Friday, July 17, 2015

It pays to have connections - be you a developer or a politician

A couple of items going on in Wisconsin's two largest cities illustrate why one should be skeptical of promises and political influence that comes with developers. These stories show how many of these bigtime players are not to be completely trusted, and often rely on their political influence to increase profits at taxpayers' expense.

The first is an item that came out earlier this week regarding the a couple of developments in downtown Madison. Bob Dunn is the president of Hammes Corp., and is a major developer in town. He has recently reached an agreement with the City of Madison to get $42 million in City subsidies to help build a $188 million project downtown that will feature the new headquarters for Exact Sciences Corp. However, Dunn was in the news this week for another reason, as the Isthmus newspaper in Madison reported that Dunn hasn't paid taxes and bills related to his last major city-funded project.
[Dunn's] LLC currently owes the city more than $312,000 in back taxes, including more than $25,000 in interest and fees, on his last controversial development, the Edgewater Hotel. His LLC also owes a smaller amount, $2,548, on a separate piece of the property, which is likely a common area of the condo section of the building.

The Edgewater was the cause of a bruising development fight that dragged on for years and still resonates with many residents. It pitted historic preservationists and neighborhood groups against pro-development advocates. It likely played a role in the 2011 mayoral election, when Paul Soglin unseated Dave Cieslewicz, who championed the project.

The hotel renovation cost roughly $100 million. Last month, the Wisconsin State Journal reported that J.H. Findorff & Son and 15 other companies had filed liens against the hotel totaling $23.7 million.

Dunn hasn’t paid real estate taxes on the property since March 31. Dave Gawenda, the city’s treasurer, says that if the taxes aren’t paid by Sept. 1, the owner is issued a tax certificate, and the account is turned over to the county for enforcement.
Guy hasn't paid all of his own bills, but yet he gets the nod for a massive injection of revenue with the Judge Doyle Square project, with the city floating a sizable amount of the bill. Most of us would be told to hit the road and never do another job again if we were deadbeats, but we're not Bob Dunn and Hammes Corp., so they get the inside track at the next big project. Cool deal huh?

Speaking of connections, Dunn's partner in the development business has some pretty strong connections himself. In addition to the real estate company that carries his name, Jon Hammes has donated huge amounts of money to Republican candidates, especially in Wisconsin, and a quite a bit of that money has floated to Wisconsin Governor Scott Walker. In addition, Hammes is going to serve as the national finance co-chair of Walker's presidential campaign, and those connections may help explain why the allegedly "free-market" Walker wanted to originally throw so much state money for the Bucks new arena project. David Sirota and Andrew Perez at the Intetrnational Business Times connected the dots, and it should make you "Hmmmm."
....before Walker proposed the arena deal, Hammes had donated more than $15,000 to his gubernatorial campaigns, according to state campaign finance data. Federal records also show that over the last decade, Hammes has donated almost $280,000 to Republican candidates and third-party groups -- including more than $14,000 to the Wisconsin Republican Party. He also contributed $500 to Walker while he was a Milwaukee county executive.

Hammes became one of the part owners of the Bucks in 2014. A little more than three months later, Walker unveiled his proposal to spend a quarter of a billion dollars on a new arena for the team. The team currently plays at BMO Harris Bradley Center in Milwaukee.

A Hammes Company representative declined to say what percentage of the team he owns.

Hammes’ financial interest in Walker’s arena subsidy package may not be limited to just his stake in the team. According to local news reports, his real estate firm also also bought parcels of downtown land near the location of the proposed new arena. Hammes’ firm also was contracted by the local chamber of commerce to evaluate new stadium proposals. The company has expertise in that area, having been involved in the construction of the New York Giants’ stadium and the renovation of the Green Bay Packers’ home at Lambeau Field in Wisconsin.
On top of the increased revenue that will be flowing to all NBA teams as part of the new TV deal for the league, if Hammes can get himself a piece of the $500 million arena project or any of the related developments around the new arena, that's a nice little return on investment for having the arena project be supported by Walker and other state politicians,, isn't it? Maybe this is all happening independently of these donations and connections for Hammes (you know, like how Super PACs help certain candidates "independently"), but it sure makes you wonder. And now with this week's John Doe ruling trying to allow campaign coordination without the public being allowed to know the names of the donors to these "third parties" that are nothing more than outgrowths of a candidate's campaign apparatus, it'll make it a lot easier to have these cronies keep the cycle of "donation/reward/donation" going with less of a chance of it being detected.

On a related "Hmmmm" note, why didn't the Milwaukee media or other Wisconsin publications pick up on this obvious connection between the Bucks arena project, Hammes, and Walker. Makes you wonder if they're in on the take as well (we know JournalComm has a clear interest in getting the arena done, due to their owning of land near the arena and because of Bucks broadcasts on AM620).

There's another major elected official could be looking at a nice payoff in his recent real estate investment. That's Milwaukee County Executive Chris Abele, who bought a $2.1 million condo a few blocks from the arena site at the new Moderne complex downtown. Sure, maybe Abele bought that 4,300+ sq. foot condo just to be closer to the action downtown and to his workplace at the Milwaukee County Courthouse, but it sure is a nice coincidence that he bought the building just as the Bucks arena debate was heating up, and before the public knew about the added development in the blocks around the arena. Shiny new developments downtown would make that unit a lot more attractive to buy for a Bucks player or another high roller, and very likely to quickly go up in value. Now maybe that's all a coincidence or just good business savvy, but that sure makes Abele quite the lucky investor, doesn't it?

When you dig into what these members of Wisconsin's exclusive club get out of these development deals, it sure explains how they stay on top, doesn't it? So when do we crash the club and even the score?


  1. Face it, Wisconsin IS a Banana Republic.

    1. Sure seems like it, don't it? As George Carlin said "It's a big club, and you aren't in it."