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Wednesday, May 21 1997
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Treasure Island Giveaway
At a Board of Supervisors meeting last month, San Francisco Supervisor Leland Yee ruined everyone's good time for a moment by doing the extraordinary -- asking an on-point question of the Mayor's Office.

His query was as simple as it was welcome: Why in the hell do we need to create an incredibly powerful, private nonprofit corporation to develop Treasure Island?

Larry Florin, the mayor's point man on Treasure Island, stood up and uttered words to this effect: We hired a consultant; the consultant told us these corporations are a good thing; so we think they're a good thing, too.

Even though the mayor's variation on Descartes' maxim -- I outsource, therefore I think -- is what's commonly called a non-answer, Yee accepted it. And even then, his fellow supervisors treated him as if, by asking an intelligent question, he'd just spit on Harvey Milk's grave.

Amos Brown blared: "If we are going to get things done, we need to approach this in a special way, so it doesn't take from now until eternity to get things done."

Michael Yaki scolded Yee, too, calling for "comity, cooperation, and goodwill" among the mayor and board members.

Sue Bierman managed to rouse herself from her normal somnolence and unconditionally stated her support for the redevelopment of Treasure Island -- missing the point under discussion by several miles.

When the posturing was, mercifully, complete, the supervisors voted nine to one (Yee dissented) to create the Treasure Island Development Authority. The authority will be a private, nonprofit corporation run entirely by mayoral appointees. By creating it, the willfully ignorant supes gave to Mayor Willie Brown total control of the most beautiful and valuable piece of property ever at the disposal of municipal government.

Because the supervisors ceded all control of the authority to the mayor -- an abdication of power the mayor always enjoys watching -- and because the acronym for the authority -- TIDA -- is less than inspiring, this new real estate development firm needs a name.

It should rightly be called Willie, Inc.
What will the mayor do with Treasure Island, now that his namesake corporation has complete control over its future?

The short answer: Almost anything Willie Brown damn well wants.
State law deems Treasure Island to be public trust land; by law, trust lands must be used for the public benefit. But the law is pretty broad in defining public benefit. Generally, projects related to the maritime industry, public recreation, and environmental restoration are allowed. One thing state law absolutely won't condone is housing, so all this talk about building homes for the homeless out on the island is just that -- talk.

The only other public interest laws Willie, Inc., must adhere to while selling, leasing, and dealing away Treasure Island are the California public records and public meeting laws, and the rules and regulations of the city's budget process.

Those safeguards, however, cannot prevent Willie, Inc. from doing almost exactly as it pleases. The public meetings law allows closed-door meetings when real estate transactions are discussed. Since that's pretty much all Willie, Inc. will be discussing, the nod to the state open meetings law is meaningless. Likewise, public records laws generally allow access to documents related to real estate deals only after the deals have been struck.

And even if Willie, Inc. discusses its land deals in open meetings and hands out paperwork by the ream, the deals will likely be ignored by a City Hall press corps that is generally more interested in sodomy than the intricacies of sleazy land play.

And believe us -- believe us -- the potential for sleaze in the disposition of all but priceless Treasure Island is amazing.

Under the deal approved by the Board of Supervisors, the mayor gets to appoint all members of the board of directors for Willie, Inc., and remove them at his pleasure. Ergo, Willie Brown and Willie, Inc. are one and the same, and they will control something of almost inestimable value.

Ask yourself: How much is Treasure Island worth? How many billions of dollars? Two? Three? Nine? Could it be more? There is, after all, only one Treasure Island; the supply of available Treasure Islands is low. There are many people who would love to have a piece of the incomparably beautiful, strategically located island. Demand, clearly, is high.

Competition, then, would probably set a very, very high price on the sale or lease of any land on the island.

But it is quite clear that competition was not an important concept when Willie, Inc. was conceived.

Once Willie Brown has named the Willie, Inc. board, the corporation apparently will be able to sell or lease the unique property known as Treasure Island entirely as the board sees fit. At least nothing in the founding documents for Willie, Inc. suggests that its unelected board will have to follow the competitive bidding or proposal requirements placed on California governments. And no one in the government -- including the Board of Supervisors -- will be able to reverse stupid or crooked deals that Willie, Inc. cuts.

The opportunity for Treasure Island side deals is going to be manifold -- also, apparently, by design.

The bylaws for Willie, Inc. allow its directors to steer contracts or leases to -- well -- to themselves. Although the bylaws state that such self-dealing is verboten, the very same bylaws go on to say that the directors of Willie, Inc. can self-deal whenever and however they want, so long as they agree among themselves that it's okey-dokey to self-deal. (Really, no kidding. That's what the bylaws say.)

In another vein, the bylaws make it clear that any individual or company can contribute as much money as he, she, or it chooses to Willie, Inc. and write it off as a charitable deduction, come tax time. The suspicious among you may wonder whether this might not provide a new and exciting way to curry favor with Brown. And, this being an extraordinarily greasy deal all the way round, the lucre can flow in the other direction, too.

Under its own bylaws, Willie, Inc. can transfer its assets to other nonprofit entities. Because most political ward heelers in San Francisco are connected to or actually run nonprofits, the potential for political back-scratching is almost unbelievable.

And because he will have near total control of Willie, Inc., Willie Brown's back is unlikely to ever again itch.

So why would San Francisco supervisors agree to transfer such a huge amount of power, responsibility, and deal-cutting potential from themselves to the mayor? There are two probable explanations: Board members were too lazy to do the reading necessary to understand the deal and protect the public's interest; or they read the paperwork connected to Willie, Inc. and were too stupid to get in on Treasure Island's graft possibilities themselves.

Knowing the supes as we do, the actual explanation probably involves equal measures of sloth and brainlessness.

Questioned after they had created Willie, Inc., few of the supervisors seemed to have any idea what they had just voted on. Even Brown's biggest critic, Tom Ammiano, was under the impression that island leases would go before the Board of Supervisors for approval.

But nothing in the legislation creating Willie, Inc., or the corporation's articles of incorporation, or its bylaws, says anything about supervisor approval of leases. In fact, those documents are quite clear in granting Willie, Inc. sole power to: strike leases, development, and land-option agreements; enter joint ventures and partnerships; and approve all land sales, grants, and easements related to the development of the former naval base in the middle of San Francisco Bay.

There is nothing in those documents that mentions competitive bidding for TI property, either. So Supervisor Yaki must have been horribly misinformed or flat-out lying when he told us that Willie, Inc. would be required to abide by competitive bidding laws. He said: "My expectation is there will be some competition, but between people with the means to come in."

Because documents creating Willie, Inc. describe such an all-encompassing shift of power from the Board of Supervisors to the mayor's nonprofit, we asked Supervisor Susan Leal what leverage the supervisors still retained in regard to the island's development. Haltingly, she answered, "Well, we could hold up its [Willie, Inc.'s] budget."

It was pointed out to Leal that this was not only unlikely to occur, but also not much leverage at all. "It's some," she said with a shrug.

With this kind of room to move, Mayor Brown will be able to sell or lease the island, whole or in pieces, to whomever he wants. Early indications of who that might be are not encouraging.

Chronicle columnists Phil Matier and Andrew Ross broke a story in March that illustrates the mayor's inclinations. The columnists reported that representatives of Hong Kong multibillionaire Li Kai Shing were talking to city officials about transforming Treasure Island into a ritzy resort, a hotel and golf course complex that would include other amenities, such as wetlands, recreation spaces, and an entertainment park.

Last week, Boris Dramov, a principal of the architecture and land development firm Roma Design Group, said the mayor recently appointed him an official liaison between Li, other Hong Kong interests, and the city, in regard to Treasure Island development.

Dramov said the mayor had productive meetings with Li in Hong Kong during his recent goodwill and trade mission. The discussions, Dramov said, are continuing.

Continue as they may, the talks between Li and Brown are a perfect illustration of what's wrong with Willie, Inc., and perhaps what's wrong with his entire mayoralty. A priceless public asset is taken from public control and placed under the wings of a private nonprofit corporation run by one man with an exceeding distaste for public input. Without any competitive bidding, without any attempt to discover what's the best possible deal for all San Franciscans, Mayor Brown then calls in a multibillionaire who has no ties to the city, and therefore little concern for San Francisco, and offers him the public asset -- in secret.

If you think that seems sleazy, know this: It's only the beginning.

About The Authors

George Cothran

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