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.
If BART is extended to SFO and Millbrae, Eugene Friend will almost certainly benefit financially. Feinstein's press secretary insists that Blum has no interest in the Millbrae land, but it is clear that the senator's husband and Friend have long-standing business connections.
According to multiple press accounts of disclosures made during Feinstein's unsuccessful 1990 campaign for governor, Blum listed "Eugene L. Friend and family partnership" as a client of his investment management firm, Richard C. Blum & Associates Inc. A Friend family partnership -- Friend, Friend & Friend -- is the registered owner of a large block of land cater-corner from the future Millbrae BART station and a half-block south.
Deed records describe Friend, Friend & Friend as a "California partnership." But the partnership is not registered with the California secretary of state or with the San Francisco or San Mateo county governments; it is, therefore, unclear from the public record whether Blum's firm holds current ownership in the partnership.
It is clear that the 80-year-old Friend -- who reportedly gave Richard Blum his first job, in a men's clothing store -- owns at least $100,000 of Blum's investment partnership. That ownership stake is listed in a 1997 disclosure Friend filed as a city commissioner.
The obvious question about Blum and Friend involves cross-ownership and conflict of interest. Even if Blum holds no interest in the Friend land in Millbrae, should Feinstein be lobbying for a public works project that would bring large profits to an owner of her husband's primary business?
Friend did not return telephone messages. However, his son, Robert Friend, a partner in Friend, Friend & Friend, denies any connection between Blum and the Friend family land in Millbrae.
Robert Friend also says he was unaware that a BART station was even planned for Millbrae. "This is the first I've heard of it," he says.
Mayor Brown's transformation into a BART-to-SFO supporter is remarkable.
Thanks in no small part to a ballot measure, Proposition I, which Brown opposed, BART-to-the-airport came to mean BART-into-the-airport. Prop. I called for extending the transit line inside an airport terminal, so long as the extension did not require San Francisco tax monies. Voters approved the proposition in a lightly attended 1994 election, even though Brown, then speaker of the Assembly, had signed a ballot argument against the plan and, newspapers reported then, called it a "white elephant." Brown also labeled Prop. I a "divisive, bloated proposal," according to contemporaneous news reports.
But on Aug. 7, 1995, Brown, then a candidate for mayor, appeared at a press conference with state Sen. Quentin Kopp to embrace the project. Brown explained his flip-flop on the BART extension as merely part of his pledge to carry out "the will of the people."
Four months later, at a crucial point in Brown's mayoral campaign, Anthony Chan, who represents owners of land across the street from the BART station planned for Millbrae, came to Brown's aid. On Oct. 31, 1995, one week before the general election, Chan contributed $1,500 to the Willie Brown for Mayor campaign. At the time, Brown was in a hotly contested three-way race with former Supervisor Roberta Achtenberg and then-Mayor Frank Jordan. On Nov. 28, 1995, two weeks before the runoff election between Brown and Jordan, Chan dumped another $1,500 into Brown's mayoral campaign.
Presumably because of local campaign contribution limits, Chan used four separate partnerships or corporations to donate the money: Wealth Properties Inc., Capitol Square Partners, Worldco Inc. (the mailing address for the property taxes assessed to the Millbrae land), and Action Management Inc. of Bellevue, Wash. All contributions were listed on Brown's campaign filings as having come from Anthony Chan.
As a transit project, BART-to-SFO has had a rocky life. The merits of the $1.2 billion project -- which hinges on congressional approval of $750 million in federal funds -- are sharply debated.
If funded, the project would extend BART tracks south 8.2 miles from the town of Colma to Millbrae. A branch of rails would veer into the airport six miles south of Colma, in a configuration known as the "Y."
Taking BART into the airport itself requires the Y, as well as an extension of the BART line past SFO to Millbrae. Airport officials insisted that BART could not simply end at the airport, because of airport parking problems and traffic congestion, among other reasons.
Opponents of the BART-to-SFO plan note that a BART station could be built outside the airport, and be connected to terminals with the airport's own "people mover," for hundreds of millions of dollars less than would be spent on the current extension plan. Such a configuration would also eliminate the need for a Millbrae BART station.
The Millbrae station would be one of four necessitated by the current extension plan -- and by far the biggest. It would be a combined facility for riders of BART and CalTrain, the commuter rail service from San Jose to San Francisco, as well as a transfer depot for the region's bus service, run by the San Mateo County Transportation District. Some 33,000 passengers would pass through the station each workday, if official estimates pan out.
Transit activists and environmentalists have lambasted the project as a wasteful government boondoggle. As a private real estate deal, however, it could be judged less harshly.
The city of Millbrae expects the 16-acre BART station to serve as an economic catalyst, igniting a transformation of the sleepy bedroom community on the outskirts of SFO into a contemporary commercial, employment, entertainment, and transportation hub, located midway between San Francisco and Silicon Valley.
Ground zero for the BART-CalTrain station is a Hertz rental car lot just northeast of the intersection of El Camino Real and Millbrae Avenue, the city's east-west arterial hookup to Highway 101.
If Sen. Feinstein and other members of the local congressional delegation bring home federal funding for the BART extension, waves of economic prosperity are expected to ripple across El Camino to property owned by two companies, Mandalay Holdings I Inc. and Mandalay Holdings II Inc. Anthony Chan is listed in public records as an agent for Mandalay Holdings.
According to Ralph Petty, the Millbrae official managing the station-area redevelopment effort, Mandalay's property, home to a strip shopping center and an asphalt parking lot, is ripe for change. It could, Petty suggests, become intensive commercial office space or a hotel, built lot line to lot line.
Also on the west side of El Camino, a half-block south of Millbrae Avenue, is the Friend property, part of which is leased to a Lucky supermarket and a Lyon's Restaurant. Friend also owns a small parcel on the east side of El Camino Real; a Coldwell Banker real estate office occupies the smaller site.
Petty says the Friend land also could host an office building or a hotel, although, he notes, airport height restrictions would cap such a project on that property at four stories.
Hotel construction is of particular interest to Millbrae, because officials there see the city as uniquely positioned to host overnight and short-range business travelers who have clients up and down the Peninsula.
And anticipation of a BART extension already has had a yeasty effect on land values. Before Millbrae was part of he BART-to-the-airport package, the city acquired property along Millbrae Avenue for street improvements at $40 a square foot, Petty says. He estimates that owners of land near the future station would not consider taking less than $50 a square foot today -- which, if true, reflects a 25 percent jump.
But Petty is quick to point out that the project spoils aren't being hogged entirely by Democratic insiders from San Francisco.
Local property owners, led by a convalescent-home owner and a real estate agent, are striving to assemble small parcels adjacent to and in close proximity of the station, hoping to build movie theaters, a parking garage, and a hotel, Petty says.
"If BART gets funded, we are going to crank right along with them," Petty declares with civic pride.
