Official had conflict, probe finds

SFPUC president quit after vote on $1.25 million in deals

The former president of the San Francisco Public Utilities Commission improperly voted to award two contracts worth a combined $1.25 million that benefited labor organizations with which he was affiliated, a city investigation has found.

Vince Courtney Jr. resigned from the commission in February, ostensibly to pursue his work as a political fundraiser for Progress San Francisco, a prominent independent expenditure committee that donates to business-friendly causes and candidates.

But it’s his role as a paid political captain for Laborers’ Local 261, a construction trades union, that created a conflict of interest with his job as a commissioner, according to documents reviewed by The Chronicle and interviews with three people familiar with the city attorney’s investigation.

The episode involves the transfer of a large amount of public money to programs controlled by local and regional labor organizations with political ties. The contracts have since been canceled.

In both instances, Courtney voted on contracts as a commissioner that sent money to Local 261 or affiliate labor organizations, which could violate state and local conflictof-interest laws. It is unclear whether he could face any consequences. Documents obtained by The Chronicle show that the city attorney’s Public Integrity Unit was conducting an “investigation of possible violations of

law including, but not limited to,” three separate state and local government conduct codes.

While the city attorney’s office does not comment on investigations, people familiar with the investigation confirmed that it focused on Courtney.

In one document dated March 14, Keslie Stewart, head of the Public Integrity Unit, wrote that the city attorney’s office concluded that one contract was worth $900,000. The five-year contract, which commenced in 2014, was made “in violation of state and local conflict-ofinterest laws.” State law voids contracts made under those conditions. Courtney, who was first appointed to the commission by thenMayor Gavin Newsom in 2010 and reappointed twice by Mayor Ed Lee, did not respond to numerous requests for comment. Documents show the investigation dates to at least October 2017. Courtney sent his letter of resignation Jan. 23, 2019, but didn’t step away from the commission until February. Mayor London Breed has yet to name a replacement.

Both contracts awarded agency funds to organizations that provide job training, mostly in the construction and building trades. The agency funds a variety of workforce development programs as part of its goal to increase training and employment opportunities. Many of the workers in the entry-level programs go on to become union members employed on utilities commission projects.

“We think these programs are great. They help the community, the contractors and the union,” commission General Manager Harlan Kelly said. “The problem is, (Courtney) voted on it, which posed a potential conflict.”

In one contract, the commission granted $900,000 to the Laborers’ Training and Retraining Trust Fund. The money was to provide entrylevel skills training to economically disadvantaged people.

Before the vote to award the money in 2012, Courtney told the commission the trust fund was “separate and apart” from the labor organizations he was affiliated with.

“It’s important for us to make sure that there’s complete transparency with respect to my relationship with the entity. Of course, you know, they’re all our brothers, right? We’re all a family,” Courtney said at the commission meeting.

On Feb. 8, Kelly sent a letter to the trust fund’s executive director, Leonard Gonzales, canceling the contract. Nearly $776,000 had already been spent by the time the agency canceled the deal, after being alerted to the conflict as part of the investigation. The agency didn’t disburse the rest of the contract money.

The trust fund was created by the Northern California District Council of Laborers, an organization that brokers collective bargaining agreements between employers and labor unions in 46 counties. The fund collects money from employers for worker training and retraining programs.

The trust fund, the Council of Laborers and Local 261 have several important players in common.

The council’s chairman, Oscar De La Torre, is also a trustee for the trust fund, as is Ramon Hernandez, the business manager at Local 261. Neither responded to requests for comment.

And, in addition to his work with Local 261, Courtney’s financial disclosure forms from his time as a commissioner show he was also working for the Council of Laborers as a “special assistant to the business manager,” a job he was paid a salary of from $10,000 to $100,000 annually. His Local 261 political captain salary is more than $100,000, the disclosure forms show.

His financial disclosure forms from 2012 show he was working for the council at the time he voted for the contract.

And the conflicts don’t end there.

One part of the agency contract with the trust fund earmarked $200,000 for the Gleneagles Training Academy, a program at the Gleneagles Golf Course at McLaren Park that teaches skills such as gardening and grounds maintenance to low-skilled workers.

The Gleneagles academy’s curriculum is administered by yet another organization, the Laborers’ Community Service and Training Foundation, a tax-exempt organization directly affiliated with Local 261.

In addition to sharing the same address on 18th Street in San Francisco and the same phone number, the organization registered itself with the IRS as Laborers’ Local 261 Community Service and Training Foundation.

The foundation’s principal officer is Gonzales, according to its most recent IRS filing from 2016. Gonzales is also executive director of the Laborers’ Training Center, a part of the Laborers’ Training and Retraining Trust Fund, which received the grant money. Gonzales did not respond to multiple requests for comment. Hernandez, who serves as a trust fund trustee and business manager of Local 261, is listed as a chairman of the foundation, as is De La Torre, chairman of the Northern California District Council of Laborers and a trust fund trustee.

The intertwined relationships among the organizations mean that, by voting to send money to the Gleneagles training center, Courtney again was using his authority to enrich organizations he works for, which is prohibited by state and local laws.

The second, separate contract was smaller and the conflicts of interest it presented were uncovered more quickly. In March 2018, the commission awarded a two-year, $350,000 grant to Hunters Point Family, an organization that supports at-risk youth and adults. Hunters Point Family would have used the money for landscaping and urban agriculture training programs at the Gleneagles training facility.

But the contract would have funneled $20,000 of agency money to pay Local 261 dues for trainees who went on to become union members.

The contract also specified that one measure of success for Hunters Point Family would be the “number of program graduates enrolling in Local 261.” Kelly canceled the contract on March 8 in a letter to Hunters Point Family Executive Director Lena Miller saying that “it has come to our attention that the award of this grant to HPF was made in violation of conflict of interest laws.”

Less than $40,000 had been sent to Hunters Point Family, and none of it had been used to pay union dues, the agency said.

Kelly said the agency plans to take steps to ensure such problems don’t arise in the future.

“We will send commissioners to additional trainings and refresher courses, make city attorney ethics staff available and advise commissioners to err on the side of asking questions versus risking conflicts,” he said.

The agency also plans to reissue a request for contract bids, which would give Hunters Point Family another opportunity to apply for the grant money. But mending fences with with the laborers’ trust fund might not be so easy.

Gonzales, executive director of the trust fund, sent a letter to Kelly on March 11 responding to the decision to cancel that contract.

In it, he said the organization was confused by the agency’s decision to cancel the contract, and “respectfully and vehemently” disagreed with the city attorney’s conclusion that the organization had violated state law. Saying the utilities commission had acted in “bad faith,” Gonzales torpedoed their relationship, saying the trust fund would “no longer collaborate and partner with any entity that is receiving resources via the SFPUC.”

That could be problematic for the agency, which has long relied on the trust fund’s workforce programs to train people to work on its projects. The agency is getting ready to embark on major sewer system improvements and said it hopes to have reconciled with the trust fund by then.

On March 11, Stewart, who leads the city attorney’s Public Integrity Unit, wrote to the trust fund’s attorney, Conchita Lozano-Batista, questioning the trust fund’s incredulity over the canceled contract. Stewart said Lozano-Batista had been warned that the contract would be canceled in a phone call.

“In that conversation, you did not contest the grant termination,” she said. Lozano-Batista did not respond to requests for comment.

“This illustrates how little attention is paid to issues like conflicts of interest in a city government like San Francisco’s, where we rely on city commissioners to set policy and vote on contracts,” said Larry Bush, who helped created the city’s Ethics Commission. “There’s too many moving parts for someone to keep their eye on all of them.”

Dominic Fracassa is a San Francisco Chronicle staff writer. Email: dfracassa@sfchronicle.com Twitter: @dominicfracassa