The Morning Report
Get the news and information you need to take on the day.
Our reporting relies on your support. Contribute today!
Help us reach our goal of $250,000. The countdown is on!
Friday, Aug. 22, 2008 | Former Centre City Development Corp. President Nancy Graham participated in numerous discussions about the landmark Ballpark Village project, despite receiving income from one of its landowners.
Graham, who resigned July 24, acknowledged under oath in 2007 that she received money from a business deal with Lennar Corp., which is part owner of the seven acres near Petco Park that will house the colossal mixed-use project. But she never disclosed the income in annual conflict-of-interest forms, nor did she recuse herself from Ballpark Village negotiations, attending at least 17 meetings about the project.
The revelation again expands the scope of potential conflicts of interest that Graham may have had while serving at CCDC, the city’s downtown redevelopment agency. CCDC has already suspended a 41-story, $409-million skyscraper proposed by The Related Cos., an affiliate of Graham’s other business partner. The agency’s chairman has questioned whether that project can be salvaged.
In response, CCDC announced late Thursday that it will restart and expand an investigation into Graham’s potential conflicts. A narrower investigation into the Related Cos. skyscraper project at 7th Avenue and Market Street was halted Tuesday, after the agency reviewed her sworn testimony in which she admitted being paid in 2007 by developer’s affiliate. CCDC indicated that the testimony made the conflict-of-interest investigation unnecessary.
But CCDC will now examine every downtown project planned or proposed during Graham’s tenure to determine whether they were tainted by her undisclosed business interests.
Among the projects to be reviewed will be Ballpark Village, a massive development that will include 3 million square feet of mixed-use residential, retail, hotel and office uses. One of its developers is Lennar Corp., a nationwide builder and Graham’s former business partner. Also to be reviewed will be 7th and Market and another Related Cos. proposal made at 9th Avenue and Broadway but that was not ultimately chosen.
Before coming to San Diego, Graham worked with Lennar and The Related Group to build a luxury condominium project in Lantana, Fla. Graham testified about their deal during a deposition last summer, specifically calling a 2007 payment of $125,000 from the developers “just mine.” She admitted earning almost $3 million from the deal with the two companies. The Related Group is partly owned by The Related Cos.
While at CCDC, Graham was extensively involved in a process to modify the Ballpark Village project, which was originally approved shortly before she took office in 2005. Her personal calendars show numerous meetings with the project’s developers, a team that includes JMI Realty, a development company controlled by Padres owner John Moores. Steve Peace, a Moores advisor, said Graham had been “totally involved” in the modifications to include a large Marriott hotel.
CCDC Chairman Fred Maas said the investigation will try to determine whether Graham swayed anything about the deal. It should be completed within approximately one month, as Maas said the investigation should not drag on indefinitely. “The organization could not withstand that,” he said.
“We need to ensure there was no undue influence in any event in this transaction,” Maas said. “The board needs full assurances of the absence of even the appearance of a conflict of interest.”
Peace, special advisor to Moores, said JMI Realty was unaware of any Ballpark Village-related contracts with CCDC during Graham’s tenure. However, he said some may exist and called on CCDC to act quickly to redo anything that Graham may have influenced so the project could advance on schedule. The City Council is set in October to consider modifications to the project, Peace said, which is planning to add a 1,929-room Marriott hotel, slated to be the largest on the West Coast.
“We want them to take an abundance of caution,” he said. “Obviously, we don’t want to go forward with a contract that’s potentially challengeable downstream.”
State law forbids officials from having any financial connection to a contract they participate in. The law is fundamentally underpinned by the expectation that government officials must serve the public interest, not their own. If that law is violated, the contract in question can be invalidated and the public official can face criminal charges.
As the full scope of Graham’s Florida income was revealed, CCDC has been slow to acknowledge Lennar’s involvement in Ballpark Village and the potential conflicts raised by her participation.
Last week, Maas resisted expanding CCDC’s 7th and Market investigation to include any other developers or projects. Asked then whether CCDC would review Graham’s connections to Lennar, Maas said the agency would not, since Lennar had no active projects proposed downtown.
But Lennar is a partner in one of the largest projects slated for downtown. Maas apologized Thursday and said he’d been mistaken.
“I believed that they were out of the picture, because all of the negotiations we had had recently were with JMI,” he said. “Lennar closed its urban division months ago. We’ve had no dialogue involving them.”
Peace said Lennar effectively has been a “silent partner” in the Ballpark Village deal.
Regardless of Lennar’s interest in Ballpark Village, Graham still had a legal obligation to disclose income received from the company. CCDC’s disclosure policies require its employees to report any money earned from businesses that are doing development or construction downtown. Lennar had a separate condominium project, Breeza, which was being built during Graham’s tenure.
CCDC said it also has hired the Los Angeles-based Center for Government Studies, to review its conflict-of-interest and ethics policies. Bob Stern, a former attorney with the state Fair Political Practices Commission and the center’s president, will consult with CCDC.