According to a new audit issued last week by City Auditor Courtney Ruby, the Oakland Chinatown Improvement Council, which was created two years ago to provide increased services and safety in the neighborhood, has been poorly managed, at times violating best practices around transparency and governance.
The improvement council has held chaotic meetings that failed to ensure transparent or accurate voting on critical issues, such as spending $75,000 on drones for the police department, the audit found. The formation of the improvement district’s board of directors “was not based on authoritative standards, such as organizational best practices or bylaws,” and the board was made up of “self-appointed” members whose interest in Chinatown were not verified by anyone. The auditor also said her team found instances in which people who were not on the improvement council’s board may have been allowed to cast votes during its meetings.
Stewart Chen, president of the Oakland Chinatown Improvement Council, told The Oaklandside he doesn’t contest any of the recommendations in the auditor’s new report, some of which he thinks are good ideas. But he said at least one of the findings in the audit is inaccurate, and that others take facts out of context.
Going much further, Chen said he thinks the audit is actually a politically motivated attack by a disgruntled Chinatown power broker who feels threatened by a new organization that isn’t under his control. And he said he didn’t think Ruby was fair or neutral when she took on the investigation.
The audit, the finer points of which will be debated and mulled over in the coming weeks by Chen’s organization, the City Council, and other interested groups, has brought to the surface a long-simmering conflict between different leaders in Oakland Chinatown. On one side is Chen and business owners and other leaders who currently run the Oakland Chinatown Improvement Council. On the other side is Carl Chan, a realtor and longtime leader of the Oakland Chinatown Chamber of Commerce. It’s unclear if there are significant policy disagreements between these two camps, but Chan has suggested that Chen’s group is made up of supporters of progressive Council President Nikki Fortunato Bas. Chan has been critical of Bas and blamed her for public safety issues in the neighborhood.
Local stakeholders are eager for a resolution so Chinatown can focus its resources on community issues rather than political battles among the neighborhood’s leaders.
Who should lead Chinatown’s civic improvement board?
The Oakland Chinatown Improvement Council was created in 2021 following increased concerns about safety among Chinatown merchants and residents. Its formation was spearheaded by the Oakland Chinatown Chamber of Commerce and its president Carl Chan.
Established as a business improvement district, a public-private partnership that raises money from local businesses and stakeholders through special assessments of buildings and land, the Oakland Chinatown Improvement Council can provide enhanced services in the neighborhood, such as cleaning sidewalks, removing graffiti, organizing cultural events, and neighborhood safety patrols.
Chan had previously opposed creating a business improvement district for Chinatown because his group felt the city should already have been providing better services to the neighborhood, but the need for more safety during the pandemic changed his thinking.
When it came time to elect permanent leadership, two Oakland Chinatown Chamber of Commerce members were nominated for leadership positions, but they failed to get enough votes. Instead, a chiropractor named Stewart Chen was elected president.
Chan for a time was part of the improvement council’s board of directors. But it appears he felt that his group was being elbowed aside. He may have been one of the people who complained to the auditor that the new improvement council wasn’t being governed properly: In May 2022, he sent a letter to city officials, including the auditor, in which he demanded an investigation of alleged misconduct. The auditor explained in her report that she initiated her review after receiving “numerous” complaints about the improvement council from unnamed parties.
Chen claims the audit was an act of political retaliation instigated by Carl Chan. Chen alleged that Chan unsuccessfully tried to take control of the business improvement district, and after he failed at this he attempted to undermine it.
“I have not attacked anyone—they’re attacking, we’re playing defense,” Chen said. “I don’t want to keep fighting, I want unity.”
Chan did not respond to an email and phone call seeking an interview for this story. Jessica Chen (no relation to Stewart Chen), the executive director of the Oakland Chinatown Chamber of Commerce, said her organization’s leaders are still reviewing the audit.
Stewart Chen questioned the neutrality of the city auditor, who has the freedom to investigate any city-related financial or administrative activities. Chen said he witnessed Courtney Ruby and Carl Chan having dinner together at a restaurant in March.
Over the weekend, Ruby discussed the report’s findings at a street festival in Chinatown that was hosted by the Chinatown Chamber of Commerce.
“I am not afraid to challenge her because this is totally uncalled for what she did,” Chen said.
Ruby told The Oaklandside that as an elected official it’s not unusual for her to meet with local leaders or share information from reports with the public.
“We have quality control procedures to make sure we are sticking to the facts and allegations of reports,” Ruby said, adding that the office ensures it has evidence to back up every finding included in a report.
The consultant who helped set up the improvement council also objects to the audit’s findings
New City America, a San Diego-based company that consults with cities all over the United States to establish business improvement districts, helped set up the Oakland Chinatown Improvement Council. Marco Li Mandri, New City America’s president, told The Oaklandside that this is the first time in over 20 years he’s faced this kind of scrutiny around his work on community benefit districts.
“There are statements in that document that are absolutely incorrect,” Li Mandri said about the new audit. He added that he’s preparing a formal response.
As an example of what he said is a flaw in the report, Li Mandri pointed to a finding that said New City America was supposed to work with the Oakland Chinatown Chamber of Commerce and other Chinatown leaders who had come together under a “steering committee” to identify large and small property owners, along with other community members, and invite them to the board. According to the audit, New City America did not do this.
“That’s not true,” Li Mandri said, noting that he made numerous efforts to get stakeholders to join. “I made every effort, so there’s no truth in that whatsoever, and they can’t prove that.”
Michael Houston, assistant city auditor, said this allegation was supported through witnesses and a review of records.
“Based on those, we’re able to confidently say there wasn’t the outreach that was contemplated early on,” Houston said.
From the beginning there were questions about who would run the powerful neighborhood group
City Council President Nikki Fortunato Bas, who represents Chinatown, said in 2021, while the new improvement district was being launched, that it would help stabilize the community and support low-income residents and small businesses. The district, which covers about 52 square blocks and over 1,000 properties, is anticipated to raise up to $16 million over its 10-year lifespan. This money can pay for safety ambassadors, landscaping and lighting, community events, and much more.
But the question of who would run the improvement council proved to be a divisive issue.
Meetings in the fall of 2021 were marked by shouting matches over the creation of the benefits district, and then over who should be put in charge of the improvement council’s board of directors. In the letter Chan sent to city officials in May 2022, he claimed that Bas’ supporters disrupted one meeting and that the council president later let her supporters self-appoint themselves to the interim board.
In the same letter, Chan demanded that a hold be placed on the Oakland Chinatown Improvement Council’s funds. Chan raised numerous concerns about how the nonprofit was running the district and claimed that many property owners and businesses weren’t being given the ability to participate on the interim board.
“Furthermore, we request the City Auditor to conduct an investigation regarding whether the formation of the OCIC interim board followed proper procedures with respect to the law and the bylaws of the (community benefit district),” Chan wrote.
Chen said the current board is made up of a diverse mix of developers, business owners, residents, and other community members. It also currently includes members of the Oakland Chinatown Chamber of Commerce. He noted that anybody who wanted to join the interim board was able to self-nominate themselves during the September 2021 meeting. He said Chan was upset because his allies didn’t secure leadership roles on the board.
“This is a democracy,” Chen said. “When voters voted for me, we moved on.”
Complex relationships, but love for Chinatown
The auditor’s investigation found that in some cases, people who weren’t on the board may have cast votes during virtual meetings. For example, in a December 2021 meeting, the board of directors voted to accept a $75,000 anonymous donation to sponsor drones for OPD. The vote was “rife with irregularities,” including unknown individuals voting on behalf of board members. Some board members were also concerned that the drones were for citywide use, not just in the district. The chair and executive committee did not adequately address those complaints, the report says.
In the end, the improvement council approved the donation to OPD. The police bought several drones with the money, which was from local businessman David Duong, who owns California Waste Solutions, the city’s recycling contractor.
Chen acknowledged that this meeting was chaotic, but he said that non-board members did not participate, and that the board secretary kept an accurate vote tally.
Ruby said her office reviewed footage of the meeting and there is significant confusion around voting, including a moment where a woman claiming to be a person named “Peter” participates in a vote.
The auditor also faulted the community benefit district’s leadership for failing to follow best practices when hiring contractors. According to the auditor, the board hired a San Diego law firm without documenting its consideration or approval of the contract. The report says business improvement districts are supposed to publicly disclose all major contracts, and that the Oakland Chinatown Improvement Council didn’t do this with the law firm.
Chen doesn’t dispute this, but he said the report is missing important context. He said the board had to scramble to hire a law firm so it could respond to a letter the Oakland Chinatown Chamber of Commerce sent to city officials, urging them to withhold the improvement council’s funds.
“The chamber was telling the city to withhold funding, pretty much killing the community benefit district,” he said.
According to the audit, New City America’s process for selecting board members was “misleading,” and “haphazard,” and caused division in the very community the improvement council was meant to serve. For example, New City America allegedly let anyone appoint themselves to the board if they had “some connection” to Chinatown and didn’t verify whether people were actually qualified.
When the auditor investigated the board’s members, it found incomplete or unknown board member names, affiliations, and addresses. It also found some members had addresses outside the district they were supposed to represent. The report also noted that the initial board had 48 members, which was larger than any BID board that New City America has ever been involved with.
Based on her team’s audit, Ruby is recommending that the City Council change its rules for creating business improvement districts in the future, and impose stricter requirements on organizations that want to manage districts. The auditor also recommended limiting the size of BID boards to no more than 20 members.
Chen said the board is currently at 25 members and he believes it can get down to 20.
Council President Nikki Fortunato Bas, who represents Chinatown, said she appreciates the auditor’s report and will consider its recommendations.
Jennifer Li, former executive director of the Oakland Chinatown Improvement Council, said it’s challenging for Chinatown’s stakeholders to collectively agree on solutions to complex solution problems, and in some ways, the community benefits district made that harder.
“The relationships and sometimes conflicts within our community can be very complex, even though we agree on most things,” Li said. “And we all agree we love Chinatown.”