Sunday, January 13, 2013

Ravenstahl philosophy one of "Crony Capitalism." We have citations.

Resourceful Earth

An evolving clash over development policy foreshadows what will surely be among the clearest visible contrasts among Pittsburgh mayoral candidates this spring.

In response to possible concerns about a $90 million tax-increment financing (TIF) plan for a new Hazelwood development, and in reaction to furor over special zoning changes and shelved notions of a $50 million TIF in the Strip District, URA board member and State Sen. Jim Ferlo caricatured the standard bearer of some of the opposition:

"This is the beginning of a very long process," said URA board member Jim Ferlo, a Democratic state senator from Highland Park. "There are going to be a lot of hurdles, if not some significant roadblocks."

Buncher on Tuesday announced that it no longer would seek the financing, which was being held up by councilman Patrick Dowd, who Mr. Ferlo called "Doctor No."

"As far as I'm concerned, this is going nowhere fast," he said. (P-G, Mark Belko!)

It is a politically interesting exchange in that Dowd and Ferlo's respective districts of representation overlap. But more immediately and importantly, it highlights exactly what has long been Mayor Luke Ravenstahl's signature mission and most pernicious stumbling block as city leader: finessing deals with the private sector to get shovels in the ground and cranes in the sky.

In June, Councilman Dowd attempted a characterization of his own:

Your "laissez-faire" policy for development and lack of regard for local flavor is reminiscent of the era of so-called urban renewal – the results of which include the devastating East Liberty and Allegheny Center development projects -- and could have similarly detrimental results in the Strip District. (Letter PDF; see also P-G)

However Dowd's analysis is woefully imprecise. Although "laissez-faire" policies would obviously include granting the private sector wide latitude from planning regulations, labor regulations and taxation -- all of which Ravenstahl is famous for as part of his avowed "pro-growth" agenda -- true free market conservatives would never cotton to such aggressive seeking of public subsidies, public financing, sub-market rates on public land and the non-competitive consolidation of broad parcels to single bidders, all of which Ravenstahl touts as "public-private partnerships."

Although they earn the wrath of economic liberals, what we see in this administration is not conservatism, much less laissez-faire free market capitalism. But rather...

Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, or other forms of dirigisme. (Wikipedia)

It gives me no great joy to employ jargon that has been recently appropriated by Sarah Palin and her brain trust, though its usage seems to predate all that. And I acknowledge the word "crony" bears negative connotations which are not strictly speaking necessary to the development model -- it should be possible to both bestow concessions upon, and lift regulations for, total strangers.

But the model just fits too perfectly, far better than anything else. And we must have a grammar for talking about the differing "development policies" up for debate.

Besides, Buncher Co. of Riverfront Landing has been bragging of its 60-year history as a major developer working with the city and region. And the genesis of Almono LP's project in Hazelwood figured prominently in the e-mails which reveald close ties between the Ravenstahl administration and business figures.

It is less clear what development models are going to emerge as alternatives to Ravenstahl's crony capitalism during the coming election. City Councilman Bill Peduto speaks and writes frequently about consensus and community based development, but I'm not sure if we can engrave that as a comprehensive philosophy. Neither Michael Lamb nor Jack Wagner, as City Controller and State Auditor General, respectively, have had much cause in the course of their day-to-day activities to outline a development strategy.


  1. In our neoliberal era laissez faire is nothing more than the ideological cover for crony capitalism, so you and Dowd may not be that far apart.

    Nonetheless, another egregious example of this administration's ham-handed approach to development is what has been happening in Larimer. A significantly representative subset of the black, mostly lower-income population has been doing community-based planning for the last few years and a really nice plan was beginning to come together (that's just how long these things take). But instead of letting that process unfold, the Mayor, through his wolf in shepherd's clothing Ricky Burgess, shoved through a LIHTC development by Keith B Key Enterprises. KBK is the same entity that rebuilt the projects, now with newer siding, at the top of Black Street in Garfield, another project in direct conflict with the community's desires and plans.

    The modus operandi of Burgess in the Garfield case was to say that the community was too late in articulating its concerns. The deal had already been cut and they were too far along, etc, etc. This was a repeat of the Bakery Square development, also technically in Larimer, where the development was shoved through receiving TIF and, most abhorrently, avoiding the fair wage and labor laws in the hotel piece ostensibly because the hotel wasn't in fact on the ground, but was up one story (at least that's the justification I've heard). No discernible benefit has accrued to Larimer from Bakery Square, and if Burgess gets to continue to play developer in Larimer, none will.

    Now, both Garfield and Bakery Square were supposedly done deals before the community had the wherewithal to ask to be part of the conversation. That is simply absurd with regard to the current phase of Larimer development. Here a community has been planning and discussing for years, with rare involvement from Burgess, aside from his obviously bored staff member that occasionally deigns to participate. But, now that there is an election coming up where the Mayor wants black votes, Burgess is intent to give him a groundbreaking in Larimer before May. So what does the good Reverend do this time since he can no longer say the deal is already cut? He disparages and casts general aspersions on the very community members that have been working so hard for the last couple of years. He works to divide the community by encouraging the formation of a new community group and he begins to warn of "outside influences and speculators that want to come and steal the community's land". These absurdities are bold enough to actually divide the community, especially among residents who've not been paying attention that much. To them, ANY new development in Larimer, which has been disinvested for decades, is a good thing.

    They don't recognize that the development Burgess wants, and THAT THE MAYOR HAS EXPLICITLY SUPPORTED, will re-concentrate poverty in an already affordable neighborhood, making it so that Larimer doesn't improve, homeowners continue to be unable to sell their homes for more than a pittance even though they can see the flags of Google from their porches, and renters suffer slumlords whose units are even worse than the publicly subsidized ones.

    I could go on but the entire scenario in Larimer reflects the fact that this administration's ideas of development, especially at the neighborhood level, are formed in accordance with the short-term of the election cycle. Rather than engage in the hard work of community-based development that gains equity for low-income homeowners, broadens the tax base and addresses the segregating effect of the City's low-income housing practice, this administration would rather get a festive groundbreaking and photo op in a black neighborhood in order to garner another couple dozen votes.

    Apologies for the rude length of this comment.

  2. Often times community based development means letting surrogates take the lead in killing a deal of enemies or getting one approved for allies.

  3. The KBK project in Garfield was approved in 2006.

    Who was District 9's Council rep/Housing Authority Vice-Chair in 2006?

    Not Ricky Burgess.

    Chronology matters.

  4. Well said anon 11:18!

  5. My comment to Shawn got cut off last night, so here goes again, in abridged form:

    Shawn, there was no one-time everything-is-finalized deal for the new Garfield Heights by KBK. Rather there have been multiple phases, likely (though I'm not certain) with multiple financing phases. There have been multiple opportunities to change course, incorporate community desires, etc. since Burgess has been in office. Chronology does matter, and in this case a lot has happened, or hasn't happened, since 2008.

  6. For those of you a bit lost, the above commentators are discussing this story out of Larimer.

    It looked pretty interesting but I had wanted to wait for a second round of coverage before solidifying an opinion. It just sounded like city leaders were being so blatantly dismissive of that "community process" Rich Lord reported upon, and without any cover; perhaps so because of disparaging aspersions and because of what Anon 4:07 suggests. And the second round of coverage never came, the continuing stooory.

  7. Bram,

    I've never tried this before...

    So here goes...


  8. Well-replied indeed, Shawn.

  9. Proportionately thorough response in that above link -- definitely will need to circle back and do a whole post on the Larimer development situation. I'm hoping Anon 1/13 11:18 returns to hit the ball back beforehand.

  10. Mr Carter states that the poor will be better off if placed in stable neighborhoods. Why not turn Larimer into a stable neighborhood instead of building posh projects surrounded by 50 years of blight? Why increase the number of low income residents in the neighborhood instead of simply helping those that are there and bringing in more stable home owners. HACP wastes so much money on new construction rental housing. They'll drop 400k to construct a single house for a low income resident and the house will likely be bulldozed in 20 years (Northside and Hill District). Also Mr. Carter needs to check his math. If a 25k income household can afford a mortgage of 3x that, then a 200k purchase will be for a household of 67k, not 90k. That's with nothing down. If you can subsidize extra low to no income rentals, why can't you subsidize for sale housing directed at the working poor or even just median income earners? If you want stability and to spur investment in the area, you need to have home owners. Not 6 new for sale houses and 100 low income rental rentals. You mention a 2500 Sq Ft house. That's an incredibly large house. Why not build 1500 Sq Ft for sale townhouses instead and a few 2500 sq ft houses?

    Take a look at the Auburn low rise projects. Do you want to recreate that? While this is sad yet amusing - This isn't -

    I watched the new construction Fairfield Apartments being built. I don't think anybody from the 15206 zip code worked on them. Lots of gruff white guys driving big pickup trucks did most of the construction work. Likely not even from Allegheny County. They look nice and so far don't seem to be project style, but time will tell. Same with the Garfield Commons on Black St. From my memory, there's only been one homicide there. Still one too many.