$1.8 MILLION DUE CITY REMAINS WITH
TREASURER ISLAND DEVELOPER

Michael Cohen, director of the Mayor's Office of Base Reuse and Development, details funds collectible by the city.
Photo(s) by Luke Thomas

By Pat Murphy

September 27, 2006

Some $1.8 million which could be used to pay for city services lies uncollected in order for accumulating interest to maximize a Treasure Island developer equity account, it was disclosed yesterday.

The disclosure came in a Board Supervisors committee hearing convened to sort out exactly who -- de facto and de jure -- calls the shots in Treasure Island development negotiations.

Michael Cohen, designated by Mayor Newsom to lead negotiations, revealed $1.8 million available for city use is instead growing financial capacity of the Treasure Island Development Corporation (TIDC).

Tony Hall, who maintains his position as TIDA executive director authorizes Hall to lead negotiations, pointed to Cohen's decision as emblematic of "a sweetheart deal" between developer and city administration.

Authority to lead negotiations comes from predecessor job description, TIDA executive director Tony Hall maintains.

Hall claims his negotiation authority comes from a job description held by former TIDA executive Director Annemarie Conroy, although Hall technically has no job description because the TIDA Board of Directors has not issued a job description for Hall. Representatives of the mayor's office forwarded Conroy's job description to Hall when he was considering appointment to the post, Hall said.

However, in a legal opinion released yesterday from City Attorney Dennis Herrera, Cohen holds negotiation authority through the "endorsement, the understanding, and the consent" of the TIDA Board of Directors, even though the TIDA board has not formally appointed Cohen as chief negotiator. Cohen, who negotiated several development contracts over the past ten years, has led Treasure Island negotiations since early discussions began years ago. Cohen serves as director of the Mayor's Office of Base Reuse and Development.

The 2003 contract negotiated by Cohen with TIDC empowers the city to collect reimbursement for city consultant fees totaling $1.8 million from TIDC, which could be applied to the city general fund.

Cohen, saying he works in collaboration with the TIDA Board of Directors, told the Government Audit and Oversight Committee that the $1.8 million has not been collected in order for accruing interest to enlarge developer financial capacity to transform Treasure Island

"That was done by the Mayor's Office of Base Reuse," Hall recalled.

"That's a pretty good deal. That's a sweetheart deal to any developer in the world. Where 'maybe we're going to ask you for money, but in the meantime, we're going to pay it ourselves,' that's what's happening here," Hall stated.

The revelation came in a fleeting few moments of the three and a half hour public hearing.

Committee member Chris Daly urged the TIDA board to collect the $1.8 million, saying, "Not to do so is almost unthinkable."

Treasure Island falls within District 6 represented by Daly, who also serves as the one non-voting ex officio member the TIDA Board of Directors.

Supervisor Chris Daly

The issue of negotiation control came to the forefront September 14 when City Controller Ed Harrington concluded Hall had placed some TIDA funds outside full city review. Harrington went on to claim Hall had moved outside city administration participation in TIDA matters.

However, Deputy Controller Monique Zmuda yesterday confirmed an officer of the city treasurer's office is the only person having expenditure control over those funds.

Hall portrayed Harrington's action as part of an effort instigated by the mayor to distract attention from pending contract extension for TIDC, which Hall said failed to meet deadlines for the past 17 months.

In turn, Cohen termed Hall's present dissatisfaction with TIDC as "disingenuous at best," claiming Hall and Cohen had attended many meetings together and Hall never had said "the developer is doing a crappy job, and should be run out of town."

For his part, Cohen said missed deadlines and contract extensions are common place in the world of developers. Cohen, who negotiated Hunters Point Naval Shipyards development, pointed out that contract required ten extensions. Committee Chair Aaron Peskin added delay doesn't mean "something untoward."

Supervisor Aaron Peskin

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