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Political contributors both give and receive
Half of top 100 givers also get work from city
Sunday, December 07, 2008

In Pittsburgh politics, those who give big usually receive.

Developer Walnut Capital Management, whose executives chipped in $69,606 to city political campaigns between 2005 and 2007, got a $10.5 million aid package approved by the mayor and council that created a loophole in a union-friendly ordinance for its Bakery Square project.

Big-donor law firms Cohen & Grigsby ($25,750 in city political contributions) and Buchanan Ingersoll & Rooney ($43,350) each did city-related legal work worth more than half a million dollars, much of it awarded without competitive processes.

Seattle-based billboard firm Liberty Pacific Media ($27,000) got permits for three signs in areas where they're not normally allowed, and became a top donor to the mayor's campaign.

They're three of the dozens of big donors to city political campaigns that have business with city government, according to an examination of 3,300 campaign contributions since 2005 and data on more than 4,400 contracts, development deals and other actions by the city and its authorities since 2006.

The list of top 100 donors includes 31 businesses with contracts with the city or its authorities, 11 developers that have gotten special consideration from the city, eight unions that represent city employees, and three entities -- the Steelers, Comcast Corp. and Liberty Pacific Media -- that, respectively, lease a stadium from a city-county authority, negotiate cable agreements with the city, and seek billboard permits from the city.

In all, those 53 interested parties gave $1.3 million to city campaigns or about one quarter of the total raised. The $1.3 million total doesn't count contributions of $250 or less, which the Post-Gazette didn't include in its analysis because those donors aren't required to disclose their employers. Donations made this year haven't yet been reported to the Allegheny County Elections Division.

The other top 100 donors include the Democratic Party, campaign committees, candidates' family members, firms and unions without city pacts, developers that go before city panels but didn't get unusual help, and a handful of others with no obvious financial interest.

Standing on the 17th floor of the Omni William Penn while people filed out of his Nov. 26 campaign fund raiser that grossed $300,000, Mayor Luke Ravenstahl said the attendees' generosity "just validates that what we're doing is the right thing," and that there "is no scenario under which there are any quid pro quos or this is required for that. Never happened. Never will as long as I'm the mayor."

At the very least, big donations by those with city business undermine public confidence, said Barry Kauffman, director of Common Cause PA. "The people of Pittsburgh -- and all of Pennsylvania -- need to be assured that public policy and contract allocation and all of these types of public services are determined based on what's best for the people of the city, and not what's best for the campaign contributions of the decision-makers."

Some say the confluence of contributions and city work isn't necessarily nefarious. Lawyers, for instance, give to campaigns because they "recognize that there's a campaign process, and they want to participate, and want to have an opportunity to participate in not only the elections process, but also the governmental process," said attorney Cliff Levine, of Thorp Reed & Armstrong, a firm that's a top 20 contributor to city campaigns and does city work.

In some ways, there's always been overlap between those who give to campaigns and those who get from government.

Mr. Ravenstahl, a city official since 2004 who faces reelection next year, agrees. "Some [contributors] do business with the city. Some don't," he said. "That's historically always been the case in elected offices like the mayor and the county executive."

Fundraising, he said, "is a necessary evil if you're to be able to be successful and get that positive message out there."

Councilman William Peduto said that what he calls "pay to play" is "part of the political DNA of Pittsburgh" that's destroying the body politic. He said that as he sat with a list of hosts of his Thursday campaign fundraising event for next year's council re-election race.

Some of his top donors -- like medical transcription executive William Benter and philanthropist Elsie Hillman -- do no city business. But the 23 event co-chairs listed, each of whom pledged $2,000 to his council re-election campaign, included Robert Crawford, William Hunt and Steve Mosites, who are developers with projects in or near his district.

Mr. Peduto said he'd be "naive" to think they were giving solely because they think he's the best candidate, but said they know their support doesn't buy favors from him. They may not think that of other candidates, he said.

"Vendors, or potential vendors, believe [donating to campaigns] is a requirement" for getting professional services contracts, he said. "When you have the mentality of pay to play, you cannot have good government."

No limits

Pittsburgh is one of a handful of major cities that don't limit campaign contributions.

Philadelphia put contribution caps of $2,500 on individuals and $10,000 on business partnerships and political action committees in 2006. Mr. Ravenstahl in June vetoed a bill sponsored by Mr. Peduto that would have put contribution limits of $2,000 on individuals, and $5,000 on PACs.

That keeps the door open for five-figure checks. City candidates got 81 checks of $10,000 or more from 2005 through 2007. "That certainly gives [the donor] preferred access to public officials at the very least," said Mr. Kauffman.

Robert Lewis of Orbital Engineering gave $19,000 to the late Bob O'Connor's winning 2005 mayoral bid, and $10,000 to Mr. Ravenstahl's 2007 campaign. Of Orbital's total of $48,000 in contributions to city campaigns, all but $1,000 came from Mr. Lewis.

When Orbital needed more parking for its 105 headquarters employees, Mr. Lewis approached Mr. O'Connor. Effective May 1, 2007, on Mr. Ravenstahl's watch, the Urban Redevelopment Authority gave him a no-bid lease for $5,500 a month for a parking lot it owns on Colwell Street in the Hill District. It took the lot lease from Kail Parking Inc., whose partners gave city campaigns $3,250.

"If we didn't have that [lot], we wouldn't have employees," said Mr. Lewis. "I don't think it had anything to do with the money."

The URA, which has competitively bid other lot leases, plans to re-evaluate the lot's status as the nearby new arena comes online.

Liberty Pacific Media obtained city permits for billboards in Downtown and North Shore areas where new signs aren't allowed in November 2006. They brought executives from another firm to a meeting with then-City Planning Director Pat Ford and, briefly, Mr. Ravenstahl, and then sold that firm the permits for $750,000.

In December 2006, Liberty Pacific executives gave $25,000 to the mayor's campaign, and one made another $2,000 donation in 2007. That year, the firm obtained a permit for another sign in a Downtown zone where new billboards are barred -- at 610 Wood St. -- though it was revoked when the firm's check for city sign fees didn't clear.

Liberty Pacific executives could not be reached for comment.

Developer Beacon/Corcoran Jennison faced a years-long logjam in its effort to enlarge its Oak Hill housing development in the Hill District, until Mr. Ravenstahl brokered a deal with that firm, the University of Pittsburgh and the Pittsburgh Housing Authority in March 2007.

Six months later, the mayor visited the developer in its home base of Boston, and six weeks after that, officials from the developer made $21,000 in contributions to the mayor's campaign. "We've been in Pittsburgh since 1995, and quite frankly, [the mayor] is impressive," said Miles Byrne, project manager for the developer. "When you contribute to someone, you in essence say, we like that leadership."

Law of the land

Trading campaign contributions for governmental favors is illegal, and an increasing number of cities have taken measures to stamp out any appearance of it. In Newark, N.J., for instance, if anyone associated with a business gives more than $300 to a city candidate's campaign, that business can't get a no-bid contract for one year.

Most government legal work is dished out following subjective proposal reviews or with no competitive process. The theory is that bargain legal work isn't always the best bet.

Not surprisingly, law firms that do city work are among the largest campaign donors.

Cohen & Grigsby has landed 23 contracts worth some $544,000 since 2006, mostly for bond sale paperwork and crafting Housing Authority development agreements. The firm's PAC and members have given $25,750 to city candidates since 2005, including $11,000 in PAC contributions each to Mr. O'Connor's and Mr. Ravenstahl's campaigns.

"It is not a pay-to-play scenario," said Kaveri Subbarao, Cohen & Grigsby's chief marketing officer. "You want to develop long-term relationships with your clients. That's not going to be the case if it's a pay-to-play scenario."

Buchanan Ingersoll & Rooney obtained 13 city and authority contracts worth up to $696,000 since 2006, mostly for bond work that's assigned without any competitive process. Its PAC and lawyers gave $43,350 in contributions -- including those by a firm it merged with in 2006 -- among them $15,000 to Mr. Ravenstahl's campaign.

Last year Buchanan Ingersoll also gave $5,000 to Mr. Ravenstahl's inaugural committee. Eight entities gave at that top level. Those that had city or authority contracts were Highmark Inc., Chester Engineers, engineering firm McTish Kunkel & Associates, and the PAC of The Bank of New York.

Mr. Ravenstahl has set up a panel that's reviewing city contracting procedures, including for legal work. He said it isn't likely to recommend Newark-like limits.

"Our goal in that effort is to make sure that everything is documented, transparent, people know what happened throughout the process, why Vendor A was chosen over Vendor B," he said. "That doesn't preclude, nor should it preclude, anybody from contributing to campaigns if they feel it's the right thing to do for what we're doing."

Tax break in the sky

Shadyside-based Walnut Capital's generosity to city campaigns includes $27,500 to Mr. O'Connor's campaign, $16,000 to Mr. Ravenstahl's, $11,906 in checks and non-monetary help to Mr. Peduto's bids, and smaller donations to nearly every council member's coffers. Its total was exceeded only by the state Democratic Party's largesse.

"We do almost 100 percent of our work in Pittsburgh and the Pittsburgh region, and we're happy to support people who want good development," said Todd Reidbord, Walnut Capital's vice president and a member of the City Planning Commission. Mr. Ravenstahl, in particular, "has really understood what it means to move the city forward."

The firm's Bakery Square office, retail, housing and hotel complex in the East End received an unusual boost from the city.

Late last year, the $111 million project won a $10.5 million tax-increment financing, or TIF, benefit in which the Urban Redevelopment Authority borrowed money to back a parking garage and infrastructure improvements, to be paid off using future tax dollars from the site.

Under a city ordinance approved in 1999, TIF-backed hoteliers have to try to come to terms with unions that want to organize their workers. But URA lawyers ruled that a hotel at Bakery Square was not subject to that rule, because it would be built in a specially created tax parcel in the air above the site.

That finding sounds like it's "in direct contravention of why we would have created a TIF," said Irwin W. Aronson, a lawyer with Willig, Williams & Davidson in Harrisburg, who has litigated landmark TIF cases. "You can't have an island within a TIF," he said, and developers getting a high degree of taxpayer help "should also be expected to meet at least the minimum public conditions imposed on anybody who gets public funding."

Council voted 7-1 for the TIF in December 2007, with only former member Len Bodack voting no. That tally came despite vocal opposition from the UNITE HERE union, whose PAC has given $3,700 to city campaigns in recent years.

When the private backing available to Bakery Square dipped, Walnut Capital turned again to the URA, and last month got a $2.5 million loan. With that, 29 percent of the project's financing consists of the URA loan, the TIF, state loans and grants and federal tax credits for historic preservation.

Mr. Reidbord didn't think political contributions smoothed the process. "Things haven't moved as fluidly as we wanted."

Rich Lord can be reached at rlord@post-gazette.com or 412-263-1542.
First published on December 7, 2008 at 12:00 am