January 15 SB City Council Agenda Studded With Signs Of Valdivia Graft Entanglements

A heavily-laden agenda considered by the San Bernardino City Council this week after that body had not met in a regular session for almost a month contained four items that involved issues relating to past or current questionable activity on Mayor John Valdivia’s part, including quid pro quos which have caught the attention of federal and local investigators who are now angling to determine if Valdivia has been provided with bribes or kickbacks intended to influence city policies.
The council last met on December 18. Its previously scheduled January 2 meeting was canceled. As a consequence, the council was confronted on Wednesday night with 34 action items in its open session commencing at 7 p.m and during its closed session that was not open to the public during which it conferred with senior staff and the city attorney with regard to 16 current or potential lawsuits against the city.
Among the action items on the agenda was one, designated as number 6, which authorized the city to issue a 10-day notice of termination to the firm the city employs to lobby federal legislators and President Donald Trump’s administration in Washington, D.C.; another designated number 11, which called for raising the police chief’s pre-benefit pay by $23,160 per year from $255,960 to $279,120 and raising the assistant chief of police’s pay by $20,640 per year from $234,264 annually to $254,904 before benefits; another, designated as number 12 amending a company’s commercial cannabis permit to provide a change of location;  and a fourth, designated number 31, which provided for the city settling, with a payout of more than $600,000, a long ongoing dispute with the city’s franchised trash hauler over what city officials maintain has been a failure of the trash hauler to perform in accordance with the specification in the franchise contract.
Each of those action items has an implication to suggest that Valdivia was, or is, on the take.
The Sentinel learned more than a year ago that Valdivia is being scrutinized by both the FBI and the San Bernardino County District Attorney’s Office’s Public Integrity Unit for his solicitation of money from individuals or companies doing business with the city or what has been described as his willingness to take money provided to him from such sources and then utilize his public position to influence the City of San Berrnardino’s official action or policy that has a direct impact on those individuals or companies in terms of their functionality within the city and potential profitability. Reports are that the money provided to Valdivia in some but not all cases comes in the form of political donations made to his campaign war chest. In other cases, the money provided to Valdivia has not been reported as a campaign contribution. Under California law, it is not illegal for an elected official to receive campaign contributions from entities impacted by that politician’s votes, as long as the money provided was not done so with an implicit or explicit understanding that the money was provided to influence the elected leader’s decision or decisions in favor of the donor. There are multiple demonstrable instances of Valdivia as a councilman prior to his election as mayor having cast votes that were favorable to his campaign supporters. In California, officeholders are required to file reports of the contributions they receive from political supporters in documents known as California Form 460s.  The law does provide California politicians with the opportunity to report non-political contribution payments provided to them from any source in what are called statements of economic interest, known as California Form 700s. While an elected official can vote on an issue pertaining to an individual, company or entity that appears as a donor in that politician’s Form 460s, an elected official is generally prohibited from voting on or participating in the decision-making process with regard to any matter impacting or affecting a source of income listed in that politician’s Form 700s. For an elected official to omit from his or her Form 700s a source of income is a felony.
Valdivia, the Sentinel is reliably informed, had sought to bypass the need for the city council voting on item number 6 on this week’s agenda, which called for the city notifying Washington, D.C.-based Federal Advocates that it is going to cancel the contract the city council voted to enter into with that company, owned by Mike Esposito, on October 2, 2019. Valdivia wanted City Manager Teri Ledoux to use her administrative authority to simply cancel the contract. She, however, refused to do so, as the contract had been put in place by a binding council vote. Prior to October 2, senior city staff, including Ledoux, had evaluated the city’s options for hiring lobbyists to seek assistance from California and federal officials in Sacramento and in the nation’s capital. Esposito’s Federal Advocates was one of four lobbying firms that indicated an interest in doing the work. The staff evaluation ranked Federal Advocates, which had the most expensive proposal to carry out the federal lobbying assignment at $120,000 per year, behind two of the three other applicants for the post, and recommended that the city hire Townsend Public Affairs to represent it in Washington, D.C. Valdivia, however, told the council he had spoken directly with Esposito, who agreed to have his company carry out advocacy on behalf of the city for the reduced cost of  $100,000 annually. This convinced Valdivia’s allies on the council – Bessine Richards, Henry Nickel, Juan Figueroa and Ted Sanchez – to ink the contract with Federal Advocates in lieu of Townsend Public Affairs. In the months since, it has been revealed publicly that the FBI is investigating Esposito, a reality that was given particular emphasis when Esposito’s home and the offices of Federal Advocates were searched pursuant to a federal search warrant on January 2. For that reason, Valdivia wanted Ledoux to quietly end the city’s relationship with Federal Advocates, given the commonality of the FBI’s interest in Esposito and him, a circumstance and coincidence Valdivia would prefer the public did not take note of. Without much ado, the council on Wednesday voted to give Federal Advocates the requisite 10-day notice to terminate the contract. There was, nevertheless, some grumbling from city staff about the way in which Valdivia in October violated the city’s purchasing protocol to award the contract to the third-ranked vendor over the first-ranked vendor at twice the price, and how neither the city manager nor city attorney spoke up at the time about what was at least an inappropriate and possibly illegal negotiation for a city contract after the deadline for receiving proposals closed and bids were received. “All bidders should have had the same chance to renegotiate,” one city employee told the Sentinel. “The city manager or the city attorney should have recommended rejecting all proposals and starting the process over. The very reason purchasing protocols are in place is to prevent what happened.”
After acting Police Chief Eric McBride was given an automatic annual 3.5 percent raise in August that took his annual salary to $255,963.80, Ledoux subsequently brought forth a proposal to confer on McBride and acting Assistant Police Chief David Green further raises. On November 6, that initiative had been solidified to add another $23,160 to McBride’s $255,960 pay before benefits, zooming his salary to $279,120 per year, and to increase Green’s $234,264 annual salary before benefits by $20,640 to $254,904, and was brought before the city council for a vote. With the council majority reasoning that the city’s financial circumstance did not permit the city to be making such payroll increase commitments, the motion to give McBride and Green those raises failed, 2-to-4, with councilmembers Fred Shorett, Jim Mulvihill, Sandra Ibarra and Juan Figueroa in opposition and councilmen Ted Sanchez and Henry Nickel in support. This week, however, the item was revived as item 11 on the agenda and again brought before the city council.  In it, the identical increases of $23,160 to McBride’s $255,960 salary to bring it to $279,120 per year before benefits and to increase Green’s $234,264 annual salary before benefits by $20,640 to $254,904 were proposed.
Green was the member of the department whom then-Councilman and Mayor-Elect John Valdivia, just eight days after his victory over incumbent Mayor Carey Davis, had contacted on November 14, 2018 when he involved himself in what was a messy legal situation that was rife with political hazard. Valdivia called to report that he had been on the premises of what the city has charged is an illicit marijuana dispensary located at 1435 North Waterman Avenue roughly an hour-and-a-half to two hours prior to an unidentified gunman coming into the business and shooting an employee in the leg before making off with $19,600 in cash. Valdivia used his status as a councilman and the soon-to-be mayor to arrange for Green to handle the investigation into the matter. For the official record that went into the police report, Valdivia said he had been there to “meet-and-greet” the owner of the building and then go over “business investment and other opportunities” with him. Over the previous nine months, the dispensary at 1435 North Waterman had been the site of three police department raids, out of which two felony charges against the operators had been issued by the district attorney’s office. In his statement to Green, Valdivia insisted that he was in no way involved in the robbery that took place after his departure from the scene. A report on the matter was sent to the district attorney’s office, which has not charged Valdivia with any crime.
The increase to the police chief’s salary and assistant police chief’s salary was opposed by councilmen Mulvihill and Fred Shorett, Valdivia’s major rivals on the council. Councilmembers Sanchez, Ibarra, Figueroa, Nickel and Richard approved the item.
Wednesday night the city council was scheduled to consider a request by a company Nibble This, LLC, which is owned by Kater Bilow and Raquel Origel, to relocate a business permit for a so-called micro business offering marijuana-related products from the address at which the company was granted a permit to operate last year, 4130 West Hallmark Parkway in San Bernardino, to another location at 390 North H Street in San Bernardino.
After years of resisting the concept of permitting medical marijuana-related operations to set up shop in San Bernardino, city officials, after the success of local initiatives calling for the permitting of marijuana dispensaries and the statewide passage of Proposition 64 and the Adult Use of Marijuana Act in 2016, relented, seeking to establish a regime under which marijuana and cannabis product cultivators, processors, manufacturers, wholesalers and retailers can do business. After a tortuous application process, Mayor Valdivia and the city council on February 21, 2019, awarded 16 commercial cannabis business permits covering several different license types. Nibble This, LLC was awarded a commercial cannabis business permit for a cannabis microbusiness to be located at 4130 West Hallmark Parkway. A cannabis microbusiness is considered to be a plum commercial permit in that it allows the licensee to cultivate up to 10,000 square feet of marijuana plants, manufacture and distribute refined marijuana products, and act as a retailer.
To obtain a commercial cannabis license in San Bernardino, the operator is required to, among other things, demonstrate that it has secured the property where the business is to be located, either through ownership outright by title or through a lease.
On November 7, 2019, Nibble This submitted a request for a zoning verification letter for an alternate location at 390 N. H Street. On November 18, 2019, Nibble This was issued an approved zoning verification letter for 390 N. H Street. On November 19, 2019, Nibble This submitted a commercial cannabis business application, 19-0002, seeking a change in location from 4130 West Hallmark Parkway to 390 North H Street. In the process it was revealed that Nibble This had never secured or otherwise had possession of or the right to occupy the property at 4130 West Hallmark Parkway. This brought into question how it was that Nibble This had obtained the cannabis microbusiness permit it has in the first place. Since before the awarding of the 16 commercial cannabis business permits on February 21, 2019, there have been questions about the fashion in which the city conducted the application and selection process for the businesses eventually selected to achieve licensing. Charges of favoritism have permeated the process. Since last year, without any explanation of why, Valdivia has surrendered his gavel and duties as the council’s presiding officer whenever issues pertaining to the city’s commercial cannabis permitting process have come before the council, sparking widespread speculation that he has an undisclosed financial interest in one or more of the cannabis-related business operations in the city, and that behind the scenes he has been involved in what many consider to be the favorable treatment accorded to some of those business applicants and the resistance that their competitors or would-be competitors have experienced in their efforts to achieve licensing in San Bernardino.
The request by Nibble This was not heard on Wednesday, after it was pulled administratively until February 5.
On Wednesday, the council took up item number 31, pertaining to reaching a “settlement” with Burrtec, the city’s franchised trash hauler, over the dispute the city has with the company relating to recurrent resident complaints that the company is not abiding by the terms of its franchise contract.
The consent calendar is reserved for what are deemed noncontroversial items. In recent weeks and months, Valdivia has been pressuring the city to reach an accord with Burrtec. Burrtec, through its ownership, is one of Valdivia’s major campaign contributors. Until 2016, the City of San Bernardino had its own sanitation department, which was responsible for trash hauling in the city. In 2015, after declaring its intention to dissolve its sanitation division, the city conducted a competition to settle on a franchise refuse hauler. That competition narrowed itself to Burrtec and Athens Industries. While an independent analysis of the proposals made by both companies indicated that the city and its residents as well as the city’s sanitation workers who would continue to function as employees with whatever franchisee was chosen would see more favorable terms if Athens were granted the franchise, the city council majority ultimately sided with Burrtec. It was reported at the time that Valdivia had approached both companies during the franchise contract evaluation period, and had requested $10,000 from each. Athens executives stated that the company had informed Valdivia the company could not comply with his request, and certainly could not provide him with money in any form while the competition for the franchise was yet ongoing. Ultimately, Valdivia advocated on behalf of Burrtec.
The staff report for item 31, sent to the city council by Ledoux and authored by acting Public Works Director Alex Qishta, states, “A series of disputes have arisen between the city and Burrtec related to performance by the parties of their respective obligations under the franchise agreement and under related undertakings. In April 2019, the city contended that Burrtec failed to perform its obligations related to sweeping city park parking lots in accordance with Section 11.8.4 of the franchise agreement and assessed monetary penalties against Burrtec totaling $594,000 in accordance with the franchise agreement. Burrtec denies that the city is entitled to any monetary penalties and contends that the city has failed to compensate Burrtec for extra work authorized by the city and presently owes Burrtec a total of $927,194.06, of which the city is accused of failing to pay. The sweeping dispute and the payment dispute are collectively referred to herein as the ‘disputes.’”
On numerous occasions, city residents have come forth during council meetings, lodging complaints about Burrtec’s service level with regard to trash pick-up as well as failure to sweep streets for months at a time. Burrtec, as had Athens, offered to provide street sweeping as a bonus provision of the service level it was offering to obtain the franchise contract during the 2015 competition.
Qishta’s report to the council for Wednesday night’s meeting continues, “The city and Burrtec now desire to resolve the disputes once and for all in order to avoid the expense and delay of adversarial proceedings, and without any admission of liability whatsoever, and enter into this agreement for that specific purpose. With regard to the city’s dispute that Burrtec failed to perform its obligations relating to sweeping city park parking lots in accordance with Section 11.8.4 of the franchise agreement and assessed monetary penalties against Burrtec totaling $594,000 in accordance with the franchise agreement, the settlement of that dispute will amount to half of the $594,000, totaling $297,000. Burrtec contended that the city has failed to compensate Burrtec for additional work authorized by the city and claims that the city presently owes a total of $927,194.06. The settlement of that dispute will be resolved in the total amount of the dispute as all of the additional work that was performed by Burrtec was in fact authorized by the city.”
According to Qishta, “The city’s final obligation to Burrtec’s dispute will be in an amount no more than $630,194. This is a result of crediting the $297,000 towards the $927,194.06 that the city owes to Burrtec Waste Industries, Inc.”
City employees told the Sentinel that pressure Valdivia was applying was instrumental in having the sweeping and payment disputes between the city and Burrtec settled on terms favorable to the company.
Scott Olson, one of Valdivia’s supporters, told the Sentinel that the investigations into the mayor are “going nowhere.” He attributed the complaints alleging wrongdoing on Valdivia’s part that have gone to federal and local law enforcement agencies and prosecutors as efforts to harm Valdivia politically. He identified Valdivia’s former campaign treasurer, Robert Rego, as the source of at least some of the information pertaining to Valdivia that had been provided to investigators.
Olson said that Valdivia had fired Rego as his campaign treasurer, but did not specify whether that had occurred before or after Rego had begun cooperating with the FBI.
-Mark Gutglueck

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