Oakland councilwoman broke city, state rules, report says

Oakland City Council President Lynette Gibson McElhaney speaks during a press conference at the Oakland Museum of California, in Oakland, CA Friday, April 22, 2016. Oakland City Council President Lynette Gibson McElhaney speaks during a press conference at the Oakland Museum of California, in Oakland, CA Friday, April 22, 2016. Photo: Michael Short, Special To The Chronicle Buy photo Photo: Michael Short, Special To The Chronicle Image 1 of / 1 Caption Close Oakland councilwoman broke city, state rules, report says 1 / 1 Back to Gallery

An Oakland city councilwoman broke state and city ethics rules by interfering with the approval process for a five-unit town house development planned for a lot next door to her home, according to a civil grand jury report released Tuesday.

The councilwoman inappropriately wielded her position and used city resources to contact a department head to argue her objections and cause a re-evaluation that stalled the project, according to the report of the Alameda County grand jury. Although the report does not name the councilwoman, a source with knowledge of the grand jury probe identified her as City Council President Lynette Gibson McElhaney, and city documents show the address of the project lot as 530 32nd St. in West Oakland, which is next door to McElhaney’s home.

The interference by the councilwoman led to several revisions and downsizing of the building plans, and the project was approved in 2014, according to the report. But the project has not been built. Instead, the property owner is offering the lot for sale.

“The property owner is concerned that further battles with the city may occur while attempting to obtain permits and constructing the town house project,” the report states. “Witnesses to the grand jury testified that developers are reluctant to purchase the property due to the council member’s interference.”

McElhaney did not return calls seeking comment.

“As public servants, elected officials are precluded from seeking to influence a decision in which they have a financial interest,” the grand jury report stated.

The report noted that “the councilmember had a material financial interest in governmental decisions based on the proximity of the town house project to her residence and the likelihood that her privacy would be adversely impacted.”

Opposition to project

The saga began in January 2014 as the property owner, who is not identified in the report, was in the midst of working with the city planning department on a design for the five-townhouse project with downtown views in a part of Oakland long starved for development. The property owner was contacted by a “next-door neighbor who stated that his wife was an Oakland city councilmember and further stated that he and his wife would be working to stop the project if the design was not changed to their liking,” according to the report.

Shortly afterward, the report states, the councilwoman contacted Oakland Planning and Building Department chief Rachel Flynn to complain about the town house project. It says Flynn visited the lot, decided the design was subpar and pressured the property owner to make several modifications to mollify the councilwoman and her husband.

Flynn also installed herself as a point person for the project and urged the property owner to submit the revised plans to the councilwoman and other neighbors before turning them in to the city, the report stated.

At Flynn’s urging, the owner decreased the height of the building, reduced the number of dwellings from five to four and diverted the views away from McElhaney’s house, instead directing them toward a freeway wall and another neighbor’s home, according to the report.

The grand jury found that the councilwoman “directly violated ethics rules” by calling Flynn and that Flynn’s involvement “gave the appearance that the department head was an advocate for the council member.” The councilwoman also used her influence to attack Flynn and suggest that the planning staff had flouted city procedures in approving the town house development, the report said.

Email cited in report

The grand jury report states that an email it reviewed showed the councilwoman telling the planning director that the town house project approval raised “a series of serious concerns for your department, including how well you track and enforce the city’s procedures.”

Flynn referred questions to the city administrator’s office, which issued a statement Tuesday acknowledging the ethics rules and promising to work with Oakland’s Public Ethics Commission to ensure that rules are followed.

The city planning and zoning commissions ultimately approved the modified design on March 21, 2014, but it still did not placate McElhaney and her husband, who filed an appeal two weeks later. Oakland’s Planning Commission denied their appeal on Dec. 17, but the project has not been built.

In its report, the grand jury recommended that the Public Ethics Commission conduct its own probe of the councilwoman’s interference with the project and that the commission “reinforce” its ethics training for city officials and employees. The grand jury also encouraged the City Council to consider censuring the councilwoman for using her office for personal gain.

Public Ethics Commission head Whitney Barazoto said the commission opened an investigation on Feb. 18, 2015. That investigation is continuing.

Rachel Swan is a San Francisco Chronicle staff writer. Email: rswan@sfchronicle.com Twitter: @rachelswan