Tuesday, October 20, 2009

The Times mentions FCR's bailout of ACORN only parenthetically, claims city agreed to help finance AY housing plan

In a front-page article last Friday, October 16, the New York Times finally reported that the controversial housing activist group ACORN had been bailed out by a $1.5 million grant/loan from developer Forest City Ratner, a partner with ACORN New York on the Atlantic Yards project.

But that wasn't the point of the article, headlined Acorn’s Woes Strain Its Ties to Democrats.

Rather, the information was presented parenthetically, a variation of "rowback," which former Times Public Editor Daniel Okrent described in his 3/14/04 column as "a way that a newspaper can cover its butt without admitting it was ever exposed."

Beyond that, the article cited "[t]he city’s agreement to help finance the [Atlantic Yards housing] plan."

That overstates the city's commitment, which is no more than conceptual, and should be corrected, given that it could mislead readers into thinking that the affordable housing--the major source of political support for the project--is guaranteed.

Note ACORN's continued staunch support for Atlantic Yards despite mounting evidence that the housing promises are tenuous, depending on the availability of subsidies.

Also, the affordable housing total depends on Forest City Ratner completing Phase 2, though the state acknowledges that only one residential building may be built at first and the developer could abandon the project.

Donovan, housing, and AY

The article focused on the role of Shaun Donovan, who as head of the city Department of Housing Preservation and Development, had a close relationship with New York ACORN--whose housing work was widely seen as credible--but, after the national organization has been tinged by scandal and the focus of Republican attacks, "is unwilling to speak publicly about that project or any other work with Acorn."

From the article:
And [ACORN's Ismene Speliotis] and Ms. Lewis appeared to help Mr. Donovan deliver a coup for Mr. Bloomberg in 2005 when Acorn endorsed a huge Brooklyn development he was supporting in the face of local opposition.

Acorn backed the plan in return for an unusual promise from the developer, Forest City Ratner, to make half of the 4,500 rental apartments that it was proposing — along with a new Nets basketball arena — available to poor and middle-class families at below-market rates.

The city’s agreement to help finance the plan, hammered out among Mr. Donovan, Ms. Speliotis and others, was hailed as a breakthrough for subsidizing a substantial amount of housing for an unusually broad range of middle-class tenants.

Ms. Lewis — a supporter of Mr. Bloomberg’s challenger that election year, Fernando Ferrer — celebrated by exuberantly kissing the mayor at a public ceremony.

The project’s opponents accused Acorn of selling out. (More recently, Forest City Ratner — a development partner with The New York Times on its new Manhattan headquarters — complied with Acorn’s plea for $1.5 million in grants and loans to help it restructure after an internal embezzlement scandal involving Dale Rathke, the brother of its founder, Wade Rathke.)
(Emphasis added)

Curiously enough, though Atlantic Yards may be a step forward in providing subsidized housing to the middle-class, ACORN primarily represents low-income people, many of whom may not be eligible for the "affordable housing." In other words, Lewis got Forest City Ratner to agree to provide housing for people who aren't ACORN's constituents.

The "rowback" sequence

In this case, the Times wasn't publishing an unacknowledged correction, as is typical with "rowback," but providing information it owed its readers months ago--and without acknowledging the delay or that the information had been published elsewhere.

Consider this sequence:
  • the bailout occurred in August 2008
  • a Times reporter knew about it in September 2008 (and called ACORN's actions "incredible")
  • it was reported by me in December 2008
  • I sent an open letter to the Public Editor in April 2009
  • it was mentioned in a Congressional report in July 2009
  • the New York Post mentioned it nearly a month ago
The Times's vague formulation placed the bailout in context of the long Atlantic Yards fight, but did not mention the date it occurred.

NYC's "agreement to help finance the plan"?

Did New York City make an "agreement to help finance the plan"? No.

Even New York ACORN head Bertha Lewis--now head of the national organization--doesn't cite a government role, writing in the 7/31/06 City Limits:
Through months of negotiations we arrived at New York City’s first legally binding Community Benefits Agreement [CBA] and a groundbreaking Memorandum of Understanding [MOU] between ACORN and Forest City Ratner about the housing component of the project.
The city was not a party to either agreement, though Mayor Mike Bloomberg was a "witness" to the CBA and Bloomberg and Donovan expressed conceptual support for the Housing MOU (which speaks of "goals").

The Times's 5/20/05 coverage, headlined Brooklyn Arena Plan Calls for Many Subsidized Units , stated:
The corporation plans to use a combination of bonds and reserves from investments to finance the subsidies, said Carol Abrams, a spokeswoman for the Department of Housing Preservation and Development. The funds will not be committed until the developer closes on the project, Ms. Abrams said.
And, as I've reported, the Empire State Development Corporation (ESDC), when it approved the project in December 2006, made no effort to ascertain whether there would be sufficient housing subsidies.

In June 2007, I reported on a huge deficit (at the time) in tax-exempt bonds, noting that Forest City Ratner had not yet applied for financing and that Donovan had asked Congress to increase the "volume cap" to allow cities like New York to issue more bonds. (The contours of the challenge may have changed since the economic downturn.)

When the ESDC re-approved the project September 17, it explicitly acknowledged that the housing was contingent on subsidies.

The House Republican report

Interestingly enough, the Forest City Ratner bailout was mentioned, albeit somewhat parenthetically, in a report released 7/23/09 by Rep. Darrell Issa (R-CA), the Ranking Republican on the House Oversight and Government Reform Committee, titled Is ACORN Intentionally Structured As a Criminal Enterprise?.

The report got little notice in the mainstream press. Fox News had a story, which quoted ACORN as calling the report a "partisan attack job." It was reported in The American Spectator Online, under the headline Community-Organized Crime, which mentioned the FCR bailout.

There clearly were exaggerations in the report--the executive summary states that "ACORN stands to receive a whopping $8.5 billion in available stimulus funds," while page 10 acknowledges that ACORN was eligible for that larger sum.

But there also were references to mainstream media reports, internal ACORN notes, and documents like the ones at left and below, which confirmsthe Forest City Ratner bailout.

The report did not make much of the Forest City Ratner bailout, perhaps because the writers did not recognize the significance of the alliance between the developer and ACORN is to both parties--an article that, as I wrote in April, the Times should have written.

(Click on graphics to enlarge)

Catching up

A few months later, a couple of mainstream press reports did take note of the Issa report.

A 9/18/09 article from McClatchy Newspapers, headlined As ACORN grew, so did its clout and its problems, cited "[i]nternal ACORN notes obtained by Republican investigators found some of the agency's top leadership worried about news coverage and anger at the actions of Rathke."

The article notes, "Weeks after the Republican House report, two undercover conservative activists began visiting ACORN offices across the country posing as a prostitute and her pimp." It also cites warnings to ACORN--as noted in the House Report--from a law firm that it could be improperly co-mingling financial accounts.

On 9/19/09, the AP, in an article headlined Did ACORN get too big for its own good?, reported:
The organization praised for its Hurricane Katrina relief efforts and treated by federal, state and local governments as a valuable public resource has had nearly $1 million embezzled by its founder's brother. The openly Democratic-leaning group has seen its employees accused of voter registration fraud, and taking it down has become a cause celebre for Republican lawmakers, activists and pundits.
The article described Democrats as distancing themselves from ACORN.

ACORN's Lewis met Issa in a contentious 9/20/09 debate on "FOX News Sunday." Forest City Ratner didn't come up.

The mainstream press & ACORN


In a 9/23/09 online Q&A headlined Latest Developments in ACORN Story, Washington Post government accountability reporter Carol Leonnig took questions about ACORN. (I've lightly edited segments of the transcript.)
New York: How did the two conservative activists decide to approach their investigation the way they did? Did they have prior information that ACORN was giving questionable tax advice, something like that? What made them decide to impersonate a pimp and prostitute?

Carol Leonnig: I don't know the complete answer. Both Giles, O'Keefe and their supporters have been pretty helpful to us in giving a broad-brush description of how this came together, but they are also defensive about claims that the pair were bankrolled by some big amorphous conservative GOP movement to tarnish ACORN. So some details are missing.

However, I noticed that the House Republican investigative report, which was launched earlier this year by Rep. Darrell Issa (R-Ca.) and was published in July, gave an interesting road map for a reporter if they wanted to find the vulnerable areas of the organization. The report highlights how poorly staff were trained, and how little they were paid and supervised.

Cumberland, MD: Why was the mainstream press so slow to deal with the criminality of ACORN? This failure to deal with the Acorn story is why the mainstream media is not trusted anymore.

Carol Leonnig: I have to agree with our executive editor when he said the other day that he is concerned that reporters sometimes tend to have more liberal sources than conservative ones. This could be part of the problem, but it also strikes me as a fairly natural imbalance that can happen when reporters focused on Washington have been covering a Republican administration for eight years, and trying to learn for the reading public whether they are doing a good job.

Next, I would offer this: There is such a lot of hyperbole being shouted from the rooftops as fact -- on BOTH extreme ends of the political spectrum, left and right -- that reporters are fairly dubious when someone makes a claim that is laden with factual exaggerations.

For example, when I heard ACORN was "on tap to get $8.5 billion in federal funders under the Obama administration", I kept thinking: Wow, Lockheed is sure gonna be jealous. Nobody, nobody, gets an $8.5 billion contract. And indeed this claim was wildly exaggerated. That said, when I was assigned (I cover federal agencies mostly) to start digging into ACORN's past financial problems, there was plenty to write about.
But the Washington Post hasn't mentioned the FCR bailout, despite a prime opportunity to do so.

The latest skirmish

ACORN CEO Lewis, speaking at the National Press Club, accused Republicans of McCarthyism. As the Times reported:
She decried a “modern-day Acorn McCarthyism,’’ and blamed some of the group’s current problems on its more than 40-year history of “going after the rich and the powerful.”
Issa issued a response:
"Was it Republicans who embezzled millions from within their own organization and have yet to report the embezzlement to the IRS or Labor Department? Was it Republicans who conducted the internal review that highlighted the lack of firewalls between their charitable and political activities?"

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