Wednesday, Aug. 20, 2008 | The Centre City Development Corp. on Tuesday suspended its internal investigation into its former president’s role in a proposed downtown condominium and hotel project.
The step imperils the future of the proposed $409-million, 41-story skyscraper, and indicates that CCDC believes it is unnecessary to continue spending money on an investigation that aimed to determine whether the official, Nancy Graham, had a conflict of interest in being involved in the project.
The investigation’s suspension came after testimony surfaced in which Graham acknowledged receiving income from The Related Group while CCDC under her leadership chose a Related affiliate as its preferred developer for a proposed downtown San Diego skyscraper.
Fred Maas, CCDC board chairman, said the downtown redevelopment agency stopped work on its investigation after voiceofsandiego.org contacted him Friday and shared details of Graham’s testimony. CCDC did not obtain the full 167-page transcript of her testimony until City Attorney Mike Aguirre sent it today, Maas said.
Aguirre reiterated his call for the project to be abandoned Tuesday, citing Graham’s testimony. The project stands to benefit from an $8.7 million city subsidy in exchange for including affordable housing. Graham’s calendars show she participated in negotiations and other meetings related to the project.
Maas said the 7th and Market project, which was suspended pending the investigation, will face serious questions when discussed at a special meeting Sept. 10.
“I can’t speak for the rest of the board, but as an individual director, I think it is going to be very hard to salvage this project,” Maas said, “given the facts that have been presented to me today.”
Maas on Friday had said CCDC wouldn’t continue investigating if the testimony answered its questions about Graham’s potential conflict of interest. “If there’s a smoking gun, there’s no sense continuing looking for the bullets,” Maas replied.
Asked Tuesday whether he believed Graham had a conflict, Maas said, “I think the record should speak for itself.”
Graham, who resigned July 24, publicly denied having any business connection to the skyscraper’s developer. But her own sworn testimony from a Florida lawsuit contradicts that.
State and local laws prohibit public officials from influencing any decisions that can benefit themselves or their business partners. Those laws further require public officials to disclose income that could create a conflict. Graham publicly said she had no income to disclose, that she’d not been involved with the companies for years. However, under oath last summer, she admitted earning close to $3 million from a Florida condominium deal with the developers, describing one payment of $125,000 in 2007 as “just mine.”
Violating those laws can result in fines as high as $5,000 per incident as well as misdemeanor or felony criminal charges.
One of those developers, Lennar Corp., already had a project approved and ready for construction downtown when Graham arrived in San Diego in December 2005. But Graham never disclosed her ongoing business relationship with Lennar, as required by CCDC’s internal conflict policies.
Her other former partner, The Related Group, is partly owned by The Related Cos., a nationwide builder that has proposed the 7th and Market project. Graham publicly denied having any financial connection to them when asked by voiceofsandiego.org in May, despite receiving money from The Related Group while she served at CCDC.
That denial is just one of the inconsistencies that arise from comparing Graham’s public statements to her sworn testimony. She has stopped returning calls for comment.
When asked in May, Graham told a reporter she hadn’t worked at N-K Ventures, her Florida development business, since 2004. She said she had divorced her husband and sold her interest in the business to him in “early 2006.”
But under oath during a 2007 deposition, she acknowledged a “minor” ongoing financial interest in the company and said she’d only sold her portion of N-K Ventures sometime before June 2007. She confirmed personally receiving almost $3 million (minus taxes) from her partnership with Lennar and The Related Group.
When asked by a reporter, she said she couldn’t have had a conflict of interest at CCDC, because Jorge Perez, the billionaire Florida real-estate magnate and her former business partner, owned “100 percent” of The Related Group. Its affiliate is working with CCDC.
Under oath, she acknowledged that a portion of Perez’ company is owned by The Related Cos., which proposes to build the hotel and condo project at 7th and Market in San Diego.
When asked by a reporter, she said she had never run N-K Ventures, the Florida development business she jointly owned with her husband.
Under oath, she acknowledged being its executive director.
Most telling, Graham’s testimony details the timing of her income from the developers. Graham testified that she was due 50 percent of payments from the joint venture with Lennar and The Related Group and described a $125,000 payment to her business in mid-2007 as “just mine.”
CCDC’s board chose Related of California as its preferred developer for the downtown project in March 2007.
Graham is not the only one who had a duty to divulge her business ties. When The Related Companies submitted its proposal in 2006, it said its corporation had no known connection to any CCDC employees. The company is a minority owner of The Related Group, Graham’s former business partner. A company representative did not return a call Tuesday.
Please contact Rob Davis directly at rob.davis@voiceofsandiego.org with your thoughts, ideas, personal stories or tips. Or set the tone of the debate with a letter to the editor.