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I Think I Can: Mayor Ron Gonzales has taken umbrage at a grand jury report implicating his handling of a city recycling contract. But he hasn't been able to put a lid on the controversy whose origins date back five years.

October Surprise

The mayor's garbage troubles can be traced back to Oct. 10, 2000. Here's the story of G-Day.

By William Dean Hinton

IF MAYOR Ron Gonzales needed a chance to confess, he had one during the first part of an Oct. 10, 2000, council debate over which garbage contractor the city would hire to haul away and process recyclables.

Former Councilmember John Diquisto, a retired firefighter known for gardening vegetables on the roof of City Hall, asked the mayor what would happen if there were a labor dispute between recycling management and union workers. Gonzales diverted the question to a staff member, who answered that the contractor would still have to perform the contract. Diquisto clarified by asking whether there was a guarantee that there would be no labor dispute.

"That's correct," the mayor answered. "There is no guarantee." What Gonzales failed to tell Diquisto was that only four days prior, he'd already begun working toward guaranteeing labor peace. Unfortunately, his effort would eventually cost the city an extra $11 million and any goodwill left in Gonzales' scandal-plagued tenure.

The Trashy Backstory

According to a grand jury report released two weeks ago, Gonzales met with representatives of San Francisco­based Norcal Waste Systems and one of its subcontractors, California Waste Solutions (CWS), Oct. 6, 2000, in the mayor's sixth-floor conference room. At the time of the meeting, neither company had been awarded the recycling contract, but both had ranked high enough in the bidding process that their selection seemed likely. But the snafu in awarding Norcal and California Waste a contact was that CWS, a Vietnamese-American-owned company whose headquarters are located in Oakland, had based its cost estimates on rates of the Longshoremen's union, also located in Oakland. The estimates affected about 60 employees organized under the Teamsters union who sorted commingled trash at a north San Jose recycling facility.

The Teamsters were concerned about Longshoremen muscling them out, and sorters were concerned about a $3-per-hour drop in pay. According to the grand jury report, Gonzales was willing to broker a deal—a deal he had no business making since it would verbally bind city money without a council vote. He was willing to pass the Teamsters' higher pay rates, $10.85 per hour vs. $7 per hour, plus a difference in the cost of benefits, to the city as soon as CWS was able to negotiate a contract with the union.

Oct. 10: G-Day

But if the mayor screwed up by brokering the deal during the meeting, he was about to make a mistake equally as severe at the Oct. 10 council meeting. He failed to tell a single member of the council that retaining the Teamsters would cost the city, based on the life of the contract, an extra $11 million. Withholding information impacting council decisions is a violation of the city's charter.

Not only did Gonzales fail to tell councilmembers about the meeting, he also denied he met with Norcal officials to the grand jury, prompting jury members to rebuke the mayor and other witnesses for "half-truths, concealments, misrepresentations and deceptions foisted upon the council and public."

The mayor reacted by calling the grand jury report slanderous and inaccurate without bothering to explain exactly what was false. He reluctantly agreed to an independent investigation, in which administrators, councilmembers and Gonzales will have to testify under oath.

It's doubtful, though, that the mayor will receive anything more punitive than a reprimand or censure from the council for concealing the meeting with Norcal. Yet most local politicos agree Gonzales has extinguished what little chance he had of a post-mayoral career. The question is, why? Gonzales has repeatedly claimed he wanted to avoid a labor stoppage, though the evidence is that the city had a backup plan in case the recycling sorters went on strike. The mayor also needed council support to pay for the $11 million to cover the additional Teamster expense. Why wouldn't he have notified the council early on what was at stake between the parties? "That's the $64,000 question," says Councilmember Linda LeZotte, who voted against giving Norcal the $11 million when it finally came to a vote last December.

Petty-Vindictive Era

To understand Mayor Gonzales' frame of mind at the time of the Norcal vote, it's important to remember how utterly chaotic his personal life had become. In September 2000, a full month before his private meeting with Norcal, he made national news by admitting to bedding a subordinate, Guisselle Nunez, a revelation that still rolls eyes in the South Bay political community. (Nunez and Gonzales married last September.)

Gonzales also had a political reason to glad-hand Norcal and the Teamsters. Before the affair was reported, Gonzales was considered to be on track for state office. By mediating the Teamster problem, he was able to please two constituencies at once—Norcal managers and union reps—ensuring the campaign contributions rolled in if he ran statewide. In the meantime, the mayor could continue to ask for donations to his favorite charities or PAC, loopholes no longer permitted under city ethics rule changes adopted this year.

Another theory is that the mayor withheld information out of arrogance. His first years in office were known as the "petty-vindictive era," when the mayor attempted to expand his powers and influence at the expense of the rest of the council.

"In October 2000, there may have been a reasonable assumption that the mayor could have put the bid on the agenda and have it blow through without it being a big deal," one pundit says. "He could say he was saving the city a lot of money. He didn't want anyone meddling with the bid process. So he kept it a secret. That's the arrogance."

But more than likely, Gonzales took a practical view about the recycling bid. "I think he favored the Teamsters because he knew the rest of the council would not tolerate the lower wage," says San Jose State political scientist Terry Christensen. "So to get the Norcal contract passed he needed to assure them of this.."

The mayor, meanwhile, said labor peace was "very important" three different times during the meeting because "those picking up the garbage and recycling materials will determine the level of service." But if it was so important, why wouldn't he tell the council he was working toward a resolution?

Saving the Day?

Bob Morales is the president of Teamsters Local 350, which represents the 60 recycling sorters who work on Timothy Drive in north San Jose. Morales is well-known in the Bay Area's political establishment, having been recognized in Washington by U.S. Rep. Nancy Pelosi in 1992 and serving on San Francisco Mayor Gavin Newsom's transition team.

Morales says the sorters' labor dispute with California Waste Solutions became so intense that he called for a one-day strike in 2003.

"We negotiated with them for a long time but we couldn't get anywhere," he says. "The company couldn't afford the wages and benefits." He says he was ready to extend the strike to include truck drivers when the mayor's office called. "The mayor saved the day," Morales says. "Not only for our members, but for the city. He did a damn good job."

The problem is, though, hardly anyone believes 60 recycling sorters could have plugged up the city in garbage. For one thing, even though Morales had complained about labor strife as far back as 2000, a strike didn't seem imminent.

"How do you cut a deal in 2000 to prevent a strike in 2003?" asks Councilwoman Linda LeZotte.

For another thing, as the grand jury's report makes clear, there was little likelihood of a strike. Norcal had struck with CWS days after the October 2000 meeting with Gonzales, obligating Norcal to pay for the Teamster salaries even if the money could not be recouped from San Jose city officials—a deal never mentioned to Teamsters. So while Teamsters negotiated with CWS officials, they had no way to know Norcal was legally bound to pay Teamster salaries or risk forfeiting all or part of the $250 million 11-year contract signed in 2000.

There was also a $6 million performance bond at stake Norcal would have had to forfeit in the event a strike disrupted picking up recyclables. And lastly, the city's Environmental Services Department, which oversees the recycling program, had arranged during the bid process for another company to take over within 24 hours if a strike were to occur.

What the grand jury report tried to do was unravel the Norcal deal based on the mayor's failure to communicate with the City Council, which jury members view as a violation of the city charter. Unfortunately, the City Council voted 7-3 last December for the additional $11 million to Norcal even though the city was in no way obligated to pay the money. The mayor defended the decision by saying more than 100,000 families would have been crippled by a work stoppage, which, he said, would have caused a backlash in the local media. But now, it's G-Day that he must respond to—a mess he won't be able to bulldoze over anytime soon.


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From the June 29-July 5, 2005 issue of Metro, Silicon Valley's Weekly Newspaper.

Copyright © 2005 Metro Publishing Inc. Metroactive is affiliated with the Boulevards Network.

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