The Morning Report
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This story has been updated.
Well, that was a week.
Alleged Footnote 15 is now, officially, Forged Footnote 15.
Who forged it? We don’t know. May never know.
We provided a summary last week of how we got to this point in the saga of 101 Ash St. So if you have no idea what we’re talking about, please go back to the first section.
We also ran an emergency podcast Thursday night because the one we recorded earlier in the day was completely irrelevant by the afternoon. If you are really into this story, that should be donuts for you.
But here’s a bit more.
What happened: NBC 7 San Diego made the brutal decision to retract the parts of its story last week referencing Assemblyman Todd Gloria and City Attorney Mara Elliott.
The station had claimed in its bombshell story last week that it had obtained a copy of an investigative report commissioned by the mayor to figure out what happened with the city’s purchase of the building. And in the report, one footnote – now forever known as Forged Footnote 15 – implied that Gloria had been part of a dishonest effort to advance the purchase of the building, though it was unclear exactly how.
It said that the investigators – from the firm Burke, Williams and Sorensen – had sought to interview Gloria to find out more but they were thwarted by the city attorney.
Then, last week, the firm claimed this was a complete fabrication.
Now, NBC 7 has agreed. Reporters Tom Jones and Dorian Hargrove wrote that they were essentially duped by this forgery. They are going to try to find out who did it, they wrote, but they pulled down all the parts of the story related to Gloria.
The questions that remain: First, who did this? It would have had to have been someone who had access to the actual report or got it from someone who did. Then they manipulated it. They don’t seem to care much about Hargrove and Jones, who are having what we can only imagine is one of the worst weeks of their careers.
But Hargrove and Jones also left a few questions on the table. When their story came out last week, they said that they had gotten the report from a reliable source. Then, when pressure intensified on them to pull down the story, they put up an update to the story saying they stood by it and, again, that they had gotten the story from an extremely reliable source.
But now they say they got the report from an anonymous – to them – source. They then took steps to get verified by a reliable source, who did verify it. But now that source says they were mistaken and the confirmation was the result of a miscommunication.
Hargrove and Jones also report they have obtained the entire report.
“NBC 7 Investigates has since obtained a copy of the verified report and has confirmed that the forged footnote, as well as three other footnotes, do not appear in the original,” they wrote.
This brings up our next question: Why won’t anyone publish this actual report? On Voice of San Diego at Home Wednesday, Aimee Faucett, the mayor’s chief of staff, said that the Council could waive its attorney client privilege on the document. But we aren’t even sure the City Council has seen it.
The damage is done: Bry had begun running ads about the story right after it was published.
Facebook makes it easy to search political ads and see how long they ran and at what cost, so we know a fair bit about her spending.
Bry ran this ad with a link to the NBC 7 story and its headline, which included the phrase “Todd Gloria Misled Public.”
And here’s how far it went.
Gloria was furious. He held a press conference online Friday.
“While we don’t know who’s at the center of this, what we do know is that my opponent ran paid Facebook ads using NBC 7’s story moments after it was published. She paid to reach hundreds of thousands San Diegans to communicate a falsehood knowing that the source of NBC 7’s story had been contested,” Gloria said.
Last week, Tom Shepard, Bry’s campaign consultant, had stood by the campaign’s messaging regardless of the veracity of the NBC 7 report.
“It is undisputed that Todd Gloria participated in a scheme to inflate the value of 101 Ash Street and put taxpayers on the hook for the added cost. Gloria not only knew about this, he orchestrated the transaction through the City Council,” Shepard wrote to us at the time.
Gloria did support the city’s decision to purchase the building at the price the buyer wanted. It’s not uncommon for a seller and buyer to agree on a price and then hope the appraisal is as high as possible. A buyer, of course, can walk away if the appraisal reveals a massive discrepancy.
The NBC report had implied a further connection that took Gloria from merely supporting the purchase to actually, in some unclear way, advancing the deal fraudulently.
And that part has been fully retracted.
In a statement Friday, Bry disavowed any responsibility for spreading misinformation by promoting the story while it was disputed but not yet retracted.
“As soon as NBC7 retracted a portion of the story, the campaign discontinued the posts, but the key facts related to Mr. Gloria’s role in this scandal remain un-retracted and undisputed,” Bry wrote. “Our campaign’s communications did not focus on the disputed Footnote 15 because the record of Mr. Gloria’s responsibility for this transaction is far better documented by city videotapes of his public statements.”
Sort of. In an email three days ago, the campaign had backed up its claim that Gloria “orchestrated” the deal with video of him discussing it at a 2016 Council committee meeting, rather than the NBC story. But the promoted Facebook post is a campaign communication, too, and there’s nothing in that video that substantiates the NBC 7 headline’s allegation that investigators looked into whether Gloria misled the public. The headline was featured prominently in ads run by the Bry campaign, and the headline would not have been possible without Forged Footnote 15. That’s why NBC7 retracted the story.
Zombie Hotel Tax Back from Dead Again, Again
Dispatch from Lisa Halverstadt: Backers of a March hotel-tax measure that sought to fund a Convention Center expansion, homeless services and road repairs are mulling whether – and how – to pursue a backup strategy hatched in the wake of a Supreme Court decision that gives the initiative new life.
In March, Measure C got 65 percent of the vote, just shy of the two-thirds needed to approve a tax for a specific purpose.
But supporters had decided to make it a citizens’ initiative, instead of being placed on the ballot by the City Council, because of a legal theory that as a citizens’ initiative, it could maybe be implemented with just a majority of support from voters. Other municipalities were testing it. Then, the state Supreme Court decided this week not to relitigate an appeals court decision to allow a San Francisco citizens’ initiative to pass with a simple majority.
Now the business and labor coalition behind Measure C is consulting attorneys about whether they can salvage the measure. Depending on the coalition’s next steps, the City Council could eventually be asked to put its thumb on the scale at a time when the city’s Convention Center is hosting hundreds of homeless San Diegans rather than the conventions that the measure was partly sold on.
Over the past few years, cities and interest groups across the state have filed lawsuits to test a legal theory that citizens’ measures – as opposed to those introduced by government entities – are not constrained by the California Constitution’s requirement that two-thirds of voters must approve them. The cases followed a blockbuster 2017 state Supreme Court ruling that inspired the Measure C campaign to pour hundreds of thousands of dollars into a signature-gathering effort to facilitate such a challenge. It was vastly more expensive than had the City Council just placed a measure on the ballot. But now, it could prove to be the only way it lives.
This week, Measure C supporters cheered the Supreme Court decision not to hear the San Francisco case.
But any challenge would likely still be, um, a challenge.
Lawsuits over tax measures in Fresno and San Francisco (yes, another one) are now snaking their way through state appeals courts and rulings could be months away. Then the Supreme Court would have to decide whether to take them up.
Attorney Gil Cabrera, a Measure C supporter, estimated it could take a year and a half for a San Diego lawsuit to get an appeals court ruling that could lead to Supreme Court consideration.
A former city attorney has also opined that even if that theory works out, another obstacle stands in the way. The initiative also sought voter approval to have the city borrow money. That needs two-thirds support too and could complicate Measure C’s next steps.
Andrea Guerrero of Alliance San Diego, a group that opposed placing Measure C on the March ballot in the first place and previously challenged the proposition’s ballot description in court, said her organization will also be watching closely. She believes statements by the city clerk and City Attorney Mara Elliott ahead of the primary declaring that a two-thirds vote would be required to pass the measure could complicate matters for Measure C supporters.
“We are deeply concerned that they would consider changing the rules of the election after it happened. The bottom line is election rules matter in a democracy,” Guerrero said. “That’s how we maintain election integrity.”
Measure E Campaign Staffing Up
Mayor Kevin Faulconer’s longtime aide Matt Awbrey is moving on. Awbrey will end his service as the mayor’s chief of civic and external affairs to go work for the campaign to pass Measure E.
E is the one that would exempt the Midway Pacific Highway Community Plan area from the coastal height limit. For the last 48 years, builders have not been allowed to construct anything higher than 30-feet west of I-5 within the city of San Diego. You couldn’t rebuild the Sports Arena on that plot of land. The height limit would stop it.
SeaWorld, in the late ’90s, persuaded voters to allow it to build roller coasters but there has not been an exemption since then.
The plan would raise the height limit not just for the Sports Arena area but the entire Midway corridor down to Old Town. There are a lot of property owners in that area who would suddenly have land they could do a lot more with.
Awbrey used to be Faulconer’s representative for the Midway area. He’s well aware of how the coastal height limit is sacrosanct to many coastal residents. Faulconer himself once scoffed at the notion that it could ever be adjusted in any way.
“Anyone who is a fan of more parks, housing and jobs, especially during this crisis, has a reason to support E,” Awbrey said. “It protects the high limit in coastal neighborhoods and revitalizes this landlocked district.”
Disputed SANDAG Audit Heads to Full Board
SANDAG’s board will soon discuss a disputed audit into the agency’s hiring and firing practices, the first major report by the auditor created by state legislation following the agency’s cost and revenue projection scandal of 2016.
The audit has created deep divisions between SANDAG management and the agency’s auditor, Mary Khoshmashrab. SANDAG leadership says the audit is simply incorrect. The auditor says the agency has been manipulating her work and misleading the public.
Now, the board will have its chance to dive in. SANDAG’s board has itself been an acrimonious place since Executive Director Hasan Ikhrata arrived, driven by policy disagreements between him and board members who oppose the transit-focused direction in which he’s taken the agency.
The auditor alleges that large severance packages given to high-ranking officials last year while Ikhrata sought to reshape the agency were actually illegal gifts of public funds. She also reported that promotions and bonuses Ikhrata gave to staffers who were elevated in the restructuring should have been formally approved by the board. SANDAG disputes her conclusions. They say the board long ago legally delegated that responsibility to its executive, and that there was nothing unusual about the severances. The agency commissioned an outside legal review, which largely supported its contention and disputed Khoshmashrab’s conclusions. There’s little agreement on the substance of the audit between the auditor’s office, and SANDAG management and its outside counsel.
La Mesa Councilman Bill Baber, chair of the audit committee, marshaled support for a series of recommendations based on the audit that will now serve as a starting point for the full board discussion. Baber, not the auditor, wrote the recommendations, and those that passed did so on thin margins, while others didn’t get enough support to go to the full board.
“The audit committee made a recommendation to the full board, which is the final arbiter on this decision,” Baber said in an interview. “What we did is, we evaluated all the documents, Mary’s report, management’s report, the outside counsel documents and we sent to the full board a set of findings and recommendations based on it. That’s our job.”
But beyond the scope of the audit, is the process by which the audit has come before the public and how it has been received by management.
“I think it’s important to mention that in my 25 years of auditing government, at all levels of government and from an internal and external perspective, that I have never experienced this degree of interference, and impairment of independence from a government agency by their management and their audit committee chair,” Khoshmashrab said in her introductory remarks.
In response, Julie Wiley, SANDAG’s director of contracts and grants, argued that Khoshmashrab was conflating disagreement with impairment, and said management’s only modifications to her report were to redact information that should be confidential, which Khoshmashrab regarded as “manipulation.”
On that front, one committee member, Stewart Halpern, expressed his disappointment at the start of the meeting. Halpern was the chair in 2016 of a committee tasked with overseeing the SANDAG transportation program that was the subject of the scandal that eventually remade the agency.
“In 2016 I had a front row seat to the circumstances of not just revenue forecast errors, but some very questionable governance issues that made me wonder, ‘Should I have asked more questions? Should I have been a little less trusting?’” Halpern said.
“I feel compelled to raise some governance issues around the process surrounding today’s meeting,” he said. “I do so making no judgment, and frankly with no pleasure. First, the placement of the audit report to be discussed on our committee’s website is behind some 300 pages of other material, as if someone were trying to bury it. Second the extent of the redactions of substantive material from the auditor’s report, especially dealing with ‘undue influence.’”
Halpern ended up voting against most of the recommendations that are now headed to the full board.
In an interview, Baber said he agreed with Halpern’s point about the excessively large document that contained the audit, and said he twice asked staff to break it out as a standalone document.
“Never attribute to conspiracy that which can be explained by incompetence,” Baber said.