San Francisco Bay Guardian, November 28, 2007
As lawsuits and regulators probe Lennar Corp.’s negligent approach to development on Hunters Point, a new campaign seeks to give the embattled corporation even more control over SF
By Sarah Phelan. firstname.lastname@example.org
Sen. Dianne Feinstein, former mayor Willie Brown, Sup. Sophie Maxwell, and Mayor Gavin Newsom in recent weeks have come out in support of a proposed ballot measure that would allow Lennar Corp. to develop thousands of new homes at Candlestick Point, create 350 acres of parks, and possibly build a new 49ers stadium at Hunters Point Shipyard.
The campaign for the Bayview Jobs, Parks and Housing Initiative just launched its signature drive, but the measure should qualify relatively easily for the June 2008 election, given new low signature thresholds and the campaign’s powerful backers.
The measure would give Lennar, which is also involved in Treasure Island and much of the Bayview–Hunters Point redevelopment area, even more control over San Francisco’s biggest chunks of developable land.
But should San Franciscans really reward Lennar with more land and responsibilities when the financially troubled Florida developer has a track record in San Francisco and elsewhere of failing to live up to its promises, exposing vulnerable citizens to asbestos dust, and using deceptive public relations campaigns to gloss over its misdeeds?
As the Guardian has been reporting since early this year (see “The Corporation That Ate San Francisco,” 3/14/07), Lennar failed to monitor and control the dust from naturally occurring asbestos while grading a hilltop in preparation for building condominiums on Parcel A of the former Hunters Point Naval Shipyard.
Last month the Bay Area Air Quality Management District’s Board of Directors asked staff to pursue the maximum fines possible for Lennar’s violations, which could run into millions of dollars, particularly if they are found to be the result of willful or negligent behavior.
“It’s clear to everyone in the agency that this case needs to be handled well,” BAAQMD spokesperson Karen Schkolnick told the Guardian. “It’s in everyone’s interest, certainly the community’s, to get resolution.”
The air district gives parties to whom it issues a warning three years to settle the matter before it goes to court. Lennar officials have publicly blamed subcontractors for failing to control dust and leaving air-monitoring equipment with dead batteries for months on end, but the BAAQMD is treating Lennar as the responsible party.
“It’s air district policy to deal with the primary contractor, which in this case is Lennar, although additional parties may be held liable,” Schkolnick said.
Accusations of willful negligence also lie at the heart of a Proposition 65 lawsuit that was filed against Lennar for alleged failures to warn the community of exposure to asbestos, a known carcinogen (see Green City, 8/29/07).
Filed by the Center for Self Improvement, the nonprofit that runs the Muhammad University of Islam, which is next to Parcel A, the suit alleges that the construction activities of Lennar and subcontractor Gordon N. Ball “caused thousands of Californians to be involuntarily and unwittingly exposed to asbestos on a daily basis without the defendants first providing the adjacent community and persons working at the site with the toxic health hazard warnings.”
Now fresh evidence from another whistle-blower lawsuit filed by three Lennar employees (see “Dust Still Settling,” 3/28/07) shows that higher-ups within Lennar reprimanded and reassigned a subordinate who told subcontractors to comply with mandated plans or face an immediate suspension of construction activities at the Parcel A site.
In an April 21, 2006, BlackBerry message that was copied to Lennar Urban senior vice president Paul Menaker and other top Lennar executives, Lennar Urban’s regional vice president Kofi Bonner wrote to Gary McIntyre, Lennar/BVHP’s Hunters Point Shipyard Project manager, “Gary why do you insist on sending threatening emails to the contractor. If you can no longer communicate directly without the threat of a shutdown … perhaps we should find another area of responsibility for you to oversee. Such emails should only be sent as documentation of [a] conversation.”
McIntyre says he was just trying to do his job, which involved ensuring that subcontractors abided by the long list of special health and safety criteria that were developed for this particularly hazardous work site, located in an area long plagued by environmental injustice.
The shipyard is a Superfund site filled with toxic chemicals, and although the 63-acre Parcel A had been cleaned up enough to be certified for residential development, it sits atop a serpentine hill full of naturally occurring asbestos, a potent carcinogen. So the Department of Public Health and the BAAQMD both insisted on a strict plan for controlling dust, which Lennar used to sell the community on the project’s safety.
Yet when McIntyre began insisting in writing that Lennar and its subcontractors adhere carefully to those rules, he was removed from his job. In a work evaluation signed Oct. 17, 2006, Menaker described McIntyre as “a good company spokesperson as it relates to Hunters Point Shipyard” but claimed that he required major improvement in his leadership and communication skills.
“As a manager, he needs to focus on achieving his ultimate mission, rather than focusing on details. Poor communication skills have led to incomplete and often incorrect information being disseminated,” Menaker wrote.
The ultimate mission for Lennar — which has seen its stock tank this year as it’s been roiled by a crisis in the housing market — was to get Parcel A built with a minimum of problems and delays. And as concerns about its behavior arose, its communication strategy seemed to be more concerned with positive spin and tapping testimony from financial partners than with putting out a complete and correct view of what was happening.
Whether or not McIntyre was a good Lennar employee, he was at least trying to do right by the community, as records obtained through the lawsuit’s discovery process show. As McIntyre wrote in a three-page response to Menaker’s evaluation, “Our BVHP Naval Shipyard project has unique environmental requirements and compliance therewith is mandatory.”
But the record is clear that Lennar didn’t comply with its promises, raising serious questions about a company that wants to take over development of the rest of this toxic yet politically, socially, and economically important site.
So who is really behind the Bayview Jobs, Parks and Housing Initiative, which does not even have the support of the 49ers, who say they’d rather be in Santa Clara?
The measure was submitted by the African American Community Revitalization Consortium, which describes itself as “a group of area churches, organizations, residents and local merchants, working to improve Bayview Hunters Point.” Yet this group is backed by Lennar and draws its members from among those with a personal financial stake in the company’s San Francisco projects.
AACRC founders Rev. Arelious Walker of the True Hope Church of God in Christ in Hunters Point and Rev. J. Edgar Boyd of the Bethel African Methodist Episcopal Church of San Francisco are both members of Tabernacle Affiliated Developers, one of four Bayview–Hunters Point community builders who entered into a joint venture with Lennar/BVHP to build 30 percent of Lennar’s for-sale units at Parcel A. TAD is building the affordable units while Lennar develops the market-rate homes.
Neither Walker nor Boyd disclosed this conflict of interest at a July 31 Board of Supervisors hearing where they and the busloads of people Lennar helped ferry to City Hall created the illusion that the community was more concerned about keeping work going on Parcel A than temporarily shutting down the site while the health concerns of people in the Bayview were addressed.
Referring to reports from the city’s Department of Public Health, which claimed that there is no evidence that asbestos dust generated by the grading poses a threat to human health, Walker and Boyd warned that even a temporary shutdown of Lennar’s Parcel A site would adversely affect an already economically disadvantaged community. There is no way to test for whether someone has inhaled asbestos that could pose long-term risks, and Lennar supporters have used that void to claim all is well.
But even if community benefits such as home-building contracts, better parks, and job training opportunities do trickle down to Bayview–Hunters Point residents, will those opportunities outweigh the risk of doing business with a company that has endangered public health, has created deep divisions within an already stressed community, and is struggling financially?
In a recent interview with the Guardian, Minister Christopher Muhammad, whose Nation of Islam–affiliated nonprofit filed the Prop. 65 suit “individually and on behalf of the general public,” described Lennar as “a rogue company that can’t be trusted.”
“I’m concerned about the health of the community, as well as the other schools that border the shipyard,” Muhammad said. “Our contention is that Lennar purposefully turned the monitors off. If you read the air district’s asbestos-dust mitigation plan, it appears that there was a way to do this grading safely. And the community went along with it. The problem was that Lennar was looking at their bottom line and violated every agreement. They threw the precautionary principle to the wind, literally. And the city looked the other way.”
And even if Rev. Walker truly believes the June 2008 Bayview ballot measure is “a chance for all of us to move forward together,” does it make financial sense, against the backdrop of a nationwide mortgage meltdown, to give Lennar permission to build thousands of homes at Candlestick Point when this measure doesn’t even specify what percentage of the 8,000 to 10,000 proposed new units would be rented or sold at below-market rates?
Lennar/BVHP has already reneged on promises to build rental units at its Parcel A site, and on Aug. 31, Lennar Corp., which is headquartered in Miami Beach, Fla., reported a third-quarter net loss of $513.9 million, compared to third-quarter net earnings of $206.7 million in 2006. Its stock continues to tumble, hitting a 52-week low of $14.50 per share on Nov. 26, down from a 52-week high of $56.54.
On Nov. 2, Reuters reported that Standard and Poor’s had cut Lennar’s debt rating to a junk-bond level “BB-plus” because of Lennar’s “exposure to oversupplied housing markets in California and Florida.” And on Nov. 16 the Orange County Register reported that Lennar is shelving a condominium-retail complex in Long Beach and keeping high-rise condos it built in Anaheim vacant until the housing market bounces back.
Redevelopment Agency executive director Fred Blackwell, who was hired Aug. 30, told us his agency’s deposition and development agreement with Lennar wouldn’t let the company indefinitely mothball its housing units: “The DDA gives Lennar and the vertical developers the option to lease the for-sale units for one year, prior to their sale.”
While the agency has been criticized for failing to do anything about Lennar’s problems on Parcel A and letting the company out of its obligation to build rental units, Blackwell said it is able to hold Lennar accountable.
“I feel like the DDA gives us all the tools we need,” Blackwell told us. “We have opportunities to ‘cure’ whatever the contractor’s default is, but we can’t just arbitrarily shut things down.”
But many in the community aren’t convinced. With the grim housing picture and the 49ers saying they’d rather be in Santa Clara, the only certain outcome from passage of this ballot measure would seem to be a mandate for the city to turn over valuable public lands and devote millions of dollars in scarce affording-housing funds to subsidize the ambitions of a corporation with a dubious track record that is actively resisting public accountability.
True, Lennar has promised to rebuild the Alice B. Griffith public housing project without dislocating any residents, and the measure also allows for the creation of 350 acres of parks and open spaces, 700,000 square feet of retail stores, two million square feet of office space, and improved transit routes and shoreline trails.
But although the rest of the shipyard is contaminated with a long list of human-made toxins, would passage of the initiative mean an early transfer of the shipyard from the Navy to the city and Lennar? And with that shift, the requirement that we put even more faith in this corporation’s ability to safely manage the project?
In October, Newsom, who was running for reelection at the time, told the Guardian he was worried about Lennar’s ability to follow through on “prescriptive goals and honor their commitments.”
“We have to hold them accountable,” Newsom told us. “They need to do what they say they’re going to do. We need to hold them to these commitments.”
But how exactly is the mayor holding Lennar accountable?
In March, when the Guardian asked Newsom’s office if he intended, in light of Lennar’s Parcel A failures, to push ahead with plans to make Lennar the master developer for the 49ers stadium and Candlestick Point, the Mayor’s Office of Communications replied by referring us to Sam Singer, who has been on Lennar’s PR payroll for years.
On Nov. 18 the Chronicle reported that Singer was on the campaign team for the Bayview ballot initiative, along with former 49ers executive Carmen Policy, Newsom’s campaign manager and chief political consultant Eric Jaye, Newsom’s former campaign manager Alex Tourk, political consultant Jim Stearns, and political advertising firm Terris, Barnes and Walters, which worked on the 1997 49ers stadium bond and the 1996 measure for the Giants’ ballpark, both approved by voters.
In recent months Lennar has asked the Guardian to send questions to its latest PR flack, Lance Ignon, rather than Singer. In reply to our latest round of queries, about lawsuits and air district violations, Ignon forwarded us the following statement: “The record is abundantly clear that at each and every stage of the redevelopment process, Lennar has been guided by a commitment to protecting the health and safety of the Bayview–Hunters Point community. Lennar has fully cooperated with all relevant regulatory agencies and public health professionals to determine whether grading operations at the Shipyard pose a health threat to local residents. After months of exhaustive analysis, numerous different health experts — including [the Agency for Toxic Substances and Disease Registry] — concluded that the naturally occurring asbestos did not present a serious long-term health risk. Lennar will continue to work with the San Francisco Department of Public Health and other regulatory agencies to ensure the health of the community remains safeguarded.”
Actually, the ATSDR report wasn’t quite that conclusive. It took issue with the faulty dust monitoring equipment at Parcel A and noted that exposure-level thresholds for the project were derived from industrial standards for workers who wear protective gear and don’t have all-day exposure. “However, there are studies in the scientific literature in which long term lower level/non-occupational exposures (from take home exposures and other areas of the world where naturally occurring asbestos occur) caused a low but epidemiologically detectable excess risk of mesothelioma,” the ATSDR-DPH report observes.
It’s not surprising to see Lennar gloss over issues of liability, but it’s curious that Newsom and other top officials are so eager to push a proposal that would give Lennar control of Candlestick Point and perhaps result in a 49ers stadium on a federal Superfund site — without first demanding a full and public investigation of how the developers could have so miserably failed to enforce mandatory plans at Parcel A.
This fall the Newsom administration was peeved when the San Francisco Board of Education, which includes Newsom’s education advisor Hydra Mendoza, and the Youth Commission unanimously called for a temporary shutdown of Lennar’s Parcel A site until community health issues are addressed.
These demands were largely symbolic, since major grading at the site is complete, but the Mayor’s Office shot back with a Nov. 2 memo including the request that city department heads and commissions follow the example of the Hunters Point Shipyard Citizens Advisory Committee and the Bayview Project Area Committee, which have said they won’t hear further testimony on the dust issue “unless and until credible scientific evidence is presented to contradict the conclusions of the DPH, CDPH, UCSF and others that the construction dust at the Shipyard had not created a long-term or serious health risk.”
Such complex points and counterpoints have been like dust in the air, preventing the public from getting a clear picture of what’s important or what’s happened at the site. But a careful review of the public record shows that, at the very least, Lennar has failed to live up to its promises.
As records obtained through a whistle-blower lawsuit’s discovery process show, Lennar employee McIntyre was reprimanded for e-mailing a group of Lennar subcontractors including Gordon N. Ball, Luster National, and Ghirardelli Associates and demanding that their traffic-control plan implementation be in place before Gordon Ball/Yerba Buena Engineering Joint Venture “begin using (oversize construction equipment) scrapers or articulating trucks on Crisp Road.”
In court depositions, Menaker, who became McIntyre’s supervisor in April 2006, claimed he “never told McIntyre that he should not raise issues related to what he perceived to be deficiencies in Gordon Ball’s dust control measures.
“Rather, I repeatedly advised him that management by e-mail would not accomplish the goal of improving Gordon Ball’s performance and that he needed to communicate with Gordon Ball and others on the project in a more effective fashion. As a result of my observations of his job performance and the feedback from others … on Aug. 1, 2006, we brought in other professionals to assist with duties initially assigned to McIntyre.”
But public records reveal that things continued to go awry at the site, long after the bulk of McIntyre’s construction field-management duties were transferred to David Wilkins, an employee of Lennar subcontractor Luster National.
According to a report filed by the city’s Department of Health, on July 7, 2006, the DPH’s Amy Brownell drove to the Lennar trailers and informed McIntye that Lennar was in violation of Article 31, the city’s construction-dust ordinance, after she observed numerous trucks generating “a significant amount of dust that was then carried by the wind across the property line.” She even observed a water truck on the haul road doing the same thing as it watered the road.
On Aug. 9 — eight days after McIntyre was relieved of his field-construction management duties and seven days after Lennar declared it could not verify any of its air district–mandated asbestos-monitoring data — Brownell drove to the Lennar trailers and spoke with McIntyre’s successor, Wilkins, about dust problems generated by hillside grading, haul trucks, and an excavator loading soil into articulated trucks.
“Every time [the excavator] dumped the soil into the trucks, it created a small cloud of visible dust that crossed the project site boundary. There was no attempt to control the generation of dust,” Brownell observed in her Aug. 9, 2006, inspection notes.
On Sept. 21, seven weeks after McIntyre’s transfer, Brownell issued Lennar an amended notice of violation when it came to her attention that construction-dust monitors hadn’t been in place for the first two months of heavy grading.
On Dec. 8, 2006, five months after McIntyre’s reassignment, Lennar got slapped with another violation after DPH industrial hygienist Peter Wilsey observed on Nov. 30, 2006, that “dust from the work, particularly from the trucks on the haul road, was crossing the property boundary.”
And on Aug. 17, a year after McIntyre left, the DPH issued Lennar its most recent violation for not controlling dust properly. But this time the notice included a 48-hour work suspension period to establish a dust-control plan monitor to be supervised by DPH staff, with costs billed to Lennar.
“The issuance of notices of violations shows the regulatory system is working,” Brownell told the Guardian. “Dust control on a gigantic project like this is a continuous, everyday process that every single contractor has to do properly. That’s Lennar’s issue and problem. At DPH, we feel we have enough tools to do inspections, which Lennar gets billed for. And if they violate our requirements again, we’ll shut them down again. Or fine them.”
So far, the DPH has not chosen to fine Lennar for any of its Parcel A dust violations.
“We considered it for this last violation but decided that shutting them down for two days was penalty enough,” Brownell says, adding that while she’d “never just rely on air monitors, a monitor helps when you’re having problems with dust control, because then you can say, ‘Here’s scientific proof.'”
And scientific proof, in the form of monitoring data during the long, hot, and dusty summer of 2006, would likely have triggered numerous costly work slowdowns and stoppages. According to a memo marked “confidential” that the Guardian unearthed in the air district’s files, Lennar stated, “It costs approximately $40,000 a day to stop grading and construction” and “Gordon Ball would have to idle about 26 employees at the site, and employees tend to look for other work when the work is not consistent.”
After Rev. Muhammad began to raise a storm about dust violations next to his nonprofit Muhammad University of Islam, Lennar Urban senior vice president Menaker accused him of being a “shakedown artist” when he refused an offer to temporarily relocate the school.
But Muhammad told the Guardian he refused the offer “because I didn’t want the school to be bounced around like a political football. And because I was concerned about the rest of the community.”
Muhammad said he’s trying to sound the alarm about Lennar before it takes over all of Hunters and Candlestick points. As he told us, “This city is selling its birthright to a rogue company.”
So what does the BAAQMD intend to do about Lennar’s enforcement record past, present, and future?
At an Oct. 29 hearing on asbestos dust, the BAAQMD Board of Directors unanimously instructed staff to pursue the maximum fines possible for Lennar’s Parcel A violations.
Air district staff tried to reassure the public that the “action levels” the BAAQMD set at the shipyard are health protective and provide a significant margin of safety.
Health impacts from unmonitored exposures, BAAQMD staffer Kelly Wee said, “are well within the guidelines,” claiming a “one in three million” chance of developing asbestos-related diseases.
BAAQMD board member Sup. Chris Daly, who as a member of the Board of Supervisors voted July 31 to urge a temporary shutdown of Lennar’s Parcel A site, praised the air district for “moving forward with very conservative action levels.
“But these levels are political calls that are not necessarily scientific or health based,” Daly added. “The initial violation, the one that, according to Lennar, CH2M Hill is responsible for, we don’t know what those levels of asbestos were, and that’s when the most significant grading occurred.
“The World Health Organization and [Occupational Safety and Health Administration] scientists are very clear that any level of exposure to asbestos comes with an increased health risk, and if you are already exposed to multiple sources, this becomes more serious,” he said, referring to the freeways, power plants, sewage treatments plants, and substandard housing that blight the community, along with the area’s relatively high rate of smoking.
The BAAQMD’s Wee told the organization’s board that Lennar did not conduct proper oversight of its contractors and did not properly document the flow of air through its monitors but did discover and report its lapses in August 2006.
“Lennar exceeded the air district’s work shutdown level on at least 23 days in the post–Aug. 1, 2006, period, which is when the developer was monitoring asbestos dust,” Wee observed, noting that the air district has two additional notices of violation pending against Lennar for 2007: one for overfilling dump trucks, the other for failing to maintain enough gravel on truck-wheel wash pads.
BAAQMD spokesperson Schkolnick later confirmed to the Guardian that the air district issued Lennar a notice of violation on Oct. 26 for failing to control naturally occurring asbestos at Parcel A, where grading is finished, but Lennar subcontractor Ranger is digging up the earth again to lay pipes.
“It’s time for the board to make sure the air district is as aggressive as possible to protect residents and sensitive receptors,” Daly said. “Asbestos is carcinogenic. The state and federal government knows it. That was why there was an asbestos-dust mitigation plan. The air district asked for air monitoring because of the site’s proximity to a school. The air monitors were sold not just to the city but to the public as the major safeguards to the community, especially sensitive receptors, but during the most gigantic grading period and perhaps the most gigantic exposures, we don’t know what the levels of asbestos were.”
Fellow BAAQMD board member Sup. Jake McGoldrick, who was a key swing vote against urging a Lennar work stoppage at the Board of Supervisors meeting in July, is now joining Daly in demanding full enforcement of the law.
“The July 31 resolution had no way to force Lennar or the SFRA to do anything,” McGoldrick told the Guardian, explaining why he’s now taking a stronger stance. “It seemed that we’d reached the conclusion that the community didn’t want to shut down the project, since it included 31 percent affordable housing, and that the work was essential in terms of revitalizing the area and that the evidence presented seemed to show that everything is now under control.”
But because the coalition of Lennar supporters — who didn’t mention they are on Lennar’s payroll until after the July 31 resolution failed — is now pushing a ballot measure to vastly expand Lennar’s control in our city, McGoldrick is demanding answers and accountability.
“We want to look into whether Lennar screwed up deliberately, and if so, fine them to the hilt,” McGoldrick said. “But let’s get the project on Parcel A going, because the grading has been completed and it will be beneficial to the community.”
McGoldrick claimed that in July he and Daly knew they had an air district hearing coming.
“And we knew where the strongest action could be taken in terms of sticking it to Lennar and showing them we won’t just be looking over your shoulder, we’ll be standing on it,” McGoldrick told us.
“A fine means we have warned you — and we’ve got a gun to your head. It means if you don’t act properly, we can pull the trigger,” McGoldrick said, noting that at the time of the July 31 vote the Parcel A grading was essentially done and no one could present any solid evidence that the public health had been harmed.
“So now the question is: did you or did you not do this? [A maximum fine of] $75,000 a day for 383 days, even if it’s not a lot of money to Lennar — it’s a lot of embarrassment,” McGoldrick said.
But if Lennar tries to delay settling with the air district to avoid fines until after the June 2008 election, will its perceived unwillingness to face consequences backfire at the ballot box — and soil Newsom’s reputation as a great environmentalist in the process?
As McGoldrick observed, “Some of us are having serious second thoughts about going forward with Lennar. Our feeling is, you should sit down and cooperate with the air district and settle this thing with them. And you know darn well that we are standing there, ready to pull the trigger.”
He framed the issue this way: “We’re saying to the Mayor’s Office, you guys have a responsibility [to ensure Lennar is accountable] before you give them another 350 acres — on top of the 63 acres they already have — just to save the mayor’s butt, since he blew it with the Olympics and the 49ers.”
LENNAR BY THE NUMBERS
Number of days Lennar Corp. had been in violation of air district monitoring rules, according to the Sept. 6, 2006, citation: 383
Fine, per day, for violating the air district’s plan: $1,000–$75,000, depending on intent
Maximum fine Lennar faces: $28.7 million
Fine, per day, for violating the city’s construction-dust plan: $5,000
Number of cited violations of city’s construction-dust control plan: 5
Daily cost Lennar claims for stopping work at Parcel A: $40,000
Amount Lennar paid subcontractors for grading Parcel A: $19.5 million
Amount Lennar paid Sam Singer Associates for public relations work in 2005: $752,875
Amount Lennar paid CH2M Hill for environmental consulting work: $445,444
Parcel A acreage: 63
Acreage Lennar controls on Treasure Island: 508
Percentage of rental units promised at Treasure Island and Yerba Buena Island: 27
Number of rental units Lennar is building at Parcel A: 0
Acreage in the Bayview Jobs, Parks and Housing Initiative: 780
Number of rental or below-market-rate homes in Bayview initiative: Unknown
Lennar’s share price Nov. 26: $14.50 (a 52-week low)
Lennar’s stock’s 52-week high: $56.54