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Wednesday, May 7 1997
Questionable Developments
Earlier this year, when political infighting threatened a compromise effort to gain federal funds for extending the Bay Area Rapid Transit system to San Francisco International Airport, U.S. Sen. Dianne Feinstein snapped into action.

Feinstein pointed fingers publicly, making it plain whom she faulted for stalling the BART-to-SFO project.

"What is clear to me is that the airlines are effectively opposing BART to the airport," Feinstein said. "You don't know what hit you, because it's all behind the scenes."

Feinstein then teamed up with Mayor Willie Brown to close a local rift between the airlines that use SFO and the BART board of directors, convening closed-door peace talks at City Hall and later pressing key decision-makers not to break ranks on a compromise funding plan for the $1.2 billion project. It was an extraordinary political effort.

And when Feinstein spoke of behind-the-scenes interests, the senior senator from California was on the mark. There is, indeed, more to the BART-to-SFO project than has previously met the eye.

An SF Weekly investigation shows that a real estate investor who is a significant business partner of Feinstein's husband, Richard Blum, stands to profit handsomely if the BART extension is completed as now planned. Meanwhile, the investigation shows, a developer who contributed heavily -- and with impeccable timing -- to Willie Brown's mayoral campaign is also poised to profit from the new BART line, a project made possible by Feinstein's and Brown's extraordinary lobbying efforts.

Public records show that San Francisco investor Eugene L. Friend owns 3 1/2 acres of land in the immediate vicinity of a rail station that would be built in the city of Millbrae if BART is extended to the airport under current plans. This property is expected to rise in value as a result of the BART project, real estate experts with knowledge of the extension say, putting Friend in line for significant profits.

The business connections between Friend and Feinstein's husband are direct.
As recently as December 1996, Friend held a $100,000-plus stake in Blum's exclusive and highly successful investment firm, Richard C. Blum & Associates LP, public records show. And in 1990, during his wife's unsuccessful run for governor, Blum disclosed that his firm managed a Friend family partnership.

Feinstein's press secretary says Blum holds no stake in the Friend land, and that the senator was unaware Friend owned any land near a future Millbrae station until contacted by SF Weekly.

"She has never heard this before," Feinstein Press Secretary Susan Kennedy says. She describes Friend as a "client" of Blum's firm, adding that "none [of Blum's business activities] are associated with BART-to-the-airport."

Blum was out of the country and unavailable for comment.
A second real estate investor who stands to gain from the BART-to-the-airport project, Anthony Chan, is an agent for two Hong Kong-based entities that own nearly 2 1/2 acres of land directly across the street from the planned Millbrae station. This property also can be expected to greatly increase in value if BART builds the station, real estate sources acknowledge.

Chan was Willie Brown's landlord for more than a decade, with one of his companies providing Brown business offices at 1388 Sutter St. while he was first speaker of the state Assembly and then mayor of San Francisco. Brown used those offices as an attorney, as a legislator, and as a political candidate, closing them in March 1996, when he sold his interest in his law firm. Between 1992 and the spring of 1996, Brown's legislative and mayoral campaign committees paid one of Chan's firms, Wealth Properties Inc., more than $43,000 in rent, apparently for portions of those offices that were used for political purposes, campaign records indicate.

Personal finances notwithstanding, Feinstein and Brown both have reaped political benefits from Friend. Chan appears to have contributed only to the mayor's political efforts.

Since 1987, Friend, his family members, and his business entities have donated at least $28,000 to the political campaigns of Feinstein, a former San Francisco mayor, and Brown, the former speaker of the state Assembly. Through various corporations and partnerships, including Wealth Properties, Chan has made $14,000 in contributions to Brown, including late donations of $3,000 to his mayoral campaign. Records show no contributions from Chan to Feinstein.

Chan's late contributions to Brown came just months after Brown changed a long-held position on an important public policy issue -- the extension of the BART system to San Francisco International Airport. Brown had opposed the project. In August of 1995, in an abrupt about-face, he decided to publicly back BART-to-SFO.

Chan, who expects to serve as "project manager" for future commercial development on land near the planned station, says his contributions to Brown had nothing to do with bringing BART to the airport, and he's never discussed the topic with the mayor. Chan declined to name the actual owners of the property he would help develop, saying he considered the matter to be "confidential."

"He has been a long-term tenant. I believe he has been an excellent mayor, and still do," Chan says, explaining his contributions to Brown. "He is making things happen in San Francisco."

Brown declined requests for an interview, and his press secretary offered no comment.

The extension of BART to the San Francisco airport owes its political viability to Feinstein and to Brown.

Both politicians jumped on the BART-to-the-airport bandwagon late, after Millbrae was becoming a likely southern terminus for the extension. Though Feinstein and Brown can cite political and policy reasons for their support of the project, their lobbying also seems likely to provide major benefits to their benefactors, Friend and Chan.

Feinstein was largely absent from the BART-to-SFO debate until this year, when the airlines challenged the funding formula for the project and threatened its future.

A City Hall summit convened by Feinstein and Brown in February led to an agreement under which the airlines pledged to share the cost with BART -- and aid BART's effort to gain a $750 million congressional appropriation for the extension. A month later, the senator and the mayor put in telephone calls to BART directors, asking them to vote to authorize the deal, which they did, albeit with grousing about airline intransigence.

About The Authors

George Cothran


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