G.W. Schulz

Shooting at the OCC


› gwschulz@sfbg.com

When the head of the city’s police union, Gary Delagnes, appeared before the San Francisco Police Commission May 10, he told a story based on his recent lunch with Boston’s former top cop, Kathleen O’Toole.

"We talked about the similarities between San Francisco and Boston and the similar problems that we have," Delagnes recounted. "Commissioner O’Toole said to me, ‘Gary, you have one problem, hopefully, I won’t ever have to worry about, and that’s the OCC.’”

She was referring to San Francisco’s Office of Citizen Complaints, the watchdog agency that accepts and investigates allegations of police misconduct. Delagnes and others in the 2,200-member San Francisco Police Officers Association rarely conceal their disdain for the OCC and have regularly attacked it in the past.

But OCC officials say the cop union will always have it in for them, simply because they’re good at what they do: holding officers accountable for their actions.

No news outlet in town started the year without at least one major story noting the slow pace of homicide investigations and the city’s persistently high murder rate. A series of stories published by the San Francisco Chronicle in February that were critical of the police department’s use of force against civilians led to citywide calls for reform. And a satirical video made by an officer late last year that appeared, at the very least, latently racist and homophobic drew the wrath of the mayor.

Despite the department’s troubles, however, Delagnes seems interested in attacking the OCC for reminding residents that they have the right to report bad police behavior.

In a letter to the commission written May 10, Delagnes claimed the agency had "apparently been soliciting certain members of the community to file complaints against San Francisco police officers." Setting his sights on the OCC’s lead prosecutor, Susan Leff, he fumed that her "outreach" had called into question her ability to conduct an objective analysis of any personnel matter involving San Francisco police officers."

"We find such behavior on the part of the attorney responsible for prosecuting police officers in this city reprehensible if not downright scandalous," Delagnes wrote.

Attached to the letter was an e-mail from Leff that Delagnes claimed proves his charges. The message, sent out late last September, was a response from Leff to a community member inquiring about what could be done to address an unidentified incident involving alleged infractions by a group of officers.

"I am very concerned about taking a complaint as soon as possible, so that the witness’ memories of what they saw do not begin to fade," Leff wrote in the e-mail. "You or anyone else could file an anonymous complaint so we could start investigating."

There doesn’t appear to be anything illegal about this, and OCC Director Kevin Allen argued as much in a letter to the commission the very next day. But the POA has never liked anonymous complaints, and in his letter, Delagnes demanded that Leff be placed on leave until the city attorney and police commission conduct a full investigation.

"I don’t think there’s going to be an investigation," Allen later told the Guardian. "I don’t think the city attorney works for Mr. Delagnes." Asked whether Leff would be placed on leave, Allen responded, "Please. This agency supports Susan Leff, and she will continue as our litigator."

Allen stated in his response letter to the commission that Leff’s effectiveness at doing what the OCC was formed to do had made her a target "for those POA members who believe that no officer no matter how egregious his or her misconduct should be disciplined."

"The POA has long engaged in these thug-like tactics to undermine and intimidate the OCC," Allen’s letter reads. "I have personally been subject to their attacks, as have members of the Police Commission. I will not tolerate these attacks on OCC employees."

The commission essentially agreed, because a week later it appeared to reject the complaint and chided the POA for leveling a personal charge at Leff and the OCC in the first place. The City Attorney’s Office told us that so far, no city officials have requested an investigation.

With police officers experiencing so much uncomfortable scrutiny right now, the timing of Delagnes’s letter looks terribly convenient.

Partly as a response to the Chronicle stories and a resulting vow to "run roughshod" over the department made by Mayor Newsom, the police department recently began drafting a new Early Intervention System designed to identify disturbing patterns of police misconduct among problem officers. Early last month, the OCC noted "several glaring weaknesses" in the department’s current EIS draft.

Publicly, the POA insists the group is not opposed to the idea of civilian oversight. But comparing San Francisco’s cop-watch agency to other such offices around the country, POA spokesman Steve Johnson told us in a phone interview, "I know no other agency that has as much power as they do."

"There’s a real problem with the process itself," he complained.

Further, just as Delagnes submitted his letter to the commission, the POA was buoyed by a San Francisco judge’s ruling, handed down in early May, in a lawsuit filed by four police officers against the OCC. The OCC had charged the four officers with wrongdoing after a suspect was shot and killed during a May 2004 car chase. The court tossed the charges against the officers, citing an administrative mistake on the part of the OCC. But the judge made clear that the OCC could still file new charges against the four cops.

In the wake of the decision, Johnson told us that the POA was looking to discuss changes to OCC procedure during an upcoming law enforcement summit organized by former police chief Tony Ribera and former mayor Frank Jordan scheduled to be held at the University of San Francisco.

Formed as the result of a ballot measure passed by voters in 1983, the OCC is one of the few citizen-review entities in the United States with the power to subpoena officers. But otherwise, it simply investigates complaints and determines whether to sustain them. Only the chief of police and the police commission can file actual charges or exact disciplinary measures against officers.

Anonymous complaints, which the POA has long decried, cannot be sustained without additional evidence. And under the state’s Peace Officers Bill of Rights, details of complaints and investigations are not publicly accessible unless they make it all the way to the police commission. Between January and September of last year, 55 cases were sustained, but the OCC has hundreds of pending cases.

Up to three years before the Chron stories, the Northern California Chapter of the ACLU, the City Controller’s Office, the Guardian, and the OCC had called on the police department to implement new best practices policies instituted in other cities. But the department reacted slowly, at least until victims of police brutality began appearing in broad snapshots across the pages of the city’s largest daily newspaper for several days in a row.

OCC director Allen maintains that Delagnes and the POA were too eager to protest the agency.

"It concerns me that the POA didn’t act in a diligent manner to find all the facts," he told us. "They acted a little impulsively." SFBG

Paying for renewal


› gwschulz@sfbg.com

BayviewHunters Point residents have cause to be concerned about any redevelopment plan that would dramatically alter the face of their neighborhoods, particularly given the displacement and corporate subsidies that have resulted from past redevelopment schemes in San Francisco.

So when housing activist Randy Shaw reported on his Beyondchron.org Web site April 10 that "hundreds of millions of taxpayer dollars" in revenue from the BayviewHunters Point Redevelopment Plan could go toward rebuilding Candlestick Park for the 49ers, his claim created a firestorm. The rumor quickly circulated among community groups and lefty media outlets already fearful of what SF officials had in store for the southeast section of the city.

But Marcia Rosen, executive director of the San Francisco Redevelopment Agency, says Shaw got it wrong: The tax increment financing (TIF) the main source of redevelopment money from BayviewHunters Point was never intended for Candlestick Park. Sup. Sophie Maxwell, whose district includes the project area, also told the Guardian last week that there hasn’t been any talk of subsidizing the stadium project or its surrounding housing.

Nonetheless, Maxwell has spent weeks trying to respond to community concerns about the stadium funding, as well as a host of other concerns raised by a portion of the community that has been galvanized by the redevelopment issue. On April 20 she added an amendment to the plan that explicitly restricts any TIF money from outside the Candlestick Point Special Use District from going anywhere near the stadium.

But that’s unlikely to end the controversy over a plan that Maxwell has been working on for six years and that has been in the pipeline for nearly four decades.

"This plan didn’t just happen out of thin air," Maxwell said at the May 9 Board of Supervisors meeting. "It came from many different plans in the Bayview. It was an accumulation of many outreach efforts. The plan has been thoroughly vetted. The scrutiny and disagreements have only made it stronger."

The legislation before the board for consideration now contains two parts: a 136-acre area that includes the Hunters Point Hill residential neighborhood, and a much larger area, added in the ’90s, that would expand the Redevelopment Agency’s jurisdiction by 1,361 acres.

Inside the enormous widened area is the Candlestick Point Special Use District, which was created by voters in 1997 as part of a narrowly passed legislative package infused with $100 million in bond money for the construction of a new Candlestick stadium and shopping mall. The plan was stalled until last month, when public mutterings about an alternative plan with more housing units began to circulate.

The propositions (there were two in 1997) allocating $100 million for Candlestick are still technically in effect. The money was never spent, and the football club’s ownership has since indicated it may build the project without that bond money in order to focus on housing. A feasibility study is currently under way, and no plans have yet been made public.

According to a report released by the Budget Analyst’s Office in late April, the Redevelopment Agency is expecting to generate almost $300 million in TIF money from new property taxes over the next 45 or so years to pay for the redevelopment plan. Approximately $30 million of the money available for infrastructure improvements and low-income housing would be contingent on business activity inspired by a new stadium, meaning the agency could end up with much less if the stadium area remains in its current state.

TIF money generated inside Candlestick Point can still flow outward, new stadium or not. But Rosen clarified for us that TIF money could also go toward infrastructure improvements associated with the Candlestick project, such as roads, streetlights, green spaces, and housing at least 50 percent of which is required to be affordable to those with low incomes, a far higher rate than citywide requirements. None of this could happen, however, without board approval and considerable public oversight.

"There is the possibility that the board could allocate tax-increment financing to a park or other public space," Rosen said.

Other concerns residents had over the redevelopment plan have cooled somewhat as Maxwell has introduced a series of amendments, including a call for regular management audits during the plan’s implementation and increased public participation in approving "significant land use proposals," an amendment she introduced last week.

But some skeptics have continued to express concern about gentrification of the area and the displacement of its predominantly minority residents.

Shaw, who opposes the plan, told us his greatest concern now is no longer the 49ers but turnout at public meetings.

"The proponents have outnumbered the opponents," he said. "I haven’t seen the kind of turnout we would have expected." SFBG

One down, one to go


› gwschulz@sfbg.com

As the Pacific Gas and Electric Co. prepared to finally shut down its Hunters Point power plant May 15, environmentalists were gearing up for another task pressuring the Mirant Corp. to replace its 40-year-old, pollution-spewing cooling system near Potrero Hill. The two plants have been blamed for a wide variety of health problems in the southeast part of San Francisco.

Community groups aren’t the only ones decrying the aging facility. Sup. Sophie Maxwell, City Attorney Dennis Herrera, Board of Supervisors president Aaron Peskin, and San Francisco Public Utility Commission general manager Susan Leal all plan to appear at the May 10 Regional Water Quality Control Board meeting to call on Mirant to update the cooling system of its Potrero Unit 3 with more modern technology.

Critics claim the current unit absorbs nearby polluted sediment through its cooling system and discharges it into Bay waters.

The water board will be considering whether to green-light a discharge permit drafted by its staff. But the RWQCB staff proposal, according to Hererra spokesperson Matt Dorsey, is really an extension of a permit Mirant was granted all the way back in 1994. The permit was extended by the water board in 1999 and again in 2004, meaning that the permit has fallen "out of compliance with current environmental standards," Dorsey said.

SF-based Communities for a Better Environment says the permit does not take into account new technologies that would eliminate the need to suck up Bay water for cooling purposes. If Mirant does not switch to the alternative "upland cooling," CBE says, the plant should be closed.

"We’re hoping for there to be as big a turnout as we can get," CBE’s Greg Karras said in a phone interview. "This is the most important issue for the community’s goals on the existing Potrero plant. This plant’s ancient cooling technology is known to kill hundreds of millions of larval fish every year and poison the fish people rely on for food."

The Board of Supervisors passed a resolution April 25 asking the water board to reject the current draft discharge permit and adopt an alternative "community permit" that includes the requirement of a new cooling system.

Lila Tang, chief of the wastewater division of the EPA’s National Pollutant Discharge Elimination System, said the water board needs more time to "fully assess and analyze alternatives for compliance" before addressing new pollution rules that were passed in 2004. But she insisted that the current draft permit includes updated toxicity monitoring requirements and imposes discharge limits on copper and mercury concentrations where such requirements haven’t previously existed.

The water board meeting is scheduled for Wednesday, May 10 at 9:00 a.m. at 1515 Clay St. in Oakland (near the 12th Street Oakland City Center BART station). The deadline for submitting written remarks has passed, but interested parties can still show up at the meeting to make a public comment. Call the water board at (510) 622-2300 for more information.

The Mirant plant has become the new target for environmentalists now that the Hunters Point plant is finally closing. PG&E announced in late April that the long-awaited closure of the plant would finally be completed by May 15. Energy production was transferred to another transmission line April 29. Construction of the new transmission line began in January 2005, but BayviewHunters Point residents have waited for nearly a decade to see the old plant closed as concerns over widespread asthma symptoms in the area grew.

Longtime Hunters Point power plant closure advocates Greenaction and the Huntersview Mothers Committee will throw a community celebration of the plant closure May 12 in the Huntersview public housing project, 227 West Point Rd., near Evans, in San Francisco. All are welcome. SFBG

Business ethics 101


› gwschulz@sfbg.com

Marcoa Publishing seems to be at the top of its game. The San Diegobased company bills itself as the "nation’s largest publisher of advertising-supported, local business publications."

It rarely misses an opportunity to remind prospective advertising clients and employees alike about its exclusive contract to print industry-specific guides and an annual membership directory for the San Francisco Chamber of Commerce, of which it is also a member and business partner.

In fact, Marcoa’s San Francisco offices are located just four floors below the Chamber in the heart of the Financial District, at 235 Montgomery St. But what the oldest Chamber of Commerce in the western United States may not have known is that its "exclusive publisher" is being investigated by the California Department of Industrial Relations (DIR) for possible violations of the state’s labor code.

And now the question is: Does the business community’s biggest booster have a blind spot for dubious ethics?

Paula Ceder went to work as an ad sales specialist for Marcoa’s SF office from her home in November 2004. But despite the fact that she quickly became the San Francisco office’s top seller, she realized that Marcoa had no interest in reimbursing her for business expenses. High-end salespeople regularly spend thousands of dollars a year making personal contact with their clients money that employers generally reimburse.

It’s perfectly common, and in fact legally required, for employers to reimburse workers for such expenses. And Marcoa has even promoted the claim that it offers expense reimbursements in its job postings on Monster.com.

But by the time Ceder left Marcoa, in August 2005 having worked much longer than many former Marcoa employees she told the Guardian she had accrued $2,500 in reimbursable business expenses. Over that nine-month period, she didn’t meet another employee who’d received reimbursed expenses, meaning former Marcoa employees could still be awaiting thousands of dollars in compensation. Marcoa did, however, claim to offer a taxable $10 "parking bonus" for each ad contract that the sales specialists managed to sell. But even then it took her four months to get the "bonus," Ceder said. Some ad buyers can commit as much as $12,000 to a two-page spread.

"As soon as I went to work for Marcoa, it became clear that there was no program for expense reimbursement, and I was aware that that was against the law," Ceder said recently. "That was entirely different than any experience I had ever had. Had I known I was going to have that experience, I would have never gone to work for them."

Section 2802 of the state’s labor code reads: "An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer."

Believing she’d never see the money, she approached the California Labor Commission, which ruled in her favor and granted her $1,693 of the expenses in January. At the hearing, Marcoa CEO Stewart Robertson told the administrative judge he would produce the company’s policy regarding expenses. He never did.

During her tenure, Ceder had managed to squeeze a substantial raise out of Marcoa, due mostly, she said, to her top performance. But she said others weren’t so lucky.

Ceder said she concluded that the company not only failed to maintain any sort of policy regarding expenses but also seemed to systematically shortchange workers, from declining to pay simple business expenses to withholding commission payments for months on end or never making the payments at all. Salespeople often earn a percentage of each ad contract in the form of commission as an incentive to sell, which Marcoa portrayed as a significant part of its compensation package.

"My entire point for pursuing a claim for myself was not to receive my expense reimbursement back, although it’s always nice to get the money you put out," Ceder said. "My aim was twofold: One, to have the state investigate and prosecute Marcoa, so that the result of that investigation and prosecution would be an across-the-board change in Marcoa’s current noncompetitive business practices. And second, to get the Marcoa story out into the public."

Former Marcoa workers we interviewed appeared to corroborate Ceder’s claims.

Mario Sarafraz worked as a salesman at Marcoa for 13 months, but he’s worked elsewhere in sales for 17 years. He said he only "tolerated" Marcoa for so long because he liked working closely with the hotel and restaurant industries for the company’s semiannual Business Meetings and More publication.

"Everything else was a nightmare from the beginning," he said. Sarafraz claimed he never received a single commission check, and added that even in a profession where workers move on quickly, Marcoa "had an extremely high turnover rate."

Virtually everyone we talked to said the sales staff had to share two old computers and the company didn’t allow them access to the database of businesses that had purchased ads. Repeated phone calls to businesses that had already grown disenchanted with Marcoa were common, they complained.

A former office manager who asked not to be identified said she believed the Chamber was largely kept in the dark about annoyed advertisers waiting for sometimes long-delayed publication dates and embittered former Marcoa employees.

Carol Piasente, the Chamber’s vice president of communications, said the group had no comment and that the issue was a "personnel matter between Marcoa and their employees." Steve Falk, the Chamber’s CEO and a former publisher of the San Francisco Chronicle, wrote in an e-mail that he "had not heard any complaints about Marcoa" but failed to respond to follow-up questions. No one at the Chamber would confirm whether the group received annual fees from Marcoa for revenue generated from ads placed in Chamber publications.

"It was by far the most shady company I’ve ever worked for," one saleswoman, who also requested anonymity, said. "They turn and burn employees like you would not believe."

Although she too became a top seller for the company, she said she never received commission and never saw her last paycheck.

Dean Fryer, a spokesperson for the DIR’s Division of Labor Standards Enforcement, told us that agency officials pursue an investigation based on the case’s merit.

"On all cases that involve wages due employees, we’ll move forward to collect those wages," he said. "Our primary goal is to collect money due employees."

In Marcoa’s San Francisco office of 10 or so employees, sales can reach anywhere between $1 million and $3 million annually. The company also publishes industry, relocation, and real estate guides in at least four other major cities, including San Jose, Dallas, Austin, and Houston. Elsewhere, Marcoa publishes local resource guides for new trainees at 80 of the nation’s military installations, according to the company’s Web site.

Marcoa’s San Francisco publisher Bart Lally and CEO Robertson declined to respond to a series of detailed e-mail questions.

"Marcoa absolutely believes that it is in compliance with all relevant labor laws," Robertson wrote in an e-mail. "However, we are not going to provide specific responses to any of your questions."

Sarafraz insisted it’s not his nature to complain.

"As far as training and having a working system, I’ve never heard of an organization so out of place," he said. "Every organization has shortcomings. But these people just didn’t care." SFBG

Family business


Frank Edward Lembi has spent nearly six decades turning San Francisco’s hot housing market into his version of the American dream, in the process creating nightmares for many struggling renters.

The aging patriarch still resides at the top of the Lembi family’s colossal accumulation of capital, Skyline Realty, also known widely as CitiApartments, the second-largest owner of rental units in San Francisco, as the company describes itself.

Skyline owns somewhere between 130 and 150 apartment buildings, hotels, and commercial properties throughout the city. Over the past few years, the company has spent tens of millions of dollars buying new properties everywhere from the Tenderloin to Russian Hill, quietly making the already controversial Skyline an even more ubiquitous force in San Francisco’s housing market.

As the Guardian has reported over the past few weeks, some Skyline tenants claim the company has developed an aggressive business strategy intended to empty newly purchased buildings of unprofitable tenants with rent control by either offering onetime buyout deals or simply frightening and coercing them until they leave.

Records from the San Francisco Department of Building Inspection also show violations of the city’s building and housing codes leading to complaints from tenants of roach and bedbug infestations and inoperable heating systems and elevators at some of the company’s properties. Such allegations have resulted in two lawsuits filed by the city and several more by tenants. Skyline also filed more eviction attempts in San Francisco Superior Court last year than any other single year during the past decade, according to a review of court records. Those cases have climbed fastest over the past four years and don’t reflect the true volume of notices to vacate that appear on tenants’ doors and are resolved before the matter appears in court.

From additional interviews and a review of publicly available records, corporate filings, and old press accounts emerges the portrait of a man, Frank Lembi, who has survived some of the darkest periods of the past few decades of American capitalism and retained his position as one of the city’s most powerful real estate moguls.

A San Francisco native, Lembi returned from serving in World War II and founded Skyline in 1947. Today he still lists the same Burlingame home address he had at least a decade ago when his longtime wife, Olga, passed away. The stark white and pea-green split-level is modest considering the wealth he’s accrued since Skyline began its ascension.

He and Olga had five children, two of whom would join Frank’s list of chief business allies. Yvonne Lembi-Detert is the president and CEO of a Skyline-affiliated company that owns a handful of posh boutique hotels. His son Walter joined the real estate business in 1969.

"I learned nepotism from my father," Frank told California Business in 1987. "He came to this country from Italy and started his children off pretty much the way I’ve started mine. It’s a way of life for us."

Frank and Walter eventually founded Continental Savings of America in 1977, a savings and loan association that propelled the family beyond the simple purchase and resale of small apartment buildings. At its peak, Continental maintained a staff of nearly 200 and more than half a billion dollars in assets. The company was making individual real estate loans of up to a million dollars by 1983.

During the ’80s and early ’90s, federal deregulation of the S&Ls encouraged a push for much more profitable, yet risky, high-interest loans and resulted in a race to the bottom. It was the era of financial scandal, and paying back federally insured depositors who had invested in failed S&Ls eventually cost taxpayers billions.

Continental began posting major losses in the ’90s as the company’s capital sank, and in 1995 the Office of Thrift Supervision (OTS) took it over, fearing insolvency. Not long beforehand, just before Continental went public, Frank stepped down as chair, owing to a conflict of interest tied to Skyline’s HomeOwners Finance Center. But Frank and Walter both remained major shareholders in the company.

It was a bad time for lenders, nonetheless, and Frank was apparently not happy. The feds had to file a restraining order against him after he allegedly threatened to plant security guards at Continental’s 250 Montgomery St. doors to "physically prevent" the confiscation of its office furniture, according to court records.

In the end, according to an OTS official we contacted, the cost to taxpayers amounted to about $22 million. But it clearly didn’t send the Lembis to the poorhouse: Since the Continental Savings collapse, Skyline Realty, along with CitiApartments, has grown to become a very lucrative focal point of the family’s enterprises.

Skyline Properties alone generated approximately $36 million in sales during the 2004 fiscal year, according to the Directory of Corporate Affiliations. But the company has founded more than 100 corporations and limited liability companies, each owning individual Skyline properties, and making it difficult to ascertain Skyline’s real annual revenue.

Its business model is not uncommon, but the complex web of affiliates has enabled the company to keep some legal liabilities aimed away from Skyline and Lembi and make sizable political contributions to various candidates and causes — nearly $40,000 since 1999 — all of it in small amounts stemming from several different entities. In one case, Skyline’s affiliates donated $20,000 on a single day to help defeat a 2002 ballot initiative designed to increase utility rates and improve the Hetch Hetchy water system.

The company has declined to answer further questions for this series, but Skyline manager David Raynal stated in response to a list of e-mail questions in early March that the company’s "plan is to restore apartment buildings to the highest standard." He wrote that Skyline supports the creation of special assessment districts that benefit those neighborhoods. "Every year we renovate many apartments, upgrade common areas, and improve neighborhoods."

Since we began publishing stories on Skyline, former employees have contacted us with tales about how the company conducts business. A onetime Skyline employee who requested anonymity said she was well aware of the company’s buyout offers to rent-controlled tenants and added that the company was "pretty heavy-handed." She also said she was encouraged to enter tenants’ units without prior notice.

"We were told we were making the community better, but we knew that was a bunch of bullshit," she said.

She added that Skyline had trouble retaining employees. High turnover rates are hardly uncommon in the real estate industry, but another former employee who also asked that his name not be revealed said Skyline’s group of hotels had similar issues.

"[Frank Lembi] is not the friendliest man in the world," he said. "Salespeople would get frustrated and move on."

Dean Preston, an attorney for the Tenderloin Housing Clinic, said he’s assisted at least 100 Skyline tenants with legal advice over the last five years.

"I deal with tenants, as well as landlords, all across the city," Preston said. "In my opinion, CitiApartments is the most abusive landlord that I deal with in my practice." *