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Eric Swalwell and Pay to Play

Congressman Pete Stark has been getting a lot of flak for alleging that his challenger engages in pay-to-play politics, but some of the charges appear to be true.

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On June 5, just hours after casting a vote for himself in the East Bay's 15th Congressional District primary against incumbent Congressman Pete Stark, Dublin City Councilman Eric Swalwell voted to approve a no-bid, monopoly contract to a local garbage company while members of that firm's upper management sat in attendance. Swalwell, however, never publicly disclosed that those four top-level employees of Amador Valley Industries were large contributors to his congressional campaign in the months before the deal. Also in attendance was a consultant for the garbage company who not only had recently donated to Swalwell, but also has a history of violating campaign finance laws.

Swalwell's failure to disclose that he had pocketed $15,000 in donations from the garbage company Amador Valley Industries (AVI) before voting for a no-bid deal for that company comes at a time when Swalwell's competitor, Stark, has come under heavy fire from Bay Area news media for alleging that Swalwell accepted "bribes" in exchange for another vote he made in Dublin that favored a separate campaign donor. While the Bay Area news media, particularly the San Francisco Chronicle, has bent over backwards to debunk Stark's allegations, no one apparently has bothered to investigate the underlying claim — that much of Swalwell's nascent political career, which is devoid of any significant accomplishments, is funded by companies and individuals that are profiting by transforming vacant suburban land into housing developments in the East Bay's Tri-Valley area or are siphoning some of the residual dollars that come with Dublin's status as one of the state's fastest-growing cities.

It is no secret that the sprawling Tri-Valley area has long been a magnet for rich developers looking for unending profit through home building. And with every new development comes increased property taxes and other benefits to the growing city. At the same time, building homes and reconfiguring the landscape also creates services — in this case, a market for the hauling and disposal of construction materials. That's where AVI comes in.

Bob Molinaro, owner of AVI, is also the exclusive franchise holder for garbage services in nearby Pleasanton, in addition to waste disposal in Dublin. He said in an interview that city staff in Dublin first approached him about taking over exclusive rights of a segment of the garbage hauling industry known as concrete and demolition debris. In a report, city staffers claimed that Dublin residents would be better off with one hauler, rather than licensing the nine other companies with which the city had previously worked. Staffers, however, were vague in their reasoning for bypassing the normal bidding process for city contracts while, at times, asserting the benefits of monopolies in the free market.

The perception that city staff was being overly accommodating to AVI was clear to two debris haulers in attendance at the June 5 council meeting. "It's a benefit to one company by eliminating all the competition," said Hans Herb, a representative for Pacific Sanitation and the Independent Waste Recovery Association. Anne Lawson, a representative for a San Jose firm, Commercial Industrial Waste Applications, said, "You are creating a monopoly and monopolies do not benefit your residents. They do not benefit your business sector. They only benefit the person you issue it to and also who is issuing it."

The benefits to AVI were clear. The no-bid contract allows the company to nudge out nine competitors in one fell swoop. Although Molinaro said his company does not yet know the extent of what his profit margins may ultimately be, he said last week, "Obviously it's got to make money or we wouldn't be doing it."

AVI stands to make so much money from the deal, in fact, that the company agreed to pay the city an annual "community benefit payment" worth $100,000. It also agreed to subsidize the school district's recycling program by 25 percent and offered a 50 percent discount on the district's garbage pickup. Dublin Councilman Kevin Hart, the only vote against AVI's no-bid arrangement that night, said the deal looked fishy. "It doesn't look right," he said during the June 5 meeting. "The perception is it sounds like we're being bought."

But Swalwell had no qualms about the deal and made only a cursory inquiry into whether AVI uses union laborers. Swalwell also never mentioned before seconding the motion and voting affirmatively for the contract that six people affiliated with AVI, five of who were sitting in the audience, had contributed a combined $15,150 in campaign donations to Swalwell's congressional campaign in recent months. On hand to watch Swalwell cast his vote for the lucrative deal were Molinaro, three other high-level company employees, and a consultant for the firm.

In some cities, including Oakland, what AVI and Swalwell did would have been illegal. It's unlawful in those cities for a prospective government contractor, such as AVI, to make donations to councilmembers' political campaigns in the months before those councilmembers vote on the actual contract. Good government advocates throughout California have pushed hard over the years to eliminate this type of pay-to-play politics.

Dublin, however, has no such prohibition. The city allows councilmembers to take donations from government contractors and then vote to award public contracts to those companies, said Jim Bakker, Dublin's city attorney.

Swalwell declined to comment for this story, but Molinaro defended the no-bid deal and the donations. "We didn't even need Eric's vote," Molinaro, president of AVI, said of the 4-1 decision in his favor. "I see everyone on TV is giving money to Romney and Obama, are they getting something back?"

But John Zukoski, a Dublin resident and frequent critic of Swalwell and the suburban city's coziness with land developers, contended that if Dublin had a no-pay-to-play law, "the city's politics would look a lot different."

Even a paid consultant for AVI, Gordon Galvan, who also donated to Swalwell, distanced himself from Swalwell's failure to disclose his ties to AVI. "If he didn't disclose it, I think that is wrong. It's all on him," said Galvan, who gave Swalwell the legal federal limit of $2,500 in successive years totaling $5,000. "The ethical thing to do is — I would have said, 'These are people who have contributed to my congressional campaign and it has nothing to do with the City of Dublin or my vote.'"

Nonetheless, Galvan, who is also a lobbyist and a former San Leandro councilman, characterized what Swalwell and AVI did as being no big deal. "It's a dynamic that happens all the time," said Galvan, adding that he believes Swalwell has been at a financial disadvantage during the campaign because of Stark's political connections. "[Swalwell] can't get PAC money because it's a good ol' boys' network. If you're a forty-year incumbent you have access to all that money. To me, that's a lot dirtier."

Galvan has a sketchy past when it comes to campaign finance. In 2003, the Fair Political Practices Commission found he repeatedly failed to disclose campaign contributions and expenditures during his 1998 reelection campaign for San Leandro City Council. Galvan later paid an $11,250 fine for the violations; he resigned from the council in June 2003.

At the June 5 council meeting, the City Attorney's Office also asserted that the council could ignore a Dublin law that normally requires it to open the bidding process to all interested parties before choosing an exclusive contractor. In a broad interpretation of the law, the City Attorney's Office contended that state law gives the city "great latitude" in determining how they award hauling contracts.

Swalwell's conduct in the AVI deal also puts a new perspective on the allegations that Stark made previously. Stark claimed in April that Swalwell had taken "bribes," including payments in a deal in which he voted to rezone an area of Dublin for a development known as The Promenade. Stark later apologized, acknowledging that there was no evidence that Swalwell broke the law, but there was evidence of pay-to-play.

In The Promenade deal, the Lin family, which owns a substantial amount of real estate in the Tri Valley, and the family's company, Charter Properties, began writing checks to Swalwell's congressional campaign last fall just days after Swalwell voted in their favor. Swalwell announced that he was challenging Stark the day after he voted for the Lins. According to Swalwell's FEC filings, two members of the Lin family each contributed the maximum $2,500 to Swalwell's congressional campaign. In addition, James Tong, an in-law of the Lins who is the company's point man in the Tri Valley, and four members of his family, also made donations to Swalwell around the same time, totaling $13,000. In addition, members of the Tong family contributed another $5,000 in combined campaign donations to Swalwell during the most recent reporting period, according to finance reports. At Swalwell's campaign party following his impressive second-place finish in the June primary, Tong was in attendance and was seen congratulating Swalwell for the night's results.

The scene at the September 20, 2011 council meeting involving The Promenade deal also was similar to the events featuring AVI nine months later. City staff appeared reverential to the proposal to rezone property for the Lin family, and councilmembers, including Swalwell, failed to ask Tong any probing questions about the proposal. Dozens of Dublin homeowners, however, spoke critically of the city's plan to rezone the land. Many cited a pitch they received when buying their homes from Charter Properties that included a retail component of the development that was supposed to eventually add value to their homes. But Tong told the council that the economy made it too difficult to attract retail businesses to the site and that the Lins needed to build additional homes instead. The council concurred and approved rezoning the property despite also approving a separate deal that same night for retail across town.

Finally, it should be noted that over the past several months, Swalwell has repeatedly harangued Stark for avoiding debates with him. However, after be presented with questions regarding this story, Swalwell did not return more than a dozen calls for comment. When confronted by this reporter before and after a Dublin City Council meeting last week, Swalwell repeatedly declined to answer any questions regarding AVI. Finally, after the meeting, when asked another question, he replied, "Thank you for coming to Dublin" and sped off in his car.

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