If it's not already obvious, this is a story about possible corruption at San Francisco City Hall. It's about the appearance of political favoritism that, some claim, will cost the city hundreds of thousands of dollars. It's about an ongoing dance of impunity in which the melody changes, but the less-than-subtle beat seems to remain the same. A billion or so in malodorous cost overruns at the new airport extension -- Thud! Hundreds of millions in real-estate-speculator tax breaks -- Thump! Public school finance quagmire draws state investigators -- Thud! Dollar-dishing at the Mayor's Human Rights Commission alerts FBI agents -- Kawhump!
Talk to almost anybody who routinely deals with the city on public construction contracts, planning decisions, minority set-asides, public education spending, or anything else involving legal tender, and he or she will probably tell you that this city is soaked to its last fiber with juice. It's slathered in grease. It's oozing with slime. A big waste of tax dollars. (Yawn!)
But loss to the public treasury isn't the primary reason I'm going to tell you yet another banal tale of apparent slime and greasiness. You see, I'm a Bay Area native who not long ago moved back to San Francisco after residing for six years in Mexico City; there, I learned that the sort of corruption that's now burrowing tendrils into our town can grow until its rhizomes have spread through all of life. And the cost of that kind of generalized corruption far exceeds the amount of governmental funds wasted, and winds up infecting the way everyone, honest and dishonest, is forced to live. Eventually, both victims and perpetrators are diminished, as roles blur, and become increasingly less distinct over time.
Three years ago, following a decade of battles with citizens who opposed the project, San Francisco's Parking and Traffic Commission approved the construction of a new 300-space parking garage in North Beach, on Vallejo, between Stockton and Powell. As is ordained by state and city statute, the city asked construction companies to submit bids to build the garage. And, in accord with the city's affirmative action policies, the city asked that each bid assign 20 percent of the work on the project to a minority-owned firm certified by the city's Human Rights Commission.
The winning bid of $5,640,000 came from Ronald Arana's A.R. Construction Company, which fleshed out its minority subcontracting requirement by hiring LTM Construction Co., owned by builder Keith Lennon. But -- and here's the nub of an ensuing lawyerly pissing match that included clashing charges of corruption -- Lennon filled out his bidding information on letterhead for a firm called LTM Formworks, rather than the city-certified LTM Construction. Because of the difference between "LTM Formworks" and "LTM Construction," the Human Rights Commission, which is responsible for certifying so-called minority disadvantaged firms, disqualified Arana's entire bid. The contract was given to MH Construction, a company owned by Matthew Huey, which had put the cost of the garage project at $5,986,213, or nearly $350,000 more than A.R. Construction had bid on the job.
Lawyers for Arana and Lennon immediately claimed that "LTM Formworks" had been listed on the bid in error, that they really meant to submit the city-certified LTM Construction as the minority partner on the job. But Human Rights Commission officer Veronica Ng wasn't swayed. This was no mere clerical error, she said, both in correspondence with Arana's lawyer and in a recent telephone interview. "They were using another company," she said.
So this Friday, at around noon, Matthew Huey will join city officials in a groundbreaking ceremony for the new garage.
Arana, Lennon, and their lawyers all declined to be quoted for this story, saying they didn't wish to draw the attention of city officials, and in a city whose government has a reputation for handsomely rewarding its friends and shutting out its enemies, such reticence might not be unreasonable. But Arana and his allies clearly think they've gotten the bad end of a rotten deal. This view is spelled out in a pile of memos sent between their lawyers and the Human Rights Commission, a lawsuit by the Building Trades Council, and a letter of complaint sent to Mayor Willie Brown by that same trade union.
Early last year, the San Francisco Building and Construction Trade Council stepped into the dispute, writing Mayor Brown to protest A.R. Construction's disqualification, calling the move a "direct violation of city law." Under a fair bidding process, council contended, the Commission would have allowed the error, in which "LTM Construction" was replaced with "LTM Formworks," to be corrected.
The union then filed a lawsuit listing A.R. Construction as a plaintiff and suggesting that Arana had been treated unfairly. For their part, attorneys for Arana and Lennon wrote a half dozen memos describing legal precedent for the correction of clerical errors in bid documents. For example, bids connected to the $600 million remodeling of City Hall went so far as to leave spaces for names of minority subcontractors blank, to be filled in later.
Lawyerly memo firefights aside, there's a certain logic to allowing for a simple correction to be made in a case where a mistake was made by a subcontractor, rather than the prime contractor seeking the job. In this case, employing that logic could have saved the city some $350,000.
These complaints seem all the more serious because the Human Rights Commission has become an archetype for the sort of apparent influence peddling that's reputed to riddle this city. The FBI and the City Attorney's Office began investigations last year that have resulted in several indictments, all of which
suggest the commission's contract-reviewing system, which is meant to ensure that minority and disadvantaged businesses get their fair share of city work, actually was being distorted to steer public contracts to the politically favored. One commission employee, for example, remains at work pending a trial on charges she used her position at the Human Rights Commission to inappropriately send business toward shell companies operated by Charlie Walker, a longtime ally of Mayor Willie Brown.
With regards to the parking garage, allies of Arana and Lennon contend that something similar happened: Under the guise of enforcing the city's affirmative action regulations, business was redirected toward a different Brown ally -- in this case, Matthew Huey, who was a celebrant at Mayor Brown's election night victory party last fall, where he was quoted by the Los Angeles Times as suggesting that a Brown administration would be good for the construction industry.
In both instances, the implication is that Human Rights Commission officials used their discretion to further the mayor's political interests, rather than husband the city's financial resources. In fact, the Human Rights Commission has become so ripe with political deal-dishing that an accounting firm hired by the city recommended earlier this month that the commission no longer be allowed to review city construction contracts. That duty, the auditors said, should be handed over to the City Controller's Office, which, supposedly, is more independent of mayoral influence than the HRC.
So here you have it: A city agency that, outside auditors say, has been open to the mayor's political meddling. A fishy-looking, multimillion-dollar construction contract whose contours resemble sleazy deals under investigation by the FBI. An atmosphere of fear and intimidation that's absolutely unmistakable.
In this kind of environment -- an environment that begins to approximate what I encountered, living in Mexico City -- it's impossible to know whom one should trust. The lines between right and wrong, truth and excuse, become blurred.
Keith Lennon, for instance, may have been the victim of political chicanery that his allies have described in their letters and memos of complaint. Then again, he and most of his allies refused to talk for the record about the supposed injuries they have suffered, and some of the way Lennon's done his business has been ... well ... squirrelly. The bid documents that were submitted under the name LTM Formworks did, after all, look a bit unusual. Those documents did name a firm -- a real firm, not certified by the Human Rights Commission -- with a name very close to, but not the same as, the name of a city-certified, minority-owned business.
On the other hand, and despite the beating the Human Rights Commission has taken in the press, Veronica Ng, the commission official who handled the North Beach parking garage contract, swiftly returned seven of my phone calls. She spent a great deal of time on the phone explaining, for the record, her decision to disqualify Arana's company. And she provided me with all the documents I asked for.
Likewise, Matthew Huey, the supposed mayoral ally, immediately returned my calls and spoke at length, and for the record, explaining that he is not, actually, all that close to Willie Brown.
And so the saga of the North Beach parking garage could, I suppose, be seen in an innocent light: A responsible public official did her job. An earnest local businessman got a contract. A petulant loser complained, as losers often do. The end.
But the particulars of the North Beach parking garage deal appear to match the precise types of circumstances the FBI is investigating in regard to the Human Rights Commission. The charges of political deal-making that surround the garage contract parallel the situation that, auditors say, has made the Human Rights Commission incompetent to carry out its duties.
And so the innocent interpretation is not the end of the story, at least not in my mind.
When corruption becomes widespread, it's not unusual at all that lines blur. In fact, after a while, the blurred lines are the only ones that exist.
In Mexico City, where generalized corruption defines much of life, one honest, hard-working friend attempted to pay off a judge, because, the friend was told, it was the only way he could prevent a local shyster from stealing his tiny drugstore. Every single person I knew in Mexico City occasionally paid bribes to police. I paid them, too. During my time there, I met dozens, even hundreds, of good, humble people who had to curry favor with local politicians just to have a neighborhood street paved, to get their children into public school, or to gain access to government-subsidized school lunches.
In such an atmosphere, cheating and mistrust becomes a language everybody understands, and speaks, and is diminished by.
If you believe the FBI investigators, outside auditors, and an awful lot of people who've done work for the city of San Francisco, the same lingua franca now is spoken here.
Matt Smith can be reached at SF Weekly, 185 Berry, Suite 3800, San Francisco, CA 94107.