Day’s dilemma

Pub date August 8, 2007
WriterG.W. Schulz


One investigation by the District Attorney’s Office is enough of a headache for City College of San Francisco. But two?

The Guardian learned that just days before the November 2005 election, in which City College asked voters for $246.3 million in bond money to continue a series of capital works projects, the office of Vice Chancellor Peter Goldstein received a letter from investigators requesting detailed information about a land transaction that took place in Chinatown earlier that year.

At least three of the school’s elected trustees don’t recall being informed by Chancellor Phil Day about the probe, setting off new concerns after we alerted officials about the letter, which the Guardian obtained. The DA’s Office is also investigating potential laundering of public funds into campaign donations by college officials in connection with that bond campaign.

"It puts a further cloud on the college," trustee Julio Ramos told us. "Presumably the statute of limitations has not run on the transaction, so what’s going on here? I’m concerned because no one ever informed us."

Two other trustees, Milton Marks and board president Anita Grier, told us they don’t remember being told of the inquest.

"We do have to give them some leeway to operate the college without informing us of everything," Marks said. "But when the district attorney is asking questions about something that’s coming from a board action, why wouldn’t we have to know about it as early as possible? It’s kind of indefensible."

But Day fervently insisted that the board was informed of the letter during a closed-session meeting the same month the letter was received and that Ramos and Marks simply weren’t there. Day had no explanation for why Grier couldn’t recall it, but trustees Rodel Rodis, Natalie Berg, and Lawrence Wong and former trustee Johnnie Carter all confirmed they’d been told about it. Day also said the school had never heard back from the DA’s office after it produced all of the requested documents.

"I had even forgot about the fact that we had this initial inquiry back then," Day told us. "I had totally removed it from my brain and forgotten about it completely."

Either way, this is the first the public has heard of the DA’s interest in City College’s land deals. Debbie Mesloh, a spokesperson for District Attorney Kamala Harris, told us she could neither confirm nor deny that any such investigation was taking place, although the letter confirms that an investigation was opened.

The DA this year began an inquiry into City College after the San Francisco Chronicle revealed that the school had used a $10,000 lease payment from a business tenant to help bankroll a campaign committee formed for the purpose of promoting the 2005 bond election, City College’s third since 1997.

But we now know that the DA began snooping around the college’s land purchases in October 2005, when Goldstein was asked for escrow documents, property appraisals, memos, and board minutes concerning the school’s purchase of two lots in Chinatown at the corner of Kearny and Washington streets for a long-planned (and now vastly over budget) campus.

The Guardian has also obtained a pile of documents detailing months of real estate negotiations between the college and politically connected Chinatown businessman Pius Lee, who owned one of the lots and had an option to buy a neighboring and much larger tract.

The construction of the new Chinatown–<\d>North Beach campus hasn’t gone smoothly for the college or voters. The school originally used $5.8 million to buy property in the neighborhood using bond money that voters authorized in 1997. Voters were then asked for $45 million in 2001 to build the campus, with construction expected to begin in 2003.

But Day’s ambitions led to clashes with Chinatown residents after the original plan — slated for an area facing Columbus Avenue on the other side of the block from where City College now hopes to build — called for demolishing a historic building and low-income apartments housing elderly tenants.

The school entered a legal settlement promising to preserve the Columbo Building and relocate the nearby Fong Building’s tenants. In 2005, however, it hastily decided incorporating that work would be "infeasible" and turned to Lee for help in finding a new location.

Lee (who did not return our calls) told the college he’d give up a sliver of land he owned on the other side of the block and also help it secure the much larger lot nearby owned by a Taiwanese company, Fantec Development Corp., with which Lee had a long business relationship.

The school paid Lee $1.9 million for a strip of parking lot 18 feet wide, even though an appraisal that City College received placed its market value at $1.1 million, records show. (San Francisco County assessed it at $267,000 in 2004 for tax purposes. The neighboring, much larger piece of land, also a parking lot, was assessed at $1.5 million.) During early negotiations, records show, the college offered $785,000 for Lee’s property and $4.5 million for Fantec’s, but in the end it wound up paying much more — a total of $8.7 million in bond money for both.

Yet it’s not clear precisely what investigators were looking into, what they found, or whether the investigation is still open.

"The properties were not available for anything less than the price we paid for them," Goldstein told us. "That’s what the sellers demanded in order to sell their properties…. Pius drove a very hard deal and demanded what I would consider to be the maximum possible price for his property that we could defend."

Ground still hasn’t been broken on the school’s Chinatown dream, and in the interim, as we’ve reported recently, the estimated costs have ballooned from $75 million to $122 million, an increase of 62 percent. As a result, the school has chosen to gut some projects authorized by voters to keep this and other favored proposals alive (see "The City College Shell Game," 7/4/07).

The Board of Trustees is slated to vote next month on whether to certify the campus’s environmental documents and whether the project should be exempt from building height limits in the neighborhood.<\!s>*