Pay to Play: Construction firm TELACU bankrolling Centinela Valley school board campaigns, receiving millions in contracts
Feb. 19, 2014
For a couple of moms from working-class families hoping to retain their seats on the Centinela Valley school board, it was a stark lesson in machine politics.
In a small room at the Proud Bird restaurant near LAX, a group of maybe 15 had gathered to support board members Sandra Suarez and Gloria Ramos. Nearly everyone sharing finger foods that day was connected to a community development corporation called TELACU, which bills itself as the fifth largest Latino-owned business in California.
There were architects, lawyers, consultants. And high-powered figures from TELACU itself. Everyone in attendance wrote out two checks for $99 — the highest amount that can go unreported in campaign filings — one for Suarez, one for Ramos.
Donors included President and CEO David Lizarraga, who at the time was chairman of the U.S. Hispanic Chamber of Commerce and has since been appointed by President Barack Obama to a key administrative post in the U.S. Department of the Treasury. Also included was John Clem, the TELACU executive who heads up all the construction projects in the Centinela district, as well as the wives of both men.
All for two women in a tiny district that oversees just three comprehensive high schools in Lawndale and Hawthorne.
“It was kind of odd,” Suarez said. “They were giving us money — I’m not used to any of that. … To tell you the truth, I didn’t even realize they were giving for us at first.”
The event was a window into the political machine that has been picking leaders in the tiny district since 2008. In the two past contested elections, TELACU has poured large amounts of money into campaigns to elect their favored candidates who almost always win.
TELACU won, too. Since 2008, the TELACU-backed Centinela Valley school board has put two construction bond measures on the ballot totaling nearly $200 million. Voters approved both, and TELACU was awarded contracts to manage the construction projects.
Clem, president of TELACU Construction Management, did not return calls from the Daily Breeze on Tuesday and Wednesday. But Centinela Valley officials have pointed out that as a result of the two successful bond measures — one in 2008, another in 2010 — major face-lifts have occurred or are in the pipeline for all three campuses. The projects have replaced old, sometimes crumbling facilities with state-of-the-art classroom wings, media centers, offices and commons areas.
Critics, on the other hand, say the whole thing smacks of a money grab for the interested parties at the expense of the taxpayers.
“The problem with Centinela Valley, and so many school districts and community colleges, is that they have become bond-passing machines that milk the public to pay for lavish construction projects, outrageous salaries and terrible loans,” said Mariano Vasquez, the plaintiff in a lawsuit opposing a recently passed parcel tax floated by Centinela Valley and four feeder elementary school districts.
“This causes a very harmful misallocation of scarce resources and capital that slowly brings ruin to the town.”
In recent weeks, Superintendent Jose Fernandez — who took the helm roughly at the same time that TELACU began exerting its influence in Centinela — has said publicly that the district intends to try for a third construction bond. This announcement came just days before a Feb. 9 story in the Daily Breeze revealed that Fernandez amassed more than $663,000 in total compensation last year. At least $215,000 of that came from a one-time expense, but Fernandez — in exercising another generous provision of his contract — also has taken a $910,000 loan from the school district to purchase a home in Ladera Heights. He has 40 years to pay it off, at 2 percent interest — an unusually favorable set of terms.
TELACU first demonstrated its ability to influence the outcomes of Centinela Valley school board elections in 2009. The company donated $28,000 to a political action committee called Citizens for Better Schools, according to campaign finance reports obtained from the Los Angeles County Register-Recorder’s Office. Citizens For Better Schools, in turn, dished out $55,000 to purchase mailers and other promotional materials touting three candidates: Rocio Pizano, Hugo Rojas and Maritza Molina.
(By comparison, Pizano’s election committee raised $5,000, according to the documents. Rojas and Molina apparently raised no money.)
Pizano was an incumbent. But Rojas, a karate instructor and former Hawthorne school board member with at least two DUIs on his record — and Molina — then a 23-year-old recent college graduate — ousted two incumbents with education credentials. One of them, Rudy Salas, is the principal at Hawthorne Middle School. The other, Frank Talavera, is an educator who at the time was teaching at Gardena High School. Both opposed an effort to put a bond measure on the ballot in 2008.
Sources say those two board members were controversial as well and had a vindictive streak. Salas declined to be interviewed; Talavera couldn’t be reached.
In his ballot statement that year, Talavera wrote that his experience “will help me guide the district in a more positive direction where students are the PRIORITY and not buildings or superficial fix-ups.”
TELACU’s preferred candidates were triumphant. In December 2009 — a month after the election — the new school board unanimously approved Fernandez’s generous employment contract. Not long after, the board voted to put another $98 million bond measure on the ballot. In November 2010, the voting public gave its assent.
The initiative raised eyebrows on the Lawndale City Council.
“I think it’s outrageous they do this in low-income communities,” Councilman Larry Rudolph said. “What are we getting for it? I don’t see anything except for these big fancy buildings. I don’t see how they are going to make the kids any smarter.”
Rudolph added that in his own elections, he does not accept campaign contributions. “I wouldn’t want to be in debt to anybody,” he said. “I don’t have to do anything but vote my conscience.”
Although it is common for big construction companies to make financial contributions for the passage of bond measures, it is rare for them to put up money for individual school board candidates — at least in the South Bay.
“In our case, I doubt anybody got a dime,” said Jane Diehl, a former longtime school board member in the Redondo Beach Unified School District. Diehl was on the board when voters in the district approved a $145 million construction bond measure in 2008. That project has been managed by the company Balfour Beatty.
“Most of the school board elections in Redondo are pretty sparse,” she added, saying candidates there generally raise around $8,000. “If you want to win, you gotta walk” and knock on doors.
Mark Steffen, president of the Torrance school board, said he believes the same is true in Torrance Unified, where voters approved a $355 million pair of bond measures in 2008.
Balfour Beatty manages those projects as well.
“They’ve never offered, nor have I sought out dollars from them,” Steffen said.
In the Centinela Valley school district — which oversees Lawndale, Leuzinger and Hawthorne high schools — TELACU hasn’t been the only heavy contributor to election campaigns.
In 2011, the investment firm Piper Jaffray of Minneapolis contributed $25,000 to Citizens for Better Schools, donating much of that to TELACU’s favored candidates. The two firms have combined forces elsewhere in support of school bond measures, including a 2010 bid in Claremont. Piper Jaffray contributed $25,000 to that campaign, and TELACU $20,000.
Also contributing to Centinela’s 2010 effort to get a construction bond measure passed were law firms such as Dannis, Woliver, Kelley — which has a lucrative contract with the school district. (It donated $7,500.) Another law firm gave $5,000.
The event at the Proud Bird back in the summer of 2010 was a campaign fundraiser for the 2011 school board race. It was early in the game, and things wound up taking an unexpected twist — both Suarez and Ramos fell out of favor.
It so happens that Suarez is big on historic preservation. When it came to her attention that the bond measure called for knocking down much of Leuzinger High, she began to have doubts. By October 2010 — a few months after the fundraiser — she was fully opposed, and speaking out publicly.
It’s less clear why the construction company ended its support of Ramos. But she — unlike the other three members — was generally known for occasionally voicing dissent on district matters.
In any event, Citizens for Better Schools found two new candidates to support: banking executive Lorena Gonzalez, who was challenging Suarez; and Ugo Felizzola II, a 24-year-old financial analyst who was trying to unseat Ramos.
This time, the political action committee spent $82,000 on its campaign favoring those candidates. Once again, TELACU made a sizable donation; records show it contributed at least $10,000. (This was the race in which Piper Jaffray pitched in $25,000.)
Because none of that money went to the candidates directly, they did not have to report the support. The committee spent at least $26,486 on each candidate. The money paid for slate mailers, door hangers, brochures and campaign signs, among other things, according to documents.
A political consultant closely aligned with TELACU met with leaders of the teachers union to request that they endorse the two political newcomers. The union declined, opting instead to endorse nobody.
The effort to oust Suarez was a success; Ramos managed to eke out a victory over the young Felizzola.
Suarez says that prior to the election, Fernandez sometimes took her and other board members to fancy restaurants such as Houston’s in Manhattan Beach. The tab, she said, was often picked up by a law firm or by TELACU.
She later took her husband to Houston’s, not knowing the prices.
“When we looked at the menu, we realized what they were, and we looked at each other,” she said.
They ordered an appetizer, ate it quickly and left.