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The Deal With Treasure Island 

Tony Hall's firing casts the spotlight on a real estate mega-deal that slogs along under a veil of secrecy

Wednesday, Nov 9 2005

Page 4 of 5

But the decision by the Newsom-appointed TIDA board to extend TICD's exclusive agreement another three years despite the firm's failure to meet key deadlines in relation to the project -- and Hall's ouster after being critical of it -- has inevitably rekindled questions about Newsom's own reliance upon Anderson for help in raising political donations since becoming mayor.

In March of 2004, facing a campaign debt of $400,000 after his runoff victory over former Board of Supervisors President Matt Gonzalez, Newsom was the guest of honor at a fundraising reception hosted by Anderson at the lobbyist's Sacramento office. Anderson invited lobbyists, state Democrats, and others to make contributions of up to $750 apiece. Although about 30 people, including Lt. Gov. Cruz Bustamante and Oakland Mayor Jerry Brown, are said to have attended, Newsom spokesman Ragone says that the mayor raised only about $4,000 at the event.

(Hall has acknowledged that he, too, raised about $4,000 from a fundraiser sponsored by Anderson at the lobbyist's office in the Ferry Building in June 2004 while he was still a supervisor and before he had been approached about accepting the Treasure Island job. He said that $500 of the money had come from Anderson and that he later returned it.)

One of Anderson's partners at Platinum Advisors is Chris Grewell, who was Newsom's chief fundraiser in his campaign for mayor.

Ragone, the mayor's spokesman, dismissed the suggestion that Newsom acted improperly, declaring, "Gavin Newsom has not done anything inappropriate for a contributor in his career and he never will."

City voters in 1995 passed a law prohibiting campaign contributions from anyone bidding or negotiating for a city contract or development lease if the recipient has a say in the outcome. When the fundraiser was first reported last year, a Newsom campaign lawyer insisted that the law didn't apply to the mayor since the Treasure Island Development Authority, the entity that must approve any dealings involving TICD, is technically a state agency. Besides, the lawyer declared, TICD hadn't contributed to Newsom. (Although TIDA is chartered by the state, the mayor not only appoints its board members but four of those members answer directly to the mayor as city department heads. Other than the executive director, TIDA's entire 11-member staff consists of personnel attached to the city's Redevelopment Agency.)

Others, however, see a potential conflict.

"This is the kind of politics as usual that undermines the public's faith in the system," says Kathay Feng, executive director of California Common Cause. The notion that the mayor could accept campaign help from Anderson, a principal in TICD, and justify it in part because TIDA is a state agency "is a technicality without a real distinction," Feng says. "The larger question is, 'What is the public's interest and is it being served?'"

Whether the public's interest is best served by the Navy's apparent reluctance to give up the former base at no cost may depend on which taxpayer is being asked. "We have to get what's called fair compensation," says Navy realignment manager Doug Gilkey. He declined to elaborate, citing ongoing talks with San Francisco. Although those talks are in their fifth year, Gilkey says they haven't stalled, insisting that "with the complexity of a negotiation of this kind things do not ordinarily happen fast."

The Navy moved onto Treasure Island and part of neighboring Yerba Buena Island (through which the Bay Bridge passes) during World War II, using the facility for radar training. The island's art deco Administration Building, built for the 1939 exposition and intended as the terminal for what was to have been San Francisco's airport, was pressed into wartime service as headquarters for the Pacific Fleet. The fleet's commander, Admiral Chester Nimitz, occupied a spacious corner office on the second floor -- the same office used by Hall and his predecessor, Conroy.

The naval station was targeted for closure in 1993, during the first round of military base closings. The last naval personnel left the island in 1997. The following year, the state legislature created TIDA as the local agency for conversion of the island to civilian use. At one point, city leaders envisioned an amusement park on the island. Former Mayor Brown had wanted to see a casino there.

As with many military installations, there is considerable environmental pollution at Treasure Island. By law, the Navy is required to clean up the property before it is transferred to civilian ownership. Thus far, Gilkey says the Navy has spent $100 million on cleanup and intends to spend another $7 million. But there's likely to be disagreement between the Navy and state environmental regulators as to how much more cleanup will be needed before anything new is permitted to be built there -- especially something on the scale of the TICD project.

The cost of the cleanup, whatever it turns out to be, is of critical importance, since that cost is certain to become part of the equation as the Navy determines what its compensation should be in surrendering ownership of the island.

Indeed, of all the issues surrounding the future of Treasure Island, the transfer of ownership is perhaps the murkiest and most misunderstood. Even though media reports have continued to routinely portray the anticipated transfer as "no cost," there is little, if any, reason to conclude that the Navy may still be considering giving Treasure Island away.

Over the years, news accounts have helped fuel the widespread perception that the delay in the handover was somehow related to satisfying the complexities of federal law mandating that the property be cleaned up before it could fall under civilian governance.

But that is only partly true.

In June 2000, the city, or more specifically, TIDA, submitted the application to have the Navy turn over Treasure Island at no cost. "No cost" transfers of military property originated in the Bill Clinton Administration. A 1999 change in the law governing base conversions decreed that such conveyances "shall be without consideration." But in 2001, after the Bush Administration came into office, the word "shall" was changed to "may," leaving the Armed Forces with discretion as to whether to seek remuneration.

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Ron Russell

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