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  Richmond Confidential - Richmond and Concord Vie for State-Run Call Center
March 5, 2013

See email following this story from Jim Rogers.
Tom Butt
Richmond and Concord vie for state-run call center
This building, located at 1450 Marina Way, is one of the locations being considered for a state-run call center. (Photo provided by owner Richard Poe at Virtual Development Corporation)
This building, located at 1450 Marina Way, is one of the locations being considered for a state-run call center. (Photo provided by owner Richard Poe at Virtual Development Corporation)
By Jennifer BairesPosted 2 hours ago
As part of an ongoing tussle over the fate of a state-run call center expected to create some 200 jobs, city council members in Concord and Richmond will discuss the same item at their respective meetings on Tuesday night: How to guarantee the center is placed in their town.
The call center is part of California’s move to comply with Affordable Care Act regulations and provide information for Californians on health insurance changes and plans. The goal is to have the center up and running by June, said Contra Costa County Supervisor Karen Mitchoff.
The Health Benefits Exchange Commission (HBEX), a five person board appointed by the state legislature and governor to help Californians access affordable health care, announced on January 18 that it intended to award one of the three state-run call centers to Contra Costa County. The commission laid out specific criteria that the county’s chosen location must meet, including that the center must be in an “area of persistent unemployment,” have a large pool of employable workers, nearby available public transportation and have two dedicated training rooms and eight closed offices.
According to a memo from staff in the Contra Costa Public Works Department, the minimum requirements also include specifics on the type of phone cabling that should run through the center, that cubicles should be single-occupancy and there should be direct, securable access to the “main point of entry” for telephone repair crews to get into the building.
After an initial review of a few sites in January, the board of supervisors narrowed down the possible location of the center to Richmond and Concord.
Joseph Garaventa, the owner of the Concord site—located at 2500 Bates Avenue—submitted a proposal to charge the county $1.9 million in rent and occupancy expenses for a three-year contract. But county staff estimated that the cost to the county to improve the property to meet the HBEX commission’s standards would take another $1.3 million, in addition to roughly $1 million more needed to buy furniture. County staff also found that two conference rooms would need to be built, along with a separate entrance for service access—but they did not put a specific cost estimate on these items.
The Concord site is currently wired with an older generation of phone cable, which according to the county staff’s report would need to be removed and re-wired with the appropriate cable. The price tag for that project, according to their estimates, is $557,000. In total, staff estimated that the Concord site would cost the county at least $4.2 million during the three-year lease term.
Richard Poe is the owner of the Richmond space proposed for the call center, which is located at 1450 Marina Way South.  According to the county’s staff report, rent and occupancy expenses in Richmond would be higher by $15, 540 for the whole three-year period—putting it at $1,915,000—but the total cost would be $850,564 lower because the improvements needed for the property would be less expensive.
The Richmond site does not have any existing cabling, but according to the county staff report Poe’s three-year proposal included the cost for installation as part of the estimated occupancy expenses. The two items that would cost the county additional expenses are the installation of a sound system (the Concord site already has such a system in its building), which county staff estimates at $45,000 and installing a monitored-enry security system. The price for that is not estimated, but the same system is needed at the Concord site.
After considering rent and the expenditures needed to bring the Richmond site  up to HBEX standards, the total cost for the three-year contract proposal is $3.4 million, according to the county staff report.
This difference in bids has councilmembers in Richmond upset that Concord is still being considered. Richmond Councilmember Jael Myrick—who along with Councilmember Jim Rogers, has added a call center item to the city council’s agenda for the last few meetings—said he is troubled that the call center wasn’t awarded to Richmond after the county’s staff’s report in February.
“There are politics at play,” Myrick said, in a phone interview last week. “The supervisors have more connections to Concord than Richmond.”
Myrick called Garaventa a “powerful political player” with lots of connections. “We need the 200 jobs,” he said. “If they pick the Concord site they’re voting to waste $850,000 of voters money to give to their friend.”
“I can understand why the supervisors would want it to be in their region,” Richmond councilmember Jovanka Beckles said. “But, when talking fairness and what’s right and integrity … then the right thing to do would bring it to Richmond.” 
At Richmond’s February 19 city council meeting the council voted to send a letter to the county strongly encouraging the supervisors to vote for the Richmond site. During that discussion many councilmembers voiced frustration that Richmond might not win the call center. “When you look at the geographics we really only have two supervisors who identify with West County,” Councilmember Nat Bates said, “our own [Supervisor John Gioia] and maybe one other, Federal Glover, that serves portion of West County. So now, it looks like unless something occurs dramatically we may just get one vote.” 
Salvatore Evola, Pittsburg’s vice mayor and the government relations spokesperson at Garaventa Enterprises, said that he did not see the issue as political maneuvering and that Garaventa is not being favored by anyone on the Board of Supervisors.
“I think everyone is trying to serve the county as a whole,” he said. He added that he and Garaventa think it would be better for the county to use the Concord site’s existing infrastructure—it’s cabling and cubicles—instead of spending money to purchase new items.
Poe said that his understanding of the situation was very different. He said the state guidelines as laid out by the HBEX commission are clear.
“When I was on the tour with the state they made it very specific that they needed CAD 6 wiring, natural light for their employees, cubicles with glass on top so supervisors could see employees and secure point of entry for servicers,” Poe said. “They had very specific, specific requirements.”
Richmond’s site, he said, is the best option because the community needs the jobs most and his bid was much cheaper. In addition, Poe said that at tonight’s city council meeting he is expecting the council to approve further assistance to secure the site for Richmond by voting to extend a loan to his company to cover the costs of purchasing the necessary cubicles. If approved, Poe will then re-pay the city back for the loan over a period that “might be as long as 25 years,” according to the updated staff report on the agenda item.
“After tonight we suspect we’ll be about one million and eight cheaper than Concord,” Poe said.
Mitchoff, whose district includes Concord, agreed with Evola that the issue is not political. She said she wants to make sure that the “minimum requirements” the county is using to evaluate the sites—like the specifications on cabling to cubicle size—are truly required by the HBEX commission. “This to me is a fiscal issue, not a political issue,” she said.
Another consideration for where to house the call center is unemployment rates—Richmond’s is at 13 percent and Concord’s is at 9 percent. But Mitchoff and Evola say that it’s not the individual cities’ unemployment rates that matter, it’s the county’s. Concord—they said—is in a better location to serve more people. “It is the best site for the majority of county residents, both in terms of location and transportation,” Mitchoff said.
“I stand with elected officials throughout the area who believe that it would serve more individuals [in Concord] than if it were located in far East County, or far West County,” Evola agreed.
After discussions at both city’s council meetings this Tuesday, the Board of Supervisors will vote on March 12 over whether to place the call center in Richmond or Concord.

To: City Clerk Diane Holmes and City Manager Bill Lindsay
From: Councilmembers Rogers, Myrick and Bates
RE: Staff Report  Concerning Health Exchange Call Center Agenda Item

Please circulate this Staff Report as widely and quickly as possible, including posting it or emailing it in the same manner that the original agenda was distributed.  It concerns recommended Council  actions to attempt to bring the Call Center to Richmond, which grew out  of a meeting with the landlord, Richard Poe, which occurred on Friday, March 1, 2013, after the deadline for Staff Reports had passed.

Accordingly the posted Agenda Item:

" Agenda Item Description: Discuss and give direction to Staff concerning  efforts to bring the Call Center and its 200 jobs to Richmond"  did not have detailed information as to our recommendations.

Co-sponsors: Councilmembers Rogers, Bates, and Myrick

Staff Report: Councilmembers Rogers, Myrick and Butt met with Richard Poe, owner of the property being considered by the County for the Health Exchange Call Center.

At our invitation, County Supervisor John Gioia, City Manager Bill  Lindsay, and Employment and Training Director Sal Vaca also attended.

In spite of the Herculean efforts of Supervisor Gioia, Richmond is in distinct danger of losing the Call Center, and its 220 good paying jobs open to those with a high school degree, to a competing bid from
  Concord. It is extremely likely that a majority of the Supervisors will pick the Concord site, which is more centrally located, and closer to their districts, unless  the Richmond bid is substantially cheaper.
Issues with the main labor union have been resolved and it appears very  likely that the issues with the  second County employees union will also be resolved.

Therefore the Board is expected to pick one of the two competing bids on March 12.

Richard Poe  had already sharpened his pencil and put in an extremely low bid, which underbid the Concord proposal by about $ 860,000.

However, it is expected that the new Concord bid which the Supervisors will consider on March 12 will be considerably lower.

Therefore  it is vital that the Richmond bid be lowered significantly. Realizing the importance of this huge number of good paying jobs coming to Richmond to all members of the Council, to the community, and to his own long term  interest in a thriving Marina Bay,  Richard Poe and his affiliated companies Marina Bay Partners, LLC, and Marina Westshore Partners, LLC, (hereafter referred to as Richard Poe), following negotiations with us, has made an offer to cut his bid by $1,012,545.  This will be done by Richard Poe buying the 200 cubicles instead of the County paying for them.

In return he would receive a loan which  might be as much as $1,012,545, but would very likely be less than half of that. He would repay the loan over a time period which might be as long as 25 years, but would very likely be about a fifth of that.

The loan would only occur if Richmond gets the Call Center. In the unlikely event that the Call Center is cancelled by the State,  he would still be responsible for the loan repayment.
We are mindful of the criticism of City Councils being pressured into throwing money to enrich developers who are considering locating in  their City.

However, in this case, it is necessary to have a reasonable  chance of winning the competition. Further, Richard Poe is not getting extra money from the loan, he is in fact losing money because he will have to repay it in full, with interest, and he is reducing his bid by $1,012,545. The loan benefits the 220 people who will no longer be unemployed, not Mr. Poe.

We believe this loan compares favorably with past situations where Richmond has invested public money in order to bring businesses and jobs to Richmond.

For example, the Ford Building received $8,000,000 in public money (which was an expenditure, not a loan which will be repaid with interest.)

Mr. Poe needs to put in his new bid first thing on the morning of  Wednesday March 6, 2013, so we believe it is appropriate to ask City Manager Bill Lindsay to negotiate the details of the loan with Mr.
Poe. The item would then come back to the Council for formal approval.

Accordingly, we recommend the following:

The City Council directs the City Manager to negotiate a loan for subsequent Council approval with Richard Poe in an amount not to exceed $1,012,545, to be repaid with interest, over a period of years not to exceed 25 years, in return for RichardPoe reducing his bid by $1,012,545.

PS Councilmember Butt sent the following email on the morning of March 4, 2013:

FW: Virtual development
From:    Butt, Tom <tom.butt@intres.com>
To:          Rogers, Jim <elirapty@aol.com>
Date:     Mon, Mar 4, 2013 8:52 am


You are going to have to find another vote. Turns out that Interactive Resources has been paid by Richard within the year. There is no way I can avoid recusing myself.


Tom Butt
Richmond City Councilman

Since Councilmember Butt has recused himself, Councilmembers Myrick and Rogers asked Councilmember Bates to replace him as a co-sponsor, and he agreed.

Representatives of the  State Health Department of California have informally indicated to others (e.g. Bill Lindsay, John Gioia, and Jim Rogers) that they will not pick up any additional costs if the Board of Supervisors decides to accept a more expensive bid.

This makes sense because State taxpayers should not be subsidizing a dispute in Contra Costa County about which City gets the Call Center.
Accordingly we recommend the following:

The City Council directs City Manager Bill Lindsay to write to  appropriate State representatives on behalf of the Council and request them to confirm in writing that they will not be picking up the cost if the Board of Supervisors chooses a more expensive site for the Call Center.

Sal Vaca indicated at our meeting on Friday that there are  about $100,000 in training funds that we already have that we could promise to the County to reduce their cost of training the Call Center employees.

Since we have to substantially underbid the Concord proposal in order  to bring the Call Center to Richmond, every penny we can put into the pot helps.

Since time is short and since whatever we do needs to be done before the Council meets again, we believe that it is appropriate to ask Bill Lindsay to deal with the details of implementing this.

Accordingly we recommend the following:

The City Council directs the City Manager to take appropriate steps to communicate that the City has roughly $100,000 in training funds and is willing to commit those funds in order to reduce the County's cost and increase Richmond's chances of winning the Call Center.

We wish to publicly thank all of those (the Mayor and Councilmembers, Senator Loni Hancock, Assembymember Nancy Skinner, City Manager Bill Lindsay and others too numerous to mention) who have worked on this. As we found out during the LBNL competition, Richmond works best when we work together.

  Please feel free to contact us if you have questions, comments or

Jim Rogers 510.687.5725
Jael Myrick 510.932.5715
Nat Bates 510.307.6410