‘Red flag’ on S. Side housing project
Developers sought $20K from taxpayers to cover donations to alderman
As developers sought taxpayer help to overhaul a prominent South Side apartment building, an unusual email arrived at the Chicago Housing Authority that raised a red flag for its top ethics watchdog and drew interest from the FBI.
In the 2013 email, the developers sought taxpayer reimbursement for various expenses tied to the redevelopment of the historic Rosenwald Courts housing complex in Bronzeville. In the more than two dozen standard entries was one eye-catching line: “Donation-Alderman $20,000.”
By then, state records show, the developers and an associate had made a combined $20,000 in political contributions to Ald. Pat Dowell, the 3rd Ward alderman who held sway over the project thanks to a long-standing tradition known as aldermanic prerogative. Two of the project’s top developers also served as co-chairs for her annual fundraiser while the
project was under consideration by the city in 2011 and 2012, according to copies of the invitations.
The developers later dropped the unusual reimbursement request filed with the CHA, and cut an additional $607,000 in other reimbursement requests. No criminal charges have been filed, though one of the developers acknowledged to the Tribune that the FBI asked questions about the $20,000 reimbursement request.
Amid increasing political and legal scrutiny of Chicago aldermen, the Tribune has uncovered records that detail how a developer chronicled its costs of doing business in Chicago — and listed political contributions to an elected government official among them. The news comes as reformers, including Mayor Lori Lightfoot, rail against Chicago’s political culture, including the often-unspoken expectation that developers must donate in order to get their projects approved.
Those involved say there’s an innocent explanation: A secretary made a mistake that eventually was corrected, and taxpayers didn’t reimburse for the donations, which were legal.
Dowell declined an interview request for this story, but in response to written questions she said the political dollars and support she received from the developers did not have an effect on their project’s approval. The alderman also said she did not ask the developers for $20,000.
“Business leaders are a vital part of any community. They are welcome to participate in the political process,” Dowell said. “All large scale developments in the 3rd Ward are contingent on a robust and intense community engagement process. The Rosenwald was treated no differently.”
Nevertheless, the CHA’s internal watchdog acted on the email. CHA Inspector General Elissa Rhee-Lee forwarded the matter to Faisal Khan, the former legislative inspector general who at the time was tasked with City Council oversight.
Rhee-Lee told the Tribune she sent it to Khan because she didn’t have authority over aldermen or campaign finance matters. She questioned why the contributions would be listed as a project cost. “Obviously, that’s a red flag.”
Government watchdogs contacted by the Tribune said the documents and political fundraising history with the alderman raise the appearance of impropriety, even though they’re legal.
Ben Silver, a lawyer with the Elmhurst-based Citizen Advocacy Center, said officials like Dowell should avoid doing anything that even looks like it could be improper. “Without more information, we can’t know if it’s an example of the Chicago Way. But if you had an example of a project that you knew was done in the Chicago Way, it would look just like this,” Silver said.
David Melton, a senior adviser with the government watchdog group Reform Illinois, said he’s never seen a project document before that lists political donations as a cost.
But, he said, “I would not be surprised to learn that real estate developers typically internally list that as one of their expenses of doing business.”
The Rosenwald
The reimbursement request stems from the $132 million redevelopment of Rosenwald Courts apartment complex, a block-long Depression-era compound in Bronzeville where heavyweight champion Joe Louis, jazz icon Nat King Cole and poet laureate Gwendolyn Brooks once lived.
Rosenwald Courts, at 47th Street and Michigan Avenue, fell into disrepair during the 1960s and shut down during the 1990s until developers and the city sought to revive the property.
Dowell was instrumental in pushing for redevelopment of the Rosenwald, which she once called “a huge, hulking building that is a blight on the community.”
Court and property records show the developers signed a deal in February 2010 to buy the Rosenwald from a real estate firm if the developers could line up the financing, including any government help.
Later that month, Dowell cosponsored a two-day conference with a nonprofit land use group on what to do with the dilapidated complex. The conference’s report does not mention the developers’ deal but broadly recommended that government dollars help with redevelopment.
In October 2011, Dowell wrote a letter to then-Ald. Daniel Solis, who was the Zoning Committee chairman, supporting a zoning change sought by the developers.
In July 2012, the Chicago Community Development Commission approved a redevelopment deal with the developers, sending the matter to the City Council.
In October 2013, the City Council passed $25 million in tax increment financing subsidies and backed $58.6 million in loans for the project, which Dowell voted for.
Those joined other public subsidies for the project, including a $17.4 million CHA loan, an $8.5 million loan from the Neighborhood Stabilization Program and $155,000 worth of city-owned parcels of land sold to developers for $1 each.
The developers on the project were a mix of locals and out-ofstate figures, city records show. Landwhite Developers was a main entity, led by Indiana-based David Roos and New York-based Jay Landesman, city records show. Landesman has since died.
Iowan Jim Bergman also partnered with them, according to city records.
The developers also turned to Chicago-based Lightengale Group for help coordinating financing, records show.
It was Lightengale President Virginia Pace who emailed the CHA in July 2013 with the list of project expenses that generated scrutiny. The document, titled “Rosenwald costs spent to date, 4/10/13,” listed nearly $2.6 million in development expenses.
The accounting Pace submitted included standard project items including accounting, appraisal, architecture, engineering, legal, predevelopment interest and fees paid, and $127,500 to a TIF consultant. Records show Ernest Sawyer, whose brother was a former mayor and whose nephew is South Side Ald. Roderick Sawyer, also consulted on the project.
And the document included the line noting the $20,000 that was donated to Dowell.
A Tribune review of campaign finance records shows Dowell received a series of donations in the more than three years between when she sponsored the summit that recommended developers get government subsidies and when the City Council approved the TIF deal.
Rosenwald Courts LP gave two donations adding up to $5,000 to Dowell’s campaign committee on Nov. 30, 2010. On Dec. 2, 2011, the company gave another $5,000. Rosenwald Courts LP gave another $1,500 on Dec. 21, 2012 — the same day that five other individuals or entities with the developers gave Dowell a combined $7,000, records show.
Roos donated another $1,500 to Dowell’s campaign fund on Jan. 11, 2013, records show.
Those 10 contributions from six separate donors total $20,000, down to the penny.
In an email, Dowell acknowledged receiving the $20,000 in contributions “over the four year period between 2010-2013.”
She also released invitations to her annual “Glitter Gala” fundraisers that show Roos and Landesman served as co-chairs on Dec. 6, 2011, and Dec. 6, 2012. Roos also co-chaired the gala on Dec. 5, 2013, though his last name was misspelled, Dowell said.
Roos said in an email that he donated to Dowell “because of the positive work she had done in her ward, as well as knowing that she will continue to do a wonderful job in her ward.”
The retraction
Nearly three months after her initial reimbursement email, Pace sent a follow-up to the CHA seeking to retract the $20,000 reimbursement request.
“This worksheet was prepared by a prior partner’s secretary,” Pace wrote in the email to the CHA. “I forwarded it without reviewing it, which of course, I should have. As you know from all budgets and information on draw back-up sent to you, any donations are not a project budget item.”
Explaining further, Pace told the Tribune she forwarded the initial document requesting reimbursement and “went on vacation the next day.”
Records show a CHA employee emailed Pace a request to immediately file a new version of the document without the donations, and Pace responded with an email that also withdrew more than $607,000 in other claimed expenses.
The CHA worker replied in an email, “I’m sorry, but I’m a bit confused. I thought you would only eliminate the $20,000 item, so the total amount would only be reduced by $20,000. This seems substantially different.”
In her response, Pace said the original document included other nonreimbursable items in addition to the political donations.
“This list was created by a secretary not involved with the deal and included several items which we knew would not be reimbursable items,” Pace wrote back. “We have eliminated those items which we believe may not be reimbursable to the project.”
That included more than $400 in bank charges, $62,500 for a “construction manager fee,” the aldermanic donations, about $2,900 for a construction hall rental and more than $150,000 in travel. The revision also cut “predevelopment interest and fees” from $815,594 in the original document to $444,500.
It’s not clear what prompted Pace to retract the months-old document. She said she couldn’t remember how it was brought to her attention.
Roos in an email told the Tribune the document was created by an assistant for the now-deceased Landesman.
Bergman, the Iowa developer, told the Tribune there were internal differences on the project and he wanted Landesman off the job. He said he bought out Landesman and told him that he could submit legitimate expenses to the CHA for reimbursement.
Bergman’s recollection is that the CHA said it wouldn’t reimburse for the donations, which he said was an “idiotic” request.
But, Bergman said, he doesn’t believe it was an example of the so-called “Chicago Way.” He said he doesn’t believe the $20,000 was anything other than a legal campaign contribution and that the total isn’t “big enough to move the needle.”
“If it was $2 million or $200,000 I would tend to say yeah, that looks bad,” Bergman said. “Twenty-thousand dollars or whatever it was? That just looks like, to me, you like what she’s doing and how she’s doing it. I have nothing but great things to say about the alderman.”
Dowell said she had never seen the reimbursement request until the Tribune sent it to her for comment. However, she said, Roos had forwarded Pace’s retraction email to Dowell in 2013 with an “FYI.”
Emails released by the CHA show Roos was included on the July 2013 email with the reimbursement request as well as the later retraction.
In an email, Pace told the Tribune she was contacted by the FBI about the incident in 2013 and told them “the same I told you — the list was sent to me from (a) Landwhite secretary and that I forwarded it on without reviewing it and later retracted it without the donation shown.”
“I do not remember when/who determined that the list was sent in error with the donation,” Pace wrote. “There was no intent to obtain reimbursement for these funds.”
She said she has not heard from the FBI since 2013. Khan, whose office the City Council has since eliminated, declined to comment. Dowell said she never was contacted by the FBI or inspectors general. The FBI declined to comment on the matter.
Records show Dowell kept the campaign money, a small part in an aldermanic fundraising machine that took in more than $480,000 from 2010 through 2013, according to a Tribune analysis of state campaign finance disclosure data. Overall, she collected cash, loans and in-kind contributions of more than $1.9 million from 2007 through 2015, the two election cycles between the start of the Rosenwald donations and the end, with her biggest listed donors ranging from unions to developers and builders.
Earlier this year, Lightfoot picked Dowell to head the City Council’s budget committee.
Rosenwald Courts reopened in September 2016. Standing next to then-Mayor Rahm Emanuel, Dowell smiled for the cameras. Emanuel held one giant scissors to cut the ribbon. She shared the other with Bergman.
That December, state records show Bergman donated $1,500 to Dowell’s campaign fund. He said he doesn’t remember giving the money but said it isn’t unusual for him. “If I see people that are doing a good job helping their community, I do that,” Bergman said. “I think she’s as good as anyone I’ve ever worked with in terms of trying to help her community and her ward. She’s all about: ‘How do I lift the lives of the people in my community?’”
“I would not be surprised to learn that real estate developers typically internally list that as one of their expenses of doing business.” — David Melton, a senior adviser with the government watchdog group Reform Illinois, on listing political donations as a cost