Friday, Sept. 12, 2008 | City Attorney Mike Aguirre’s office has charged former Centre City Development Corp. President Nancy Graham with three misdemeanors, alleging that she improperly used her position and failed to disclose her potential conflicts-of-interest.

The charges, filed Wednesday in San Diego Superior Court, say Graham participated in a decision in which she had a financial interest. Graham also faces two counts of violating local ethics rules. One count alleges that Graham influenced the negotiations of a downtown condominium and hotel project at CCDC, the city’s downtown redevelopment agency, when she knew it could benefit a former business partner.

The other count says Graham failed to accurately disclose her economic interests. Before moving to San Diego in 2005, Graham worked as a developer in Florida, where she had a business relationship with The Related Group, a large Florida development company. Together, they built a mixed-use condominium project, a partnership that Graham estimated had paid her almost $3 million as of last summer — including a $125,000 payment that came in mid-2007. Graham did not subsequently report that income on the annual conflict-of-interest form that public officials are required to submit to the city.

The charges say that Graham and her husband began receiving income on March 7, 2006 and continued receiving payments through April or May of 2007.

Graham received the money while she participated in negotiations at CCDC about a city-subsidized $409-million, 41-story hotel and condominium project proposed by The Related Cos., an affiliate and part owner of Graham’s Florida business partner. CCDC selected the company as the project’s preferred developer in March 2007.

The project at 7th Avenue and Market Street downtown would have been built atop city land and included an $8.7 million city subsidy for including affordable housing. CCDC’s board unanimously voted Wednesday to kill that project, citing Graham’s involvement and undisclosed business partnership.

State and local laws prohibit public officials from influencing decisions that can benefit themselves, their spouses or their business associates. The laws extend the prohibition for a year after receiving money from a source.

Graham resigned July 24 after having changed her story about her involvement in the project’s negotiations. She initially said she had recused herself from the project. Her personal calendars subsequently revealed that she had attended negotiations about the project with the developer and CCDC staff.

The charges incorrectly allege that Graham struck the business deal in Florida with The Related Cos., a New York developer. Graham actually signed a deal with The Related Group, a different company that is partly owned by The Related Cos.

The inner workings of the business relationship between the two Relateds will play a significant role in Graham’s defense. Though Graham declined comment Thursday night, Paul Pfingst, a former district attorney representing Graham, said the charges were based on “tenuous, remote, potential” business relationships.

“Ultimately a jury is going to hear the evidence and find out she’s done nothing criminal,” Pfingst said. “The facts don’t support a hyper-technical interpretation of the statute.”

Aguirre declined comment Thursday night.

Pfingst’s defense centers on an argument also offered by Steven Strauss, a Related Cos. attorney: The Related Group is not the same as The Related Cos. The two companies are separately controlled. State law says companies are connected when one of several conditions is met, such as whether one controls the other, they have shared management or a close working relationship.

Pfingst said CCDC’s board had gone too far Wednesday in discarding the 7th and Market project. The board cited the need to restore public trust in the agency; CCDC Chairman Fred Maas declined comment Thursday night.

“A half-billion dollar public project was stopped and hundreds of jobs and good public things are not happening,” Pfingst said, “and everyone agrees it’s at most a technical violation of a difficult and challenging law because of six degrees of separation.”

Pfingst would not comment on the charge that Graham had not disclosed all relevant income in her annual reporting form. He said he had not seen the charging document nor Graham’s annual form.

The charges do not address Graham’s relationship with Lennar Corp., a nationwide homebuilder that was also her business partner in Florida. Graham was involved in negotiations about Ballpark Village, a massive mixed-use project adjacent to Petco Park. Lennar is part-owner of the underlying land there. She did not disclose receiving any income in 2006 or 2007 from Lennar. She admitted under oath in Florida that she had received money from her partnership with the company.

The charges set an Oct. 16 arraignment date. Pfingst said Graham was unlikely to appear.

“She is taking care of her ill mother (in Tennessee),” he said. “She does have a mother with significant problems. And these are misdemeanors.”

CCDC terminated the 7th and Market project Wednesday on the recommendation of an outside attorney the agency hired to review Graham’s involvement. James Lough, the attorney, said Graham had a clear conflict and simply by participating in negotiations had tainted a process that is supposed to be fair and impartial. However, he said he did not believe Graham had steered the deal to the eventual winning developer.

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