Large corporations working in California have reaped tens of millions of dollars in new federal stimulus funds, despite previous pollution violations, criminal probes, and allegations of fraud, a California Watch investigation has found.
Residents in Ventura County say they are dismayed that airplane and defense giant Boeing received a $15.9 million stimulus contract for environmental monitoring at Santa Susana Field Laboratory -- the same site near Simi Valley and Chatsworth where the company was fined for polluting a creek with chromium, dioxin, lead and mercury. A local resident and opponent, Dawn Kowalski, called the new contract "the fox guarding the hen house."
Watsonville-based Granite Construction received $6.4 million in stimulus contracts to work on airport runways in Salinas and Monterey, and to repair roads in San Bernadino, Riverside and Butte counties. Yet the company faces three federal probes, including a criminal investigation into whether it fraudulently overcharged the city of San Diego in the wake of the devastating 2007 wildfires.
And a major apartment owner based in Denver, AIMCO, stands to benefit from $13 million in stimulus tax credits to rehabilitate its housing complex in Los Angeles. This federal assistance comes after the company paid $3 million in 2004 to settle a lawsuit from the city of San Francisco over complaints that it operated mold and rodent-infested buildings that posed serious safety hazards to residents. Residents
continue to complain about AIMCO's management.
To government watchdogs, these contracts and others raise concerns about the way the massive federal stimulus program is being administered. Although most major companies in America face lawsuits and regulatory action, these government reformers say a contractor's entire history should be considered before doling out more money to the same firms.
"It is very upsetting that the government doesn't do more due diligence before it hands money out," said Laura Chick, California's inspector general for stimulus funds. "We've gotten very used to handing out taxpayer dollars and not so good at overseeing to whom are we giving them and how they are being spent."
Boeing contract under fire
One stimulus contract through the Department of Energy is causing consternation in the rugged foothills above Simi Valley in Ventura County.
The toxic contamination at the Santa Susana Field Laboratory has been a painfully sore subject to locals for decades. Since the 1940s, the lab was operated by divisions of North American Aviation, which eventually became Rockwell International. It was the site of rocket engine testing and nuclear power development that led to toxins leaching into the dirt and groundwater and a partial nuclear meltdown in 1959.
Boeing acquired the aerospace divisions of Rockwell International in 1996, but community activists said Boeing has been fighting its responsibility for pollution that occurred before and after the purchase. A group of local residents sued Boeing, contending that the company caused cancer. The company settled for $30 million in 2005.
The regional water quality board fined Boeing $471,000 in 2007 for 79 pollution violations that let wastewater and storm runoff from the site ooze toxins into various creeks, flowing downstream to the Los Angeles River.
Boeing had discharged 118.5 million gallons of water laced with pollutants like chromium, lead and mercury, according to the water board. At one point, the company exceeded the allowable concentration of cancer-causing dioxin by 6,900 times. The water board said the chronic violations created a risk to public health and, given Boeing's resources and sophistication, were "exceedingly serious."
Dan Hirsch, president of a California nuclear watchdog group, doesn't believe Boeing should have been rewarded with federal stimulus money for environmental monitoring there. The contract for Boeing, which made $2.7 billion in profits in 2008, was not bid competitively. "How can one have federal taxpayer money going to a company that is responsible for the contamination and is resisting the cleanup?" Hirsch said.
Boeing said it has made significant progress on the cleanup. "Boeing is fully committed to cleaning up the site in a manner that fully protects public health and the environment," wrote spokeswoman Kamara Sams in an e-mail to California Watch. She said Boeing, NASA and the Department of Energy are responsible for cleaning up portions of the property.
And Jen Stutsman, an Energy Department spokeswoman, responded by e-mail that Boeing has the expertise to perform the work and a good track record of working with the agency.
"Changing contractors would only cost the taxpayer additional money as a new contractor arrived and took over the work for Boeing," she wrote.
The project was reported to have created 11 jobs.
At the same time, Boeing is trying to overturn a California toxic cleanup law. On Nov. 13, Boeing sued in federal court to invalidate SB 990, which holds the Ventura County cleanup to especially strict standards. Boeing claims the California-mandated standards are unnecessary and the excavation required would further destroy the "ecological habitat."
State Assemblywoman Julia Brownley, who represents nearby residents, said she's concerned that Boeing is getting stimulus money and "almost in the same breath" suing against California cleanup standards. "Something just seems not right in that picture," she said.
Apartment owners sued
The federal government has directed stimulus funds, in the form of tax credits, to create low-income housing across the state. Denver-based AIMCO – in a joint venture with the nonprofit Foundation for Affordable Housing – was offered $13 million in tax credits to help fix up its senior housing apartment complex in Los Angeles. An AIMCO spokeswoman said the company has yet to accept the stimulus tax credit and contends the project "represents the company's continued commitment to meeting the critical need for affordable housing."
But in the Bayview-Hunters Point neighborhood in San Francisco, residents have complained for years of slumlord conditions and bad management at the AIMCO apartment complexes.
"We trust them as far as we can throw them – that's the general rule when it comes to AIMCO," said Sara Shortt, director of the Housing Rights Committee of San Francisco, a nonprofit tenants-rights organization.
The city of San Francisco sued AIMCO, saying that the company ignored more than two dozen orders to fix scores of health and safety hazards, including stairways and landings collapsing from dry rot as well as moldy, water-damaged ceilings and walls. Inspectors cited a blocked fire escape and lack of smoke detectors. They also found broken windows and doors and faulty plumbing. AIMCO settled the suit for $3 million in 2004.
Resident Dorothy Peterson said she was considering protesting the stimulus assistance to AIMCO. "If they really wanted to make sure that low-income housing was built properly and for residents that were going to be treated like human beings, then they would not give it to an AIMCO," she said.
But AIMCO's partner on the Los Angeles project vouches for the company. "They're huge," said Deborrah Willard, president of the Southern California-based Foundation for Affordable Housing. "When you're huge and you own this many units, you're bound to make somebody unhappy somewhere along the line."
# To search a database of $18.5 billion in stimulus funds awarded in California go to www.californiawatch.org.
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