Home » Money Train

Money Train

Why would a U.S. Congressman from Oklahoma come to L.A. to raise money?

March 10, 2005

By Chip Jacobs

High up in a downtown skyscraper, inside the white-linen world of Bunker Hill’s City Club, the campaign checks were being scribbled next to the scrambled eggs and coffee. It was an eclectic bunch that’d assembled, north-county conservatives and stiff management types milling around with dapper lobbyists, but they were united by their purpose on the morning of May 28, 2004. The guests had come to raise money for the man of the hour – a congressman from America’s former Dust Bowl whose face few had ever seen before.

Ernest Istook (R-Oklahoma) had just granted the MTA what it had long coveted: federal subsidies to pay for roughly half the cost of an $898-million light rail line through East Los Angeles. Just eight days earlier, Istook had been openly skeptical that the line deserved federal funds in a lean budget year, and as chairman of the House Transportation Appropriations Committee his opinion was decisive. His continued resistance meant delays, uncertainty, and a sense of frittered opportunity.

Those anxieties would soon melt. After his L.A. fact-finding trip and talks with some of Southern California’s House members, Istook’s reservations about the trolley changed to an official blessing. And he jetted home richer than he’d come. A series of California fundraisers, including the Bunker Hill affair, had fattened his campaign war chest by about $25,000.

Nobody questioned the timing of Istook’s flip-flop, perhaps because few outside the area’s clubby transit world had pieced it together, or perhaps because out-of-state representatives are continually raising money here. The congressman’s approval for the extension of the Gold Line into East L.A. is what got the headlines, not the fact the Metropolitan Transportation Authority CEO Roger Snoble had attended the City Club event, or that it was cohosted by one of the agency’s former executives, Arthur Sohikian.

If this is business as usual in L.A., it’s become a crowded marketplace. For the last year, Angelenos have been deluged with reports about “pay-to-play” investigations into former aides, commissioners, and public relations confidantes of Mayor Jim Hahn. His opponents in the mayoral race have seized on the FBI and District Attorney inquiries as proof that influence peddling cuts through City Hall. Meanwhile, people like Istook – little-known congressmen with plum committee jobs – tend not to attract much attention for the campaign dough they scoop up here.

Istook declined to be interviewed for this story. His campaign manager did not return phone calls.

Because of his power over the purse strings, the Oklahoman was not a man the MTA could ignore. Los Angeles’ reputation for rail expenditures had been sullied by multimillion-dollar miscues during Metro Rail’s subway construction in the 1990s. Since then, Southern California’s fractious congressional delegation hadn’t had much luck corralling funds for big-ticket projects from a reluctant Bush administration. New York, Boston, and Philadelphia – old-money, rail-dependent cities just a hop from Washington, D.C. – took advantage. The death of longtime Los Angeles Rep. Julian Dixon, considered the go-to man to get the region federal bucks, didn’t help.

But thanks to Istook, things were looking suddenly sunnier. On May 26, two days before his City Club event, Istook announced he was withdrawing his opposition to the six-mile extension of the Gold Line, which is set to run from Union Station to Atlantic Boulevard by late 2009. (Istook also had been out here in April, when he inspected the proposed right-of-way by helicopter.) The MTA, he wrote, had soothed his concerns about the extension’s cost-effectiveness and pruned back its first year funding request from $80 million to $60 million. It wasn’t a guarantee the money would always be there, he cautioned, but “significant progress” had been made toward laying track.

His okay meant that the MTA could sign a construction contract against a looming deadline that might’ve added $100 million to the project’s overall price tag. Istook’s role was so hyped there were whispers – unfounded, it turned out – that Gov. Arnold Schwarzenegger might pop his head into the fundraiser. An Istook congressional colleague, Howard P. (“Buck”) McKeon, R-Santa Clarita, did attend.

Snoble was not available for comment on this story, MTA spokesman Ed Scannell said. According to Scannell, Snoble and the agency’s government relations chief, Gary Clark, were at the City Club strictly for logistical reasons. After the event, they were taking Istook on a tour of the preliminary work being done on the line before the congressman rushed to catch a flight.

State and in-house regulations prohibit MTA employees from soliciting or directing any campaign contribution of more than $10 from any company, consultant, legal firm, or vendor seeking work with the agency.

Snoble “was not a contributor and had nothing to do with setting up” the event, Scannell said. “We have very strict guidelines we live by … . Certainly, given Istook’s limited amount of time and the fact we are talking about a major project, [Snoble] would have been remiss not to talk to him.”

So, what was the agency’s role at the City Club? According to one attendee: “MTA participated in the sense they were there respectfully, and did the tour and briefing afterwards. But I don’t think it was the fundraiser that changed [Istook’s] mind. My sense was that Istook got religion on the issue and [asked], ‘By the way, how much money can I raise?'”

The Mystery Million

Mark Pisano, executive director of the Southern California Association of Governments (SCAG), the southland’s regional planning body, said Istook needed assurances the East L.A. line met tough new White House performance standards. With Congress facing $30-40 billion in similar requests and only a fraction of that to spend, the sales job had to be impressive. “He wasn’t convinced that the East L.A. line was one of the projects worth funding,” Pisano said. “We agreed with his premise on performance but disagreed that the East L.A. line didn’t meet it.”

Sohikian, MTA’s government-relations manager until 1997 and now a political consultant with real estate and transit clients, said Istook had been voicing his qualms about the line with federal officials for months before he came to L.A. Sohikian also said the transit industry typically takes it upon themselves to show their support when an important politician comes to town. Istook back then was toying with a 2004 U.S. Senate run.

“The more we can do to educate members to bring funds to L.A., the better,” Sohikian said.

One lobbyist, who spoke on the condition his name not be used, said the MTA ´´ is more involved than it lets on. He said they informally encourage firms who do business with it to contribute to visiting House and Senate members with a big say on projects.

“The arm twisting is very subtle,” the lobbyist said. “It’s couched in terms of the public good. It doesn’t say the congressman wants to see you on this list.”

Pisano and Istook required no introductions. Almost exactly one year earlier, in 2003, Istook had trekked to Southern California to hear about gridlock-cutting rail projects in L.A. and Orange County, the case for magnetic levitation trains, and the danger of the area falling out of compliance with federal Clean Air standards. A fundraiser was thrown for him at the City Club, this time over cocktails and hors d’oeuvres and fewer people than would attend the May 2004 soiree.

Istook received $27,750 from California sources during the second quarter of 2003, campaign records show. Companies headquartered out of state but with large L.A. presences also ponied up. Among his 2003 and 2004 California donors with MTA ties were Sohikian, Nick Patsaouras, Northrop-Grumman Corp., Parsons Corp., Bechtel, and the law firm of O’Melveny and Myers.

“It was nothing spectacular, no big money,” said Patsaouras, an ex-MTA board member, of the 2003 event. Istook is “a decision-maker allocating transportation money, and we’ve had fundraisers like this as long as I can remember. We’re not virgins.”

The then-seven-term congressman certainly remembered Pisano.

Sometime after his 2003 trip, Pisano briefed Istook about a sticky situation closer to Pisano’s home base. A December 2001 Caltrans audit of SCAG’s books uncovered problems with its management and accounting. Auditors had, in particular, red-flagged SCAG’s handling of a design-engineering contract to improve traffic flow on State Route-71 in a hot-growth section of the Inland Empire. San Bernardino and Riverside counties had been at each other’s throat over the bottleneck there since the early 1990s, and part of SCAG’s mission is to settle internecine feuds.

Caltrans examiners questioned SCAG about how the $947,921 contract with Omaha-based HDR was structured and where the proper documentation was. When no satisfactory answers came back, Caltrans notified the Federal Highway Administration that SCAG was “a high-risk recipient” for money out of Washington, D.C. – a major blow.

“We thought the audit displayed a somewhat surprising and large number of deficiencies in the way they were running the agency from an organization and project-management standpoint,” said Brian Smith, Caltrans deputy director for modal programs. “It’s a matter of documentation, of where’s the beef? We haven’t had to declare other agencies like them as a high-risk recipient. We are obviously dealing with federal money.”

The Federal Highway Administration docked the nearly $1 million from its payments to California and slapped that unwanted “high-risk” label on SCAG. Caltrans, through which all federal transit money flows, could have stripped the money out of SCAG, but didn’t want to cripple the organization financially. The SCAG board huddled in closed session debating its options, including whether to sue Caltrans over the money. The audit report also hit the papers with an embarrassing thud, as word spread that SCAG had bounced some employees’ paychecks, lost money on a business venture, and overused purchase orders. None of the bad publicity, though, mentioned the HDR contract.

Pisano appealed the ruling to U.S. Department of Transportation officials, noting that SCAG had implemented a number of reforms to clean up contracting and administrative procedures; even Caltrans acknowledges that now. When the department wouldn’t bend, Pisano lobbied some of California’s congressional delegation and then members of the House Transportation Subcommittee, including then-chairman Istook.

“I didn’t think the [punishment] was commensurate with the finding,” Pisano said in a series of interviews. “There were no improprieties, just incorrect procedures we needed to tighten. There was nothing Caltrans found we hadn’t found ourselves.”

This issue, which Pisano hopes will soon be resolved with a clearance audit by Caltrans, does raise a question: Why would a congressman from America’s heartland, a committee chair already knee-deep in sectarian disputes about Amtrak subsidies and anti-terrorism rail security, care about a convoluted contract squabble in the suburban outskirts of a state half a continent away?

Micah Leydors, Istook’s deputy chief of staff, said it was the principle. Her boss was sympathetic to Pisano’s argument that federal officials were being inflexible about releasing the money. An effort to settle it with a legislative fix failed, so Istook instead inserted a $1-million appropriation in the 2004-2005 federal transit bill signed by President Bush to reimburse the state and relieve the heat on SCAG. People suspicious of it have nicknamed the appropriation “the mystery million.”

Leydors, though, said there was nothing mysterious about it. “What was presented to us was that it was a small infraction, and [SCAG] was getting the death penalty for jaywalking,” she said.

Pisano was adamant he did nothing to aid Istook with his Southern California money-raising, though he conceded he knew an event had been planned for him in Santa Clarita. Likewise, several MTA officials admitted they knew in advance about Istook’s City Club event in 2004.

“Everyone who comes through here has a fundraiser,” said Pisano. “I never contributed to Istook.

“We’re just not that type of agency,” Pisano added. “We don’t have contractors and vendors.”
Istook, a lawyer by training and Texan by birth, is described as a religious conservative who got his start in Congress after terms on a city council and the state legislature. His home office is in Oklahoma City, which was hit by domestic terrorism when the Murrah Federal Building was blown up in 1995. Considered hard-nosed about spending, he no longer chairs the House Transportation Subcommittee that he led in 2003 and 2004. Today he is vice chairman of the Homeland Security Appropriations Subcommittee.

Copyright Chip Jacobs