The Daly Deal

How the sordid extraction of $50 million from Rincon Hill developers helps Chris Daly, city bureaucrats, and Gavin Newsom -- and hurts everyone else in San Francisco

I might sum up the whole thing by sayin': "I seen my opportunities, and I took 'em."

-- George Washington Plunkitt, philosopher of Tammany Hall

For a journalist covering San Francisco, Roger Gordon is a unique and valuable commodity. Until recently, Gordon was director of a charity called Urban Solutions, which is devoted to helping low-income entrepreneurs start businesses in southeastern San Francisco. Now, he's a law student at Georgetown University in Washington, D.C. As a veteran of the city's secretive nonprofit wars, he's able to provide a rare glimpse into the shady nexus of government, money, and power in San Francisco.

Over time, S.F. politicians have delegated control of social services usually provided by county governments to nonprofit charity groups, creating a flow of millions of city dollars into private hands. This funding shift has created opportunities for political patronage, as officials allot or deny money to charities based on whether their employees support the correct candidate at election time. As a result, contests over money and political support in the charity world constitute some of the most important power struggles in San Francisco. But they're largely invisible struggles, because they're waged in a legal gray area called influence-peddling.

Gordon got on the wrong side of the nonprofit funding equation three years ago when he committed the political crime of challenging Supervisor Chris Daly, who serves as ward boss of the South of Market and eastern Mission neighborhoods. It seems that Gordon did the unforgivable. He contested Daly's seat in the 2002 election but did not win, finishing third. Gordon soon saw a re-elected Daly make every effort to dry up government funding for Urban Solutions.

In May 2002, after Gordon had spread the word that March that he would oppose Daly in the November elections, Daly used his seat on the Board of Supervisors' Finance Committee to block $50,000 of city-managed federal grant funding slated for Urban Solutions. This money constituted less than 1 percent of the federal grant to the city, and Urban Solutions was the only recipient questioned by members of the Finance Committee. During a months-long political quarrel, which included objections to Daly's action by the Board of Supervisors' budget analyst, Urban Solutions came away with its funding reduced by $20,000, according to a complaint Gordon filed with the federal Department of Housing and Urban Development.

In 2004, Daly used his Finance Committee post to freeze $100,000 in Urban Solutions funding. Again, Urban Solutions was the only aid recipient of its type to receive such attention. Earlier this year, Gordon says, Daly again attempted to halt funding to Urban Solutions. Support for the group from Supervisors Tom Ammiano and Sean Elsbernd got the funding approved, Gordon says.

"I went up to him and said, 'Chris, we don't need to be doing this for the rest of our lives. We can do better things than me harassing you and you harassing me.' He said, 'Let's get together and talk about it.' But I could never reach him after that. I left messages for Bill Barnes, his aide. I said, 'This is stupid. This is innocent people getting hurt here.' I never got anything back. I went to numerous members of the 'progressive' political community, and asked them to approach Chris on my behalf, and try to find a way to make it work. They said, 'Chris is like that -- if you break the rules, Chris is going to come after you.'

"Chris is an old-style, Chicago politician. He hands out favors, and he hands out pain. Everybody I approached said, 'Your cardinal sin was running against Chris.'"


Roger Gordon's battle with Chris Daly qualifies as politics as usual in this city. Last year, for example, Daly maneuvered to block government funding of another nonprofit, the Mission Housing Development Corp., after its board of directors fired employees who had supported Daly in the 2000 elections.

But last month, Daly made his most audacious move in the charity-funding domain, leading a successful effort to extract as much as $50 million from apartment developers in the downtown Rincon Hill neighborhood and to funnel much of the money to Daly-approved charity groups operating in the supervisor's South of Market district.

The city's newspapers tut-tutted the deal in editorials, calling it an example of commonplace machine politics. But it's more than that. It is an example of what can happen when a mayor removes himself from the business of managing a city, creating a political vacuum that allows petty ward bosses and entrenched bureaucrats to run the show for their own benefit.

Make no mistake about it. Last month's Rincon deal is good for Chris Daly and truly awful for San Francisco as a whole. And the man who should most forcefully protect the interests of the entire city -- the mayor -- at key moments stood on the sidelines, apparently oblivious to the worst aspects of the deal, and seemingly unaware that different portions of the executive branch he is supposed to lead were at war with one another in regard to the development plan.

Though it bears the Daly hallmark of using government-funded charity groups as a way to advance political goals, the Rincon Hill deal really does signify something horribly innovative in city politics.

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