San Francisco Shakedown: Problems at the Port

Attempts to end City Hall corruption are crumbling faster than San Francisco’s seawall

This report is the culmination of 18 months of research. Thank you to my experts, editors, and sources. I couldn’t do this without you.

To read the introduction to this report, click here.

DOJ AND FBI CONTINUE CORRUPTION INVESTIGATION AT CITY HALL — OVER A DOZEN INDIVIDUALS CHARGED TO DATE

Our communities place great trust and responsibility in our public figures. Mohammed Nuru ultimately betrayed this trust when he abused his power to defraud the City and County of San Francisco and its people. We will not tolerate public corruption and will hold perpetrators accountable for their actions.

— IRS Criminal Investigation Special Agent in Charge Mark H. Person, during Nuru guilty plea announcement, Dec. 17, 2021

In April 2019 in the Marina Times, I told the story of San Francisco Department of Public Works (SFDPW) Director Mohammed Nuru’s ethical missteps, misappropriated taxpayer funds, travel boondoggles, lawsuits, and incompetence as the street cleaning chief of San Francisco, perpetrated under four mayors and multiple boards of supervisors. Nine months later, on Jan. 16, 2020, the U.S. Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) filed its first San Francisco City Hall corruption criminal complaint against Nuru and restaurateur Nick Bovis, owner of Lefty’s Grill and Buffet at Fisherman’s Wharf (formerly Lefty O’Doul’s hoffbrau downtown). Bovis and Nuru were originally arrested in late Jan. and charged with one count of wire fraud in a federal complaint that alleged they were involved in a number of corruption schemes involving city resources.

The complaint triggered a steady stream of astonishing DOJ announcements. To date, over a two-year period, the U.S. Attorney’s Office Northern California District has issued a series of 16 news releases, with 12 individuals being charged.

By June 8, 2020, the DOJ and FBI had signaled the pervasiveness and severity of San Francisco corruption during the arrests of the Mayor’s Neighborhood Services Director, Sandra Zuniga (also Nuru’s girlfriend); longtime employee of SFDPW and now CEO of engineering firm AzulWorks, Balmore Hernandez, the go-between Nuru and PrōVen; and former City of San Francisco Immigrant Rights Commissioner and construction company owner Florence Kong, who bribed Nuru with a $40,000 Rolex watch in exchange for SFDPW contracts.

At the time, U.S. Attorney David Anderson stated:

The federal investigation into City Hall corruption has not been sidetracked by Covid-19 or other recent traumatic events. Today’s criminal complaints will not be the last. To everyone with a piece of this corruption, again I urge you to help make things right for San Francisco. Run, don’t walk to the FBI, before it is too late for you to cooperate.

By Sept. 17, 2020, in its press release headline for the PrōVen corruption scandal involving Nuru, the SFDPW and the Port of San Francisco, the FBI and DOJ simply began referring to the entire sordid affair as the “San Francisco City Hall Corruption Investigation.”

After their arrests, Nuru and Bovis were charged with honest services wire fraud in a scheme to bribe a San Francisco Airport Commissioner with cash and free travel in exchange for the commissioner’s assistance to win a bid for a restaurant lease at SFO with the help of another of Willie Brown-appointed commissioner.

Two years later, on Dec. 17, 2021, Nuru admitted to defrauding the citizens of San Francisco of their right to his honest services while pleading guilty in a plea agreement. Recently appointed U.S. Attorney Stephanie Hinds said, “He now faces a prison sentence for enriching himself at the expense of the public as he sat in high office.” Hinds warned, “Federal authorities will investigate public corruption wherever it leads in San Francisco and throughout the district.” (A sentencing hearing for Nuru is still pending.)

“This case is part of a larger federal investigation targeting public corruption in the City and County of San Francisco. To date, 12 individuals and three corporate entities have been charged, including two high-ranking San Francisco public officials, Nuru and Harlan Kelly,” The DOJ said at the close of its Dec. 2021 announcement.

To back up a bit, in a March 2020 column in the Marina Times, I broke the story of Kelly and his Chief Strategy Officer and Assistant General Manager of External Affairs Juliet Ellis, and 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 then-San Francisco City Administrator Naomi Kelly. Three months later, federal officials obtained Kelly and Ellis’s personnel files, along with complete records related to trips the pair took, including expense reports and reimbursement records, back to 2005. The U.S. Attorney’s Office also ordered the agency to produce any commission audits from 2010 to the present related to trips taken by Kelly and Ellis.

In July 2020, I wrote an investigative report about San Francisco Public Utilities Commission (SFPUC) General Manager Harlan Kelly and the pay-to-play community benefits scheme that he created with Ellis. Five months later, on Nov. 30, 2020, the DOJ and FBI charged Kelly with honest services fraud for taking bribes in the public bidding process.

A year later, on Oct. 19, 2021, the Feds expanded Kelly’s charges to include bank fraud conspiracy. The indictment included his co-conspirator, former port SFPUC commissioner Victor Makras. The criminal prosecution of Kelly and Makras is underway. The extent of their investigation cooperation is unknown.

CHAPTER 1

‘CITY FAMILY’ TREE MUST BE SHAKING

You pay to play here. We got it. We know this. We’re the best at this game. Uh, better than New York. We do it a little bit more sophisticated than those New Yorkers. We do it without the mafia. And, you know we, we, um, this is a moderate business focused mayor [Ed Lee]. He was pretty much trained and developed by Willie Brown and same as myself, and we were trained to get the job done. We know we have to get the job done. We get it done … We eat, sleep money in this town. We go to bed; we dream about money. We wake up; we dream about money. Here there’s no limit if you got the right hook up … Get me the money, you gonna be saying get me the contract, so I’ll deliver. Everything is about relationships and connections. Course we have the public process.

— Zula Jones, San Francisco Human Rights Commission staffer, on an FBI wiretap, May 2012

In Jan. 2016, then-District Attorney George Gascon charged former Human Rights Commissioner Nazly Mohajer and longtime commission staffer Zula Jones with four counts of bribery and a count of money laundering for trying to persuade an undercover FBI agent posing as a businessman to give an illegal contribution to Ed Lee’s 2011 mayoral campaign in exchange for providing access that might lead to political favors.

It wasn’t the first time Jones had been involved in a corruption scandal.

In April of 2000, federal prosecutors indicted Jones on charges that she was part of a scheme to defraud the city’s minority contracting program while working as chief contract compliance officer with the Human Rights Commission. Jones’ attorney said the prosecutors never had evidence to prove their case, and two years later the Feds dropped all criminal charges against her. Right after those charges were dropped, Jones returned to her job at the commission. When she retired in 2014, her party was held at the home of Harlan and Naomi Kelly.

Former Mayor Willie Brown’s City Family is a legacy culture, entrenched and ripe for disruption. Long gone are the days of plausible deniability, when Brown declared that “the ‘e’ in email stands for evidence.” Former insiders said they believe this is the reason why, as city attorney, Herrera never had a private or public email address.

Corruption and bribery; money laundering; honest services fraud; bank fraud; making false statements; and unethical, irresponsible business practices are all evidence of a deeply flawed culture of cronyism celebrated for decades. Transparency is just that — full disclosure, an absolute acknowledgment that our public servants are honestly representing the people, working for them, and have nothing to hide. Transparency is not flouting the law and evading, delaying, and seeking workarounds to public records requests. Transparency is not about gaming the system, finding a workaround, a means to a predetermined end. Sadly, one of the least transparent officials at City Hall resides in Room 200. Mayor Breed frequently ignores public records requests. Her chief of staff, career politician Sean Elsbernd, even bragged in an email accidentally copied to a journalist that he got rid of not only Breed’s texts but “the screenshots, too.”

On Feb. 4, 2020, two weeks following the Nuru and Bovis charges, Breed and then-City Attorney Dennis Herrera attempted to distance themselves from the corruption by denouncing it and starting their own San Francisco City Controller Public Integrity Review Unit (CPIR).

Left out of the grandstanding, of course, was that in 2011, when Herrera himself was running for mayor, he said in a press conference, “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.” Lee beat him in the race, Herrera remained city attorney, and Nuru was never investigated by the City Attorney’s Office.

Sources tell us a high-ranking city official documented Nuru’s web of corruption at SFDPW, SFPUC, the port and the San Francisco Municipal Transportation Agency (SFMTA) and sent it to Herrera, who responded, “These are unproven allegations.” Herrera was involved in his own scandals including the $19 million spent for thousands of meritless sewer repairs coming to light after his own deputy city attorney Joanne Hoeper blew the whistle. Herrera’s office also paid Hoeper a $5 million settlement, which was held up by the California Court of Appeals in Feb. of 2020.

Despite all of that, on April 26, 2021, Breed announced that Herrera would take over Kelly’s SFPUC job — a veritable fox in the henhouse. 

NEW S.F. PUBLIC UTILITIES COMMISSION GENERAL MANAGER DENNIS HERRERA UNABLE TO LET GO OF ROGUE S.F. PUC SOCIAL IMPACT PROGRAM

No control environment can control all risks created by a bad actor, particularly in a position of leadership. Throughout our review, we found significant lapses in the ‘tone at the top’ created by Mr. Nuru that provided the pressure, rationalization, and ability to carry out unethical and unacceptable acts.

— City & County of San Francisco, Office of the Controller, Public Integrity Review, Preliminary Assessment on San Francisco Public Works Contracting, website and press release, June 29, 2020

In another quiet holiday announcement, the S.F. Controller’s Office published its eighth CPIR report, Public Integrity Audit Finds SFPUC’s Social Impact Partnership Program Is Poorly Designed and Monitored.

On Dec. 9, 2021, the CPIR unit found the SFPUC Social Impact Program to be “poorly designed, with significant flaws in the monitoring and enforcement of contractor commitments.” In other words, the Dennis Herrera-established CPIR Unit blamed city contractors and downplayed the severity of a $34.2 million community benefits corruption scheme now overseen by the Herrera-led SFPUC.

Kelly and Ellis established the program, which functions similarly to the now prohibited behested payments, and Herrera, in his former role as city attorney, signed off on it for a decade. Stuck in his City Family cultural mindset, Herrera rationalized, “We agree with all the recommendations, and we will be fully implementing them. The premise of the Social Impact Partnership Program is sound.”

David Chiu, appointed by Breed to replace Herrera as city attorney, appeared a little more skeptical, stating, “If this program is to continue and live up to its goals, it must be reformed and authorized by the appropriate policy bodies, including the Board of Supervisors.”

As the Marina Times pointed out in its July 2020 investigation, the SFPUC’s community benefits program is just another pay-to-play variant and should be similarly prohibited under any new legislation from the Board of Supervisors or should simply be taken under the “behested payments” umbrella and prohibited.

CHAPTER 2

PORT DENIES PANEL STACKING DURING CONTRACT AWARDS STEERING WORK TO FAVORED VENDORS

The breadth of Herrera’s subpoenas suggest years-long, widespread corruption is suspected,’ said Larry Bush, a longtime ethics watchdog. Bush, who co-founded the group Friends of Ethics, noted that many targeted by Herrera also make legal payments to nonprofits on behalf of city officials as favors, which are regulated and called ‘behest payments,’ an ethically dubious but common practice. The arrest of Nuru and Bovis may help shake San Francisco from its complacency around pay-to-play politics, Bush said. ‘I think most of the people on the subpoena list have either been behest donors or behest recipients, it’s what people call legal bribery. And it’s in the millions of dollars,’ Bush said. He added, ‘It’s no secret how to play the game in San Francisco, what has been secret is who would confront it.

— Joe Fitzgerald Rodriquez, S.F. Examiner, Feb. 12, 2020

The Fair Political Practice Commission published data showing behested payments jumped from $13 million in 2019 to a whopping $227 million in 2020.

On Nov. 30, 2020, Harlan Kelly was charged with honest services wire fraud for taking bribes in the public bidding process. The bribes included a family trip to China with hotel stays, meals, and gifts. On Oct. 19, 2021, the U.S. Attorney expanded the federal charges against Kelly to include bank fraud conspiracy. The indictment charged Kelly and Victor Makras, former SFPUC and former port commissioner, with loan fraud conspiracy in addition to Kelly’s earlier charged bribery-related conduct.

In one SFPUC bid, publicly disclosed text messages suggest Walter Wong (a longtime contractor and permit expediter who agreed to plead guilty to fraud, conspiracy, and money-laundering charges) lost a large LED lighting contract because another Kelly insider, who doesn’t even have a state contractor license under his name, offered more money.

As Zula Jones indicated on that long-ago FBI wiretap, “everything is about relationships and connections.” The port had already been linked to two San Francisco City Hall corruption investigation arrests. Makras, a recent port commissioner, marked the third. Lefty O’Doul’s Foundation for Kids, a nonprofit run by Bovis and used by Nuru to launder behested payments, bribes, and kickbacks, had Kimberly Brandon — a Willie Brown appointee who has served on the Port Commission for 25 years both as president and vice president — sitting alongside Bovis on its board. Nuru also utilized his relationships with Recology, Clark Construction, Pankow Builders, and Webcor to direct $33,000 in bribes to Bovis for “the kids.” Bovis used the money to pay for a 2017 holiday party organized by Nuru for select SFDPW employees and other invited guests.

Nuru was also the go-between for Oakland-based construction firm PrōVen and the port where bribery led to a successful bid. Two of the company’s executives, President Alan Varela and Vice President William Gilmartin III, were accused of giving Nuru the infamous $40,000 tractor in exchange for his help with opening an asphalt plant on the waterfront. The port selected PrōVen at its Commission meeting on Sept. 22, 2015. On Jan. 27, 2020, while the asphalt recycling plant agreements with SFDPW and the port were still being finalized, Nuru and Bovis were arrested.

Varela and Gilmartin have since pleaded guilty to honest services fraud in the port PrōVen corruption scandal. Gilmartin and Nuru, along with Bovis, are cooperating with the Feds. For his lack of cooperation, Verela was sentenced to two years in prison.

On Feb. 5, 2020, when quizzed about the Nuru and Bovis arrests, with respect to Bovis specifically, Lefty O’Doul’s for Kids board member Al Casciato said, “I feel so duped. How could I be so duped?” A week later, fellow board member Brandon appeared to be working from the same script, saying, “He duped us all.”

In the wake of the Nuru and Bovis arrests and in relation to their involvement in a separate bribery scheme at SFO, CPIR (Controller Public Integrity Review Unit) questioned the Airport Commission regarding the integrity of its contract award process. According to its Jan. 2021 report, Ethical Standards for Contract Award Processes of the Airport Commission and Other Commissions and Boards, CPIR found that Airport Commissioners were “appropriately excluded from participating in the selection process for evaluation panels.” CPIR then posed the same question to port leadership, who denied its commissioners were “involved in the solicitation process or evaluation panel selection process.” Evidence suggests otherwise, however, particularly when it comes to panel stacking — an agency’s ability to configure evaluation committees and steer contracts to preferred vendors.

The port typically stacks its evaluation panels with city insiders and staff simply to control the selection process and gear it toward a pre-determined selection of consultants and contractors. Those port-selected panelists have built-in alignment, biases, conflicts of interests, and even potentially surrogate-like relationships with city and port leaders. City staff panelists can have upward reporting relationships with city and port staff leaders, their career paths depending on their supervisors, and their direction. Worse, port panelists are occasionally protected, unnamed, or anonymous, with their names on reports and scorecards left blank or redacted. Even when the panel is named, decisions are not always made in the public eye, with favored vendors rising to the top. For example, the panel for Nuru’s TractorGate co-conspirators Varela and Gilmartin, which included two of Nuru’s SFDPW deputies, overwhelmingly scored their firm PrōVen as the winner, while flunking its three competitors.

CHAPTER 3

HOW THE PORT SELECTED NURU TRACTOR-GATE PALS PRŌVEN FOR PIER 94 PROJECT

You know, it’s amazing here that uh, hands down, this Central [Concrete Supply)], man, they won every category. When I’m looking at this uh one to uh nine. I mean, normally, you don’t ever win nine games in a row, but I mean, they, they won every category, hands down.

— Port Commission President Willie Adams in reference to the Port evaluation panel scoring of the PrōVen/Central proposal for Sustainable Recycled Asphalt and Concrete Plants and Lease Opportunity at Pier 94 and Seawall Lot 352B, Sept. 8, 2015

An industry veteran told Gotham by the Bay that both Herrera and Kelly controlled the selection process by hand picking panel members loyal to them and willing to follow orders in exchange for career advancement. The panel members would then score the interviews with a wide gap in ranking, making it easy for the City Attorney’s Office to look the other way.

In a Sept. 17, 2015, memo from port executive Monique Moyer regarding awarding the asphalt plant lease at Pier 94/ Seawall Lot 352 to PrōVen Management, the selection panel members were listed by name and title (that’s not always the case; in fact the July 12, 2022, hearing docket conceals the identities of panelists).

1.    Kristin Allen, Project Manager III, SFO

2.    Richard Berman, Utility Specialist, SF Port

3.    Julia Dawson, Deputy Director, Financial Management & Administration, SFDPW

4.    Brian Henderson, Wastewater Enterprise Engineering Manager, SFPUC

5.    Larry Stringer, Deputy Director, Operations, SFDPW

On the above scorecard, the panel awarded PrōVen 426 points while giving the other three teams 278, 251, and 231, but FBI Special Agent J. Floger testified that PrōVen (“CONTRACTOR 4) admitted they didn’t have the money or the experience to do the job, stating, “Based on my review of email communications and other records, I believe CONTRACTOR 4’s joint venture may not have been the most qualified bidder and benefitted significantly (and intended to benefit significantly) from NURU’s influence on the process in exchange for the items of value conferred on NURU by HERNANDEZ and CONTRACTOR 4 … For example, in an email regarding the asphalt plant to CONTRACTOR 3, dated June 7, 2015 (nine days before final bids were submitted), CONTRACTOR 4 wrote “Why are we even involved? Because I've pursued this for three plus years and the deal is finally here. We don't have the capital or the experience to do this deal, but we are in the middle of it.” He then asks for help deciding who they should partner with, to which CONTRACTOR 3 responds, “Let's talk about this. I want to make sure we do this for us and not for others. I also know we are short on cash, and we also have not run an asphalt plant or concrete plant.”

On Feb. 2, 2015, four months ahead of the bid due date, when a work colleague expressed concern about being fully prepared for a pending Port Commission meeting to authorize the release of the RFP, Gilmartin responded, “Don’t worry … this is set up for us to win.”

On Sept. 17, 2015, current Port Waterfront Resilience Program Director Brad Benson issued his report recommending PrōVen for the asphalt plant operations lease and requesting authorization from the Port Commission to commence negotiations. As justification for his recommendation, Benson cited PrōVen as “outscoring all other proposals on every criterion” and its “demonstrated ability to produce asphalt and concrete.”

On Sept. 22, 2015, the Port Commission unanimously authorized port staff to negotiate with PrōVen for the terms of an Exclusive Negotiations Agreement. On Feb. 18, 2016, Benson and Forbes issued their recommendation for the approval of the agreement with PrōVen to negotiate a lease for the construction and operation of a recycled content asphalt batch plant at Seawall Lot 352 (located south of Islais Creek Channel and east of Amador Street). On Feb. 23, 2016, the Port Commission unanimously authorized port staff to enter into the Exclusive Negotiation Agreement with PrōVen. Those negotiations ended with the arrests of Nuru, Gilmartin, and Valera in 2020.

Alan Varela of PrōVen pleaded guilty and was sentenced to two years in prison and ordered to pay $127,000 for a seven-year conspiracy, honest services fraud, and bribery. His business partner William Gilmartin pleaded guilty to honest services fraud and is cooperating with the DOJ and FBI.

The corruption timeline developed over several years:

This was a port deal, a port lease on port property, requiring Port Commission approval. SFDPW had interest in a potential long-term contract with PrōVen to purchase recycled asphalt and concrete. The port and SFDPW jointly managed the RFP process. SFDPW issued the RFP on April 7, 2015. The port selected the evaluation panelists. Current port leaders involved in the transaction and seeking approvals on behalf of PrōVen with the Port Commission included Port Executive Director Elaine Forbes and Port Director of Special Projects Brad Benson, who were responsible for the PrōVen written contract award and exclusive negotiation recommendation reports, respectively. As a political player, Benson’s only qualification was serving as Tom Ammiano’s legislative aide from 1997 to 2005. Now he’s sitting atop the $5 billion-plus Port Waterfront Resilience Program which requires in depth knowledge in engineering and construction, which he lacks.

Kimberly Brandon, Willie Adams, and Doreen Woo Ho were on the Port Commission (Woo Ho retired on May 10, 2022). On June 19, 2015, Hernandez texted an update to Gilmartin, “Finishing panel selection before they can start review. Panel is 2 from DPW, 1 PUC, 1 Port, & 1 MTA.” Gilmartin responded, “Just do your thing and make it ALL happen!!”

The panel included port, SFO, SFDPW, and SFPUC representatives. Panelist Julia Dawson, representing Nuru’s interests, resigned from her post last year as deputy director of financial management and administration amid allegations of her role in the Recology corruption scandal. Her colleague Larry Stringer, another Nuru deputy director with no relevant qualifications, was also on the panel. Stringer was in charge of SFDPW Operations, and still is.

In a City Family blast from the past, Stringer replaced Nuru as deputy director for operations when Mayor Ed Lee and City Administrator Naomi Kelly (Harlan Kelly’s wife) promoted Nuru to director of SFDPW in 2011. As Nuru’s second-in-command, Stringer solicited Recology for community benefits donations directed to the San Francisco Parks Alliance nonprofit in April 2015, while inviting Recology to support and join in a two-day event — SFDPW’s annual open house and employee appreciation picnic. Recology spent nearly $1 million for Nuru’s favors from 2014 through Jan. 2020 when Nuru was arrested.

On Sept. 9, 2021, Recology admitted to the bribery and agreed to pay $36 million in criminal penalties and to cooperate fully in ongoing law enforcement and regulatory investigations. Recology executives Paul Giusti and John Porter were also charged with bribing Nuru and money laundering. CFO Adam Tabak committed suicide by stabbing himself in front of his family after Recology officials interrogated him over the allegations (his widow has sued the company).

Giusti pleaded guilty to one count of conspiracy to bribe Nuru and honest services fraud in a plea agreement. He is cooperating in the federal government corruption investigation.

Porter paid approximately $60,000 for SFDPW holiday parties between 2016 and 2019. These payments were disguised as charitable donations to Bovis’s Lefty O’Doul’s Foundation for Kids. His criminal prosecution is still underway with charges pending.

The DOJ now has a new and more powerful tool called Procurement Collusion Strike Force (PCSF), a Coordinated National Response to Combat Antitrust Crimes and Related Schemes in Government Procurement, Grant and Program Funding. The PCSF has already scored several high-profile contracts collusion cases nationally and internationally, including a recent Caltrans case, and the term strike force sends a clear message to other corrupt players that the DOJ means business.

CHAPTER 4

SAN FRANCISCO PORT AWARDS SFPUC PUBLIC BENEFITS PARTNER CH2M EMBARCADERO SEAWALL PROGRAM

Thank you very much and clearly Mayor Brown had the political courage and clearly Mayor Brown is a trailblazer … Dwayne, I love you.

— Port Commission President Willie Adams, responding to opening remarks from CH2M front man Dwayne Jones and its closer Emilio Cruz, while in public session, San Francisco Port Commission meeting, Aug. 8, 2017

During the fall 2018 election, voters overwhelmingly approved “Proposition A: San Francisco Embarcadero Seawall Improvement Bonds,” an initial $425 million general obligation bond to strengthen the Embarcadero seawall. The city and port obtained voter approval before the San Francisco City Hall corruption investigation erupted in early 2020.

Fast tracking the project, possibly risking capital in advance of voter bond approval, the port issued an RFP for Planning, Engineering, and Environmental Services on April 24, 2017, the first significant contract under the $5 billion-plus program, with many still-to-be-determined contracts in the pipeline.

The city and port solicited the RFP and established an unusual, not-to-exceed $40 million budget and 10-year spending plan for engineering consulting services. The RFP respondents did not provide a price in their proposals. There was no financial bid for their services. Instead, the proposers competed on services, qualifications, and access to spend $40 million, almost open checkbook-style, to provide ongoing services, as required and approved on a “task order by task order basis” established by the Port over the 10-year term of the contract.

Similar to the PrōVen contract award, the port staff, commissioners, and leaders most consistently involved in the Embarcadero Seawall Program are Forbes, Benson, Adams, Brandon, Makras, and Woo Ho. The evaluation panel was again stacked, with the port hand-picking panelists behind closed doors. Unlike the usual five-member panel, the seawall panel had only four panelists, including one representative from the SFPUC, one from SFDPW, and two from the port. Oddly, the names of the panelists were not listed. For example, one was simply tagged as “Assistant General Manager from the San Francisco Public Utilities Commission.”

On June 2, 2017, the port received five proposals from CH2M, AECOM, TetraTech/GHD, Stantec, and Parsons. (It’s interesting to note that CH2M, AECOM and Parsons are three of the SFPUC’s favored vendors in the Community Benefits program.)

The panelists prepared their evaluation scorecards behind closed doors and scores were closer than in the PrōVen scoring scandal. CH2M was effectively awarded a B+ overall; three respondents received a B and one received a C. Final scoring was CH2M/Arcadis 745, AECOM 705, TetraTech 693, Stantec 687, and Parsons 654.

The scoring was weighting 50–50 between the written proposal and oral interviews, versus a standard RFP process, including the usual port 70–30 written/oral split. It made the difference, with the lone A in oral presentation ensuring CH2M the win (with fellow SFPUC vendor AECOM coming in second place). CH2M promised a 21 percent higher Local Business Enterprise (LBE) participation rate than the city-required 15 percent. On a $40 million contract award, that’s an additional $2.4 million allocation to LBEs, which, in true community benefits style, likely influenced the panel.

On Aug. 8, 2017, the day the Port Commission awarded the contract to CH2M, Dwayne Jones of RDJ Enterprises pitched and served as the CH2M front man. Strangely, the representatives from the team sponsor and leader CH2M took a back seat. As the Marina Times wrote in “Friends with community benefits” and again last Feb., Jones functions as a SFPUC community benefits conduit for the city, contractors, LBEs, and nonprofits. Despite the arrest of his close friend Kelly and with his other close friend Ellis under scrutiny in the sweeping SFPUC subpoena, Jones is still getting lucrative city contracts, including from the port. In 2017, RDJ inked a deal for community relations related to the Embarcadero Seawall Program and a fee commitment of $198,039. As of April 8, 2022, with the Port Commission well aware of his connection to the SFPUC Community Benefits scandal, RDJ’s costs were running at $419,761 — more than double the initial agreed-upon fee.

After Jones made his Aug. 2017 pitch for CH2M, Carollo Engineers Senior Vice President Emilio Cruz served as the closer:

… we are a subconsultant on this team. I've spent 29 years of my career here in the Bay Area. I've had the fortune to serve as a public servant for 14 of those years here in the City and County of San Francisco. I was Director of Operations right here at the port when I was appointed by Mayor Brown as his Chief of Staff … .

Cruz failed to disclose in his statement that he had been an SFPUC assistant general manager under his longtime friend Harlan Kelly (he was even the best man at Kelly’s wedding). Earlier in 2017, Cruz’s role raised ethical questions when he helped MWH Constructors/Webcor Builders land a $1 billion sewage contract with the SFPUC. In 2015, as part of a six-member SFPUC and city delegation, Cruz joined his boss on a week-long junket to Ireland, England, and Norway to observe sewage technology. The other delegation members included three other SFPUC assistant general managers, notably Juliet Ellis, and then-supervisor Malia Cohen. The cost to ratepayers: nearly $30,000. According to sources, the married Kelly and his subordinate Ellis didn’t even try to hide their romantic relationship, sharing rooms during the trip.

Due to the port allowing anonymity for members of the 2017 evaluation panel in the seawall contract award, it is unknown whether the “SFPUC assistant general manager” was Ellis, but it would make sense considering she was the lone scorer for community benefits contracts, many of which went to AECOM and the contract winner, CH2M. Documents obtained by the Marina Times for our July 2020 Friends with community benefits investigative report show Jones as a paid conduit between Ellis and contractors, where he “helped them” to understand how to achieve a higher score.

Adding another level of controversy to the CH2M contract award, at that Aug. 8 Port Commission meeting, Jacobs Engineering, headquartered in Texas, had announced its definitive acquisition of CH2M six days earlier, jeopardizing CH2M’s selection. The port contract procurement process did not vet or select Jacobs Engineering, rather the port’s stacked evaluation panel selected CH2M.

On June 30, 2017, the city had added Texas to the city’s 12-X list, which prohibits doing business with companies headquartered in states with anti-LGBTQ and anti-abortion laws, with an effective ban date of Sept. 1, 2017.

CH2M was based in Colorado, which is not on the 12-X ban list. Jacobs, however, was based in Texas, and on the 12-X ban list. The ensuing contract award discussions brushed over the fact that the port had not vetted or selected Jacobs. The local CH2M team, Forbes, and Port Finance Director Meghan Wallace downgraded the Jacobs definitive acquisition agreement and offered the Port Commission an alternative version, indicating that there was a possible merger between Jacobs and CH2M still subject to vetting. Forbes went as far as saying, “This is a proposed merger. It has not occurred. It may or may not occur. City Administrator Kelly is the shepherd of the 12-X ordinance, and she will review any change or acquisition once it does occur, if it occurs, in 2018.”

The local CH2M team provided a letter using similar, nondefinitive acquisition agreement softening language. Port staff used these statements and their narrative to justify their recommendation and obtain approval from the Port Commission for the CH2M contract award in the face of the Jacobs Engineering acquisition and the 12-X issue. The statements made by the local CH2M team in letter form and port staff comments conflict with the actual Jacobs and CH2M press release of Aug. 2, 2017, in which Jacobs and CH2M had a signed deal.

On Aug. 8, 2017, the San Francisco Port Commission awarded the 10-year, $39,984,714 contract to CH2M. Just four months later, Jacobs completed the acquisition of CH2M.

PORT FAWNS OVER HARLAN KELLY’S PAY-TO-PLAY SFPUC SOCIAL IMPACT PROGRAM

On Nov. 13, 2018, a year after the Jacobs Embarcadero Seawall Program contract award, Harlan Kelly and Director of Community Benefits and Social Responsibility Yolanda Manzone (who resigned in Nov. 2020 following the Kelly/Ellis fallout) presented their SFPUC Social Impact Program to a fawning Port Commission. During his closing remarks, Kelly indicated that he had worked closely with City Attorney Dennis Herrera to develop the community benefits program. These remarks seem to support the notion that Herrera’s appointment to SFPUC general manager was more about corruption damage control, likely protecting the City Family and himself, rather than leading the SFPUC into a new era. In fact, Herrera knew about the pay-to-play scheme all along. The payments were accomplished off-the-books, outside of the actual contracts. With little oversight and transparency, the scheme lacked governance and financial controls, and opened the door to pay-to-play corruption and bribery. This is the same program that the S.F. Public Integrity Review reported as “poorly designed and monitored, and lacking legal authorization,” on Dec. 9, 2021. (To further consolidate his control, Herrera recently appointed one of his former city attorneys, Ron Flynn, as the new SFPUC deputy general manager and chief operating officer.)

Following its strong interest in Kelly’s community benefits presentation and the implementation of the city’s new Racial Equity Ordinance No. 188–19, the port submitted the Port Racial Equity Action Plan (REAP) to the mayor in Dec. 2020. The ordinance created a new Office of Racial Equity, as a division of the City of San Francisco Human Rights Commission Department, with authority to create a citywide Racial Equity Framework and require City Departments to create Racial Equity Action Plans. The port REAP signaled its first intended use of a “community benefits” strategy, establishing “criteria for development of community benefits agreements that require use of Black, Indigenous and other people of color tenants, sub tenants or suppliers.” Indicators of progress were to “establish desired community benefits for projects like Piers 38–40, Piers 30–32 and SWL 330; Kneass and Building 49; and Northern Piers.”

On June 2, 2022, in a 14-page letter, Breed sought clarifications from the San Francisco City Attorney and Ethics Commission on the new City Behested Payments Ordinance. She fielded questions from city departments to use as hypothetical examples. The port asked:

Assume that the Port is negotiating with a developer for a $5 million development project contract. During the negotiations, could a Port Officer ask the developer to financially support a local nonprofit in providing marine biology classes for youth as part of the project’s community benefits package?

The port is clearly on the SFPUC community benefits bandwagon. As City Attorney David Chiu pointed out last Dec., the SFPUC has no authority or enabling legislation to create community benefits packages. And, of course, there is a gargantuan $14 billion annual city budget to fund programs, while developers already contribute additional impact fees.

Notably, Breed and the port used the “community benefits package” phrase interchangeably with “behested payments,” confirming that the more attractive-sounding community benefits package and behested payments are indeed the same thing.

CHAPTER 5

PORT AWARDS JACOBS ADDITIONAL $20 MILLION NO-BID CONTRACT AMENDMENT, CONTRACT INCREASE OF 50 PERCENT

On Sept. 24, 2019, two years into the program, with little Embarcadero Seawall Program work completed, the port approved a 50 percent increase in the Jacobs contract. The amendment covered additional consulting services to extend the footprint of the original Embarcadero Seawall Program beyond the 3½ mile-long Embarcadero seawall, south beyond Mission Creek, to cover the entire 7½ mile-long port-controlled waterfront. The port named it the Waterfront Resilience Program (WRP). The WRP includes the original Embarcadero Seawall Program and extends another four miles south, to include the Southern Waterfront.

Geographically, the program doubled in size, creeping beyond the Embarcadero seawall south to Mission Creek and Islais Creek, and apparently even north to include Aquatic Park, a part of the Golden Gate National Recreation Area under federal jurisdiction.

Port WRP director Benson indicated to the Port Commission that day, “We are requesting authorization to amend the contract to address these flood and seismic risks port-wide … It was great to start in the northern waterfront. But, what about the southern waterfront? A lot of the increase is going port-wide with our work.”

Benson said over half of the $20 million increase would go to the Southern Waterfront. Based on a port budget itemization published earlier on Aug. 13, 2019, our investigation estimates that the Southern Waterfront allocation is likely in the $15 million range. Since the increase is allocable to the Southern Waterfront for work “off-site” and not part of the Embarcadero seawall, it is clearly not part of the Embarcadero Seawall Program and should be an ineligible Embarcadero seawall bond cost.

The Jacobs $20 million contract amendment and increase were not without Port Commission controversy. On the table, there was the reasonable possibility of a competitive bid process to address this sizable “offsite” Southern Waterfront work as a new and separate project and the 12-X compliance issue again resurfaced. With the CH2M acquisition having closed on Dec. 18, 2017, two years earlier, the proposed contract amendment was clearly with Jacobs, which is now headquartered in Texas, a banned state. Port staff recommended not to publicly bid this substantial chunk of “off-site” resiliency work, citing a city administrative code loophole allowing the no-bid option under an existing contract for expediency, and for the port, easier coordination of the single, preexisting agreement with Jacobs. It seems, given that the port had been working on the Embarcadero Seawall Program for over 10 years, expediency should have been a nonstarter.

With respect to the 12-X compliance, Director Forbes reminded the Port Commission of the original contract award history. Referring to the existing Port Commission and Board of Supervisors institutional knowledge, she repeated her version from two years earlier:

They were, and everyone was aware that it was occurring. They’d [CH2M] given notice and we made the Commission aware. We made the Board of Supervisors completely aware. This was a situation where we didn’t know for certain that the sale would go through. They had given notice of intent. Everyone was aware that they potentially were going to be bought by Jacobs. Again, it was in this forum and with the Board of Supervisors. Everyone was aware of this issue.

Forbes did not mention that her recommended Jacobs no-bid approach trickled down to around 30 other CH2M subcontractors who would not be required to submit competitive bids either.

Despite the relevant no-bid and 12-X decision making issues, Brandon instead signaled her LBE priority as sufficient justification to approve the $20 million contract amendment to Jacobs:

Regardless of what we do today, the original $40 million contract stays in place. Once we approve this, most of the additional funding will go to the LBE support services and workforce development and LBEs along with other businesses. But only approximately 25 percent of this amendment will be going to CH2M. I’m okay with supporting that.

Commissioner Gail Gilman then confirmed her understanding: “I’m going to go along with my other Commissioners and vote on this amendment particularly in light of the fact that the majority of the funds are going to our LBE contractors.”

Apparently, math skills aren’t required for port commissioners — at their Aug. 13, 2019, meeting, Forbes indicated an LBE estimate of $5,864,820 as part of the total contract amendment of $19,479,111. The estimated increase of $19,479,111 was split three ways — Jacobs $5,019,514 or 26 percent; subconsultants $8,594,777 or 44 percent; and LBE subconsultants $5,864,820 or 30 percent, meaning the LBE allocation was not a “majority of the funds.”

As of April 8, 2022, the LBE piece of the port pie has more than doubled from approximately $7.6 million to $16.6 million over the first four years of the Jacobs contract. Another six years remain on the Jacobs 10-year contract.

3½ MILE-LONG EMBARCADERO SEAWALL PROGRAM MORPHS INTO 7½ MILE-LONG WATERFRONT RESILIENCE PROGRAM

On Aug. 13, 2019, Forbes formally referred to the Port Waterfront Resilience Program as including the original Embarcadero Seawall Program and now the U.S. Army Corp of Engineers (USACE) Flood Resiliency Study. Forbes further elaborated that the Flood Study significantly expands the scope and scale of the port’s resilience efforts, which were previously focused on the $500 million Phase 1 Embarcadero Seawall Program and are now expanded port-wide.

Forbes reiterated in her recommendation for the Port Commission to approve the $19,992,357 contract increase and amendment to Jacobs, “the new Waterfront Resilience Program presents the need to expand the original scope of consulting services from the Embarcadero Seawall to the port’s full 7½ mile jurisdiction.” On Sept. 24, 2019, the Port Commission approved the Jacobs $19,992,357 contract amendment for the Flood Resiliency Study and the Waterfront Resilience Program.

Port Resolution 19-415 clearly indicated that the Jacobs contract amendment covered the Port Waterfront Resilience Program, which includes within it the Embarcadero Seawall Program:

Subject to the approval of the Board of Supervisors, the San Francisco Port Commission hereby authorizes port staff to execute an amendment to the existing contract with CH2M Engineers, Inc. [now Jacobs] for planning, engineering, and environmental services for the Waterfront Resilience Program, which includes the Embarcadero Seawall Program, the U.S. Army Corps of Engineers Flood Resiliency Study and related activities to increase the contract amount by $19,334,390, resulting in an amended contract amount of $55,684,130, with no change in the contract term or duration.

On Nov. 19, 2019, the San Francisco Board of Supervisors unanimously passed Resolution 504–19, the Jacobs $20 million contract amendment for the newly named Waterfront Resilience Program, which includes the Embarcadero Seawall Program and the flood initiative “to study coastal flood resilience for the port’s entire 7½ mile jurisdiction.” The mayor and supervisors Aaron Peskin, Shamann Walton, and Rafael Mandelman sponsored the resolution.

On Nov. 22, 2019, Mayor Breed signed and filed a Notification of Contract Approval, SFEC Form 126(f)4, with the San Francisco Ethics Commission to increase the Jacobs contract by $19,992,357, for a total contract amount of $59,977,071. The notification indicated that Breed approved the contract, the contract increase, and the list of 32 subcontractors and four CH2M officers affiliated with the contract. All 32 subcontract increases were likely not competitively bid under the increase. No one questioned the fact CH2M, now part of Jacobs, was technically headquartered in Texas, a state on the city’s 12-X ban list.

CHAPTER 6

PORT, JACOBS FUNNEL MILLIONS OF DOLLARS INTO NO-BID SUBCONSULTANT CONTRACTS

Once the $40 million Jacobs contract was in place, the port used it as a financial conduit to funnel millions of dollars in contracts to favored subconsultants, avoiding the competitive public bid process. As the above port table indicates, the port and Jacobs doled out at least six other contracts to LBE subconsultants, “since contract amendment,” likely awarding these contracts on a task order basis and then buried in the Jacobs contract. Two were significant — Silvestrum Climate at $1,276,606 and Sitelab Urban Studios at $1,303,660.

The 2018 voter-approved $425 million Embarcadero seawall bond provides funding for the Embarcadero Seawall Program. The funding was designated for the 3½ mile stretch of the San Francisco waterfront along the Northern Waterfront, north of Mission Bay, not for the Southern Waterfront. Most of the Jacobs $20 million contract amendment was for offsite resiliency engineering services along the Southern Waterfront. The city and port misappropriated that estimated $15 million and charged it to the Embarcadero seawall bond.

How $15 million was concealed and the legislation timeline unfolded

On March 12, 2019, in her written report for the Port Commission meeting that day, Director Forbes informed the commission of the planned request of “$45.8 million, plus the costs of issuance, for the first seawall bond sale to support the planning and preliminary design phases of the Seawall Program.” She explained:

Work in these phases will include planning, site and geotechnical investigations, risk assessment, alternatives analysis, program development, identification of potential pilot projects, and the San Francisco Waterfront Storm Risk Management Study General Investigation [Flood Study] with the United States Army Corps of Engineers [USACE], which will analyze flood risks to the Port’s entire jurisdiction from Fisherman’s Wharf to Heron’s Head Park.

Port Chief Financial Officer Katie Petrucione confirmed in her presentation, “Additionally, we are proposing to use funds from the first bond sale to act as the port’s match to the U.S. Army Corps of Engineers flood study.”

On March 26, 2019, at the next meeting, Forbes confirmed:

The port is now requesting authorization up to $50 million, including issuance costs, for the first Seawall Bond sale to support the planning and preliminary design phases of the Seawall Program. Work in these phases will include planning, site and geotechnical investigations, risk assessment, alternatives analysis, program development, identification of potential pilot projects, and the San Francisco Waterfront Storm Risk Management Study General Investigation [Flood Study] with the United States Army Corps of Engineers [USACE], which will analyze flood risks to the port’s entire jurisdiction from Fisherman’s Wharf to Heron’s Head Park.

The Port Commission approved the corresponding port resolution.

On April 2, 2019, Mayor Breed announced the first Embarcadero seawall bond sale to strengthen the Embarcadero seawall. It was a $50 million first tranche, the initial allocation of the $425 million Embarcadero seawall bond to fund the first phase of repairing and replacing the Embarcadero seawall.

That same day, corresponding with a press release, the mayor and the Board of Supervisors introduced three pieces of city legislation (approved in the summer of 2019) as follows:

The language contained in the first two resolutions appear to generally match the intent of the voter-approved Embarcadero seawall bond. It contains no references to a Waterfront Resilience Program or a USACE study or using bond proceeds to fund resiliency work along the port’s entire 7½ mile-long waterfront and including the Southern Waterfront.

However, the legislation language for ordinance 171–19, the actual appropriation of the first $50 million tranche of the Embarcadero seawall bond proceeds to the port and how it can be spent, differed. It omitted the geographic description clause, which was contradictory to the voter-approved Embarcadero seawall bond, “which will analyze flood risks to the port’s entire jurisdiction from Fisherman’s Wharf to Heron’s Head Park.” Instead, the description for the appropriation Ordinance No. 171–19 is even broader and reads:

Ordinance appropriating $50,000,000 of the Series 2019B Embarcadero Seawall Earthquake Safety General Obligation Bond proceeds to the Port of San Francisco in FY2018-2019 for planning, site and geotechnical investigations, risk assessment, alternatives analysis, program development, identification of potential pilot projects, and the San Francisco Waterfront Storm Risk Management Study general investigation with the United States Army Corps of Engineers; and placing these funds on Controller's reserve pending sale of the bonds.

The appropriation ordinance makes no specific reference to the Embarcadero Seawall Program as it should, and instead mentions the USACE Waterfront Storm Risk Management Study. By default, the wiggle-room language implies the USACE Flood Study and the entire 7½ mile-long waterfront under port jurisdiction. Ordinance No. 171–19 placed no specific geographical boundaries or limitation on the use of the funds and did not designate the use of the funds for the Embarcadero seawall and Embarcadero Seawall Program only, as required by the City of San Francisco voters.

On July 23, 2019, the SFBOS unanimously approved Ordinance 171–19.

On Aug. 2, 2019, Mayor Breed approved and signed Ordinance 171–19.

On May 12, 2020, Forbes reported that the port and the Controller’s Office were coordinating on a schedule to issue the first series of bonds to support the Embarcadero Seawall Program and the Flood Resiliency Study in the amount of $50 million, authorized by the port and Board of Supervisors.

On June 14, 2022, while referring to funding for the entire 7.5 mile-long Waterfront Resilience Program, Forbes said, “We’ve been using for the entire program, the GO Bond [Embarcadero Seawall General Obligation Bond], we have another GO Bond slated for 2026 for waterfront resilience.”

At each legislative step, the port and city earmarked the entire Jacobs $20 million contract amendment for funding under the voter-approved Embarcadero seawall bond, providing $15 million for ineligible costs.

CHAPTER 7

PORT, PACIFIC WATERFRONT PROPERTIES GIVE AWAY FREE WATERFRONT OFFICE SPACE TO FRIENDS

In early 2020, the port issued two overlapping RFPs for the redevelopment of Piers 38–40 and Piers 30–32 along the historic Embarcadero seawall in South Beach with rushed submission deadlines of seven to eight weeks. The projects were complex. The total value of the two contracts was approximately $1.5 billion.

The buildings on Piers 30–32 had burned down 38 years ago and had been vacant ever since. The port awarded a contract to URS/AGS to study the waterfront and piers over 10 years ago with respect to the crumbling seawall and sea level rise. It was a highly questionable RFP timing strategy considering the project complexities and price tags, in a tight economic market with little resource bandwidth, unless, of course, the port was trying to minimize competition. The two solicitations were intertwined, with the Piers 38–40 RFP serving as a template for the Piers 30–32 RFP that followed closely behind.

On Oct. 22, 2019, during the public Port Commission meeting, Forbes stated, “In terms of the selection process, we looked at the airport and what they did for the hotel. We consulted with the Mayor’s office in terms of what they considered to be the best practices of solicitation and selection as it relates to development.”

For the Piers 38­–40 RFP, the primary port players were Forbes, Assistant Port Director Michael Martin (also a former city attorney under Herrera), Port Deputy Director Rebecca Benassini, Port Deputy Director David Beaupre, Port Procurement and Contracts Manager Stephanie Tang, and Port Commissioners Brandon, Adams, Woo Ho, and Gilman.

Once again, the port stacked its evaluation panel, handpicking Port COO Byron Rhett along and SFPUC Commissioner Sophie Maxwell, a longtime City Family insider appointed to the SFPUC Commission by her friend Mayor Breed.

During a SFPUC public video conference meeting held Dec. 22, 2020 — six months after the Marina Times report on the SFPUC community benefits scheme — Commissioner Tim Paulson asked SFPUC staff about Dwayne Jones, his nonprofits, and his involvement with the SFPUC community benefits program. Maxwell, clearly angry at the mention of her friend Jones, can be heard saying “Fuck you” to Paulson.

Two days later, NBC Bay Area’s investigative team exposed that the SFPUC had paid Jones over $7 million in community benefits consulting fees, along with millions more in payments from SFPUC contractors to nonprofits connected to Jones, his family, and his friends.

WITH ONLY TWO RESPONSES TO PIER RFPs, PORT MOVES AHEAD

The port’s process for the Piers 38–40 RFP was ineffective and yielded only two respondents — Pacific Waterfront Partners (PWP) and Orton Development. As is typical, the port did not open the proposals in public or release full copies of the proposals to the public, as it becomes a public document only after the award.

The port did not question the lack of responses, nor did it publicly consider a resolicitation process to attract more, possibly better proposals. “Others are not willing to waste millions putting teams together,” one developer, who asked for anonymity because he still bids on city projects, told me. “These are very smart companies, and they see the fixing in place. This deprives taxpayers from a truly competitive process and significantly increases the costs.” In one documented case, he said, Herrera and SFPUC acting assistant general manager Alan Johanson awarded a sole source construction contract to a city insider by “hiding it within the communication agenda rather the construction agenda.”

“Given the strength of the proposals and the potential for success for the highest-scoring bidder, port staff intends to follow this process and to return to the Port Commission to seek authorization to negotiate an ENA,” port staff said. On April 13, 2020, the panel scored the written proposals. On June 10, 2020, after a two-month delay, the evaluation panel conducted oral interviews.

On July 14, 2020, port staff made an informational presentation to the Port Commission. The panel scoring was close, with 23 percent of the total attributable to the oral interviews. Forbes omitted from her report the typical scoring details such as category-by-category line items, like experience, and financial capacity. PWP edged out Orton 114 to 106. Despite the tight scoring, Orton was a no-show for its presentation opportunity at the meeting that day.

Simon Snellgrove represented his firm, PWP. Snellgrove attended Willie Brown’s 2009 birthday bash in Paris along with 100 of Brown’s other closest friends including Harlan and Naomi Kelly, and Victor and Farah Makras. In 2013, Brown publicly backed Snellgrove in his failed 8 Washington project proposal. In a landslide, San Francisco voted down the project, concerned by its excessive, “Wall on the Waterfront” 136-foot building height.

On July 14, 2020, Snellgrove opened the presentation for his Piers 38–40 proposal to the Port Commission:

After submitting our proposal in March and after the horrible events in Minneapolis and afterwards and like many of us around the country and the world, we decided that we must stop talking about equitable minority inclusion and start acting. Should we be selected, we have restructured our project team. And I have asked Cornerstone to join us as project managers. I've known Wayne Perry for over 15 years and have always admired his work and his mission. And I look forward to actually partnering with him in the project.

“Simon, I really want to thank you for listening to me over the last twenty-some-odd years,” Commissioner Brandon remarked at the conclusion of the presentation, to which Snellgrove said through nervous laughter, “I'm terrified of you.”

Brandon continued, “I am just so happy that you actually went and revised your project to include Cornerstone and Wayne Perry. I've known Wayne for over 20 years also. And for the last five to 10 years, he has been looking for a facility to do job training to give back.”

The phrasing in the final sentence had an eerily familiar, Bovis-code corruption ring to it. In a recorded conversation, an undercover FBI agent asked Bovis what he meant by “giving back to the community.” Bovis said it meant a nonprofit donation in exchange for an Airport Commission lease approval.

Executive Director Forbes indicated that Cornerstone Institute for Anointing, a sister company of Cornerstone Facilities Consulting (and PWP’s new project manager) would get “free offices and learning space” at Piers 38–40 as an LBE and a Disadvantaged Local Business Enterprise. PWP, Dwayne Jones of RDJ Enterprises, and Wayne Perry of Cornerstone were atop the development team organization chart in the proposal presentation for Piers 38–40.

Among the many conflicts of interest, Jones, Perry, former Willie Brown press secretary Darolyn Davis, and Port Procurement and Contracts Manager Tang are all advisors on the City of San Francisco Local Business Enterprise Advisory Committee — and Tang participated in the Piers 38–40 contract award process. The Committee has also been conducting meetings without proper public notifications, violating the Brown Act. Meanwhile, the only legislation they have approved is increasing the LBE gross revenue allowance to ensure Cornerstone and other larger firms remain in compliance with the City Charter to stay in the lucrative program.

PORT, PWP RESILIENCY DESIGN INADEQUATE

The PWP proposal was also, in effect, nonresponsive due to an inadequate resiliency design, offering only floodproofing of the piers, a repair and restore model at their existing elevation. The solution simply utilized a flood wall (an upturned beam) around the perimeter of the pier’s apron to prevent water infiltration. Although the PWP resiliency design was consistent with the port’s floodproofing strategy, it offered no adaptability or associated cost coverage to synchronize with a potentially higher seawall as required by the RFP.

The resiliency design was an interim solution, a Band-Aid of limited, short-term value, in the face of rising seas. The design was a low-sustainability solution, putting investor capital at risk, with the potential inability to exit due to lack of liquidity, much like the position the port is in today. The piers have negative value, given their condition, and many sit vacant, as they have for years.

Waterfront development experts know resiliency design is the most significant development challenge and cost component on a pier redevelopment project. The port has been studying the issue for years and has lost lease deals with the Warriors and others over it. On Sept. 8, 2020, Port Commissioner Woo Ho even alluded that infrastructure and the investment required for resiliency of the piers was the number one issue and that “everybody is very clear on what the challenge is.”

Despite PWP’s noncompliance with the RFP, the port waved it through. On Aug. 11, 2020, the Port Commission unanimously approved and awarded the $383,000,0000 contract for Piers 38–40 to PWP.

CHAPTER 8

SAN FRANCISCO PORT AWARDS CITY INSIDER STRADA PIERS 30–32 PROJECT

I think that there is going to be a lot of interest in this RFP. I am looking forward to seeing who responds. I do hope that we can keep Pier 30–32 and the Sea Wall Lot together, because I think that we may just lose Pier 30–32 if we don’t take advantage of the opportunity now. So, I really do hope whoever responds, responds to both, but I’m excited and looking forward to seeing what the responses are.

— Port Commissioner Kimberly Brandon, Dec. 10, 2019

On Feb. 3, 2020, three short weeks after it issued the RFPs for Piers 38–40, the port issued its RFP for Piers 30–32. The same primary port players, Forbes, Benassini, Beaupre, Tang, Brandon, Woo Ho, and Gilman, were again present, with the added emphasis that the port had consulted with the Mayor’s Office.

The port’s covertly handpicked panel included Port Special Projects employee Kari Kilstrom, ex-port employee Kirk Bennett, and Port Waterfront Plan Working Group member Jasper Rubin.

The outsiders this time were Michael Willis and Katy Liddell. A retired architect with a practice that was affordable housing-centric, Willis worked on the Willie Brown-sponsored Dr. George W. Davis Senior Center and Residence in the Bayview. Liddell, a human resources consultant, is a South Beach resident, living directly across from Piers 30­­–32 next to the landside seawall lot that was part of the Piers 30–32 RFP development package. Notably, Liddell publicly supported Proposition D, the 2015 ballot measure to increase building heights and affordable housing on the San Francisco Giants’ Mission Rock project, located on port property.

The 303-page RFP does not mention affordable housing. In fact, housing is mentioned only once, as an “acceptable/desirable use” for seawall lot 330.

Instead, the RFP emphasized waterfront development, and the need for developers with “over the water” experience.

The port provided the panel with Van Meter William Pollack (VMWP) as its appointed architectural advisor. Again oddly, the name of the VMWP individual advising the panel was anonymized. Surprisingly, VMWP’s practice focuses on affordable housing projects, having worked on several projects with Mayor Breed: 1101 Connecticut, Balboa Reservoir, and 4840 Mission Street in the Excelsior district.

On June 26, 2020, five competitors submitted their proposals: Enterprise Consortium; a team combining companies Strada and Trammell Crow; Tishman Speyer; Vornado Realty; and Earthprise. Port staff immediately disqualified the proposals of Enterprise Consortium and Earthprise as “nonresponsive” based on “technicalities.” Despite strong, creative teams, both were likely victims of an oft-rumored Willie Brown strategy: “If you can find a way to eliminate a nonpreferred city contractor early, do it.”

In a Feb. 19, 2022, episode of YouTube channel California Insider called “How San Francisco Extorts Contractors,” former San Francisco Board of Supervisors president Matt Gonzalez pointed out that a bad actor, in a very subjective way, can focus on bid and proposal technicalities, form over substance, and deem bids and proposals nonresponsive, on a whim or in support of another favored competitor, and throw them out, disqualify their bid or proposal entirely, to possibly protect a pay-to-play corruption scheme. Gonzales added that a lack of impartiality does not go unnoticed by bidders and the business community and can lead to less bid competition and higher prices on future projects.

On Aug. 11, 2020, seven weeks after the proposal submittals, the evaluation panel finally scored the other three written proposals. On Aug. 14, 2020, three days later, the panel judged the oral interviews. Strada/Trammell Crow won by a significant 20-point margin.

The panel scoring was again extreme, exhibiting excessive numerical ranking gaps between the winning proposal and the next two evaluated competitors. The Strada/Trammell Crow team received a B to get the contract, while the panel gave two global real estate titans, Tishman Speyer and Vornado Realty, a D and an F respectively.

As usual, the port did not question the validity of the excessively higher Strada/Trammell Crow scores and the evaluation panel scoring was never independently audited. Once again, the port only provided a scorecard summary — no detailed category-by-category scoring was made available to the public.

STRADA AND THE CONTRACT AWARD INSIDE TRACK

The Strada/Trammell Crow team is led by Strada’s Jesse Blout, a city insider and former deputy chief of staff for former San Francisco Mayor Gavin Newsom. On May 6, 2021, at a San Francisco Bay Conservation and Development Commission (BCDC) meeting, Supervisor Aaron Peskin disclosed to BCDC, in apparent reference to Blout and the Piers 30–32 project, “I have been contacted by the project sponsor, and I did not believe that I had to divulge that. But then insofar as it occurred to me that I should raise this question, I wanted to let you know that I had a conversation, actually two of them, with the project sponsor.”

On June 17, 2021, the port and Strada then briefed the BCDC on its Piers 30–32 proposal, excerpted as follows.

Blout: Good afternoon, Commissioners. I am Jesse Blout. I am founding principal of Strada Investment Group. We are a local San Francisco developer, and we are partnering with Trammell Crow Company on this really important opportunity. Before I start, I was a little late to the meeting, but I heard during the ex parte section of your agenda, Supervisor Peskin disclosed that I texted him today. And I did, in fact, text him and I wanted to disclose the nature of that text, it was happy birthday. So, Happy Birthday, Supervisor and Commissioner Peskin.

Peskin: Thank you to our BCDC staff as well as the San Francisco port staff for their presentations, as well as to my former city colleague and friend, the project sponsor Jesse Blout on behalf of Strada.

Peskin (later): I agree with everything that is being said relative to having BCDC staff work in a collaborative fashion with the port. I think I am the only one in this meeting who can say the same thing with regard to the Port of San Francisco which is, they kind of blew it at the beginning of this process and they have got to collaborate in good faith as well. I am not saying that they are coming from a bad position, but it harked back to the bad old politically charged days when my now-friend Willie Brown would say what he wanted and he didn't care about the Public Trust and he didn't care about the McAteer-Petris Act and he didn't care about BCDC and we would end up in just one, big, fine time-wasting mess.

Peskin hit the conflict-of-interest trifecta that day — San Francisco Supervisor, BCDC Commissioner, and friend to Strada’s Jesse Blout — and those conflicts are ongoing because the Board of Supervisors and BCDC will likely decide the fate of the Strada/Trammell Crow project.

One developer, who spoke on condition of anonymity because he competes in the same circles, noted that Blout operates more like a lobbyist: “He appears to be pedaling his City Family influence to expedite those approvals with Peskin and other politicos, in public and behind closed doors. Walter Wong and Zula Jones are probably nodding their heads.”

STRADA/TRAMMELL CROW PROPOSAL EXCEEDS VOTER-APPROVED BUILDING HEIGHTS

The Strada/Trammell Crow proposal was also, in effect, nonresponsive. Although port staff never questioned it, the proposal exceeded the voter-approved “No Wall on the Waterfront” building heights by a shadow-casting and view-blocking two times — 218 feet versus the permitted zoning of 105 feet.

Additionally, compared to its competitors, the Strada/Trammell Crow team had no direct over-the-water development experience, offered the least amount of public space, and relied on multiple forms of city public financing. In comparison, Vornado had $1.5 billion in cash on its balance sheet, and was prepared to self-finance the project. Vornado also had waterfront development experience and owned waterfront assets.

The Strada/Trammell Crow proposal cost the city hundreds of millions of dollars more than some of its competitors, and it also offered no minority or women-owned LBE commitments, which is normally a huge priority for the port.

On Nov. 12, 2019, an appalled Brandon admonished the Pier 70 and Giants Mission Rock projects for their low minority contractor participation rates. Plus, the port had just used LBE fulfillment to justify its recent port contract awards to CH2M and PWP. But in the case of Strada/Trammell Crow, not so much.

During the contract award meeting held Sept. 8, 2020, Brandon said:

I do want us — and it's unfortunate that it wasn't part of this RFP — a diversity, equity, and inclusion component. And I was surprised to see in the Strada presentation no mention of diversity, equity, and inclusion. Luckily, I know that, with the Chase project, they set a standard and a model for other projects across the city we could look at. So, I hope that that continues. And like John Williams Templeton said, hopefully there will come a day when we see it at this level, not at the backend. But I think it's very important that, when we're looking at these projects, that we make sure we're inclusive of all San Franciscans.

There was also clear opposition to the project from residents:

We're really, really unhappy with the idea that someone's going with a 220-foot elevation on these things, when Proposition B limits them to 105 and 160 or something like that. I mean, this is really kind of an affront, and I think it's very arrogant, frankly, of Strada, to assume that they're just going to blow right through those, and they might. They're very well connected, who knows, get some legislation passed and just trump all this. But as you guys have the responsibility to make sure that the legacy of the port is that it's something that works for the community and the community intent, and this is the exact opposite of this, and I find it a little disturbing that one of your commissioners has recused herself. I’m glad she did, but the fact that she was connected to one of the proposals leaves me a little bit concerned.

— John Cornwell, president of Portside HOA, at the Sept. 22, 2020, Port Commission meeting

Cornwell was referring to the Strada proposal and Commissioner Gail Gilman’s late recusal due to conflict of interest, which she hadn’t mentioned before:

So, I just need to recuse myself. I need to make a statement before we launch into this item. In Dec. of 2019, I consulted with Strada Investment Group on a non-port-related project and must recuse myself from the discussion or acting on Port Commission actions involving Strada Investment Group through the remaining calendar year of 2020. So as this being the last agenda item on our agenda for this evening, I'm going to be leaving the meeting …”

Commissioner Adams summarized, “I heard the public. We're in for a fight. This is going to be a fight. I remember when I moved to San Francisco, we looked at a lot of uses for Piers 30–32. First, it was the cruise ship terminal, then it was the Warriors, and this is going to be a fight.”

Despite the opposition, the port followed its contract award playbook and fast-tracked the $1.1 billion project. On Sept. 22, 2020, the Port Commission unanimously approved the $1,100,000,000 contract for Piers 30–32 to Strada/Trammell Crow.

CHAPTER 9

PORT, JACOBS REVERSE COURSE ON EMBARCADERO SEAWALL PROGRAM DESIGN

Public works contracts in San Francisco are supposed to be awarded on a merit system in San Francisco for the benefit of the residents and taxpayers of San Francisco. The complaint filed today alleges that this merit system was undermined with insider information and favorable treatment. Instead of awarding public works contracts on the basis of merit, the defendants allegedly sought to secure significant profits on the basis of bribes and backroom deals.

— United States Attorney David L. Anderson, on city corruption during the PrōVen contract award process, Sept. 17, 2020

On June 29, 2012, the URS (now AECOM) and AGS engineering joint venture prepared and issued its Sea Level Rise and Adaptation Study for the Port of San Francisco. The three-part, comprehensive report was the first in a series of climate change analyses for the port.

On Sept. 9, 2014, experts John Englander and former BCDC Director Will Travis, briefed the Port Commission on the dangers of the climate change crisis, severe weather events, and unstoppable sea level rise.

While showing a copy of BCDC San Francisco Waterfront Plan during his presentation, Travis concluded:

This approach has worked well in a world of certainty, but climate change will make our future considerably uncertain. In the face of this uncertainty, it might seem prudent to take a defensive stance and do as little as possible now, and to deal incrementally with the problems that arise along with the rising water in the decades ahead. But kicking the can down the road isn’t a solution. It’s a copout. Instead, be bold. Think big in creating your broad vision for San Francisco’s future waterfront, and then allow the details of that vision to dynamically evolve in response to the unpredictable and ever-changing conditions that will unfold in the decades ahead.

Two years later, on March 8, 2016, Executive Director Forbes disclosed to the Port Commission that no less than six piers were already below the FEMA base flood elevations, as shown on the preliminary 2015 FEMA flood maps, notwithstanding future sea level rise. Piers 30, 32 and 38 were three of those piers, and the subject of the two RFPs.

The city and the port disregarded the advice from Travis not to kick the can down the road on July 28, 2016, when they appealed the Nov. 12, 2015 preliminary FEMA flood maps. The appeal pertained to flood hazard boundaries, flood zone designations, and base flood elevations on the preliminary FEMA flood maps for the Embarcadero waterfront. The appeal requested a change to the way the flood maps represented the flood hazard along the waterfront and for the piers. By May 31, 2019, the city and the port had finagled FEMA to remove the hazardous special flood zone designations and base flood elevations for the entire Embarcadero waterfront from the preliminary flood maps and to reclassify the waterfront as FEMA Flood Zone D, an “Area of Undetermined Flood Hazard.”

FEMA removed the base flood elevations for the Embarcadero promenade and piers from the flood maps and reissued revised preliminary flood maps. Today, the final published flood maps, in public circulation and effective now, show no specific flood hazards or base flood elevations for the waterfront and the piers. According to FEMA’s own literature, “Flood Zone D can be misleading.” Although there is a risk of flooding, the level of risk is “unknown.”

Today, avoiding the appearance of any connection to the appeal, the port usually points to FEMA and makes a simple statement that FEMA has mapped the waterfront as Flood Zone D. In actuality, the level of risk was known. FEMA quantified its base flood elevations on the original 2015 preliminary FEMA flood maps. City and port officials just didn’t like the numbers.

On Nov. 26, 2019, three years after the appeal, then City Administrator Naomi Kelly, wife of twice-indicted former SFPUC head Harlan Kelly, confirmed in a memo to her friend and boss Mayor Breed that “the port was able to collaborate with FEMA to ensure that the revised floodplain designations for the port will enable continued management and development of the port’s piers in accordance with the port’s flood mitigation and sea level rise standards.”

The city and the port effectively covered up the magnitude of the Embarcadero waterfront flood risk. Likely intended to ease the transition for port stakeholders to FEMA flood insurance requirements and enable the port to historically rehabilitate and floodproof the piers as-is, the Flood Zone D maneuver seems a questionable strategy. Seas are rising. The piers are over 100 years old, their substructures deteriorated. Additionally, there was the possible dubious intention of shifting the hazardous flood risk and the associated costs to an unknowing public, port tenants, and future developers of the piers. The standard port pier RFPs and port leases include onerous flood and sea level rise provisions. Developers and tenants bear the entire cost of providing “Pier Flood Protection Measures” as enforced by the port, at its discretion.

On Jan. 31, 2020, eight years after the initial port sea level rise study, the port and Jacobs team finally published its Waterfront Resilience Program design, entitled “Floodproofing of Piers, Technical Feasibility Assessment of Adaptive Flood Risk Mitigation Strategies.” The floodproofing-of-the-piers-only design conformed with the port’s undetermined Flood Zone D strategy and ignored the FEMA base flood elevations established in 2015.

WHO’S DESIGN IS IT ANYWAY?

The port required developer proposals to adhere to the Floodproofing of Piers study, while highlighting that it would prioritize projects that met its Strategic Plan to better address the needs of the public and the waterfront. Six respondents agreed to these RFP requirements and signed a corresponding port RFP compliance document, except for one — Earthprise. Recognizing the need for an integrated seawall-and-pier, infrastructure-first waterfront solution, the firm provided its own next generation resiliency design with a model prioritizing human health and safety over historic preservation and following the more reasonable 2015 FEMA flood maps and base flood elevations as guidance.

Earthprise labeled its resiliency design as “the first over-the-water, elevated, sea level rise retrofit, (historic) pier and waterfront solution anywhere” almost two years ago, yet the port had eliminated Earthprise during the RFP process over a year earlier. Through public records, we discovered the port’s contractors are now using a design very much like the Earthprise model.

On Nov. 17, 2020, the port flashed its possible interest in the Earthprise Resiliency Model and Earthprise Resilient Waterfront Platform on an Instagram story entitled “Raised Marine Structures.”

On Sept. 24, 2021, one year after the port contract awards for Piers 30–32 and Piers 38–40 to Strada/Trammell Crow and Pacific Waterfront Properties respectively, Pacific Waterfront Properties signaled that it, the port, Jacobs, and port-selected developers were now moving in a new Embarcadero Seawall Program design direction — an elevated, adaptation solution — rather than their previous nonelevated design. Mayor Breed, Port Executive Director Elaine Forbes, Port Deputy Director Rebecca Benassini, and Strada/Trammell Crow’s Jesse Blout participated in the presentation.

On Nov. 7, 2021, in a San Francisco Chronicle article by John King, Port Resilience Director Brad Benson continued to publicly emphasize the elevated design and added that the Embarcadero would need to be elevated by as much as seven feet to prevent catastrophic flooding from rising bay waters. The port was clearly reversing course, away from its Floodproofing-of-Piers strategy to the Earthprise resiliency design shared with the port over a year earlier.

On Feb. 17, 2022, Benson and Port Deputy Program Manager for Planning Alan Varat briefed the San Francisco Bay Conservation and Development Commission (BCDC) on the Port Waterfront Resilience Program and went a step further.

Commissioner Randolph: But my specific question was about the piers. When you talk about the adaptation zone there are certain properties that are outside the adaptation zone and perhaps the most highly vulnerable on the waterfront.

As we know, the piers have suffered from a lack of investment for many, many decades for reasons beyond the port’s control. How far have you considered at this point options? Not the actual choices but options that would be available to the port for dealing specifically with the finger piers?

Benson: Great question, Commissioner Randolph. The port, we love the Historic District along the waterfront, the Ferry Building, and the historic piers. Through our public/private partnership model now we are looking at what we can do to rehabilitate these structures so that they can be resilient to sea level rise. We are early in some of the planning at sites like 38–40 and 30–32 but hoping to see whether or not it is financially feasible to elevate some of the historic piers. We are definitely looking in the program at elevating the wharf zone and the bulkhead buildings as a strategy so that wharf zone can connect to that high point of the flood defense system.

That is the Earthprise Resiliency model, found here. It also appeared in a Sept. 2021 CNN article titled, “Architectural Designs to Combat Urban Flooding” which featured Earthprise’s architect, London-based Heatherwick Studio. CNN included the rendering of their vision, The Cove, “a design that would futureproof the area from flooding while providing a new social hub and ecological park for the community. The development would utilize the abandoned piers, including Piers 30-32 which were left untouched after the Loma Prieta earthquake in 1989.”

According to the United States Patent and Trademark office, Earthprise EPX2 Resiliency Model is a Patent Pending Resilient Waterfront Platform with U.S. Copyright Certificates of Registration.

In a June 2, 2022, San Francisco Chronicle interview, Snellgrove and Benassini appear to confirm the merits of the Earthprise Resiliency Model over its original design:

The development at Piers 38-40, set to cost about $528 million, would be the first Port of San Francisco pier project to tackle sea level rise: the Pier 38 shed would be moved 40 feet to the east, which would allow for the seawall to be rebuilt, and the sheds on both piers would be raised 4 feet.

The Piers 38-40 contract is currently on the Port Commission docket for July 12, 2022. The original proposed project cost was $383 million but has since ballooned 39 percent to $528 million to cover the inadequate resiliency design in its original proposal. Pacific Waterfront Properties is effectively developing a new project in comparison to its original proposal. The port is sidestepping the public competitive bid process and giving PWP the opportunity to unfairly submit a new proposal, one with entirely new financial metrics. The port is signaling its planned acceptance of this additional $145 million bait-and-switch, which appears to include unauthorized use of a non-City Family development firm’s concept.

With a $5 billion-plus redevelopment program on the horizon, an unbiased city contracting process is critical for the safety, success, and future of San Francisco’s waterfront. Sadly, the tone at the top is all talk, and plans to root out rampant City Hall corruption continue to crumble, just like the city’s seawall.

Follow Susan on Twitter: @SusanDReynolds