Thao: "I Have Done Nothing Wrong"; Mid-Cycle Budget Item Removed from Agenda with Deadline to Pass Budget Amendments Approaching; Plus much more...

Mayor Thao Strikes Defiant Tone on FBI Search

In a Monday morning press conference, Oakland Mayor Sheng Thao made her first public appearance and comments about a Federal search of her residence last Thursday. Thao declared her innocence of any wrong-doing and clapped back at the recall group, which has demanded her resignation at several poorly attended spectacle events since Thursday.

"I have done nothing wrong," Thao said. "I have not been charged with a crime, and I am confident that I will not be charged with a crime, because I am innocent."

Thao depicted the FBI's intrusion into her house as a "nightmare" that had her worried for her son's safety. She said she was troubled by the timing of the FBI search, occurring only days after the recall group's signatures were deemed qualifying. And said she would seek answers around "the probable cause" and evidence undergirding the warrant.

"I want answers. We will get answers," Thao said.

By turns emotional, Thao commiserated with Oakland residents who've suffered at the hands of law enforcement.

"I know many of you know exactly how this feels, sitting with your head in your hands, scared, angry, scared to look too angry, in fear of how you might make the situation worse, feeling the injustice in every bone in your body, knowing, if you cry out and demand for answers, you will do nothing but cement the judgment they have rooted deep in their mind. I see you. I really see you," Thao said.

The press conference also marked Thao's first response to the recall group, which she largely ignored for the last several months. Thao went on offense, calling them "a radical right wing group" and "a handful of billionaires from San Francisco and from Piedmont who...succeeded in buying a recall election".

The Public Ethics Commission is currently investigating the recall group and another group, Foundational Oakland Unites [FOU], for failure to report donors and for collusion between the recall group and the supposedly separate FOU. FOU raised about a quarter of a million dollars with no reports about donors and spent it paying the bills for the signature gathering company On the Ground. Members of the recall group have reportedly received subpoenas from the Public Ethics Commission.

Thao also questioned the speed at which media arrived at her home early in the morning, and the rapidity with which right wing media organizations like Breitbart and Fox were able to turn around stories on the raid. Thao also referred to one of the organizers of the recall as "a dangerous man with a history of assault weapons violations".

After the event, the recall group again held a performative protest, in which about a dozen participants came—in the photo below, it appears that the media crews and reporters to the right outnumber the protesters. While several media companies have described these events as "escalating" calls for resignation, the group has remained contained to about a dozen people who are involved in an intersecting network of small landlord advocacy groups connected to both the Price and Thao recalls.

The images match a Sunday night event by the same organizers where media somehow outnumbered the protesters but failed to report that fact.

Ironically, congressional candidate Jennifer Tran also has links to the network. Tran received about $13K in donations from the Duong family and her father and fellow Vietnamese Chamber of Commerce director was at the heart of inquiries into "straw donations" to political candidates. The elder Tran refused to respond to a subpoena over the allegations [see below].

Still later, Thao's attorney Tony Brass told reporter Zak Sos at KTVU that Thao's vision of her defense and his had diverged and that they'd separated amicably.

The Mayor's issued a statement noting that she'd separated from Brass as of Saturday.

"Over the weekend, I obtained new legal counsel and thanked Mr. Brass for his counsel. I will share the name of my new counsel once agreements are finalized."

A source at City Hall confirmed to OO that they'd known about the switch from Brass by yesterday.

Mid-Cycle Budget Item Removed from Agenda with Deadline to Pass Budget Amendments Approaching

The mid-cycle budget amendment process is already running on a tight schedule—budget amendments must be completed by June 30th in order to use the new budget parameters starting July 1, the beginning of the 2024-25 fiscal year. The June 26th Special City Council Meeting agenda for this Wednesday was originally meant to focus on deliberations over Mayor Sheng Thao’s budget amendments; the amendments by the Council President’s budget team; and additional focused amendments from the remaining CMs, Treva Reid, Janani Ramachandran and Noel Gallo.

According to statements made by Council President Nikki Fortunato Bas, at a previous meeting, Bas intended to introduce her amendments to Thao’s mid-cycle amendments to the FY 24-25 budget at the June 26th  meeting. But according to the agenda, Rule 28 was used to remove the mid–cycle item from the agenda before it was published for reasons that remain unclear. This last Thursday’s Rules Committee meeting was canceled, likely in the wake of the tumult caused by the FBI search of Thao’s home just hours earlier so there was no chance for deliberation or explanation of the move. 

Rule 28 is a Council procedure that allows a scheduled item to be pulled from an agenda before it's printed with the consent of the Council President, Chair of the Rules Committee and City Administrator/Mayor—all three must agree. It's not clear at this point why the item was pulled, the agenda was only printed late Friday night, but given the Council President’s stewardship of the mid-cycle process, it was likely pulled by Bas. Given the structure of Rule 28, Bas would have had to approve the move, regardless, as would the City Administrator.  

Bas’ proposed amendments would have shuffled and added revenue—with, for example, the addition of two parking attendants to add revenue. Bas appears to have honored several of the requests in the Ramachandran/Reid/Gallo proposed amendments, including the restoration of a Fire Captain, several police technicians, community ambassadors and changing some deleted positions into frozen positions. 

But since the item has been pulled, the soonest it can reappear on an agenda is the meeting set for June 28th—a meeting scheduled in case the Council needed more time to deliberate before the deadline of June 30. The Council needs to pass a new budget to have the appropriations, expenditures and revenue assumptions listed in the amendments take effect—but if the Council misses the deadline, the original FY 24-25 baseline budget would be used. A short delay in the use of the budget amendments would likely be irrelevant. But the nature of the delay may be more worrisome with the City headed into uncharted territory given the large deficit and make-or-break closure with one time funds and the delays involved in doing so, along with the current media-fueled instability plaguing City Hall. 

It's not clear if the Council now intends to pass the budget amendment in one meeting of deliberation or plans to pass it at a subsequent meeting, past the deadline. Meetings can also be continued to a following day to continue to discuss items on the agenda, but that would make three continuous days of budget meetings on short notice.

Wednesday's cancellation of the mid-cycle item will mark the second anti-climactic meeting in a month where an important issue that was the entire rationale for a special meeting is pulled—last week’s special meeting was to hear the CAO’s plan to close this year’s deficit [see below] by year’s end, but otherwise few items of urgency. This week’s meeting will be a redux, with the only significant piece of legislation being the Public Ethics Commission ballot measure—it hasn’t been amended since last week, but based on concerns about the cost of the election during the deficit crisis and the concern that the PEC isn’t the right home for the Mayor’s salary calculation, it could simply be pulled as well. 

Bas Budget Team's Proposed Amendments as of Last Week

Bas’ spreadsheet of amendments would seem to include much of the D4/D5/D7 requests, it includes partial restoration of community ambassadors, restores three OPD civilian investigative staff, and one of two frozen Fire Captain positions. But whether the document available prior to Thursday’s rules committee—and then pulled—is the final version remains to be seen along with why the item was pulled in the first place. It may also not be enough to satisfy Ramachandran and, to a lesser extent, Reid, who is backing what appear to be amendments written mostly by Ramachandran. Gallo appears indifferent, despite having his name on the legislation. But all of these would be based on assumptions in the budget to date—and the delay may mean these assumptions aren't valid any longer.

Parks Orgs Wary of Measure Q Utilization

There are more issues to deliberate, however. The Oakland Parks and Recreation Commission, Heritage Alliance and Oakland Parks and Recreation Foundation have all sent letters to the City and Council wanting clearer answers about how Measure Q funds will be used to balance the budget. The City Council will, as it did last year, pass a resolution of fiscal necessity, allowing it to supersede the “maintenance of effort” requirements in Q and other ballot measure parcel tax funds. That allows the City to transfer qualifying existing roles in the areas of homelessness in parks, water use, and park maintenance and beautification from their usual funding source in the GPF to Q.

The groups are pushing back on some of the expenses, including an additional funding for Beautification Council, administrative roles in parks maintenance and some take over of the LLAD duties. Q’s maintenance of effort requires that no more than 55% of the funds be used to maintain current park services, and that the remaining 45% be only used for additional park services. PRAC says the percentage is now up to 63%, a similar level as last year. Other critics have also cautioned that the increases are simply hiding a portion of the deficit—either the city will have to vote for a fiscal necessity each biennial, or the funding will have to be cut or taken from elsewhere in the next budget making cycle. 

FY 23-24 Budget Balancing Now Envisions Cutting New OPD/OFD Fleet, Relying More Heavily on Library Bonds to Balance GPF Shortfall As Coliseum Funds Unavailable Until FY 24-25

As The Oakland Observer has reported in the past several weeks, the City Administrator originally reported a package of actions to close this year’s large budget gap of $155 MM* in late May. After adjusting for the large carry forward that began the year with the last ARPA funds and the cancellation of baseline budgetary carry forwards, the true gap ends up being around $60 MMM. The original report noted a planned use of a combination of canceling carry forwards and funds transfer to save about $30 MM—and held back about $10 MM of that as a contingency–the final savings from that cut in the previous formula was $20 MM. That left a gap of about $42 MM to close, which was meant to be covered by a portion of the Coliseum sale, closing the gap entirely for this current fiscal year.

In the new formula, the City is utilizing the entire available $30 MM of the cuts. That leaves $30 MM to close in the new formulation. Now, the City Administrator says, $19.3 MM of that will be resolved through the following actions, including canceling a new $9 MM OPD/OFD fleet, & $6 MM use of library bond measure on library expenditures.

After all that, $12.76 MM is left to close, according to the report. The City Administrator claims that the current regimen of hiring freeze, suspending pursuit of contracts and grants will get the city there. The legislative item approving the OPD vehicle purchase is still on the agenda for public works on Tuesday, it’s worth noting. The assumption is it will be pulled with explanation, but the OO will update this story if that's not the case. 

Details on Thao FBI Search Unknown, So Local Corporate Media Invent Their Own

Details on the well-publicized raid on Thao’s home have been scarce—the FBI, which led at least two other Federal agencies in the action, according to the Oaklandside’s reporting, has released little information other than stating the obvious—that it was conducting an action at the address where Thao lives with her partner and children and the other sites which are owned by members of the Duong family, which runs and operates California Waste Solutions and the Vietnamese Business Association.

Thao remained silent about the event for a little over 36 hours from the pre-dawn raid, until Friday when an attorney, Tony Brass, made a brief statement on her behalf, saying that Thao doesn’t appear to be the focus of the investigation per conversations with the Attorney General and the documents so far made available.  

With little to go on, local media corporations and politically connected “moderate” bloggers seemed focused on adding their own speculation or hearsay as a substitute for facts. A short list of misinformation sponsored by the media founts that are supposed to be informing Oakland residents.

—ABC7’s Dan Noyes Claims Rebecca Kaplan’s home was also searched: It was not.

—KRON’s reporter on the scene Michael Thomas claims all four properties searched belonged to Thao, who rents her home at 80 Maiden Lane. That was false, Thao is a renter and does not own her home. Two other residences are owned by members of the Duong family, and the Duong family appears to also own the building in which California Waste Solutions is headquartered. The video is still on the Kron’s branded Youtube site and the company has not corrected the record. 

—Blogger Steven Tavares claims City Hall offices were searched by federal authorities. No federal agency visited City Hall in any capacity, those present at City Hall have confirmed to numerous outlets including this one. He has not corrected the claim.

—KTVU Interviews Thao Critic without Revealing Connections To Duong Family. KTVU and other orgs interviewed Congressional candidate Jennifer Tran as an ostensible neutral commentator on the Duong’s and Thao. But she's anything but. Tran’s father, Duoc Tran, is at the heart of the original Oakland ethics investigation started on the Duongs in 2020 and was actually accused of being one of the "straw donors". The elder Tran refused to respond to a subpoena in the affair.

The elder Tran is still a board member of the Vietnamese Chamber of Commerce of Oakland where Tran is now President. The elder Tran was also suspected of his own bundling and straw donor operation, all according to a Fair Political Practices Commission complaint from 2021. Tran received around $13k in donations from the Duong family for her congressional run.

But none of this is mentioned in the KTVU interview. Tran has been allied with Neighbors Together and with East Bay Rental Housing Association Director Chris Moore's local Recall operations, and has appeared at several events supporting their platforms.

There is no public information about the search by the FBI, who it was focused on or who is under investigation, although it seems likely the center of the investigation is the Duong family. More on this story as details emerge.

Thao Recall Meets Statistical Threshold, but 26.4% of Signatures Rejected 

The City Clerk confirmed on Tuesday that signatures handed in by Brenda Harbin-Forte, the leader of the Mayor Sheng Thao Recall effort, reached the threshold of validity in a statistical model used by the Registrar of Voters to certify them, according to state law. The reason an actual number of valid signatures is not available is due to the ROVs use of state law, where the ROV can use a statistical model testing a random sampling of 5% of the signatures for validity in lieu of a full count and verification. When that statistical methodology is used, a 5% sample is considered to have qualified outright if 110% of the count is valid.

Public documents reviewed by this publication reveal that the signatures did reach the threshold, but not by the figure being touted by Harbin-Forte in comments to the press of 40,654. Rather, 26.4% of the signatures were ruled invalid–proportionately. If that number were extrapolated proportionately, about 29,900 signatures would be valid in the statistical model. It's about 5,000 signatures more than needed, not nearly double the amount as Harbin-Forte claims. 

According to the data most of the invalid signatures were ruled so on issues around incomplete signatures, inactive registrations—and, the majority of invalid signatures were non-registered voters.  

* The amount was lowered from a projected $177 MM, which was predicted in the 2nd quarter revenue and expenditure report. By the third quarter report, the amount appears to be more likely $155 MM, per the Finance Department.