Council member Graham had heavy hand in D.C. development deal

D.C. developer Warren C. Williams Jr. was on his way to a project meeting in 2007 at Metro’s headquarters when he got a call telling him that D.C. Council member Jim Graham, a Metro board member and chairman of the council’s real estate committee, was displeased.

“What are you doing? This project isn’t for you,” said the caller, Buwa Binitie, then with the Office of the Deputy Mayor for Planning and Economic Development. Referring to a competitively bid, mixed-use residential project to redevelop land owned by the transit authority near the Shaw-Howard University Metro station, he was paraphrasing what Mr. Graham, Ward 1 Democrat who represents the Shaw area, had just told him.

Inside the lobby of Metro headquarters, according to multiple sources present that day, Mr. Williams recounted the call to the rest of the development team, headed by Banneker Ventures, a firm known at the time for its close ties to Mayor Adrian M. Fenty.

According to the Banneker team and its attorney at the time, former prosecutor A. Scott Bolden, Mr. Graham “misused his official position as a member of the [Metro] board and a D.C. Council member to improperly influence [Metro’s] selection of Banneker.” In the process, Banneker accused Mr. Graham, of offering “a quid pro quo” for his support if a specific developer of his choosing was chosen.

Mr. Bolden’s analysis of Mr. Graham’s actions are detailed in an 11-page, heavily annotated letter sent in April 2010 to Metro General Manager Richard Sarles. A copy of the letter was obtained by The Washington Times.

In a response to Mr. Bolden’s letter, Mr. Graham called the accusations “wholly groundless.”

The Graham-Metro investigation is unfolding as the FBI is asking questions about the actions of Mr. Graham and other council members in the approval of the $38 million D.C. Lottery contract.

The nexus: After Mr. Williams was awarded the lottery contract, Mr. Graham said he would not approve the contract unless Mr. Williams bailed on the Metro project, according to emails among Mr. Williams, his political consultants and Mr. Bolden, in reaction to what they thought was an inappropriate offer by Mr. Graham.

The Bolden letter, though it does not include accusations regarding the lottery matter, speaks to aspects of the Metro deal that shed troubling light on the extent to which Mr. Graham wields power.

At the time of the project meeting, Banneker had secured financing from high-profile real estate investor Victor MacFarlane and was on the short list of firms vying for the Shaw-Howard Metro deal. When the firm emerged as the winning bidder in early 2008, it began negotiating terms with Metro as a precursor to signing a joint development agreement and lease by October 2008.

But before the Metro board could act on recommendations from its staff to approve the terms, Mr. Karim received a call in April 2008 from Metro real estate specialist Rosalyn Doggett, who said Mr. Graham had concerns about Mr. Williams’ participation on the Banneker team.

According to Mr. Bolden’s letter, Ms. Doggett instructed Banneker to assure Metro officials in writing that if they approved the deal, Banneker would drop Mr. Williams from the team.

After Mr. Karim addressed Mr. Graham’s concerns, Mr. Graham requested that the Metro real estate committee meet in closed session to discuss Banneker’s selection as lead developer, the letter says. He then moved to delay approval of the project for up to 60 days.

In June 2008, Metro staff again requested an approval vote and Mr. Graham again sought a private discussion with the real estate committee, after which the committee voted over Mr. Graham’s objection to approve Banneker’s selection as lead developer and the terms negotiated by Metro staff, the letter states.

When the project moved to the Metro board for approval, the letter states, Mr. Graham told Mr. Karim that he would vote to approve the deal but not before he met privately with Mr. Karim. The meeting began in Mr. Graham’s office, and continued through lunch at the now-defunct Ten Phen restaurant. The letter states that Mr. Graham wanted Banneker to add local real estate firm LaKritz Adler — a firm with other projects in Ward 1 that has donated at least $6,000 to Mr. Graham’s campaigns — to the Metro development team or purchase adjacent land controlled by the firm.

Banneker chose not to add LaKritz Adler to the deal, the letter states, and the project moved forward with Banneker paying Metro $100,000 to reserve its option to develop the site while the parties continued to negotiate over the next several months.

In January 2009, Mr. Graham became chairman of the Metro board. In March that year, after Banneker secured an investment agreement with Bank of America, the Metro board extended the negotiation period pending outside appraisal of the deal by an independent contractor, the letter states.

In October 2009, the letter says, a meeting was held with Mr. Graham and his chief of staff and Mr. Karim and his chief financial officer. They met at Busboys and Poets on 14th Street Northwest. According to the letter, Mr. Graham said that Banneker “should not have bid on the project” and that he “won’t allow the sale of the parcels” where the project was to be developed.

Mr. Graham instead proposed a lease arrangement and again instructed Banneker to bring in a new joint-venture partner, this time to facilitate the lease.

With the terms revised to reflect the new lease arrangement, Metro staff submitted the package to the board for approval in November 2009, the letter states. After the board declined to act and further revisions to the deal were negotiated, including a requirement that Banneker pay additional funds to develop the site, Mr. Graham persuaded the Metro board to remove the project from its agenda in March 2010, the letter states.

Finally, on April 26, 2010, Banneker was informed that the Metro board had voted unanimously, “without explanation or rationale, to table indefinitely” any further consideration of Banneker’s terms, the letter states.

Through Mr. Karim’s attorney Brian McDaniel, who confirmed having been contacted by Bradley J. Bondi, a lawyer hired by Metro to investigate the matter, Mr. Karim said, “We are pleased that someone has been commissioned to look into the allegations related to the mishandling of the Metro contract. We look forward to a full and complete report from Mr. Bondi’s office.”

Mr. Williams declined to comment.

Reached by telephone, Mr. Binitie, who first delivered the Graham message, was dismissive: “I have no comment whatsoever on anything to do with Jim Graham or the [Metro] contract.”

In a recent interview, Mr. Graham insisted he had done nothing wrong.

“Some people lost out on a lot of money, and they think it’s because of me,” he told The Times. “But there’s nothing there. They lost out because of their own actions, not mine.”