September 16, 2008
Obama 's Friends and Chicago's New Slums
[See also "Obama and South Chicago Slum Developers" here.]
"Mayor Daley's always talking about fair housing and decent housing, and he's got Allison Davis, who he appointed on the planning commission," says Smith, who heads the tenants association that represents Evergreen/Sedgwick residents. "We still live in a slum." (From the article "We still live in a slum," Mark Konkol, Chicago Sun Times, June 29, 2007)
In 1993, Barack Obama joined a Chicago law firm that specialized in helping develop low-income housing. In time, the job would bring him political support from slum landlords who make Clinton's shady Arkansas associates look like teenage shoplifters.
Obama's connections with public housing developers and property managers have been investigated in depth by a cadre of reporters from the Chicago Tribune and the Chicago Sun Times. The major TV networks and national print media, particularly the New York Times and Washington Post, have ignored their findings.
Once the media declared the Tony Rezko story over when he was convicted in federal court, the national media's attention turned away from Chicago. Here's just part of the story they've missed.
Obama Joins The Law Firm of Davis Miner Barnhill & Galland
Barack Obama was a law student at Harvard in 1990 when Rezko's low-income housing development company offered him a job. He declined. Two years later he returned to Chicago to work on a voter registration drive while he figured out what to do next.
Next came in 1993 when he joined a law firm that represented subsidized housing developers eager to tap into government funds available to reconstruct public housing. Mayor Richard M. Daley planned to tear down Chicago's old, dilapidated public housing stock and build new units. It promised government housing renovation on a massive scale.
At Davis Miner Barnhill & Galland, Allison Davis was Obama's boss and tutor in the legalities of government subsidized housing.
A generation older than Obama, Davis grew up in Hyde Park, home of the University of Chicago, where his father was the school's first African-American professor. After a stint in the U.S. Agency for International Development (USAID) in West Africa, he returned to Chicago to become active in the civil rights movement as an attorney in the Metropolitan Housing and Planning Council. In those years, Davis was a reformed-minded lawyer often at odds with Mayor Richard J. Daley, Richard the 1st.
In 1971, Davis opened a small law firm that would include Carol Moseley-Braun, who became a one-term U.S. Senator from Illinois. Years later, Davis would serve on the finance committee of another former employee running for the U.S. Senate, Barack Obama, along with Tony Rezko and Valerie Jarrett.
Obama worked at the firm from 1993 until he was elected to the U.S. Senate in 2004.
Meanwhile, in learning how to represent developers, Davis learned how to be one. So he became a principal. In 1997 he left his firm and started playing for bigger stakes at the gaming table that's Chicago low-income housing business. This time he played for himself in partnership with a pro named Antoin "Tony" Rezko. Here's a sampling of Davis' winnings over the years.
New Kenwood L.L.C
In 1997, Davis and Rezko formed New Kenwood L.L.C. and set out to build a seven-story apartment building for seniors called Cottage View Terrace. At the time, Davis was a member of the Chicago Plan Commission, having been appointed by Mayor Richard M. Daley, Richard the 2nd.
Several local elected officials, representing both city and state, wrote letters-of-support citing the need for senior citizen housing. State Senator Obama's letter was dated October 28, 1998. He still worked as an attorney at Davis' former firm, renamed Miner Barnhill & Galland. (Judson H. Miner had been Corporate Counsel for the City of Chicago from 1986-1989.) The firm's clients included companies owned by Davis and Rezko.
New Kenwood L.L.C. hired the law firm of Daley & George -- the Daley being the current Mayor Daley's brother, Michael Daley -- to assist in securing city-of-Chicago issued bonds. (Brother Michael is not to be confused with brother John Daley, the Cook County Board finance committee chairman and 11th Ward committeeman. Or, brother William "Bill," Daley, who is contemplating a run for Illinois governor.)
The city owned the two-acre vacant lot targeted for the proposed project. It had once been the site of a gas station and needed an environmental cleanup. Davis and Rezko bought the land for $1, and spent $100,000 for the cleanup.
Here's what the Chicago Sun Times (June 13, 2007) reported about the project:
"The $14.6 million Cottage View Terrace was funded entirely by city, state and federal taxpayers. The projected included $855,000 in development fees for New Kenwood...In addition to the development fees, a separate Davis-owned company stood to make another $900,000 through federal tax credits."
William Moorehead, a Davis business partner, was supposed to manage the property when it opened in 2002. But, according to the Chicago Sun Times (November 11, 2007),
"One of his [Davis'] business partners, William Moorehead, recently began serving a four-year prison sentence for stealing more than $600,000 from at least 13 federally funded housing projects he managed - including two building that he and Davis owned."
Urban Property Advisors (remember that name), a Davis company run by his son, Cullen (more on him later), took over management of the property.
Last year, the Sun Times asked the Obama Campaign if Obama's letters of support for the project represented a conflict with his statement on December 2006 wherein he told the Chicago Tribune that, "I've never done any favors for him [Rezko]." The Sun Times reported (June 13, 2007) that,
"On Tuesday, Bill Burton, press secretary for Obama's presidential campaign, said the letters Obama wrote in support of the development weren't intended as a favor to Rezko or Davis."
Guess it just happened that way. Stuff happens.
Rezko & Davis Ventures
The success rate of Rezko/Davis public housing ventures in the mid-to-late 1990's was not outstanding. The Chicago Sun Times (April 23, 2007) catalogued the disposition of 14 redevelopment projects where Rezko and Davis engaged Davis' old law firm while Obama worked there. After millions of dollars in government loans, the state foreclosed on 4 projects, and Rezmar Corp. walked away from 10. The Sun Times comment on two of the properties contains a puzzling notation:
"Two buildings - 5630 S. Michigan and 6446 S. Kenwood. Rezmar [Rezko's company] and the Fund [for Community Redevelopment and Revitalization, a Davis company] closed on this deal in 1998. The city approved a $3.8 million loan for this project while Rezmar was facing foreclosure on another funded by the city. Rezmar gave up management of the buildings about a year ago [in 2006]." (emphasis added)
So, why would the city loan new money to a company about to default on a previous loan?
On April 23, 2007, the Sun Times submitted questions to the Obama Campaign through Robert Gibbs, the campaign's Communications Director, probing Obama's knowledge of development deals involving a donor (Rezko) and a former boss and donor (Davis). The entire 28 questions and answers merit reading. Here are two samples:
Q. At the time of those deals, Tony Rezko was a client of the senator's firm, a campaign donor to the senator, a personal friend, and a business partner with the senator's boss, Allison Davis. But Mr. Rezko was also a landlord to many constituents living in the state Senate district that Senator Obama represented at the time. And many of those Rezmar properties had fallen into disrepair, while Rezmar began to fail financially. Did the senator ever talk to Tony Rezko about the deteriorating status of his housing projects?A. To reiterate: the firm did represent entities in which Tony Rezko had an interest but never Tony Rezko, personally. (Ahh, so it was the impersonal Rezko they represented.) Senator Obama does not remember having conversations with Tony Rezko about properties that he owned or any specific issues related to those properties.Q. Was the senator aware of Rezmar's financial problems at the time?A. No.
And so we have here a variation on the Sergeant Schultz Defense of Hogan's Heroes fame: I knew nothing. In fact, after reading the Q. & A. exchange you might wonder: Did Obama show-up for work at the firm, or just get a paycheck in the mail?
So how much taxpayer money have Davis and his partners gleaned over the years for their government housing projects? Sit down before you read the answer. According to the Sun Times (November 11, 2007),
"Davis and his partners - including sons Jared and Cullen - have gotten more than $100 million in taxpayer subsidies to build and rehabilitate more than 1,500 apartments and homes, primarily for the poor. His deals include a massive redevelopment of the Chicago Housing Authority's Stateway Gardens, across the Dan Ryan Expy from Sox Park. It is a lucrative business. Davis and his partners have made at least $4 million in development fees over the last decade."
And, Davis has generously shared his winnings.
"He has donated more than $400,000 to dozens of political campaign funds. His top beneficiaries include Daley, [Illinois Gov.] Blagojevich and Sen. Barack Obama, who worked for several years as an attorney in Davis' law firm." (Sun Times, Nov. 11, 2007)
Can we wonder how much money Davis' contractors and their subs have contributed to politicians who have sponsored their employment opportunities?
You can see Davis' impressive list of political donations here. Since 2003, about $25,000 has gone to Barack Obama. Before 2003, it was $1,000.
A picture of how urban redevelopment works in the Windy City is emerging.
The Chicago Tribune recently (July 7, 2008) reported on the status of the Stateway Gardens project.
"At what once was Stateway Gardens, part of the most infamous wall of public housing in the world, construction is being overseen by a team that includes Allison Davis, a powerful developer with close ties to City Hall. The new Park Boulevard on South State Street sits not far from U.S. Cellular Field, home of the White Sox, on what has become prime real estate. It also stands as the most dramatic example of troubles with the city's strategy."
As of last year, only 53 of 439 planned housing units were completed, and bankruptcy was depleting team membership. But there was positive news about the site's northeast corner where a Starbucks, Jimmy John's, and a FedEx Kinko are doing quite well. This is particularly good news for those who control the commercial strip -- Davis and Robert Vanecko, Mayor Daley's nephew.
The Sun Times, unafraid to pose embarrassing questions, asked Daley why his nephew "was given $63 million in city-related pension funds to invest in a risky real estate venture." His Honor cited the Sergeant Shultz Defense.
All in the Family
The quote at the beginning of this article is from a resident of the New Evergreen/Sedgwick Apartments complex, where living conditions are...well, there's no adequate word. Last June 29, Sun Times reporter Mark Konkol couldn't find the right word, so he described the living conditions in the "publicly financed, mixed-income, subsidized housing complex." The event that finally provoked action from the city was when "raw sewage bubbled up to the electrical outlets in a couple of apartments." Konkol reported that,
"Not until their clout-heavy landlord, Allison Davis, one of Mayor Daley's top allies in the black community, and the property management company run by Davis' son was sued by the city, found liable for building code violations and fined $2,500 on May 31."
Here's the routine. The property management company calculates how much to spend on renovation and maintenance, and then adds in their desired profit. When the maintenance budget is gone, so is the maintenance.
At another public housing complex managed by Davis, Sam Olkon of the Tribune reported that, on June 27, 2008, 3-year-old Curtis Cooper was killed while riding his tricycle when a tall, rusted, steel gate came off its hinges and crushed him to death at the Chicago Housing Authority's (CHA) Cabrini-Green complex. (Video report here.) Davis' company, Urban Property Advisor (UPA), manages the complex. Cullen Davis runs his dad's company. All in the family.
"UPA manages properties all over Chicago. The Davis family stands to make millions as part of CHA's Plan for Transformation, the city's ambitious effort to demolish high-rise public housing and replace it with mixed-income communities."
Allison Davis is one more prominent friend and supporter of Barack Obama from Chicago's public housing development and management community.
Those associations beg a serious question the old big media has not asked.
Who was looking out for the public housing interests of State Senator Obama's constituents while slum landlords used taxpayer funds to provide their appalling housing? And, now that Obama is a U.S. Senator from Illinois, who's looking out for the taxpayers?
Author's Note: A standing ovation is owed the persistent, professional journalists extraordinaire representing the Tribune and the Sun Times, on whom this piece leans heavily.
[Hat tip: AT reader "Dee"]