California Assembly Speaker-elect Pérez has ties to deep pockets
Supporters of incoming Assembly Speaker John Pérez say his rapid climb from rank-and-file lawmaker to one of the most powerful offices in the state is due to his intellectual prowess and unwavering commitment to the working poor.
But Pérez, a Democrat who was chosen as speaker in December and will be sworn in Monday, has something that left-leaning former labor leaders and freshman lawmakers usually lack: a financial pipeline to billionaire developers and white-shoe investors who rank among the most politically active power brokers in the state.
Forged during his years as an executive with the United Food and Commercial Workers Union, those ties have helped fill his campaign coffers. They have also outraged consumer advocates. And two of his mentors from the union came under the microscope in recent political corruption investigations.
Many of Pérez’s legislative efforts have been consistent with the image he has cultivated as a crusader for the marginalized and powerless. He said he’s most proud of a bill that authorizes a study of foul drinking water streaming from taps in the small, poor city of Maywood in his district.
But he has also championed causes that seem directly at odds with his political persona.
In 2009, his first full year as a lawmaker, Pérez carved a lucrative exception into state law for billionaire developer Philip Anschutz. He also introduced a bill at the request of Enterprise Car Rental that would have helped boost the company’s bottom line by stripping away a significant consumer protection.
Before his election to the Assembly, while a member of the Los Angeles redevelopment commission, Pérez voted to give millions in government subsidies to a giant real estate firm that contributed heavily to his union’s political fund.
Pérez, 40, a cousin of L.A. Mayor Antonio Villaraigosa -- a former Assembly speaker himself -- responded philosophically when asked about his involvement with powerful patrons.
“Exposure to people with different points of view, I hope, helps you make better decisions,” he said, adding that it’s impossible to help union members if their employers don’t do well. “I come out of private-sector labor. There is a notion that business has to thrive.”
But in the state with the most expensive legislative races in the country, there is also the reality that lawmakers who want to become leaders have to accumulate rich backers, said Tony Quinn, co-editor of the California Target Book, a nonpartisan publication that tracks political contests.
“Legislators turn to somebody who has developed a knack for tapping all the corporate interests, the big money,” Quinn said. “In the Assembly, it has become a prerequisite for the speaker to be in a position to protect legislators by building a huge war chest.”
Pérez was a 25-year-old labor activist when he was hired in 1995 to direct the Western states council of the United Food and Commercial Workers union, which represents more than 200,000 Californians employed by grocery stores and in related industries. As he moved through the ranks, eventually becoming a political director and vice president, Pérez learned to press the UFCW’s agenda with lawmakers and wield the considerable power of its campaign funds.
He worked closely with fellow union executive Sean Harrigan, who said he had been a Pérez mentor and who in 2000 was appointed to the board of the California Public Employees Retirement System, the world’s largest pension fund.
Consumer groups and government watchdogs were shocked by what the union did next: raise more than $374,000 in political contributions from investment firms doing business with CalPERS.
“That’s one step short of payola,” said Doug Heller of the Santa Monica-based nonprofit group Consumer Watchdog.
Four firms targeted in an investigation into corruption in the New York state pension fund contributed to the union while Pérez was vice president. They include Markstone Capital Group, which agreed in December to pay $18 million in restitution after founder and former Chairman Elliott Broidy pleaded guilty to felony charges related to gifts and political donations to top decision-makers in New York.
In an interview, Pérez acknowledged that the union’s solicitation of money from CalPERS investors while Harrigan worked in both places was awkward. But he distanced himself, saying Harrigan alone raised the money.
“In retrospect, yeah, I would have asked questions,” Pérez said. “But I didn’t know what business [the contributors] had with CalPERS then. I only know that now after what I’ve read.”
The CalPERS investors donated to a union fund that contributes to ballot-measure campaigns, although not to candidates. Pérez benefited from the union’s overall fundraising success, however. When he ran for the Assembly in 2008, the UFCW and its locals put $86,000 into his campaign.
Harrigan said there was nothing improper about the fundraising.
Last spring, Harrigan resigned from a separate post, on the Los Angeles Police and Fire Pension Fund board, after being questioned by authorities looking into financial firms doing business with it. No charges were filed.
Another Pérez ally from the UFCW is Dan Weinstein, a former regional political director of the labor group who recruited him to run the regional council and later helped fund his election to the Assembly. While Pérez was a local political director and Harrigan sat on the CalPERS board, Weinstein’s financial firm made millions of dollars helping clients land CalPERS business. Weinstein also put $18,000 into the union’s political accounts.
Weinstein and his firm later became embroiled in a probe of New York state pension fund business, agreeing to repay the fund $1 million, although Weinstein admitted no wrongdoing and has not been accused of illegal activity.
Weinstein and Pérez say they have remained friends.
“I feel horrible for all the difficulties he’s found himself in,” Pérez said.
Harrigan was executive director of the union’s regional council from 2001 through 2005. Pérez was local political director starting in 2001 and served concurrently as a regional vice president beginning in 2003, until he left the union in 2008. One of the council’s most generous contributors during those years was the CIM Group, a Los Angeles real estate development firm that donated $51,000 to a UFCW political fund.
During those years, the company prospered in front of public boards that Harrigan and Pérez sat on. CIM got $280 million to invest from the state pension fund and favorable decisions from the Los Angeles Community Redevelopment Agency while Pérez was on the agency’s board of commissioners.
In December 2005, Pérez voted to allow CIM to use a $4.3-million redevelopment grant to pay off a private loan financing the firm’s downtown Gas Company Lofts project. Months before the vote, CIM had given $12,000 to the UFCW’s political committee.
In May 2006, Pérez voted to approve the use of public money to subsidize CIM’s Reseda Theater renovation. Two months later, CIM gave his union an additional $6,000.
Pérez said there was no connection between his votes and the contributions, adding that he didn’t “know that CIM was still contributing to the union while I was on the CRA board.”
CIM spokesman Bill Mendel said each contribution paid for an advertisement in the souvenir book for the union’s “Person of the Year” award ceremony, a donation the company made annually from 2002 to 2007.
Nothing Pérez did on the redevelopment board generated heat like his vote in 2005 to let CIM install “supergraphic” signs on Sunset Boulevard.
The previously banned billboards, which can cover an entire side of a building, outrage some residents who say they destroy the aesthetics of a neighborhood. Chris Schabel, an elected member of the Hollywood Studio District Neighborhood Council, said Pérez should have recused himself.
“If the union was receiving money” Schabel said, “he should not have voted on it.”
Pérez said recusal is necessary only if a board member has personal business ties with an applicant. “I had no business with them,” he said.
Three years later, Pérez rented an apartment from CIM.
In 2008, when he ran for the Assembly seat representing downtown and areas to the east and south, Pérez needed to move from Loz Feliz into the district. So he rented a 900-square-foot apartment in CIM’s Gas Company Lofts -- the project he’d voted to subsidize.
“I looked at about 12 buildings downtown,” hoping to find somewhere that wouldn’t become a political liability, Pérez said. But, “as you can imagine, almost every building downtown has some business with” the redevelopment board. So he just chose a place he liked.
He would not say how much rent he pays, only that it’s market rate and “exorbitant.”
Proposals draw fire
Since his arrival in Sacramento in December 2008, several of Pérez’s proposals have drawn fire from consumer advocates. One was a measure that would have made it easier for car rental companies to hold customers liable when vehicles get stolen. Under existing law, the companies must prove that the client acted recklessly in order to collect.
Pérez concedes that Enterprise wrote the bill and asked him to submit it, while noting that most lawmakers in Sacramento sponsor legislation written by private interests. “It’s not uncommon,” he said.
Enterprise made a $2,500 contribution to Pérez less than a month after he introduced the bill, campaign finance records show.
“We approached Mr. Pérez because he is a thoughtful and knowledgeable member, who displayed interest in the car rental industry,” said Enterprise spokeswoman Laura Bryant.
Pérez said he let the bill die because, although he had submitted it at the company’s request, he never liked its liability provision and was unable to negotiate more reasonable terms for consumers.
Another measure that Pérez pushed made an exception to state law that allows billionaire developer Anschutz to advertise alcohol inside Club Nokia, part of his $2.5-billion L.A. Live entertainment project.
The bill seemed dead last year, but Pérez revived it. The move surprised political observers because Pérez is openly gay and Anschutz, who lives in Denver, supported a measure to overturn Colorado laws against discrimination based on sexual orientation.
Pérez, who received $4,600 in contributions from Anschutz’s company and lobbyist, said he championed the cause to help create jobs in his district, a worthy goal even if the businessman in question is “a jerk.”
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