Mayor O'Connor has business friends who wield clout
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In late July, Pittsburgh Parking Authority solicitor Jacqui Lazo ended a conversation with authority Director David Onorato believing that her law firm, Buchanan Ingersoll & Rooney, would be replaced as solicitor by crosstown rival Reed Smith, ending a relationship dating through the previous two administrations.
The sudden news puzzled Ms. Lazo's boss, Jack Barbour, who turned to John Verbanac, a political consultant who advised Mayor Bob O'Connor during the last mayoral campaign. Mr. Verbanac reported back to Mr. Barbour with a somewhat different message: the work would be put up for bid and his firm would be allowed to compete for it.
The incident points to Mr. Verbanac's role and influence along with a small handful of nonelected, nonappointed business figures with close ties to Mr. O'Connor's inner circle, a closeness heightened by the mayor's illness and the recent purge of three top aides. Each of the executives are connected in varying ways, the most prominent being their joint participation in a slot casino bid from Forest City Enterprises and Harrah's Entertainment, the group hoping to get a license for Station Square. They include:
Charles Zappala, who works for Downtown-based venture capital firm G&Z Investments and co-founder of RRZ Public Markets, a municipal bond underwriter bought by JP Morgan in 2003. A donor to the O'Connor campaign last year, Mr. Zappala is a local partner in the Harrah's bid. His nephew, Greg Zappala, helped the city refinance $243 million in debt in May.
Glenn Mahone. A partner at Reed Smith, Mr. Mahone is the solicitor for the Intergovernmental Cooperation Authority, an oversight board created in 2004 by the state Legislature to help Pittsburgh deal with its financial problems. ICA's headquarters is in Reed Smith's Downtown building, on Sixth Avenue. Reed Smith received $60,000 in May for its work assisting the city with the $243 million refinancing. Mr. Mahone also is a local partner in the Forest City/Harrah's casino bid. His law firm gave new deputy mayor Yarone Zober his first job out of law school.
Bill Lieberman. An insurance broker and O'Connor fund-raiser, Mr. Lieberman was chairman of the ICA for parts of 2004 and last year. Mr. Lieberman was part of an effort in March to steer a city health care consulting contract held by Towers Perrin to his former firm, Hilb Rogal & Hobbs, according to the president of Hilb Rogal's Pittsburgh office. (Mr. Lieberman said he did not try to orchestrate a contract switch). A former Hilb Rogal executive, Mr. Lieberman still shares an office with his former firm and collects fees or commission if he brings in new work.
The decision to fire Towers Perrin, made in March according to a Towers Perrin memo obtained by the Pittsburgh Post-Gazette, was reversed after then-chief-of-staff B.J. Leber found out about the attempted switch. Ms. Leber was one of the three aides ousted July 27 by Mr. O'Connor; she was replaced by longtime friend Dennis Regan.
Mr. Verbanac. A protege of U.S. Sen. Rick Santorum, R-Pa., Mr. Verbanac worked on the O'Connor campaign last year as an informal adviser and shares Gateway Center office space with Mr. Zappala at G&Z Investments. He works as a consultant on the Forest City/Harrah's casino bid. Allegheny County Chief Executive Dan Onorato said last week that he talked with Mr. Verbanac while cobbling together a new city-county hockey arena financing plan in July that included financial commitments from two casino bidders, including Forest City.
Mr. Verbanac made calls on behalf of Cleveland developer John Ferchill regarding land controlled by the city's Urban Redevelopment Authority at the Pittsburgh Technology Center on Second Avenue in Hazelwood.
Both Mr. Ferchill and Mr. Verbanac said there was no official business arrangement between the two of them, even though Mr. Verbanac said he placed calls to the URA general counsel and URA board chairwoman/ Ms. Leber, to argue Mr. Ferchill's case and ask that the developer be considered for the project, the last buildable site at the technology center.
"Do I know John Ferchill?" Mr. Verbanac said. "Absolutely. But I have no business interest whatsoever."
Mr. Ferchill, who described Mr. Verbanac as a "guy who gets things done," eventually won the right to pursue development on the land after the URA let an option from Madison Realty Group expire, a sequence of events that still mystifies that firm's chief executive officer, Blaise Larkin, who said he had met all of the URA's requirements. "I'm still scratching my head as to why I was not allowed to move forward on that project," Mr. Larkin said.
URA Director Jerry Dettore said his agency let the Madison option expire because of doubts about the company's ability to put up a building without any tenants. He said Mr. Verbanac would call now and then to check on the status of the option, but that Mr. Verbanac had nothing to do with the decision.
Mr. Verbanac made it clear in an interview that "I don't have a single piece of business with the city of Pittsburgh," nor does he represent any clients who do work with the city. He argued he would never use his personal relationship with the ailing Mr. O'Connor for his own financial benefit. "I have never done that," he said.
What's more, he played down his influence within the new administration. Mr. O'Connor's decision to fire Ms. Leber, Solicitor Susan Malie and Budget Director Paul Leger had "nothing to do with me. I do not make those decisions. I am not the mayor of Pittsburgh. Bob O'Connor is. People need to start respecting that he is the mayor."
He chose to work on the Forest City/Harrah's bid, Mr. Verbanac said, because "that is the best plan. Am I not allowed to work on that? Last time I checked, the city of Pittsburgh doesn't decide who gets a license."
While he admits to hearing rumors about his influence at city hall, he argues that "it doesn't work like that. I am not in city government. Those people are. I helped put them there. There is a difference."
As for when he got the phone call from Mr. Barbour, at Buchanan Ingersoll & Rooney about that status of the Parking Authority contract, "I didn't take overt steps for him," Mr. Verbanac said.
"Do I talk to Jack Barbour? Sure I do. I've talked to him for 10 years. He lives around the corner from me,'' Mr. Verbanac said.
"Did Jack say, 'Are we retaining that business?' Sure he did. Did I take action? No. That is not my business."
Mr. Barbour, when asked about the call, declined comment and said he was not allowed to discuss relationships with clients. The firm also does work for the Public Housing Authority and the URA.
The value of its contract at the Parking Authority varies from year to year, depending on the amount of work. The rate charged by Buchanan Ingersoll & Rooney for legal work runs about $210 an hour.
David Onorato, the Parking Authority executive director, said the new administration asked him to put all Parking Authority contracts, including legal, out for bid in search of the best price.
Mr. Onorato is the one who had the initial conversation with Ms. Lazo of Buchanan Ingersoll & Rooney in July, the one that left Ms. Lazo with the impression that her firm would lose the contract, according to sources familiar with the conversation.
Mr. Onorato said he never told Ms. Lazo that Buchanan Ingersoll was out and Reed Smith was in, only that all firms soon would be able to bid on the work. But Reed Smith's name did come up during the conversation, he said, as part of a "general discussion" about "who was out there who would do the work" and that Reed Smith would be one of the firms asked to submit a bid.
Asked about the contract, O'Connor spokesman Dick Skrinjar argued the administration "is simply looking for the best service at the best price for the taxpayers of Pittsburgh."
Legal services work is "open to any firms employed by the previous administration that have current contracts," Mr. Skrinjar said. "The O'Connor administration is open for business."
First Published August 13, 2006 12:00 am