Council to decide how, when and if they will work with Lennar at Tuesday’s meeting

By Allen Payton

At their special meeting on Monday, March 28, after hours of questioning Guy Bjerke, the Director of Community Reuse Planning for the Naval Weapons Station project, the Concord City Council, acting as the Local Reuse Authority (LRA) voted 2-1 to deny Catellus’ demands, accepted their offer to withdraw and refund their Good Faith Deposit.

Both Councilmembers Ron Leone and Tim Grayson were not in attendance, because they had recused themselves from participating in the selection process. Mayor Laura Hoffmeister pointed out that Leone had to do so because he lives within 500 feet of the project site.

The staff presentation and answers to Council members’ questions included Bjerke demonstrating the patience of Job and admitting the staff and consultants preferred Catellus and didn’t want to have to recommend the Council approve the company’s withdrawal. But, they were “unanimous in this,” he said.

“Staff estimates a transfer of between $350,000 and $700,000 in financial risk from Catellus to the City,” he said. “It would eliminate any leverage the city has.”

He spoke of the “insurmountable trust and confidence issues between our staffs.”

Bjerke also stated that Catellus would not be participating in the meeting.

Later in the meeting he said the following:

“Our staff recommended Catellus, last September,” he said. “There is no one on city staff or on my team that likes making these recommendations, tonight. But we’re doing what we think are our professional responsibility and fiduciary responsibility to protect the city.”

The report on the investigation of Catellus’ complaints against Lennar by the outside attorney, Michael Jenkins, revealed that Catellus has wanted out of the process since at least last September.

So, their latest request, although it included a demand for the refund of deposit money, didn’t come as a surprise.

Bjerke advised the council members of their three options with Lennar, at this Tuesday’s council meeting, if they voted to reject Catellus’ demands and accept their withdrawal.

First, they can select Lennar as the Master Developer and approve their term sheet. Second, they can direct staff to meet with Lennar and renegotiate their term sheet, or third, they can reject Lennar’s term sheet, which would reopen the process.

The council members asked a few questions of Bjerke before Hoffmeister opened the public comments, which were split between supporting Catellus and Lennar.

She asked each speaker, who didn’t offer a recommendation on the agendized item, what they thought the Council should do.

Public Comments

Tim Lynch, Jr. stated clearly, “Please reject special favors…for Catellus.”

Dennis Costanza, President of the Community Youth Center, said he was there representing himself, “Because I care about the community of Concord.”

“I agree with staff. You should reject Catellus’ desire to change their term sheet. Refund the money and allow them to withdraw,” Constanza stated. “Make today the first day of the rest of this project.”

Another speaker was less cordial.

“I blame the incompetence of the city staff” and their “gross lack of negotiating skills,” said Greg Sandborn. He opened his comments by disclosing that he is Councilmember Edi Birsan’s campaign treasurer and that he is an elected member of the county Democratic Central Committee representing Concord and Birsan is his alternate.

He went on to ask for the resignation of the city manager, “without severance” and the political issues surrounding Grayson and his State Assembly campaign consultant. Regarding the refund of money to Catellus, Sandborn said, “That money should come from Councilman Grayson’s pocket.”

However, he asked the Council to “grant Catellus’ request. Go forward and select from the two.”

Phyllis Gordon said she was “Here as a citizen of the region” and that the developer chosen “will be the region’s partner.” She supported Catellus’ request to withdraw.

Louise McGuire said “I can understand Catellus wanting to put boundaries in place,” then proposed a third developer and wanted “LEED housing…be brought back in.”

“Lennar’s credibility has been tarnished in their dealings with Councilman Grayson,” she added.

Dr. Harmesh Kumar, a former Concord City Council candidate and now candidate for State Assembly against Grayson, said “I think there has been some bias” and that the “Lennar group has been tainted.”

“I have been told not to say these things,” he continued. “Objectivity we are losing in this city.”

Ralph Oliver, a resident of Sun Terrace area in north Concord said, “I am a stakeholder in the process. I don’t desire to deal with Lennar because I don’t trust them.”

“Catellus has been put in a difficult situation at no fault of their own,” he continued. “I suggest you grant Catellus’ request. Catellus is just trying to protect themselves.”

Hope Johnson was the most animated of the speakers, and continued to speak out during the meeting from her seat and was asked to be quiet by both Hoffmeister and Birsan.

“It’s Concord who broke the agreement,” she stated. “You are the ones who violated it…with Lennar. You’ve created a hostile environment.”

“Most of us don’t trust you. Your handling of this. You failed us and we’re embarrassed,” Johnson continued. “This is the biggest project in Contra Costa County. There’s three of you voting.”
She then mentioned one difference in the term sheets between the two developers.

“Lennar has only $16 million for roads. Catellus has $67 million.”

Helix Statement

Following the close of public comments, Councilmember Dan Helix read from a prepared statement.

“We need to understand how one of the two finalists believe the deck is stacked against them,” he said. “This is not easy for me but I must continue.”

“I’m not sure how the city manager [Valerie Barone] came to her conclusion. I have not heard a persuasive reason for deleting the staff recommendation…which would have favored Catellus.”

“I do not blame Catellus for their concern,” Helix continued. “Of the 10 areas in the Term Sheets Catellus was seriously ahead in six areas.”

He also mentioned the offsite road improvements of $67 million in Catellus’ plan compared to Lennar’s $16 million.

“I would prefer this not happen,” he said. “There’s a difference in Lennar’s request [to change their term sheet, last fall] and Catellus’ request is based on the trust factor…a matter of good faith and trust.”

“I want very much for them to be here next week to compete to be Master Developer,” Helix added and then advocated that the Council members “also accept Lennar’s changes. Let them change their term sheet.”

“This is why I came back to this city council to work on this huge, huge opportunity,” he stated. “I’m also old enough to know it takes two out of three.”

Hoffmeister then asked “Is that legally possible?”

Bjerke responded, for the first of multiple times, “What staff recommends that you likewise grant those same changes to Lennar. But keep the underlying principles of their Term Sheet. You need to make identical changes to Lennar’s Term Sheet.”

Acting City Attorney Brian Libow expounded on Bjerke’s statement.

“Under the process, any changes to that contract have to be by mutual assent by the City, Catellus and Lennar,” he stated. “It is my opinion we cannot change Lennar’s Term Sheet.”

Hoffmeister then reiterated “We can only change the engagement and staff costs. But we can not accept the changes to the term sheets.”

Helix responded.

“I just want to keep two Master Developers in the process,” he said.

Hoffmeister then attempted to appease Helix’s desire and asked should changes be allowed to the Term Sheets what would be the time frame.

“It would be at least a month,” Bjerke responded.

“Could that be done by the 5^th of April,” Hoffmeister then asked.

“No,” Bjerke flatly stated.

Libbow then said “Both parties would have to concur.”

Bjerke clarified.

“The Term Sheets are a framework but are not the final document for the DDA [Disposition and Development Agreement] process,” he said.

That process will occur once the Council chooses the Master Developer for the project.

“The staff will work with the Master Developer to turn that Term Sheet into a DDA,” Bjerke explained, later.

The difference between Lennar’s requested changes and Catellus’ was Lennar’s were to aspects of their Term Sheet while “Catellus’ requested changes are in their Rules of Engagement,” Bjerke explained. “$350,000 more is required upon being selected as Master Developer. If they are selected as Master Developer but can’t agree on a DDA, they get their $350,000 back.”

That’s what Catellus was demanding of the City Council.

However, “If they stay in the process they’re only allowed a refund of the $71,000 [of their initial $250,000 deposit] remaining,” he added.

Birsan’s Key Question & Answer

Birsan offered a key question and scenario.

“If we grant Catellus’ request to withdraw could we renegotiate [with Lennar]?” he asked.

Libbow said that was possible “with only one developer left in the process.”

That is what the Council majority of Birsan and Hoffmeister ended up making possible. But, not before Helix made a motion to accept the request by Catellus. The motion died without one of the other council members offering a second.

“Where we are, there is no change to the Term Sheet whatsoever,” Helix then stated. “We are back to square one.”

His failed motion, which hinted at how the other two would eventually vote, was followed by another lengthy discussion and questions and answers between council members and Bjerke.

Birsan offered his argument against Catellus’ demands for a refund if no DDA could be agreed upon should they be selected as Master Developer.

“We have no hammer,” he stated. “The power is shifted to the developers. The City abdicates its power.”

Birsan then made another motion, to direct staff to provide a complete refund of fees and accept the withdrawal of Catellus.

Hoffmeister seconded the motion and offered what sounded like a contradictory statement.

“I would like to keep Catellus in…but it seems to be an indication they want to part…go their separate way,” she stated. “I would encourage them to reconsider that. In the DDA stage, these are things that could be addressed.”

“Us approving this is an option for them to consider,” Hoffmeister continued, to groans from the audience and a few verbal outbursts. “If they don’t want to sign the letter they can stay in the process.”

The Council then voted 2-1 with Helix dissenting, approving the motion.

Following the meeting, when asked if she understood the motion she voted on, Hoffmeister responded, “They don’t have to accept the refund. I’m just allowing them the option.”

When Bjerke was asked if that was correct, he stated, “They could. But they won’t.”

And they didn’t.

During the week following the Monday meeting, Catellus chose to withdraw from the process leaving just Lennar remaining as the sole, current option for the Council to choose as Master Developer.

Tuesday Meeting, Staff Recommends Council Defers Decision

The Concord City Council, acting as the Local Reuse Authority, will at their meeting, tonight, Tuesday, April 5, have the option to do just that. If they do, it will be according to the staff report “to negotiate a DDA to implement the First Phase of the Concord Reuse Project (CRP) Area Plan.”

Also in the staff report for Item 6 on the Council’s meeting agenda, staff lists five “Primary areas of concern:

1. Use of binding arbitration to resolve disputes over reimbursement of City costs (Sec 8.f.iii)
2. Transfer of the Remaining Development Footprint (Sec 7. B.ii and Sec 25. a.b.c.)
3. Affordable Housing Gap Subsidies (Sec 3 d.e. and Exhibit H Sec 4)
4. Offsite Improvements (Sec 6 and Exhibit I)
5. Use of a limited liability corporation structure and the relationship to Five Point Holdings (Sec 25)”

Staff is recommending the City Council “Request staff to re-open negotiations with Lennar on the five primary areas of concern noted above as well as any others that the Council identifies at tonight’s meeting and defer the selection of Lennar to be the Master Developer until staff can return with a revised Term Sheet for Council consideration.”

The meeting begins at 6:30 p.m. and will be held at the Concord Senior Center, 2727 Parkside Drive.

For the complete Council Agenda, click here.  To see the complete staff report on Item 6 click here.

By Allen Payton

It was the best of times. It was the worst of times. What started out as an opportunity to convert the 5,046 acre Inland Area of the Concord Naval Weapons Station into a civilian use of new home communities, permanent open space with walking and biking trails, and a possible college site, has devolved into accusations by developers against each other, apparent favoritism by city staff, questions surrounding release of one developer’s confidential information to the other, the city attorney’s suicide, and an imbalanced investigation with no resulting affect.

The process, begun in 2006, could now be all for naught, as the developer that started the accusations, Catellus Development Corporation, is now asking the city council for a change in their “term sheet” they submitted. If not they want a refund of the deposit fees they paid and will withdraw from the selection process.

The Concord City Council has called a special meeting for this Monday, March 28th to discuss that matter, just a week before it is scheduled to make a decision on the master developer, during their regular meeting on Tuesday, April 5th.

Details contained in this report were derived from information available to the public on the City of Concord’s website or as a result of public records requests. Please see Special Investigators Report at www.concordreuseproject.org and http://www.concordreuseproject.org/pdf/report/comments_public.pdf

Background

The two finalists for redeveloping of the site are Oakland-based Catellus and San Francisco-based Lennar, both new home community developers with years of experience.

In the agreements with the City of Concord that both companies signed, it disallows them from lobbying any member of the City Council or city staff or having any communication with them during the process, except for one, Michael Wright, the then-Director of Community Reuse Planning for what became known as the Local Reuse Authority (LRA). The U.S. military requires the formation of an LRA when transferring military bases to civilian use, and in this instance, since only the City of Concord is involved, it also serves as the LRA. Wright retired last fall and Guy Bjerke now serves in the position.

In addition, each developer had to pay up front $250,000 in fees to the city, to cover staff costs in the processing of their proposals.

Conflicts of Interest

Due to a legal conflict of interest, Councilmember Ron Leone had to recuse himself from the vote on selection of the Master Developer, because he lives within 300 feet of the project. But, he can later vote on other issues related to the project.

Councilmember Tim Grayson, at first claimed he didn’t have a conflict of interest due to contributions he received for his campaign for State Assembly, in a letter from his attorney to the the Concord City Attorney. He has since recused himself from voting on the selection of a Master Developer. More on that, later.

HR&A Advisors, is the city’s hired contractor on the reuse plan, “for specialized real estate advice in support of Master Developer selection and negotiations.”

The company also has Catellus as a client.

Paul Silvern, who is assigned by HR&A to the Concord contract, is a Partner in the firm and one of the 10 Partners on the company’s leadership team.

When asked by Grayson about a possible conflict of interest, City Manager Valerie Barone told him that there was no conflict of interest, since HR&A is a large firm and a different part of the company deals with Concord than the one that deals with Catellus. So, the potential conflict was ignored.

The Jenkins’ report states “In response to a question raised by one of the Master Developer finalists on August 13, 2015 Mr. Wright sent an email to certain consultants working on the Project requesting that they disclose any ongoing contracts with either Catellus or Lennar one of these consultants was Mr. Silvern. In response Mr. Silvern disclosed that between 2008 and 2013 HRA’s New York City office provided services to Catellus. Mr. Silvern was not involved in this assignment. More distantly in the 1990s HRA’s Los Angeles office worked on an economic Impact analysis concerning a Specific Plan for property around Union Station in Los Angeles then owned by a joint venture including Catellus. The property has since been sold to LA County Metro. Lastly, Mr. Silvern disclosed that the HRA New York office was awarded a $30,000 assignment by a partnership including SunCal. Mr. Silvern was not involved in this project. On August 14, 2015 Mr. Wright considered Mr. Silvern’s disclosures and concluded that they did not create a conflict of interest.”

When reached for comment about why his company’s website lists both Catellus Development Corporation and the City of Concord as clients, Silvern would not speak on the record.

http://www.hraadvisors.com/portfolio/client-list/

Cronyism

From email communications, it appears that Catellus received unfair, favorable treatment by Concord city staff. In those emails Wright appears to have been in favor of Catellus being selected as the Master Developer.

Wright emailed Antenucci on September 22, 2015 at 11:36 am:

“Council has officially reversed its request for a staff recommendation and the staff report will be issued without one, over my strong objections. The Council is aware that if a recommendation were made that it would be for Catellus. I am truly sorry about this…

I do not think all is lost but I can certainly understand why you might think so and want to stop spending money on this.

M”

Wright emailed Antenucci on September 24, 2015 at 6:55 pm:

“Not everyone has signed on so this is close hold for the moment. My strong recommendation to City Manager and City Attorney is for the City to pause the proceedings because we have received your letter and conduct an independent investigation of the issues. Council consideration of staff report and term sheets will be rescheduled liekley in early November to allow time for the investigation. CM [City Manager] and CA [City Attorney] agreed with approach subject to Council briefings, CM has completed 3 of 5 including Mayor who she called in China. so far no major resistance although Laura suggested that maybe we proceed with tues and then differ to later date but I told CM that would be awkward because we will have had to release the letter to the public to explain pause.

More tomorrow. Trying to control process but delay will make difficult. We got 25 letters today 23 from firms in SF singing Lennar’s praises. if you wish to stop I think i can get ernest [sic] money returned in full beyond more difficult.”

Catellus CEO Denies

Asked if Catellus had received favorable treatment or Lennar’s confidential financial information, Antenucci responded, “No. Absolutely not. “

“The belief was Lennar got information from someone in Council,” he continued. “We absolutely and unequivocally did not get any favorable treatment nor information.”

Antenucci commented on the report by Jenkins.

“He looked into allegations that were made up about us. He found none of them to be truthful,” he stated.

“Do you think it was favorable treatment to have the staff report not include a recommendation?” Antenucci asked. “We were told all along there was going to be a staff recommendation. The city changed the protocol when they didn’t have a recommendation in the staff report.”

Asked about Wright offering to get Catellus’ deposit returned, he said, “It was a total change, a 180 and he felt bad about it. I think Mike is an ethical guy.”

He was asked the reasoning for Catellus’ request for a change in the Term Sheet or withdrawal and refund.

“There have been some things that have transpired. It makes sense after all that has happened, to make some change for some sharing of the risk,” Antennuci said. “Mike said he wasn’t going to recommend it and we said fine. We are assuming that city council is not going to do it.”

He pointed out one strength of Catellus’ proposal over Lennar’s.

“The economic differences are huge. They’re substantial,” he stated. “Our proposal, economically is much better.”

“85% of the market-rate homes Lennar has the ability to develop themselves,” Antenucci gave as one example.

Confidentiality

Yet, in private email exchanges between Wright and Steve Buster, Catellus’ Vice President of Development, and in meetings with Buster and Silvern, they discussed Lennar’s Term Sheet and proforma, which is usually confidential, proprietary, financial information. The proformas submitted by each developer are public, but the calculations and details of how the developers came to their conclusions are considered trade secrets, and are not available to the public or the other developer.

In one email dated October 5, 2015 at 11:30 a.m. from Buster to Silvern with copy to Wright, Buster wrote:

“Paul,

I talked to Mike this morning. It would be really helpful to go through a few of Lennar’s numbers with you to make sure I’m stating them correctly. I’m having a hard time tying the staff report to the proforma. Would you mind speaking with me this afternoon or tomorrow? Much appreciated.”

Silvern responded by email to Buster and copied Wright, at 12:19 p.m. that day with the following:

“Steve – I am heading to LAX at 1 pm, so available today until then only. But I be in SF for the ULI meeting on Tues & Wed. and can find time to talk during those days. The main differences between the staff report table and the Lennar pro forma excerpt in the staff report and the Lennar Term Sheet values are: (1) nominal versus constant dollars; (2) that I got more nominal dollar detail for some line items from Lennar; and (3) from the confidential detail in Lennar’s pro forma I was able to split out hard costs from soft costs for some items that is not readily apparent in the pro forma except or [sic] Term Sheet numbers.”

Then at 1:29 p.m., that same day, Buster emailed Silvern:

“Paul – I can meet you in the City if that works best for you. Otherwise, I can do a call. Just let me know what time works for you. Thank you.”

Silvern responded on Oct. 6 at 11:24 a.m.:

“How about 12:30 or 1 pm today? Easiest if I call you.”

Buster replied at 11:34:06 a.m.:

“1:00 is great. Thank you Paul.”

However, in an email from Wright to Silvern, on October 5 at 11:21 a.m., he wrote:

“Paul I also got a call from STeve Buster. as they prepare their presentation that are working on some comparisons of the two term sheets and wanted to confirm with me howsome [sic] of the numbers have been added together from the summary proforma’s, i told him you would be better person to ask but only within the bounds of what is in the public domain.”

Yet, it’s clear that confidential information from closed sessions held by the City Council, was shared by city staff with Catellus’ representatives, based on what was revealed in the emails posted on the City’s website, but not shared by Councilmembers in open session.

Another call to Antenucci and emails to Wright and Buster asking what was provided to Buster from the Lennar proforma, were not returned.

Campaign Contributions – Catellus Accuses Lennar of Agreement Violations

Catellus complained to the City that individuals and companies associated with Lennar had made contributions to then Concord Mayor Tim Grayson’s campaign for State Assembly.

In a letter dated August 21, 2015 from Catellus’ attorneys to then City Attorney Mark Coon, and copied to the council members, Catellus claimed those contributions were a violation of Lennar’s agreement.

By communicating directly with the council members, Catellus was violating their agreement, as well.

According to Jenkins’ report, “Apparently, Mr. Coon refused Catellus’s request to investigate at that time.”

City Attorney Investigates, Commits Suicide, No Notes or Report Found

However, just a few weeks later, in an email exchange between City Manager Valerie Barone and Lisa White, Staff Writer for the Contra Costa Times, dated October 2, 2015, it was mentioned that Coon was conducting an investigation into the allegations against Lennar by Catellus.

“Mark told me today that the investigation is nearly complete and he planned to release a letter early next week responding to Catellus’ claims,” White emailed Barone on October 2 at 1:45 p.m.

“Working on it…hope to announce before day is out” Barone responded at 3:04 p.m. that day.

On October 6, 2015, Coon committed suicide by jumping off the top of a public parking structure on Locust Street in Walnut Creek.

But neither a report nor any notes by Coon were ever released.

Catellus Decides to Withdraw

An email from Catellus’ Buster to Antenucci, on October 12, 2015, revealed they had already decided to no longer pursue the project:

“Ted,

Seth Adams with the coalition reached out to us. He would like to meet to discuss the proposed term sheet. He is also planning to meet with Lennar. Since we haven’t made it public that we are not pursuing the project anymore, I thought it was best to meet with him and answer his questions until such time as we provide the official notice to the City. I will likely be meeting with them next week.

Steve”

Council Hires Outside Attorney, Investigates, Issues Report

In response to Catellus’ accusations against Lennar, the Council hired an attorney to investigate them. A report on that investigation conducted by attorney Michael Jenkins, of Jenkins & Hogan, a Southern California law firm, was released on Friday, February 11th.

Jenkins’ cover letter states “The City’s Interim City Attorney engaged this firm as independent special counsel to investigate and report back to the City Council findings and conclusions with respect to these allegations. What follows is a detailed explanation of the applicable law and analysis of the relevant issues which lead me to conclude that Lennar’s orchestration of campaign contributions to Mayor Tim Grayson’s Assembly campaign constituted a form of lobbying prohibited by the Agreement to Negotiate and the removal of the recommendation from the final staff report resulted from an illegal serial meeting I did not find merit with any of Catellus’s other allegations. Moreover, I conclude that the Agreement leaves the consequences if any of such lobbying entirely within the Council’s discretion.”

The report includes a list of contributors to Grayson’s campaign. Each of them had either done or are doing work for Lennar, or associated with former San Francisco Mayor Willie Brown, who in the past was connected to Lennar through their Hunters Point project in that city. They include the Shalom Eliahu, CEO of Engeo, who has done work for Lennar in the past and are their proposed geotechnical engineering company on the Reuse Project; G.F. Bunting+Co, a public relations firm which has done work for Lennar in the past, and whose Regional Vice President is the daughter of Kofi Bonner, the CEO of Lennar Urban; an attorney who had also helped Lennar raise $250 million for a project in San Francisco; a San Francisco resident and partner in Scarborough Insurance, who had been a “vocal proponent” of Lennar’s Hunters Point project; and Mary Jo Rossi, who had done work for Willie Brown and was Grayson’s campaign consultant.

The report also mentions that Bonner was appointed by Brown “to serve as his Chief Economic Policy Advisor” and that “Mr. Bonner declined to be interviewed in connection with this investigation.”

The report further states that “On or about April 22, 2015 Mayor Grayson arranged for a one-on-one meeting with Mr. Brown in order to seek advice about his nascent Assembly campaign. Mr. Brown was aware of the pending Project however according to Mayor Grayson the two did not

discuss the Master Developer selection or any Project specifics.”

Jenkins’ report lists contacts by Grayson and Rossi with

Site Visits, Grayson Consultant in Attendance, Campaign Contributions, Brown Meetings

Jenkins’ report lists the following information about a list of activities involving Grayson, his consultant Mary Jo Rossi and their connections to contributions to his campaign for State Assembly:

“On June 5, 2015 Mayor Grayson and Councilmembers Birsan and Hoffmeister along with City staff attended a special meeting consisting of a site visit to Catellus’s Mueller Project in Austin, Texas. Ms. Rossi and Mr. Antenucci attended the site visit.

Mr. Antenucci reports that at some point during the site visit Ms. Rossi approached him and suggested that it would benefit Catellus to connect with local third party developers in order to improve its chances of being selected as the Master Developer and he stated that she had also communicated the same message to Lennar.

While staff took appropriate measures to prevent interactions between and among the Councilmembers side conversations of this kind inevitably took place. For instance, during this site visit Mayor Grayson, in passing, mentioned his upcoming Assembly race and according to Mr. Antenucci commented on the difficulty of raising campaign funds within earshot of Mr.Antenucci. Mayor Grayson denies making this comment.

At some time prior to June 16, 2015 Mr. Bonner contacted Mr. Bunting to suggest that G.F. Bunting consider making a contribution to Mayor Grayson’s Assembly campaign. On June 16, 2015 G.F. Bunting donated $1,000 to Mayor Grayson’s campaign.

On June 17, 2015 Mayor Grayson and Councilmembers Birsan and Hoffineister attended a special meeting consisting of a site visit to Lennar’s El Toro Project in Orange County. Ms. Rossi was also present at the site visit.

On June 18, 2015 G.F. Bunting donated another $3,200 to Mayor Grayson’s campaign. The total amount donated by G.F. Bunting to Mayor Grayson’s Assembly campaign was $4,200 the maximum allowable contribution to individual candidates for the Legislature.

By the end of June, 2015 three other entities with ties to Lennar, Scarborough, Engeo and Mr. Kay each donated $4,200 to Mayor Grayson’s campaign.

In July of 2015 Catellus learned of the foregoing campaign contributions from an unnamed source.

On July 27, 2015 Mayor Grayson and Councilmembers Birsan and Hoffineister attended a public tour of Catellus’s Alameda Landing Development.

On August 4, 2015 Mayor Grayson and Councilmember Hoffmeister attended a public tour of Lennar’s San Francisco Shipyard Development. Ms. Rossi and Mr. Buster were also in attendance. Mr. Brown was the lead presenter.

At this tour Councilmember Hoffineister reports that Mr. Buster approached her to express concern over what he believed to be inappropriate private meetings between Mayor Grayson and Mr. Brown.

On August 17, 2015 Catellus received a phone call from an unnamed source stating that certain of Mayor Grayson’s campaign contributors were connected to Lennar.”

When contacted for comment on why she attended the three site visits, Rossi did not respond.

Grayson, according to Jenkins’ report, claimed he was unaware of the contributions or that they had any connections to Lennar and later returned them.

Jenkins’ report also states “Between August and September of 2015 Mayor Grayson and Ms. Rossi met with Mr. Brown to obtain advice for Mayor Grayson’s State Assembly Campaign.”

Also, according to Jenkins’ report “Prior to June 16, 2015 Mr. Bonner contacted Mr. Bunting to suggest that G.F. Bunting consider making a contribution to Mayor Grayson’s Assembly campaign… and discussed Engeo’s contribution with Mr. Eliahu.”

Bonner did not respond to attempts to contact him for comments for this report.

Imbalanced Report

The report on the investigation, while mentioning rumors and allegations of impropriety by Catellus, provided details on the accusations against Lennar. However, the report appears to include a cursory response to those against Catellus, and dismisses all of them as baseless. Of the 42 pages in the cover letter and report, Jenkins deals with accusations against Lennar on 24 page and only eight pages are devoted to allegations against Catellus.

Accusations Against Catellus Unfounded

Jenkins’ report includes accusations by both Grayson and Councilmember Edi Birsan against Catellus:

“Team member Paul Silvern of HR&A had a conflict of interest and favored Catellus due to his firm’s prior work with Catellus (a concern which was first reviewed in August). Catellus was secretly negotiating a deal with Seeno Company that would give Seeno a major role in the Project. Catellus had given Golden State Warrior tickets to City staff and Catellus was vulnerable to being acquired by outside interests.”

However, Jenkins concludes that “Each of these allegations was investigated by [consultants] Mr. Wright, Mr. Ramiza and or the City Attorney and determined to have no merit.”

Additional accusations were made by Lennar against Catellus and investigated by Jenkins. His report states “Catellus representatives requested a meeting with staff to obtain a better understanding of Lennar’s term sheet. Lennar contends that its confidential information was shared with Catellus at this meeting. Both Mr. Wright and Catellus deny that any confidential information was shared.”

Jenkins concludes “There is no evidence to support the contention that confidential information was compromised in the meeting. It is true that the Negotiation Team concluded that the Catellus term sheet was superior to Lennar’s and by mid-September had made Catellus aware of that. This did not constitute more favorable treatment the very point of the process was to evaluate and compare the term sheets on their merits.”

Contributions, Yes. Brown Meetings, No.

Jenkins’ report includes responses from Lennar’s attorney, David Marroso of O’Melveny & Myers, arguing for the innocence of his client.

In letters dated January 6 and 25, 2016, Marroso states,

“1. Lennar has not given any money to the Committee for Councilmember Tim Grayson’s campaign for State Assembly (even though it would not have been improper to do so has not given money to others to contribute to Mr. Grayson’s Committee and has not pressured or coerced anyone to contribute money to it.

2. None of the individuals or entities that contributed to Mayor Grayson’s campaign communicated with Mayor Grayson about the Concord Naval Weapons Station.

3. As a matter of law ‘[c]ampaign contributions are not forbidden by or even mentioned in Section 11 or anywhere in the Negotiating Agreement. Nothing in the Negotiating Agreement purports to abridge Lennar’s or anyone else’s First Amendment rights.’

5. Lennar did not discuss the Master Developer selection process with Mayor Grayson through Mr. Brown.”

Jenkins responded with the following: “Mr. Marroso’s letter does not deny that Lennar solicited the contributions nor does it confirm or deny whether Lennar spoke to Mr. Brown about the Master Developer selection process and whether those conversations included discussions about campaign contributions.”

Furthermore, Jenkins commented on Marroso’s claim about Section 11, by stating, “I reject the argument that the lobbying prohibition in Section 11 excludes campaign contributions. It is fair to conclude that the agreement bound both Catellus and Lennar to refrain from engaging in any discussions, negotiations or any other actions intended to influence any City Council or Planning Commission members or other City employees or officials.”

Jenkins concluded that the contributions by the associates of Lennar to Grayson’s Assembly campaign violated prohibition against lobbying in the agreement, in the general, not technical definition of the term.

As for Grayson’s meetings with Willie Brown, Jenkins offered the following: “The concerns raised by Catellus are purely circumstantial.” But, later the report states that Grayson “certainly would have had some awareness of the relationship as a consequence of the August 4 San Francisco Shipyard tour, which was led by Mr. Brown.” Yet, Jenkins concluded “the investigation resulted in no evidence to contradict or to corroborate Mayor Grayson’s description of the meetings. There is no basis to conclude that Catellus’s suspicions have merit.”

Grayson Recuses Himself from Vote

According to Jenkins’ report, “On August 26, 2015 Mayor Grayson returned the campaign contributions from G.F. Bunting, Mr. Kay, Engeo, and Scarborough. Mayor Grayson later delivered to Mr. Coon a letter from Jim Sutton, his private counsel on the matter, concluding that the campaign contributions would not require his disqualification from the Master Developer selection.”

Yet, Grayson has since then recused himself from any vote on selecting the Master Developer to restore the public’s “faith in the process.”

According to an article on the Claycord.com website, dated February 14^, 2015:

“Councilman Grayson sent the following email to Claycord.com:

I am pleased that the Concord Naval Weapons Station report exonerates me from wrongdoing. The report concludes that there is no basis to Catellus’s accusation that I solicited funds from companies allegedly connected to Lennar, nor is there credibility to the developer’s accusation that suggests my meetings with Speaker Willie Brown had anything to do with or related to the Concord Naval Weapons Station.

My character and my integrity as an elected leader are important to me and I will always put what is best for the Concord community first and foremost, and it is for this reason I will be recusing myself from voting on the selection of Master Developer for the Concord Naval Weapons Station. I believe this is the only way the public can restore its faith in this process without concern, moving forward, that there may be undue influence in the selection of a Master Developer.

Tim Grayson”

But, according to the state conflict of interest law, Grayson may not have one. According to that law, a recusal may be required for receiving campaign contributions from the party affected.

“Conflict of Interest Resulting from Campaign Contributions – Gov. Code, § 84308

Is there a proceeding involving a license, permit or entitlement for use? Is the proceeding being conducted by a board or commission? Were the board members appointed, rather than elected, to office? Has any board member received campaign contributions of more than $250 from the applicant or any other person who would be affected by the decision: (1) during the proceeding; (2) within the previous 12 months prior to the proceeding; (3) within 3 months following a final decision in the proceeding. If the answer to any of these questions is yes, the board member may have to disqualify himself or herself from participating in the decision.”

Grayson’s campaign returned the contributions and they weren’t directly from Lennar. If he wasn’t aware there was any connection to Lennar, even if his campaign consultant was, there appears that no legal conflict remains.

Grayson did not respond to attempts to contact him for this report.

Lennar Not Disqualified

Even after the Jenkins concluded his investigation and submitted his report, the City Council chose to not disqualify Lennar. They did however better define the term lobbying, as written in Section 11 of the agreements.

According to the annotated minutes of the February 23, 2016 Concord City Council meeting the Council heard a report by Guy Bjerke, Director of Community Reuse Planning on the “City response to Investigative Report by Michael Jenkins regarding the Master Developer Selection process for the Concord Naval Weapons Station Project.

Prior to Bjerke’s report, Councilmember Leone recused himself from the item and left the dais and Councilmember Grayson recused himself from further participation in the selection process for the Concord Naval Weapons Station Project master developer. He didn’t vote on the first item, however Grayson did vote on the remaining items related to the issue.

On a unanimous vote of the three participating council members, the City Council ‘Determined that Lennar Concord, LLC’s violation of the Agreement to Negotiate by soliciting campaign contributions to Councilmember Tim Grayson’s Assembly campaign does not merit the firm’s disqualification from the Master Developer selection process because (1) There is a public benefit to continuing with the competitive process and having both finalists considered by Council and the public as part of a robust public discussion; and (2) there is no evidence that Councilmember Grayson was aware of the source of the campaign contributions and he has indicated he was not; he returned the contributions as soon as he became aware of their possible connection to Lennar, and he has now recused himself from further participation in the selection process.’

The Council, including Grayson, then voted unanimously on the following items related to the report about Lennar.

3. Directed staff to inform both Catellus and Lennar that the Council intends to apply the ordinary meaning of the word ‘lobbying’ in Section 11 of the Agreement to Negotiate and that campaign contributions fall within that definition.
4. Committed as individual Councilmembers and as a Council to approach the Master Developer selection dispassionately, disregard previous history, proceed impartially, consider all public testimony, and adhere to a merit-based evaluation focused on the Term Sheets and what is in the best interests for the City of Concord.”

Catellus Wants a Change or Refund

Then, in a meeting between city staff and representatives from Catellus on March 14, and a subsequent letter from Catellus, dated March 16, the company asked for change in Term Sheet or the refund and their withdrawal from the process.

The city has scheduled a special meeting on Monday, March 28th for the Council to discuss and decide on the matter.

In the staff report for the meeting, it states, “The Local Reuse Authority (LRA) staff and consultants met with Catellus Development Corporation (Catellus) on March 14, 2016 in preparation for the scheduled April 5, 2016

Council meeting for selection of a Master Developer for Phase 1 of the Concord Naval Weapons Station (CNWS) project. In the meeting and through subsequent letters on March 17 and March 22, 2016, Catellus requested changes to its Agreement to  Negotiate and Disposition and Development Agreement (DDA) Term Sheet (Term Sheet) related to the Master Developer Selection process. The changes sought, should Catellus be selected by the Council, would shift the financial risks associated with the DDA and Navy negotiation from Catellus to the City. Staff indicated at the March 14, 2016 meeting, and in a March 18, 2016 reply letter, that the requested changes are not in the best interest of the City; consequently, staff would not recommend to the Council that the changes be approved. This is the same approach staff took last September when Lennar Urban requested to modify its Term Sheet after submittal of the final version.

Catellus’ letters state the company wishes to remain in the Master Developer Selection process. But, this request for changes in the Agreement to Negotiate and Term Sheet, coupled with their offer to withdraw if the City refunds its Initial Good Faith Deposit of $250,000, suggests to staff that Catellus lacks confidence and trust in the process and that Catellus’ preference is to exit the selection process.”

Please see the following for details – http://contracostaherald.com/032501-2/.

Meeting to Choose Master Developer, Tuesday, April 5

On Tuesday, April 5, the City Council will discuss selection of the master developer for the Concord Naval Weapons Station, at 6:30 p.m. at the Concord Senior Center.

The Concord City Council will hold its regularly scheduled meeting on Tuesday, April 5 at the Concord Senior Center beginning at 6:30 p.m. to select the master developer for Phase 1 of the Concord Naval Weapons Station Reuse Plan. City Council meetings are usually held in the Council Chamber at Civic Center, 1950 Parkside Dr. The change of venue has been made to accommodate the large number of residents expected to attend. The Senior Center is located at 2727 Parkside Circle.

At the meeting, staff will make a report followed by presentations by the two developer finalists, Catellus Development Company and Lennar Concord LLC. Councilmembers will hear the presentations, ask questions of the finalists and take public comment before deliberating on the selection of the master developer. In the event a decision cannot be reached at the April 5 meeting, the Mayor will continue the meeting to Wednesday, April 13 at 6:30 p.m. in the City Council Chamber.

Unless Grayson changes his mind, again on whether or not he has a conflict of interest in voting on selecting the Master Developer, it will be left up to current Mayor Laura Hoffmeister and Councilmembers Birsan and Dan Helix.

For more information on the Concord Naval Weapons Station Reuse Plan, visit www.concordreuseproject.org.