Fishing for Revenues
Is a media fat cat using a connected local firm as bait to acquire lucrative billboard deals from the Oakland port? Also, don't believe cops and firefighters who claim they're too poor to live where they work.
The FBI and a federal grand jury are investigating two lucrative billboard contracts that the Port of Oakland signed with John Foster, a longtime buddy and top donor of state Senate boss Don Perata. Newly released public records also raise questions about whether Foster overstated the amount of money the billboards would generate so he could make a killing at the public's expense.
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The feds are scrutinizing Foster's contracts to put up billboards at Oakland International Airport and on port land near the Bay Bridge toll plaza. The airport deal went down in fall 2003 when the port nearly signed a long-term pact with Foster's company, Foster Media Inc., without putting it out to bid. Port officials defended the plan at the time, saying there was no reason to solicit rival proposals because Foster had approached them — not the other way around.
The plan, however, sparked a protest from one of Foster's competitors, Clear Channel Outdoor. In an angry letter to then-Port Commission President John Protopappas, Clear Channel VP Michael Colbruno alleged the Foster deal was unfair, misleading, and illegal. "Clear Channel Outdoor, and other companies, should be given a sufficient amount of time to review and respond to this proposal," he demanded.
Full Disclosure obtained the Colbruno missive this month among 1,300 pages of port documents, including copies of internal e-mails and deposited checks. The documents were the result of public record requests that also produced an August 31, 2006 subpoena served on the port by a federal grand jury in Oakland. It's the same grand jury that is investigating Perata and several of his friends and family members for public corruption.
After Colbruno's letter made it clear that Clear Channel planned to sue, the port quickly solicited bids from Clear Channel, and also Viacom Outdoor — which became CBS Outdoor after CBS Corp. bought its parent company in 2005. But the port's bidding process had a ridiculously quick turnaround and appeared to be just a sham. Five weeks after the date on Colbruno's letter, the Port Commission approved the same deal with Foster it had wanted to sign earlier.
Port officials were in such a hurry that they apparently never bothered to second-guess his rose-tinted revenue projections. Foster boasted that his airport billboards would produce up to $700,000 a year for the port. Port officials also said they picked Foster because of his creative approach to billboards, and because he represented a small local company. While Foster's billboards are eye-catching, the other assertions were dubious at best. His five airport billboards, in fact, generated only $300,000 for the port last year, less than half of Foster's pumped-up estimate.
If port officials had done their homework, they would have known better. Or perhaps they didn't want to. Prior to the deal, Foster's only claim to fame was his relationship with Perata and the controversial billboard deal he'd previously inked at the Oakland Coliseum. Foster has been friends with Perata since the 1970s — he was a student of the Don's back when Perata taught high school in Alameda, and then became a frequent Sunday dinner guest at the Perata family table.
As Foster's business raked in the cash, he became one of the senator's best campaign donors. Since 2000, Foster has cut checks totaling at least $139,000 to Perata and political committees associated with him — including $25,000 to the senator's legal defense fund. Perata, meanwhile, did his part by twice carrying state legislation that paved the way for the row of giant billboards Foster built in the Oakland Coliseum parking lot.
That Coliseum no-bid deal was based on similarly bogus revenue projections. Back in 2002, Perata dubbed the unpopular proposed billboards "manna from heaven" and claimed they would generate up to $60 million over twenty years for the debt-strapped Coliseum Authority. But according to a report last year by Authority Executive Director Ann Haley, actual revenues have been about one-third of Perata's estimate — netting only about $1 million a year for the agency.
Foster, meanwhile, has been pocketing thick wads of cash. In early 2004 he sold the Coliseum billboards to Viacom Outdoor for a reported $20 million. Two months ago he did the same thing at the airport, selling his billboards there to Viacom/CBS Outdoor. "He uses his political connections to get the deals, builds the billboards, and then flips them to CBS Outdoor," explained a source familiar with the situation.
So has John Foster been a front man for Viacom/CBS all this time? Has he been getting sweetheart deals based on inflated revenue projections, his Perata friendship, and his "small company" status just so he can then make a fortune selling to a media fat cat later?
The port's chief spokesman, Harold Jones, promised last week that the agency would answer those questions, but he never called back. Foster and CBS Outdoor veep Patrick Roche aren't talking either; neither returned phone calls seeking comment.
There's no dispute that Foster Media and CBS Outdoor are collaborators. In 2005, the port agreed to a joint proposal by the two companies to build a new giant billboard at the foot of the Bay Bridge. Then-Mayor Jerry Brown backed the deal because it promised to share revenues with his arts charter school. Public records show the FBI and the grand jury are investigating that contract as well.
But what will they find? Probably that Foster has become rich while the port, by neglecting due diligence, has managed to erect a series of new billboards in a region where billboards are widely despised. Yet there was no evidence in the port documents that the public agency broke any laws, nor any indication that Perata was directly involved.
The documents, however, do show that port officials had a reason not to piss off the state's most powerful legislator. At the same time the billboard deals were going down, the port was depending on Perata to carry two pieces of legislation on its behalf. The first had to do with the port's desires at the former Oakland Army Base. And the second? It's a bill that would give the port the privilege of selling sixty-plus acres of waterfront land to one of Perata's other top campaign donors.
Bitchy Rich
Cops and firefighters love to whine about not making enough money to live in the pricey East Bay. At least that's the excuse they give when they buy homes in Tracy or Manteca, then tell their employers they may not be able to make it here during a major crisis. But our analysis of Berkeley and Oakland payroll records reveals those claims to be hot air. Cops and firefighters are in fact the highest-paid public employees across the board, and if they can't afford to live where they work, then no one can.
Last year, for example, Berkeley paid 307 employees more than $100,000, and 238 of them — more than three-quarters — were police and firefighters. Things are even more lopsided in Oakland. In fiscal 2005-06, there were 1,159 Oakland employees who took home more than 100 grand, of which 943 (81 percent) were cops and firefighters.
Oakland even had 43 employees who pocketed more than $200,000 (Berkeley had three), of whom 38 worked for police and fire departments. Oakland's top earner, by the way, was Fire Captain Michael Fahey, who took home $272,588. Fahey made about $90,000 more than his boss, Fire Chief Daniel Farrell, because he pocketed $154,997 in bonuses and overtime.
But last year's sweepstakes winner has to be Lieutenant Edward McBride, a veteran Berkeley cop, who pocketed $274,723, making him one of the East Bay's highest paid public employees for the year. McBride also took home $90,000 more than his boss, Police Chief Douglas Hambleton, whose salary was $183,603, and nearly 80 grand more than his boss' boss, City Manager Philip Kamlarz, whose $196,091 salary was supposed to be the city's highest.
So how did McBride pull this off? He retired and cashed out all of his sick pay, explained Robert Kraus, a city HR analyst. You see, the Berkeley po-po have an out-of-this-world sick-pay policy. B-town cops get to roll over sick pay throughout their careers. Under their union contract, an officer can amass up to 3,100 hours of sick time, which works out to 387.5 sick days. And you thought you had it good when your employer gave you ten?
Berkeley police also get to roll over up to 320 hours of vacation, or eight weeks. That, plus the sick time, plus $23,173 in overtime, allowed McBride to essentially double his regular pay last year.
Mayor Tom Bates, are you listening? Maybe you should rethink your decision to forsake a salary. Or maybe local mayors should order cops and firefighters to live in town, so the rest of us won't be stranded when the Hayward Fault rips apart.
Editor's Note: Comments are not edited or fact-checked by the East Bay Express.
I wanted to apologize for posting twice about the Jack London marina. I did not realize my previous comment had been accepted. The software does not make that clear. And I want to comment on the poster who said, "Want some cheese with your whine?". First off, we hear the cops and firefighters complain, over and over, about being underpaid, when all of them make a good living, and those with rank make frankly big bucks. In fact, so big that the unions fought very hard to prevent the CC Times from getting a list of the highest paid people in Alameda County, because it included so many cops making over $100K. So, if you want to talk about whining, how about looking at those groups, which, once again I say, seem to feel the need to keep the public in the dark. If you don't think anyone will ojbect to your high pay, why do you have to keep it secret. As for "typical grade school media", the fact is, the East Bay Express has consistently been one of the best papers for exposing government corruption, which, if you look at the Bill of Rights and the history of the First Amendment, was the special place protected for the press by the people who started the country. The other local papers are consistently weaker in this regard, except maybe CC Times and SJ Merc, but they are not based in the near East Bay. Martier and Ross in the Chron do some of this stuff, but they have the whole North Bay to cover, and the Express does more on our area. Your complaint has no factual basis, it's just whining. I don't want to dis the police or the firefighters, but you guys have really had years where you are untouchable, it's gone way too far, and it's time for the citizens to take back control.
Comment by Steve White - February 22, 2007 @ 09:06 AM
Great Kudos to Robert Gammon for this story. The Port of Oakland is ripe for raiding by the politically connected, because they have so much valuable land, and so little oversight. A few years back, the recreational boat marina was leased out. I talked to the new managers in their office, and they told me it was for 50 years. They immediately raised the rates radically, though they were not far out of line with other marinas before. The boat owneres were angry of course at the new high rates, but taxpayers should be angry too. If the market could bear the higher rates, the Port should have raised them itself, and kept the profits which went to the private company for the taxpayers. Additionally, a 50 year lease is not uncommon in commercial real estate, but it's nearly always tied to substantial capirtal improvements. For example, say the Port owned the land, (and water) where the marina is, but nothing had been built. Giving a private company a 50 year lease so they would build a marina and keep all the profits would not be at all unreasonable, as long as the rent was high enough. But giving over a completely finished facility, a going profitable business, for 50 years, to someone who is clearly going to instantly profit with higher rates, is basically just giving away money the taxpayers should have had. It's really unheard of in private business. No properly operated company would ever make such a deal. I hope Mr. Gammon can check into that at some point. Again, great kudos and thanks to him for this story.
Comment by Steve White - February 22, 2007 @ 08:53 AM
Would you like some cheese with your whine? Quit your typical grade school media whining and toss in your application to the police or fire departments. Get a real job which needs doing instead of sitting on the sidelines and snivelling.
Comment by Anonymous - February 21, 2007 @ 02:18 PM
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