Grubb & Ellis fined for late money to hospital measure

San Diego — A subsidiary of the real estate outfit that recently recommended taking day-to-day approval of San Diego's real estate dealings away from the city council has again been tagged with campaign-reporting violations. According to a stipulation approved two weeks ago by the state's Fair Political Practices Commission, Grubb & Ellis/BRE Commercial -- which has offices on La Jolla Village Drive in University City -- violated California's Political Reform Act. It failed to report in a timely manner a $50,000 late contribution it made on October 28, 2004, to "Citizens for Better Healthcare-Yes on BB," backer of a successful $496 million bond measure to upgrade hospitals and other health facilities in inland North County. Under state law, donors who give money after the campaign committee's final reporting deadline prior to an election are required to file their own separate disclosure of "late" contributions so that voters may be aware of who is giving to the cause right up to Election Day. For that lapse, Grubb & Ellis agreed to pay a $3500 fine. The company also didn't file a required "major donor" statement with the secretary of state, listing all of the contributions it had made that year, and agreed to pay an additional $930 for that omission.

The stipulations follow Grubb & Ellis/BRE's September agreement to pay a $3000 fine to the City of San Diego for laundering $900 to the November 2005 campaign of Mayor Jerry Sanders through John Frager, the firm's chief executive. City law bars corporations from contributing to mayor and council campaigns, whether directly or via reimbursements to employees. According to a September 18, 2006, stipulation between the company and the city's Ethics Commission, Frager made two contributions of $300 each to the Sanders campaign -- one for the primary and another for the runoff -- using his corporate credit card, which was covered by the firm. His wife Kristen gave $300 on her personal credit card, which Frager was later reimbursed for. The mayor denied having anything to do with the laundering.

As it happened, in September of last year Sanders chose another Grubb & Ellis subsidiary, Grubb & Ellis Property Solutions Worldwide, to "provide the review and analysis required to recommend improvements to the Real Estate Assets Department's organizational structure, management practices, business processes, and operations." The final report, costing about $200,000, went before the city council's Housing and Land Use Committee February 7. It recommended that the council's involvement in the disposal of city land be limited to "batched approval," using "authority within a box." According to Grubb & Ellis, "most real estate decisions requiring Council action should be approved as part of a portfolio plan, rather than as individual transactions." It adds that "once a portfolio plan is approved, including thresholds and terms for typical transactions, [the Real Estate Assets Department] should be free to execute those transactions that comply with these guidelines. The appropriate focus of Council is to periodically review the guidelines and to address exceptions." Critics argue that without some kind of mandatory public airing of final sales terms and policy "exceptions," Sanders and his people may be tempted to unload city-owned land in stealthy sweetheart deals to friends and campaign contributors.