BY SHALEECE HAAS // The mayor of Emeryville, who describes himself as “tired of being broke,” is under investigation by the city attorney for accepting a consulting contract with a company recently hired to provide Internet service to five municipal buildings.

Bukowski, 57, a retired nightclub owner and 21-year veteran of the city council, has also refused to pay business taxes to the city for more than four years and owes nearly $2,000 in property taxes. In addition, state officials are investigating the mayor for possible violations of the state’s Political Reform Act.

City Attorney Michael Biddle said he is concerned about Mayor Ken Bukowski’s business relationship with Paxio Inc., the firm that in June won a $24,643 Internet service contract with the city.

Bukowski said Paxio pays him
 $1,500 a month to “hook them up with business people and developers in the city.” But he says the deal began after the city contract had been signed and that he has not voted on any issue affecting the company’s work in Emeryville.

The city attorney said that while he sees nothing wrong with a council member getting paid to help a company do business in Emeryville, “when that company is contracted with the city, that crosses a line.”

The Political Reform Act, a ballot initiative passed by California voters in 1974, made it illegal for any public official to “make, participate in making or in any way attempt to use his official position to influence” a decision of government in which he has a financial interest.

Central to the question of whether Bukowski’s actions regarding Paxio are legal is whether his business relationship with the firm began after the contract with the city had been signed, and whether the mayor has voted on, or influenced others to vote on issues concerning Paxio.

“I’m still trying to find out the facts,” Biddle said.

Bukowski defended his arrangement with Paxio and said that he is helping the company to build an open-access fiber optic network that will ultimately benefit the city as a whole.

Philip Clark, Paxio’s chief executive officer, said he sees no conflict of interest in Paxio’s arrangement with Bukowski. He pointed out that the mayor was hired in July primarily to help Paxio make business contacts with city officials outside Emeryville.

But Biddle is concerned about the implications. “Even if the law says it’s OK to continue the contract (with Paxio), we’ll probably have to terminate it and find someone else,” he said. “Irrespective of the law, to me it just smells bad.”

JoAnne Speers, executive director of the Institute for Local Government, a Sacramento-based organization that helps city officials comply with state ethics rules, stressed that it is important for elected officials to consider not only the legality of their actions, but also the way those actions will be perceived by the public.

“The law is a floor – not a ceiling – for what you need to think about as a public official,” she said. “Local officials have the ethical responsibility to think about the appearance of impropriety.”

It was not the appearance of impropriety, but a violation of state ethics laws, that led Emeryville’s city clerk to report the mayor to a statewide political watchdog organization last year for failing to file campaign disclosure forms since 
2003.

Bukowski completed the overdue forms earlier this year, but Roman Porter, executive director of the Fair Political Practices Commission, said Bukowski is under investigation for possible violations of the Political Reform Act.

Porter declined to give details of the investigation. 
If the commission determines that Bukowski has failed to comply with ethics laws, it may fine him. And that could contribute to the mayor’s already strained finances.

“I’m tired of being broke,” Bukowski said. “I get paid $1,100 a month by the city and I have some income from renting my property, but it’s not enough. I always did well when I was in business, so I’m not used to this.”

Bukowski’s Statement of Economic Interests, an income-disclosure form required by federal law, states that Bukowski earned between $10,001 and $100,000 in rental income from his Doyle Street property in 2007.

When the mayor agreed to be interviewed for this article, he asked to be treated to lunch and chose the Townhouse Bar & Grill. There, over a plate of mini burgers and fries, he described a financial life in chaos.

“The consultant fee I’m getting from Paxio helps,” he said, “but it’s not enough to get ahead.”

The mayor said he recently had his cell phone disconnected for lack of payment and that in the previous week alone he received five $35 overdraft charges on his ATM card. When he encountered difficulty paying his mortgage six months ago, a local developer who is also a friend of the mayor’s, gave him a $30,000, 10-year loan that he said he will begin making payments on next year.

While his mortgage is current, county records show that Bukowski owes $1,720 in property taxes from last year and another $800 is due in December. 
Even with his consulting job, the mayor said he needs another source of income to make ends meet.

Several months ago, he began work on a new business venture based out of his house, which was outfitted with Paxio fiber optic cable that the mayor does not believe he will have to pay for.

“They’re not going to send me a bill. They’re so happy about getting Emeryville and getting all these accounts. I hope it’s a perk. It should be.”

Paxio’s Clark said free fiber optic installation is included with all service contracts and after the standard 45-day trial period, Bukowski will be charged for Internet service at the same rate as any other residential customer.

Bukowski said he plans to convert the front section of his Doyle Street home into an Internet café and offer computer games and high-bandwidth services that showcase the benefits of fiber optics.

“I see it as a way to market Paxio,” he said. “It’s going to work really well.”

To finance the café, Bukowski figures he will need $70,000. He said he hopes Paxio will put up half of the money and he anticipates two “developer friends,” will loan him the other $35,000.

As for funding the café, Clark said Paxio has no plans to support Bukowski’s venture. “Ken comes up with a lot of ideas,” Clark said. “Some are good, some are not so good. But his goals are genuinely about the city. It’s not about his own needs.”

City Councilman John Fricke, an outspoken opponent of the mayor’s politics, is also critical of Bukowski’s behavior outside the council chamber.

In addition to Bukowski’s failure to file campaign disclosure forms, Fricke criticized the mayor’s refusal to pay business license taxes owed to the city for more than four years.

Under Emeryville’s Business License Tax Ordinance, residential landlords are required to pay a
 .08 percent tax on their rental income. Though the taxes on Bukowski’s rental property would likely be less than $100 per year, he is defiant.

“Why am I going to pay this tax? It’s not something I support,” he said. 
When the city sent him a notice in 2004 requiring that he obtain a business license, Bukowski took his objection to the city council. In his role as council member, Bukowski called for a vote to suspend collection of the taxes until a public hearing could be scheduled.

“We need to take a look at who [this tax] is impacting and maybe decide to exempt owners who have less than five or six units,” he said at the Sept. 7, 2004 meeting.

Bukowski’s rental property has three units.

Biddle said Bukowski’s request to suspend the tax did not violate conflict of interest laws because the council did not bring the issue to a vote.

Bukowski said his opposition to the tax is not the only reason he hasn’t paid. “In my large list of creditors, it’s on the bottom of my list,” he said.

Fricke said he is disturbed by what he sees as the mayor’s tendency toward rule-breaking. “Most voters have a standard for conduct of someone on a city council,” Fricke said. “I would think that for most voters, Ken falls below that standard.”

Councilmember Nora Davis, who has served with Bukowski since 1987, sees things differently. “The people of Emeryville have elected him five times. They have evinced a lot of support for Mayor Bukowski over the years,” Davis said.

But in June of last year, Davis led the charge to formally censure Bukowski, in part for disclosing confidential information from closed meetings.

“Ken has been doing this for years,” Fricke said. “Something comes up in closed session and then he goes out and tells someone.”

The censure resolution was never brought to a vote, and Bukowski has not been formally reprimanded for his actions. Davis said she doesn’t recall why the issue was dropped but she suspects there were not enough votes to carry the motion.

“I’ve had many disagreements with Mayor Bukowski over the years,” Davis said. “But nobody is 100 percent. There’s always upsides and downsides to people.”

So, what, if anything, will the city do about Bukowski, who is not up for re-election until 2011?

“There’s nothing the city can do, quite frankly,” Biddle said. “It’s up to the voters. They can take matters into their own hands, if you know what I mean.”

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Editor’s Note:

This is an expanded version of the story by In Emeryville reporter Shaleece Haas that appears in the San Francisco Chronicle: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/29/BA9R14B1H8.DTL