Tag Archive for California Watch

Riverside Press-Enterprise Publishes My Commentary: Don’t Blame Wal-Mart for Fighting CEQA Abuse

The Sunday, December 2, 2012 Riverside Press-Enterprise published my opinion piece Don’t Blame Wal-Mart for Fighting CEQA Abuse. It is a response to a Riverside Press Enterprise editorial from November 25, 2012, Big-Box Browbeating, which I felt lacked an important perspective: labor unions and other groups routinely exploit the California Environmental Quality Act (CEQA) to suppress potential competition or to coerce labor agreements or other payoffs from developers (a practice known as “greenmail”).

On October 30, 2012, a California appeals court ruled in Tuolumne Jobs & Small Business Alliance v. Superior Court of Tuolumne County (Wal-Mart and the City of Sonora, Real Parties in Interest) that a city cannot bypass CEQA and approve a project if voters qualify a ballot measure to approve the project.

The Sonora Planning Commission and the Sonora City Council didn’t seem to have objections to Wal-Mart in their town. “The legal battle slowing down Wal-Mart’s expansion frustrates Sonora Mayor Hank Russell,” according to an article in the November 19, 2012 Bay Citizen (Ruling Is Win for Environmental Law, Loss for Wal-Mart):

These people just want to delay a process that should be part of a free market economy. I don’t think it’s the city’s role to decide who can compete.

The League of California Cities and the Howard Jarvis Taxpayers Association’s foundation submitted amicus briefs on behalf of the City of Sonora, which had won approval to bypass CEQA in Tuoloumne County Superior Court.

Meanwhile, the true identity of Tuolumne Jobs & Small Business Alliance does not appear to be public. Another mysterious group called CREED-21 (Citizens for Responsible Equitable Environmental Development) submitted an amicus brief on behalf of the Tuolumne Jobs & Small Business Alliance.

A variety of anonymous organizations purporting to represent local citizens challenge proposed Wal-Mart superstores (Wal-Marts that sell groceries) using CEQA. Some of these groups are reportedly fronts for the United Food and Commercial Workers (UFCW) union, which represents grocery store workers in the older, “legacy” grocery stores in California such as Safeway, Raley’s, Vons, Albertsons, Ralphs, Save Mart, and Stater Bros.

A November 21, 2011 California Watch article (Wal-Mart Ramps Up Ballot Threats to Speed New Stores) reported on the Wal-Mart ballot measure strategy and claimed it “raises questions about whether California’s communities – dogged by economic woes – can afford an aggressive use of the state’s system of direct democracy.”

I guess it would not be “progressive” to ask whether California’s communities – dogged by economic woes – can afford an aggressive misuse of the state’s environmental laws by unions and other leftist organizations that philosophically object to so-called “big box stores.” Has Wal-Mart ever considered releasing a list of the phony front groups and the names of the law firms that object to the Environmental Impact Reports (EIRs) and file CEQA lawsuits?

The law firm representing Tuolumne Jobs & Small Business Alliance is Herum Crabtree, based in Stockton. A web search indicates this firm has also used CEQA to challenge proposed Wal-Marts in the Northern California and Central California cities of Elk Grove, Lodi, Ceres, Tracy, American Canyon, Bakersfield, and Anderson.

Citizens for Responsible Equitable Environmental Development (CREED-21) is represented by the Briggs Law Corporation. A web search indicates this firm has used CEQA to challenge proposed Wal-Marts in the Southern California cities of Tehachapi, Apple Valley, Lake Forest, Victorville, Ontario, San Bernardino, Hesperia, Menifee, Gelndora, Barstow, Rialto, Murrieta, and Vista.

These are not the only law firms prominent in using CEQA to stop Wal-Mart.

A lawyer based in Davis named William D. Kopper has used CEQA to hinder the construction of Wal-Mart superstores. A web search indicates this firm has used CEQA to challenge proposed Wal-Marts in the Northern California cities of Redding, Red Bluff, Oroville, Linda, Yuba City, Galt, Stockton, Ukiah, Santa Rosa, and Gilroy. Kopper also exploits CEQA on behalf of construction trade unions seeking Project Labor Agreements from developers proposing private residential and commercial projects in Northern California.

The law firm of M.R. Wolfe & Associates, based in San Francisco, has used CEQA to challenge Wal-Mart projects. A web search indicates this firm has used CEQA to challenge proposed Wal-Marts in the Northern California and Central California cities of Antioch, Fremont, Hayward, Suisun City, Madera, Porterville, Visalia, Delano, Atascadero, and Rohnert Park.

Mark Wolfe used to work at the law firm of Adams Broadwell Joseph & Cardozo, the CEQA lawyers of choice for California Unions for Reliable Energy (CURE) and individual construction trade unions. I did not find any evidence through a web search that Adams Broadwell Joseph & Cardozo has ever worked for a client who objected to a Wal-Mart on CEQA grounds.

An Overlooked Feature of Bond Measures for School Districts: Fees to Underwriters and Financial Service Firms

Under contract to Fair and Open Competition – Sacramento, I’ve developed a modest web site presenting an argument against Measures Q and R, two proposed bond measures at the Sacramento City Unified School District. It’s not a pretty web site, but it’s packed with information obtained from primary source material – information not available anywhere else. See Vote No on Sacramento’s Measures Q and R.

If voters in the school district approve these ballot measures at the November 6, 2012 election, the school board of Sac City Unified will have authority to borrow up to $414 million for construction by selling bonds to investors. Property holders in the district will pay that back – with interest – through taxes. Current debt for the school district’s two previous bond measures totals $522 million. Basically, these proposed new bond measures will create a billion-dollar debt for this school district.

During my research, I decided to investigate how much the district has paid in fees to underwriters (bond brokers) and other financial service firms that assess fees when bonds are prepared and sold. The total comes to almost $6 million.

Bond Issue Financial Transaction Fees
Official Statement – Sacramento City Unified School District – $50,000,000 – General Obligation Bonds, Election of 1999, Series A 2000 $404,375.42
Official Statement – Sacramento City Unified School District – $52,310,000 – General Obligation Refunding Bonds 2001 $592,524.77
Official Statement – Sacramento City Unified School District – $45,000,000 – General Obligation Bonds, Election of 1999, Series B 2001 $394,463.50
Official Statement – Sacramento City Unified School District – $45,000,000 – General Obligation Bonds, Election of 1999, Series C 2002 $486,543.56
Official Statement – Sacramento City Unified School District – $80,000,000 – General Obligation Bonds, Election of 2002, Series A 2003 $483,000.00
Official Statement – Sacramento City Unified School District – $64,997,966.35 – General Obligation Bonds, Election of 1999, Series D 2004 $615,158.17
Official Statement – Sacramento City Unified School District – $80,000,000.00 – General Obligation Bonds, Election of 2002, Series 2005 $737,700.00
Official Statement – Sacramento City Unified School District – $64,997,966.35 – General Obligation Bonds, Election of 2002, Series 2007 $757,134.42
Official Statement – Sacramento City Unified School District – $79,585,000 – General Obligation Refunding Bonds 2011 $522,897.60
Official Statement – Sacramento City Unified School District – $113,245,000 – General Obligation Refunding Bonds 2012 $849,939.95
Total Fees $5,843,737.39

Supporters of Measures Q and R might defend these fees by pointing out they only comprise 1.4 percent of the total amount of $420 million borrowed under the authority of Measures E (1999) and Measures I (2002), and the fees paid for the sale of the three refunding bond series were offset by the resulting reduced cost of interest payments. Fair enough, but don’t claim in your ballot arguments for Measures Q and R that “Every penny from Measures Q and R will stay in our community” and “ALL of the money raised by these measures will stay in our community.” That’s just not true. Set aside the issue of interest payments to wealthy individuals and institutional investors in New York City and other financial centers – the $5.8 million in transaction fees is proof that some of the money did NOT stay in the community.

I suspect such statements from proponents reflect a lack of understanding of municipal bonds or a cynical recognition that ordinary voters don’t understand municipal bonds.

One thing I did not research was whether or not the underwriters who assessed these fees were donors to the campaigns to pass Measure E (1999) and Measure I (2002). Here is another excerpt from the Vote No on Sacramento’s Measures Q and R web site:


Learn How Bond Brokers, Bond Dealers, Bond Underwriters Spend a Little Money to Make a LOT of Money Selling Bonds for California School Districts.

Not all bond brokers improperly influence school boards. In fact, some have high integrity and are speaking out against the inappropriate conduct of some underwriters in their industry.

But clearly things have gotten out of control since California voters narrowly approved Proposition 39 in November 2000. Borrowed money began gushing into California school districts, and everyone wanted a piece of the action.

In fact, a September 13, 2012 letter to the Municipal Securities Rulemaking Board from the California Association of County Treasurers and Tax Collectors urged the Board to consider a complete prohibition on brokers, dealers, and other municipal finance professionals from making political contributions to campaigns of local governments (such as the Sacramento City Unified School District) to get voter approval to borrow money from investors by selling bonds. The letter identifies the origin of the problem as Proposition 39.

The issue of bond brokers being major donors to campaigns to pass bond measures has not gained much attention, but it should. A specialty publication –The Bond Buyer – and a news service – California Watch – have been the leaders on investigating this obscure but significant scheme. Here are some articles that reveal the problem:

Brokers’ Gifts That Keep Giving – The Bond Buyer – January 13, 2012

When broker-dealers give money to California school bond campaigns, it appears to be money well spent. A review of campaign finance records by The Bond Buyer found a nearly perfect correlation between broker-dealer contributions to California school bond efforts in 2010 and their underwriting subsequent bond sales…

With Campaign Donations, Bond Underwriters Also Secure Contracts –California Watch – May 3, 2012

Leading financial firms over the past five years donated $1.8 million to successful school bond measures in California, and in almost every instance, school district officials hired those same underwriters to sell the bonds for a profit, a California Watch review has found…

Critics Struggle to End ‘Pay to Play’ in School Bonds – California Watch – May 14, 2012

Critics of the practice in which financial firms help pass school bonds that they profit from are continuing to push for reforms, but so far have faced resistance and failure. In California, underwriting companies hired by school districts to sell bonds often make campaign contributions to help convince voters to pass the bond measures…

Some California FAs [Financial Advisors] Use Pay-to-Play Tactics, Critics Say –The Bond Buyer – May 24, 2012

Firms that work as financial advisors helping California school districts issue bonds after serving as campaign consultants on the preceding bond measure have a conflict of interest and are engaged in a form of “pay-to-play,” critics say. Such firms, a small subset of the financial advisor sector in California, walk the school districts through the bond election process, then help the them select and negotiate prices with underwriters and bond counsel for the subsequent sale. In many cases, they are paid both by the political action committee formed to pass the bond measure, which receives contributions from underwriters and the bond counsel, and then by the district…

Underwriters Paying to Pass Bond Issues Face Scrutiny – Business Week – May 24, 2012

Over the past five years, underwriters gave $1.8 million to successful school-bond campaigns in California and got almost all the work selling the approved bonds, California Watch reported earlier this month.

Underwriter Bought Meals For Poway Board – San Diego Union-Tribune – September 1, 2012

The underwriter of Poway Unified’s controversial $105 million bond deal hosted $2,200 in dinners for the school district’s officials in recent years — most of which they accepted and initially failed to report on state-mandated disclosure forms. In March, the officials belatedly disclosed the meals dating back several years, as the District Attorney’s Office prosecution of South Bay school board members for failing to report such meals made the news…

Muni Groups Urge More Action on Bond Ballot Campaigns – The Bond Buyer – September 18, 2012

Municipal analysts and other muni market participants are urging the Municipal Securities Rulemaking Board to strengthen a proposal to tighten bond-ballot campaign contribution reporting requirements for dealers. In comment letters filed in recent days, several participants urged the board to do more to attack corruption and protect the voting public, with some suggesting there should be an outright ban on such contributions rather than disclosure requirements.

California Capital Appreciation Bonds Have Unintended Consequences – The Bond Buyer – September 20, 2012

The recent controversy over the way some California school districts use capital appreciation bonds may reflect the law of unintended consequences…

Feds Urged to Crack Down on Donations to Bond Measures – California Watch – September 21, 2012

Critics of political donations to school bond campaigns from companies that profit from the bonds are urging federal regulators to take bolder steps against what they call a “pay to play” practice.

California’s Voting Rights Act of 2001: A Weapon for Unions

It’s not just the California Environmental Quality Act (CEQA) that construction unions exploit for their own ulterior purposes. The State Building and Construction Trades Council of California (a Sacramento-based umbrella group for construction unions) has apparently found inspiration from an organized campaign to use lawsuits under the California Voting Rights Act of 2001 (Election Code Section 14025 et seq.) to force California local governments to abandon at-large voting and instead adopt districts that are deliberately drawn to increase Latino representation on elected boards.

An article published by www.CaliforniaWatch.org on March 9, 2012 (White-Dominated Boards Face Legal Threats Over Racial Makeup) reports on how the State Building and Construction Trades Council of California was among the plaintiffs who filed a lawsuit against the City of Escondido in December 2011 alleging that the city violates the California Voting Rights Act of 2001 by not having city council districts designed to elect more Latinos to the city council. (Demetrio Gomez v. City of Escondido, Case #37-2011-00060480-CU-CR-NC). Compared to the naïveté or timidity seen in much of the mainstream news coverage of the case, this article is surprisingly blunt about the true motivation for the union involvement in the lawsuit:

But labor unions and other groups also could use the law as a weapon in disputes with cities and school boards. 

The first such case came in December, when the State Building & Construction Trades Council of California sued the city of Escondido, in San Diego County, alleging that at-large elections leave Latinos without fair representation. The union targeted Escondido because officials there have been trying to lower wages on public construction projects.

The brief submitted by the State Building Trades can be found here. Of course, it says nothing about the underlying objective of the lawsuit: dissuading cities from including provisions in their charters that allows those cities to establish their own state-mandated construction wage rates (prevailing wages) for purely municipal construction. A honest perspective about the lawsuit is revealed in excerpts below from the State Building Trades web site:

Members of SBCTC Affiliates Demand Fair Elections by Bob Balgenorth, head of the State Building and Construction Trades Council – January 2012

It’s not surprising that a city council that treats its Latino citizens disdainfully also has plans to worsen the quality of life for all construction workers. As the San Diego Union-Tribune reported in its coverage of the lawsuit, the current council will try to convince voters to make Escondido a charter city, in hopes of lowering construction wages on public works projects – for all workers, Latino and non-Latino alike.

“They want to take away the prevailing wage,” Demetrio Gomez, the lead plaintiff, told the paper. “They want to take away the things that make the average worker’s life worthwhile. We believe that’s wrong. And we believe if we had the ability to elect Latinos we would have better representation.”

(Also, see Members of SBCTC Affiliates Demand Escondido Change to District-Based Elections – State Building and Construction Trades Council of California web site – December 8, 2011.)

In response, the City of Escondido asked the San Diego County Superior Court to dismiss the State Building Trades as a plaintiff because it obviously lacked standing to sue: see here.

A judge ruled on March 16, 2012 (Superior Court Decision – Gomez v. City of Escondido) that the State Building and Construction Trades Council of California did NOT have standing to be a plaintiff in this lawsuit:

In addition, Plaintiff Council does not satisfy the requirements for associational standing because voting rights are not germane to its purpose. The purpose of the Council is to protect the members’ rights with relation to their work and trade in construction. Voting rights are separate and distinct. Registering members to vote and providing voter education does not make members’ voting rights germane to the Council’s purpose.

Surely this is not the last time California unions will be manipulating the California Voting Rights Act of 2001. At the National Federation of Independent Business (NFIB) in California’s “Day at the Capitol” program on April 18, 2012, I asked a panel of three California elections experts if they thought unions and other special interest groups will routinely use the California Voting Rights Act of 2001 as a weapon to achieve their political objectives at local governments. The unequivocal answer was YES.

“Absolutely,” said Paul Mitchell, a political consultant with Redistricting Partners, a firm based in Sacramento. He agreed with me that “that’s exactly what happened” at the City of Escondido and noted that the California Voting Rights Act of 2001 is “a card able to be played.” He expressed surprise that police, firefighters, and other public employee unions in cities such as Stockton had not already used this powerful weapon to win concessions from governments during negotiations for collective bargaining agreements.

Additional Recent News Media Coverage of Union Exploitation of the California Voting Rights Act of 2001:

Judge Bars Union from Voting Rights Lawsuit – San Diego Union-Tribune – March 17, 2011

ESCONDIDO: Judge wants union removed from voting rights suit – North County Times – March 17, 2011

Lawsuit Aims To Elect More Latinos In Escondido – KPBS – April 4, 2012