|By Matt Smith|
|Center for Investigative Reporting|
|Publish date: July 2, 2013|
House Minority Leader Nancy Pelosi and San Francisco Mayor Ed Lee have devoted staff time, lobbying resources and political capital to ensure the success of a private investment firm linked to Democratic power broker Willie Brown.
The firm, the San Francisco Bay Area Regional Center, would help secure visa priority for foreign investors who back a city dream: redevelopment of the former Hunters Point Naval Shipyard withLennar Corp. Like other investment firms, its core business is to sell private shares, collect fees, reap returns and pass along risk.
In a letter to the U.S. Department of Homeland Security, Pelosi, a longtime Brown ally, wrote that “it would be in our national interest” to allow the firm to collect fees and investment returns under a federal program, noting federal investment in the toxic cleanup of the property.
Lee’s support has included having an aide travel to China to help market shares to investors. The city’s lobbying firm joined the effort last September, also pressing U.S. immigration officials to fast-track the regional center’s application for certification under the federal EB-5 visa program, according to internal emails.
Brown’s exact role in the investment firm is a bit of a puzzle. He denies knowledge of it, but the company’s brochures and website call him a “principal,” and regional center CEO Ginny Fang says he is a minority partner.
But when Fang wrote to city officials July 4, 2012, making the case for lobbying the Homeland Security Department, she wrote that the regional center has three leaders: herself, Brown and Steven Kay, secretary of the board for the Willie L. Brown Jr. Institute on Politics & Public Service. Brown is chairman and CEO of the institute.
Records show the regional center’s managers are lining up $67 million in investments and hope to eventually raise $300 million. Investments would be held by two separate LLCs. In U.S. Securities and Exchange Commission filings, both of those LLCs name Kay as president.
“If I had to diagram this project, it would look like a family tree with lots of extra little problems,” said Judy Nadler, senior fellow in government ethics at Santa Clara University. “Brown as chair and principal of this financial services firm stands to benefit financially, probably in a significant manner. So I’d say that the skeptic would look at this and say this pretty much looks like an inside deal.”
Fang took issue with the term “inside deal,” telling The Center for Investigative Reporting that support for her firm was no different than other civic enterprises. She did not answer questions about Brown’s potential financial stake.
“The City supports, advocates and funds a myriad of projects, nonprofits and contractors across San Francisco, most of which have no relationship with Willie Brown,” Fang wrote in an email. “Are each of those also ‘inside deals?’ ”
The San Francisco Bay Area Regional Center formed a partnership with Miami-based developer Lennar Corp. in 2011 to act as a broker for foreigners, primarily Chinese, under the federal EB-5 visa program, according to company memos. Named for a section of the U.S. immigration code, the program gives green-card priority to people who invest at least $500,000 in designated U.S. enterprises.
The regional center hired the Shanghai firm Visas Consulting Group to host a series of seminars this spring in Chinese cities. The pitch to foreign investors has emphasized the firm’s links to political figures such as Brown as evidence that it is a sound investment. At an April 14 seminar in Shanghai, prospective investors received glossy brochures illustrated with photographs of Lee and Brown.
Lee aide Wells Lawson traveled to China in March to help pitch investment in the regional center. “This would not be possible without deep commitment at the federal, state and county level,” he said, according to his presentation notes, obtained through a public records request. “I invite you to be a part.”
The investment brochures, like online materials, refer to Brown as a company “principal.” During the seminar, a presenter described Brown several times in connection with the regional center as “dong shi zhang,” or chairman of the board.
Fang said Brown is not chairman but, after being provided a tape of the presentation, acknowledged that was what he was called. She offered no further explanation.
A video featuring Brown led into the April 14 sales pitch. It was shown before a presenter told attendees that 50 investments already had been made, with 40 remaining.
“I am Willie Brown, former mayor of San Francisco and, of course, former speaker of the California Assembly, and I am a principal in the San Francisco Bay Area Regional Center,” Brown said in the video. “I am just delighted to be a part of this.”
At a May 21 City Hall speech by Lee, Brown brushed off a reporter’s request to discuss the regional center.
“I have no idea what you’re talking about,” he said.
The CIR reporter asked Brown: “You don’t know what the San Francisco Bay Area Regional Center is?”
“Nope,” Brown said, before excusing himself.
At a June 26 groundbreaking for the first 247 Hunters Point housing units, Brown wound up the ceremony by touting the project’s moneymaking potential. The regional center was never mentioned.
“The investment opportunity here represents something that’s unique in America,” he said, highlighting his own role in getting government funds for the project. “There is no other piece of soil as potentially lucrative and profitable for the public sector and private sector than this spot is going to be.”
Asked at the event what he expected the San Francisco Bay Area Regional Center’s profit to be, Brown said: “I don’t know what that is. I don’t know what that is. I don’t know what that is.”
Brown is credited with engineering Lee’s 2011 appointment to serve out the remainder of Gavin Newsom’s mayoral term after he was elected lieutenant governor. Brown later played a prominent role in Lee’s campaign to remain mayor.
Lee likewise initially claimed ignorance about the regional center. Asked at a May 30 ribbon cutting to comment on the San Francisco Bay Area Regional Center, he said, “I can’t say that I have much detail on that.”
However, in an interview at the Hunters Point groundbreaking last week, Lee acknowledged that the first phase of construction would be financed by the Brown-linked firm. The Lennar Urban division previously installed streets and sewers at the Hunters Point project site, but delayed construction, citing lack of money.
Before the event, regional center CEO Fang said her company would fund part of the first phase of Hunters Point construction, referring specific questions to Lennar. Lennar Urban President Kofi Bonner, who served as San Francisco’s director of economic development while Brown was mayor, did not answer questions.
Pelosi’s Sept. 18 letter urging U.S. immigration authorities to fast-track the regional center’s certification was part of her efforts to bring jobs to low-income sections of her congressional district, her press secretary wrote in a statement.
“By incentivizing private investment to the redevelopment of the Hunters Point Naval Shipyard, the shipyard will be transformed into a source of local jobs and economic development into this disenfranchised community,” the statement said.
In her letter to the Homeland Security Department, Pelosi wrote that the government so far has spent $1 billion at Hunters Point, with most of the money going to toxic and radioactive waste cleanup.
The project still requires $3 billion to pay for infrastructure and $7 billion for planned apartments and office space, yet neither the city nor Lennar has been able to come up with necessary funds, Pelosi wrote.
According to Pelosi, U.S. Citizenship and Immigration Services needed to authorize the San Francisco Bay Area Regional Center to solicit funds under the Immigrant Investor Program, so the city can “proceed with the remainder of the project without delay.”
Manuela Zoninsein contributed to this report from Shanghai. This story was edited by Amy Pyle. It was copy edited by Nikki Frick and Christine Lee.