WITH DANIELA KIRSHENBAUM

Photo by Andrew McDonald

PAY-TO-PLAY BAY AREA

An abbreviated primer on how our political players operate

By Daniela Kirshenbaum

October 29, 2006

Of course serious money is at stake with the results of each election. The proof is in the cost and the viciousness behind the mailers and ads, and the desperate threats insisting we vote one way or another. Now that we are in election season, it's a good time to ask how, exactly, the connection works between money and government.

These days, if Mr. Smith wants to go to Washington - or San Francisco's Civic Center - then he should know where the corridors of power are. They aren't really at City Hall. As in so many other parts of the land, that grand edifice is merely a stage for the show of making decisions. By the time official votes are taken, the power brokers have already gamed - and often determined - the outcome.

Sure, there is the occasional surprise. But when it comes to the commission meetings and hearings that count - the ones on the recurring themes of land use and development, especially - City Hall isn't where those decisions originate. There's simply too much money at stake to wait for citizens to read their earnest, home-spun speeches into public record.

So if Mr. Smith is looking to confront the holders of power, one good place to start would be the nicely appointed offices in the Ferry Building. One of San Francisco's oldest buildings is now a shadow City Hall; it's become a nexus for decisions designed to maximize profits.

You may not have heard of some of the heavy hitters with Ferry Building suites. They don't list themselves very often, and the titles of officers are hard to find.

Inside the San Francisco Ferry Building where security is tight
and officer titles are hard to find.
Photo by Luke Thomas

There's Platinum Advisors. They share an address with Kenwood Investments. Our source tells us that Platinum has an impressive, framed oil portrait of Willie Brown mounted on the wall. The Willie L. Brown Institute itself is also at that same address. As is an outfit called Gold Coast Capital.

These groups don't sell widgets. They trade in the Big Three of contemporary power: land, money, and entitlements. Each of these three commodities is dependent on the other. Knowing how to make them work together is a skill so valuable that clients are willing to pay Platinum, Kenwood, or any outfit able to provide the connections to provide access to top officials, to smooth approval processes, and to line up investors.

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In order to see how this functions, let's start with the spectacular view of Treasure Island that the Ferry Building offices have. Treasure Island may be flat and man-made, but nonetheless it is land with a sparkling waterfront - it might as well be over 400 acres of undeveloped gold. It is irresistible to anyone with a nose for development and the wherewithal to make that development happen.

Treasure Island's fate seems to be following that of the Presidio. In 1994, the Presidio was formally transferred from the Army to the Presidio Trust (with the edges of the site going to the National Park Service) for "public-private" development and usage opportunities. Three years later, the process started to transfer Treasure Island from the Navy to the city for development. Both transfers were initiated by former Mayor Willie Brown and Congresswoman Nancy Pelosi. The Treasure Island transfer was completed by Pelosi with Mayor Newsom.

Nancy Pelosi, Barbara Boxer and Gavin Newsom attend the official opening
of the $100 million Letterman Digital Arts Center, June 26, 2005.
Photo by Luke Thomas

The Presidio Trust, a group of well-connected citizens, was charged with stewardship of the new national park. The Trust made a big show of gathering public input, which it then ignored in favor of building the absurdly gargantuan Letterman Digital Arts Center.

Letterman Digital Arts Center.
Photo by Luke Thomas

It was a perfect example of how important it is to developers to ensure that appointments go to people who can be counted on to make development-favorable decisions. In the case of the Presidio, the Trust decided to transform a national park into an office park. They also decided who got the lucrative building contracts. For a developer, it's just the way business is done. The Presidio continues to be stocked with new, private enterprises, and the tussling continues over Hunter's Point.

Right now, though, the next big, exciting opportunity is Treasure Island.

An undated aerial photo of Treasure Island.
Photo by Luke Thomas

After some very serious wrangling over control (see "more info" below), the fate of Treasure Island rests mainly with TIDA: the Treasure Island Development Authority. Just as with the Presidio Trust, the people who comprise TIDA are awfully critical. It is they who decide what gets developed and who gets to develop it - and profit thereby.

Likewise, the person who appoints the people on TIDA and similar boards is also a key player, for he or she must be guided to select members who can be trusted to vote favorably to one's interests. That's the entitlement portion of the Big Three: garnering approvals that entitle one to development and maximize profits by upzoning the land. (Upzoning means changing the rules to allow more profitable development than would otherwise be allowed.).

That's why forming relationships between would-be developers and appointing officials is crucial. Lobbyists like Platinum's Darius Anderson and Jay Wallace specialize in building those relationships, sometimes by finding sources of cash reserves for campaign contributions, or occasionally hosting key fundraisers. Wallace was at one time Pelosi's campaign manager.

When Anderson held a fundraiser a couple of years ago to retire Mayor Newsom's campaign debt, it raised eyebrows, but it is what lobbyists do. They specialize in creating access for themselves and for clients with the people who make appointments, sign or promote legislation, and grant entitlements to develop - all of which have big profit implications.

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It's easy to conclude that clients are getting their money's worth from Platinum and friends - especially when the client is Platinum itself. TIDA has granted to Platinum the uncontested contract to be the sole developer of Treasure Island. Or, to be exact, that exclusive contract has been granted to Platinum's new entity, Treasure Island Community Developers, with the master plan component going to Anderson's other company, Kenwood Investments.

The entity Treasure Island Community Developers needed to be created because giving a development contract to a lobbying firm is like asking an ad agency to start a strip-mining operation: it doesn't make much natural sense. Unless the ad agency can't resist the thought of finding veins of gold in the ground, and creates an entity for that purpose.

Considering the grand, incestuous family that is politics, maybe it's no surprise that Platinum's development entity has been handed the Treasure Island bounty. Given the Pelosi and Newsom history of enthusiasm for developing the Presidio, we should hope it's not too late to keep a close watch and short leash on Treasure Island developments. Unfortunately, this means paying attention to the entire family. That would include even the new president on the Commission on the Environment, Paul Pelosi, Jr., who is Nancy Pelosi's son and Gavin Newsom's cousin. As for TIDA itself, all the members are appointed by the mayor; all but one is a City Hall official.

Who else will benefit from the arrangement? Certainly Lennar Corporation will. They are a partner with Platinum's Treasure Island Community Developers. Lennar has experience developing former military bases, and is one of the country's largest residential housing builders.

By what could solicitously be called a coincidence, Laurence Pelosi was president of acquisitions for Lennar. He is Nancy Pelosi's nephew, and currently works as executive director of Morgan Stanley's real estate division. As Newsom's former campaign treasurer, he would have worked with Darius Anderson on the campaign fundraiser for Newsom. He's not the only one: Doug Boxer, son of Senator Barbara Boxer, is an attorney who has worked for Anderson as a Platinum lobbyist, and has been a partner with Anderson at Kenwood Investments.

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A case could be made that without Platinum and Lennar playing a role, there would be no financing and Treasure Island would remain a fallow relic of an outdated military past. And without Willie Brown, Nancy Pelosi, and Gavin Newsom creating the situation for the necessary government entitlements, the land and the assets would simply sit.

Or would they? Is there really no recourse other than to deliver the choicest projects to our most skillful lobbyists? Even if everything described here is completely legal, is it right for our elected officials to hand over profits to their inner circle? Are the ethical concerns greater when those profits involve our public lands? The children of politicians are allowed to join commissions and earn a living. But how certain are we that our leaders and their friends and families have the public's best interests in mind?

The other troubling problem is that we citizens get no substantial say in the matter, even when we know what is transpiring. We may have elected Pelosi and Newsom, but we didn't intend to cast votes for their relatives, too. Or their friends. Or their funders. And if there are certain players who are enriching themselves so handily with our public property, it wouldn't hurt to have a lot more transparency in the process.

Kepa Askenasy contributed research and graphics for this report.

Political Players: Treasure Island

(click on the image below to see a larger version of the chart)

More Information

Background on Treasure Island from U.S. Navy, click here.

Kenwood Investments, plans for Treasure Island, click here.

Lennar Corporation, a partner with Kenwood Investments to build on Treasure Island, click here.

Jay Wallace of Platinum Advisors is former campaign manager for Nancy Pelosi, click here.

Treasure Island on the radar (Willie Brown's) for at least a decade (1996), click here.

Treasure Island on Pelosi's legislative details list (1998), click here.

Tussle over Mayor Willie Brown's sole control over Treasure Island, click here.

Grand Jury criticizes Willie Brown for Treasure Island politics, click here.

Darius Anderson wins Treasure Island projects, hired former Willie Brown protege (2001), click here.

Fundraising tangle for Newsom by Darius Anderson of Platinum, who sought (and won) Treasure Island contract (2004), click here.

Politics + real estate or development, a frequent combination for the elected (2004), click here.

Draft of financing plan between Treasure Island Development Authority and Platinum Advisors' Treasure Island Community Development. Tables of cash flow projections are at the end (Aug 2006), click here.

$100 buys a seat at breakfast club with Willie Brown, click here.

Background on Laurence Pelosi, click here.

Background on Doug Boxer, click here and here.

Editors Note (11/14/6) : A follow-up conversation with Paul Pelosi, Jr. reveals the following clarifications and corrections to a chart accompanying the story “Pay-to-Play Bay Area”:

Laurence Pelosi and Paul Pelosi, Jr. are cousins, not step-siblings; Nancy Pelosi is Laurence’s aunt, not step-aunt; the relationship between the Pelosi and Newsom families is through marriage and not by blood.

Paul Pelosi, Jr. is a loan officer, not a mortgage broker, for Countrywide, which is the largest home lender in the country.

Paul Pelosi was appointed to the Commission on the Environment by Willie Brown, not Gavin Newsom.

Finally, all are invited to a public meeting on Treasure Island itself, to be held November 15.

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