Katrina, HUD, and Foundations: Exploiting the Exploited?

The New York Times reported that Katrina had succeeded in areas where the federal government and city administrators couldn’t, that it had destroyed the majority of the low-income public housing stock of the City of New Orleans, 7,500 dwelling units, though only 5,300 had been occupied even prior to the Hurricane. Known in his prior life for the administration of the St. Louis housing authority that resulted in the depopulation and eventual demolition of Pruitt-Igoe and other public housing eyesores, HUD Secretary Alphonso Jackson was cited as “pledging to spend more than $1.8 billion to rebuild government and private housing in the Gulf region ravaged by the hurricane.” (http://www.nytimes.com/2005/11/22/national/nationalspecial/22public.html).

But the Washington Post’s Michael Powell reported that public housing administrators from the Gulf Coast of Mississippi, where 2,000 public housing units were destroyed, reported a different story: “But the federal government, which expects to spend close to $2 billion on temporary trailers, has not offered a dime to rebuild public housing. A spokeswoman with the Department of Housing and Urban Development said the agency's budget could remain just as tight next year.” (http://www.washingtonpost.com/wp-dyn/content/article/2005/11/24/AR2005112400796.html?sub=AR).

Whose story is to be believed? We’ll take the Mississippians, whose take on the Bush Administration’s HUD seems more believable, given Jackson’s history and his pronouncements of the likely depopulation of New Orleans’ public housing. The federal government and the governor of Mississippi, former Republican Party chairman Haley Barbour, has invited the Congress for the New Urbanism (CNU) to conduct design charrettes on rebuilding these communities (http://www.motherjones.com/commentary/columns/2005/10/gentrifying_disaster.html), but you can be sure that plans based on idyllic communities infused with the architectural and design ideas of Andres Duany such as Seaside (where lots sell for $1million and homes routinely for $3 million) and Disney’s Celebration in Florida, favorites of both the Clinton and Bush Administrations and major philanthropic funders, won’t counteract Jackson’s premonition that the rebuilt New Orleans will be much less black ("New Orleans is not going to be as black as it was for a long time, if ever again,” http://www.csmonitor.com/2005/1027/p01s02-ussc.html) or Congressman Richard Baker’s famous proclamation: “"We finally cleaned up public housing in New Orleans. We couldn't do it, but God did." (http://www.commondreams.org/views05/1011-20.htm).

Among CNU’s more enthusiastic foundation funders have been the Packard, MacArthur, and Surdna Foundations, among others, and the “new urbanism” oriented Seaside Institute has had strong support from Robert Wood Johnson and the J.M. Kaplan Foundations. Although convened by Governor Barbour, the Biloxi charrette was funded apparently by the Knight Foundation, part of the foundation’s second $1 million grant in Katrina relief, devoted to strategic planning for the rebuilding effort including the Mississippi charrette (http://www.knightfdn.org/default.asp?story=/news%5Fat%5Fknight/releases/2005/2005%5F09%5F19%5Fplanning.html, also http://www.radioopensource.org/rebuilding-the-mississippi-coast/). CNU’s executive director, former Milwaukee Mayor John Norquist, intends to seek foundation money for a New Orleans CNU charrette (http://www.newurbannews.com/KatrinaInsideOct05.html). There’s no doubt that the Knight Foundation and the head of the Mississippi Commission on Recovery, Rebuilding, and Renewal, Netscape CEO Jim Barksdale, are aiming for a well-planned community recovery, but they have to be wary of rather than entranced by Duany’s team of “architects on steroids” (http://www.sunherald.com/mld/thesunherald/12928921.htm).

Paul Weyrich, the CEO of the Free Congress Foundation and founding president of the Heritage Foundation, has declared Duany’s New Urbanism as the conservative approach to the revitalization of inner city neighborhoods (http://www.aim.org/guest_column/A3900_0_6_0_C/, also http://www.worldmag.com/weyrich/weyrich.cfm?id=18480). In NCRP’s earlier commentary on the Administration’s response to the long term reconstruction of the devastated Gulf Coast region, we warned that the catastrophe could be used by the right wing as the Petri dish for all sorts of conservative policy hallucinogens. Nonprofits and foundations should be careful not to fall prey to calls for design charrettes and New Urbanism designs as camouflage for the destruction of thousands of low- and moderate-income housing and the gentrification of vast swaths of inner city New Orleans, Biloxi, and Gulfstream. Be assured that there won’t be much government-subsidized public housing replacement in the new communities designed by the New Urbanists hailed by Weyrich and Barbour.

Hi-yo Philanthropic Silver, Away!

Maybe that’s what the Lone Ranger as well as the users of the proposed equestrian center in Redding, California might say, thanks to the beneficence of the McConnell Foundation.

Located in Shasta County, Redding is a small city of 80,000 people, more than 85% white, a largely Republican community represented in Congress by 10-term arch-conservative Wally Herger. The big philanthropic player in Redding is the McConnell Foundation, one of the largest private foundations north of San Francisco, founded by the late Carl and Leah McConnell, wealthy through real estate investments plus major holdings in Farmer’s Insurance Group.

With a mission to “help build better communities through philanthropy,” McConnell’s $11 million in grants in 2004 supported a handful of educational programs and scholarships, nearly $200,000 in employee matching gifts, $100,000 for “program consultants”, listed in the Foundation’s list of grants, $92,000 for Redding’s July 4th fireworks, and $280,000 for continuing work in Nepal as McConnell’s international program. The Foundation’s operating costs were another $8,000,000, including the CEO’s salary of $326,000, a sizeable admin hit for a grants portfolio of only $11 million, though the foundation would probably point to the $3 million that it devotes to its 400-acre Lema Ranch headquarters in explanation.

The bulk of McConnell’s grantmaking went to the Turtle Bay Exploration Park, including a $7.2 million gift to the Turtle Bay endowment. The Park is a 300-acre environmental complex, including an arboretum, aquarium, museum, and a McConnell-supported $23 million pedestrian bridge over the Sacramento River designed by world-famous Spanish architect Santiago Calatrava.

A click to the website’s grants page notes that the McConnell Foundation has for the indefinite future suspended accepting new grant applications, noting at the bottom that the Foundation “continues to research the merits and costs of the proposed California Horse Park at Gore Ranch in South Redding”.

That’s not quite accurate. The Foundation is hardly researching the merits and costs. It is the prime mover and sponsor for a new equestrian center to be built at the 1,800 acre Gore Ranch. The head of the foundation has made his interest clear: “There’s no place in Redding to rent a horse and go for a trail ride. There’s very few boarding places to board horses, so I think this is a potential opportunity for the community to have something that is rarely this close to a city.” (web.redding.com/specials/where_we_live/stories/200306301o065.shtml)

The Foundation’s plans for what is calls an equestrian center includes a 9,000 seat indoor event center and trade show area, including space for the Redding Rodeo two outdoor arenas, horse barns, stalls, and riding trails.

The deal is that the Foundation has committed $30 million for the equestrian center and will put in another $25 million, apparently as a program related investment, which would be reimbursed from sales and hotel taxes paid by horse park users. In addition, the Foundation wants the city and county to put an additional $23 million in bond financing into the project plus an additional $7 million in infrastructure costs such as roads and sewers, though some reports put the expected public sector commitment at $55 million. Nearly every news report describes the estimated 100,000 to 160,000 users of the park as “well-heeled” horse enthusiasts. Total costs seem to lurch from $53 million to $106 million.

Those attracted to the deal look at projections from a McConnell-commissioned study that the horse park would generate $45 million in economic benefits for the region plus $1.5 million in annual tax payments, though it’s difficult to figure out if that is before or after the cost of debt service to retire the $25 million in public bonds.

The Foundation’s horse park, dependent on significant public subsidies, has been discussed with extensive public disclosure, so one might guess that the deal, even though it’s targeted to the affluent horse set, fits within the unbelievably broad concept of what is legal in philanthropy. The ultimate justification of the philanthropic investment in the horsepark, not unlike the Bradley Foundation’s $20 million PRI for Milwaukee’s Miller Park or the El Pomar Foundation’s financing of the El Pomar Youth Sports Complex, both projects whose public benefit is more in the area of broadly defined economic development than specific services to disadvantaged and disenfranchised populations, unless you think of the owners of the Milwaukee Brewers major league baseball team as needy. For Redding, the horse park ‘s estimated 40 horse shows, seven trade shows, and 5 concerts a year could spur over 1,000 new permanent jobs according to foundation consultants (www.redding.com/redd/nw_local/article/0,2232,REDD_17533_4157463,00.html)

Even within that broad picture of potential benefits to the Shasta county community, a few components of the Foundation’s expectations might raise eyebrows:
$15 million of the project cost is apparently the cost of the Gore Ranch, which the Foundation owns, suggesting that a good chunk of the financing will circulate back to the foundation’s coffers.
The Foundation has made it clear that it expects an up-front commitment from the City and County for public subsidies even though it really can’t say what the ultimate cost of the project might be, and it wants the public agencies to reimburse any costs over $60 million (ww.redding.com/redd/sp_outdoors/article/0,2232,REDD_17583_4060241,00.html). The Foundation has offered to guarantee the city and County bond debt service, estimated to be $2.5 million annually, but the Foundation wants to take any revenues over that amount if its guarantee isn’t needed.
The horse park will be run by a nonprofit created and controlled by the Foundation itself, governed by the foundation’s own board of directors, assisted by “an advisory committee of horse and entertainment industry experts” according to the Foundation CEO. In other words, the $30 million investment that McConnell says it will invest and never see again will actually go into a park that is controlled and run by the Foundation itself.

Saddle up, all you people inclined to cutting, reining, and dressage. You’ll get a foundation-funded equestrian park, with a substantial infusion of public sector investment. But it’s not quite a foundation grant to some arm’s-length third party grant applicant. It’s a project of the foundation, by the foundation, and run by the foundation, a foundation self-directed grantmaking trend that is not all that unusual lately. Giddy-up!

Bob Ney, Getting his Abramoff Due

Welcome to the world of questionable philanthropy as practiced by one Jack Abramoff. NCRP has been on the Abramoff case since we published “Abramoff: Well-Connected to the Well-Heeled of the Right” in the Fall 2004 issue of Responsive Philanthropy. That piece and others were submitted to the Senate Finance Committee to help spur investigators to look into the Abramoff’s Capital Athletic Foundation.

There wasn’t much athletic about Abramoff’s philanthropy, as the foundation tended a bit more to funding activities ranging from the religious elementary school whose board Abramoff chaired and where his kids went to school to a school in Israel where the foundation gave $140,000 for sniper scopes, night-vision goggles, camouflage suits, and other “security” equipment and the training to use them, especially sniper training. Senator McCain’s Indian Affairs committee hearing on November 2nd addressing the various kinds of Abramoff philanthropy is a bit of a hoot to read, especially for the nonchalance of Abramoff’s tax advisor and the frustration of senators who belatedly learned that you can do almost anything legally through foundations, even sniper training.

If sniping isn’t an athletic activity, golf certainly is. NCRP’s 2004 pointed out that the Capitol Athletic Foundation paid for a golf trip attended by lobbyists, federal bureaucrats, and one Congressman Bob Ney. Although Ney’s memory of the trip is a bit foggy, following the trip, Ney’s congressional committee helped arrange a Capitol Hill wi-fi contract for an Israeli high tech company that just happened to be represented by Abramoff in his lobbying guise for a $280,000 lobbying contract and contributed $50,000 to Abramoff’s foundation that paid for Ney’s trip. One of the government bureaucrats on the foundation-paid trip was David H. Safavian, then chief of staff at the General Services Administration, since indicted for having lied that Abramoff had no business before the GSA when he went on Abramoff’s junket.

The Bob Ney part of the Abramoff story seemed to get short shrift in much of the mainstream press until Ney found himself accepting a subpoena from a federal grand jury to explain his connection to these events (http://www.washingtonpost.com/wp-dyn/content/article/2005/11/04/AR2005110401197.html). Apparently, Ney’s official explanation to Congress that he had gone on the golf junket to give a “speech to Scottish parliamentarians” didn’t wash, since there’s no record of his speech in Scotland and the Scottish parliament was not in session at the time.

Ney has since had second and third thoughts about the trip, started a legal defense fund, hired top flight criminal defense representation, and changed his opinion about his good friend Jack Abramoff: "I am absolutely outraged by the dishonest and duplicitous words and actions of Jack Abramoff," Ney contends (http://www.washingtonpost.com/wp-dyn/content/article/2005/10/17/AR2005101701918_pf.html). Clean-cut, well-spoken, foul-emailing Jack Abramoff and his associates will hopefully get their due, especially now that lobbyist pal Michael Scanlon has pledged to work with authorities investigating whether Abramoff (and Scanlon) conspired to bribe Congressman Ney (http://www.washingtonpost.com/wp-dyn/content/article/2005/11/19/AR2005111900937_2.html). Scanlon’s most intriguing recent activity might have constituted one of the Capital Athletic Foundation’s athletic ventures—with Abramoff’s help, Scanlon founded and directed a think tank, the American International Center, which he staffed with his yoga instructor and a local lifeguard.

The inquiries into Bob Ney’s connections to Jack Abramoff might not qualify as exactly athletic exertion, but it does look like Congressman Ney will get to break a sweat.