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Dispute over who gets to run city parking garages leads to allegations of a shakedown 

Wednesday, Apr 21 2010

Early last year, Fred Bekele, owner of Convenient Parking, scraped together $200,000 in bank loans to take his small business big time. He partnered with the Vancouver-based ImPark, a giant firm with 240,000 parking spaces in 60 cities in North America and Asia. The resulting joint venture submitted the best bid last summer to manage six of the most lucrative city-owned garages.

But after his bid came out on top in September, Bekele waited months for a contract that inexplicably never came.

Now, the Metropolitan Transportation Agency has announced that it is throwing out all bids and starting over again within the next two weeks. Bekele alleges this is because losing bidders engaged in influence peddling.

There are reasons to believe something was not quite right about MTA chief Nat Ford's decision-making. Internal documents suggest he made moves toward throwing out the bid just as he was being asked to do so by a politically connected attorney hired by Pacific Park Management, which stood to lose control of the 639-space St. Mary's Square Garage in the Financial District.

"There's really something very strange and uncomfortable about what's going on with this contract," says MTA board member Bruce Oka. "I have no recollection of ever telling Ford it's okay to change that contract. ... I asked him, 'When did we do that?' Ford evaded me. He wouldn't give me a straight answer. I can tell you this, without fear of contradiction: I don't feel the majority of the board right now is happy with Nat Ford." Ford's spokesman, Murray Bond, said he couldn't tell me why the bids were thrown out.

Bekele believes his business plans began to go awry at a 2009 New Year's Eve meeting at the Ferry Building penthouse office shared by attorney Steven Kay, who has a reputation for wielding political influence, and Willie L. Brown Jr., Inc., the the ex-mayor's lobbying firm, which has been represented by Kay.

At the meeting were Bekele, his lawyer, and an ImPark representative; officials from Pacific Park Management, which had retained Kay; and Scott Hutchison, an executive with Five Star Parking, which was poised to lose control of the Golden Gateway Garage, also in the Financial District.

Pacific Park Management runs 19 parking facilities around the Bay Area, including St. Mary's Square, whose contract was also scheduled to be rebid.

Five Star Parking is part of the Los Angeles–based, 5,500-employee L&R Group, which manages parking facilities in 33 cities, including the Moscone Center Garage and the Golden Gateway Garage.

Five Star has had a troubled history in San Francisco. In 2007, investigators from the city attorney's office said they had uncovered evidence that the company and its employees had skimmed garage revenues and submitted inflated expense reports. Five Star agreed to pay a $4.6 million settlement.

Of the people in Kay's office that day, Bekele was the smallest player. His company managed three city-owned parking facilities in the Mission, SOMA, and the Marina, with a total of 557 spaces. Winning the contract to manage some of the city's biggest parking garages would have transformed his small business.

In April 2009, MTA had put the management of its garages out to bid and set up a process whereby there would be three winners. The one judged to offer the most attractive deal for the city would get to manage the choicest package of garages, including Golden Gateway and St. Mary's Square.

Five Star and Pacific Park Management placed second and third respectively, and were to receive contracts to manage smaller groups of garages elsewhere in the city.

At the Dec. 31 meeting, the also-rans seemed determined not to let go of their local crown jewels. "We asked, 'What are you proposing?'" Bekele recalls.

The proposal, Bekele alleges in a complaint to the MTA and in testimony and letters to the Human Rights Commission and members of the Board of Supervisors, was a political shakedown.

Kay's client, Pacific Park Management, wanted to keep St. Mary's Square, its Financial District prize. Five Star didn't want to give up Golden Gateway.

Bekele claims that at the meeting, Hutchison threatened that, unless Bekele and his partners agreed to give up Golden Gateway, the contract award would be delayed, or even cancelled.

According to Jeff Ogle, ImPark's general manager, Hutchison said there would be consequences if the Convenient Parking/ImPark venture refused to give up the two Financial District garages. "Scott Hutchison said, 'Here's the way it's going to work: We can stall this indefinitely. To move forward, I'll get to keep Golden Gateway,'" Ogle recalls.

Neither Hutchison nor Kay returned calls requesting interviews. But I received a call from Sam Singer, a crisis communications consultant who said he spoke for Kay. Singer described the Dec. 31 penthouse meeting as a constructive dialogue rather than a political shakedown.

"The meeting was to have a discussion ... to try to figure out what would be a smart and successful way for all three businesses to apportion those contracts to each other," Singer says.

The plan was to meet with Ford on Jan. 4 to seal the deal, Bekele said.

At the Jan. 4 meeting, Bekele recalls Ford speaking as if he'd been tipped off about the meeting at Kay's office. Ford said he understood the parking companies had "been talking," Bekele recalls, and was pleased they were "all in agreement." But Ford said he had to check with MTA staff first to see whether the garage-trading deal was permissible under contracting rules.

On Jan. 5, Bekele was called to a meeting with MTA staff members, who said the reassignment of garages couldn't be allowed. Pacific Park Management managing director Behailu Mekbib produced a printed series of e-mails as proof that a legitimate agreement had been struck, Bekele said.

Bekele was outraged. "I said, 'That was not an agreement. What took place at the meeting was an offer with a threat. So don't ever say agreement,'" he says.

The meeting, Bekele recalls, was immediately adjourned.

Singer says Bekele reneged on anhonest deal. "An agreement was made," he says. "They would go back to the MTA to ask for their blessing and approval of those agreements, so the city would not have to rebid them all. They shook hands on it. Except that Mr. Bekele is dishonest."

Unknown to Bekele, Ford seemed to have been moving to throw out the parking management bids just as Kay was privately urging him to take that very step, according to internal MTA documents released in response to a public information request by Bekele's former lawyer, Martin.

The documents suggest Kay played two games at once, urging Ford to throw out the bids, with the possibility of backing off if Bekele's group agreed to some kind of deal.

On Oct. 26, Kay wrote to Ford, complaining that the bidding won by Bekele's group was unfair. As a local company, Kay wrote, Pacific Park Management deserved special consideration; Bekele, meanwhile, had partnered with out-of-towners. Kay complained that a better-run bidding might have attracted more competitors. He argued that the way the garages were arranged into first-, second-, and third-place groups was unbalanced, and pointed to the fact that the garages won by Bekele's group pulled in 16 times the revenue of Pacific Park Management's.

He closed by urging Ford "to take the appropriate steps to rectify and redress this unjust and inequitable process and result."

That morning, Amit Kothari, the MTA's director of off-street parking, sent an e-mail to fellow staffers saying Ford had told them to arrange a meeting to discuss the parking contracts.

On Nov. 24, MTA transportation engineering director Bond Yee wrote to the board announcing that staff intended to reject the bids, saying the garages should be divided into more equitable groups, and that the agency would seek more bidders.

On Dec. 9, Kothari e-mailed his colleagues again, this time concerning plans to start the bidding process anew. "Coming up with rationales would help the agency deliver the right message to the board and public," Kothari wrote.

At a Jan. 5 board meeting, Ford recommended further postponing the contract award to give staff time to come up "with a recommendation about the best course of action to move forward with maximum participation and achieve economies of scale," echoing concerns expressed in Kay's letter.

The issue ultimately didn't come up until March 2, when, the board voted to reject the garage management bids, despite a staff recommendation that Bekele be awarded a contract, Kothari said in an interview.

But the picture painted by board members suggests they were ushered into the decision without fully understanding why.

I asked board member Cameron Beach why the board had taken this step. He recalls that the vote was taken after five hours of a seven-hour meeting. "There was some discussion about how the bid was put together," he says, but is unable to recall exactly what the objections were.

President Tom Nolan wasn't at the meeting because he was undergoing eye surgery, but says, "there were protests from people who didn't get it."

"Needless to say, we were all confused," boardmember Oka says.

Bekele has asked the city Human Rights Commission, which monitors whether city contracts are awarded fairly, to investigate the matter. Commission executive director Theresa Sparks says she began stepping up inquiries last week, after some earlier stonewalling from Ford's staff.

I hope an investigation results in a few kicked-in doors. And I'm not the only one.

"The Human Rights Commission director has subpoena power," commissioner Douglas Chan told me. "And my colleagues were interested in knowing whether that should be employed in this situation."

It's possible the commission might not have jurisdiction over the matter. If that's the case, Chan says, "I would be inclined to favor preparation of the Commission's own complaint to the U.S. Department of Transportation."

About The Author

Matt Smith


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