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

And did the city ever pay.

In April 1988, a city-hired appraiser valued the parcel at $31,000. A few days after submitting this "final" appraisal to the city, the appraiser mysteriously changed the figure to $81,827. Even that price was too low for city officials. In the end, the city gave Live Oak II $155,000 for the property -- five times the original appraisal.

In the second instance of buying what might have been had for free, the city used state money to purchase a dozen acres of parkland from Live Oak II for $1.2 million; the city then created a park on the land. The park is one of the central amenities and value-adders for North Laguna Creek. Again, the process seems backward. Ordinarily, a developer would donate land he hoped the city would agree to make into a park. In this case, the city bought the land and built the park.

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 the request of Live Oak Associates II, the city also annexed 400 acres of nearby farmland in which Live Oak had substantial holdings. That acreage needed water, and annexation would allow access to the city's distribution system.

And if all these favors were not enough, the Sacramento City Council allowed Live Oak to renege on a promise to set aside land for a school.

Originally, the subdivision plats for North Laguna Creek set aside 10 acres for a school. But then in September 1988, the City Council allowed Live Oak II to remap its subdivisions. In the ensuing remap, the developers took back the proposed school site so it could be sold for housing.

Local governments often favor developers who make campaign contributions. Political connections always play a role in gaining government assistance. But the North Laguna Creek development raises the question of degree of assistance. The government paid about $6 million up front for Live Oak's infrastructure. The rest was funded with tax-free bonds. Normally, before this type of debt can be used, private developers must, at the very least, pay for roads, sewers, and water mains. For some reason, Live Oak got an almost wholly free ride.

"Live Oak II's contribution in this deal looks to have been political, not financial," says Clint Reilly, a veteran of Sacramento politics who is running against Brown for mayor. "Where others would just walk away from a real estate deal dependent on government entitlements, Willie Brown plunges into a thicket of conflict without seeming to care about consequences."

After the federal government gave its environmental blessing, and the city of Sacramento showered North Laguna Creek with local entitlements and development freebies, a variety of governments stepped in to provide the new community with transportation. And Willie Brown was directly involved in providing some of that transit aid.

As speaker of the Assembly, Brown wielded tremendous power over California's transit systems. He made appointments to the governing board of the California Transportation Commission. He held the power of the purse over Caltrans. And in 1989, Brown sponsored a bill that provided millions of dollars in road improvements to state highways serving the ongoing development of Laguna Creek. But, more important, Brown's bill finally resolved a local transportation war.

For years, local politicians had been wrangling over the route to be taken by the southern extension of the Sacramento Regional Transit District's commuter light rail system. Starting in downtown Sacramento, the South Line had a half-dozen possible paths into the exurbs. Speaker Brown's 1989 transportation bill settled the matter by choosing one particular route -- which just happened to be the route that best served North Laguna Creek. The Calvine Road extension of the South Line will cost $222 million and is scheduled for completion in 2003. The fact that it will directly serve Live Oak's North Laguna Creek holdings adds tremendous value to the property.

In all, city and the county governments blessed the North Laguna Creek developers with more than $45 million in road improvements. A new connector -- called Consumnes River Boulevard -- was built for $12 million. Bruceville Road, an arterial leading directly into North Laguna Creek, was widened for $3 million. Millions more have been spent on bridge reconstructions, carpool lanes, bus stops, and slip ramps. State-funded Caltrans is poised to build a $20 million interchange at Sheldon Road and Highway 99, which will greatly ease access into North Laguna Creek.

This cornucopia of transportation improvements did not appear in Laguna Creek by accident. They were deliberately put there by government officials to enable the spread of urban sprawl. They happened to also serve the interests of Willie Brown's Live Oak Associates II.

Only fools -- or canny speculators -- buy fields that lie in a flood plain. Angelo Tsakopoulos is no fool. Tsakopoulos, age 62, immigrated to Sacramento from Greece in the early 1950s. Working as a waiter, he befriended rich customers who passed on real estate tips. By the end of the 1960s, Tsakopoulos had turned relatively minor investments in raw grassland into a fortune, as Sacramento burst its seams and extruded suburbs into areas owned by Tsakopoulos.

Tsakopoulos' relatively quick rise to huge wealth was explained in 1996 by his business partner and daughter, Eleni Tsakopoulos. "Ultimately, what we do is take land that is missing entitlements (e.g. zoning, services, improvements), and we bring it to a later stage," she told the Sacramento Bee. "So a builder can come in and build on it. ... Before that happens, you have a very complex mechanism in place."

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