Last September, several dozen Silicon Valley tech execs, nonprofit boosters and city of San Jose officials took a trip to New York City. The excursion was billed as a study mission for the San Jose Silicon Valley Chamber of Commerce, an effort to learn how the nation’s biggest city had revitalized areas like crack-infested Times Square to an M&M-infused candyland. The goal for this roving band of urbanists would be to learn the Big Apple’s secrets and apply those strategies to the South Bay.
In addition to touring the boroughs and taking meetings by day, the group spent three nights at the chic Millenium Hilton, which is “located right in the heart of New York City’s bustling financial district,” according to the hotel’s website. Evening highlights included tickets to the Broadway play “Love Letters,” starring Brian Dennehy and Mia Farrow, as well as taking in a Yankees game from an Oakland A’s-provided luxury box. On the last night of the trip, they watched future Hall of Famer Derek Jeter hit his last homerun in pinstripes.
But for one San Jose elected, the trip has proven to be a prickly endeavor—it constituted a violation of state law and will force her to sit on the sidelines for some of this year’s most important City Council votes.
Magdalena Carrasco admitted in a statement to San Jose Inside that she accepted an improper benefit by allowing the Chamber to pay for her $2,400 trip to New York. A council member-elect at the time, Carrasco consulted in advance with city attorney Rick Doyle to make sure her inclusion would not violate city rules. Since she had not taken office yet, Doyle reasoned, she would not be held to the same standards as recently termed-out Mayor Chuck Reed and Councilman Pete Constant, who both attended but had their expenses covered by city funds.
The trip would have been one of the last freebies Carrasco could receive before taking over as council member of San Jose’s District 5, except for one hitch. She was still a sitting school board member for the East Side Union High School District. Consequently, she was bound by the same gift restrictions—a $440 cap—as all other elected officials in California.
Carrasco said via a statement that in her “zealousness to ensure propriety at the city level, I failed to recognize that this was not allowed under East Side Union High School District policies.” She added that she “immediately contacted the Chamber to request an invoice then rectified the situation by reimbursing the chamber for my travel and expenses associated with the study mission.”
The last part of that statement appears to be a bit too neat. Derrick Seaver, the Chamber’s vice president of public policy, confirmed to San Jose Inside that his organization did not receive a check from Carrasco reimbursing the cost of the trip until mid-April—at least two months after she became aware that the trip constituted a violation and the same week James Rowen, a behind-the-scenes political operative, began sending email blasts to reporters and city staff.
As a result of her acceptance of the trip—covered almost entirely by Yellow Checker Cab, a sponsor of the Chamber’s study mission—Carrasco was forced to file a conflict of interest form in February that bars her for one year from voting on all matters related to taxi cabs and airport ground transportation. In a letter Doyle sent to Carrasco before the trip, he noted that she also might need to abstain from any votes connected to the Chamber.
Carrasco declined San Jose Inside's requests to elaborate on her statement, but through a review of two conflicting economic interest forms she filed, as well as nearly a dozen interviews with people who attended or have knowledge of the trip, two things have become clear:
First, the trip subverted the spirit and letter of state law, as Carrasco attempted to slip in a quick benefit before taking office; and second, the city of San Jose, in its reimbursement of costs to the Chamber, has created a way to subsidize entertainment. Thirteen city officials attended the trip at taxpayer expense, and one could argue that the included costs of Broadway shows and luxury suites at Major League Baseball games are a less than ideal use of funds when tight budgets persist.
Just exactly how, and why, Yellow Cab’s money was used to fund Carrasco’s trip remains unclear. The mission’s major sponsors included PG&E and the Oakland A’s.
“As I understand it, the contribution was made from Yellow Cab to the Chamber of Commerce, and for some reason the Chamber applied it to the trip,” says Jerry Strangis, a lobbyist for Yellow Cab. Doyle, the city attorney, confirmed that account, saying, “I spoke with Yellow Cab’s attorney and they said money was just given to the Chamber.”
The timing of Carrasco’s knowledge of the sponsor complicates matters. In a Form 700 filing, also known as a statement of economic interest, Carrasco stated in a Feb. 2 report for her seat on the East Side school district that the Chamber and Yellow Cab paid $2,700 for the trip. But on March 6, Carrasco filed the same form for her new role as a San Jose council member and only listed the trip at $2,400. The form conspicuously omitted any mention of Yellow Cab as a sponsor.
In between those two reports, she admitted in a memo to the city attorney that she had a potential conflict of interest regarding an agenda item related to airport ground transportation—Yellow Cab is one of the biggest taxi cab operators in the city. The matter was dropped from a March agenda but is expected to return to the council in May.
Seaver could not say exactly why Yellow Cab’s sponsor money was used to pay for Carrasco’s trip, but he stressed that the Chamber's study missions have become an annual tradition and every effort is made to comply with city rules.
The person who brought attention to the issue, Rowen, said he is not working for anyone with a political vendetta against Carrasco and simply brought it up because he thought it “sounded weird that the Chamber of Commerce would give a gift to a non-city councilmember.” Seaver confirmed that the Chamber has no business going before the East Side school district.
Jay Wierenga, a spokesman for the Fair Political Practices Commission, the state’s government watchdog, confirmed with San Jose Inside that a review of Carrasco's actions is underway, which could lead to a formal investigation being launched.
Below is the full statement from Magdalena Carrasco and a list of all city employees who attended the trip:
“In September of 2014, I was part of an informational study mission to New York City that looked first hand at the issue of emergency preparedness, parks and economic revitalization where we learned about the best practices the city had taken to reinvigorate several public spaces while encouraging private & public investment.
“This Chamber sponsored trip attended by Mayor Reed, Council member Constant and several Silicon valley business and community leaders was an informative learning experience in how New York City successfully approached issues we are facing at home.
“I was not yet a city councilmember but spoke to City Attorney Rick Doyle as to whether such trip would be permissible under city policies. He assured me that several other city officials had attended Chamber study missions in the past and that doing so would be permissible. As such, the study mission was properly reported on my statement of economic interest filed with the California Fair Political Practices Commission.
“In my zealousness to ensure propriety at the city level, I failed to recognize that this was not allowed under East Side Union High School district policies. I immediately contacted the Chamber to request an invoice then rectified the situation by reimbursing the chamber for my travel and expenses associated with the study mission.
“I apologize for the oversight but I want to reiterate that the overall study mission provided very good information for important issues we are facing in San Jose.”
NYC Attendees from the city of San Jose (Titles as of Sept. 16-19, 2014)
- Mayor Chuck Reed
- Councilmember Pete Constant
- Ed Shikada, City Manager
- Harry Freitas, PBCE Director
- Dave Sykes, Public Works Director
- Jacky Morales-Ferrand, Assistant Director of Housing
- Kim Becker Aguirre, Director of Aviation
- Jerad Ferguson, District 1 Chief of Staff
- Ken Willey, Senior Advisor of Public Safety, District 1
- Curtis Jacobson, Deputy Fire Chief, Bureau of Operational Support, SJFD
- Nanci Klein, Deputy Director of Economic Development
- Chris Burton, Sr. Business Development Manager/Assistant to the City Manager, Office of Economic Development
- Kathryn Sedwick, Plan Review Division Manager, PBCE