Northside SF
Editor's Note
Cozy ties between Tourk, Ginsburg and Ortega in bid for Stow Lake boathouse don't pass judge's 'smell test'

This article has been revised to reflect the following correction:
The May 2011 Editor's Note ("Cozy ties between Tourk, Ginsburg and Ortega in bid for Stow Lake boathouse don't pass judge's 'smell test'") misidentified Alex Doniach. Ms. Doniach was an unpaid intern with Alex Tourk from May through August 2010. She was hired as a field representative for Senator Leland Yee in November 2010. The Stow Lake controversy has no connection to Senator Yee.

Just days after my March 2011 Publisher’s Note (“Six degrees of Phil Ginsburg: How a good ole boys network is taking Golden Gate Park to hell in a hand basket”), which expounded on the questionable relationship between the Recreation and Park Department; Alex Tourk’s PR firm, Ground Floor Public Affairs; and Ortega Family Enterprises regarding the Stow Lake boathouse lease award, current leaseholder Bruce McLellan filed a lawsuit against the City of San Francisco, the Board of Supervisors, the Recreation and Park Department, the Recreation and Park Commission, and the Ortegas. The filing includes damning e-mails that clearly demonstrate Recreation and Park not only worked closely with Tourk’s firm and the Ortegas to help secure the lease, but that key city officials were meeting privately about the situation and releasing nonpublic information about the process only to the Ortegas in an effort to backdoor them into the boathouse.

As I wrote in my March column, the incestuous, good ole boys’ network at City Hall left behind by Gavin Newsom is a multiheaded monster, with Newsom’s close pal Phil Ginsburg representing one head as general manager of Recreation and Park. But I notice Ginsburg is conspicuously absent – not so much as a “cc” – from the e-mail correspondence flying back and forth. Rumors abound that Ginsburg has higher political aspirations than his current Newsom-appointed position: he would like to be on the Board of Supervisors, and the murky dealings surrounding Stow Lake could certainly hurt his chances. So rather than put his political future on the line, I predict he will let Nick Kinsey, assistant director of property and concession management for Rec and Park, take the fall as the sacrificial blue heron.
Kinsey, it turns out, is present in a number of the e-mails, as is Meagan Levitan, a member of the Recreation and Park Commission who also sat on the “independent” panel, whose recommendations in favor of the Ortega bid were ultimately accepted by the Commission, and later by the Board of Supervisors.

At a preliminary hearing held Wednesday, April 13, Superior Court Judge Loretta Giorgi was obviously concerned about the cozy relationship between city officials, Ground Floor Public Affairs, and Ortega Family Enterprises. “It didn’t pass the smell test,” she said. (Another hearing is scheduled for May 13.)
The main e-mail that Judge Giorgi pointed out, dated Sept. 17, 2010, was from Shane Ortega to Nick Kinsey, in which Ortega says:

We really thought negotiations would be completed easily and quickly, and we’re just waiting for your side. … I know that you remember that we were wary of this process because we didn’t want to be used to negotiate someone else into a deal.

This clearly indicates that Ortega and Kinsey had been working together for some time. The most damning part of the e-mail comes when an obviously frustrated Ortega refers to Tourk’s politically connected lobbying firm, saying:

We were also afraid when you all asked us to spend what amounted to $15K for a PR agency to help the process.

During the hearing, the city attorney representing Recreation and Park tried to downplay the e-mail “because it was written in September,” several months after the panel chose Ortega and one month after the Recreation and Park Commission upheld the decision; however, public records reveal a $7,500 payment from Ortega Family Enterprises to Ground Floor Public Affairs in July and two more payments in November and December for a total of $22,500.

It also turns out there are more incriminating e-mails – one of them dated July 21, 2010, sent from Maxwell Szabo of Ground Floor Public Affairs to Kinsey and Sarah Ballard (policy and public affairs director for Recreation and Park) with copies to Alex Tourk, Shane Ortega, Frank Klein (Ortega's choice for food service at Stow Lake), and Alex Doniach (a Ground Floors intern). In the e-mail, Szabo lists Ground Floor’s choices for who should accompany Ortega and speak on his behalf at an upcoming Recreation and Park Commission meeting. He also directly addresses Kinsey and Ballard:

Sarah and Nick, you guys are working on someone from SF Parks Trust, yes? Let us know who that ends up being as we’d love to activate them going forward. There are a number of reasons we feel they’ll be supportive [of the Ortega bid], namely, the benefit of 30–40% increase in revenue ...

In the final paragraph, Szabo says:
FYI – We can try and find a neighbor to speak in support, but the reality is we haven’t been out there yet talking about this because we’ve been waiting until the selection was made public.

This clearly demonstrates that Ground Floor, Recreation and Park and Ortega, along with other public officials, had been communicating for some time and were working together to ensure the Stow Lake boathouse lease went to the Ortegas.

In a declaration dated March 25, 2011, Kinsey denies having communicated with the Ortegas or steering them to Tourk, a statement that, in light of these e-mails, is blatantly false.  

So where is Ginsburg in all of this? As I said, he is conspicuously absent from the e-mail trail, but definitely involved behind the scenes. In an e-mail dated Aug. 17, 2010, his executive assistant, Staci White, requests Tourk’s presence at a meeting: “I know this is last minute, but I’ve been asked to coordinate a meeting to discuss Stow Lake tomorrow. Would you be available at either 12:30 or 1:00 p.m.?” Also copied on the e-mail are Kinsey, Ballard, Szabo, and Levitan. The date of the meeting – Aug. 18, 2010 – is one day before the Recreation and Park Department presented the commission with their recommendation to award the lease to Ortega (remember, Levitan is a member of the commission and also sat on that supposedly “independent” panel).

As to why Recreation and Park so desperately wants Ortega in and McLellan out remains somewhat of a mystery. Ginsburg and his cronies are fond of pointing out the boathouse’s disrepair, but what they forget to mention is that for the past six years McLellan has been on a month-to-month lease. If you were a tenant living in an apartment on a month-to-month lease, would you remodel the kitchen and the bathroom with your own money? That is the landlord’s responsibility, and in the case of the Stow Lake boathouse, the landlord is Recreation and Park.

The new lease won by Ortega is for 15 years with a five-year option, which gives him two decades worth of incentive to invest his own money.

Recreation and Park also likes to refer to the Ortega bid as the “best bid,” but in reality, McLellan’s bid was superior, offering rent numbers of 28 percent for food (Ortega negotiated 10 percent), 36 percent for boats (Ortega offered 33 percent), and an annual guaranteed rent of $215,000 (Ortega originally guaranteed $140,000, which he raised to $160,000 the day before the lease approval went before the Budget and Finance committee).

While Ginsburg proudly touted Ortega’s “new fleet of boats” to the Board of Supervisors, in reality, new boats were a required element for anyone bidding on the lease. Ortega offered to start with 50 boats and increase the number “if necessary,” McLellan, whose family has run the boathouse for more than six decades, offered 85 boats based on his knowledge of actual need.

With regard to capital improvements, both parties were in the $200,000-plus range – the difference was Ortega plans to convert the entire boat repair shop into a cafe and gift shop, while McLellan planned to devote a small portion of the shop to indoor seating (realizing, again from his years of experience, that you can’t operate a boat rental business without adequate repair facilities).

The RFQ also required “experience operating a boat rental operation,” which McLellan obviously has – and Ortega doesn’t. Ortega said the Balzano family, operators of Carlsbad Caverns Cruise Lines, would run the boats for him; however, Balzano did not appear at any public meetings. It is also unclear how Balzano would be compensated for providing the “boating experience” requirement of the lease (or where those new boats will be housed or repaired since Ortega plans to turn the entire facility into a cafe and gift shop).

It all comes back to those plastic great blue herons – I think Recreation and Park has high hopes that Ortega will sell a ton of trinkets, toys, hats, mugs, magnets, and sweatshirts like he does at his other formulaic concession stands. And though alcohol wasn’t part of the RFQ, Ortega’s presentation did mention creating a “lounge area.” Since the other cafes in Golden Gate Park serve alcohol, I have no doubt Stow Lake will, too. (Now that’s a great combination – boating and alcohol!)

As for Ground Floor Public Affairs founder Tourk, a friend of Ginsburg’s from their days in Newsom’s regime, he continues to weave a tangled web. The main attorney for the City of San Francisco, the Board of Supervisors, Recreation and Park, and Recreation and Park Commission is, of course, City Attorney Dennis Herrera. It just so happens Herrera is also a mayoral candidate. On his website, Herrera says as mayor he will “work to ensure that city government is clean, transparent, and efficient,” and boasts that he created a Public Integrity Task Force to “root out corruption in city departments.” And who is Herrera’s PR firm? Why that would be Ground Floor Public Affairs.

Perhaps Herrera should take a look in his own backyard before he makes any more big promises.


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