators were responsible for the worst oil spill in U.S. history.

 

A YEAR IN THE LIFE

Spain wasn’t the only country Peevey jetted off to with complimentary airfare in 2010. According to a Form 700 filing with the Fair Political Practices Commission, he also traveled to Germany from Aug. 1–5 for a sustainable energy study tour organized by the Energy Coalition. Joining that trip were representatives from investor-owned utilities PG&E, Southern California Edison, and Sempra, plus various city officials and energy experts from the Swedish Energy Agency.

The group stayed at the Radisson Blu Berlin Hotel, which is famous for its AquaDom. “Standing at 25 meters high, it is the world’s largest cylindrical aquarium containing 1 million liters of saltwater,” according to the hotel website. All Radisson Blu Berlin guests have free access to “the hotel’s well-being area,” called Splash, which features a pool, sauna, steam bath, and fitness room.

Based in Irvine, the Energy Coalition’s Board of Directors is chaired by Warren Mitchell, a retired chair of the Southern California Gas Co. and San Diego Gas & Electric Co.. Another director is a utility lawyer who also sits on the board of directors of the Northeast Gas Association, a consortium of natural gas companies in the northeastern U.S.

Founded in the late 1970s by John Phillips to get large businesses to reduce energy consumption in partnership with utilities, the Energy Coalition has arranged excursions for years to bring energy regulators, city officials, and utility executives to Sweden (where Phillips’ wife was born) to exchange ideas on energy issues. The nonprofit organizes an annual summit called the Aspen Accord, “an energy policy forum where cities, utilities, regulators, and end-users collaborate to identify problems and propose solutions to our most pressing energy issues,” according to a 2009 tax filing. While it used to be held in Aspen, Colo., the most recent Aspen Accord was held at San Francisco’s Westin St. Francis. Peevey gave introductory remarks, and the conference featured talks from PG&E, among others.

Craig Perkins, executive director, told the Guardian that the Aspen Accord and study trips are designed to create a venue for major stakeholders to arrive at outside-the-box solutions. “What we try to do is get everybody out of their comfort zone, if you will — that’s the best way to support more creative thinking,” he said. Official regulatory proceedings are “so rigidly legalistic and bureaucratic that it almost prevents any creative thought from happening,” he added. “We’re not in San Francisco, we’re not in Sacramento, we’re not in corporate offices — let’s just talk about these really big issues, and really big challenges.”

The Germany tour included meetings with the Berlin Energy Agency, talks about climate policy, and a tour of an eco-community in Freiburg. Perkins said utility companies must to pay their own way on the trips, but costs are covered for governmental officials.

An Energy Coalition tax filing reveals that board members receive a monthly retainer of $1,000, quarterly meeting fees of $1,000, plus $500 for each board committee meeting. Teleconferences also result in $500 meeting fees.

Several years ago, the Energy Coalition partnered with PG&E to create the Business Energy Coalition, which paid businesses including Bank of America and the Westin St. Francis $50 per KW of energy savings for banding together to reduce energy during peak load hours. According to a tax filing, total annual Energy Coalition revenue dropped from $10.7 million in 2008 to $3.75 million in 2009 “due to large revenue receipts for participant incentives” for the Business Energy Coalition program, as “revenues were used for direct pass-through payments to program participants and contractors.” In 2006, according to a CPUC filing, PG&E paid the Energy Coalition $227,373 for unspecified consulting services.

In addition to the $8,880 trip to Spain (comped), and the $6,583 trip to Germany last year (comped), Peevey’s 2010 disclosure form shows that he also went to Australia May 14-19 to participate in a conference hosted by the Sydney-based Total Environment Center called “Smart Metering to Empower the Smart Grid” ($12,577, comped). And while it doesn’t show up on his FPPC filing, an agenda for CFEE’s Energy Roundtable Summit from Dec. 9-10 at the Carneros Inn in Napa lists Peevey as a participant. A glance through past filings suggests that 2010 was no anomaly; it’s a typical year in the life of a jet-setting utilities regulator.

 

GREEN CAPITALISM

Peevey once served as president of the Southern California Edison, an investor-owned utility, and was president of NewEnergy, Inc., an electricity company that later was sold to Williams Energy. Yet his professional image is that of a forward-thinker on climate change. According to a bio on the CPUC website, he’s received awards for achievements on green and sustainable energy from various organizations throughout California.

In 2005, speaking in Berkeley at an annual conference for the California Climate Action Registry, Peevey touted a list of his accomplishments on sustainable energy. My final example of PUC actions on climate change is related to PG&Es bankruptcy, he said. When they emerged from bankruptcy last year, one of many conditions of our support for their reorganization plan was that they create a $30 million Clean Energy Fund, devoted to investing in California businesses developing and producing clean technologies.

What Peevey didnt mention is that he chairs the board of directors of that fund. As a nonprofit venture capital fund, the obscure, San Francisco-based CalCEF sounds like an oxymoron. Based on the terms of the PG&E bankruptcy settlement, its governed by a nine-member board consisting of three CPUC appointees, three PG&E appointees, and the rest selected jointly by the CPUC and PG&E appointees. Other board members include past PG&E executives, a former member of the California Energy Commission, and a former chair of the board of governors of the California Independent System Operator (Cal-ISO), the body that ensures statewide grid reliability and blocked the closure of the Mirant Potrero Power Plant for years.

The nonprofit’s stated mission is to catalyze clean energy investment to aid in the state’s transition away from fossil fuels. CalCEF president Dan Adler described it as a sort of seasoned guide for fledgling green companies that might otherwise fail to navigate the murky, complicated clean-energy sector. CalCEF is in a position to usher start-ups toward success with a combination of funding, networking, and insider wisdom on state energy policy.

Among the challenges that the clean-energy sector faces, Adler said, are the utilities themselves. “They are effectively monopoly, or oligopoly, controllers of the energy industry,” he said. “And they don’t like outside innovation coming and disrupting their work process or their relationship with their customers.”

CalCEF aims to guide the finance community “to be partners with what public policy is doing around clean tech and clean energy,” Adler went on. “There’s a tremendous amount of money to be made, but there’s also a lot of opportunity for money to be wasted. If you don’t have a private-sector investment community that understands these rules and can put their money alongside these rules in a collaborative framework, we’re very unlikely to achieve the really aggressive energy targets that California has set.”

Yet as one skeptical energy insider noted, “there are 15 to 20 other funds, with 10 times as much money, an hour south in the same field,” referring to the burgeoning clean-tech hub in Silicon Valley. It’s questionable whether the CPUC is actually fulfilling some dire need with CalCEF, this person said.

Lynch, not surprisingly, takes a dim view of CalCEF. The former CPUC president questions what business the CPUC has creating a private foundation to guide venture capital investment. “It is a fundamental distortion of the PUC’s authority,” she charged, “all in service of Peevey’s ambitions.”

Peevey’s economic disclosure showed that he holds more than $1 million in a private family trust, without disclosing whether private investments contributed to that fund.

Adler stressed that there is arms-length relationship between CalCEF board members and the companies that benefit from the fund’s investments. “Because we are a nonprofit, and because we have on our board members of the regulatory community, we recognized quickly that we can’t be making direct investments into companies,” said Adler, a former CPUC staff member who was highly regarded even by the critics of CalCEF. “So … we’ve picked the venture-capital funds that we wanted to partner with.”

CalCEF funnels its capital into three different for-profit investment firms, which in turn select the companies that will be included in CalCEF’s investment portfolio. Several directors of the partnering investment firms also sit on the boards of directors of the companies they invest in. The startups run the gamut, from carbon-offset outfits, to energy-efficient lighting manufacturers to solar and wind companies, to biofuels startups to various kinds of technology firms related to the smart grid.

But CalCEF has also poured money into companies that bolster the fossil-fuel industry. One of its first investments was CoalTek, a company developing technology for so-called “clean coal.” Asked to explain why, Adler told the Guardian, “We don’t have veto power on every deal that goes down.”

Adler said he personally believes that “there’s no such thing as clean coal,” but tempered this by adding, “there are some very smart people in our community who will tell you that there’s no future … without coal.”

Another CalCEF investment, DynaPump, is developing technology to make it more energy efficient to pump oil and gas. Asked about this decision, Adler responded: “I will say that when we were approached with this investment by the venture partner that ultimately undertook it, we had our misgivings. If you can save energy in the production of oil and gas, then you’re definitely making a contribution to overall energy efficiency.”

 

TAX-EXEMPT TESLA

There appear to be some closer-than-arms-length links between CalCEF board members and the investment fund’s beneficiaries. A bio for CalCEF director Nancy Pfund, for example, notes that in her capacity as manager of an outside investment fund, she had “worked closely” with Tesla Motors, a CalCEF investment. Tesla provided CalCEF’s first investment return earlier this year after Tesla went public. A principal of one of the investment firms that works with CalCEF, Stephen Jurvetson of Draper Fisher Jurvetson, holds Tesla shares in a personal trust, according to a filing with the U.S. Securities and Exchange Commission.

Tesla manufactures sleek, electric, zero-emission sports cars with prices in the six-figures, and it’s gearing up to roll out a model that will cost somewhere closer to $50,000. The company’s success was helped by a sales-and-use-tax exclusion granted by the state of California last year. Peevey had a hand in that, too. Few Californians may have heard of the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA), a state body within the Office of the Treasurer, which has the power to authorize sales-tax exclusions for companies that are developing alternative energy technologies. Peevey has a seat on it.

In October 2009, according to a CAEATFA document, Tesla was granted a sales tax exclusion from that financing authority. The sports car manufacturer had received a tax break of $3.3 million as of December 2010, and stands to gain a tax break as large as $29.1 million, depending on its property purchases. As a CAEATFA member, Peevey approved the deal by proxy.

A central question is whether the CalCEF dollars that benefited Tesla and other CalCEF portfolio investments were originally derived from PG&E shareholder profits or ratepayer funds. Adler was careful to note that the initial $30 million came from company shareholders, not PG&E customers. But Lynch pointed out that every dime in PG&E coffers originates with the millions of customers who pay utility bills.

Lynch noted another provision of the bankruptcy settlement agreement, which guarantees PG&E a minimum annual profit of 11.2 percent, catapulting it forever into a higher rate of return than the 8 percent to 11 percent profit traditionally granted by the CPUC in prior decades. “They’re manipulating how big this bucket is to siphon off funds into programs like CalCEF,” Lynch said. “It’s all to give Peevey and his friends access — and to greenwash what was a very stinky deal for the ratepayer.”

 

ELUSIVE CLEAN ENERGY FUTURE

In California, a national leader in addressing climate change, the stakes are high in the energy sector. The CPUC is tasked not only with shoring up transmission-pipeline safety to prevent another San Bruno disaster, but helping to chart a course away from reliance on fossil fuel-powered energy sources.

CFEE, the Energy Coalition, and CalCEF share a common thread — their missions relate to advancing the cause of a clean energy future in California. And while utility funding and partnership is evident in all three operations, the overarching goal is understood to be green.

But as Adler observed, the utilities themselves present one of the greatest obstacles to progress on a clean-energy transition. While California has increased renewable energy sources, it’s done a poor job at supplanting fossil fuel generation with green alternatives, in part because the CPUC has allowed for increasing fossil fuel power generation even as renewable energy expands. According to a listing on the California Energy Commission website, nine natural gas power plants have won approval statewide and are moving toward construction, while six new ones are under review.

The CalCEF approach to addressing climate change, rather than aggressively targeting polluting industries, is to encourage the fledgling green industry in hopes of facilitating success in partnership with the financial sector. In many cases, the backers of the clean-tech companies are the same players behind the big energy giants.

Environmental advocates are critical. “If anyone thinks the CPUC is set up to serve public interests, forget that,” says Al Weinrub, executive director of the Local Clean Energy Alliance, a group that organized against PG&E’s ill-fated Proposition 16 last year. “They never have and they never will.”

Weinrub said he viewed proponents of green energy as falling into two camps: Moneyed interests motivated by a growing new market sector, and activists motivated by environmental and social justice causes. Major green investment firms “want to de-carbonize capitalism,” he observed. “But everything else stays the same.”

Peevey is considered a major driver behind the state’s climate change legislation, and he’s highly regarded for his dedication to green energy. Yet as long as the interlocking dynamic between energy regulators and California’s largest utilities goes unchallenged, change will only come in a way that’s as comfortable, profitable, and manageable for the state’s top polluters as they wish. And in a state with an aging energy infrastructure that’s vulnerable to the impacts of climate change, that pace isn’t nearly quick enough.