.Living Large

How state Senator Don Perata uses campaign cash to finance his lavish lifestyle. First of two parts.

State Senate boss Don Perata throws impressive parties, and this one was a doozy. The guests, some of Perata’s best donors among them, feasted on buttery Dungeness crab and sipped California Chardonnay. Then they settled into their plush luxury box seats to watch the Oakland Raiders play the New York Jets in a game with playoff implications.

It was mid-December 2000, and the state senator had just dropped $43,600 on an oversize luxury suite at the Oakland Coliseum for a single afternoon of festivities. At the time he said he was trying to convince East Bay business leaders to buy suites of their own. But like his other ideas involving the Raiders, this one misfired. Team officials later said the bash produced zero luxury box sales.

Perata paid for the box, and the bash, from the treasury of one of his political campaigns. Since the state senator often transfers cash from one campaign to another, it is difficult to determine its exact origin, but public records suggest that most of it came from the Three Rs, a fund-raising committee Perata formed with then-Mayor Jerry Brown a year earlier to improve Oakland schools. The same month as the Raiders party, Perata transferred the remaining $32,668 from the Three Rs into his main Senate account and paid for the luxury box. In other words, money raised to help Oakland schoolchildren likely was spent on crab, wine, and football for a bunch of rich people.

An intensive analysis of campaign finance records by this paper shows that California’s most powerful Democratic politician has a long history of living large on money raised for his various campaigns. Over the past ten years, Perata has spent more than $1 million of campaign cash on parties and high-end lifestyle expenditures. That amounts to more than one-quarter of the total he raised for his reelection campaigns in that time. (For the complete run-down of Perata’s expenses, see our news blog 92510 at EastBayExpress.com.)

Although politicians commonly use campaign cash to enhance their lifestyles, Perata, who sets the tone for the state legislature, appears to be among the most prodigious spenders in California politics. His prolific expenditures also undermine his well-crafted persona as a populist politician, a man of the people. The top expenses include:

Dining: The state senator frequents some of California’s best restaurants, including Oliveto and BayWolf in Oakland. His campaign restaurant tab totals at least $119,517 over the past ten years, and includes at least 62 meals with bills in excess of $500.

Golf: He hosts an annual tournament he calls the Perata Cup at a private Pleasanton country club owned by one of his top donors. He has spent a total of at least $121,746 on the past four events, including gifts. He describes these tournaments as fund-raising events, but on at least one occasion there is no evidence of any fund-raising having occurred.

Hotels: He stays at some of the state’s priciest luxury hotels, including several in both the Bay Area and Sacramento, where he owns homes. Perata has spent a total of $7,883 on posh lodging near his homes; his total hotel tab for the past ten years is at least $68,503.

Perata also uses money from his campaigns to shower gifts on his donor friends, colleagues, lobbyists, and staffers. He shops at Macy’s and Nordstrom or buys expensive luggage, monogrammed pens, and upscale office supplies. Public records show he also creates dubious campaign committees and milks them for cash. “Clearly, the campaign money is not being used for re-election purposes,” said Bob Stern, president of the Center for Governmental Studies in Los Angeles and former general counsel of the California Fair Political Practices Commission. “It’s being used to maintain a lifestyle and create an image.”

It’s nonetheless legal, on paper at least. Although state and federal law bar politicians from enriching themselves with campaign funds, lax reporting rules make it virtually impossible to tell whether expenditures are for legitimate campaign needs or for personal use. Perata and other politicians easily exploit this loophole by calling an expensive dinner a “meeting” or “travel.” Perata even uses these types of labels when he charges everyday items such as groceries, wine, and coffee to his campaign accounts.

Perata’s spokesman Jason Kinney defended the state senate boss’ many expenditures as “entirely legal,” “legitimate,” and “run-of-the-mill and commonplace.” “Every officeholder, up and down the state, does this,” he said.

However, this newspaper sampled campaign expense reports from other top state senators and found no others who appeared to have such extensive expenditures. There’s also no denying that Perata benefits from the spending: It allows him to live the high life and bestow gifts on friends and colleagues, thereby cementing his leadership status. Plus it’s all tax-free. In practice, the campaign money has allowed him to nearly double his $130,000 annual legislator’s salary with more than $103,000 a year in tax-free income.

Perata’s campaign spending habits bear more than a passing resemblance to the behavior that got him in hot water with federal law enforcement officials. The FBI and the US Attorney’s Office are investigating whether Perata has enriched himself by taking kickbacks from family members, trusted friends, and donors.

It’s unclear whether the FBI and the federal grand jury investigating the state senator during the past two-plus years also have delved deeply into his campaign expenditures. But this much is certain: Perata’s high-end socializing and reputation for generosity would be impossible to sustain without his donors’ money. And that makes him beholden to them.

War Chest, But No Contest

Don Perata has never had to watch his back. The core cities of his Ninth Senate District — Alameda, Berkeley, Oakland, and Richmond — are so politically homogeneous that Republican opposition is little more than a joke. According to the secretary of state’s most recent voter registration statistics, Democrats outnumber Republicans in Perata’s district 59.1 percent to 13.7 percent. “You can kiss off the chance of any Republican ever winning in that district,” said Bruce Cain, a political science professor and director of the Institute of Governmental Studies at UC Berkeley. In fact, none of the no-name GOP candidates who have run against Perata over the years has ever managed to win more than 16 percent of the vote.

The only place a Democrat can lose is in the Democratic primary. “The primary is everything,” Cain said. But not for Perata: Because he is a powerful incumbent, the state senator gets a free pass. Since 1998, not a single East Bay Democrat has dared to take him on. “No one is that stupid,” Cain noted.

As a result, Perata doesn’t have to campaign for reelection, and thus doesn’t have the typical campaign expenses. Television, newspaper, and radio ads are unnecessary, and glossy mailers are relatively rare. Yet few in state politics rival him as a fund-raiser. From January 2000 through December 2006, he collected at least $3.72 million for his personal reelection campaigns. That doesn’t include the $37.31 million raised by more than a dozen political action committees he’s been associated with during that period.

So why does Perata need so much cash? Kinney, his spokesman, maintained that being a master fund-raiser is part of “the mandatory job description” of becoming and remaining a legislative leader. “The senate president is expected to be an aggressive fund-raiser,” he said.

Indeed, Perata, like other political leaders, has used a significant portion of his campaign funds over the years to get his allies elected, thereby establishing and maintaining his power. He also has used his campaign cash to employ close friends and family members. But culling through more than two thousand pages of the state senator’s campaign finance disclosures made it clear that Perata diverts a sizeable portion of his war chest toward extravagant expenditures.

In the 2000 general election, for example, Perata squared off against an unknown Republican named Linda Marshall, who received just 11.5 percent of the vote, compared to his 83.4 percent. Mounting a real campaign against Marshall would have been overkill, so Perata was awash in cash after the election.

And what did he do? He embarked on a massive spending spree. From late October through the end of that year, Perata dined three times at BayWolf, including one meal that cost $2,419. He took a trip to the Napa Valley wine country and dined at Tra Vigne in St. Helena ($1,199) and Rings Steak, Seafood and Chops in Napa ($199). He also enjoyed a $500 dinner at Trader Vic’s in Emeryville, and spent $2,226 at Lalime’s in Berkeley. He spent $1,329 at the Claremont Resort and Spa, and $2,134 at the Embassy Suites in Napa. He shelled out $475 on coffee and $846 on wine. He bought $168 worth of sports memorabilia, and spent $2,500 at Bullock’s department store in Sacramento. And, of course, he cut a $43,600 check for an afternoon in the Raiders luxury box.

In little more than two months, Perata burned through $123,606 of campaign cash on these expenditures. The post-election binge made 2000 his top year of the past ten for such expenses — $193,195 in all.

The runner-up, not coincidentally, was another election year, 2004. That fall, as legislators up and down the state were locked in expensive races, Perata sat atop a mountainous war chest looking down on Patricia Deutsche, a Republican few had heard of. Without breaking a sweat, Perata trounced her 77.1 percent to 15.6 percent. He had so little respect for Deutsche, in fact, that he started his partying well before November.

From July through September of that year, Perata racked up $82,802 in lifestyle spending, representing more than half the year’s total of $156,966. Within those three months, he ate twice at Biba, one of Sacramento’s best restaurants — one of the meals cost $2,418. He dined at Chops Steak House ($334), twice at Esquire Bar and Grill ($662), and once at the Riverside Clubhouse ($165), all in Sacramento. Rather than walk precincts, he jetted at least twice to Los Angeles, checking into the Millennium Biltmore Hotel ($197) and the Beverly Hilton ($658).

Perata capped his pre-election spree with a $50,000 charter flight with Komar Aviation of Santa Ana. The state senator offered no explanation in his expense reports of where he went or whom he took with him, but it must have been one helluva party. According to an Orange County Register story a year later, Komar charges $10,626 to fly eight people from Los Angeles to Aspen. Perata’s bill was nearly five times that.

Expensive Tastes

Some people who know him say Don Perata has always preferred an intimate rendezvous with the rich and powerful to a giant cocktail party fund-raiser. “If it’s a large group, he’ll either show up and say a few words and leave or never show up at all,” noted a knowledgeable Sacramento source. “But if it’s a small group, he enjoys it and will stay the whole time.”

These exclusive affairs are where the Senate’s president pro tem spends much of his campaign cash, plotting the future of California politics. Campaign finance laws do not require Perata to disclose the names of his companions, but judging from his expense reports they’re the kind of men and women who regularly enjoy a top-shelf filet mignon and perfectly aged Cabernet Sauvignon.

Among Perata’s favorite restaurants are Biba and Morton’s of Chicago Steakhouse, generally regarded as two of the best in Sacramento. Since 1997, his combined tabs at the two eateries have totaled at least $13,710. Closer to home, the son of an Italian immigrant prefers Oliveto Cafe and Restaurant in Rockridge. The 2006 Zagat Survey rates it as the East Bay’s best Italian restaurant and among the top ten of all restaurants in the area. In the past ten years, Perata has spent at least $6,932 there.

When the senator has a party, a favorite venue is the Bellevue, one of Oakland’s oldest and most venerable private clubs. Set alongside Lake Merritt, with private terraces and expansive views, the Bellevue is one of the premier party locales in the East Bay. Over the years, Perata’s tab, including his monthly membership to the club, totaled $37,844.

To some observers, Perata’s spending crosses the line. “Campaign funds are not supposed to sustain your personal lifestyle,” said Doug Heller, executive director of the Santa Monica-based Foundation for Taxpayer and Consumer Rights, a liberal consumers’ watchdog group. “But clearly he’s using them to live the life of a Roman senator.”

Perata’s spokesman Kinney maintained that lobbyists and the senator’s other dining companions “expect” to eat at fine restaurants. Perata, he said, derives no personal benefit, or even pleasure, from the expensive dinners and upscale parties; he would prefer to stay home and watch the Raiders on TV. “Don Perata is the consummate public servant,” Kinney said. “He leads an extremely modest lifestyle. He lives in a modest 1,200-square-foot home.”

When this “modest” Raiders fan travels, however, he lodges far from Motel 6. Perata has stayed at the exquisite Lodge at Pebble Beach ($343) and the Ritz Carlton in Half Moon Bay ($2,499). In Los Angeles, he usually checks into hotels where you’re likely to spot Hollywood celebrities. His favorites are the Four Seasons ($425 a night) and the Beverly Hilton (single room: $275; junior suite: $450).

The senator also enjoys posh hotels in the Bay Area and Sacramento, although he owns homes in both places. His total Bay Area hotel stays, including the Claremont Resort and Spa and the Waterfront Plaza Hotel, both in Oakland, were at least $6,007. In Sacramento, Perata has owned a condo not far from the statehouse since 1997, yet he repeatedly stays at the Hyatt and other nice hotels there. He spent $1,876 in the state capital for “candidate lodging” or “candidate travel.”

When asked why the senator would check into a hotel when he owns a home just a few minutes away, Kinney said that on some occasions, Perata has been forced to stay at a hotel because his “residence is otherwise unavailable.” He refused to elaborate.

And on occasions when his condo was available? “It can’t be that he had too many drinks,” one Sacramento source said. “You can call the sergeant-at-arms 24 hours a day.” Indeed, the state Senate’s sergeant-at-arms maintains a round-the-clock chauffeur service 365 days a year for inebriated legislators.

“A Great Customer”

Whatever the reason for the hotel stays, there’s no doubt Don Perata enjoys a good bottle of wine. “He loves wine, red wine,” said a Sacramento source. “Rosenblum Cellars is his favorite.” Rosenblum is an award-winning local winery, best known for its Zinfandels. It even has a tasting room in Perata’s hometown of Alameda.

When the busy politician doesn’t have time to drive to the island, he dashes over to his favorite neighborhood wine store, Montclair Village Wines, a few minutes from his Oakland house. Perata uses campaign funds to buy wine there several times a year. Kinney said most of it was for fund-raisers. Yet over the past decade, Perata has also labeled these purchases “office supplies,” “food,” “election party,” “meals and beverages,” and “meeting.” In all, he spent $6,814 at Montclair Village Wines, while his total alcohol purchases came to $11,738. “I would call that an abuse of the process,” said Heller, who is a close follower of politicians throughout the state.

Perata also spends campaign funds on basic household items such as groceries and coffee. His neighborhood grocery store and coffee shop, Village Market and Terrace Coffee and Gifts, are his favorites. They sit side by side on Broadway Terrace, a short drive from his house. Over the years, he has charged his campaign accounts $5,007 for groceries from Village Market, and $6,600 for items purchased from Terrace Coffee.

In addition, the senator likes to buy books, greeting cards, cigars, and hardware, as well as magazine and newspaper subscriptions. His favorites, in order, are Diesel Bookstore in Rockridge ($5,084), Greetings on Piedmont Avenue ($2,937), Home Depot in Emeryville ($1,163), LaSalle Cigars in Montclair ($650), The Economist ($2,253), and The New York Times ($1,256). Are these legitimate campaign expenses? Stern, the former FPPC general counsel, said they could be for gifts or bona fide office supplies.

But a closer examination of other seemingly legitimate campaign expenses raises similar questions. For example, Perata charges his personal cell phone (Cingular Wireless, $17,046, and Cellular One, $8,226) to his reelection campaigns even though he hasn’t truly campaigned for elected office in nine years. Or consider the tens of thousands of dollars he has spent on basic office supplies. On the surface, these expenses may look legit — until you realize that Perata’s campaigns don’t have offices.

Might he be buying supplies for his state Senate offices? Unlikely. According to Dina Hidalgo, the Senate’s director of personnel, supplies for each senator’s office are purchased internally through the state government.

Perhaps Perata is buying supplies related to campaign mailers? Possibly. But consider the fact that his various campaigns paid his son, Nick Perata, more than $1.2 million from 2000 through 2004 to do his mailers and consulting work for him.

Kinney said Perata used most of the office supplies to outfit his house, from stationery and pens to computers and other electronic gadgets. The supplies, he said, enabled the senator to write campaign letters and correspond with his donors, constituents, and colleagues from the comfort of his home. “It’s all perfectly legal,” he said.

It also must be one well-stocked and nicely decorated home office. Over the years, his “office” expenses have included $6,574 at two Oakland art galleries (Barloga et Fils Gallery and Dakot Art); $4,297 at Piedmont Stationers on Piedmont Avenue; $2,679 at Best Buy in Emeryville; $1,201 at CompUSA; $3,259 at Levenger.com fine office products; and $11,773 at Office Depot in Oakland. And then there’s the $1,826 in “office supplies” from Montclair Village Wines.

One fact is beyond dispute: The senator supports local businesses from his campaign coffers. From office supplies and wine to restaurants and hotels, he gives meaning to the slogan “Buy Oakland.” “He puts his money where his mouth is,” said Piedmont Stationers owner Shelly Lowe, who adds that she’s a strong supporter of the state senator. “He’s a great guy, and a great customer.”

The Grand Pooh-Bah

Don Perata also is a great customer at Macy’s, Bullock’s, and Nordstrom. His total expenditures at the three upscale department stores were $14,747 over the past ten years. Oftentimes he labeled these purchases “gifts.” For instance, in October 2004, he charged $5,786 in “staff gifts” at Macy’s in Walnut Creek. “He’s very generous to people,” explained one Sacramento source. “He’s the Grand Pooh-Bah. He wants to take care of people.”

The Grand Pooh-Bah especially likes to take care of people during the December holidays. In late 2005, he went to the Apple Store in Emeryville and plopped down $3,249 on “holiday gifts for colleagues.” In late 2002 alone, he spent $6,669 at Abigail women’s apparel on Piedmont Avenue. Though he labeled the expenditures “office supplies,” they were probably gifts, because the next year he spent $630 there and labeled it “staff gifts.” Why, in any case, would a politician need to buy women’s clothing for his office?

Despite his generosity, Perata doesn’t always treat staff and fellow legislators to the quality to which he’s become accustomed. For example, his favorite place to buy gifts in the past few years has been Target in Albany. Last holiday season, he spent $16,750 at the discount department store, including $10,000 that he labeled “holiday gifts for staff and legislators.” In all, he has charged $30,048 in Target purchases to his personal campaign accounts.

For his donors, though, the senator usually spares no expense. In particular, he likes to buy fund-raising gifts from T. Shipley ($2,677), a retailer of fine leather goods. According to one Sacramento source, Perata is fond of handing out $150 pens engraved with his name. In late 2005, he purchased $1,549 worth of Italian ceramics for his contributors at Bella Ceramica on Piedmont Avenue. He charged another $544 for his donors from the upscale Herrington catalogue.

But Perata’s real gift-giving extravaganza is the Perata Cup, his annual golf tournament. Like Santa Claus on Christmas Eve, he typically arrives with bags full of presents. “The more money they give,” explained one source, “the better presents they get.”

Based on campaign finance reports, it’s not difficult to determine who should get the best presents. Although Perata’s list of donors is long and varied, there are a few loyal East Bay contributors whom he can count on to cut checks for at least $5,000, and sometimes as much as $50,000, nearly every time he launches a new campaign committee. They are the true creators of the Grand Pooh-Bah. The top five among them are Ed DeSilva, roadbuilder and developer ($512,500); Ron Cowan, Alameda developer ($210,300); Jim and Michael Ghielmetti, owners of Signature Properties, and Jon Reynolds, owner of Reynolds and Brown, developers of Oak to Ninth, a giant condo project on Oakland’s waterfront ($175,800); T. Gary Rogers, chairman and CEO of Dreyer’s Ice Cream ($143,500); and billboard owner John Foster ($81,300).

In return, the senator has done right by them. DeSilva, for example, stands to be the biggest Bay Area beneficiary of the $20 billion statewide transportation bond Perata sponsored last year (see Full Disclosure, page 4). As for Cowan, Perata was instrumental in getting a $40 million road — which DeSilva built — constructed between Oakland International Airport and Cowan’s flagging business park (“Road to Nowhere,” feature, 3/1/06). Foster, meanwhile, made millions after Perata twice carried state legislation that let him erect a series of billboards next to the Oakland Coliseum (“Fishing for Revenues,” Full Disclosure, 2/21). Finally, Signature Properties and Reynolds and Brown could gross nearly $2 billion after Perata pushed legislation that let them buy sixty-plus acres of public waterfront property for less than half its likely value (“Oakland Can Do One Hell of a Lot Better,” City of Warts, 8/16/06).

In four out of the past six years, meanwhile, Signature Properties has benefited by hosting the Perata Cup at Ruby Hill Golf Club, an exclusive championship golf course and country club the company owns in Pleasanton. Perata uses campaign cash to pay Signature between $17,000 and $35,000 per tournament — the price includes eighteen holes of golf and a banquet dinner at the villa-style clubhouse for his guests. “The strange thing is that he doesn’t golf,” said a source familiar with the tournaments. “He just drives around in a cart and hands out cigars and golf shirts that say ‘Perata Cup’ on them.” Stranger still is the fact that Perata is using his donors’ own money to buy them gifts, dinners, and rounds of golf.

The Ruby Hill tournaments are usually half party, half fund-raiser, the source said. None of the guests pay directly for the golf or the dinner, but out-of-town donors are expected to write checks to one of Perata’s campaign accounts. For his most loyal contributors, the ones who have donated heavily to his campaigns, the Perata Cup is just a “big thank-you party,” the source explained.

Sometimes, in fact, it appears to be more of a thank-you than a fund-raiser. In October 2003, Perata spent $45,141 on a Ruby Hill event, including gifts and prizes. But his campaign statements show no contributions originating on that day, and none from his usual stable of contributors in either the month before or the month after the tournament. “Are they really events for fund-raising purposes?” asked Heller of the Foundation for Taxpayer and Consumer Rights. “Or is he just socializing on the campaign’s dime?”

Four More Years?

Senator Perata may no longer need to campaign for reelection, but he does have costs that go beyond his lifestyle — such as the legal defense fund he formed after the FBI began investigating him for corruption. But since donors don’t particularly like to give to such funds, one fund-raising alternative is to create a campaign committee based on some dubious pretense.

In August 2005, the state senator launched Taxpayers for Perata, a committee he said would cover his run for the state Board of Equalization in 2008. While it’s not totally inconceivable that a termed-out Perata might want that job — a plum position that pays nearly $155,000 a year for little work — someone with his name recognition would hardly need much cash for the campaign.

Yet cash he got: Within sixteen months of launching the committee, Perata had raised more than $1 million, and he has already spent more than two-thirds of it. Not a penny, however, was spent campaigning for the Board of Equalization. Instead, he transferred nearly half of the total — $464,000 — to his legal defense fund. Much of the rest was eaten up by his lifestyle expenses. In the last three months of 2005, for example, Perata made three trips to Montclair Village Wines ($719), bought cigars ($173), dined twice at BayWolf ($260), scored furniture from Fenton MacLaren in Oakland ($430), and charged all of it to Taxpayers for Perata.

From the same coffer, Perata made the previously mentioned Apple Store gift purchase, spent $1,347 at T. Shipley, and hosted a $22,758 golf tournament at Ruby Hill. He took at least three trips to Los Angeles, where he stayed at the Beverly Hilton ($218), the Hotel Bel Air ($667), and the Sheraton ($147). In Beverly Hills, he dined at Maestro’s Steakhouse ($450) and the Peninsula ($537).

Donors sometimes tire of contributing to the same campaigns over and over, so in 2005 Perata made things easier by creating another committee, Rebuilding California, to support a series of statewide bond measures the following year. The committee raised $9.2 million, but because success wasn’t a sure thing this time, Perata had to spend most of it on actual campaigns. He did, however, siphon off $35,670 for living large.

This year, Senator Perata has indicated he plans to mount at least three more campaigns for the February 2008 primary — a healthcare initiative, a term-limits extension measure, and a referendum on the Iraq war. If past practice is any indication, these campaigns should provide Perata with plenty of dinners, hotel stays, wine purchases, and gift giving. “When one campaign dries up, you simply open up a new one — this looks like more of living the high life,” Heller said.

If the term-limits measure succeeds, Perata can forget the Board of Equalization and cruise to another four-year Senate term. The anti-Iraq war measure should boost his chances significantly. For even though it carries no weight, it will help endear him to liberals and likely increase Election Day turnout.

Indeed, the whole idea is a stroke of political genius. Consider that liberals and progressives across the state — people and organizations that don’t normally donate to the moderate Perata — likely will flood the referendum campaign with donations to make a statement against President Bush. In anticipation of all that money, Perata has already transformed Rebuilding California into another committee, Leadership California, which began sending out mailers last month urging support for the antiwar measure.

It gets better. Not only will Perata have plenty of cash for his slush fund, but the antiwar referendum will make for perfect cover should Bush’s Justice Department ever file corruption charges against him: He can claim political retribution.

The Investigation

How we conducted our campaign spending analysis.

Over the past three months, the Express scrutinized hard copies of Senator Perata’s personal campaign expense reports totaling more than two thousand pages. We then created an Excel spreadsheet logging every expense that didn’t appear to be directly related to actual campaigning. The result is available for download on our news blog 92510 at EastBayExpress.com. It includes items Perata labeled as “fund-raising” because it was impossible to distinguish where the fund-raising stopped and the partying began. To determine whether the spending patterns were unusual, we sampled campaign expense reports from other top senators, but found no others who appeared to have such extensive expenditures. Two political watchdogs, Bob Stern and Doug Heller, also expressed surprise that any legislator would spend more than $1 million on dining out, hotels, gift giving, etc., over the period in question.

That’s Just Part of It

Add $164,000 in unexplained credit-card expenses.

You might have noticed that the senator’s expenses in this story are preceded by the words “at least.” That’s because Perata incurred at least $163,976 in credit card charges over the past ten years for which he provided no specific explanation. It’s not clear whether this violates campaign-reporting rules, since state law doesn’t compel politicians to disclose individual expenses of less than $100. Because of this loophole, his total “living large” spending may be significantly higher than the $1,027,568.38 our analysis of campaign finance records has uncovered.


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