News

W.L. Brown: A Public/Private Partnership

Continued from page 3

2) CalPERS backs the Whitney Oaks venture and, consequently, aids Live Oak Associates III, which just happens to count San Francisco Mayor Willie Brown among its investors.

Next to Mission Bay and the Presidio, the Hunters Point Naval Shipyard is one of the most valuable pieces of soon-to-be-developed real estate in San Francisco. To be sure, sections of the former naval base have massive environmental problems. But the area also boasts some of the city's best bay views. The contract to develop the decommissioned shipyard, which is in the process of being returned to city ownership, is truly a one-of-a-kind opportunity.

The Lennar Corp. is the lead partner in a group that was recently awarded a San Francisco Redevelopment Agency contract to oversee the conversion of the shipyard to civilian use. The redevelopment contract became politically controversial in 1998 because some of Mayor Brown's close associates -- including Yber-lobbyist Billy Rutland, trucking contractor Charlie Walker (known sometimes as "The Mayor of Hunters Point"), and local Democratic Party insider Natalie Berg -- had been hired as consultants by the companies competing for the contract.

Struggling to avoid the appearance of favoritism, the Redevelopment Commission -- which is appointed by the mayor -- brought in the major accounting firm of KPMG LLC to review the qualifications of the three finalists. Then, at a public hearing last month, the commission rejected KPMG's recommendation, and, in a surprise vote, chose the Lennar-led group as master developer of the former shipyard.

All while Renaissance Homes, the Lennar subsidiary, was working away on its section of Whitney Oaks, in partnership with CalPERS, Newland, and the Willie Brown investment vehicle Live Oak Associates III.

Lennar officials did not return phone calls this week seeking comment on possible conflicts involving Whitney Oaks.

Throughout his political career, Willie Brown has been a lightning rod for ethics criticism. Much of this criticism has focused on the seemingly inherent conflict between his duties as one of the state's most powerful officeholders -- speaker of the Assembly -- and his work as a private attorney for some of the state's most prominent businesses. Time after time, critics have pointed at supposed conflicts; time after time, those conflicts have been vague, attenuated, incomplete.

While in the Legislature, Brown did indeed represent many clients who benefited from governmental action. But Brown never was shown to have represented a private client for the purpose of winning a state government approval over which Brown had official sway. He adamantly insisted his private law practice was perfectly ethical, and all but taunted critics with a personal style that included Porsche automobiles and Wilkes Bashford suits.

As revealed to this point, the public record contains no direct evidence of a tie between Willie Brown's interest in Live Oak Associates III and his actions in favor of CalPERS or the Lennar Corp. Such evidence as does exist is circumstantial, and subject to varying interpretation. In other words, there is no transcript of a conspiratorial conversation between Willie Brown, CalPERS, and Lennar to scratch one another's wallets.

But the Whitney Oaks project raises serious ethics questions about Willie Brown -- questions that differ fundamentally from those raised in the past about his former law practice.

The Whitney Oaks questions do not involve a vague, indirect, incomplete connection between Brown's actions as private lawyer and public figure.

At Whitney Oaks, documents show definitively, Brown himself stands to profit privately from the financial backing of a public agency, CalPERS. And just as definitively, the public record shows that the mayor's official support of Mission Bay has profited CalPERS.

The appearance of tit for tat seems all but inescapable:
It is clear that CalPERS funded Whitney Oaks, and that Live Oak Associates III, which counts Willie Brown as a partner, is part of the project.

It is clear that Willie Brown's successful effort to restart Catellus' Mission Bay development was a factor that helped put millions -- perhaps tens or even hundreds of millions -- of extra dollars into CalPERS's coffers.

And it is clear that Whitney Oaks and the approval of a new Mission Bay plan have moved forward during roughly the same time period.

It is unclear, however, whether Whitney Oaks and Mission Bay -- and the roles of Willie Brown and CalPERS in each -- are connected by more than appearance and shared timing.

Likewise, the simultaneous involvement of the Lennar Corp. in Whitney Oaks and a major redevelopment project in San Francisco may be simple happenstance. Lennar is, after all, a huge real estate firm with wide-ranging interests.

Still, obtaining city approvals for major projects is always a primary concern of developers who hope to make money in San Francisco, and the projects in which CalPERS and Lennar have interests here are not small, or peripheral. They are major, and central to the development of the city.

State and local conflict-of-interest laws prohibit a public official from participating in public actions in which he has a private economic stake. One section of the state Government Code puts it this way: "No public official at any level of state or local government shall make, participate in making or in any way attempt to influence a governmental decision in which he knows or has reason to know he has a financial interest."

According to his own financial disclosure statements, Mayor Brown's investment in Live Oak Associates III is significant and enduring. Other limited partners in Live Oak III have been well aware of the partnership's investment with CalPERS in Whitney Oaks. As a longtime speaker of the Assembly, Brown is, or should be, familiar with the workings of the state retirement system. In fact, one member of the CalPERS Board of Administration is appointed jointly by the speaker of the state Assembly and the Senate Rules Committee.

Brown's interest in Whitney Oaks does not appear to be huge; he has disclosed a $10,000 to $100,000 ownership in Live Oak Associates III, but that partnership apparently owns less than 1 percent of Whitney Oaks. How much Live Oak III might profit from its 1 percent stake seems likely to vary, depending on the success of the development. Whether Willie Brown's interest in Whitney Oaks has been or will be large or direct enough to reach legal definitions of conflict of interest is certainly a debatable question.

Still, Brown's own public utterances show he knew that CalPERS was a major owner of the Catellus Development Corp., and had a major stake in the Mission Bay project. The available record shows that, at the very least, he ought to have known he was also involved in a private business deal with CalPERS, and in a prima facie conflict of interest.

David Pasztor edited and helped research this article.

• 1
• 2
• 3
• 4