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EIII HITLIIA LAW PARTNERSHIP
MCxnE JENKINS MANHATTAN TOWERSCHRIST HoGiv 1230 ROSECRANS AVENUE SUITE 110JOHN C CO ITIGaeGG KErrLES MANHATTAN BEACH CALIFORNIA 90266LnuxEV LnNCEx 310 6438448 FAx310 6438441TREVOR RUSIN WWWLOCALGOVLAWCOMMELINDA A GR66N
NATALIE C KARPELES
WRITERSEMAIL ADDRESS
MENKINSnLOCALGOVLAWCOM
February 11 2016
Ciry CouncilCity of Concord1950 Parkside Drive
Concord CA 94519
Re Concord Naval Weapons Station Master Developer Selection
Dear Members of the City Council
As you know the Cirys Interim City Attorney engaged this firm as independentspecial counsel to investigate and report back to the Ciry Council findings andconclusions with respect to allegations contained in a letter dated September 24 2015from Andrew Giacomini of the Hanson Bridgett law firm on behalf of CatellusDevelopment Corporation I have concluded my investigation and my final report isattached
The investigation involved interviews of wimesses and review of a substantialnumber of documents I appreciate the cooperation of all of those individuals whoconsented and gave of their time to be interviewed for the investigation
This final report reflects my independent review and analysis of the facts as best asI can ascertain them from the evidence reviewed Some relevant witnesses declined to beinterviewed Some matters that arose in the course of the investigation remaininconclusive due to the unavailability of evidence
The report addresses the allegations raised in the Giacomini letter and severalother allegations of improprieties that have been raised by other parties The report doesnot include analysis related to the threat of potential litigation raised in the September25 2016 letter from Mr Giacomini I have separately addressed that issue to the Council
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February 11 2016Page 2
and interim City Attorney That analysis is confidential related to exposure to litigationand outside the scope of the investigation The attached report contains all of my findingsand analysis related to Catelluss allegations that Lennar violated the prohibition onlobbying in the agreement to negotiate
I appreciate the opportuniry to be of service to the City I am available to answerany questions that arise concerning the attached report
Vtruly yours
cc Brian Libow Interim Ciry AttorneyValerie Barone City Manager
INVESTIGATIVE REPORT ON THE CONCORD NAVAL WEAPONS STATION
MASTER DEVELOPER SELECTION (INCLUDING EXHIBITS A THROUGH YY, ATTACHED THERETO AND INCORPORATED BY REFERENCE)
FROM MICHAEL JENKINS, ESQ., JENKINS & HOGIN, LLP, TO THE CITY COUNCIL OF THE CITY OF CONCORD ,
DATED FEBRUARY 11, 2016 (COLLECTIVELY “JENKINS REPORT”)
LIMITED WAIVER
Notwithstanding the exceptions contained in the California Public Records Act, the City Council of the City of Concord has opted to waive the
attorney-client privilege, work product protection, and the deliberative process privilege with respect to the Jenkins Report solely for the information contained
in the report and the specific attachments disclosed herein. This limited disclosure is not intended and shall not be construed to operate as: (a) a waiver
of any privileges and protections applicable to any materials other than the Jenkins Report; (b) a waiver of the subject matter of the Jenkins Report,
including but not limited to any otherwise-privileged documents directly or indirectly related to the master developer selection process for the former Concord Naval Weapons Station; or (c) a subject matter waiver in litigation.
Y1A LAW PARTNERSHIP
MICHAEL JENKINS MANHATTAN TOWERSCHRISTI HOGINJoxN C Corrt 1230 ROSECRANS AVENUE SUITE ll0GREGG KETrLES MANHATTAN BEACH CALIFORNIA 90Z66LAURenLscEx 310 6438448 Fc310 6438441TREVOR RusIN
WWWLOCALGOVLAWCOMMELINDA A GREENNATALIE C KARPELES
WRITERS EMAIL ADDRESSMJENKINSqLOCALGOVLAWCOM
February 11 2016
City CouncilCiry of Concord1950 Parkside DriveConcord CA 94519
Re Concord Naval Weapons Station Master Developer Selection
Dear Members of the Ciry Council
As you are aware the City Manager received a letter dated September 24 2015from the Hanson Bridgett law firm on behalf of Catellus Development Corporationasserting violations of the Agreement to Negotiate by FivePoint CommunitiesLennar inconnection with the Master Developer selection process for the Concord Naval WeaponsStation Specifically the Hanson Bridgett letter contends that Lennar violated the termsof the Agreement to Negotiate with the Ciry of Concord by lobbying the City CouncilThe Ciry received a second letter from Hanson Bridgett on September 25 2015 raisingthe specter of litigation against the City due to Lennarsalleged breach The CirysInterim Ciry Attorney engaged this firm as independent special counsel to investigate andreport back to the City Council findings and conclusions with respect to these allegations
In connection with the preparation of this report I have considered bothdocumentary and testamentary evidence and where possible I have drawn inferences asto the credibility consistency and relevance of the evidence in order to determine thefacts surrounding this complex issue What follows is a detailed explanation of theapplicable law and analysis of the relevant issues which lead me to conclude that Lennarsorchestration of campaign contributions to Mayor Tim Graysons Assembly campaignconstituted a form of lobbying prohibited by the Agreement to Negotiate and theremoval of the recommendation from the final staff report resulted from an illegal serialmeeting I did not find merir with any of Carellussother allegations Moreover I
See September 25 2015 letter from Mr Giacomini to Mr Coon attached hereto as Exhibit YY
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February 11 2016Page 2
conclude that the Agreement leaves the consequences if any of such lobbying entirelywithin the Councils discretion
I Factual Backround
A Persons of Note Unless otherwise indicated below the following personswere interviewed in connection with this investigation Participation by witnesses wasvoluntary and interviews were not conducted under oath
1 Concord City Councilmembers as of September 2015
Edi Birsan Councilmember
Tim Grayson Mayor during the relevant time period and candidate for 2016District 14 State Assembly Race
Dan Helix Councilmember
Laura Hoffineister Councilmember
Ron Leone ViceMayor Mr Leone recused himself from the MasterDeveloper selection process due to the proximity of his hometo portions of Phase I of the Concord Naval Weapons StationProject
2 City Staff
Valerie Barone Ciry Manager
Guy Bjerke Director of Communiry Reuse Planning Local Reuse
Authority Mr Bjerke assumed the position of Director ofCommunity Reuse Planning upon the retirement of MrWright on or about September 21 2105
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Mark Coon Ciry Attorney Mr Coon was deceased prior to thecommencement of this investigation
Jovan Grogan Assistant City Manager
Michael Wright Former Director of Community Reuse Planning Local ReuseAuthorityConsultant Mr Wright served as the Director ofCommunity Reuse Planning until his retirement from hisposition on or about September 21 2015 Mr Wrightattended all of the closed sessions convened to discuss theMaster Developer negotiation
3 City Consultants
Dahlia Chazan Consultanturbanplanner with Arup a consulting firm undercontract with the Ciry
Craig Labadie Consultantformer City Attorney
Gerald Ramiza Consultantattorneywith Burke Williams and Sorensen a lawfirm under contract with the Ciry Mr Ramiza regularlyattended closed sessions convened to discuss the MasterDeveloper negotiation
Paul Silvern Consultanteconomist with HRA a consulting firm undercontract with the Ciry Mr Silvern attended some of theclosed sessions convened to discuss the Master Developernegotiation
4 Contributors to Mayor GraysonsAssembly Campaign
Engeo Uri Eliahu is the CEO of Engeo an engineering companyfounded in Concord Engeo was LennarsHunters PointProject geotechnical engineer and has worked on Lennars
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Treasure Island Project Engeo is Lennarsproposedgeotechnical engineer for the Concord Naval WeaponsStation
GFBuntingCo Glenn Bunting is president and founder of GF BuntingCoGF Bunting provided public relations services for LennarsHunters Point project and potentially other Lennar projectsNoelle Bonner daughter of Kofi Bonner Regional VicePresident of Lennar Urban is a consultant to GF Bunting
Steven Kay Mr Kay is president of Golden Gate Global Golden GateGlobal had worked with Lennar International to raise over250 million dollars for Lennars Hunters Point Project Asan attorney Mr Kay has represented both Lennar Homes andLennar Communiry Builders Mr Kay declined to be
interviewed in connection with this investigation
See Engeo Portfolio regarding Hunters Pointhttbwwweneocomportfoliohunterspointnaval baseshiyardreusei and Treasure Islandhttpandyerbabuenaislandreusei attached hereto as Exhibit A
3 See staff report from Mr Wright to the City Council regarding Introductory Presentations by MasterDeveloper Caniidates on Implementation of the Concord Reuse Project Area Plan dated February 102015 attached hereto as Exhibit B
See Community awaits benefits as Lennar finally breaks ground in Hunters Point by Steven T Jonesprinted in the San Francisco Bay Guardian on July 1 2013httpwwwsfbgcolieics20130701conmuniawaitsbenefitslennarfinallybreaks oundhunters oinr attached hereto as Exhibit C
Interview of Mr Bunting Also see GF Bunting Website httpwww gfbuntin comwho we aren aprintout from which is attached hereto as Exhibit D
6 See Golden Gate Global Websitehttpwww3fundcomnewourcompanvourteam a printout fromwhich is attached hereto as Exhibit E
See Golden Gate Global Websitehttpwww ard a
printout from which is attached hereto as Exhibit Fs See Exhibit E
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Fred Naranjo Fred Naranjo is a partner of Scarborough Insurance which isbased in San Francisco Mr Naranjo has attended andcontributed to fundraisers at the Bay View Opera Housealong with Mr Brown and his daughter Susan BrownAdditionally Mr Naranjo is a resident of the Bayviewneighborhood in San Francisco and was a vocal supporter ofLennarsHunters Point project Mr Naranjo declined to beinterviewed in connection with this investigation
Mary Jo Rossi Mary Jo Rossi is a former employee of Mr Willie Brown andcurrently serves as Mayor Graysons Assembly campaignmanager Ms Rossi also represents local business interestssuch as Garaventa Ms Rossi declined to be interviewed inconnection with this investigation
5 Master Developer Finalists
Catellus Ted Antenucci is CEO of Catellus and Steve Buster is VicePresident ofCatellus
See Scarborough Insurance Websitehttpjsiagencynetconract a printout from which is attachedhereto as Exhibit G
10 See Legendary Sarah Vaughn dress auction benefit finds Bayview Hunters Point global arts program byAldrich M Tan printed in the Fog City Journal on April 28 2006htwwwfociryjoumalconinews in briefera house funraiser 06052 shtml and Bayview kidshead to Africa and France thanks to Bayview Opera House by Pat Murphy printed in the Fog CityJournal on May 26 2006h a iewerahouse fundraiser 060428shtml attachedhereto as Exhibit H
Se Catellus cries foul over Lennar contributions to Concord Mayor Tim Graysons Assemblycampaign by Richard Eber printed in the Contra Costa Bee on August 23 2015httpsjcontracostabeecomcatelluscriesfouloverlennacontributions to concord mayor timraysonsassemblycampai attached hereto as Exhibit I
Interview of Councilmember Birsan13
Interview of Ms Barone
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Lennar Kofi Bonner is CEO of Lennar During his term as mayor ofSan Francisco Mayor Brown appointed Mr Bonner to serveas his Chief Economic Policy Advisor Mr Bonner declinedto be interviewed in connection with this investigation
6 Others
Garaventa Garaventa Enterprises is a recycling and resource recoverycompany that serves Concord Pittsburg Bay Point AntiochCounry Oakley Discovery Bay BrentwoodCounry ByronKnightsen Rio Vista Bethel Island Rio Vista Counry aswell as the entire East Bay through the Mt Diablo RecyclingCenter Garaventa has been known to participate in localpolitics and has shown its support for local politicians thoughcampaign contributions Garaventa and two individualsassociated with Garaventa contributed 12800 to MayorGraysonsAssembly campaign Garaventa was not contactedin connecrion with this investigation because its involvementin the matters addressed herein appears to be peripheral tothe focus of rhe investigation
Seeno AD Seeno Construction Co is a local Concordcontractordeveloper involved in residential and commercialprojects including multifamily developments real estate andsubdivision development new home construction and
property management Seeno has been known to participatein local politics and has shown its support for local politicians
1 See UC Berkley College of Environmental Design 2015 Distinguished Alumni Awardhttpiicedberkeleyeducedalumnifriendsdistinguishelalumniawardalumni2015kofiattachedhereto as Exhibit J
See Garaventa Enterprises Websitehttpwwwgaraventaent comn a printout from which is attachedhereto as Exhibit K
16 See Discovery Homes Website httpswwwdiscoveryhomes comaboutusseeno a printout fromwhich is attached hereto as Exhibir L
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though campaign contributions Seeno was not contacted inconnection with this investigation because its involvement inthe matters addressed herein appears to be peripheral to thefocus of the investigation
Willie L Brown Former Assembly Speaker and San Francisco Mayor In 2014Mr Brown was a registered lobbyist with the San FranciscoEthics Commission Mr Brown is connected to LennarsHunters Point Project through Golden Gate Global formerlyknown as San Francisco Bay Area Regional Center and wasMayor of San Francisco when Lennar was awarded theHunters Point project Mr Brown declined to be
interviewed in connection with this invesrigation
B Commencement o Master Develo er Selection Process Catellus LennarNamed as Finalists
In January 2014 the City commenced an arduous threepart selection process inorder to ultimately identify a Master Developer for Phase I of the Concord Reuse ProjectArea Plan Project The process was managed by Mr Wright and a team ofconsultants consisting of Mr Ramiza Mr Labadie Mr Silvern and Ms Chazan
The first part of the selection process the qualification review resulted insubmittals by over 22 development companies By March 2014 the Local ReuseAuthority LRA was presented with eight qualification packages 1 Following anindependent review this list was ultimately reduced to four qualified firms recommendedby staff these firms included Catellus Development Corporation Catellus FivePoint
See San Francisco Ethics Commission Website
htsLnetfilecomSunlightsobbyistDetails20143SFO153710 a printout from which is attachedhereto as Exhibit M
13 See BiographycomWebsite httpiwwwbiographycompeoplewilliebrown40059a printout fromwhich is attached hereto as Exhibit N
L9 Interview of Ms Valerie Barone and Interview of Mr Wright Also see Exhibit B20 See Exhibit BZ
Interview of Ms Barone and Interview of Mr Bjerke Also see Exhibit B
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CommunitiesLennar Lennar JF Shea Company and SunCal CorporationSunCal While Council ultimately approved staffs recommendation on June 102014 several Councilmembers reported receiving criticism principally from Seenothat the Council was rubberstamping staffs recommendation By May 26 2015 JFShea dropped out SunCal was eliminated and the list of four was narrowed to Catellusand Lennar both of which entered into Agreements to Negotiate with the CiryAgreement The identical Agreements included among other things a prohibitionon lobbying between the developers and either the Ciry Council Planning Commissionor other City employees designated by the LRA Executive Director It was generallyunderstood that the Master Developer selection process would culminate in therecommendation of one Master Developer via a staff report prepared by the LRAExecutive Director and his team Negotiation Team
C Neotiations Contributions and Closed Sessions
On or about April 22 2015 Mayor Grayson arranged for a oneonone meetingwith 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 twodid not discuss the Master Developer selection or any Project specifics 28
Interview of Ms Barcne and Interview of Mr Silvern Also sec Exhibit BInterview of Councilmember Leone Interview of Mayor Grayson and Interview of Councilmember
Hoffineister
Z Interview of Ms Barone Interview of Mr Wright Interview of Mr Grogan and Interview of MrSilvern Also see staff report from Mr Wright to the Ciry Council regarding Consideration and Approvalof the Agreements to Negotiate Between 1 the City of Concord Local Reuse Authoriry and CatellusDevelopment Corparation and 2 the City of Concord Local Reuse Authority and Lennar ConcordLLC dated May 26 2015 attached hereto as Exhibit O
See May 26 2015 Agreement to Negotiate between the Ciry of Concord and Catellus Section 11 page9 and May 26 2015 Agreement to Negotiate between the City of Concord and Lennar Section 1 l page9 Exhibit PZ6 Interview of Mr Bjerke Interview of Mr Grogan Interview of Mr Wright and Interview of MrSilvern
Interview of Mayor Grayson Interview of Mr Wright and Interview of Mr GroganZ
Interview of Mayor Grayson
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On June 5 2015 Mayor Grayson and Councilmembers Birsan and Hoffineisteralong with Ciry staff attended a special meeting consisting of a site visit to CatellussMueller Project in Austin Texas Ms Rossi and Mr Antenucci attended the sitevisit Mr Antenucci reports that at some point during the site visit Ms Rossi approachedhim and suggested that it would benefit Catellus to connect with local thirdpartydevelopers in order to improve its chances of being selected as the Master Developerand he stated that she had also communicated the same message to Lennar While stafftook appropriate measures to prevent interactions between and among theCouncilmembers side conversations of this kind inevitably took place For instanceduring this site visit Mayor Grayson in passing mentioned his upcoming Assembly raceand according to Mr Antenucci commented on the difficulry of raising campaign fundswithin earshot of Mr Antenucci Mayor Grayson denies making this comment
At some time prior to June 16 2015 Mr Bonner contacted Mr Bunting to suggestthat GF Bunting consider making a contribution to Mayor Graysons Assemblycampaign On June 16 2015 GF Bunting donated 1000 to Mayor Graysonscampaign
29 Interview of Councilmember Birsan Interview of Councilmember Hoffineister and Interview of MrWright Also see Minutes of the June 5 2015 Ciry Council site visit attached hereto as Exhibit Q3o Interview of Ms Barone Inrerview of Mr Bjerke Interview of Mayor Grayson and Interview ofMrWright Also see Exhibit Q31 Interview of Mr Antenucci32 Interview of Mr Antenucci33 Interview of Mr Wright3 Interview of Councilmember Hoffineister Interview ofMr Antenucci Interview of Ms Barone andInterview of Mayar Grayson3s Interview of Mayor Grayson36 Interview of Mr Anetenucci3i Interview of Mr Glenn Bunting38
See Campaign Finance Information for Grayson For State Assembly 2016 htt cal
accesssscaovCampainCommitteesDetailaspxid1376431session2015viewreceivedattached hereto as Exhibit R
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On June 17 2015 Mayor Grayson and Councilmembers Birsan and Hoffineisterattended a special meeting consisting of a site visit to LennarsEl Toro Project in OrangeCounty Ms Rossi was also present at the site visit
On June 18 2015 GF Bunting donated another 3200 to Mayor Graysonscampaign The total amount donated by GF Bunting to Mayor Graysons Assemblycampaign was4200 the maximum allowable contribution to individual candidates forthe Legislature By the end of June 2015 three other entities with ties to LennarScarborough Engeo and Mr Kay each donated4200 to Mayor Graysonscampaign
In July of 2015 Catellus learned of the foregoing campaign contributions from anunnamed source
On July 27 2015 Mayor Grayson and Councilmeinbers Birsan and Hoffineisterattended a public tour of CatellussAlameda Landing Development
On August 4 2015 Mayor Grayson and Councilmember Hoffineister attended apublic tour of Lennars San Francisco Shipyara Developinent Ms Rossi and Mr Busterwere also in attendance Mr Brown was the lead presenter At this tourCouncilmember Hoffineister reports that Mr Buster approached her to express concernover what he believed to be inappropriate private meetings between Mayor Grayson andMr Brown
39 See Minutes of the June 17 2015 City Council site visit attached hereto as Exhibit SSee Exhibit SSee Exhibit R
4Z See Exhibit R4j See Gov Code 85300 et seq44 See Exhibit R4s Interview of Mr Antenucci
See Minutes of the July 27 2015 City Council site visit attached hereto as Exhibit T47 Interview of Councilmeinber Hoffineister Interview of Mayor Grayson and Interview of Mr WrightAlso see notes from the August 4 2015 site visit attached hereto as Exhibit U4s See Exhibit U
Interview of Mr Wright and Interview of Councilmember Hoffmeister Also see Exhibit UInterview of Councilmember Hoffineister It should be noted however that according to Mr Btisrer he
was not present at the Lennar Shipyard Tour a fact confirmed by the notes from the August 4 2015 site
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In response to a question raised by one of the Master Developer finalists onAugust 13 2015 Mr Wright sent an email to certain consultants working on the Projectrequesting that they disclose any ongoing contracts with either Catellus or Lennar one ofthese consultants was Mr Silvern In response Mr Silvern disclosed that between 2008and 2013 HRAs New York Ciry office provided services to Catellus Mr Silvern wasnot involved in this assignment More distantly in the 1990s HRAsLos Angelesoffice worked on an economic impact analysis concerning a Specific Plan for propertyaround Union Station in Los Angeles then owned by a joint venture including CatellusThe property has since been sold to LA County Metro Lastly Mr Silvern disclosedthat the HRA New York office was awardeda30000 assignment by a partnershipincluding SunCal Mr Silvern was not involvec in this project On August 14 2015Mr Wright considered Mr Silverns disclosures and concluded that they did not create aconflict of interest
On August 17 2015 Catellus received a phone call from an unnamed sourcestating that certain of Mayor Graysons campaign contributors were connected toLennar
On or before August 19 2015 according to an email sent from Ms Barone toCouncilmember Birsan Mayor Grayson indicated to her that he may not want a staffrecommendation as to which Master Developer to select
visit attached hereto as Exhibit U Furthermore Mr Buster denies having ever made a comment toCouncilmember Hoffineister regarding Mayor Graysonsmeetings with Mr Brown at all
See Email from Mr Wright to Mr Silvern as well as Shawn Zovod Steve Rottenborn MarkOBrienMr Ramiza and Amy Herman about COI check sent August 13 2014 attached hereto as Exhibit Vs See Email from Mr Silvem to Mr Wright regarding COI check sent August 13 2014 attached heretoas Exhibit V
See Email from Mr Silvern to Mr Wright regarding COI check sent August 13 2014 attached heretoas Exhibit V
See Email from Mr Silvern to Mr Wright regarding COI check sent August 13 2014 attached heretoas Exhibit V
See Email from Mr Wright to Mr Silvem regarding COI check sent August 14 2014 attached heretoas Exhibit V
5e See September 24 2015 letter to Ms Barone from Mr Giacomini of Hanson Bridgert aerached heretoas Exhibit W
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On August 21 2015 Catelluss lawyer Mr Andrew Giacomini of HansenBridgett sent a letter to the Concord Ciry Attorney requesting an investigation as to thecampaign contributions Apparently Mr Coon refused Catelluss request to investigateat that time
On August 24 2015 Mr Wright sent a letter to both Lennar and Catellus statingthe deadline for presenting their last and best offer to the City was September 2 2015
On August 26 2015 Mayor Grayson returned the campaign contributions fromGF Bunting Mr Kay Engeo and Scarborough Mayor Grayson later delivered to MrCoon a letter from Jim Sutton his private counsel on the matter concluding that thecampaign contributions would not require his disqualification from the Master Developerselection
Between August and September of 2015 Mayor Grayson and Ms Rossi met withMr Brown to obtain advice for Mayor GraysonsState Assembly Campaign
See Email from Ms Barone to Mr Birsan regarding Deal Points meeting Lennar and Catellus sentAugust 19 2015 attached hereto as Exhibit X58 See Exhibit I59 See Exhibit W
bo See August 24 2015 letter from Mr Wright to representatives of both Catellus and Lennar attachedhereto as Exhibit Y
See Concord Mayor Returns Donations Linked to Possible Weapons Station Developer by Lisa PWhite printed in the Contra Costa Times on September 1 2015httpiwwwcontracostatimescomiconcordci28740507iconcordmayorretumsdonationslinkedossibleweaponsstation attached hereto as Exhibit Z Additionally see Minutes of the September 1
2015 Ciry Council Meeting attached hereto as Exhibit AA and August 28 2015 letter from Mr JimSutton to Mayor Grayson attached hereto as Exhibit BB62 On January 1 2016 Ms Christine Callahan counsel for Ms Mary Jo Rossi contacted my colleague MsNatalie Karpeles and indicatea that Ms Rossi will not voluntarily participate or provide an interviewHowever Ms Callahan indicated that per Ms Rossi Mayor Grayson Willie Brown and Ms Rossi metone time in August of 2015 and there was no discussion of either the Naval Base or campaigncontributions63
Interview of Mayor Grayson
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On September l 2015 the Ciry Council met in closed session to discuss theMaster Developer process and the thencurrent term sheets
During this closed session Mayor Grayson raised a concern as to whether HRAand Mr Silvern in particular had a disqualifying conflict of interest due to the fact thatCatellus was a past client of HRA Mayor Grayson explained his concern to me asfollows I was having questions and in my own mind had developed questions aboutHRAs objectiviry and I was doing my own research This research led MayorGrayson to HRAs website where he discovered that Catellus is named as a clientThis information coupled with his observations that HRA leaned more towardsCatellus than Lennar caused Mayor Grayson to believe that there was a preferenceand he wanted to see whether there was any validity to that perception so he did hisown research
One of the items discussed during this closed session includea both developersposition on afforaable housing
Prior to the conclusion of the September 1 closed session Mr Wright asked theCouncil whether or not it wanted a recommendation from the Negotiation Team in thefinal staff report it was his longstanding belief and that of other members of the teamthat the Council had directed the team to prepare a staff recommendation as part of thestaff report that would be presentea at the conclusion of the Master Developer selection
6 Interview of Mr Bjerke Interview of Mayor Grayson Interview of Mr Silvern and Interview of MrWright Also see Minutes of the September 1 2015 City Council Closed Session Meeting attachedhereto as Exhibit CC
Interview of Mayor Grayson66 Interview of Mayor Grayson67 Interview of Mayor Grayson68 Interview of Mayor Grayson69 Interview of Mayor Grayson70 Interview of Mr Silvem and Interview of Mr Wright Also see Exhibit AA
Interview of Mr Wright and Interview of Mr Silvern Also see staff report from Mr Wright to the CiryCouncil regarding Report on Master Developer Term Sheets and Selection Process dated September 12015 attached hereto as Exhibit DD
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process The Council confirmed that understanding as reflected in the Closed SessionMinutes of September l 2015
There was u discussion as toauhether the City Council wished to have staff make arecommendation in the staff report for the meeting on September Z9 auhen theselection will be made Ultimately the councilmembers concluded that consistentwith general city policy staff should make a recommendation
Furthermore it had been communicated to both Lennar and Catellus that therewould be a staff recommenaation at the conclusion of the negotiation process
On or about September 10 2015 eight days after the deadline imposed on bothdevelopers by Mr Wright to provide the Negotiation Team with their best and finaloffers Lennar sent staff an updated term sheet addressing affordable housing andrelenting on its prior insistence on obtaining a commitment for Phase II of the ProjectThe proposed modifications to the term sheet were not accepted
On September 16 2015 the Ciry Council met in closed session to discuss theMaster Developer process and term sheets Dtiring the meeting staff answered questionsraised by Council during the September 1 closed session and presented it with a draft
Interview of Mr Wright Interview of Mr Bjerke Interview of Mr Grogan Interview of Mr SilvernInterview of Mr Ramiza Interview of Ms Chazan and Interview of Councilmember Brisan Myimpression was that they were going to give a recommendation there wasnt a vote on ir I felt that whenWright walked out of the room that there was going to be a recommendation73 See Exhibit CC italics in original
Interview of Mr Wright Interview of Mr Bjerke Interview of Mr Grogan and Interview of MrSilvern
Interview of Mr Wright Interview of Mr Silvern Interview of Mr Bjerke and Interview of MsBarone Also see 1 email from Suheil Totah with Lennar to Mr Wright regarding affordablehousing sent on September 10 2015 and resulting email exchange between Mr Wright Mr Ramiza MrSilvern Mr Labadie and Ms Chazan between September 10 and 1l 2015 attached hereto as ExhibitEE and 2 email from Matthew Gray counsel for Lennar to Mr Wright Mr Silvern Mr Ramiza MsChazan aniMr Labadie reCNWS Lennar Highlight Summary91015 Status on ReyuestedItems sent on September 10 2015 attached hereto as Exhibit FF
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staff report disclosing staffs recommendation of Catellus as Master Developer At theconclusion of this meeting the Negotiation Team members present Messrs WrightSilvern and Ramiza understood that they would prepare a final version of the staff reportand the Councilsselection of the Master Developer would take place on September 292015
On September 17 2015 Mayor Grayson contacted Ms Barone regarding hisconcerns that according to an unspecified source Catellus was negotiating with Seenoand that Seeno was trying to gain control of the project through Catellus SpecificallyMayor Grayson was concerned that the City did not have enough protections in placeunder the term sheet to prevent a thirdparty developer from gaining control of theProject during Phase 2
On September 21 2015 in a memorandum to Mr Wriht and Mr Coon preparedin response to Mayor Graysonsabovestated concern Mr Ramiza concluded that
both Master Developer semifinalists have agreed to be bouna by a DDA thatonly allows transfers or assinments in certain well defined limitedcircumstances Both semifinalists term sheets allow as a permitted transfertransfers to affiliated entities and vertical developers Lennar also includes aprovision allowing transfers to nonaFfiliated entities for specialopportunities Other assignments would only be allowed in Cityssole andabsolure aiscretion
76 Interview of Mr Wright Interview of Mr Silvern Inrerview of Mr Grogan Iam pretry sure that thestaff report presented to Council on the 16 contained a staff recommendation that does not shock meThey presented a semicomplete version because we were ready to go
Interview of Mr Grogan Interview of Mr Silvern and Interview of Mr Bjerkei See email exchange between Ms Barone and Messrs Wright and Coon regarding Contidential sent onSeptember 17 2015 artached hereto as Exhibit GG79 See Exhibit GG
80 See Confidential Memorandum from Mr Ramiza to Messrs Wright and Coon regarding Transfer andAssignability under Master Developer DDA and Term Sheet September 21 2015 attache hereto asExhibit HH
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Ms Barone and Mr Wright both stated during their interviews their opinions thatMayor Graysonsconcerns were unfounded as Catellus a privately held corporationwoula not be susceptible to a takeover Mr Antenucci categorically denies anyinvolvement with Seeno
On or about September 22 2015 Ms Barone instructed Mr Wright to remove thestaff recommendation from the final staff report Mr Wright told me that he reporredthis instruction ro both finalists to Catellus by way of an email ro Mr Antenucci and bytelephone to Lennar
On or about September 23 2015 Mr Coon received a telephone message fromMr Giacomini inquiring why the Ciry will no longer provide a staff recommendation inthe final report Upon inquiry Ms Barone explained to Mr Coon that the removal ofthe staff recommendation was her decision albeit she took input from Council Laterthat day the staff report was released to the public without a staff recommendation Inresponse Mr Giacomini told Mr Coon rhat Catellus had authorized him to transmit aletter to the Ciry raising concerns about the Master Developer selection processaccording to Mr Giacomini Mr Coon endeavored to persuade him not to send theletter Mr Wright similarly attempted to persuade Mr Antenucci not to send the letterout of concern that it would derail the selection process
In a memorandum dated September 24 2015 followin his investigation MrCoon revealed to Council that HRAhad also worked with Lennar between 2013 ana2014 These facts coupled with the information that Mr Silvern presented to Mr
si Interview of Mr Antenucci
82 See email exchange between Ms Barone and Mr Helix regarding Closing the Loop sent on September22 201 S attached hereto as Exhibit II
83 See email exchange between Mr Coon and Ms Barone Mr Wright and Mr Bjerke regardingTelephone Call from Catellus sent on September 23 2015 attached hereto as Exhibit JJ84 See Exhibit JJ8i See email exchange between Mr Wright and Ms Laperchia regarding92915 Staff Report sent onSeptember 23 2015 attached hereto as Exhibit KKgb See email to Mr Coon from Mr Silvern regarding Urgent Need Contact Info on Any Catellus andLennar Contects sent on September 21 2015 and email from Mr Silvern to Mr Coon regarding COICheck sent September 21 2015 attached hereto as Exhibit LL
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Wright in August ultimately led Mr Coon to conclude that Catellus and Lennar werebasically on equal footing in their relarionship with HRASilvern and there is nocredible explanation as to why Catellus would have been preferred over Lennar as aprospective future client and therefore favored in the Master Developer selectionprocess As such no conflict of inrerest has at any time existed between HRAPaulSilvern and the City of Concord nor have they engaged in any conduct suggestingfavoritism of Catellus over Lennar in the Master Developer selection process
D Sebtember 24 2015 Hanson Bridgett Letter
The Hanson Bridgett letter signed by Mr Giacomini asserts that Lennar violatedthe terms of the Agreement to Negotiate by lobbying the City Council Specifically theletter contends that Lennar attempted to influence the Master Developer selectionprocess and thus violated Section 11 of the Agreement to Negotiate in the followingways
l Orchestrating campaign contributions to Mayor GraysonsAssembly campaignin an effort to curry his favor and influence his vote on the Master Developerselection
2 Engaging Mr Brown to lobby Mr Grayson in support of its proposal and
3 Influencing the City to remove a staff recommendation from the final staffreport Included within this contention is an allegation that the Ciry Councilengaged in a serial meeting in violation of the Brown Act
E Sehtember 2 7 2015 Lennar Response Letter and Refisal to Cooperate
Following the Cirysreceipt of the September 24 2015 Hanson Bridgett letter MrBonner transmitted a letter categorically denying any wrongdoing without addressing any
8 See Confidential Memorandum from Mr Coon to City Council regarding Concord Reuse ProjectAllegea Conflict of Interest Involving Consultant HRAAdvisors Seprember 24 2015 page 5attached hereto as Exhibit MM88 See Exhibit MM
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specific allegations made by Mr Giacomini Mr Bonner states that Lennar willcooperate in the Citys efforts to evaluate Catellus claims When contacted inconnection with this investigation in December 2015 Mr Bonner and his associatesdeclined to be interviewed and elected to limit Lennars participation in thisinvestigation to letters from its attorney David Marroso ofOMelveny Myers The
Bonner letter also states that we rrust that as part of this effort the Ciry will alsoevaluate whether Catellus has engaged in improper activities including activities inbreach of its agreement with the City The letter does not allege any specificwrongdoing by Catellus This report addresses those allegations concerning allegedCatellus wrongdoing that have been brought to my attention during the course of theinvestiation
F Sebtember 29 2015 Meetin with Catellus
Following the receipt of the Hanson Bridgett letter Ms Barone in consultationwith the Ciry Attorney Mr Wright and Mr Ramiza cancelled the September 29 2015scheduled public hearing Staff was extremely frustrated that Catellus had chosen tohave its lawyer send the letter and derail the selection process Mr Wright suggested ameeting with Catellus the meeting was held on September 29 and included Ms BaroneMr Wright Mr Bjerke Mr Coon and Mr Antenucci along with other officers ofCatellus Staff hoped that the meeting might allay Catellussconcerns so that theprocess could move ahead without furrher delay Following the meeting it was clear tostaff that Catelluss allegations would require a more formal response
89 See September 27 2015 letter from Mr Bonner to Ms Barone attached hereto as Exhibit NN90 See Exhibit NN91 Interview of Mr Wright92 Interview of Mr Wright Interview of Mr Ramiza and Interview of Mr Silvern93 Interview of Mr Wright9 Interview of Mr Wright9
Interview of Mr Wright
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G Lennar Mr Kav and Mr Nardnio Respond to CatellussClaims
In a letter dated Deceinber 24 2015 Vigo Nielsen counsel for Mr Kay and MrNaranjo replies to the Catellus allegations on behalf of his clients as follows
l Under California law there is a clear difference between lobbying andmaking a campaign contribution and that under California state law therecan be no doubt that making a campaign contribution is entirely differentfrom and exclusive of engaging in discussions negotiations or lobbying ofConcord officials as stated in Section 11 of the negoriation agreement
2 Mr Kay made a personal contribution to Mayor Graysonscampaign he didnot attend any fundraising events for Mayor GraysonsAssembly Campaignnor did he meet or communicate with Mayor Grayson Additionally MrKay did not communicate at all with any Concord CouncilmembersPlanning Commissioners or any other Concora officials
3 Mr Naranjo made a personal contribution to Mayor Graysons campaignFurthermore he did not communicate on any subject with Mayor Graysonany of the Concord City Councilmembers Planning Commissioners or anyother Concord City Official
Mr Nielsens response does not indicate whether Mr Kay or Mr Naranjo haa anycommunications with Lennar regarding the contributions and specifically whetheranyone acting on behalf of Lennar solicited them
In his letters of January 6 and January 25 2016 on behalf of Lennar MrMarroso replies to the Catellus allegations as follows
l Lennar has not given any money to the Committee for CouncilmemberTim Graysonscampaign for State Assembly even though it would not
96 See December 24 2015 letter from Vigo Nielsen to Mr Jenkins attached hereto as Exhibit 0097 See January 6 2016 letter frm Mr Marroso to Mr Jenkins attached hereto as Exhibit PPg See January 25 016 letter frum Mr Marroso tu MrJnkins attacheihcret as Exhibit QQ
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have been improper to do so has not given money to others to contributeto Mr Graysons Committee and has not pressured or coerced anyone tocontribute money to it
2 None of the individuals or entities that contributed to Mayor Graysonscampaign communicated with Mayor Grayson about the Concord NavalWeapons Station
3 As a matter of lawcampaign contributions are not forbiaden by or evenmentioned in Section 11 or anywhere in the Negotiating AgreementNothing in the Negotiating Agreement purports to abridge Lennars oranyone elsesFirst Amendment rights
4 Mr Marroso describes Lennars relationship with the contributors asfollows
a GF Bunting is a public relations firm that does work for manycompanies on a multituae of projects across the country includingLennar Corp
b Mr Kay is an attarney of whom Lennar is one of many clients
c Engeo is a prominent engineering firm that has workeci with Lennar inthe past
io3
d Scarborough is an insurance firm which Lennar has not engaged orcontracted with in any capaciry
99 See Exhibit PP eniphasis in original1o See Exhibit PP
101 See Exhibit QQioz See Exhibit QQio3 See Exhibit QQ04 See Exhibit QQ
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5 Lennar did not discuss the Master Developer selection process with MayorGrayson through Mr Brown io5
Mr Marrosos letter does not deny that Lennar solicited the contributions nor doesit confirm or deny whether Lennar spoke to Mr Brown about the Master Developerselection process and whether those conversations included discussions about campaigncontributions
II What is Lobbvin within the Meanin of Section l l T
The architect of the Master Developer selection process was Mr Wright whoassembled a team of outside consultants to negotiate term sheers with the two finalistsand to recommend the superior proposal to the Ciry CounciL Mr Wrightsintent was tocreate a process that would yield the objectively superior proposal without politicalinterference in essence a decision that would be made strictly on the merits of the twoproposals To this end and in response to concerns that the finalists night attempt roinfluence the decisionmakers Mr Rainiza drafted Section ll to the Agreement toNegotiate which reads as follows
1 l Lobbving Prohibition
Developer agrees and acknowledges that the Preliminary Stage andDDA Stage negotiations shall take place with the LRA Execurive Directorthe Citys legal financial and planning advisers and such other Ciry parties asmay be designated by the LRA Executive Director from time to timecollectively the CityDesignated Team Developer shall not engage indiscussions negotiations or lobbyinh of any Ciry Council or PlanningCommission members or other City employees or officials as may bedesignated by the LRA Executive Director from time to time collectivelyExcluded City Parties unless requested to do so by the CiryDesignatedTeam for specific purposes related to the negoriations Nothing in this Section11 shall prevent i responses to requests for inforniation from one or moreExcluded Ciry Parties providea such responses are directed to the CiryDesignated Team ii Developers participation in any questionandanswer
10 See Exhibit QQ
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sessions workshops or tours approved in writing by the CityDesignatedTeam or iii Developers participation in public events or community fora atwhich one or more Excluded City Parties are present provided Developer doesnot engage in communications with such Excluded Ciry Parties at such eventsthat are intended to influence the Preliminary Stage or DDA Stagenegotiations In the event of Developersviolation ofits obligations under thisSection 1 l Ciry may immediately terminate this Agreement by written noticeto Developer without affording Developer any opportuniry to cure suchviolation
The key phrase in Section 11 is that neither developer shall engage in discussionsnegotiations or lobbying of any City Council or Planning Commission members or otherCiry einployees or officials as may be aesignated by the LRA Executive Director from timeto time There is no definition of the word lobbying in the Agreement Section 18states that the Agreement shall be construed in accordance with the laws of the State ofCalifornia The California Civil Code governs the interpretation of contractsSection 1644 of that Code provides thatthe words of a contract are to be understoodin their ordinary and popular sense rather than according to strict legal meaning Unlessused by the parties in a technical sense ar unless a special meaning is given to them byusage in which case the latter must be followed The paramount rule in interpreting aconrract is to give effect to its true inrent iob
The issue that arises here is whether Section 11 was intended to use the wordlobbying in its ordinary sense defined by MerriamWebster as influencing governmentdecisions and by dictionarycom as trying to influence public officials or whether itintended to use it in the technical sense found in Government Code 87100 aka thePolitical Reform Act where campaign contributions are excluded from the definition oflobbying In their letters both Mr Nielsen and Mr Marroso contend that theinterpreration of Secrion 11 is controlled by the Political Reform Act
As explained to me by the authors of the Agreement the purpose of Section 11was to advance Mr Wrightsgoal of precluding the finalists from influencing decisionmakers by means other than the merits of their proposals In other words to insulate the10b See California Civil Code 1636 1641
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decisionmakers from outside influences whatever they might be or however they mightbe conveyed In drafting this section Mr Ramiza advised me that he used the wordlobbying as it is commonly understood in the English language nor in its technicalsense Mr Ramizas unaerstanding of the lobbying prohibition is that it intended topreclude an endrun by either finalist directly or indirectly to the decisionmakers Theword lobbying in Section 11 is listed with discussions and negotiations two otherverbs suggesting that the finalists are to avoid any activity that might be perceived asattempting to influence the decisionmakers The exclusion of campaign contributionsin the Political Reform Act has no bearing on Secrion 11 if the donarion of campaigncontributions was meant to influence Mayor Grayson then the contributions violated thelobbying prohibition
According to Mr Wright and Mr Ramiza both developers understood thisordinary meaning of rhe lobbying prohibition in Section 11 Neither developerquestioned its meaning nor did they at any time ask whether the word lobbying was tobe interpreted in a technical sense or to exclude activities such as making campaigndonations Had they not understood the prohibition both developers had ampleopportuniry tc ask Ciry staff for clarification indeea communications between MrWright and Mr Ramiza and the representatives of the two developers were continuousand numerous during the time period following the execution of the Agreements
I reject the argument that the lobbying prohibition in Section 11 excludescampaign contributions It is fair to conclude that the agreement bound both Catellusand Lennar to refrain from engaging in any discussions negotiations or any other actionsintended to influence any Ciry Council or Planning Commission members or other Ciryemployees ar officials
A Do the Contributions to Mavor Gravsons Campain ConstituteLobbyin on Behalf of Lennar
Prior to June 16 2015 Mr Bonner conracred Mr Bunting to suggest that GFBunting consider making a contribution to Mayor GraysonsAssembly campaign MrBunting thereafter arrangea for his company to make the contribution as an
10iInterview of Mr Glenn Bunting
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accommodation to Mr Bonner something his company does for its clients from time totime Shortly thereafter Mayor Grayson also received contributions for the maximumallowable amount from Mr Kay Scarborough and Engeo Mayor Grayson asserts thathe was unaware of these contributors connections with Lennar at the time they weremade and until that connection was made public
In light of the direct evidence that Mr Bonner solicited GF Buntingscontribution and discussed Engeos contribution with Mr Eliahu it is more likely thannot that he or someone acting on his behalf also solicited rhe conrributions from Mr Kayand Mr Naranjo neither of these donors have any known connection with Concord orwith Mayor Graysons campaign aside from their connections with Lennar Our reviewof campaign contribution records with the Secretary of State indicates that neither has ahistory of contributing to local campains in Concord Lending further support to thisconclusion is the carefully chosen language in Mr Marrosostwo letters on behalf ofLennar Mr Marroso states in connection with this issue that Lennar neither coercedthese contributions nor reimbursed the contributors Aware as he was of thisinvestigationsinterest in the genesis of these contributions Mr Marrosos lettersconspicuously do not deny that Lennar solicited the contributions
Additionally Mr Marroso concludes that because the Political Reform Actstechnical definition of the term lobbying excludes campaign contributions Mr Bonnercould have directly contributed to Mayor Graysonscampaign in exercise of his FirstAmendment rights and without violating the terms of Section 11 However Mr Bonnerchose not to do so but instead suggested that GF Bunting and likely Mr Kay andScarborough contribute to Mayor Graysonscampaign Given Mr Marrososconfidence
l08 Interview of Mr Bunting109 Uri Eliahu CEO of Engeo stated that his company was founded in Concord and is still local and hasan interest in local politics He said that his company rourinely makes political contributions and that thecontribution to the Grayson campaign was his iaea and not prompted by a request from Lennar MrEliahu stated that befare making the contribution he asked Mr Bonner whether the latter thought thecontribution woula generate any problenis and was told it would not Engeo provided a list of its 2015political and charitable contributions that included several campaign contributions to candidates for Stateanilocal offices in the Concord area
10 Mr NielsensDecember 24 2015 letter confirms that Mr Naranjo and Mr Kay had no involvementwith the City
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that Mr BonnerLennar could have contributed directly one could reasonably infer thatMr BonnerIxnnar either knew or suspected that the provisions in Section 11 wouldhave precluaed such conduct or at least that a direct contribution would have cast anegative light on Lennarsparticipation in the selection process Aside from that MrBonnerIennar could have foreseen that the contributions made at their behest wouldhave put Mayor Grayson in an awkward position when they came to light
Lastly both Mr Nielsen and Mr Marroso conclude that campaign contributionsie lobbying in the technical sense constitute a form of speech protected by the FirstAmendment to the Constitution however this is beside the point The issue here is notwhether the contributions were constirutional but whether they were made in
contravention of a contractual provision to which Lennar voluntarily chose to be bound
A party may voluntarily agree to waive constitutional rights in order to participatein the process leading up to the award of a contract Some cities preclude campaigncontriburions by entities actively biading on ciry contracts
l iIn this instance both
Lennar and Catellus agreed as a condition of participating in the selection process toallow their applications to be decided on the merits and to avoid any efforts to influencedecisionmakers The first amendment claims are a red herring The issue here iswhether Lennar acted contrary to the Agreement
Two possible conclusions may be drawn from Lennars solicitation of thesecampaign contributions The first is that Lennar orchestrated the contributions
anonymously magnanimously without any expectation of receiving anything in returnThis would be consistent with Mayor Graysonsinsistence that he was unaware of the
Otherwise referred to as paytoplay laws a growing number of states and municipalities have enactedmeasures limiting or prohibiting campaign contributions from parties bidding for a prospective contractwith the City For instance the City of Los Angeles prohibits a person who bids on or submits a proposalar other response to a contract that has an anticipated value of at least 100000 and requires approval bythe elected City office that is held or sought by the person to whom the contribution would be given frommaking canpaigncontribution to the Mayor the City Attorney the Controller or a City Couneilmember Los Angeles Ciry Charter section 470c 12 B The Ciry of Los Angeles takes theprovisions of its Charter one step further and incorporaessection 470c12 into every contractsolicitation and additionally requires prospective bidders to supply the names of their agents or principalsto ensure compliance with section 470c12 Los Angeles Ciry Charter section 470c12 H
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relationship between the contributors and Lennar until the issue was brought to light bythe press and by Catellus
The alternative conclusion is that Lennar certainly orchestrated one and possiblythree contributions with the specific intent of generating goodwill with Mayor Grayson inorder to enhance its position in the Master Developer selection process The
contributions were not token donations they were in the maximum amount allowed bylaw The contributions materially assisted Mayor Grayson to demonstrate his fundraisingprowess early in the campaign possibly giving him an advantage over his competitionThere is no evidence that Lennar and Mayor Grayson collaborated in this endeavor orthat Mayar Grayson was even aware of it at the time Nevertheless the fact that Lennarconcealed its involvement by using at least one pro to donate at leasr one contributionto Mayor Graysonscampaign suggests a clandestine effort to advance its interests in theselection process whether or not it actually did so Regarded in that way thecontributions would constitute lobbying within the meaning of Section ll
Mayor Grayson suggests that his return of the contributions on Auust 26 2015establishes that no wrongdoing occurred The relevant inquiry however is why thecontributions were made in the first instance not whether they were retained
B Did the Meetings between Mr Brown and Mavor Gra ConstituteLobbying on Behalf of Lennar
Catellus contends that Mayor Grayson met with Mr Brown on numerousoccasions and that Mr Brown ostensibly lobbied Mayor Grayson on behalf of Lennar Itis establishea that Mr Brown has a longstanding relationship with Mr Bonner goingback at least to when Mr Bonner worked for Mr Brown and business connections withLennar and that Mr Brown is a registered lobbyist in San Francisco When Mr Brownwas Mayor of San Francisco he favored Lennar to serve as Master Developer of the SanFrancisco Shipyard project despite a contrary staff recommendation in favor of anotherdeveloper Mr Brown appointed the selection committee that chose Lennar as theMaster Developer for Treasure Island From these facts Catellus concludes that Mr
11z Interview ofMayor Grayson Ihad many contributinscome in within a very short period of time andthere was some quick fundraising taking place to meet a deadline for Sacramento
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Brown had obvious motivation and opportunity to lobby Mayor Grayson but Catellus hasno evidence that Mr Brown engaged in such lobbying
Mayor Grayson states that he initiated contact with Mr Brown exclusively to seekpolitical advice regarding his Assembly campaign in view of Mr Browns extensivepolitical experience and network Mr Browns political expertise is wellknown and thisis a perfectly plausible reason for Mayor Grayson to seek Mr Brownscounsel Accordingto Mr Grayson they met twice once in April and again in August of 2015 the secondtime with Ms Rossi and the two never discussed the Master Developer selectionprocess
The concerns raisea by Catellus are purely circumstantial While MayorGraysonsaecision to kick off his cainpaign during the Master Developer selection processseems entirely coincidental Mayor Grayson could have known of Mr Browns
connections to Lennar if not the totality of those connections He certainly would havehaa some awareness of the relationship as a consequence of the August 4 San FranciscoShipyard tour which was led by Mr Brown and of the possibiliry that meeting privatelywith Mr Brown might create the appearance of impropriery during the Master Developerselection process Nonetheless the investigation resulted in no evidence to contradictor to corroborate Mayar Graysons description of the meetings There is no basis toconclude that Catellusssuspicions have merit
C The Letters in SuUUort of Lennar po Not Constitute Lobbyin on Behal f ofLennar
In late Seprember in anticipation of the scheduled September 29 2015 publichearing on the selection of a Master Developer the City received numerous lettersencouraging the Council to award the contract to Lennar Some of these letters werelocal but many were authored primarily by San Franciscobased entities companies and
113 Interview of Mr Wright When we took the Councilmembers to HuntersPoint Willie Brown wasthere holding court Dliring Brownspresentation he talked about how during his tenure as mayor hehad done things for the neighborhood and how he had worked with affordable housing advocates andworked closely with Lennar during this process and liked Lennar14 Interview of Ms Barone and Interview of Mr Bjerke
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persons who had no connection with Concord but who had some relationship withLennar For instance the executive director of the Family Justice Center contacted MrBjerke and informed him that he was asked to write a letter in support of Lennar andasked whether such letter would be appropriate It is unclear why the Family JusticeCenter would have any motivation or reason to care who was ultimately selected asMaster Developer for the Project It is obvious from the riming similar content andidentities of the authors of the letters that Lennar orchestrated them Ms Barone recallsasking Mr Coon if such endorsements constituted lobbying and he opined that they weremerely a form of public comment 16
Lennar did not ask Mr Wright if such endorsementswould be permissible under Secrion 11 prior to arranging for their delivery l
The endorsement letters unquestionably were intended to influence the CouncilHowever as the Ciry Attorney noted at the time they were delivered to the Council aspart ofand within the framework of the public process established for consideration of thetwo proposals Unlike the campaign contriburions which were made outside theframework of the process the letters were not directed to a single Councilmember withthe potential expectation of garnering favor Additionally the letters were subject torebuttal at the public hearing Section 11 intentionally reserves for the developers theabiliry to participate in the public process to their own advantage This only makes senseThus there are material differences between the two activities While the letters are a
form of lobbying in the broadest sense it is my conclusion that they were not proscribedby Section 1 l
D Alleations that Catellus Lobbied Citv Staff by Offering Them Tickets toGolden State Warriors PlavOff Games
In an email to Ms Barone Mayor Grayson questions whether Catellus an affiliateof Catellus or someone connected in any way to Catellus purchased or providedunspecified Concord Ciry staff inemhers wirh free tickets to attend an NBA game
i ls
Interview of Mr Bjerke110 Interview of Ms Baronei Interview of Mr Wright
See email from Mayor Grayson to Mr Coon regardin News Alert Developer accused of improperlobbying in 6 billion East Bay project sent September 26 2015 attached hereto as Exhibit RR
I
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Others interviewed for this investigation also report hearing this rumor Ms Baroneinquired of her staff and no one indicated they had received tickets There is noevidence to support the truth of this claim
E Do the Conversations betaveen Councilmembers and Catellus and LennarReUresentatives at Various Functions Constitute LobbZing
At least two Councilmembers report seeing representatives of Catellusprincipally Steve Buster at communiry events One Councilmember similarly reportsseeing and talking to Mr Bonner at an event Durin those occasionsCouncilmembers report that conversations were social and no mention was made of theMaster Developer selection process Catellus representatives state and Mr Wrightconfirms that they askea Mr Wright if attendance at communiry events was
permissible Mr Wright advised both developers that they were free to attend suchevents provided they did not discuss the selection process No evidence has beenadduced to suggest that either developer violated this admonition Further Section 11carves out a specific exception far participation in conlmunity events
III Did Lobbvin bv Lennar Result in Removal of a Staff Recommendationfrom the Final Staff Report
Several members of the Negotiation Team reported that the Team uniformly heldthe expectation that the final staff report to the Ciry Council would include their
19 Interview of Mr Wright120
Intervicw ofMs Barone There was als a rumor that someone on staff got tickets to a Golden Stateplayoff game but the timing of that rumor did not make sense because of when the playoff games wereand I had questioned staff and no one admitted to receiving any tickets and then it finally came out thatGaraventa had received the tickets and we checked with Catellus and Catellus stated that at a meetingwith the Garaventas Garaventa asked if Catellus could get them tickets and Catellus said no1zL Interview of Councilmember Hoffineister and Interview of Councilmember Birsan
Interview ofCcuncilmember Birsani3 Interview of Councilmember Hoffineister and Interview of Councilmenlber Birsan1 Interview of Mr Antenucci
Interview of Mr Anenucci and Inrerview of Mr Wright
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recominendarion f a preferred Master Developer Mr Wright had assembled thisteam of experts precisely for the purpose of negotiating the best terms they couldconcurrenrly with both finalists and informing the Council which Developers terin sheetoffered the best deal for the City According to Ms Barone it is customary for staffreports in Concord to include a staff recommendation Indeed the Request forPrcposals stated as follows
The LRA anticipates that one of the two Candidate Master Developers willbe recommenaed for desination by the City Council as the Master Develoereligible to negotiate with the LRA a proposed Disposition and DevelopmentAgreement to be consistent with the negotiated Term Sheet and the fornz ofDisposition and Development attached hereto with such modifications as havebeen requested by Respondent in its proposal and agreed to by the LRA in itsdiscretion Emphasis added
On August 19 2015 Ms Barone inaicated via email to Councilmember Birsanthat she wanted direction from Council on whether it wanted or didntwant a staffrecommendation on the 16 128
in regards to which of the two firms staff views as meetingmore of the needs of the communiry and the Councils goals Ms Barones second
goal was to avoid a 22 vote between the firms That would be highly problematic
The uncertainry as to whether the Council would want a recommenaation mayhave stemmed in part from the experience months earlier when the Council was stung bythe criticism that it had ceded too much authoriry to staff when it winnowed the field ofapplicants from eight to four In view of this uncertainry Mr Wright expressly raised theissue with the Council during the September 1 2015 closed session The Council
Interview of Mr Bjerke Interview of Mr Grogan Interview of Mr Wright and Interview of MrSilvern
Interview of Ms Barone
128 The public hearing was originally scheduled for September 16 but delayed to September 29129 See Exhibit X130 See Exhibit X
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discussed the issue and the minutes of the closed session memorialize Councilsdecisionto include a staff recominendation in the final staff report
A near final version of the staff report was provided to the Councilmembers inclosed session on September 16 2015 The report includes a paragraph expresslyrecommending Catellus on the basis of its superior term sheet The Council did not
question or object to the presence of the recommendation or take any action to remove itfrom the report Later however in the days following the September 16 closed sessionas shown by this email from Ms Barone to Mr Wright a majoriry of Councilmembersdecided that they no longer wanted a staff recommendation
A key issue that Laura wants to discuss is her desire for there NOT to be aCiry staff recommendation I know we discussed this in closed sessian and weleft closed session with direction to include the recommendation which youand I both recommended happen however it is clear from my recollection ofthe item in closed session and my subsequent oneonones with Council thatthere may not be a majoriry of Council who want a staff recotnmendarion
In the days following the September 16 closed session Mayor Grayson andCouncilmember Hoffineister had a change of heart regardin the inclusion of therecommendation in the report This occurred in the context of both Mayor Grayson andCouncilmember Birsan earlier in the month raisingcuestions about Catellus that staffbelieved had no validiry and created concern among rhe Negotiation Team thatCouncilmembers who favored Lennar were attempting to smear Catellus These
allegations included the following
Team inember Paul Silvern of HRA had a conflict of interest and favoredCatellus due to his firms prior work with Catellus a concern which was firstreviewed in August
13 See Exhibit CC
132 See email from Ms Barone to Mr Wright regarding Draft 929 staff report atrached hereto as ExhibitSS
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Catellus was secretly negotiating a deal with Seeno Company that would giveSeeno 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
Each of these allegations was investigated by Mr Wright Mr Ramiza andor theCiry Attorney and determined to have no merit
Further within days of the September 1 closed session the Negotiation Teamreceived overtures from Lennarscounsel Matthew Gray to the effect that Lennar wantedto modify its ternz sheet notwithstanding that the term sheet deadline of September 2had passea Lennar sought in particular to improve its proposal on the affordablehousing component which the Negotiation Team had identified to the Council assignificantly weaker than Catellussproposal Lennar also suddenly backed off its staunchrequirement for a commitment beyond Phase I a position that staff recommendedagainst ro the Council in closed session At all times during the negotiation process theterm sheets were confidential and Lennar ostensibly had no reason to know that itsaffordable housing proposal was aeficient or its desire for a Phase II commitment had metwith such sriff opposition Several members of the Negotiation Team stated that ir did notseem coincidental that Lennar sought ro improve the weakest parrs of its proposal at thatpcint in time and speculate that information may have been leaked from the closedsession
I have not discovered any direct evidence demonstrating that the foregoingconcerns raised about Catellus or the late efforts by Lennar to iinprove its term sheetwere linkea coordinated or the result of lobbying by Lennar They were however raisedat the 11 hour as it became more and more obvious to the Council that the NegotiationTeam preferred and would be recommending the Catellus term sheet The culminationof this activiry occurred when three Councilmembers communicated to Ms Barone theirdesire to remove the recommendation favoring Catellus from the report Ms Barone
discussed the recommendation issue over an intense twoday period with Mr Wright andMr Coon and ultimately directed Mr Wright to remove the recommendation from the
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report Mr Wright reported this decision to Catellus in an email and to Lennar bytelephone By this time Mr Wright had told Catellus that the staff recommendationwould favor it133 when Mr Wright informed Mr Antenucci that the recommendationwould be removed Mr Antenucci believed that this was a direct result of Lennarslobbying efforts This proved to be the final straw for Antenucci leading to the deliveryto the City of the Hanson Bridgett letter
Ms Barone subsequently has taken the position that the decision to remove therecommendation was hers to make and that she made it in order to avoid putting theCouncil in a box
I varied from the usual protocol of including a staff recommendation thatrecommended one of the two firms to Council for three reasons First becauseour selection process has worked weve ended up with two of the best firmsin the Nation competing to be our Phase 1 Master Developer and both firmsare qualified and capable of successfully accomplishing the project Seconathe staff report stands on its own it successfully highlights the majordifferences between the two Tern7 Sheets I didntbelieve a staffrecommendation was needed Third having a staff recommendation createsits own controversy if Council selects the same firm staff recommends thenCouncil has rubber stamped staffs work if Council selects the firm staffdidntrecommend the other allegations arise I was hoping to avoid creatingunnecessary controversy
Ms Barone contends that she first made the aecision and then informed theCouncilmembers in individual meetings of that decision She steadfastly took thatposirion in her interview for this investigation
Ms Barones explanation is belied by the email trail The communicationsbetween Ms Barone and Mr Wriht show clearly that Ms Barone had heard from three
133 See email from Mr Wright to Mr Antenucci regarding Staff Recommendation sent September 222015 attached hereto as Exhibit TT
13 See eniail exchange between Ms White of the Contra Costa Times and Ms Barone regardingCNWS Staff Report sent on September 30 2015 attached hereto as Exhibit UU
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Councilmembers Grayson Hoffineister and Birsan who wanted to excise therecommendation from the report These communications suggest that Ms Barone wasunder considerable pressure to do so Mr Wright also communicated what washappening and his frustration over it to Mr Antenucci in a series of contemporaneousemails
September 17 2015 The Mayor is adamant that based on a source withinSeeno that will go unnamed because of fear of retaliation by the Seeno Cothere are conversations occurring between Catellus and Seeno That Seeno isplotting some way of gaining control of the project through Catellus He
doesnt know how and he says he has been a nonbeliever but his source issolic enough he does believe Catellus and Jackie Seeno haveare meeting Heis not convinced we have adequate protections in place to keep that fromhappening in the term sheet He says this was all about pride for Seeno and heis still seething ar how he was cut out of the processSeptember 21 2015 Steve staff report will go out tomorrow but Councilappears to have reversed its decision to staff so there may not be arecommendation from staff
September 22 2015 Council has officially reversed its request for a staffrecommendation and the staff report will be issued without one over mystrong objections The Council is aware that if a recommendation were madethat it would be for Catellus
13 See email from Mr Wright to Messrs Antenucci and Buster regarding I need a Confidentialmresponse ASAP sent on September 17 2015 attached hereto as Exhibit W13ti See email from Mr Wright to Mr Buster regarding Recommendation sent September 21 1015attached hereto as Exhibit WW13iSee Exhibit TT
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September 25 2015 Ps reporter asked me point blank did CouncilMayorDirect me to withhold recommendation and my answer was no my boss theCiry Manager did after she talked w Council
The concern that a recommendation would limit Councils options and crearecontroversy had arisen months before when the Council was criticized for ceding toomuch authoriry to the staff when it winnowed the field down to four developers Giventhat this criticism was first raised in June that dilemma was foreseeable Yet the Councilmajoritys concern about this issue was not raised in closed session either on September1 or 16 it was stirred in the days following the 16 after staffs recommendation ofCatellus was communicated to the Council in the September 16 closed session Thetiming of these events the modification of the agreed protocol after the Council wasmade aware of the staffs recommendation creates the appearance whether warrantedor not that the sudden shift in direction was a reaction to staff making explicit itsrecommendation of Catellus
Ms Barone contends that her decision to remove the staff recommendation waswithin her authoriry Ordinarily that would be true In this instance however theCouncil determined at its September 1 closed session that it wanted staff to recommenda Master Developer in the final draft of the staff report This decision was memorializedin the minutes of the meeting Ms Barone had no authoriry unilaterally to countermanda Council decision
The Brown Act requires that decisions of the Council be made in properly noticedmeetings The oneonone meetings conducted between Ms Barone and
Councilmembers Grayson Birsan and Hoffiniester resulting in a reversal of the CouncilsSeptember ls decision to include a recommendation in the final staff report constituted ahubandspoke type serial meeting in violation of the Brown Act Ms Barone lackedauthoriry to countermand the Councils direction indeed according to her own
138 See email from Mr Wright to Mr Antenucci regarding Demand for pocument Retention sentSeptember 25 2015 attached hereto as Exhibit XX139 Two Councilmembers were present in one of the meetings Email from Ms Barone to Jenkins Laurawas around for a portion of my meeting with Dan
See Government Code section 549522b 1
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contemporaneous description of the circumstances resulting in the removal of the staffrecommendation she did it when told to do so by a majoriry of the Council acting outsidea meeting
I have no direct evidence that Lennar was behind this effort and based on myinterviews with the Councilmembers I do not believe that the three Councilmembersmotives in seeking removal of the recommendation were necessarily the same The
evidence establishes that the Council requested a staff recommendation but thereafterindependently communicated their changed positions during oneonone discussions withthe Ciry Manager There is also evidence that the City Manager was acting in responseto pressure from Councilmembers indicating thatamajoriry may not want a staffrecommendation Note that a Brown Act occurs even if it is inadvertent Thus evenif the Councilmembers were unaware of each othersconversations the City Managersaction based on the individual communications outside a meeting rransfonned theindividual communications into an illegal serial meeting regardless of any other ambiguityor conflicting eviaence While the evidence obtained does not explain the reasons for thereversal of the direction to staff to give a recommendation the events in Septembereroded a meticulously devised plan to select a Master Developer solely on the basis ofmerit because Councilmembers injecteithemselves to change the agreed procedures afterthe Council became aware of the Negtiation Teams recommendation
VI Third Partv Overtures
This investigation has revealed that several local entities have made overrures toCatellus to acquire an interest in the Project and in the course of doing so some havepromised to exercise influence over the selection process In the short space of time Ihave had to conduct this investigation and hampered further by not having been giventhe opportunity to speak with all interested parties it is difficult to ascertain whetherthese overtures played any role in the selection process All four of the participatingCouncilmembers deny that it did Mr Antenucci reports that he both rejected the
14 See Exhibit II142 See Exhibit CC13 See Exhibits X II and SS
See Exhibit II
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overtures and reported theili conrmporanecuslytMr Wriht Mr Wright confiruisthis Mr Marroso speaking for Lennar denies that such overtures were made toLennar
These overtures appear in part to be an unintended consequence of the dualnegotiation process established by Mr Wright By negotiating with both finalists over aprotracted period of time opportuniry was created for third parties to attempt to interjectthemselves into the process
The Ciry Council was unaware of these overtures although emails from MayorGrayson suggest that he was troubled by what he understood to be overtures by Seeno toCatellus Councilmember Birsan also raised a concern about the vulnerabiliry ofCatellus to a takeover Staff took this concern seriously enough to araft a memorandumreinforcin the limitations on transfer and assignment in the term sheets with Catellusand Lennar
In the inal analysis it is apparent that Mr Wrightscarefully conceived plan tomanage the process without political interference was not impervious The investigationdid not reveal enough about these overtures to form a conclusion as to whether theyplayed any role in the decisionmaking process
V AccusationsAainst Catellus Levied bv Lennar
Through Mr MarossosJanuary 6 2016 letter Lennar alleges that Ciry staff wasfavoring Catellus over Lennar as 1 Lennar was not informed of the removal of the staffrecommendation 2 staff did not share with Lennar accusations made by Catellus
In fact Mr Wright took these starements so seriously that he consulted with Mr Coon Mr RamizaMs Barone and Mr Silvern and they decided to amend the Agreements to forestall third parties fromaffecting the selection process by negotiating sidedeals with the Master Developer candidates146 Beeween September and October of 2015 legal counsel for Seeno presenred the Ciry with a PublicRecords Act request for documents related to the Master Developer selection process in an effort todetermine why Seeno was eliminated from consideration 15 months earlier
See Exhibit GGi See Exhibit HH
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against it and 3 that staff shared confidential proprietary inforniation about Lennarwith Catellus
Mr Wright states that he informed a Lennar representative by telephone on thesame day he informed Mr Antenucci that there would be no staff recommendation in thefinal report Moreover Mr Wright states that he did not share accusations that Lennarwas paying people to appear at Council meetings because there was no credence to theseallegations and he had summarily rejected them
Following the cancellation of the September 29 public hearing Catellusrepresenratives requested a meeting with sraff to obtain a better understanding ofLennars term sheet Lennar contends that its confiaential information was shared withCatellus at this meeting Both Mr Wright and Catellus deny that any confidentialinformation was shared There is no evidence to support the contention thatconfidential information was compromised in the meeting
It is true rhat the Negotiation Team concluded that the Catellus term sheet wassuperior to Lennars and bymidSeptember had made Catellus aware of that This didnot constirute more favorable rreatment the very point of the process was to evaluateand compare the term sheets on their merits
VI Movin Forward inLiht of the Accusations Raised
A Remedies Available Under theAreement
Section 11 provides that the Ciry Council may in its discretion disqualify adeveloper rhat engages in lobbying in violation of its provisions specifically Section 11states thatinthe event of Developersviolation of its obligarions under this Section 11City may immediately terminate this Agreement by written notice to Developer withoutaffording Developer any opportunity to cure such violation
In my opinion Lennar engaged in lobbying activities that are prohibitea by Section11 It is up to the Council to determine whether it agrees with this conclusion If the
Interview of Mr Wright and Interview of Mr Antenucci
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Council agrees the Council mav terminate the Agreement with Lennar but it does nothave to The Council may consider the benefit to the public of still having twocompetitive proposals to choose from and to consider the fact that the campaigncontributions have been returned as part of a decision whether to hold Lennar to theterms of the Agreement Either way I recommend that both Lennar and Catellus be
informed that the Ciry intends to apply the ordinary meaning of the word lobbying andthat campaign contributions fall within that definition Such an admonition couplewith the commitment of each Councilmember to adhere to the meritbased evaluationwith the public interest as the sole motivation would resolve the current matter short oftermination Alternatively the Council may terminate its Agreement and its
negotiations with Lennar
I recommend that the discussion and decision whether to terminate theAgreement anc how to proceed henceforth occur in open session
B Effect of Catelluss Letter on the Selection Process and Obliation oCouncil to Consider it Fairly
Reacrion to the Hanson Bridgett letter and the allegations raised in it variedMayor Grayson and Councilmember Birsan suggested that Catellus was being overlycontentious Whats more these reactions have been made public either in the press orby virtue of disclosure of emails in response to a Public Records Act request Ciry staffwas frustrated having arrived very close to the finish line they were satisfied that thefinal staff report even without the recommendation sufficiently communicated theirevaluaticm of the merits of the two term sheets The issuance of the Hanson Bridgettletter undermined staffs efforts to bring the matter to Council on September 29 Theseemotional reactions are understandable under the circumstances
However Catelluss concerns were not entirely without merit and do not appear tohave been motivated by anything other than the desire to have a fair shot at being
Councilmember Birsan is quoted in the Contra Costa Times October 3 2015 saying that Catellus hasshot themselves in the foot This is the guy you want to be in bed wirh for 20 years CouncilmemberBirsan expressed the same frusrration to me iuring our interview Mayor Grayson expressed similarfrustration about the Hanson Bridgett letter in emails to Ms Barone and Mr Coon
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awarded the contract With such high stakes the public interest sugests thatCouncilmembers and staff must overcome their initial reactions and decide on a futurecourse that dispassionately considers the options
I appreciate the opportuniry to be of service to the City
ery truly yours
J tins