From The Archive
Cosmo Garvin
No. 30  March 2016

Sacramento Shakedown

 Kevin Johnson’s crossover corruption 

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Back in the fall of 2014, Sacramento mayor Kevin Johnson was unstoppable. He’d pushed through a $300 million city subsidy for a new downtown arena for the Sacramento Kings. He’d helped elbow out racist Los Angeles Clippers team owner Donald Sterling, and grabbed a little of the spotlight for himself in the process. He’d been named president of the U.S. Conference of Mayors.

He and his wife, Michelle Rhee—once the brightest star in the corporate-backed “education reform” movement—showed up at the White House Correspondents’ Dinner. An adviser told Johnson’s hometown newspaper, the Sacramento Bee, that the couple was a “modern-day version of Bill and Hillary Clinton.” There was talk about a run for California governor or U.S. Senate.

At his peak, KJ was a figure to behold, an urban policy entrepreneur and brander-in-chief selling #Sacramento 3.0, a “world-class” city where kids would take Uber vehicles instead of buses to their charter schools, “never check out a library book,” and have “more smart devices than toothbrushes.”

In July 2014, Johnson rented the Sacramento Convention Center and threw himself a big party—a twenty-fifth-anniversary fundraising gala for St. Hope Academy. He raised $1.2 million at the event, largely from real estate developers and others with business before City Hall.

St. Hope is Mayor KJ’s charter school and development company. More than that, it’s his brand—the foundation of his own career in educational reform and politics. The keynote speaker at St. Hope’s silver jubilee was the NBA’s biggest-ever star, Michael Jordan, whom Johnson interviewed on stage, fittingly enough, about “developing your brand.”

The dinner was also a chance for Johnson to recognize the little people who helped him along the way: people like Dr. Jim Sweeney, former superintendent of the Sacramento city schools, who, along with several former members of the Sacramento City Unified school board, were recognized for their 2003 decision to close the venerable Sacramento High School and reopen it as the flagship academy in Johnson’s growing charter school empire.

Ex-superintendent Sweeney’s remarks were brief. “Fifteen years ago, a guy walked into my office and said, ‘Doc!’” Sweeney recalled. “Those of you who know Kevin Johnson know that when he goes ‘Doc!’ you’re about to give away something.” The audience laughed; it’s funny because it’s true.

Kings’ Dominion

By the fall of 2015, Johnson’s political career was effectively over. He was under scrutiny, again, for allegedly molesting a sixteen-year-old girl two decades before. And he was facing a new allegation of sexual misconduct; a city employee had filed a sexual harassment complaint. The City of Sacramento’s legal advisers warned Johnson not to hug or touch anyone at city events. So Johnson, deciding two terms in office were enough, announced that he will not seek reelection this November. His exit will coincide with the opening of the new arena, easily his most significant mayoral achievement.

Meanwhile, debt service on the bond-financed arena will reach about $18 million a year, draining money from the city treasury. Sacramento’s city finance department is warning that the city’s spending is already “unsustainable” and budget deficits are imminent. For now, however, Johnson is being credited with a dramatic makeover of the new arena district—where a decaying shopping mall had been before.

Aside from the arena, Johnson’s other legacy is something I call KJ Inc. It’s a particular way of doing public business, and it’s also a political machine: a blended network of nonprofit auxiliary organizations, political cronies, and paid city staff, powered by unlimited donations from downtown developers and corporate benefactors.

Last year, Johnson sued me for filing public records requests for city emails, part of an ongoing project to better understand KJ’s mingling of public resources with his private nonprofits. The suit appears intended to economically damage the small alternative weekly I write for—the only media outlet in town to write critically about Johnson’s arena deal, or his educational reform campaign, or his use of city resources for his private agenda. We’re still in court.

The lawsuit, the arena, KJ’s talent for diverting public resources for private gain, even the sex-creep stuff: to me, these facts seem to hang together under a common theme. The guy has boundary issues.

Excellence Abounding

To NBA fans, Johnson’s basic bio is well known. All-star point guard for the Phoenix Suns. He dunked on Hakeem Olajuwon that one time.

He grew up in the Oak Park neighborhood of Sacramento, an old inner suburb damaged by decades of disinvestment, white flight, and sprawl. Like a lot of other athletes, Johnson decided to create his own charity—St. Hope (“Helping Others Pursue Excellence”).

For his community work, Johnson was named one of George H. W. Bush’s “Thousand Points of Light” in 1991. The Sacramento Bee described Johnson’s charity as “almost saintly.”

Looked at more closely, it’s clear that the public benefits promised by Johnson’s various “public–private partnerships” often fail to materialize. Or they come at a very high price. A few examples:

• St. Hope’s development arm built Oak Park’s signature “40 Acres” building, including a beautifully restored Guild Theater, bookstore, and Oak Park’s first Starbucks. It also took nearly $3 million in city loans and grants. But for years, Oak Park residents complained that St. Hope’s properties were overgrown with weeds and illegal dumping. Johnson’s properties gathered dozens of code violations—racking up tens of thousands of dollars in fines. Today, the St. Hope website still promises that some of those properties “will be renovated over the next five years” or that they are “scheduled for 2007.” But as that last vow makes painfully clear, the website hasn’t been updated in years; meanwhile, the properties sit empty, unbuilt, or unrefurbished.

• St. Hope also promised to save Johnson’s alma mater, Sacramento High School. Lagging test scores in the early 2000s put Sac High on the state’s list of “failing schools.” Established in 1856, Sac High billed itself as the “second-oldest high school west of the Mississippi,” though the current building dates only from the 1970s. In 2003 the school board gave Sac High to Johnson’s St. Hope to run as a charter school.
The closure of Sac High was bitterly contested. Groups of parents and activists tried for years to kick St. Hope out and revive it as a neighborhood school. The takeover created an undying enmity between Johnson and the Sacramento teachers’ union. Sacramento Charter High School is a success if you go by test scores and graduation rates. But no real empirical comparison can be fairly made between the teeming comprehensive high school of two thousand students and the small charter school of nine hundred that is there today. The latter has an application process, and the local teachers’ union has accused the school of “counseling out” students who don’t perform. In other words, Johnson didn’t turn around Sac High—he gutted it and established a much smaller, more selective school in its place.

• St. Hope’s “Hood Corps” program was funded with AmeriCorps grants to get young volunteers involved in tutoring at-risk youth and other kinds of community service. In 2008 federal officials found that St. Hope had misused the AmeriCorps money for Johnson’s “personal needs and purposes and/or to provide added free or subsidized staff for one or more of the entities controlled by Mr. Johnson.” In other words, the AmeriCorps money helped pay salaries of St. Hope employees. Hood Corps students were also used to run errands for Johnson, to wash his car, and to recruit students for Johnson’s charter schools. Some were even assigned to work on political campaigns for incumbent school board members who, according to federal investigators, “would be more likely to vote in favor of renewing Sac High’s charter.” St. Hope eventually had to give back more than $400,000 to AmeriCorps, and for a time Johnson was barred from receiving public funds from the federal government.

Arena Capitalism

Some of Johnson’s behavior, and some of the dubious practices at St. Hope, started to come to light in late 2007 and early 2008, when Johnson announced his bid to be mayor of Sacramento.

His opponent was Heather Fargo, an environmental planner and former neighborhood activist who’d been mayor for two terms. Under Fargo, the city’s urban core had seen a bit of a renaissance; there were even plans for a few new skyscrapers and residential towers downtown. Near the end of her second term, however, the recession hit and Sacramento’s real estate market flatlined.

Some of Fargo’s detractors also complained of her failure to build a new arena for the Sacramento Kings. Like every Sacramento mayor for thirty years, Fargo wrestled with the problem of public assistance for the city’s only major-league sports franchise.

Fargo’s predecessor, the late mayor Joe Serna, shepherded through a $70 million loan package to keep the team from leaving town. Before him, mayor Anne Rudin oversaw the opening of vast tracts of flood-prone farmland to suburban sprawl, in exchange for real estate developers teaming up with the owners of the Kings to build the current arena in 1988.

By 2000, that arena was deemed obsolete. Plans for a replacement home came and went for years. Mayor Fargo herself always insisted that no public money would be committed without a public vote. In 2006 she backed a quarter-cent sales tax measure to build a new “sports and entertainment center.” Voters rejected it 80 percent to 20 percent.

For Fargo, the lesson was that there had to a better way. She’d later advocate for the NBA to come up with some sort of fund to help cover arena costs for small-market teams like the Kings. Kevin Johnson and his backers learned a different lesson: don’t let voters have a say in arena subsidies.

During the 2008 campaign, the wonky Fargo was ultimately no match for Johnson’s energy and celebrity—or his record-breaking campaign war chest. If anything, Johnson’s strongest opponent was his own baggage. One piece of his past was particularly troublesome: in 1996 a sixteen-year old named Mandi Koba told Phoenix police that her then twenty-nine-year-old mentor, Johnson, had molested her at his home, after the two had met while filming a public service announcement.

Phoenix police investigated, and even recorded a “confrontation call” between Johnson and his young accuser. The transcript of that call is somewhere between wince inducing and damning.

“Can I say something off the record?” says Johnson early in their chat. “I miss you bad.”

Koba tries to draw him out. “Well, I was naked and you were naked, and it wasn’t a hug,” she says later in the conversation.

“Well, I said the hug was more intimate than it should have been,” Johnson replies. “But I don’t believe I touched your private parts in those areas.”

Still, police decided there wasn’t enough evidence to pursue the matter. Koba would later confirm to Gawker Media site Deadspin that Johnson paid her $230,000 to drop her complaint.

There have been many other accusations. In 2007 a former Sacramento Charter High teacher named Erik Jones talked to a student and Hood Corps volunteer who complained that Johnson had hugged and kissed her and touched her breasts. Jones approached St. Hope attorney Kevin Hiestand about the girl’s story and suggested filing a report with Child Protective Services.

At his peak, Kevin Johnson was a figure to behold, an urban policy entrepreneur and brander-in-chief selling #Sacramento 3.0, a “world-class” city.

Hiestand was Johnson’s high school friend and also Johnson’s agent while he was in the NBA. He and two other St. Hope employees met with the girl and her mother, and later reported to Jones that the girl had recanted her story.

Jones resigned in protest in 2007. Sacramento police interviewed the girl and decided to go no further. Federal investigators also looked into a claim by another Hood Corps volunteer that Johnson had tried to climb into bed with her. But police didn’t pursue that allegation because the student was not a minor at the time.

Most Sacramento voters either didn’t believe the allegations—dismissing them as a fabricated scandal ginned up by KJ’s political opponents—or else didn’t care. Johnson was elected mayor in 2008.

Strength Regimen

But KJ was surprised and frustrated to learn that the mayor of Sacramento wasn’t all that powerful compared with big-city mayors like Michael Bloomberg in New York or Antonio Villaraigosa in Los Angeles, another ed reformer who tried to take the reins of that city’s schools.

He envied their staffs and their power to shape their cities’ agendas. But California cities had largely jettisoned the East Coast boss-mayor system during the Progressive Era, a century before KJ came on the scene. More galling, mayors in East Coast cities got to control city schools. In California, as Villaraigosa learned the hard way, the state constitution mostly prohibits mayors from meddling in the affairs of local school boards.

From day one, Johnson was preoccupied with enlarging the footprint of the mayor’s office—in both a political and physical sense. He moved his offices away from those of his fellow council members on City Hall’s fifth floor and took over the underused third floor. Soon KJ’s bullpen was teeming with interns and political consultants, “professional volunteers,” and friends, many of whom followed him over from St. Hope. Johnson was sworn in on December 2, 2008. A few days later he launched a ballot measure—the first of several—to institute a “strong mayor” system of government that would dramatically expand his power and budget.

It was rough going. The courts found one strong-mayor ballot measure unconstitutional, and the city council blocked two others. Subsequent elections resulted in a much more pro-KJ council. But when Johnson finally got his strong-mayor plan on the ballot in 2014, voters emphatically said no.

Now Johnson has the next best thing, a sort of shadow government embedded in the mayor’s office, made up of nonprofit auxiliary organizations and “volunteers,” many of whom are paid with money from big donors who have business at City Hall. This network of 501(c)(3) corporations is ostensibly set up to tackle specific policy areas—such as the environment, the arts, homelessness, education, and economic development. They are funded by private donors, at the behest of the mayor.

These sorts of “behested payments” to charities are nothing new. Council members have used them for years, to fund Little League, concerts in the park, or help keep city swimming pools open. But Johnson’s “charities” are different: he controls them, and they exist largely to promote him.

Behests have always had the potential to cause heartburn for good-government types. California governor Jerry Brown has directed millions in behests to an Oakland charter school he supports. There’s no question that some of those donors are trying to curry favor. The same goes for LA’s current mayor, Eric Garcetti, who directs behests to his Mayor’s Fund. Donations to Garcetti’s fund are tied to specific programs. Johnson’s nonprofits are more ambiguous about their spending.

There’s another striking difference between KJ’s charitable network and the nonprofit funds that other mayors control. Whereas the LA mayor’s fund is run by a board of prominent citizens, many with backgrounds in philanthropy, Johnson’s nonprofits are run entirely by his friends and political consultants.

The flagship nonprofit of KJ Inc. is, of course, St. Hope. As mayor, Johnson has been able to leverage, from real estate and other local interests, about $3 million in donations to support the family business. The biggest donors include Sacramento’s biggest sprawl developer, Angelo Tsakopoulos; arena developer Mark Friedman and his family; and Kevin Nagle, part owner of the Sacramento Kings and majority owner of the Sacramento Republic soccer team. Nagle is also on the St. Hope board of directors. All these men have been big donors to Johnson’s election campaigns and to his strong-mayor ballot measure. But while they are limited by strict political campaign contribution limits, they can give unlimited amounts to Johnson’s nonprofits.

They, along with other business interests, also give heavily to Johnson’s Sacramento Public Policy Foundation (SPPF), which is more closely associated with Johnson’s job as mayor. SPPF collects donations from interested parties who want to curry favor with the mayor, and then distributes the cash to various policy initiatives under Johnson’s direction. For a time, these initiatives included an environmental brand called Greenwise Sacramento and an arts program called For Arts’ Sake. Neither of these groups ever did much, and both are now dead links on Johnson’s website.

The real project of SPPF is Johnson’s “Think Big” initiative, which the mayor advertises as a way to “promote transformative projects that catalyze job creation and economic development.” But Think Big would be more accurately described as a public relations shop for stadium subsidies, coordinated out of City Hall, with the labor of city employees.

Cosmo Garvin writes about local politics and public policy for the Sacramento News and Review.

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