Why did the Port Authority of New York and New Jersey pay $235 million for Bayonne marshland? According to new reporting from The New York Times, the purchase was a direct bailout of the financially teetering New Jersey city -- a move aimed to keep Gov. Chris Christie from having to flood state money to Bayonne to keep it from Chapter 9 or some other untenable state of de facto bankruptcy.
It was a financial move of quasi-legal proportion. But it was also political: For Republican governor with ambitions of being the president of the United States, any clandestine deal done to ward off the need for tax dollars was a way to prop up the facade of fiscal conservatism. But how conservative is it to rob Peter to pay Paul?
The answer, of course, is that it has nothing to do with conservatism, or financial prudence, or good government. It has everything to do with the standardized abuse of public entities and authorities by politicians and their banker/bondsman masters. The shell game keeps them in power, and in the money, while the America we know is drained of its very lifeblood, one municipality at a time.
I don't see America anymore as a series of independent towns and cities whose existence weaves the complex fabric of this large and varied country. What I see are ATM machines for the rich and powerful to use at their discretion, to feed their political and financial appetites and proclivities.
This is not to paper over the vast complexities in running cities and states and providing services for people. What is troubling is that instead of confronting these complexities and speaking honestly to citizens about the real problems and the real costs, the political and banking classes have colluded to profit in the face of problems that will, indeed, bankrupt us. Anything to maintain power, and keep their hands in the cookie jars, even if Rome burns, or pension funds fail. This is where our democracy is faltering: At the place where money and power collide and the real, hard work of regenerating wealth and enhancing infrastructure/services is left undone.
In this way, what started as the shocking story about the closure of George Washington Bridge lanes in Fort Lee in September 2013 has, thankfully, morphed into a somewhat systematic investigation of every weird deal done under Chris Christie and his very good pals at the Port Authority.
The Port Authority isn't just Christie's Sugar Daddy, it has been the absolute cauldron of cash and lever-pulling that guaranteed Christie's ability to pull off big fixes that could, left undone, complicated his narrative. At least that's what the NYTimes reporting so far is indicating.
A takeover could have forced the state to pour millions into Bayonne to stabilize it. That would have been problematic for Mr. Christie, who was confronting a huge deficit in New Jersey’s budget, while trying to keep a campaign promise to not raise taxes. The Port Authority’s purchase of the land, orchestrated by Bill Baroni, Mr. Christie’s top staff appointee at the agency at the time, spared Mr. Christie from having to confront this dilemma. The agency wound up spending far more for the land than an independent appraisal showed it was worth.
In this way, there is very little difference between Republicans and Democrats when it comes to abusing public financing in order to hide problems, or, worse, dole out cash to the banker/political class, all while expecting taxpayers and property owners to suffer the consequences of their corruption and abuses.
In Harrisburg, a third-class city that merely serves as the capital of Pennsylvania, Democrats and Republican "leaders" in both the Ed Rendell and Tom Corbett administrations performed surreal feats of legal backflips and bullying to keep Harrisburg from filing Chapter 9 protection in the face of overwhelming debt. In addition to the fraudulent bonds floated for a magical-thinking incinerator retrofit, the city is home to loads of other debt, including the school district. By some estimates, the city of 50,000 mostly poor, African-American residents were fleeced to the tune of $1 billion in debt. The state takeover via Act 47 was so nebulous that it led to the dismissal of several state-appointed officials who dared tell the power brokers that Harrisburg had been abused and needed a cram down of bondholders to make any deal work.
In keeping with the new spirit of questioning how some people continue to work out good deals for the banking/political classes while saddling the rest of the population with unimaginable debt, I can't help but wonder how, in the midst of Harrisburg's forced receivership and recovery plan, how did the Commonwealth decide to pay $100 million for an office building whose debt had already been defaulted on? How did the Commonwealth decided to buy Forum Place for 100 cents on the dollar when, for years, the bonds had been floating in the market for as little as 42 cents on the dollar?
Here is a city sinking into the Susquehanna River -- a virtual Athens, Greece of overwhelming debt and government corruption -- that was forced by the state to accept total responsibility for debt it can not afford to pay, yet in the middle of this Act 47 forced recovery plan, the state still finds a way to pay $100 million for a Forum Place building it could have bought for $42 million, or, maybe $60 million.
Somehow, the players involved in transferring that debt to the state through the building sale were powerful enough to pull off a deal in which everyone was made whole. Here is the bond deal for Forum Place, with an opinion written by Rhoads & Sinon, a Harrisburg law firm that was a key player in determining whether the Harrisburg Authority needed a performance bond for the contractor who undertook the incinerator refit. The lack of a performance bond is a key issue into how and why financing was approved for a construction deal that was ill-fated from the start, thus saddling the city with $300 million in debt.
Somehow, as the city of Harrisburg was prevented from a legal process that entitled the city to seek a cram down of the fraudulent debt, the same state officials who prevented Harrisburg from a more fair recovery plan turned around and orchestrated a building sale for almost twice as much as the bond market had been seeking.
According to a Bloomberg News, the bonds had been trading for as low as 25 cents on the dollar in 2004, which means that Forum Place could have been purchased for $25 million 10 years ago.
The Pennsylvania Economic Development Financing Authority (26718MF) plans to sell $106.4 million in bonds to buy a Harrisburg (9661MF) office building connected to bonds in default.
While the sexy story of Chris Christie's "BridgeGate" has given way to a much slower, less thrilling dig into the patterns of abuse by New Jersey and the Port Authority, Christie's implosion remains a very important turning point in American politics. Or, at least it should.
The financial trouble of underfunded pensions and criminal abuses of our economic systems are many, from the tranches and derivatives and selling off of American assets that have allowed a massive transfer of wealth. But no wide-scale recovery can take place until more people understand the way in which the system is not just rigged, but completely bankrupt.
The corruption is widespread. It is systemic. But when you start to look at every single deal, whether it's Bayonne marshland bought for $235 million, or along-embattled and defaulted Harrisburg office building sold for 100 cents on the dollar to the state of Pennsylvania, you get a pretty clear idea how these guys run these deals. They do it for power. They do it because they think they can get away with it. They do it for themselves.
Smoking Gun For Bridgegate? Might Rest With Losing Bidder In Fort Lee's $1B Hudson Lights Development
Someone that I know and respect who essentially ran a big Northeast state as a key aide to a certain governor likes to paint Chris Christie's Bridgegate scandal like this:
The lane closures were a warning shot across the bow.
The idea that no one in the Christie administration, including Christie and chief politico David Samson, knows anything about why the lanes were closed is akin to a dead zebra being laid out near a watering hole and all the baboons sitting around the watering hole bleat out lies about how they have seen no lions. Not one!
Yet it's not credible. We all know: Where there's a dead carcass, there are predators.
The scenario that no lions wanted to come nosh on Fort Lee Mayor Mark Sokolich's $1 billion dead zebra called Hudson Lights is not believable. The way we see it is simple:
Chris Christie and his top donors were angry. They had to be. Here was a billion-dollar development deal taking place in Fort Lee, promising developers and potential residents easy access to the George Washington Bridge, all under the direction of a Democratic Mayor, Mark Sokolich, who had finally put a long-dormant piece of supremely pricey real estate into position for hosting two 5-story buildings, plus retail space for restaurants, shops and movie theaters.
Fort Lee was going to kick ass, and be the epicenter of one of the biggest development deals in the state. And who was in charge of giving out all those contracts for architecture, engineering, bond work, legal work? Why, it would be Fort Lee's mayor. It's a lot of power and money attached to development deals like this. It stands to reason that other people, especially a governor and his re-election campaign staff who were drunk on power might have felt a little emboldened to show Fort Lee just who's boss.
New Jersey has had a lot of bosses, all of them a little scary, except Bruce Springsteen, who has also had a few things to sing about Chris Christies' Fort Lee Traffic Nightmare.
I know we are getting ahead of ourselves, since the smoking gun has yet to be found -- and subpoenas coming from the N.J. Legislature and other investigatory bodies are just getting ready to roll off the presses. The details behind Bridgegate will likely come out, once at least one key actor is given immunity in exchange for the down low on what went down. We know David Wildstein, the lane-closure-orderer as disclosed in released documents and emails -- wants immunity. He already asked the Jersey lawmakers, who had no authority at the time to grant him the freedom to sing in exchange for no jail time. But in due time ... it will come out.
Until then, it's just not possible. Chris Christie's staffers did not just decide to play a "prank" on Fort Lee. It's not plausible that they decided to light a match for the sheer "fun" of it only to have the house burn down. It's not plausible that there's no significant underlying reason for the stupid and dangerous lane closures, or that Gov. Chris Christie or New Jersey powerbroker David Samson, the Port Authority appointee, knew nothing about what was going on, or why.
I just don't buy it. It's not how things work, or don't work. The No. 1 rule of politics is "Follow The Money."
In the case of Fort Lee Mayor Mark Sokolich's $1 billion development of the 16-acre tract of land directly near the George Washington Bridge, it is impossible to ignore this huge deal as a motivating factor for retribution.
When Tucker Development Corp. bought one half of the 16-acre site, Fort Lee still had to find a plan for the entire parcel. This is where the intrigue rests: Tucker owned half and decided to develop its portion. Meanwhile, Fort Lee was still looking for ideas, and bidders for the second parcel. To see who might have help goad Chris Christie and/or David Samson into screwing with local access lanes to the GW Bridge in Fort Lee, it might be time to look at the losing bids for the Hudson Lights deal. Did any of these people want revenge for not getting some of the action?
On Oct. 16, a month after Bridgegate lane closures, Sokolich and Tucker Development, along with other partners in the development project, broke ground in Fort Lee. Here's what Mayor Sokolich said:
“This administration is committed to forging business-friendly policies and partnerships aimed to position Fort Lee as a sought-after destination in the tri-state area for decades to come,” Mayor Sokolich said. “Hudson Lights is exactly the kind of large-scale, forward-thinking project that will help us realize that objective.”
That statement smacks of subliminal messaging. The mayor wants "business-friendly policies and partnerships" which could mean he doesn't want any of the old "business-as-usual" shenanigans that kept the 16-acre parcel in the hands of the mob and other undesirables for decades.
Here are the winners in Mayor Sokolich's development deal:
It begs the question: Which firms were the losers in this coveted and hard-won development Hudson Lights project? One of the firms that bid on developing the entire 16-acre parcel, which was split into two phases of development, was Silverstein Properties in conjunction with Taubman Centers. Silverstein is the World Trade Center developer. It was Silverstein's bid to develop the entire parcel, including the Tucker piece. But it appears that Tucker wanted to keep its piece and develop it themselves.
The New York Times outlined the deal in this 2009 article, including some minor details about what each bidder had in mind for the site.
"Tucker’s ownership of the eight acres on the west. ... Mr. Tucker made it clear in an interview that his company intended not to sell its property but to develop it — though perhaps in concert with partners,'' the Times reported in 2009.
Oddly, the NYTimes has not noted the development site as a potential issue in the strangest retribution scenario ever to involve the world's busiest bridge, a GOP presidential frontrunner and lane closures.
Larry Silverstein was a long-term client of David Samson.
Mayor Sokolich was called "an idiot" by one of Christie's key staffers, now fired. Mayor Sokolich has had some fun calling himself "the idiot" who has spearheaded Fort Lee's progressive moves, including this landmark development deal. The level of animosity in this "war" goes far deeper than anything having to do with a failure by Sokolich to endorse Chris Christie's re-election. That alone just is not a plausible reason for the timing and nature of the lane-closure retribution.
But a billion dollars in development, and all the contracts that come with it? That could get someone really "sauced," as Christie admits he sometimes gets over things having to do with Fort Lee and the GW Bridge.
It has also come to our attention that Chris Christie DOES know how to play bridge hardball. He did it with the Port Authority and Larry Silverstein over WTC subsidies.
From the New York Daily News:
New Jersey pols struck a $1 billion back-room deal with the Port Authority as their price for supporting a breakthrough pact to restore the World Trade Center, it was revealed Tuesday.
I used to write politics, news and sports for newspapers in cities like Albany NY, Seattle, Baltimore and Harrisburg PA. Now I take a lot of Instagram photos, check Facebook, swim, read about T$$$p and cook dinner for people I really like. New York native, living in Port Washington and Greenfield Center (that's near Saratoga Springs FYI).