Records: Davis adviser’s consulting clients have business interests before state

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Associated Press

SACRAMENTO — Only a few weeks after joining Gov. Gray Davis‘ inner staff on energy issues, records show Richard Katz signed a $20,000 consulting deal with the University of California, which was facing a looming electrical bill.

Shortly afterward, legislation pushed by the governor to help save Southern California Edison from bankruptcy included a provision that would exempt the university from the high energy payments it wanted to avoid.

As one of Davis’ key advisers on energy matters at the time, Katz said, he was involved in the writing of the bill, which passed the Assembly but died in the Senate in the final moments of the 2001 legislative session.

The university’s contract with Katz says he was hired to advise the university on “the payment of exit fees and/or entrance fees associated with direct access service,” to secure state money for a variety of UC energy projects, and to “consult with University of California representatives on an as needed basis on other major energy issues facing UC.”

Katz, a former Democratic assemblyman from Los Angeles and a member of the state Water Resources Control Board, has earned at least $100,000 in outside income in each of the last two years. Much of that money has come from lobbying firms and companies with business simultaneously pending before the governor’s office, where Katz is a key adviser on energy and water matters.

On at least four occasions, documents obtained by the Associated Press show, Katz acted in an official capacity on matters that involve clients or companies that his clients represent.

Repeated calls to Katz both at his office inside the governor’s Capitol wing, to his personal cellular phone and to his office at the state Water Resources Control Board were not returned Wednesday, Thursday or Friday. The administration and Katz’s attorney deny he has done anything improper.

Davis spokesman Steve Maviglio called Katz a “dedicated public servant” and said questions about his business activities form a “baseless attack.”

“Richard Katz has done outstanding work for the State of California on complex issues,” said Maviglio.

Katz joined the water board in February 2001 and began helping Davis navigate the energy crisis about two months later. He helped resolve a dispute between clean energy producers and Edison and then helped shape critical legislation aimed at keeping Edison from slipping into bankruptcy.

The legislation included a specific exemption for the University of California from paying expensive fees the Legislature planned to impose on big commercial energy users that wanted to jump in and out of the state’s supply of electricity.

According to Katz’s 2001 office calendar from the water board, obtained by The Associated Press through a Public Records Act request, Katz spent five days between Aug. 22 and Aug. 30 in the state Capitol that correspond to amendments being drafted on the Edison legislation.

In an interview May 28, Katz acknowledged he helped work on the bill, although it is not clear what his exact role was or whether he drafted the portion regarding the university. Because the fees were neither defined nor adopted, it is impossible to say how much the exemption could have saved the university.

Stephen Arditti, head of government relations for UC’s Office of the President, said he was not aware the university received the exemption in the Edison bill, adding there was little he remembered about Katz’s role in helping the university during the summer of 2001.

Although his name is on the Katz contract, Arditti said he didn’t remember how the university became affiliated with Katz, but did recall that he never asked Katz to use his influence personally.

Because the university is a public institution, Arditti said, energy fees it would have paid would cost taxpayers money. But consumer activists involved in energy matters said many other public agencies and non-profits received no special privileges.

“Whoever got in and out of the pool and received special exemptions meant substantial harm to the rest of us,” said Nettie Hoge, executive director of The Utility Reform Network.

“They wanted it both ways,” said Harvey Rosenfield, president of the Foundation for Taxpayers and Consumer Rights, who explained that the university wanted to switch any time there was a better deal to be had – often at the expense of the consumer pool.

In earlier interviews, Katz and his attorney have insisted he never participated in any official decisions that involved clients of his consulting firm.

“Mr. Katz has never participated in any decision on an issue in which a client for whom he performed consulting work was involved,” said Katz’s attorney, Kathleen Purcell, in a May 30 letter to The Associated Press. She could not be reached for comment Wednesday, Thursday or Friday.

But a search of public documents by The Associated Press found Katz either worked on issues in the governor’s office or cast votes on the water board that involved clients of Richard Katz Consulting, his one-man consulting firm based in Sherman Oaks. They include:

  • While representing the university, Katz voted to extend a $290,000 university contract with the water board on Sept. 20, 2001. The extension did not cause the contract’s value to increase.
  • While a consultant to two lobbying firms, Platinum Advisors and Planning Company Associates, Katz voted on a water board issue involving a client of both firms, Playa Capital LLC, on April 25, 2002. The company is the developer of the mammoth Playa Vista real estate complex in Los Angeles. Katz voted to deny a request for delay of the water board’s order to force Playa Capital and other petitioners to comply with rules governing storm water runoff.
  • While working for public relations giant Fleishman-Hillard, Katz voted on July 18, 2002 as a member of the water board to give the first phase of a $1.2 million grant to a Fleishman-Hillard client, the Port of Los Angeles.

Officials at Platinum and Fleishman-Hillard insist that Katz never provided help for any of their clients who had business before the governor’s office. However, neither company provided copies of their contract with Katz nor reported their payments to him on their state lobbying reports.

While Katz did not make himself available to respond to questions regarding these votes on the water board, he did say in a prior interview that he did not
know all the clients of the firms that hired him.

Information on Katz’s consulting relationships came from an Associated Press review of the statements of economic interest filed by 125 of Davis’ top administration appointees and inside staff. His were the only reports that indicated such relationships, and records show he is the only member of the water board with consulting clients.

Craig Wilson, chief counsel for the state water board, said votes Katz cast involving clients of Fleishman-Hillard and Platinum do not violate conflict of interest laws.

Andy Domeck, spokesman for the California Fair Political Practices Commission, declined to comment directly on anything involving Katz’ activities or whether his votes or work for the university violated state law.

Much about Katz’s consulting relationships is not known. More is known about the contract with the university because it’s a public institution subject to certain reporting requirements, while private clients are not.

Lobbying records filed with the California secretary of state’s office also show that in the past two years Katz Consulting clients have staged lobbying efforts with the governor’s office at least 24 times on topics on which Katz either serves as an adviser or considers as a water board member. Most of the contacts involved clients of the two lobbying firms and Fleishman-Hillard.

Katz has said he has ended all his consulting contracts except for one, with Planning Company Associates, which he still advises on transportation issues.
On the Net:

Senate Bill 78 (Polanco): EV&house=B&site=sen

Secretary of State’s lobbyist reporting home page:

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