Grand Jury Finds Cronyism on City Council in Oakland, California

OAKLAND, Calif. (CN) — The Oakland City Council violated open-meeting laws by awarding more than $500 million in contracts to developers for public properties in some of Oakland’s most valuable neighborhoods, according to a grand jury report released Monday.

Council members made crucial decisions about development in Oakland’s trendy Uptown and a rapidly gentrifying portion of its Lake Merritt neighborhood in closed-door meetings that smacked of “backroom dealing,” in violation of the state’s Brown Act and the city’s Sunshine Ordinance, the Alameda County Grand Jury said in its 127-page report.

It also slammed the council’s use of private meetings as a “systemic” problem that extends beyond the three real estate projects it analyzed for its report.

Although the Brown Act requires that most local government meetings be public, the grand jury found that the City Council “seized upon” a real estate exception, “to allow important decisions affecting city-owned property to be made without public participation.”

The real estate exception allows local governments to hold closed-door sessions to discuss price and payment terms with real estate negotiators. However, it “does not permit a City Council to keep its deliberation about the basic nature of a transaction confidential,” the grand jury said. It found that the Oakland City Council abused the exception to discuss proposals and select developers for the projects in more than 45 private meetings.

“The real estate exception to the Brown Act does not give the council free reign,” (sic) the report states. “This conduct precluded participation by the public in determining the best use of city-owned property and the selection of developers.”

City attorney spokesman Andy Katz declined to comment on the grand jury report. The city attorney’s office presided over the private meetings on the three real estate transactions, which occurred between 2014 and 2016, according to the report.

Of particular concern for the grand jury was a finding that council members often privately discuss projects with developers during competitive bidding, potentially driving contracts to favored companies instead of the most qualified ones. Moreover, council members are not required to disclose their discussions, and the city has no rule prohibiting them.

On one project, a high-rise residential and hotel complex that was to be built across the street from the bustling Fox Theater on Telegraph Avenue, the Council not only selected a developer in private, but allowed the developer to make last-minute changes to its proposal that increased costs and get out of submitting financial records: a basic requirement for the job.

The city’s contract with that developer has expired, and the city has not announced what it intends to do with the property, according to the grand jury report.

For a second project, council members approved an unsolicited $200 million proposal for a residential and hotel development at 2100 Telegraph Ave., without soliciting bids from other companies, as required by the municipal code.

The only public meeting the City Council held on a third proposed project, a high-density residential development on East 12th Street, was moved to a private room after members of the public protested the development during public comment. After deliberating in private, the Council directed its staff to award a contract to a developer that the grand jury believes council members had selected at a prior closed-session meeting.

“Operating behind closed doors gives the appearance of favoritism by the city and raises many questions,” the grand jury report states. “Public deliberations are important. The city must follow open-meeting laws to prevent further misuse of closed-session meetings and eliminate the inequities in the developer selection process.”

Councilwoman Lynette Gibson McElhaney, who was council president during most of the negotiations, and Councilmember At Large Rebecca Kaplan did not return requests for comment Monday.

The council must respond to the grand jury’s findings by September.

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