Political Economy

How a Willie Brown real estate venture snagged tens of millions of dollars in government subsidies and opened the way for Democratic heavyweight Angelo Tsakopoulo to make even more money

THERE IS A TREELESS BEDROOM community straddling the southern edge of the city of Sacramento that is a quiet testament to the will of land developers. That several thousand homes exist in North Laguna Creek today is a minor miracle. Fifteen years ago, the residents of this area were mostly cows, birds, fairy shrimp, and snakes. These 600 acres of grazing meadow, studded with vernal pools and eucalyptus trees and bisected by a bubbling brook known as Laguna Creek, were beautiful -- and a residential developer's nightmare.

The federal government said this area adjacent to Laguna Creek was deep in the flood plain -- meaning that houses could not profitably be built and sold there. Also, a variety of federal, state, and local agencies said that the savannas included large tracts of crucial wetlands -- wetlands that must be left in their natural state. And even if the flooding and environmental problems could be addressed, the area could not be developed without tens of millions of dollars of major transportation infrastructure -- freeway exits, arterial streets, bridges, and other improvements -- and none of that spending had been approved by the government.

But the property was cheap, and developers yearned to overcome the impediments to construction. In fact, by the summer of 1986, the owners of these 600 bucolic acres had persuaded local government to help address the most daunting of the obstacles to development: the Federal Emergency Management Agency's warning that the land lay in a flood hazard zone. But then the proposed flood control project stalled, and the stall seemed likely to be permanent. The U.S. Environmental Protection Agency said, officially and forcefully, that the land should not be developed for a raft of environmental reasons. Two other government agencies also lined up against the project.

Sacramento developer Angelo Tsakopoulos has given generously to Democratic coffers.
Sacramento developer Angelo Tsakopoulos has given generously to Democratic coffers.
Sacramento developer Angelo Tsakopoulos has given generously to Democratic coffers.
Owen Bewer/ Sacramento Bee
Sacramento developer Angelo Tsakopoulos has given generously to Democratic coffers.

At that point, the chances that development would be approved seemed to range all the way from slim to vanishing.

Then, in the fall of 1987, a certain development partnership arrived on the scene and optioned -- that is, paid money to gain the right to buy -- the creekside area of the stagnant project's land. The cost was minimal; after all, at that point it did not seem that the property would ever be developed, at least not with a housing density that would result in large profits.

And then, within weeks, all the major impediments to development fell like a straw hut before a typhoon.

At the urging of a powerful U.S. congressman, the Environmental Protection Agency leapt away from its previously adamant anti-development position as if it were a burning coal. The other agencies retreated, too.

The city of Sacramento dredged Laguna Creek, which allowed FEMA to remove much of the adjacent land from the flood plain, and suddenly, the property was no longer in imminent danger of flooding -- at least on paper. The city agreed to provide the development partnership with roads, sewers, water mains, and nice parks -- free of charge. In fact, over the next few years, agencies at all levels of federal, state, and local government rushed to satisfy the requests of this certain development partnership and others who wished to develop the area. Millions of public dollars poured in, benefiting not just the immediate area, but other new neighborhoods that began to emerge from the thousands of acres that fan out from North Laguna Creek. Greater Laguna Creek was born, and wetlands that had been home to endangered wildlife became part of Sacramento's suburban boom.

As Laguna Creek began to blossom, the development partnership in question exercised its option, bought 285 acres of raw land, and sold it off as subdivided property, ready for construction, reaping a multimillion-dollar profit. But these sales were only a hint of the massive development to come. The flood control project, freeway interchanges, roads, and pro-development environmental decisions that ratcheted up the value of the property optioned by a certain development partnership also primed much larger segments of nearby land for residential and commercial building. This certain development partnership, it seemed, had laid the groundwork for turning thousands of acres of inexpensive rural land into pricey suburbs.

Those thousands of acres were controlled by Democratic Party heavyweight Angelo Tsakopoulos, then-employer of state Democratic Chairman Phil Angelides, future overnight guest of President Clinton, campaign contributor extraordinaire, the controversial and all but undisputed King of the Sacramento Sprawl.

And the certain development partnership that had the foresight to option 285 acres of land in south Sacramento -- Live Oak Associates II -- also had a well-known Democrat among its owners. His name was Willie Lewis Brown Jr.

Mayor Willie Brown has never been shy about flaunting his financial success. While Assembly speaker, Brown "moonlighted" as a lawyer, and his private law practice was large, lucrative, and controversial. He was repeatedly criticized for accepting large legal retainers from clients with significant interests in state legislation. But Brown adamantly insisted his private law practice was ethical, and all but taunted critics with the Porsche automobiles he drove and the Wilkes Bashford suits he wore.

Brown's financial well-being has generally been presented as a function of his lawyerly activities. Indeed, he has represented many large and powerful business clients, and has made handsome sums for doing so. (A July 1995 story in the San Francisco Examiner, co-written by what now seems to be the almost comical duo of ace investigative reporter Lance Williams and former reporter/current Brown mouthpiece Kandace Bender, says that in a four-year period in the early 1990s, Brown earned $1.15 million moonlighting as a private lawyer while serving as the speaker of the Assembly.) But Brown has made money in other ways, too.

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