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HOGIN LLI

JENKINS

A LAW PARTNERSHIP

NS
ENK
MICHAEL

MANHATTAN TOWERS

CHRISTt Hoc
N

JOHN C

1230 ROSECRANS AVENUE SUITE 110


MANHATTAN BEACH CALIFORNIA 90266

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LAUREN LANGER

310 643
8448

TkEVOx RustN

310 643
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8441

COM
LOCALGOVLAW
WWW

MELINDA A GREEN
NATALIE C KARPELES
SEMAIL ADDRESS
WRITER

MJENKI N S
aLOCALGOVLAW COM

February 11 2016
City Council
City of Concord
1950 Parkside Drive

Concord CA 94519
Re

Concord Naval Weapons Station Master Developer Selection

Dear Members of the City Council

As you are aware the City Manager received a letter dated September 24 2015
from the Hanson Bridgett law firm on behalf of Catellus Development Corporation
asserting violations of the Agreement to Negotiate by Lennar Concord LLC Lennar
in connection with the Master Developer selection process for the Concord Naval

Weapons Station Specifically the Hanson Bridgett letter contends that Lennar violated
the terms of the Agreement to Negotiate with the City of Concord by lobbying the City

Council The City received a second letter from Hanson Bridgett on September 25 2015
raising the specter of litigation against the City due

to

salleged
Lennar

breach The

City Interim City Attorney engaged this firm as independent special counsel to
s
investigate and report back to the City Council findings and conclusions with respect to
these allegations

In connection with the preparation of this report I have considered both

documentary and testamentary evidence and where possible I have drawn inferences as
to the credibility consistency and relevance of the evidence in order to determine the
facts

surrounding this complex

issue

What follows is a detailed explanation of the

applicable law and analysis of the relevant issues which lead me to conclude that Lennar
s
orchestration of campaign contributions to Mayor Tim s
Grayson Assembly campaign

constituted a form of lobbying prohibited by the Agreement to Negotiate and the


removal of the recommendation from the final staff report resulted from an illegal serial
See

September 25

2015 letter from Mr Giacomini

to

Mr

Coon attached hereto

as

Exhibit YY

JENIdNS

HOGIN LLP

February 11 2016
Page 2

meeting

I did

not

find

merit

with

any

s other
of Catellus

allegations

Moreover I

conclude that the Agreement leaves the consequences if any of such lobbying entirely
within the Councils discretion
I

Factual Back
round
Persons of Note

Unless otherwise indicated below the following persons


investigation Participation by witnesses was
voluntary and interviews were not conducted under oath
A

were

interviewed in connection with this

Concord City Councilmembers as of September 2015

Edi Birsan

Councilmember

Tim Grayson

Mayor during the relevant time period and candidate for 2016
District 14 State Assembly Race

Dan Helix

Councilmember

Laura Hoffineister

Councilmember

Ron Leone

Mayor
Vice

Mr Leone recused himself from the Master

Developer selection process due to the proximity of his home


to portions of Phase I of the Concord Naval Weapons Station
Project
2

City Staff

Valerie Barone

City Manager

Guy Bjerke

Director

of

Community

Reuse

Planning

Local

Reuse

Authority Mr Bjerke assumed the position of Director of


Community Reuse Planning upon the retirement of Mr
Wright on or about September 21 2105

JENIaNNS

HOGIN LLP

February 11 2016
Page 3

Mark Coon

City Attorney
Mr Coon was deceased prior to the
commencement of this investigation

Jovan Grogan

Assistant City Manager

Michael

Former Director of Community Reuse Planning Local Reuse


Consultant Mr Wright served as the Director of
Authority
Community Reuse Planning until his retirement from his
position on or about September 21 2015
Mr Wright

Wright

attended all of the closed sessions convened to discuss the

Master Developer negotiation


3

Dahlia Chazan

City Consultants

urban planner with Arup a consulting firm under


Consultant
contract with the City

Craig Labadie

former City Attorney


Consultant

Gerald Ramiza

attorney with Burke Williams and Sorensen a law


Consultant

firm under contract with the Ciry Mr Ramiza regularly


attended closed sessions convened to discuss the Master

Developer negotiation
Paul Silvern

economist with HR
Consultant
A a consulting firm under
contract

with the

City

Mr Silvern attended some of the

closed sessions convened to discuss the Master Developer


negotiation
4

Engeo

Contributors to Mayor Grayson


s Assembly Campaign
Uri Eliahu is the CEO of Engeo an engineering company
founded in Concord

sHunters Point
Engeo was Lennar

JENIaNS

HOGIN LLP

February 11 2016
Page 4

Project geotechnical engineer and has worked on Lennar


s
Treasure Island Project Engeo is Lennar
sproposed
geotechnical engineer for the Concord Naval Weapons
Station
F
G

Co
Bunting

Glenn Bunting is president and founder of G


F Bunting
Co
F Bunting provided public relations services for Lennar
G
s

Hunters Point project and potentially other Lennar projects


Noelle Bonner daughter of Kofi Bonner Regional Vice

President of Lennar Urban is a consultant to G


F Bunting
Steven Kay

Mr

Kay

is

president

of Golden Gate

Global Golden Gate

Global had worked with Lennar International to raise over

250 million dollars for Lennar


s Hunters Point Project As
an attorney Mr Kay has represented both Lennar Homes and
Mr Kay declined to be
Community Builders
interviewed in connection with this investigation
Lennar

Z See Engeo Portfolio regarding Hunters Point http


base
naval
point
hunters
portfolio
com
engeo
www
reuse and Treasure Island http
shipyard
buena
yerba
and
island
treasure
portfolio
com
engeo
www
reuse attached hereto as Exhibit A
island

3 See staff report from Mr Wright to the City Council regarding Introductory Presentations by Master
Developer Candidates on Implementation of the Concord Reuse Project Area Plan dated February 10
2015 attached hereto as Exhibit B

4 See Community awaits benefits as Lennar finally breaks ground in Hunters Point by Steven T Jones
printed in the San Francisco Bay Guardian on July 1 2013

www sfb com


http
breaks o
finally
lennar
benefits
awaits
community
Ol
07
2013
politics
rund
point attached hereto as Exhibit C
hunters

5 Interview of Mr Bunring Also see G


F Bunting Website http
aren a
we
who
com
gfbunting
www
printout from which is attached hereto as Exhibit D
6 See Golden Gate Global Website our
com
www3gfund
http
teama
company
new printout from
which is attached hereto as Exhibit E

See Golden Gate Global Website com


fund
3
www
http
shipyarda
point
hunters
projects
new

printout from which is attached hereto as Exhibit F


8

See Exhibit E

JENIQNS

HOGIN LLP

February 1 l 2016
Page 5

Fred

Naranjo

Fred Naranjo is a partner of Scarborough Insurance which is


based

in

San Francisco

Mr Naranjo has attended and

contributed to fundraisers at the Bay View Opera House


along with Mr Brown and his daughter Susan Brown
Additionally Mr Naranjo is a resident of the Bayview

neighborhood in San Francisco and was a vocal supporter of


s Hunters Point project Mr Naranjo declined to be
Lennar
interviewed in connection with this investigation
Mary Jo

Rossi

Mary Jo Rossi is a former employee of Mr Willie Brown and

currently serves as Mayor Grayson


s Assembly campaign
manager Ms Rossi also represents local business interests
such as Garaventa Ms Rossi declined to be interviewed in
connection with this investigation
5

Master Developer Finalists

Catellus

Ted Antenucci is CEO of Catellus and Steve Buster is Vice


President of Catellus

9 See Scarborough Insurance Website http


contactn a printout from which is attached
net
siagency
hereto as E
ibit G

See Legendary Sarah Vaughn dress auction benefit finds Bayview Hunters Point global arts program by
Aldrich M Tan printed in the Fog City Joumal on Apri128 2006
news in brief
com
fogcityjournal
www
http
house funraiser
opera
060525 shtml and Bayview kids

head to Africa and France thanks to Bayview Opera House by Pat Murphy printed in the Fog City
Journal on May 26 2006
htt www fogciryjoumal

news
com

in

bayview opera
brief
060428 shtml
fundraiser
house

attached

hereto as Exhibit H

11 See Catellus cries foul over Lennar contributions to Concord Mayor Tim Grayson
sAssembly
campaign by Richard Eber printed in the Contra Costa Bee on August 23 2015

https contracostabee
graysons
tim
mayor
concord
to
contributions
lennar
over
foul
cries
catellus
com
n
campai
assembly
attached hereto as Exhibit I
1z Interview of Councilmember Birsan
13

Interview of Ms Barone

JENKINS

HOGIN LLP

February 11 2016
Page 6

Lennar

Kofi Bonner is CEO of Lennar During his term as mayor of


San Francisco Mayor Brown appointed Mr Bonner to serve
as his Chief Economic Policy Advisor Mr Bonner declined
to be interviewed in connection with this investigation
6

Others

Garaventa

Garaventa Enterprises is a recycling and resource recovery


company that serves Concord Pittsburg Bay Point Antioch

County Oakley Discovery Bay Brentwood


County Byron
Knightsen Rio Vista Bethel Island Rio Vista County as
well as the entire East Bay through the Mt Diablo Recycling
Center
Garaventa has been known to participate in local
politics and has shown its support for local politicians though
campaign contributions

Garaventa and two individuals

associated with Garaventa contributed 12


800 to Mayor
s Assembly campaign Garaventa was not contacted
Grayson
in connection with this investigation because its involvement

in the matters addressed herein appears to be peripheral to


the focus of the investigation
Seeno

D
A

Seeno

Construction

Co

is

local

Concord

contractor involved in residential and commercial


developer
projects including multi
family developments real estate and
subdivision development new home construction and

property management Seeno has been known to participate


in local politics and has shown its support for local politicians
14 See UC Berkley College of Environmental Design 2015 Distinguished Alumni Award
kofi attached
2015
award
distinguished
friends
alumni
edu
berkeley
ced
http
hereto as Exhibit J

See Garaventa Enterprises Website http


comna printout from which is attached
garaventaent
www
hereto as Exhibit K

16 See Discovery Homes Website https


seenoa printout from
us
about
com
discoveryhomes
www
which

is

attached hereto

as

Exhibit L

JENKINS

HOGIN LLP

February 11 2016
Page 7

though campaign contributions Seeno was not contacted in


connection with this investigation because its involvement in

the matters addressed herein appears to be peripheral to the


focus of the investigation
Willie L Brown

Former Assembly Speaker and San Francisco Mayor In 2014


Mr Brown was a registered lobbyist with the San Francisco
Ethics Commission

Mr Brown is connected to Lennar


s

Hunters Point Project through Golden Gate Global formerly


known as San Francisco Bay Area Regional Center and was
Mayor of San Francisco when Lennar was awarded the
Hunters

Point

project

Mr

Brown

declined

to

be

interviewed in connection with this investigation


B

Commencement

f Master Developer Selection Process Catellus

Lennar

Named as Finalists

In January 2014 the City commenced an arduous three


part selection process in
order to ultimately identify a Master Developer for Phase I of the Concord Reuse Project
Area Plan Project
The process was managed by Mr Wright and a team of
consultants consisting of Mr Ramiza Mr Labadie Mr Silvern and Ms Chazan
The first part of the selection process the qualification review resulted in
by over 22 development companies By March 2014 the I
ocal Reuse
was presented with
LRA
Authority
eight qualification packages Following an
independent review this list was ultimately reduced to four qualified firms recommended
by staff these firms included Catellus Development Corporation Catellus Lennar
submittals

17 See San Francisco Ethics Commission Website

SFOa printout from which is attached


3
Z014
Details
Lobbyist
sf
Sunlight
com
netfile
https
153710
hereto as Exhibit M

18 See Biography
com Website http
40059a printout from
brown
willie
people
com
biography
www
which is attached hereto as Exhibit N

19 Interview of Ms Valerie Barone and Interview of Mr Wright Also see Exhibit B


20 See Exhibit B
Z1

Interview of Ms Barone and Interview of Mr

Bjerke Also

see

Exhibit B

JENIQNS

HOGIN LLP

February 11 2016
Page 8

Lennar J
F Shea Company and SunCal Corporation SunCal While Council
ultimately approved staff
s recommendation on June 10 2014 several Councilmembers
reported receiving

criticism

principally

from Seeno

that the Council was rubber

stamping staff
s recommendation By May 26 2015 J
F Shea dropped out SunCal was
eliminated and the list of four was narrowed to Catellus and Lennar both of which
entered into Agreements to Negotiate with the City Agreement The identical
Agreements included among other things a prohibition on lobbying between the

developers and either the City Council Planning Commission or other City employees
designated by the LRA Executive Director It was generally understood that the Master
Developer selection process would culminate in the recommendation of one Master
Developer via a staff report prepared by the LRA Executive Director and his team

Negotiation Team
C

otiations Contributions and Closed Sessions


Ne

On or about April 22 2015 Mayor Grayson arranged for a on


one meeting
to seek advice about his nascent Assembly campaign
Mr

with Mr Brown in order

Brown was aware of the pending Project however according to Mayor Grayson the two
28
did not discuss the Master Developer selection or any Project specifics

zz Interview of Ms Barone and Interview of Mr Silvern Also see Exhibit B

23 Interview of Councilmember Leone Interview of Mayor Grayson and Interview of Councilmember


Hoffineister

24 Interview of Ms Barone Interview of Mr Wright Interview of Mr Grogan and Interview of Mr


Silvern Also see staff report from Mr Wright to the City Council regarding Consideration and Approval
of the Agreements to Negotiate Between 1 the City of Concord Local Reuse Authority and Catellus
Development Corporation and 2 the City of Concord Local Reuse Authority and Lennar Concord
LLC dated May 26 2015 attached hereto as Exhibit O

zs See May 26 2015 Agreement to Negotiate between the City of Concord and Catellus Section 11 page
9 and May 26 2015 Agreement to Negotiate between the City of Concord and Lennar Section 11 page
9 Exhibit P

Z6 Interview of Mr Bjerke Interview of Mr Grogan Interview of Mr Wright and Interview of Mr


Silvern

Z Interview of Mayor Grayson Interview of Mr Wright and Interview of Mr Grogan


28

Interview of

Mayor Grayson

JENKINS

HOGIN LLP

February 11 2016
Page 9

On June 5 2015 Mayor Grayson and Councilmembers Birsan and Hoffineister

along with City staff attended a special meeting consisting of a site visit to Catellus
s
Mueller Project in Austin Texas Ms Rossi and Mr Antenucci attended the site
visit Mr Antenucci reports that at some point during the site visit Ms Rossi approached
him and suggested that it would benefit Catellus to connect with local party
third

developers in order to improve its chances of being selected as the Master Developer
and he stated that she had also communicated the same message to Lennar While staff
took

appropriate measures to prevent interactions between and among the


Councilmembers side conversations of this kind inevitably took place For instance

during this site visit Mayor Grayson in passing mentioned his upcoming Assembly race
and according to Mr Antenucci commented on the difficulty of raising campaign funds

within earshot of Mr Antenucci Mayor Grayson denies making this comment


At some time prior to June 16 2015 Mr Bonner contacted Mr Bunting to suggest
that G
F Bunting consider making a contribution to Mayor Grayson
s Assembly
campaign On June 16 2015 G
F Bunting donated 1
000 to Mayor Grayson
s

campaign

z9 Interview of Councilmember Birsan Interview of Councilmember Hoffineister and Interview of Mr


Wright Also see Minutes of the June 5 2015 City Council site visit attached hereto as Exhibit Q

30 Interview of Ms Barone Interview of Mr Bjerke Interview of Mayor Grayson and Interview of Mr


Wright Also see Exhibit Q
31 Interview of Mr Antenucci
32 Interview of Mr Antenucci

33 Interview of Mr Wright
34 Interview of Councilmember Hoffmeister Interview of Mr Antenucci Interview of Ms Barone and
Interview of Mayor Grayson

3s Interview of Mayor Grayson


36 Interview of Mr Anetenucci

37 Interview of Mr Glenn Bunting


38

See

cal
Campaign Finance Information for Grayson For State Assembly 2016 ht
1376431session
id
aspx
Detail
Committees
Campaign
gov
ca
ss
access
received
view
2015
attached hereto

as

Exhibit R

JENKINS

HOGIN LLP

February 11 2016
Page 10

On June 17 2015 Mayor Grayson and Councilmembers Birsan and Hoffineister

attended a special meeting consisting of a site visit to Lennar


s El Toro Project in Orange
County Ms Rossi was also present at the site visit
On June 18 2015 G
F Bunting donated another 3
200 to Mayor Grayson
s

campaign The total amount donated by G


F Bunting to Mayor Grayson
s Assembly
campaign was 4
200 the maximum allowable contribution to individual candidates for
the Legislature By the end of June 2015 three other entities with ties to Lennar
Scarborough Engeo and Mr Kay each donated 4
200 to Mayor Grayson
scampaign
In July of 2015 Catellus learned of the foregoing campaign contributions ftom an
unnamed source

On July 27 2015 Mayor Grayson and Councilmembers Birsan and Hoffineister

attended a public tour of Catellus


sAlameda Landing Development
On August 4 2015 Mayor Grayson and Councilmember Hoffineister attended a

public tour of Lennar


sSan Francisco Shipyard Development Ms Rossi and Mr Buster
also in attendance
Mr Brown was the lead presenter
At this tour
were

Councilmember Hoffineister reports that Mr Buster approached her to express concern


over what he believed to be inappropriate private meetings between Mayor Grayson and
Mr Brown
39 See Minutes of the June 17 2015 City Council site visit attached hereto as Exhibit S
4o See Exhibit S
41 See Exhibit R
4Z See Exhibit R
43

See Gov Code

85300 et seq

44 See Exhibit R
4s Interview of Mr Antenucci

ab See Minutes of the July 27 2015 City Council site visit attached hereto as Exhibit T
47 Interview of Councilmember Hoffmeister Interview of Mayor Grayson and Interview of Mr Wright
Also see notes from the August 4 2015 site visit attached hereto as Exhibit U
48 See Exhibit U

49 Interview of Mr Wright and Interview of Councilmember Hoffineister Also see Exhibit U


so Interview of Councilmember Hoffineister It should be noted however that according to Mr Buster he
was not

present

at

the Lennar Shipyard Tour a fact confirmed

by

the

notes

from the

August 4

2015 site

JENKINS

HOGIN LLP

February 11 2016
Page 11

In response to a question raised by one of the Master Developer finalists on

August 13 2015 Mr Wright sent an email to certain consultants working on the Project
requesting that they disclose any ongoing contracts with either Catellus or Lennar one of
these consultants was Mr Silvern In response Mr Silvern disclosed that between 2008
and 2013 HR
s New York City office provided services to Catellus Mr Silvern was
A

not involved in this assignment More distantly in the 1990s HR


s I
A
os Angeles
office worked on an economic impact analysis concerning a Specific Plan for property
around Union Station in Los Angeles then owned by a joint venture including Catellus
The property has since been sold to LA County Metro Lastly Mr Silvern disclosed

that the HR
A New York office was awarded 000
30 assignment by a partnership
a
including SunCal Mr Silvern was not involved in this project On August 14 2015
Mr Wright considered Mr Silvern
s disclosures and concluded that they did not create a
conflict of interest

On August 17 2015 Catellus received a phone call from an unnamed source


stating that certain of Mayor Grayson
s campaign contributors were connected to
Lennar

On or before August 19 2015 according to an email sent from Ms Barone to

Councilmember Birsan Mayor Grayson indicated to her that he may not want a staff
recommendation as to which Master Developer to select
visit attached hereto as Exhibit U Furthermore Mr Buster denies having ever made a comment to
Councilmember Hoffineister regarding Mayor Grayson
smeetings with Mr Brown at all

s See Email from Mr Wright to Mr Silvem as well as Shawn Zovod Steve Rottenborn Mark O
Brien
Mr Ramiza and Amy Herman about COI check sent August 13 2014 attached hereto as Exhibit V

52 See Email from Mr Silvern to Mr Wright regarding COI check sent August 13 2014 attached hereto
as Exhibit V

53 See Email from Mr Silvem to Mr Wright regarding COI check sent August 13 2014 attached hereto
as Exhibit V

s4 See Email from Mr Silvern to Mr Wright regarding COI check sent August 13 2014 attached hereto
as Exhibit V

ss See Email from Mr Wright to Mr Silvem regarding COI check sent August 14 2014 attached hereto
as Exhibit V

sb See September 24 2015 letter to Ms Barone from Mr Giacomini of Hanson Bridgett attached hereto
as

Exhibit W

JENIaNS

HOGIN LLP

February 11 2016
Page 12

On August 21 2015 Catellus


s lawyer Mr Andrew Giacomini of Hansen

Bridgett sent a letter to the Concord City Attorney requesting an investigation as to the

campaign contributions Apparently Mr Coon refused Catellus


s request to investigate
at that time

On August 24 2015 Mr Wright sent a letter to both Lennar and Catellus stating
the 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 from
F
G

Bunting

Mr

Kay Engeo and Scarborough Mayor Grayson later delivered to Mr

Coon a letter from Jim Sutton his private counsel on the matter concluding that the
campaign contributions would not require his disqualification from the Master Developer
selection

Between August and September of 2015 Mayor Grayson and Ms Rossi met with
Mr Brown to obtain advice for Mayor Grayson
sState Assembly Campaign

57 See Email from Ms Barone to Mr Birsan regarding Deal Points meeting Lennar and Catellus sent
August 19 2015 attached hereto as Exhibit X
58 See Exhibit I
s9 See Exhibit W

bo See August 24 2015 letter from Mr Wright to representatives of both Catellus and Lennar attached
hereto as Exhibit Y

61 See Concord Mayor Retums Donations Linked to Possible Weapons Station Developer by Lisa P
White printed in the Contra Costa Times on September 1 2015
ci 28740507
concord
com
contracostatimes
www
http
linked
donations
returns
mavor
concord

station attached hereto as Exhibit Z Additionally see Minutes of the September 1


weapons
possible
2015 City Council Meeting attached hereto as Exhibit AA and August 28 20151etter from Mr Jim
Sutton to Mayor Grayson attached hereto as Exhibit BB

6z On January l 2016 Ms Christine Callahan counsel for Ms Mary Jo Rossi contacted my colleague Ms
Natalie Karpeles and indicated that Ms Rossi will not voluntarily participate or provide an interview
However Ms Callahan indicated that per Ms Rossi Mayor Grayson Willie Brown and Ms Rossi met
one time in August of 2015 and there was no discussion of either the Naval Base or campaign
contributions
63

Interview of Mayor

Grayson

JENIaNS

HOGIN LLP

February 11 2016
Page 13

On September 1 2015 the City Council met in closed session to discuss the
Master Developer process and the then
current term sheets

During this closed session Mayor Grayson raised a concern as to whether HR


A
and Mr Silvern in particular had a disqualifying conflict of interest due to the fact that
Catellus

was a

past client of

A Mayor Grayson explained his concern to me as


HR

follows I was having questions and in my own mind had developed questions about
s objectivity and I
A
HR

doing my own research This research led Mayor


Grayson to A
HR website where he discovered that Catellus is named as a client
s
was

This information coupled with his observations that HR


A leaned more towards

Catellus than Lennar caused Mayor Grayson to believe that there was a preference
and he wanted to see whether there was any validity to that perception so he did his
own research

One of the items discussed during this closed session included both developers
position on affordable housing
Prior to the conclusion of the September ls closed session Mr Wright asked the
Council whether or not it wanted a recommendation from the Negotiation Team in the

final staff report it was his longstanding belief and that of other members of the team
that the Council had directed the team to prepare a staff recommendation as part of the
staff report that would be presented at the conclusion of the Master Developer selection

64 Interview of Mr Bjerke Interview of Mayor Grayson Interview of Mr Silvern and Interview of Mr


Wright Also see Minutes of the September 1 2015 City Council Closed Session Meeting attached
hereto as Exhibit CC

bs Interview of Mayor Grayson


66 Interview of Mayor Grayson
67 Interview of Mayor Grayson
68 Interview of Mayor Grayson
69 Interview of Mayor Grayson

70 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 City
Council regarding Report on Master Developer Term Sheets and Selection Process dated September 1
2015 attached hereto as Exhibit

DD

JENKINS

HOGIN LLP

February 11 2016
Page 14

process The Council confirmed that understanding as reflected in the Closed Session
Minutes of September l 2015
There was a discussion as to whether the City Council wished to ha
ve staff make a
recommendation in the staff report for the meeting on
September 29 when the
selection will be made

tely the councilmembers concluded that consistent


Ultima

vith general city policy staff should make a recommendation


a
Furthermore it had been communicated to both Lennar and Catellus that there

would be a staff recommendation at the conclusion of the negotiation process


On or about September 10 2015 eight days after the deadline imposed on both

developers by Mr Wright to provide the Negotiation Team with their best and final
offers Lennar sent staff an updated term sheet addressing affordable housing and

relenting on its prior insistence on obtaining a commitment for Phase II of the Project
The proposed modifications to the term sheet were not accepted
On September 16 2015 the City Council met in closed session to discuss the
Master Developer process and term sheets During the meeting staff answered questions

raised by Council during the September ls closed session and presented it with a draft

Interview of Mr Wright Interview of Mr Bjerke Interview of Mr Grogan Interview of Mr Silvern


Interview of Mr Ramiza Interview of Ms Chazan and Interview of Councilmember Brisan My

impression was that they were going to give a recommendation there wasn
ta vote on it I felt that when
Wright walked out of the room that there was going to be a recommendation
73 See Exhibit CC italics in original

74 Interview of Mr Wright Interview of Mr Bjerke Interview of Mr Grogan and Interview of Mr


Silvern

75 Interview of Mr Wright Interview of Mr Silvern Interview of Mr Bjerke and Interview of Ms


Barone Also see 1 email from Suheil Totah with Lennar to Mr Wright regarding affordable
housing sent on September 10 2015 and resulting email exchange between Mr Wright Mr Ramiza Mr
Silvern Mr Labadie and Ms Chazan between September 10 and 11 2015 attached hereto as Exhibit
EE and 2 email from Matthew Gray counsel for Lennar to Mr Wright Mr Silvern Mr Ramiza Ms
Chazan and Mr Labadie
Items

sent

on

re

September

CNWS

10 2015

Lennar

attached

Highlight Summary 15
10
9

hereto

as

Exhibit FF

Status on Requested

JENKINS

HOGIN LLP

February 11 2016
Page 15

staff report disclosing staffs recommendation of Catellus as Master Developer At the


conclusion of this meeting the Negotiation Team members present Messrs Wright

Silvern and Ramiza understood that they would prepare a final version of the staff report
and the Council
s selection of the Master Developer would take place on September 29
2015

On September 17 2015 Mayor Grayson contacted Ms Barone regarding his


concerns that according to an unspecified source Catellus was negotiating with Seeno
and that Seeno was trying to gain control of the project through Catellus Specifically
Mayor Grayson was concerned that the City did not have enough protections in place
under the term sheet to prevent a third
party developer from gaining control of the
Project during Phase 2
On September 21 2015 in a memorandum to Mr Wright and Mr Coon prepared
in response to Mayor Grayson
s stated
above concern Mr Ramiza concluded that

both Master Developer semi


finalists have agreed to be bound by a DDA that
only allows

transfers

or

assignments

in

certain

well

defined

limited

circumstances Both semi


finalists term sheets allow as a permitted transfer
transfers

provision

to

affiliated

allowing

opportunities

entities

and vertical

transfers

to

developers Lennar also includes a


entities
for
special

affiliated
non

O ther assignments would only be allowed in City


s sole and

absolute discretion

76 Interview of Mr Wright Interview of Mr Silvem Interview of Mr Grogan I am pretty sure that the
staff report presented to Council on the 16 contained a staff recommendation that does not shock me
They presented a semi
complete version because we were ready to go
Interview of Mr Grogan Interview of Mr Silvem and Interview of Mr Bjerke

78 See email exchange between Ms Barone and Messrs Wright and Coon regarding Confidential sent on
September 17 2015 attached hereto as Exhibit GG
79 See Exhibit GG

80 See Confidential Memorandum from Mr Ramiza to Messrs Wright and Coon regarding Transfer and
Assignability under Master Developer DDA and Term Sheet September 21 2015 attached hereto as
Exhibit HH

JENIaNS

HOGIN LLP

February 11 2016
Page 16

Ms Barone and Mr Wright both stated during their interviews their opinions that
Mayor Grayson
s concerns were unfounded as Catellus a privately held corporation
would

not

be

susceptible

to

takeover

Mr Antenucci categorically denies any

involvement with Seeno

On or about September 22 2015 Ms Barone instructed Mr Wright to remove the

staff recommendation from the final staff report Mr Wright told me that he reported
this instruction

to

both finalists

to Catellus by way of an email to Mr Antenucci and by

telephone to Lennar

On or about September 23 2015 Mr Coon received a telephone message from


Mr Giacomini inquiring why the City will no longer provide a staff recommendation in

the final report Upon inquiry Ms Barone explained to Mr Coon that the removal of
the staff recommendation was her decision albeit she took input from Council Later
that day the staff report was released to the public without a staff recommendation In
response Mr Giacomini told Mr Coon that Catellus had authorized him to transmit a

letter to the Ciry raising concerns about the Master Developer selection process
according to Mr Giacomini Mr Coon endeavored to persuade him not to send the
letter Mr Wright similarly attempted to persuade Mr Antenucci not to send the letter

out of concern that it would derail the selection process


In a memorandum dated September 24 2015 following his investigation Mr
Coon revealed to Council that HR
Ahad also worked with Lennar between 2013 and

2014

These facts coupled with the information that Mr Silvern presented to Mr

81 Interview of Mr Antenucci

8z See email exchange between Ms Barone and Mr Helix regarding Closing the Loop sent on September
22 2015 attached hereto as Exhibit II

83 See email exchange between Mr Coon and Ms Barone Mr Wright and Mr Bjerke regarding
Telephone Call from Catellus sent on September 23 2015 attached hereto as Exhibit JJ

84 See Exhibit JJ

85 See email exchange between Mr Wright and Ms Laperchia regarding 15


29 Staff Report sent on
9
September 23 2015 attached hereto as Exhibit KK

86 See email to Mr Coon from Mr Silvern regarding Urgent Need Contact Info on Any Catellus and
Lennar Contects sent on September 21 2015 and email from Mr Silvern to Mr Coon regarding COI
Check

sent

September 21 2015

attached hereto as Exhibit LL

JENKINS

HOGIN LLP

February 11 2016
Page 17

Wright in August ultimately led Mr Coon to conclude that Catellus and Lennar were
basically on equal footing in their relationship with HR
Silvern and there is no
A
credible explanation as to why Catellus would have been preferred over Lennar as a
prospective future client and therefore favored in the Master Developer selection

process As such no conflict of interest has at any time existed between HR


Paul
A
Silvern and the City of Concord nor have they engaged in any conduct suggesting
favoritism of Catellus over Lennar in the Master Developer selection process
D

September 24 2015 Hanson Bridgett Letter

The Hanson Bridgett letter signed by Mr Giacomini asserts that Lennar violated

the terms of the Agreement to Negotiate by lobbying the City Council Specifically the
letter contends that Lennar attempted to influence the Master Developer selection
process and thus violated Section 11 of the Agreement to Negotiate in the following
ways

1 Orchestrating campaign contributions to Mayor Grayson


sAssembly campaign
in an effort to curry his favor and influence his vote on the Master Developer
selection

2 Engaging Mr Brown to lobby Mr Grayson in support of its proposal and


3 Influencing the Ciry to remove a staff recommendation from the final staff

report Included within this contention is an allegation that the City Council
engaged in a serial meeting in violation of the Brown Act
E

Sebtember 27 2015 Lennar Response Letter and Refusal to Coo


erate

Following the City


s receipt of the September 24 2015 Hanson Bridgett letter Mr
Bonner transmitted a letter categorically denying any wrongdoing without addressing any
See Confidential Memorandum from Mr Coon to City Council regarding Concord Reuse Project
Alleged Conflict of Interest Involving Consultant HR
A Advisors September 24 2015 page 5
attached hereto as Exhibit MM
88

See Exhibit MM

JENIdNNS

HOGIN LLP

February 11 2016
Page 18

Mr Giacomini
specific allegations made by
Mr Bonner states that Lennar will
in
the
to
evaluate Catellus claims
When contacted in
cooperate
s efforts
City
connection with this investigation in December 2015 Mr Bonner and his associates

declined

to

investigation

be
to

interviewed
letters from

and

elected

to

limit

s
Lennar

its attorney David Marroso of

participation in this
Myers The
Melveny
O

Bonner letter also states that w


e trust that as part of this effort the City will also
evaluate whether Catellus has engaged in improper activities including activities in
breach of its agreement with the City The letter does not allege any specific
wrongdoing by Catellus This report addresses those allegations concerning alleged
Catellus wrongdoing that have been brought to my attention during the course of the
investigation
F

September 29 2015 Meeting with Catellus

Following the receipt of the Hanson Bridgett letter Ms Barone in consultation


with the City Attorney Mr Wright and Mr Ramiza cancelled the September 29 2015
scheduled public hearing
Staff was extremely frustrated that Catellus had chosen to
have its lawyer send the letter and derail the selection process Mr Wright suggested a
meeting with Catellus the meeting was held on September 29 and included Ms Barone
Mr Wright Mr Bjerke Mr Coon and Mr Antenucci along with other officers of
Catellus Staff hoped that the meeting might allay Catellus
s concerns so that the

process could move ahead without further delay Following the meeting it was clear to
staff that Catellus
sallegations would require a more formal response

89 See September 27 2015 letter from Mr Bonner to Ms Barone attached hereto as Exhibit NN
90 See Exhibit NN

91
92
93
94
9s

Interview of Mr Wright
Interview of Mr Wright Interview of Mr Ramiza and Interview of Mr Silvern
Interview of Mr Wright
Interview of Mr Wright
Interview of Mr

Wright

JENKINS

HOGIN LLP

February 11 2016
Page 19

r
Lenna
Mr Kav and Mr Naranio Respond to Catellus
s Claims

In a letter dated December 24 2015 Vigo Nielsen counsel for Mr Kay and Mr
Naranjo replies to the Catellus allegations on behalf of his clients as follows

l Under California law there is a clear difference between lobbying and


making a campaign contribution and that under California state law there

can be no doubt that making a campaign contribution is entirely different


from and exclusive of engaging in discussions negotiations or lobbying of
Concord officials as stated in Section 11 of the negotiation agreement
2 Mr Kay made a personal contribution to Mayor Grayson
s campaign he did
not attend any fundraising events for Mayor Grayson
s Assembly Campaign
nor did he meet or communicate with Mayor Grayson
Additionally Mr
Kay did not communicate at all with any Concord Councilmembers
Planning Commissioners or any other Concord officials

3 Mr Naranjo made a personal contribution to Mayor Grayson


s campaign
Furthermore he did not communicate on any subject with Mayor Grayson
any of the Concord City Councilmembers Planning Commissioners or any
other Concord City Official
Mr Nielsen
s response does not indicate whether Mr Kay or Mr Naranjo had any

communications with Lennar regarding the contributions and specifically whether


anyone acting on behalf of Lennar solicited them

In his letters of January 6


97 and January 25 2016 on behalf of Lennar Mr
Marroso replies to the Catellus allegations as follows
1 Lennar has not given any money to the Committee for Councilmember
Tim Grayson
s campaign for State Assembly even though it would not
96 See December 24 20151etter from Vigo Nielsen to Mr Jenkins attached hereto as Exhibit 00
97 See January 6 20161etter from Mr Marroso to Mr Jenkins attached hereto as Exhibit PP
98

See

January 25

20161etter from Mr Marroso to Mr

Jenkins

attached hereto

as

Exhibit

QQ

JENKINS

HOGIN LLP

February 11 2016
Page 20

have been improper to do so has not given money to others to contribute


to Mr Grayson
s Committee and has not pressured or coerced anyone to

contribute money to it
99
2 None of the individuals or entities that contributed to Mayor Grayson
s
campaign communicated with Mayor Grayson about the Concord Naval
Weapons Station

3 As a matter of law c
ampaign contributions are not forbidden by or even
mentioned in Section 11 or anywhere in the Negotiating Agreement
Nothing in the Negotiating Agreement purports to abridge Lennar
s or

anyone else
s First Amendment rights
4 Mr Marroso describes Lennar
s relationship with the contributors as
follows

F Bunting is a public relations firm that does work for many


G
companies on a multitude of projects across the country including

Lennar Corp
b

Mr Kay is an attorney of whom Lennar is one of many clients

Engeo is a prominent engineering firm that has worked with Lennar in

the past
d Scarborough is an insurance firm which Lennar has not engaged or

contracted with in any capacity

99 See Exhibit PP emphasis in original


ioo See Exhibit PP

lo See Exhibit QQ
ioz See Exhibit QQ
l03 See Exhibit QQ
l04

See Exhibit

QQ

JENKINS

HOGIN LLP

February 11 2016
Page 21

Lennar did not discuss the Master Developer selection process with Mayor
Grayson through Mr Brown

Mr Marroso
s letter does not deny that Lennar solicited the contributions nor does

it confirm or deny whether Lennar spoke to Mr Brown about the Master Developer
selection process and whether those conversations included discussions about campaign
contributions
II

What is Lobbvin within the Meanin of Section 11

The architect of the Master Developer selection process was Mr Wright who
assembled a team of outside consultants to negotiate term sheets with the two finalists
and to recommend the superior proposal to the Ciry Council Mr Wright
s intent was to

create a process that would yield the objectively superior proposal without political
interference in essence a decision that would be made strictly on the merits of the two
proposals To this end and in response to concerns that the finalists might attempt to
influence the decision
makers Mr Ramiza drafted Section 11 to the Agreement to
Negotiate which reads as follows
11

Lobbying Prohibition

Developer agrees and acknowledges that the Preliminary Stage and


DDA Stage negotiations shall take place with the LRA Executive Director

the City
s legal financial and planning advisers and such other City parties as
may be designated by the LRA Executive Director from time to time
collectively the City
Designated Team Developer shall not engage in
discussions negotiations or lobbying of any City Council or Planning

Commission members or other City employees or officials as may be

designated by the LRA Executive Director from time to time collectively


Excluded City Parties unless requested to do so by the City
Designated
Team for specific purposes related to the negotiations Nothing in this Section
11 shall prevent i responses to requests for information from one or more
Excluded City Parties provided such responses are directed to the City
Designated Team ii Developer
s participation in any question
answer
and
tos

See Exhibit

QQ

JENKINS

HOGIN LLP

February 1 l 2016
Page 22

sessions workshops or tours approved in writing by the Ciry


Designated
Team or iii Developer
s participation in public events or community fora at
which one or more Excluded City Parties are present provided Developer does
not engage in communications with such Excluded City Parties at such events
that

are

intended

to

influence

the

Preliminary Stage

or

DDA Stage

negotiations In the event of Developer


s violation of its obligations under this
Section 11 City may immediately terminate this Agreement by written notice
to Developer without affording Developer any opportunity to cure such
violation

The key phrase in Section 11 is that neither developer shall engage in discussions
negotiations or lobbying of any City Council or Planning Commission members or other
City employees or officials as may be designated by the LRA Executive Director from time
to

time

There

is

no

definition of the word

lobbying

in

the Agreement

Section 18

states that the Agreement shall be construed in accordance with the laws of the State of
California

The California Civil Code governs the interpretation of contracts

Section 1644 of that Code provides that t


he words of a contract are to be understood

in their ordinary and popular sense rather than according to strict legal meaning Unless
used by the parties in a technical sense or unless a special meaning is giveri to them by
usage in which case the latter must be followed The paramount rule in interpreting a
contract is to give effect to its true intent

The issue that arises here is whether Section 11 was intended to use the word

lobbying in its ordinary sense defined by Merriam


Webster as influencing government
decisions and by dictionary
com as trying to influence public officials or whether it
intended

to use

it in the technical

sense

found

in

Government Code

87100 aka the

Political Reform Act where campaign contributions are excluded from the definition of
lobbying

In their letters both Mr Nielsen and Mr Marroso contend that the

interpretation of Section 11 is controlled by the Political Reform Act

As explained to me by the authors of the Agreement the purpose of Section 11


was to advance Mr Wright
s goal of precluding the finalists from influencing decision
makers by means other than the merits of their proposals In other words to insulate the
lob

See Califomia Civil Code

1636

1641

JENKINS

HOGIN LLP

February 11 2016
Page 23

makers from outside influences whatever they might be or however they might
decision
be

conveyed

In drafting this section Mr Ramiza advised me that he used the word

lobbying as it is commonly understood in the English language not in its technical


sense

Mr Ramiza
s understanding of the lobbying prohibition is that it intended to

preclude an end
run by either finalist directly or indirectly to the decision
makers The
word lobbying in Section 11 is listed with discussions and negotiations two other

verbs suggesting that the finalists are to avoid any activity that might be perceived as
attempting

to

influence the decision


makers

The exclusion of campaign contributions

in the Political Reform Act has no bearing on Section 11 if the donation of campaign
contributions was meant to influence Mayor Grayson then the contributions violated the
lobbying prohibition

According to Mr Wright and Mr Ramiza both developers understood this


ordinary meaning of the lobbying prohibition

in

Section

11

Neither developer

questioned its meaning nor did they at any time ask whether the word lobbying was to

be interpreted in a technical sense or to exclude activities such as making campaign

donations

Had they not understood the prohibition both developers had ample

opportunity to ask City staff for clarification indeed communications between Mr

Wright and Mr Ramiza and the representatives of the two developers were continuous
and numerous during the time period following the execution of the Agreements
I reject the argument that the lobbying prohibition in Section 11 excludes
campaign contributions

It is fair to conclude that the agreement bound both Catellus

and Lennar to refrain from engaging in any discussions negotiations or any other actions

intended to influence any City Council or Planning Commission members or other City
employees or officials
A

Do

the

Contributions

to

Mavor

s
Crravson

Caaign

Constitute

Lobbving on Behalf of Lennar

Prior to June 16 2015 Mr Bonner contacted Mr Bunting to suggest that G


F
Bunting consider making a contribution to Mayor Grayson
sAssembly campaign Mr
Bunting thereafter arranged
Interview of Mr Glenn

Bunting

for

his

company

to

make

the

contribution

as

an

JENIQNS

HOGIN LLP

February 11 2016
Page 24

accommodation to Mr Bonner something his company does for its clients from time to
time Shortly thereafter Mayor Grayson also received contributions for the maximum

allowable amount from Mr Kay Scarborough and Engeo Mayor Grayson asserts that
he was unaware of these contributor
s connections with Lennar at the time they were
made and until that connection was made public
In

light of the direct evidence that

Mr

Bonner

solicited

F
G

s
Bunting

contribution and discussed Engeo


s contribution with Mr Eliahu it is more likely than
not that he or someone acting on his behalf also solicited the contributions from Mr Kay
and Mr Naranjo neither of these donors have any known connection with Concord or
with Mayor Grayson
scampaign aside from their connections with Lennar Our review

of campaign contribution records with the Secretary of State indicates that neither has a
history of contributing

to

local campaigns

in

Concord

Lending further support to this

conclusion is the carefully chosen language in Mr Marroso


s two letters on behalf of
Lennar

these

Mr Marroso states in connection with this issue that Lennar neither coerced

contributions

nor

reimbursed

the

contributors

Aware as he

was of this

s interest in the genesis of these contributions Mr Marroso


investigation
s letters
conspicuously do not deny that Lennar solicited the contributions
Additionally Mr Marroso concludes that because the Political Reform Act
s

technical definition of the term lobbying excludes campaign contributions Mr Bonner


could have directly contributed to Mayor Grayson
s campaign in exercise of his First
Amendment rights and without violating the terms of Section 1l However Mr Bonner

chose not to do so but instead suggested that G


F Bunting and likely Mr Kay and
Scarborough contribute to Mayor Grayson
s campaign Given Mr Marroso
s confidence
108 Interview of Mr Bunting
l09 Uri Eliahu CEO of Engeo stated that his company was founded in Concord and is still local and has
an interest in local politics He said that his company routinely makes political contributions and that the

contribution to the Grayson campaign was his idea and not prompted by a request from Lennar Mr
Eliahu stated that before making the contribution he asked Mr Bonner whether the latter thought the
contribution would generate any problems and was told it would not Engeo provided a list of its 2015
political and charitable contributions that included several campaign contributions to candidates for State
and local offices in the Concord area

llo Mr Nielsen
s December 24 2015 letter confirms that Mr Naranjo and Mr Kay had no involvement
with the

City

JENKINS

HOGIN LLP

February 11 2016
Page 25

that Mr Bonner
ennar could have contributed directly one could reasonably infer that
I
Mr Bonner
ennar either knew or suspected that the provisions in Section 11 would
I
have precluded such conduct or at least that a direct contribution would have cast a
s participation in the selection process Aside from that Mr
negative light on Lennar
ennar could have foreseen that the contributions made at their behest would
I
Bonner

have put Mayor Grayson in an awkward position when they came to light
Lastly both Mr Nielsen and Mr Marroso conclude that campaign contributions

e lobbying in the technical sense constitute a form of speech protected by the First
i
Amendment to the Constitution however this is beside the point The issue here is not
whether

the contributions

were

constitutional

but whether

they

were

made

in

contravention ofa contractual provision to which Lennar voluntarily chose to be bound


A party may voluntarily agree to waive constitutional rights in order to participate
leading up to the award of contract Some cities preclude campaign

in the process

contributions

by

entities

actively bidding

on

city contracts

In this instance both

Lennar and Catellus agreed as a condition of participating in the selection process to


allow their applications to be decided on the merits and to avoid any efforts to influence
makers
decision

The first amendment claims

are

red

herring

The issue here is

whether Lennar acted contrary to the Agreement


Two possible conclusions may be drawn from Lennar
s solicitation of these
campaign contributions

anonymously

The first is that Lennar orchestrated the contributions

magnanimously

without any expectation of receiving anything in return


This would be consistent with Mayor Grayson
s insistence that he was unaware of the
Otherwise referred to as pay
play laws a growing number of states and municipalities have enacted
to
measures limiting or prohibiting campaign contributions from parties bidding for a prospective contract
with the City For instance the City of Los Angeles prohibits a person who bids on or submits a proposal
or other response to a contract that has an anticipated value of at least 000
100 and requires approval by
the elected City office that is held or sought by the person to whom the contribution would be given from
making campaign contribution to the Mayor the City Attorney the Controller or a City Council
member Los Angeles City Charter section 470
c 12 B The City of Los Angeles takes the
provisions of its Charter one step further and incorporates section 470
c 12 into every contract

solicitation and additionally requires prospective bidders to supply the names of their agents or principals
to ensure

compliance

with section 470


c 12 Los

Angeles City

Charter section 470


c 12 H

JENIQNS

HOGIN LLP

February 11 2016
Page 26

relationship between the contributors and Lennar until the issue was brought to light by
the press and by Catellus
The alternative conclusion is that Lennar certainly orchestrated one and possibly

three contributions with the specific intent of generating goodwill with Mayor Grayson in
order

to

enhance

its

position

in

the

Master

Developer selection

process

The

contributions were not token donations they were in the maximum amount allowed by
law The contributions materially assisted Mayor Grayson to demonstrate his fundraising

prowess early in the campaign possibly giving him an advantage over his competition
There is no evidence that Lennar and Mayor Grayson collaborated in this endeavor or

that Mayor Grayson was even aware of it at the time Nevertheless the fact that Lennar
concealed its involvement by using at least one proxy to donate at least one contribution

to Mayor Grayson
s campaign suggests a clandestine effort to advance its interests in the
selection

process

whether

or

not

it

actually did

so

Regarded in that way the

contributions would constitute lobbying within the meaning of Section 11


Mayor Grayson suggests that his return of the contributions on August 26 2015
establishes that no wrongdoing occurred The relevant inquiry however is why the
contributions were made in the first instance not whether they were retained
B

Did the Meetin


s between Mr Brown and Mayor Grayson Constitute

Lobbvin on Behalf of Lennar


Catellus contends that Mayor Grayson met with Mr Brown on numerous

occasions and that Mr Brown ostensibly lobbied Mayor Grayson on behalf of Lennar It
is established that Mr Brown has a longstanding relationship with Mr Bonner going
back at least to when Mr Bonner worked for Mr Brown and business connections with

Lennar and that Mr Brown is a registered lobbyist in San Francisco When Mr Brown
was Mayor of San Francisco he favored Lennar to serve as Master Developer of the San
Francisco Shipyard project despite a contrary staff recommendation in favor of another
developer Mr Brown appointed the selection committee that chose Lennar as the
Master

Developer

for Treasure Island

From these facts Catellus concludes that Mr

lz Interview of Mayor Grayson I had many contributions come in within a very short period of time and
there

was some

quick fundraising taking place to

meet a

deadline for Sacramento

JENIQNS

HOGIN LLP

February 11 2016
Page 27

Brown had obvious motivation and opportunity to lobby Mayor Grayson but Catellus has
no evidence that Mr Brown engaged in such lobbying
Mayor Grayson states that he initiated contact with Mr Brown exclusively to seek
political advice regarding his Assembly campaign in view of Mr Brown
s extensive
political experience and network Mr Brown
s political expertise is well
known and this
is a perfectly plausible reason for Mayor Grayson to seek Mr Brown
scounsel According
to

Mr

Grayson they met

time with Ms

Rossi

twice

once in April and again in August of 2015 the second

and the two never discussed the Master Developer selection

process

The

concerns

raised

by Catellus

are

purely circumstantial

While Mayor

s decision to kick off his campaign during the Master Developer selection process
Grayson
seems

entirely coincidental Mayor Grayson could have known of

Mr

s
Brown

connections to Lennar if not the totality of those connections He certainly would have
had some awareness of the relationship as a consequence of the August 4 San Francisco
Shipyard tour which was led by Mr Brown and of the possibility that meeting privately
with Mr Brown might create the appearance of impropriety during the Master Developer

seleCtion process Nonetheless the investigation resulted in no evidence to contradict


or

to

corroborate

Mayor Grayson
s description of the meetings

There is no basis to

conclude that Catellus


s suspicions have merit
C

The Letters in Support of Lennar po Not Constitute Lobbving on Behalf o


Lennar

In late September in anticipation of the scheduled September 29 2015 public


hearing on the selection of a Master Developer the City received numerous letters
encouraging the Council to award the contract to Lennar Some of these letters were
local but many were authored primarily by San Francisco
based entities companies and
1 Interview of Mr Wright When we took the Councilmembers to Hunter
3
sPoint Willie Brown was
there holding court During Brown
spresentation he talked about how during his tenure as mayor he
had done things for the neighborhood and how he had worked with affordable housing advocates and
worked closely with Lennar during this process and liked Lennar
la

Interview of Ms Barone and Interview of Mr

Bjerke

JENIdNNS

HOGIN LLP

February 11 2016
Page 28

persons who had no connection with Concord but who had some relationship with
Lennar For instance the executive director of the Family Justice Center contacted Mr

Bjerke and informed him that he was asked to write a letter in support of Lennar and
asked whether such letter would be appropriate It is unclear why the Family Justice
Center would have any motivation or reason to care who was ultimately selected as
Master

Developer

for the

Project

It is obvious from the timing similar content and

identities of the authors of the letters that Lennar orchestrated them Ms Barone recalls

asking Mr Coon if such endorsements constituted lobbying and he opined that they were
merely a form of public comment Lennar did not ask Mr Wright if such endorsements
would be permissible under Section 11 prior to arranging for their delivery
The endorsement letters unquestionably were intended to influence the Council
However as the Ciry Attorney noted at the time they were delivered to the Council as
part of and within the framework of the public process established for consideration of the
two proposals
Unlike the campaign contributions which were made outside the
framework of the process the letters were not directed to a single Councilmember with
the potential expectation of garnering favor
Additionally the letters were subject to
rebuttal at the public hearing Section 11 intentionally reserves for the developers the
ability to participate in the public process to their own advantage This only makes sense
Thus 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 proscribed
by Section 11
D

Allegations tha
t Catellus Lobbied Citv Staff bv Offerin Them Tickets to
Golden State Warriors Plav
Off Games

In an email to Ms Barone Mayor Grayson questions whether Catellus an affiliate


of Catellus or someone connected in any way to Catellus purchased or provided

unspecified Concord City staff members with free tickets to attend an NBA game
ls Interview of Mr Bjerke
116 Interview of Ms Barone

117 Interview of Mr Wright


ls See email from Mayor Grayson to Mr Coon regarding News Alert Developer accused of improper
lobbying

in 6

billion East Bay

project

sent

September 26 2015

attached hereto as Exhibit RR

JENKINS

HOGIN LLP

February 11 2016
Page 29

Others interviewed for this

investigation also report hearing this rumor Ms Barone


inquired of her staff and no one indicated they had received tickets There is no

evidence to support the truth of this claim


E

Do the Conversations between Councilmembers and Catellus and Lennar

ReUresentatives at Various Functions Constitute Lobbi


At

least

two

Councilmembers

report

seeing representatives

of

Catellus

principally Steve Buster at community events One Councilmember similarly reports


seeing and talking to Mr Bonner at an event
During those occasions
Councilmembers report that conversations were social and no mention was made of the
Master Developer selection process Catellus representatives state and Mr Wright
confirms that they asked Mr Wright if attendance at community events was
permissible Mr Wright advised both developers that they were free to attend such
No evidence has been
events provided they did not discuss the selection process
adduced to suggest that either developer violated this admonition Further Section 11
carves out a specific exception for participation in community events
III

Did Lobbvin bv Lennar Result in Removal of a Staff Recommendation


from the Final Staff Reoort

Several members of the Negotiation Team reported that the Team uniformly held
the expectation that the final staff report to the City Council would include their

1 Interview of Mr Wright
9
zo Interview of Ms Barone There was also a rumor that someone on staff got tickets to a Golden State
playoff game but the timing of that rumor did not make sense because of when the playoff games were
and I had questioned staff and no one admitted to receiving any tickets and then it finally came out that
Garaventa had received the tickets and we checked with Catellus and Catellus stated that at a meeting
with the Garaventas Garaventa asked if Catellus could get them tickets and Catellus said no
1z Interview of Councilmember Hoffmeister and Interview of Councilmember Birsan
lZZ Interview of Councilmember Birsan

123 Interview of Councilmember Hoffineister and Interview of Councilmember Birsan


lz4 Interview of Mr Antenucci
izs

Interview of Mr Anenucci and Interview of Mr

Wright

JENKINS

HOGIN LLP

February 11 2016
Page 30

recommendation of

Master

Developer Mr Wright had assembled this


team of experts precisely for the purpose of negotiating the best terms they could
a

preferred

concurrently with both finalists and informing the Council which Developer
s term sheet
offered the best deal for the City According to Ms Barone it is customary for staff
reports in Concord to include a staff recommendation
Indeed the Request for
Proposals stated as follows
The LRA anticipates that one of the two Candidate Master Developers will
be recommended for desi
nation by the City Council as the Master Developer
eligible to negotiate with the LRA a proposed Disposition and Development
Agreement to be consistent with the negotiated Term Sheet and the form of
Disposition and Development attached hereto with such modifications as have
been requested by Respondent in its proposal and agreed to by the LRA in its
discretion Emphasis added
On August 19 2015 Ms Barone indicated via email to Councilmember Birsan
that she want ed direction from Council on whether it want ed or didn
t want a staff
on the 16 lzs in regards to which of the two firms staff views as meeting

recommendation

more of the needs of the communiry and the Council


s goals Ms Barone
s second
goal was to avoid a 2 vote between the firms That would be highly problematic
The uncertainty as to whether the Council would want a recommendation may
have stemmed in part from the experience months earlier when the Council was stung by
the criticism that it had ceded too much authority to staff when it winnowed the field of
applicants from eight to four In view of this uncertainty Mr Wright expressly raised the
issue with the Council during the September 1 2015 closed session
The Council

zb Interview of Mr Bjerke Interview of Mr Grogan Interview of Mr Wright and Interview of Mr


Silvern

12 Interview of Ms Barone

128 The public hearing was originally scheduled for September 16 but delayed to September 29
129 See Exhibit X
See Exhibit X

JENKINS

HOGIN LLP

February 11 2016
Page 31

discussed the issue and the minutes of the closed session memorialize Council
sdecision
to

include

staff recommendation

in the final

staff report l31

A near final version of the staff report was provided to the Councilmembers in
session
September 16 2015 The report includes a paragraph expressly

closed

on

recommending 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 it

from the report Later however in the days following the September 16 closed session
as shown by this email from Ms Barone to Mr Wright a majority of Councilmembers
decided that they no longer wanted a staff recommendation
A key issue that Laura wants to discuss is her desire for there NOT to be a
City staff recommendation I know we discussed this in closed session and we

left closed session with direction to include the recommendation which you
and I both recommended happen however it is clear from my recollection of
the item in closed session and my subsequent one
ones with Council that
on
there may not be a majority of Council who want a staff recommendation

In the days following the September 16 closed session Mayor Grayson and
Councilmember Hoffineister had a change of heart regarding the inclusion of the
recommendation in the report This occurred in the context of both Mayor Grayson and
Councilmember Birsan earlier in the month raising questions about Catellus that staff
believed had no validiry and created concern among the Negotiation Team that
Councilmembers who favored

Lennar

were

attempting

to

smear

Catellus

These

allegations included the following


Team member Paul Silvern of HR
A had a conflict of interest and favored

Catellus due to his firm


s prior work with Catellus a concern which was first
reviewed in August

13 See Exhibit CC

132 See email from Ms Barone to Mr Wright regarding Draft 9


29 staff report attached hereto as Exhibit
SS

JENIdNNS

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February 11 2016
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Catellus was secretly negotiating a deal with Seeno Company that would give
Seeno 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 and


or the
Ciry Attorney and determined to have no merit

Further within days of the September 1 closed session the Negotiation Team
received overtures from Lennar
s counsel Matthew Gray to the effect that Lennar wanted

to modify its term sheet notwithstanding that the term sheet deadline of September 2
had

passed

Lennar sought in particular to improve its proposal on the affordable


housing component which the Negotiation Team had identified to the Council as

significantly weaker than Catellus


s proposal Lennar also suddenly backed off its staunch
requirement for a commitment beyond Phase I a position that staff recommended

against to the Council in closed session At all times during the negotiation process the
term sheets were confidential and Lennar ostensibly had no reason to know that its
affordable housing proposal was deficient or its desire for a Phase II commitment had met

with such stiff opposition Several members of the Negotiation Team stated that it did not
seem coincidental that Lennar sought to improve the weakest parts of its proposal at that
point in time and speculate that information may have been leaked from the closed
session

I have not discovered any direct evidence demonstrating that the foregoing
concerns raised about Catellus or the late efforts by Lennar to improve its term sheet
were linked coordinated or the result of lobbying by Lennar They were however raised
at the 11
hour as it became more and more obvious to the Council that the Negotiation
Team

preferred and would be recommending the Catellus term sheet The culmination
of this activity occurred when three Councilmembers communicated to Ms Barone their
desire to remove the recommendation favoring Catellus from the report Ms Barone

discussed the recommendation issue over an intense two


day period with Mr Wright and
Mr Coon and

ultimately

directed Mr

Wright

to remove

the recommendation from the

JENIaNNS

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February 11 2016
Page 33

Mr Wright reported this decision to Catellus in an email and to Lennar by

report

telephone By this time Mr Wright had told Catellus that the staff recommendation

would favor it when Mr Wright informed Mr Antenucci that the recommendation


would be removed Mr Antenucci believed that this was a direct result of Lennar
s

lobbying efforts This proved to be the final straw for Antenucci leading to the delivery
to the City of the Hanson Bridgett letter
Ms Barone subsequently has taken the position that the decision to remove the

recommendation was hers to make and that she made it in order to avoid putting the
Council in a box

I varied from the usual protocol of including a staff recommendation that


recommended one of the two firms to Council for three reasons First because
our

selection

process has

worked

ve ended up with two of the best firms


we

in the Nation competing to be our Phase 1 Master Developer and both firms
are

and

qualified

differences

of

capable

the staff report stands

on

between the

recommendation

successfully accomplishing
its

two

the

project

Second

it successfully highlights the major

own

Tertn

Sheets

tbelieve
didn

staff

needed

Third having a staff recommendation creates


controversy
if Council selects the same firm staff recommends then
Council has rubber stamped staff
s work if Council selects the firm staff
its

was

own

trecommend the other allegations arise I was hoping to avoid creating


didn
unnecessary controversy
Ms Barone contends that she first made the decision and then informed the

Councilmembers in individual meetings of that decision She steadfastly took that


position in her interview for this investigation
Ms Barone
s explanation is belied

by

the email trail

The communications

between Ms Barone and Mr Wright show clearly that Ms Barone had heard from three
133 See email from Mr Wright to Mr Antenucci regarding Staff Recommendation sent September 22
2015 attached hereto as Exhibit TT

134 See email exchange between Ms White ofthe Contra Costa Times and Ms Barone regarding
CNWS Staff Report

sent

on

September 30 2015

attached hereto as Exhibit UU

JENKINS

HOGIN LLP

February 1 l 2016
Page 34

Councilmembers

Grayson Hoffineister and Birsan who wanted to excise the


recommendation from the report These communications suggest that Ms Barone was
under considerable pressure to do so
Mr Wright also communicated what was

happening and his frustration over it to Mr Antenucci in a series of contemporaneous


emails

September 17 2015 The Mayor is adamant that based on a source within

Seeno that will go unnamed because of fear of retaliation by the Seeno Co


there are conversations occurring between Catellus and Seeno That Seeno is
plotting some way of gaining control of the project through Catellus He
t know how and he says he has been a non
doesn
believer but his source is

solid enough he does believe Catellus and Jackie Seeno have


are meeting He
is not convinced we have adequate protections in place to keep that from
happening in the term sheet He says this was all about pride for Seeno and he
is still seething at how he was cut out of the process
September 21

2015

Steve staff report will go out tomorrow but Council

appears to have reversed its decision to staff so there may not be a


recommendation ftom staff

September 22 2015 Council has officially reversed its request for a staff
recommendation and the staff report will be issued without one over my
strong objections The Council is aware that if a recommendation were made
that it would be for Catellus

13s See email from Mr Wright to Messrs Antenucci and Buster regarding I need a Confidentialm
response ASAP sent on September 17 2015 attached hereto as Exhibit W

136 See email from Mr Wright to Mr Buster regarding Recommendation sent September 21 2015
attached hereto as Exhibit WW
137

See Exhibit TT

JENIaNS

HOGIN LLP

February 1 l 2016
Page 35

September 25

2015

Ps reporter asked me point blank did Council


Mayor
Direct me to withhold recommendation and my answer was no my boss the
City Manager did after she talked w Council

The concern that a recommendation would limit Council


s options and create
controversy had arisen months before when the Council was criticized for ceding too
much

authority

to

the staff when it winnowed the field down

to

four

developers

Given

that this criticism was first raised in June that dilemma was foreseeable Yet the Council
s concern about this issue was not raised in closed session either on September
majority
1 or 16 it was stirred in the days following the 16 after staff
s recommendation of
Catellus was communicated
timing of these events
the
made

aware

to

the Council in the

September 16

closed session

The

modification of the agreed protocol after the Council was

of the staff s recommendation

creates the appearance whether warranted

or not that the sudden shift in direction was a reaction to staff making explicit its
recommendation of Catellus

Ms Barone contends that her decision to remove the staff recommendation was
within her

authority

Ordinarily that would be

In this instance however the

true

Council determined at its September 1 closed session that it wanted staff to recommend
a Master Developer in the final draft of the staff report This decision was memorialized
in the minutes of the meeting Ms Barone had no authoriry unilaterally to countermand
a Council decision

The Brown Act requires that decisions of the Council be made in properly noticed
The

meetings

on
one

meetings conducted

between

Ms

Barone

and

Councilmembers Grayson Birsan and Hoffmiester resulting in a reversal of the Council


s
September 1 decision to include a recommendation in the final staff report constituted a
hub
spoke
and type serial meeting in violation of the Brown Act Ms Barone lacked
authority

to

countermand

the s
Council direction

indeed

according to her own

138 See email from Mr Wright to Mr Antenucci regarding Demand for pocument Retention sent
September 25 2015 attached hereto as Exhibit XX

139 Two Councilmembers were present in one of the meetings Email from Ms Barone to Jenkins Laura
was around for a portion of my meeting with Dan
4o

See Govemment Code section

54952 1
b
2

jENKINS

HOGIN LLP

February 11 2016
Page 36

contemporaneous description of the circumstances resulting in the removal of the staff

recommendation she did it when told to do so by a majority of the Council acting outside
a meeting

I have no direct evidence that Lennar was behind this effort and based on my
interviews with the Councilmembers I do not believe that the three Councilmembers
motives in seeking removal of the recommendation were necessarily the same
The

evidence establishes that the Council requested a staff recommendation but thereafter
independently communicated their changed positions during one
on discussions with

the Ciry Manager There is also evidence that the City Manager was acting in response
to pressure from Councilmembers indicating that a
majoriry may not want a staff
recommendation Note that a Brown Act occurs even if it is inadvertent Thus even
if the Councilmembers were unaware of each other
s conversations the Ciry Manager
s
action based on the individual communications outside a meeting transformed the

individual communications into an illegal serial meeting regardless of any other ambiguity
or conflicting evidence While the evidence obtained does not explain the reasons for the

reversal of the direction to staff to give a recommendation the events in September


eroded a meticulously devised plan to select a Master Developer solely on the basis of
merit because Councilmembers injected themselves to change the agreed procedures after
the Council became aware of the Negotiation Team
s recommendation
VI

Third Partv Overtures

This investigation has revealed that several local entities have made overtures to

Catellus to acquire an interest in the Project and in the course of doing so some have
promised

to

exercise

influence

over

the selection process

In the short space of time I

have had to conduct this investigation and hampered further by not having been given
the opportunity to speak with all interested parties it is difficult to ascertain whether
these

overtures

played any role in the selection process All four of the participating
deny that it did Mr Antenucci reports that he both rejected the

Councilmembers

14 See Exhibit II
iaz See Exhibit CC

143 See Exhibits X II and SS


144

See Exhibit II

JENIQNS

HOGIN LLP

February 11 2016
Page 37

and

reported them contemporaneously to Mr Wright Mr Wright confirms


Mr Marroso speaking for Lennar denies that such overtures were made to

overtures

this
Lennar

These overtures appear in part to be an unintended consequence of the dual


negotiation process established by Mr Wright By negotiating with both finalists over a

protracted period of time opportunity was created for third parties to attempt to interject
themselves into the process

The City Council was unaware of these overtures although emails from Mayor
Grayson suggest that he was troubled by what he understood to be overtures by Seeno to
Catellus Councilmember Birsan also raised a concern about the vulnerability of
Catellus to a takeover Staff took this concern seriously enough to draft a memorandum
reinforcing the limitations on transfer and assignment in the term sheets with Catellus
and Lennar

In the final analysis it is apparent that Mr Wright


s carefully conceived plan to
manage the process without political interference was not impervious The investigation
did not reveal enough about these overtures to form a conclusion as to whether they
played any role in the decision
making process
V

Accusations A ainst Catellus Levied b Lennar

Through Mr Marosso
s January 6 2016 letter Lennar alleges that City staff was
favoring Catellus over Lennar as 1 Lennar was not informed of the removal of the staff

recommendation 2 staff did not share with Lennar accusations made by Catellus

14s In fact Mr Wright took these statements so seriously that he consulted with Mr Coon Mr Ramiza
Ms Barone and Mr Silvem and they decided to amend the Agreements to forestall third parties from
affecting the selection process by negotiating side
deals with the Master Developer candidates

146 Between September and October of 2015 legal counsel for Seeno presented the City with a Public
Records Act request for documents related to the Master Developer selection process in an effort to
determine why Seeno was eliminated from consideration 15 months earlier
14 See Exhibit GG
4s

See Exhibit HH

JENKINS

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February 11 2016
Page 38

against it and 3 that staff shared confidential proprietary information about Lennar
with Catellus

Mr Wright states that he informed a Lennar representative by telephone on the


same day he informed Mr Antenucci that there would be no staff recommendation in the
final report Moreover Mr Wright states that he did not share accusations that Lennar
was paying people to appear at Council meetings because there was no credence to these
allegations and he had summarily rejected them

Following the cancellation of the September 29 public hearing Catellus


representatives requested a meeting with staff to obtain a better understanding of
s term sheet Lennar contends that its confidential information was shared with
Lennar

Catellus at this meeting Both Mr Wright and Catellus deny that any confidential
information was shared There is no evidence to support the contention that
confidential information was compromised in the meeting
It is true that the Negotiation Team concluded that the Catellus term sheet was
superior to Lennar
s and by mid
September had made Catellus aware of that This did

not constitute more favorable treatment the very point of the process was to evaluate
and compare the term sheets on their merits
VI

Movin Forward in Li
ht of the Accusations Raised
A

Remedies Available Under the Agreement

Section 11 provides that the City Council may in its discretion disqualify a
developer that engages in lobbying in violation of its provisions specifically Section 11
states that i
n the event of Developer
s violation of its obligations under this Section 11

City may immediately terminate this Agreement by written notice to Developer without
affording Developer any opportunity to cure such violation
In my opinion Lennar engaged in lobbying activities that are prohibited by Section
11
149

It is up

to

Interview of Mr

the Council
Wright

to

determine whether

and Interview of Mr Antenucci

it agrees with this

conclusion

If the

JENKINS

HOGIN LLP

February 11 2016
Page 39

Council agrees the Council mav terminate the Agreement with Lennar but it does not
have

to

The Council may consider the benefit to the public of still having two
competitive proposals to choose from and to consider the fact that the campaign
contributions have been returned as part of a decision whether to hold Lennar to the
terms

of the

Agreement

Either way I recommend that both Lennar and Catellus be

informed that the City intends to apply the ordinary meaning of the word lobbying and
that campaign contributions fall within that definition

Such an admonition coupled

with the commitment of each Councilmember to adhere to the merit


based evaluation

with the public interest as the sole motivation would resolve the current matter short of
termination
Alternatively the Council may terminate its Agreement and its
negotiations with Lennar
I

recommend

that the discussion and decision whether to terminate the

Agreement and how to proceed henceforth occur in open session


B

Effect of Catellus
s Letter on the Selection Process and Obligation of
Council to Consider it Fairlv

Reaction to the Hanson Bridgett letter and the allegations raised in it varied

Mayor Grayson and Councilmember Birsan suggested that Catellus was being overly
contentious

s more these reactions have been made public either in the press or
What

by virtue of disclosure of emails in response to a Public Records Act request City staff
was frustrated having arrived very close to the finish line they were satisfied that the
final staff report even without the recommendation sufficiently communicated their
evaluation of the

merits

of the

two

term

sheets

The issuance of the Hanson Bridgett

letter undertnined staff s efforts to bring the matter to Council on September 29 These
emotional reactions are understandable under the circumstances

However Catellus
sconcerns were not entirely without merit and do not appear to

have been motivated by anything other than the desire to have a fair shot at being
iso

Councilmember Birsan is quoted in the Contra Costa Times October 3 2015 saying that Catellus has

shot themselves in the foot This is the guy you want to be in bed with for 20 years Councilmember
Birsan expressed the same frustration to me during our interview Mayor Grayson expressed similar
frustration about the Hanson

Bridgett letter in emails

to

Ms Barone and Mr Coon

JENIQNS

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February 11 2016
Page 40

awarded the

contract

With

such

high stakes the public interest suggests that

Councilmembers and staff must overcome their initial reactions and decide on a future
course that dispassionately considers the options
I appreciate the opportunity to be of service to the City

ry

uly yours

ic

ael

Jenkins