Lennar Remains in Contention for Concord Project, Despite Finding of Improper Lobbying

Lennar's proposed development rendering
Concord, Catellus, Lennar, SunCal, master developer, Concord Naval Weapons Station, Mare Island, Port Chicago, East Bay, BART
Lennar’s proposed development rendering

By Adam Steinhauer

Lennar Corp. is being allowed to stay in the running for a contract to serve as master developer of the Concord Naval Weapons Station redevelopment project, despite an independent report commissioned by the Concord City Council that found Lennar improperly lobbied former mayor Tim Grayson.

But the finding may have damaged Lennar’s chances to win the project. It led Grayson to recuse himself from the selection process, prompted other City Council members to criticize Lennar’s actions and some Concord residents to call for its rejection.

[contextly_sidebar id=”667uIdrAToPtkog3UYy149zh1K0kG2Me”]Meanwhile, chances may have improved for Catellus Development Corp. to be selected as the developer. As a result of the investigation, city staff will issue a report recommending that the Council choose Catellus.

Lennar and Catellus stand as the only remaining competitors after a two-year-long selection process that winnowed down an original field of 22 development proposals. At stake is the opportunity to develop 5,028 acres and oversee a reported $6 billion in construction spending.

The City Council was on the verge of making its selection in September, when Catellus sent a letter to the city, accusing Lennar of exerting improper influence. That prompted the Council to commission the investigation.

It found that Lennar’s actions violated its agreement to negotiate with the city and that the Council has the right to disqualify Lennar from the project. But the report stopped short of recommending Lennar’s disqualification.

“In my opinion, Lennar engaged in lobbying activities that are prohibited” under its agreement to negotiate with the city, wrote attorney Michael Jenkins, with the law firm Jenkins & Hogin LLP of Manhattan Beach. “It is up to the Council to determine whether it agrees with this conclusion. If the Council agrees, the Council may terminate the Agreement with Lennar, but it does not have to. The Council may consider the benefit to the public of still having two competitive proposals to choose from.”

The Council could also consider the fact that Grayson returned contributions that people associated with Lennar made to his campaign for State Assembly.

The Council voted on Tuesday, Feb. 23, to allow Lennar to continue negotiating with the city.

But the Council also directed its staff to include a recommendation for Catellus in a report on the developer selection process. Lennar was accused of improperly influencing city staff to remove the recommendation from an earlier draft of the report.

Lennar Regional Vice President Kofi Bonner, in a Feb. 20 letter, disputed the independent investigation’s finding that his company engaged in improper lobbying.

Grayson, meanwhile, noted the investigation’s finding that he did not knowingly receive contributions intended to influence him to select Lennar, and that he did not solicit the contributions.

Still, Grayson said at the Feb. 23 Council meeting that he would recuse himself to “minimize any kind of question or doubt that anyone might have in their minds about any kind of undue influence.”

Catellus’s September letter to the city accused Lennar of orchestrating contributions to Grayson’s Assembly campaign and engaging former San Francisco Mayor Willie Brown to lobby Grayson. Catellus also alleged that Lennar improperly influenced Concord city staff members to remove their recommendation in favor of Catellus from a report on the selection process.

Grayson met with Brown last April and again in August or September to seek advice on his State Assembly Campaign, according to the report.

Brown has close ties to Lennar, with Lennar executive Bonner having served as Brown’s chief economic policy advisor when he was mayor of San Francisco.

Since then, Brown has supported Lennar’s efforts to win contracts for other urban redevelopment projects. In San Francisco, he supported Lennar’s bid to serve as master developer of the San Francisco Shipyard project, despite a recommendation from city staff in favor of another developer, Jenkins’s report noted. Brown also appointed a committee that chose Lennar as the master developer of Treasure Island.

Grayson has said that he did not discuss Lennar or the developer selection process with Brown in their meetings.

Aside from the meetings with Brown, Grayson received campaign contributions from businesses and individuals including public relations firm G.F. Bunting + Co., where Bonner’s daughter Noelle is a consultant; Steven Kay, who is a partner with Brown at investment firm Golden Gate Global, which raised capital for Lennar’s Hunter’s Point project; and Fred Naranjo, a resident of San Francisco’s Bayview neighborhood and outspoken supporter of the Hunter’s Point project.

Grayson’s Assembly campaign manager Mary Jo Rossi also once worked for Brown, according to the report.

In his letter responding to the report, Lennar’s Bonner said that the campaign contributions did not constitute lobbying.

“Put simply, asking a company with whom we do business to consider contributing to a State Assembly election without seeking attribution or attempting to influence the politician—two facts Mr. Jenkins concedes—is not lobbying under any definition,” Bonner wrote.

Concord City Councilman Daniel Helix reacted strongly to Bonner’s letter.

“In my mind, that is simply lawyer talk, carefully circumnavigating the issue with a non-denial denial,” Helix said.

Catellus’s attorney Andrew Giacomini, with the law firm Hanson Bridgett, had sent its letter raising concerns about the process after Catellus was informed by city staff that its recommendation in favor of Catellus would be removed from the final draft of its report.

Giacomini first told Concord City Attorney Mark Coon that he would be sending the letter. Coon tried to persuade Giacomini not to send it, according to Jenkins’s report.

Coon died less than two weeks later after jumping from the third floor of a parking garage in downtown Walnut Creek, the Contra Costa Times reported. Police believe he committed suicide.

A “near final version” of Concord city staff’s report had been provided to council members in a closed session of the Council on Sept. 16, according to Jenkins’s report. The draft had included a recommendation to choose Catellus based on the “superior term sheet” it had presented.

In the days after that meeting, Concord City Manager Valerie Barone was told by three Council members that they did not want the final draft to include a recommendation, according to Jenkins’s report.

The council members’ direction to Barone outside of an official Council meeting constituted a violation of the Brown Act, Jenkins’s report found. The law requires elected bodies to make most policy in meetings that are open to the public.

The decision also came after Grayson and other Council members had raised concerns about Catellus and the improper influence it was rumored or alleged to be exerting.

Those included concerns that Paul Silvern, a consultant to the city on the Naval Weapons Station project, had a conflict of interest because his firm, HR&A Advisors, had previously done work for Catellus.

And Grayson had expressed concern that Concord developer A.D. Seeno Construction Co. was secretly negotiating with Catellus and “plotting” to gain control of the project, Jenkins’s report said.

Each of these allegations was investigated by city staff or outside counsel and found to be without merit, Jenkins’s report stated.

Concord Mayor Laura Hoffmeister, at the Feb. 23, meeting, criticized Catellus along with Lennar. While Lennar should not have directed associates to contribute to Grayson’s campaign, Catellus also should not have raised its concerns “at the last minute,” Hoffmeister said. She said they should have been raised and dealt with earlier in the selection process.

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