Effort to divert Oakland funds to job program raises concerns
An Oakland city councilwoman wants to divert millions in public funds from voter-approved projects like street repairs and park improvements and give them to a community organization in her district.
The proposal, which a legal expert cautioned could constitute an improper giveaway of taxpayer dollars, already has the backing of two other City Council members, one of whom said he hasn’t read it yet.
The legislation by Councilwoman Desley Brooks was scheduled to be heard by a council committee Tuesday, even though it lacked a required report from the bill’s author that must accompany new measures. But last week, after
The Chronicle began asking questions about the draft ordinance, top city officials abruptly pulled it from the agenda. It’s unclear when the legislation will be heard next.
If enacted, the ordinance would give 5 percent of the cost of each capital improvement project to a fund for job-training organizations. Three-quarters of the money would go to one group, the Cypress Mandela Training Center, a nonprofit that has operated at a deficit in recent years, according to its tax-exempt filings.
The organization, located near the Coliseum in East Oakland, offers a 16-week program designed to teach people basic skills to help them get jobs in construction, carpentry, painting, plumbing and other trades. It was once part of a politically influential nonprofit that has received millions of dollars in public funds over the years and could also potentially benefit from Brooks’ proposal.
The revenue sources from which the money would be siphoned are vast: the general fund, the gas tax, an infrastructure and housing affordability bond, a waterfront projects bond, an Alameda County transportation sales tax and off-street parking projects.
The current two-year city budget has about $120 million for capital improvement projects. That fund is supposed to pay for repaving roads, renovating libraries and fire stations, creating new bike lanes, building disability ramps, replacing sidewalks and similar projects.
The proposal from Brooks would take $6 million of that money and divvy it up among “citywide job centers” and the Cypress Mandela organization — in perpetuity. The push to pass the ordinance comes months after an exhaustive biennial budgeting process that involved more than a dozen public meetings.
Mark Morodomi, a former supervising deputy city attorney for Oakland, said the draft ordinance raises serious questions about whether it constitutes a gift of public funds, which is illegal in California. City grants, on the other hand, typically include an application process for specific projects. Morodomi noted that Brooks’ proposal does not specify any conditions for the organizations or what they are supposed to provide in return for the funding.
“The government can’t just give money away. The money has to have a public purpose to it,” said Morodomi, who reviewed the proposal at The Chronicle’s request. “I’m not saying they can’t receive funds, but they have to receive funds for a proper public purpose.”
The proposal is awaiting a full review by city attorneys. Moving it forward without their legal analysis would be concerning, Morodomi said. If the legislation is approved, he said, city taxpayers could sue to have it struck down on the grounds that it is a gift of public funds.
“I have nothing against the Cypress Mandela program,” he said. “If this ordinance had been giving the money to Mother Teresa, I’d raise the same legal issues.”
Brooks did not respond to requests for comment. But during a November meeting at which a City Council committee agreed to move the proposal forward, she said the need to improve job training is urgent.
“We need to — with the money that we control — be able to control what happens in our community,” Brooks said. “We have a lot of money that’s getting ready to come online. We have an opportunity to make sure that our residents get the jobs that they rightfully deserve. This is a part of their money.”
Brooks added that she would submit the proposal to the city attorney’s office for review but said it should be legal, given that she based it on a longstanding ordinance that gives 1.5 percent of capital improvement projects to fund public art.
“There should be no problem with the draft that we submit,” she told her fellow council members on the Rules and Legislation Committee.
But there are some problems. In one section, for instance, describing how the funds will be distributed, the proposal states: “It is intended that funds in the Cypress Mandela Training Program & Citywide Job Centers Project Account will be distributed quarterly to Cypress Mandela Training Program and Citywide Job Centers pursuant to Section 3(B) above.” There is no Section 3(B).
Before substantial resolutions or ordinances can be placed in an agenda packet, the sponsor — Brooks, in this case — is supposed to file a memo or report explaining the item. She has yet to do so for this bill, according to the public file for the legislation.
Despite issues with the proposal, City Council President Larry Reid and Councilwoman Rebecca Kaplan have signed on as co-sponsors.
Reid said Thursday that he hadn’t had a chance to read the text. But he said it is crucial that the city financially support Cypress Mandela, which he said is struggling.
Asked whether he was concerned the money would come from a fund meant for capital improvements, Reid said: “No, I don’t have concerns. Look, these are young adults, young kids of color, and we’re losing too many of them to the senseless violence that’s taking them away from us. … It’s not that big of a deal.”
On Thursday, after The Chronicle began questioning city officials about the proposal, Reid said the city administrator’s office asked him — and he agreed — to pull the item from this week’s agenda for another council committee.
Kaplan also defended the draft ordinance. She said it would be a proper use of public funds because training construction workers is directly related to getting capital improvement projects done.
“We have a lot of growing development and construction projects going up, and folks are having trouble finding people to hire,” Kaplan said. “There aren’t enough people being prepared. We have an opportunity here to create a real winwin for our community.”
Asked whether millions of dollars should be permanently budgeted for a non-city organization, Kaplan said: “I think it probably won’t come out to be quite that much.”
Art Shanks, CEO and executive director of Cypress Mandela, said San Francisco gives financial support to a similar program called CityBuild, and Oakland should likewise fund his nonprofit.
CityBuild, however, is a city program run by San Francisco’s Office of Economic and Workforce Development.
“The city of Oakland should administer some support to the organization. How the city does that is up to them,” Shanks said. “I see it as we’re doing a public service, and we should be supported for that. This funding will save lives and will give kids who’ve never had an opportunity the chance to do something positive.”
Cypress Mandela has developed important political connections over its 25-year history. Its office was where Gov. Jerry Brown chose to sign into law a minimum wage bill in 2013. It has been praised on social media by Rep. Barbara Lee, D-Oakland. Rep. Eric Swalwell of Dublin and Assemblyman Rob Bonta of Oakland, both Democrats, participated in a “labor vs. legislators” soccer match whose proceeds went to the organization.
Until 2003, it was part of the Oakland Private Industry Council — a nonprofit job training organization that relies heavily on public funds and has blamed the city for its past financial troubles.
That group, it appears, would qualify as one of the Brooks proposal’s “citywide job centers,” which collectively would be eligible for 25 percent of the public money. Brooks defines such centers as those that “provide accessible, highquality training and employment services to local residents and employers.” That language is a word-for-word copy of the Oakland Private Industry Council’s mission statement.
Because Brooks did not return calls, it remains unclear why the language is identical and whether the Oakland Private Industry Council is an intended beneficiary. It also remains unclear how many organizations in Oakland would qualify as citywide job centers.
Gay Plair Cobb, CEO of the group, said she is aware of the ordinance but does not know the specifics. If it passes, she said, her organization would definitely consider applying for the funds.
“It makes complete sense for the city to establish a regular funding mechanism for investing in the job preparation and training of its workforce, particularly since the ‘improved’ job numbers definitely do not affect everyone equally — especially those who are low-skilled or who lack sufficient training to be successful in a competitive labor market,” she said in an email.
Cypress Mandela has funding problems of its own. In 2016, it was running an operating deficit of about $200,000 and had just $400,000 in remaining assets, according to its Form 990 filed with the IRS. Salaries were the main expense.
Shanks said he and his staff have tried to solicit funds from foundations and private donors, but that charitable giving isn’t what it used to be. He said grants from the federal government have dried up.
The organization became independent from the Oakland Private Industry Council to be in a better position to raise money, Shanks said. He said the two groups have the same relationship they did before their division.
The roughly 60 students who participate in the 16-week program, held three times per year, come out of it with eight certifications in subjects including first aid, asbestos and hazardous waste, Shanks said. They get credits from Laney College, life-skills training, access to drug rehabilitation programs and near-guaranteed placement in AC Transit, BART, Pacific Gas and Electric Co. or other partner agencies. Those who enroll often come from low-income households or were incarcerated at some point.
Travis Watts, 41, said going through the program two decades ago changed his life.
“I was working at Home Depot and had my side hustles. No motivation, no direction,” he said. “I think about what Cypress did. It instantly gave me a means of providing for myself.”
After finishing the program, he rose through the ranks as a member of a carpenters union, becoming a journeyman, foreman and superintendent. Now he’s an instructor for the nonprofit organization.
Another alumnus, David Bahl, 61, said he was homeless and an alcoholic before joining the program. He graduated as the No. 2 student 12 years ago, got a job in a painters union, and now works as a foreman.
“Cypress Mandela is one of several youth job training programs that does important work in Oakland,” said Justin Berton, spokesman for Mayor Libby Schaaf. “We’re waiting to hear the city attorney’s analysis on whether the use of funds in this proposal is consistent with what voters approved. Any proposal needs transparency and accountability.”
A host of city officials and commissioners said they did not know the draft ordinance existed when The Chronicle asked for their comments. The chairman of the civilian Budget Advisory Commission, Ed Gerber, said it was news to him.
“I have no idea if this proposal would deliver the promises of the ballot measure,” he said, referring to the infrastructure and housing bond from which much of the money would come. “It really requires a lot of analysis.
“It ought to be looked at in the context of an amendment to the budget,” he added. “That’s not the process that’s being proposed here.”