Peralta Community College District Chancellor Elihu Harris helped steer a $940,000 no-bid contract to one of his business partners without disclosing the relationship to district trustees before they approved the deal, documents and interviews reveal.
The construction-management deal was originally worth $309,000. It was later amended three times — including once personally by Harris without board action — to total $943,000 by the time the final payment was made in January.
There is no evidence that Harris directly benefited, but legal and ethics experts found the potential for conflicts of interest deeply troubling. Peralta board President Bill Withrow said district policies will be changed to require more disclosure.
"I didn't know about it," Withrow said of Harris' partnership with Mark A. Lindquist, whose 1701 Associates Inc. was awarded a no-bid contract in April 2007 to oversee the renovation of buildings at Laney College in Oakland. The district also runs Merritt College in Oakland, Berkeley City College and the College of Alameda.
"Looking back on it, I'd feel more comfortable having known about it," Withrow said last week.
When trustees approved the contract on Harris' recommendation, he and Lindquist were partners in two limited-liability corporations. In one, they owned Fresno radio station KFIG, which the corporation sold in 2005, three years before the partnership was dissolved.
By the time the radio corporation disbanded on Jan. 16, 2008, Lindquist's firm had received nearly $870,000 from the no-bid contract, records show.
In the other collaboration, Harris, Lindquist and three others are partners in a Piedmont real estate venture seeking approval for a small residential development.
Harris, 61, refused numerous requests for an interview in the past three months. Lindquist — who also is president of the district's foundation, which raises money for scholarships and books — said nothing improper occurred.
"It's all available there as public record," he said. "I think what I do is appropriate. It wasn't even a particularly large contract. There was virtually no contact with the chancellor" before the contract was awarded.
Because the Harris and Lindquist partnerships did not directly profit from the contract, it appears no state ethics laws were broken, said Robert Stern of the Center for Governmental Studies in Los Angeles and former general counsel of the state Fair Political Practices Commission.
But Stern and others said that Harris' failures to disclose the partnerships or distance himself from the matter show ethical problems.
"There isn't a rule written for everything that may come up, so you have to look at fundamental values. The law's the floor, not the ceiling," said former Santa Clara Mayor Judy Nadler, now a fellow of government ethics at the Markkula Center for Applied Ethics at Santa Clara University.
"Transparency is the key. Best practice in this case would have been to divulge that relationship," Nadler said. "The perception of a conflict of interest is as damaging to public confidence as an absolute (legal) violation."
The board of trustees relies on its attorney, General Counsel Thuy Thi Nguyen, to note such conflicts, said Trustee Cy Gulassa. Nguyen — whom Harris has known since she was in high school — did not warn trustees about Harris' connections to Lindquist, Gulassa said.
Trustees will discuss the matter soon, he said last week. "This is of significant importance," Gulassa said. "We want to have a very clear, very transparent relationship with our vendors."
A government watchdog said one problem in a relationship like Harris and Lindquist's is that the public does not know what private deals could be made in return for a public contract.
"You don't know what favors could flow as consequence of this contract," said Terry Francke, general counsel of the group Californians Aware.
Harris should have told trustees about the business relationships before the vote, said UCLA law professor Daniel Hays Lowenstein, a former Fair Political Practices Commission member.
Two trustees raised concerns when the contract was awarded in 2007 and later abstained from voting.
A video of the meeting shows Trustee Abel Guillen was concerned about the appearance of awarding a contract to a foundation board member, Lindquist. Linda Handy called no-bid contracts "an insult to those who pay taxes in this community."
Public agencies are allowed to award no-bid contracts for professional services, or specialized tasks.
Lindquist's firm was one of several on a list of potential project managers after Peralta district voters approved a $390 million construction bond measure in 2006, said Sadiq Ikharo, Peralta's vice chancellor for general services. The district put the company on the list after it responded to a routine request for proposals.
It was Harris who ultimately controlled the flow of money to 1701 Associates, Ikharo said.
"The chancellor has to approve all the contracts with companies," he said.
At the meeting where the contract was awarded, trustees asked Harris about whether Lindquist had received preferential treatment because of his membership on the foundation board.
"I didn't have anything to do with this," Harris replied, as seen on the meeting video.
The 1701 Associates contract was paid with money from Measure A. Those funds have been steeped in secrecy, said the chairwoman of the committee overseeing the bonds.
"There has been a lot of circling the wagons around expenditures of Measure A funds," said Helene Lecar. The district did not tell her panel about the Lindquist connection, she said.
Harris declared the Piedmont partnership on his annual statement of economic interest in 2008 — after Lindquist won the contract. The annual disclosure does not require listing partners. State corporation records also do not disclose the partners.
But Harris and Lindquist signed real-estate documents in August 2007 when the business bought a Piedmont property from PG&E. Records show the deal had been negotiated for more than a year.
The chancellor's Peralta calendar shows he has met at least twice with Lindquist and other partners about the property during business hours since January 2008. The district censored other meetings on the calendar.
Harris has valued his share of the Piedmont property from $100,001 to $1 million on his economic-interest statements.
Other public records show he also has financial troubles — Harris owes the IRS more than $13,000, according to a lien against him. He also owes more than $4,000 in back taxes, according to another lien.
Harris and his wife also run a Berkeley funeral home that his parents once owned. He does not list the business on his financial disclosure, although county records list him as its owner.
State law requires public officials to report all their local business interests.
Vendors and former employees have sued the business several times, saying it failed to pay money owed them. The business lost at least three of those suits.
After the judgments, the funeral home failed to pay the penalties, court documents show. One company, Alacritas Inc., which transports cadavers, planned to send sheriff's deputies to collect the unpaid debts, said David Friedel, the firm's operations director.
Harris was Oakland mayor from 1991 to 1999 and a six-term Democratic state assemblyman beginning in 1978. He holds both a UC Berkeley master's degree in public policy and a UC Davis law degree.
The board appointed him Peralta's chancellor in 2003 despite his lack of a background in higher education. Withrow said he was hired for his management expertise and political connections.
Harris also brought to the job a record of twice being fined by the state Fair Political Practices Commission for ethics law violations. The commission fined him $2,000 for appointing his then-wife to the Oakland Port Commission in 1988 and $10,000 for several 1996 campaign-finance violations.
Harris also did not recuse himself or inform Peralta trustees of a potential conflict when a recycling company that pays him for legal services bid on a district contract in 2007, records show. California Waste Solutions, which documents show pays Harris $10,000 to $100,000 a year, did not win the bid.
The appearance of bias in the recycling discussion should have governed Harris' actions, said Stern, with the Center for Governmental Studies.
"Clearly, as an ethical matter, it seems like he should not have been involved," he said.