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Friends with Community Benefits

Is the SFPUC running a social impact program or a pay-to-play scheme?
SFPUC General Manager Harlan Kelly Jr. and his deputy, Juliet Ellis, at a job site. Photo: LinkedIn

Over a year ago, I broke the story of Department of Public Works boss Mohammed Nuru’s corruption, his romances with Mayor London Breed and Sandra Zuniga, and the way City Hall has ignored dirty politics for decades. Since then Nuru has been arrested, Zuniga has been charged with laundering money for Nuru, and the heads keep rolling. 

On June 24, U.S. Attorney Dave Anderson announced that Walter Wong, a longtime contractor and permit expediter, agreed to plead guilty to fraud, conspiracy, and money-laundering charges. Wong is the latest in a string of city insiders facing prison time in Nuru’s wake. When Anderson made the announcement, he pointed out that Wong’s fraud went back to 2004 and involved “multiple public officials.” Anderson also offered a dire warning: “Here in federal court we will sharply distinguish between those who cooperate and those who do not. Run don’t walk to the FBI before it is too late to cooperate.” Kareem Carter, special agent in charge of IRS Criminal Investigation, said Wong financially benefited from his alleged schemes and “took steps to hide the proceeds of those schemes for the benefit of him and others.” In other words, Carter said, “‘pay to play’ was the name of the game.”

I think there are probably a lot of folks in San Francisco government who haven’t been sleeping well, even before Anderson’s warning and Wong’s guilty pleas. Two of them might be Nuru’s close friend Harlan Kelly Jr., general manager of the San Francisco Public Utilities Commission (SFPUC), and his chief strategy officer and assistant general manager of external affairs, Juliet Ellis. You may remember I wrote about them in my March 2020 column regarding their frequent trips together, including a personal junket to Mexico and a trip where they snacked on tequila and Cheetos in their room. Harlan Kelly happens to be married to San Francisco City Administrator Naomi Kelly. The Kellys are Willie Brown protégés, appointed to their current positions by a fellow Willie Brown protégé, the late Mayor Ed Lee. The Kelly-Ellis affair is common knowledge in the incestuous bowels of City Hall, but it’s a different kind of friends with benefits that is likely keeping them up at night. (Wong may be in some of Kelly’s nightmares, too. More on that later.)

BENEFITING THE COMMUNITY AND THEIR FRIENDS

The SFPUC is the third largest municipal utility agency in California, managing the water supply system and treatment facilities for the City and County of San Francisco with a total current budget of $1.4 billion. The agency is headed by a board consisting of five commissioners who are nominated by the mayor and confirmed by the Board of Supervisors. 

Ellis manages the Community Benefits Program, an enormous, multimillion-dollar agreement between the SFPUC and a Joint Venture Board, a group of representatives from two different contractors who team up on an SFPUC project. There are numerous Joint Venture Boards with tentacles so far reaching I would have to write a book to fit them all in. So for the purpose of this column, let’s focus on one: AECOM-Parsons. 

On Nov. 28, 2012, shortly after construction giants AECOM and Parsons created a joint venture that secured a $150 million contract from the SFPUC for management services on the $7 billion Sewer System Improvement Project (SSIP), Ellis sent a Scope of Services memo for “Community Benefits Commitments” to the AECOM-Parsons Joint Venture Board with a minimum total commitment of $1.5 million for the 15‐year agreement, meaning AECOM-Parsons is committed to spending a minimum of $1.5 million in the community. 

Isn’t that a good thing, you ask? Indeed, and the SFPUC does some excellent work with the money extracted from their contractors. From 2012 to Jan. 31, 2020, firms have provided over $5 million in financial contributions. But the good the SFPUC Community Benefits Program does is eclipsed by a complete lack of transparency. Millions of dollars go to nonprofits — we don’t know exactly how many millions, because the SFPUC won’t say. Ellis and her team run a shadowy show that makes it impossible for outsiders to find out exactly how the money is spent. They send out press releases touting their accomplishments but send mixed messages on why certain nonprofits are selected. 

So why does the SFPUC seem intent on keeping the inner workings of the Community Benefits Program to themselves? The answer could be straightforward (they realize requiring contractors doing business with them to “commit direct financial contributions” is pay to play), more complex (offering direct or indirect input as to where the money goes is likely illegal), downright sinister (kickbacks to SFPUC staff and allies), or somewhere in between (they’re spending an exorbitant amount meant for the community on staff and expenditures for their nonprofit partners).

VAGUE AND UNCLEAR

Despite the fact PUC stands for Public Utilities Commission, the public has no access to the Community Benefits Program and there are no public hearings. For example, if I wanted to suggest that one of my favorite nonprofits, Rocket Dog Rescue, receive Community Benefit funds, I have no way of doing so. That lack of forthrightness led the San Francisco Labor Council to request documentation on the Community Benefits Program in February 2019. Dozens of requests from unions went unanswered until February 2020, when Justine Hinderliter, SFPUC chief people officer, sent a response batting down their requests. The SFPUC wasn’t subject to the Freedom of Information Act, she said, because they’re not a federal agency. The SFPUC does not have a Garden Project, she said, but rather the San Francisco Sheriff’s Office Garden Project. The use of “benefit districts” is vague and unclear. 

But it is Hinderliter’s answer to item number nine —request for information related to a “Joint Venture Board” — that will likely cause the SFPUC grief going forward: “The SFPUC does not have a Joint Venture Board . . . nor does the SFPUC have access to or control over any such external, third party joint venture boards.” And that brings us back to AECOM-Parsons.

The SFPUC says they “invite contractors to contribute” and have a hands-off approach, but in emails obtained by the Marina Times, there is a clear relationship between the AECOM-Parsons Joint Venture Board and staff at the SFPUC, rising to the highest level. Many of the emails originate from Ellis and her staff and are copied to Kelly. On Feb. 26, 2019, David Gray, then acting director of Community Benefits (who says in his LinkedIn bio that he “administered $17 million in community investments” during his six-month tenure), reaches out to Julie Labonte, then SSIP program advisor for AECOM. “Thank you for the opportunity to present to your JV board this morning . . . We appreciate the JV’s support and will touch base as we near the program launch date. Also, let me know if you’d like to chat about the disbursement plan for the remaining $360,000 after the fiscal year.” 

Labonte, who formerly worked for the SFPUC, responds: “Following your presentation [our JV Board members] unanimously voted to financially support the program starting with two $50K contributions . . . the JV Board is also supportive of our current plan to invest a total of $360K in the program. Finally, it was decided that all contributions will be made directly to the San Francisco Housing Development Corporation (as opposed to contributing through a fiscal agent such as the Southeast Consortium for Equitable Partnership).” What is the Southeast Consortium for Equitable Partnership? One of several companies with Community Benefit ties run by longtime Ellis and Kelly friend Dwayne Jones. 

WHO IS DWAYNE JONES?

Jones’s reputation is well known at City Hall. Former San Francisco supervisor Chris Daly once said, “If you are going to have an operation where you’re buying political support in the Southeast part of the town, Dwayne Jones is the guy.” 

In 2004, then-mayor Gavin Newsom announced the Communities of Opportunity program, intended to help families living in San Francisco’s public housing projects with after-school tutoring, job placement, health care, addiction treatment, and more. But, according to Board of Supervisors budget analyst Harvey Rose, after two years and nearly $4 million, the eight programs operated by a dozen nonprofits had little to show for it. Instead, the money was spent frivolously: $570,882 for conferences, mostly for hosting a gathering in San Francisco in 2007 for community development professionals; $162,000 for events, including a Comedy Shop performance with six comedians and the hip-hop group Def Jam; $464,823 for consultants, including $300,000 in public relations; $399,000 for a program office and community staff; and $1.6 million for “community-based organizations and other services” — in other words, right back into the pockets of the service providers hired for the job. Newsom also ponied up $370,000 in city funds to cover the cost of providing a top mayoral deputy to oversee the program. His name? Dwayne Jones. Communities of Opportunity shuttered and the families it was supposed to help were shuffled into already existing programs. It was one of Mayor Newsom’s biggest boondoggles thanks to the man he put in charge, Dwayne Jones. 

In 2013, an investigation into bid rigging at the San Francisco Housing Authority involving former Executive Director Henry Alvarez focused on possible co-conspirators (including former mayor Willie Brown). According to a report by then-city attorney Louise Renne, Alvarez manipulated the competitive process to steer contracts to specific favored individuals. Dwayne Jones — who served as a Housing Authority commissioner under Alvarez — was one of them, lowering his original bid to get the job.

Despite his various missteps and questionable ethics handling nonprofit money and contracts, Jones has been placed by Kelly and Ellis as a “fiscal agent” for Community Benefits through the Consortium, a somewhat fuzzy nonprofit with a website that, until I pointed it out to an SFPUC spokesperson, was password protected. The Consortium’s office is located at 1485 Bayshore Boulevard, as are three other companies run by Jones: Urban Equity Group, Urban Ed Academy, and his main firm, RDJ Enterprises — which, in a blatant conflict of interest, subcontracts with the SFPUC and AECOM. Urban Ed Academy receives Community Benefits, and SFPUC contractors have written checks totaling more than $600,000 to the Consortium, where the Board of Directors consists of Jones’s wife and his business partners. At one time Jones even had an office at SFPUC headquarters (where, by the way, the meetings discussed in those emails were held). 

Maybe integrity doesn’t rank high on Ellis’s list because she’s had her own issues in that department. In 2014, the San Francisco Ethics Commission called for Ellis to be fired after she admitted to awarding a $200,000 contract to Green for All, a nonprofit where she served as a paid board member and additionally received $2,000 per month as the organization’s acting executive director. To the surprise (and dismay) of many at City Hall, Kelly stood by her, and she kept her job. Now, Kelly has her overseeing millions of Community Benefit dollars. “She’s the most powerful official in San Francisco no one’s ever heard of,” said a former associate.

HOW LOBBYISTS INFLUENCE JOINT VENTURE BOARDS

According to sources inside the SFPUC (who asked not to be named for fear of retribution), Dwayne Jones is a top lobbyist for the Community Benefits Program, along with Chris Gruwell, also a longtime ally of the Willie Brown machine and another Newsom acolyte. Gruwell is former co-owner and president of Platinum Advisors, where Jones also worked as a lobbyist. They also tapped Willie Brown to be a lobbyist on negotiations for the Transbay Transit Center.

So what is the role of Community Benefit lobbyists? “When a contractor gets a big contract, they form a joint venture board, then the SFPUC leadership tells them which nonprofits they want paid — sometimes directly, sometimes through trusted lobbyists like Jones and Gruwell,” one person with inside knowledge said. “Juliet has scorecards that she grades, then Jones or Gruwell or whoever goes back to the joint venture contact and shows them where they did well and where they could improve. That improvement might involve writing checks to a certain nonprofit.” In scorecards obtained by the Marina Times, Ellis grades multiple firms, including AECOM. The scorecards, sources say, are the conduit for where and how the Community Benefits money is spent. 

Ali Altaha, whose company ARA Engineering Group did business with the city from 2002 until 2012, says if you’re not an insider with ties to top brass and lobbyists, good luck. He blames “the corruption and pay-to-play mentality” at the SFPUC for driving his small firm out of San Francisco to Los Angeles. In 2007, after receiving a seven-year, $4 million contract with the SFPUC “fair and square,” Altaha watched helplessly as Kelly, then assistant general manager of infrastructure, found ways to funnel the work and the funding to those he favored, even hiring Altaha’s own workers away from him. “I have seen the corruption right and left at all determents and in contract awards, and it all started when Willie Brown came in,” Altaha said. “In San Francisco you only have one door — the Willie Brown door. If you get in that door, you’re fine for life, but if you can’t get in that door, you’re screwed. I moved to L.A. because even though it’s corrupt on a much larger scale there are multiple doors you can try to get into.”  

This past January, Altaha ran into Kelly at a conference in Los Angeles. “I met with Harlan the day before Nuru’s issue became public the second time, after he talked to [Harlan’s wife] Naomi. Harlan told me point blank ‘the FBI is all over the city. I wish we [had] listened to you.’ That’s because I was telling them all throughout enough is enough. No one in the city gets a contract unless they pay someone.”

SFPUC DENIES INFLUENCE

When I asked SFPUC Communications Director of External Affairs Tyler Gamble how the Joint Venture Boards decide which nonprofits get Community Benefits money, he said they did their own research: “Contractors gather information from a variety of sources including internet searches and SFPUC publications such as the Bayview Environmental Justice Analysis to understand what communities need and the most impactful, meaningful strategies to address the need. The more they do that, the easier it becomes.” But if the SFPUC points contractors to their own publications, that’s influence. For example, one of the nonprofits touted in the Bayview Environmental Justice Analysis is Willie L. Brown Middle School (yes, named after that Willie Brown). In a series of canceled checks obtained by the Marina Times, AECOM-Parsons paid $30,000 to the San Francisco Unified School District, which Gamble confirmed went to the Willie L. Brown Middle School.

There is also a $40,000 check to the Cal Maritime Academy in Vallejo. What does that have to do with community benefits in San Francisco? According to sources, that was a favorite charity of Assistant General Manager of Wastewater and Vallejo resident Tommy Moala. As it turns out, Moala also ran the Annual Fall Classic Golf Tournament fundraiser at Eagle Vines Golf Club in American Canyon, where contractors played to gain favor with the SFPUC. One city employee says Moala was overheard telling a contractor it would cost him “$20,000 a hole.” Perhaps Moala was getting too brazen, because in 2017 the NorCal MLK Classic golf tournament, sponsored by AECOM-Parsons, was canceled — but, sources say, “the contractors didn’t get their checks back.” Moala soon retired, and the tournaments ceased.

POWER AND POLITICS

If the Joint Venture Boards are really choosing their own nonprofits by doing random Internet searches, allies of Kelly and Ellis should play the lottery because they have amazing luck. For example, in the canceled checks from AECOM-Parsons (totaling $655,000, a drop in the bucket compared to the millions running through the various Joint Venture Boards), the most prolific beneficiary is Young Community Developers. 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. During Walton’s tenure, AECOM-Parsons wrote $169,500 worth of checks to Young Community Developers. Of course, Walton was endorsed by Harlan Kelly (surely it can’t hurt to have a close friend in the District 10 supervisor’s seat where most of those Community Benefit dollars are doled out).

THE PROBLEM WITH WALTER WONG

I have a feeling at some point the FBI will knock on the doors of Harlan Kelly, Juliet Ellis, Dwayne Jones, Chris Gruwell, and others regarding the SFPUC Community Benefits Program, but Kelly may also be sweating the guilty pleas of Wong, which includes an agreement to cooperate with the FBI. It’s no secret that Wong did favors for a lot of city bigshots, and that apparently includes Harlan and Naomi Kelly. 

Numerous workers inside the SFPUC told me not only did Wong do work for the power couple, but “Harlan bragged about it.” According to the Department of Building Inspection, the Kellys pulled three permits on their home located at 1622 11th Avenue in San Francisco between 2011 and 2014. The authorized agents on each of those permits is Best Design Construction. A 2010 court case, W. Wong Construction Co., Inc. v. Watt, mentions that Wong introduced the Watts to “Charles Ng of Best Design.” Wong even used Ng’s plans to apply for a building permit on their behalf. The fact Best Design worked on the Kelly’s house for three years definitely makes me wonder who got their permits. Then again, it’s just business as usual in San Francisco.

Which brings me back to the SFPUC Community Benefits Program. After many months of research, I still don’t understand why, if they’re not doing anything wrong, the SFPUC won’t voluntarily be more transparent. 

Why spend a year ignoring requests from unions and the San Francisco Labor Council, which represents over 100,000 hard-working men and women in San Francisco? When I requested “Meeting minutes between SFPUC and Joint Venture Boards regarding Community Benefit program” I was met with similar stall tactics (“SFPUC is not in possession of any meeting minutes as described in your request”). It seems they could ask for clarification, turn over the documents, and call it a day. But even though the Community Benefits Program is mired in murk, a few things are crystal clear: There’s no oversight, no voting, no public input, and no transparency. That’s just plain wrong, and it shouldn’t take the FBI to figure it out.

E-mail: [email protected]. Follow the Marina Times on Twitter @TheMarinaTimes and like us on Facebook @MarinaTimes.

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