OFFICIALS AT Banneker Ventures were thrilled when they learned in February 2008 that their company had won a competition to develop Metro-owned property on Florida Avenue NW. The general construction and contract management firm had beaten rival companies in an open procurement process for the retail and residential project. But when the proposal came before Metro on April 24, Jim Graham (D), the District’s representative on the transit agency’s board and a D.C. Council member whose Ward 1 would be home to the development, successfully moved to postpone action. Mr. Graham’s action warrants scrutiny.
Not long after that, he allegedly tried to pressure Banneker out of the Metro deal by linking it to his support for a separate bid by one of Banneker’s principals for the District’s lucrative lottery contract. What was Mr. Graham up to? On whose behalf was he advocating? And why was it that in both cases — the operation of D.C.’s lottery and the development of Metro land — the winning bidders ended up not doing the public’s business?
Mr. Graham’s alleged threat to deny the city’s lottery contract to a related firm unless Banneker opted out of the Metro deal is described by D.C. Inspector General Charles J. Willoughby as part of his larger inquiry into the D.C. lottery deal. Mr. Willoughby said he did not find sufficient evidence to conclude the council member acted improperly but said his action “may give the appearance that he lost complete independence or impartiality, and may have affected adversely the confidence of the public in the integrity of government.”
Mr. Graham wrote in an e-mail Friday that pending litigation limits what he is able to say, but he did note that any actions he took on the Metro board concerning Banneker were due to what he viewed as “fundamental, ongoing problems” with its proposal. He has denied that he linked the two contracts during a meeting with the lottery seekers on May 29. However, as we previously reported, contemporaneous e-mails among those seeking Mr. Graham’s support for the lottery contract refer to the council member’s desire to change the Metro deal. The bidders even discussed whether they could accommodate what they saw as Mr. Graham’s demand until their lawyer warned them off: “This is complete bs and we are getting very close to corruption, bid rigging and other inappropriate conduct,” A. Scott Bolden wrote.
The two contracts were, in theory, unrelated. The city was awarding the lottery contract, Metro the development business. But Warren Williams Jr., then a principal in Banneker, also was bidding, as a partner with a big Greek firm, for the lottery business. And Mr. Williams, after his May meeting with the council member, thought he knew why Mr. Graham wanted Banneker out. A rival development firm, LaKritz Adler, had been one of three finalists for the Metro job, and that firm, Mr. Williams wrote in an e-mail to an associate, is “the developer he [Mr. Graham] wants to see win the site.”
LaKritz had done projects in Ward 1, and its principals and associated entities have contributed to Mr. Graham’s campaigns, giving $1,000 in 2006 and $5,000 in 2010, according to city campaign finance records. Mr. Williams had contributed to earlier campaigns; in a June 2 e-mail to the lobbyist pleading his lottery bid, he wrote: “One other thing that should be mentioned to council member Graham is that we have tried to support him several times during his runs for city council and that he has accepted thousands of dollars that were bundled. . . . So when he ask was I funding his enemies, the answer is no they funded you Mr. Graham.” Omar Karim, Banneker’s president, said he doesn’t recall ever contributing to Mr. Graham’s campaigns.
According to a complaint lodged with Metro in 2010 by Banneker’s attorney, Mr. Graham sought to get Banneker either to add LaKritz Adler to its development team or to purchase LaKritz’s interest in an adjacent property. Mr. Karim said that Mr. Graham told him in April 2008 to meet with LaKritz partners in response to his query about why the development proposal had been tabled. Mr. Graham, in a phone interview last week, acknowledged he had urged Banneker to get LaKritz’s help because, he said, he was worried about Banneker’s ability to handle the Metro project. E-mails confirm that Banneker and LaKritz officials discussed a possible land sale.
Joshua A. Adler, managing partner of LaKritz, told us that he was not aware of Mr. Graham’s advocating for his firm and that a sale was discussed because it would have enhanced the Metro development. Of the campaign contributions, Mr. Adler said, “We think [Mr. Graham] is a good council member.”
On June 26, 2008, about a month after his meeting on the lottery contract, Mr. Graham attended a session of the Metro board where the Florida Avenue project was to be discussed again. In a preliminary closed-door meeting, according to Metro officials who were present, he argued against giving Banneker the development rights, but it was clear that he was in the minority. When the board moved into open session, he voted in favor but, as the Washington Business Journal reported, voiced objections, including “whether this deal is financially viable.”
The project, however, was stillborn. Mr. Graham became chairman of the Metro board seven months later, in February 2009, and, according to Banneker’s 2010 complaint to Metro, “injected himself” into negotiations over a final plan, including by contacting an independent appraiser hired by Metro staff before its report was submitted. The two parties never came to agreement on a final development plan. Banneker officials say they were sabotaged by Mr. Graham’s continued obstructions, a view shared by some Metro sources we consulted. A spokesman for Metro, citing a possible lawsuit by Banneker, wouldn’t comment or make officials available to us for comment.
Mr. Graham disputed Friday that his actions caused the project to fail: “Many efforts by various people, including myself, went in to trying to salvage this deal.” From the beginning, he wrote, he had doubts about the “merits and qualifications” of Banneker, and later events — instability in the Banneker development team, ever-changing plans that amounted to what he called “bait and switch,” repeated delays — proved him right. He suggested that one reason Banneker held on as long as it did was due to the political influence of Mr. Karim’s friendship with then-Mayor Adrian M. Fenty (D).
After Metro refused in March 2010 to approve an extension of Banneker’s exclusive negotiation period, LaKritz submitted a proposal to purchase the property, prompting the transit agency in September to put out a request for new bidders. Banneker did not compete. In July 2011 — by which time Mr. Graham had left the board — Metro agreed to sell the land to JBG Associates for $10.2 million; the firm is working with the city on approvals for a retail and residential project.
Metro’s code of conduct prohibits its officials from engaging in “any actions that might result in favored treatment or appearances thereof toward any individual, private organization, consultant, contractor or potential consultant or contractor.” For reasons we will explain in another editorial, these events were not investigated by Metro at the time. We would say it’s not too late.