More
Gold and a Few Notable Failures
Not every Transcam and Landscam bill put forward by the San
Francisco cabal proved successful. In March of 1999, Senator Dianne Feinstein’s
call for a Mid-Bay Crossing Bridge didn’t get far before it was killed. This
bridge would have provided an additional crossing of San Francisco Bay from
Alameda to the Mission Bay or Hunter’s Point landfalls in San Francisco. The
MTC agreed to study the proposal, but then it died.
Another failure was the proposal to redevelop Treasure Island,
partly as the site for an Indian gaming casino. Then-Mayor Willie brown floated
the idea for an Indian gaming casino at Treasure Island in 1996, then backed
away from it when his choice for developer, Li Ka Shing, didn’t get a favorable
response. This proposal withered on the vine in 2000, but was later revived.
Of all the legislative prestidigitation proposed during the height
of the Transcam and Landscam bonanza, perhaps none was more blatant than the
attempt in the 2000 legislative session to win the trifecta: an interlinked
series of bills that would have benefited, among others, Richard C. Blum, who
had holdings in two key companies: URS Greiner and Catellus Development.
In 1997-98 Quentin Kopp’s Bay Bridge bill, SB 60, had been the
vehicle for a few sharp investors at URS Greiner to make serious profits. Though
the bridge design competition was officially still undecided, an amendment to
SB 60 essentially narrowed the field to two choices: the T. Y. Lin cable-stayed
bridge and Donald MacDonald’s self-anchored suspension bridge. As the bill
itself states, “$80 million will be provided for a cable suspension
design [Emphasis added].”
If the bridge was contracted out to private companies, URS Greiner
was first in line to board the gravy train, holding a ticket for no-bid contract
# 59N770.
URS stock shot from 10 to 18 1/2 after the amendments were added
to SB 60 in the late spring of 1997, and proceeded to perform according to the
current legal status of “contracting out.” In the beginning, URS stock rose.
Then Sacramento Superior Court Judge James Ford prohibited the practice in
August 1998, and URS fell. When Judge Ford exempted the Bay Bridge from his
ruling, URS rose again. Obviously, insiders knew URS was the only real player
in the Bay Bridge contract game.
During the Bay Bridge selection process, board members of URS
Greiner issued themselves almost 5 million shares of stock, in the form of 10K
stock options issued first in March of 1997, then again in March of 1998. U.S.
Senator Dianne Feinstein’s husband, Richard C. Blum was then the primary shareholder
in URS.
The Selling Shareholders Amendments filed with the SEC regarding
the first issuance of URS stock were for 2,933,748 shares of penny stock
issued to BK Capital Partners I, II, III and IV, all companies owned by Richard
C. Blum and the Bass Brothers of Fort Worth.
The URS stocks were issued March 25, 1997, three days before
Joseph Nicoletti of URS was named chairman of The Bay Bridge EDAP committee.
The Selling Shareholders Amendments filed with the SEC stipulated that the
shares could be sold at market rate, and that those who issued themselves the
shares were acting as their own underwriters, entitling them to all profits
derived from stock sales.
As the document states under the section titled “Risk Factors” in
the subtitled section “Dependence upon Government Contracts”: “The Company
derives a substantial portion of its revenues from local, state and Federal
government agencies. The demand for the Company’s services is directly related
to the level of funding of government programs that are created in response to
public concern with rebuilding and expanding the nation’s infrastructure and
addressing various environmental concerns. The Company believes that the
success and further development of its business is dependent, in significant part,
upon the continued existence and funding of such programs and the Company’s
ability to participate in such programs… A substantial portion of the Company’s
current and anticipated work is related to government contracts.”
The amendment also stated that the four BK Capital companies
intended to sell all the shares they had, indeed, issued themselves.
The insiders made a profit of close to $74 million during the Bay
Bridge process. Some of Blum’s fellow URS board members exercised similar SSA’s
filed with the SEC in the spring of 1998 during the final days of the Bay
Bridge selection process. Their profit taking ranged from URS CEO Martin
Koffel’s $10 million, to Treasurer Kent Ainsworth’s $3.36 million, down to URS
board member Joseph Masters’ $547,000. The 1.1 million shares of URS stock
issued to eight URS board members had a value of $25 million in less than six
months.
The BK Capital Partners’ $74 million profit and the $390 million
increase in outstanding revenues of URS Greiner during 1998-99, demonstrate how
a transportation infrastructure process can produce fantastic profits.
Although Willie Brown only lurked around the periphery of issues
like the Bay Bridge and the Desert Wildlands, his connection to both bullet
trains is firmly established. Willie Brown bought Irvine Sensors stock in
October, 1982 when it was trading at $3 a share, and sold it in December, 1982
when it hit $7, nicely doubling his money and then some.
The trifecta legislative package of 2000 finally brought all the
principals into the open. The first bill was John Burton’s Catellus-backed SB
1215, from the 1997 session. During the process of SB 1215, Catellus stock went
from below $10 a share to $18 a share. On November 26 and 28, 1997, right after
SB 1215 became law, almost 4.25 million shares of Catellus stock were traded at
over $18 a share, with heavy insider activity on both days.
Burton’s additional bill in 2000, SB 1562, called for development
of a new rail link between San Francisco Airport and another airport located in
another county. There is only one place this can be: the former Fisk Naval Air
Center in Alameda. By some strange quirk, part of this airbase is within the
city and county limits of San Francisco. The Fisk Center is presently being
developed as a mixed-use commercial office and retail facility, with 350
dwelling units. The developer is Catellus.
Directly after Burton’s SB 1215, was passed in the 1997 session,
his campaign received three contributions totaling $155,000 from the Southern
California District Council of Carpenter’s Political Action Fund. Richard C.
Blum was the union’s pension fund manager at the time.
On the day his second bill, SB 1562, was introduced in the 2000
session, Burton’s campaign received a $4,000 contribution from Nossaman,
Guthner, Knox and Elliott, the lobbyist group headed by John Foran, who has
been active on every speculation-driven transportation process from the bullet
train in 1982 up to the present.
The third bill was sponsored by Assemblywoman Carole Migden, and
called for an expansion of the San Francisco Airport. The notice that there was
going to be a “competition” for the expansion was posted the same day the
competition closed. Like the Bay Bridge circus act, it was an insider’s game, a
stacked deck involving “all the usual suspects,” as one of my sources described
it.
Migden’s AB 398 was a “juice” bill, and the juice that this bill
exuded was the opportunity for the powerful band of San Francisco political
insiders to make huge profits. Lo and behold, the company with the contract
was, again, URS Greiner. During the timeframe of the Airport bill process and
its subsequent passage, from summer 2000 to the end of that year, URS jumped
from $12 to $19 a share.
An opportunity for speculators was the possibility of a Mid-Bay
Crossing Bridge. If the bridge included a landfall at either of two Catellus
properties—Mission Bay or the Fisk Naval Air Center in Alameda—it would surely
have a beneficial effect on Catellus stock prices.
In the weeks leading up to the Burton-Migden-Feinstein legislative
package in 2000, the savvy investors were furiously buying up shares.
Blum was purchasing URS stock in 100,000 share lots; it had fallen from 28 to
12 during Willie Brown and Dianne Feinstein’s efforts to kill the the MTC’s
chosen Bay Bridge design. When they failed, URS turned around and began rising
again, from $12 to $20 a share in six months.
Imagine the effect on Catellus stock if the Mid-Bay Crossing
Bridge had run from one of their properties to a landfall on another. The
previous study done for the MTC by Korve Engineering in May 1991 alluded to
that possibility in Alternative #6. As a matter of fact, the late T.Y. Lin
already had a design for just such a bridge. When Mayor Willie Brown was trying
to kill the Bay Bridge selection in 1998, he hired Korve Engineering to help, paying
them $10,000 for a study of the bridge in November of 1998. He then dusted off
his lobbying shoes.
On August 22, 2000, a hearing was scheduled for 1:30 in one of the
old restored hearing rooms in the east wing of the State Capitol building in
Sacramento. Although the scheduled hearing was supposed to be about “wetlands
reclamation,” the real action was the proposed expansion of the San Francisco
Airport.
It was the last day of the legislative session, and the Senate
Resources subcommittee was hearing a bill sponsored by Democratic Assemblywoman
(now Senator) Carole Migden of San Francisco. The bill would provide $150
million in state funds to acquire the Cargill Salt Flats adjacent to the San
Francisco International Airport. The acquisition and preservation of the salt
flats was tied to a $3 billion expansion plan for SFO. Six months before, a
design competition had been held for the two new airport runways in the SFO
expansion project, and five engineering-and-design firms were chosen as finalists.
Representatives of a number of environmental groups— most notably
the National Audubon Society and the Sierra Club—were present in the hearing
room to give their qualified support of the bill, providing the salt flats were
preserved.
Also present during the hearing chaired by then-Senator Tom Hayden
was Senate President Pro Tem John Burton, (D) San Francisco, pushing SB 1215
from the 1997 session and SB 1562, which was introduced and passed in the 2000
session.
The first was the land swap bill between the State of California
and the City of San Francisco involving Mission Bay. The second was for a
high-speed transportation link from San Francisco International airport to
another airport across the bay. The hulking and mustachioed Senate President
John Burton circling nervously around the room, awaiting the outcome.
Seated in the audience were a number of other players with a
direct interest in AB 398. Tina Thomas, the environmental attorney who helped
author the California Environmental Quality Act (CEQA) in 1974, was there to
give testimony on behalf of the bill. Once an environmental stalwart, she
now tends to work on behalf of big-time developers, in whose interests she
tosses an occasional bone to groups like the Audubon Society (represented that day
by lobbyist John McCaull), and the Sierra Club (Warren Alford attending).
Two other lobbyists were also present. At the end of one row sat
Jo-Linda Thompson, with Nossaman, Guthner, Knox and Elliott. Seated alongside
her was the Nossaman group’s main man, John Foran, former Senator from San
Francisco.
But the real star of the show hadn’t appeared yet. He was late, as
usual, en route from San Francisco. “Does anyone know when His Eminence is
due?” inquired Hayden from the dais. “Well, when he gets here then we’ll hear
the Willie Brown bill,” said Hayden, ignoring Carol Migden’s sponsorship, and
referring to the true guiding hand in the matter.
It was 2:33 P.M. when His Eminence finally showed. Willie entered
the committee room to speak on behalf of AB 398, and the airport expansion.
He was, as usual, impeccably dressed, in a green suit, an
electric-blue monogrammed shirt with contrasting white collar, and blindingly
shiny black oxfords. It was Brown’s first appearance on behalf of a bill since
he’d stepped down after a record fifteen years as Assembly Speaker.
“The expansion of the airport is the lifeblood of the city,”
Willie said in opening his testimony. “Another twenty-six gates are being
added, and this is a golden opportunity. The Cargill Salt Flats represent a
once in a lifetime opportunity to acquire these wetlands and help keep SFO
healthy. The money that we need from the state will be matched by federal
dollars, and Senator Feinstein is pushing ahead in the Senate with a bill that
will provide the additional $150 million. Senator Feinstein managed to get a
placeholder bill [a spot bill, author’s note] in the Congress and Governor
Davis has also signed on with this project.”
After Brown’s presentation, Assemblywoman Migden echoed the same
general tone; Feinstein’ spot bill was holding a place for the expected federal
approval of funds for the SFO expansion. “Senator Feinstein is moving on this
and she’s lobbying to acquire the whole 19,000 acres of the Cargill Salt Flats
for $150 million. My interest is in helping the state acquire the lands for the
airport expansion,” said Migden.
The San Francisco Chronicle smelled a rat in the
wetlands preservation deal. In a column published on June 2, 2000, Matier
& Ross reported: “…It’s not just the $250 million or more that may be
needed to convert the murky Cargill Inc. pools into a wildlife paradise.
There’s also the possibility that closing the deal will have to be sort of a
“wink-wink” arrangement to go ahead with San Francisco International’s
controversial plans for building a pair of runways in the bay.”
Later in the Column, Matier and Ross reported: “Sen. Dianne
Feinstein (who helped craft the bill) says it’s not linked… But
Assemblywoman Carole Migden, who actually carried the bill signed by Governor
Gray Davis, says as far as she’s concerned, the two projects absolutely are
linked. “It’s a trade-off… Anyone who is straight will tell you the pond
restoration and runways are linked.”
Through all these processes the real winners have been the same:
Corporate insiders and their political partners in plunder.
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