Wednesday, October 22, 2008

Are the Atlantic Yards Land Grab and City Official Fraud Being Used to Finance Bloomberg’s Bid for Billionaire Term Limit Exceptionalism?

Here is a quick thought we can’t seem to shake. It’s been bedeviling us ever since we posted our article about the way in which abuse of “charities” for political ends has gotten out of hand: Monday, October 20, 2008, “Charity?” We Begin to Groan.

The Bedeviling Question

We must ask:

Is the Atlantic Yards land grab paying for Mayor Bloomberg’s effort to specially exempt himself from term limits and achieve a third term? For that matter, is the Mayor’s bid for billionaire exceptionalism fueled by city officials' fraud?
It seems pretty simple. In an apparent quid-pro-quo for city approvals for Atlantic Yards, developer/subsidy-collector Forest City Ratner gives hundreds of thousands of dollars to the Mayor’s charities; the Mayor then uses his charities as an instrument of pressure to generate coerced testimony in favor of his remaining in office.

Quid-pro-quo Money from Ratner?

As I reviewed in “Charity?” We Begin to Groan I think that Matthew Schuerman astutely pointed out in the New York Observer (Forest City Ratner Gives to Coney Island Carousel, Other Bloombergian Public Projects, April 1, 2007) that Bloomberg used a nonprofit to collect between $450,000 and $1 million from Atlantic Yards developer/subsidy-collector Forest City Ratner. The collection of this amount, which is very difficult to distinguish from a straight quid-pro-quo kickback, occurred following a “lobbying meeting” Forest City Ratner’s Bruce Ratner had with Bloomberg and Deputy Mayor Patricia Harris. As Schuerman’s article pointed out the Ratner $450,000 and $1 million went to the Bloomberg nonprofit organization “In December 2005, right as the debate over the Atlantic Yards complex was heating up and before the city made several crucial decisions about the project.” (Might one consider that the Mayor had privately negotiated his own version of a project “Community Benefit Agreement?”

Making the Ratner-to-Bloomberg gift appear more illicit: 1.) there was an after-the-fact attempt to deny that the lobbying meeting was the “lobbying” meeting it had been reported to be, and 2.) the meeting was with Patricia Harris. (Atlantic Yards Report has reported: that Harris a. “was Mayor Mike Bloomberg's chief philanthropic advisor at Bloomberg, LP., and her portfolio includes arts organizations” -Bloomberg, LP is the Mayor’s private media company-, and b. has been involved in dealing with officials from arts organizations since she became a city official working for Bloomberg as deputy mayor. (See: Tuesday, April 08, 2008, Ratner, the deputy mayor, the "Wild Card" BP, and the conversion of subsidies into philanthropy)

Similarly, we reported on how Forest City Ratner money was flowing back to the Bloomberg-championed-and-sponsored “New York City Waterfalls” project in “Charity?” We Begin to Groan and Self-Congratulation “Befalls” a Man Who Would Know No Limits (Wednesday, October 15, 2008). Last Thursday the president of the Bloomberg-benefactored Public Art Fund, which did the Bloomberg-championed Waterfalls (with a complex array of Bloomberg-directed funds coming into it), testified in favor of amending the City Charter for an exception to keep Bloomberg in office. This was reported in the New York Times front-page story about how charities were pressured to provide this kind of supportive testimony at the Thursday City Council hearings. The pressured charities were receiving “donations” from Bloomberg as a “private” corporate-donor and/or from city donations he controls as Mayor (See: Bloomberg Enlists His Charities in Bid to Stay, by Michael Barbaro and David W. Chen).

How Much Money? Uncertain-- Hundreds of Thousands or More

How much money is flowing in total? If we think that it is limited to what was picked up on in the Schuerman Observer article in our Noticing New York posts, we are probably naive. Also, although the Schuerman article cites a $450,000 and $1 million range for the “donation” made at the time of the December 2005 Atlantic Yards activities, neither the Observer article nor our own can cite with specificity the exact amount of money, due to the secrecy that surrounds this kind of activity. We know we are talking about at least hundreds of thousand of dollars, perhaps much more.

Loop Closed

That essentially closes the loop. The Atlantic Yards land grab is funding the Mayor’s bid to stay in office to the tune of hundreds of millions of dollars or more. You can add to the picture fuel from city official fraud to serve Ratner’s Atlantic Yard’s interests. We will get to that in a moment.

Do Charities Launder?

Is the involvement of charities sufficient to launder these funds so that they are not considered kickbacks and improper? We’ll see what the NYC Conflicts of Interest Board has to say, but our own opinions will survive for obvious reasons.

That Atlantic Yards is financially supporting the Mayor’s bid to stay in office comes back full circle because the Mayor remaining in office is likely to interfere with the natural and deserved political death the megadevelopment deserves.

Principles: Government of Rules vs. Government of Men

The Mayor’s bid to be specially honored with a third term would be a triumph of billionaire-power over principle. City Council Member Tish James observed at a Develop Don’t Destroy walk-a-thon on Saturday that we are in danger of sacrificing a government of rules for a government of men. Atlantic Yards is also an example of principle and rules being sacrificed to favor a singled-out rich individual, Bruce Ratner. No legitimate process was followed with respect to Atlantic Yards: It is essentially a rape of Brooklyn, a rape of the local community, a rape of the city and its taxpayers. This is what you get with a government of “billionaire exceptionalism.”

Bloomberg’s Lack of Principles

New York Times columnist Clyde Haberman wrote an excellent piece the other day skewering the Mayor for his lack of principle on this issue. (Back When the Mayor Loved Term Limits, October 20, 2008) He quotes the Mayor’s 2005 statements about term limits:

“This is an outrage,” he said in a radio interview. The people had spoken, he said. He added: “There’s no organization that I know that would put somebody in charge for a long period of time. You always want turnover and change. Eight years is great. You learn for four years. You can do for four years.”
Then he goes on to discuss the Mayor’s justification for his change to his current stand:

Mr. Bloomberg has redefined the concept of principle. These days, he calls it dogmatism.

“People that don’t change their mind when the facts change are so dogmatic, they’re not very practical or effective,” he said a few days ago.

What has changed, he says, is the turmoil in the American economy; it requires that his hand remain on the tiller an extra four years. In fact, he was thinking and winking about a third term well before the Dow Jones charts started looking like the EKG of a heart attack victim. For the mayor, principle had morphed into dogmatism quite a while ago.
(Billionaire) Power for (Billionaire’s) Power’s Sake

What does a government of men rather than principles look like? There was a clue in the New York Post story about how Christine Quinn was manipulating the City Council vote of the issue with assignments of committee chairmanships. Reacting to this manipulation of what should be a vote based on principle, billionaire Bloomberg defended the naked use of power-over-principle to stay in power in these words:

“Her job is to corral people and convince them to support legislation, . . .This is an administration-sponsored bill . . . Do you really want us to not go out and promote [it]?”)
In other words, “the Bloomberg justifies the means.”

(See: Quinn Targeting Term Foe's Plum, by Sally Goldenberg and David Seifman, October 15, 2008.)

Fueling Fraud: IRS Reward for Misrepresentation

Are there limits? If Bloomberg is using everything available to him, including the flow-back of Atlantic Yards land grab money to stay in power, then we think his efforts are also being fueled by city officials’ fraud.

We note with a fair amount of consternation the just-reported action by the IRS to provide Forest City Ratner with a special loophole to possibly issue tax-exempt bonds for the proposed Atlantic Yards Nets basketball arena. (See the many recent press reports.) This would not have been possible without highly inappropriate lobbying by city officials. Furthermore, if these bonds are ever allowed to be issued, it will be tantamount to a direct reward of benefit to Forest City Ratner for fraud perpetrated on the IRS by city officials who collaborated in ginning up fake numbers to try and fool the Feds. (See: Wednesday, October 1, 2008, Safety in the Numbers You Pull out of a Hat.) I have not had time to study the theoretical shelter for Ratner that is provided by the recent IRS action. I am not sure it will actually work to make the bonds tax-exempt in light of the city’s misrepresentations. I suspect the tax-exemption of the bonds will be subject to challenge.

Billionaire Exceptionalism: Anything Is Possible and Public Good Is Not the Standard

The point is that when principle and a government of rules is replaced by a government of men then anything is possible, fraud and kickbacks included, and all that really matters is what serves the interest of “billionaire exceptionalism.” What would best serve the people is left by the wayside.

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