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All in the City Family: Dennis Herrera chosen to head SFPUC

Is Mayor London Breed having a fox guard the henhouse?

Much has changed since I exposed the blatant pay-to-play scheme at the San Francisco Public Utilities Commission disguised as a social impact program (“Friends with Community Benefits,” July 2020). Harlan Kelly Jr., the SFPUC’s general manager, and his assistant general manager of external affairs/girlfriend Juliet Ellis, are both gone. You may remember I wrote about them in my March 2020 column regarding their frequent travels together, including a personal junket to Mexico and a trip where they snacked on tequila and Cheetos in their room. Those travel records were subpoenaed by the FBI in June, and Kelly was arrested after a Nov. 30 raid on his home by the U.S. Attorney’s office on multiple fraud charges (his next hearing is scheduled for Oct. 20, 2021). 

After receiving her subpoena, Community Benefits mastermind Ellis left the SFPUC but she didn’t go far, taking a job with her friend Phaedra Ellis-Lamkins (no relation) across the bay. I find that an odd choice considering it was Ellis-Lamkins who teamed with Ellis in 2012 to run SFPUC money into Oakland nonprofit Green for All, which resulted in an $8,500 ethics fine for Ellis in 2014. Ironically, the two are working to secure contracts with utility companies for a bill-pay startup they call PromisePay. 

Kelly’s wife, Naomi, stepped down from her role as city administrator and, while she hasn’t been arrested, she’s likely not sleeping well: sources tell me the FBI is closing in on her involvement with friend and ex-Public Works director Mohammed Nuru (including the two accepting comped hotel rooms in New York City to the tune of $865 each per night).

Other Kelly/Ellis underlings are also leaving the SFPUC like rats leaping from a sinking ship: Tyler Gamble, once Ellis’s spokesman (the one who told me “There is no such thing as joint venture board meeting minutes” because the Community Benefits program is voluntary and contractors “choose which nonprofits to donate to”) has moved back to Louisiana, where he works for a coffee company. Tracy Zhu, who led the Community Benefits Social Impact Partnership for Ellis, also left the Community Benefits team (her LinkedIn profile says she’s planning to take a “radical rest”).

Do these exits and indictments mean corruption has been flushed from the SFPUC? Sadly, no. In fact, it may be entering a new phase with Mayor London Breed’s appointment of City Attorney Dennis Herrera to replace Harlan Kelly as general manager. Kelly certainly saw benefits to having Herrera on his side — he maxed out his contribution to the 2019 city attorney reelection campaign, despite the fact Herrera was running unopposed.

WHAT DID DENNIS KNOW? 

Herrera has bragged for years about pursuing corruption at City Hall, but if you look closer, it’s a lot of smoke and mirrors. In April 2019, I wrote a column called “It’s time for Mayor Breed to sweep DPW boss to the curb,” about Mohammed Nuru’s decades of corruption flying under the noses of four mayors — but it also flew under the nose of Herrera, who was first elected city attorney in 2001, and has been reelected to serve in the role for 20 years. Occasionally Herrera would announce an investigation into a city department, usually on the heels of the Feds, but it’s hard to ignore his own words: When he challenged Ed Lee for mayor in 2011, he said, “For 10 years, Nuru’s questionable ethics and repeated misappropriation of taxpayer dollars didn’t seem to merit a slap on the wrist from Ed Lee. Now, as mayor, Ed Lee thinks it merits a promotion.” In other words, Herrera acknowledges Nuru’s bad behavior from the time he was first elected city attorney in 2001, and even points it out while running for mayor in 2011, but it wasn’t Herrera who took Nuru down — it was the FBI (just 10 months after my April 2019 column).

If Herrera was aware of Nuru, how could he not be aware of Kelly and Ellis? Sources within the Community Benefits program, who declined to be named for fear of retribution, tell me Herrera was aware. “He has an attorney sitting in on all meetings who reports back to him,” said one. “The city attorney has to sign off on everything.” That same person confirmed, as I reported in July 2020, that Ellis did indeed decide which nonprofits would get money (her “friends with community benefits”), and that SFPUC contractor and close pal Dwayne Jones was her favorite middleman with joint venture board developers receiving big gigs, such as AECOM/Parsons. “Dwayne told them what nonprofit donations would help earn the best scores from Juliet,” the source explained. And, it turns out, those nonprofits were often connected to Jones. 

In minutes obtained by the Marina Times, Jones appears at a AECOM/Parsons joint venture board meeting, held at SFPUC headquarters on Aug. 8, 2018. Jones, who also has a consulting contract with AECOM/Parsons, presents an updated Community Benefits contribution plan, effectively telling his client which nonprofits to pay on behalf of his other client, the SFPUC. One of the beneficiaries is Southeast Consortium for Equitable Development, run by Jones’s wife and business partners, and the payment is withheld pending legal review by the city attorney’s office. The minutes note the city attorney conducted a review of “all community-based organizations on the FY 2018-19 plan. All organizations were vetted and 501c3 status verified. There were no findings.” On Aug. 25, once Herrera’s office gave the green light, the joint venture board processed the payment and Jones received a $25,000 check at his office on Bayshore Boulevard. 

According to the IRS form 990 filed by Southeast Consortium in February 2021 and covering the time period between July 2019 and June 2020, of the $1,612,903 in revenue they reported, a big chunk went directly to Jones. In fact, the Southeast Consortium paid Jones and his firm, RDJ Enterprises, $246,676 as an “independent contractor” for “professional services,” meaning of the $736,369 taken in by the Consortium during that reporting period, one-third went directly into the pocket of Dwayne Jones. As for the balance of $400,104, it was paid to “Other.” 

At a hearing held Dec. 22, 2020, SFPUC commissioner Tim Paulson asked about Jones, his nonprofits, and the involvement with Community Benefits. Commission President Sophie Maxwell, a longtime City Family member, can be heard on the tape saying “F—k you” to Paulson. Just two days after that hearing, an NBC Bay Area investigative report by Michael Bott, Jaxon Van Derbeken and Jeremy Carroll found the SFPUC paid Jones over $7 million in Community Benefit consulting fees, along with millions more in Community Benefits payments from SFPUC contractors to nonprofits connected to Jones and his friends and family, which in some cases then made payments back to Jones’s consulting firm RDJ. The SFPUC was said to have cut Jones’s contracts in the wake of that report, but city records show that Jones and RDJ still have contracts with the SFPUC, the Port Commission, and the city administrator. (Jones also served as Recology’s “ratepayer advocate,” helping to push through those controversial 2017 garbage rate hikes.)

Despite reports by the Marina Times and NBC Bay Area on those conflicts of interest and questionable deals, the Port Commission approved a $530,000 contract with Jones on Jan. 12, 2021, for “youth employment,” where RDJ lists Young Community Developers as a subcontractor. As I reported in July 2020, Young Community Developers is the most prolific beneficiary of Community Benefits. Not only was Dwayne Jones the executive director from 1998 to 2003, but Shamann Walton held the six-figure position from 2010 until he joined the Board of Supervisors in January 2019 (he now serves as president). In canceled checks from AECOM/Parsons totaling $655,000 (a drop in the bucket compared to the millions running through the various joint venture boards), Young Community Developers received $169,500 during Walton’s tenure.

To add more tentacles to the monster, current Young Community Developers boss Dionjay Brookter is the CFO of Urban Alchemy, another Community Benefits favorite recently given a multimillion-dollar contract to patrol the Tenderloin as “community ambassadors” — an effort to lessen the role of police. But Brookter is also a police commissioner, meaning he’s essentially running money out of SFPD and into a nonprofit where he controls the finances.

All of this goes back to the Community Benefits pay-to-play scheme, which has never once been questioned by the city attorney’s office. And apparently, Herrera’s team still has “no findings” regarding Dwayne Jones and his many nonprofits: according to DataSF, Jones has more than $500,000 in billable city contracts this year alone. Search under Southeast Consortium and you’ll find even more. While Jones felt enough heat from the media to move his wife and business partners off the board of the Southeast Consortium, he replaced them with his sister-in-law and two of his college friends.

WHY HERRERA?

As Dr. Derek Kerr, a longtime SFPUC watchdog at the Westside Observer, points out, Herrera has zero experience managing “a complex water, power and sewer utility with a $1.5 billion budget.” So why would Mayor London Breed nominate him? One insider, who declined to be named for fear of retribution, said it smells like quid quo pro. “She nominates Dennis in April, and in August, while the Board of Supervisors is on summer break, he helps get Breed’s $23,000 ethics fine, for Nuru’s ‘car repair gift’ and trying to get her brother out of prison, ratified.” Others believe there’s a more nefarious reason for Breed’s selection: keeping it all in the City Family. Said one insider, “These scandals took out a lot of London’s friends who she depended on to keep her off the radar. Herrera has proven he can keep secrets.” Whether or not Herrera is keeping secrets, signing off on Community Benefits pay-to-play schemes and overlooking major players like Ellis and Jones — even after the media exposed them — doesn’t bode well for the public interest.

The cherry on top? Herrera’s SFPUC contract is a sweet deal, covering him whether he makes it through the full five years or not. The contract can be terminated “for convenience” or “for cause.” If the city terminates for convenience, Herrera receives a generous severance package of one full year’s salary, equal to at least $395,000, regardless of how many years remain on the contract. Termination “for cause” is based on very narrow criteria, making it unlikely.

Herrera says he wants a new challenge and it’s not about the money, but that can’t hurt, either. With raises, benefits and the pension plan included in the Municipal Executives Association union agreement, the move could be worth as much as $10 million over his lifetime.

Follow Susan on Twitter: @SusanDReynolds. Read more from Susan: susanreynolds.substack.com

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