ChicagoClout

June 24, 2009

BY FRAN SPIELMAN, CHRIS FUSCO and TIM NOVAK Staff Reporters
The Daley administration would be prohibited from signing a string of month-to-month leases — such as the one at a South Side industrial site co-owned by Mayor Daley’s nephew — under a crackdown in the works to restore “credibility” to the leasing process.

As chairman of the City Council’s Committee on Housing and Real Estate, Ald. Ray Suarez (31st) says he should have signed off on the lease at 3348 S. Pulaski.

But, City Hall’s decision to make it a month-to-month lease — and continue that temporary arrangement since November, 2007 — denied Suarez’ committee and the full City Council the right to approve the deal.

Last week, Suarez demanded to know why the city has paid nearly $500,000 to lease the space co-owned by mayoral nephew Robert Vanecko and his partners, developer Allison Davis and Davis’ son Jared, under an arrangement that was supposed to be temporary.

Today, he went a step further.

Suarez said he plans to introduce an ordinance at next week’s City Council meeting that would rein in month-to-month leases.

“You could have one or two or three or four months. Then, you would have to come to the City Council and have a letter of justification why it should be done,” Suarez said.

“Long month-to-month leases give the impression … that something [kinky] is going on. I want to make sure that we avoid any kind of perception out there by the public. ... We’re gonna correct this. ... It’s gonna be something that’ll bring credibility to the system.”

Asked whether he believes the South Side lease was signed to bail out the mayor’s nephew, Suarez said, “I can’t say that yet because I don’t have all the facts. ... From what I’ve seen right now, no. ... The person I talked to from the department [of General Services] says no, and I have to believe him. I think he’s a pretty credible fellow.”

The Chicago Sun-Times reported earlier this month that Vanecko and Davis used $4.2 million of the $68 million they manage for five city employee pension funds to help buy the mostly vacant warehouse and surrounding land.

The city has been leasing the space at a rate of $3.83-per-square foot for 70,565 square feet of space, 20 percent of the warehouse.

On Tuesday, City Hall finally provided the Sun-Times with a copy of the actual lease for 3348 S. Pulaski.

It shows that the city signed the agreement on Nov. 14, 2007 — 13 days before Vanecko and his partners bought the warehouse on Nov. 27, 2007.

The lease began on Dec. 1, 2007, and ended on Dec. 31, 2007. It has been a month-to-month lease ever since.

The lease was negotiated by Joel Vieyra, supervisor of leasing for the Department of General Services, according to Michael Lazar, who sold the building to Vanecko and his partners.

Lazar bought the building in 1989, and he said he and the city had been negotiating a lease for the property “for years.”

In October 2006, the city signed a one-month lease for $2,000 to park trucks outside on the property.

“They were leasing a small outside space,” Lazar said.

“To have the city occupy the building would make the building more marketable,” Lazar said. “I want to sell the building with leases in it.”

Earlier this month, Vanecko abruptly announced that he would “end his involvement with DV Urban Realty Partners, both as a general partner and as an investor,” effective July 1. He cited a desire to minimize “unwarranted distractions.

He bowed out two weeks after a federal grand jury issued subpoenas seeking details of why the pension funds invested with Vanecko’s start-up firm three years ago.

Daley has insisted that he knew nothing about his nephew’s risky real estate venture with city employee pension funds until the Chicago Sun-Times blew the whistle nearly two years ago.

And the mayor has maintained that, the minute he did find out, he ordered his nephew to drop out of the deal with Davis, only to be ignored.

Monday, June 01, 2009

In June of 2005, a major fire destroyed the Dominick's, a local grocery story, on 3030 N. Broadway. (for full disclosure this is about three blocks from where I live) Since then the lot has continued to be vacant as city planners and private builders have haggled over what to put there next. Enter a man named Robert Vanecko. He is a co founder of the Real Estate Investment start up, DV Urban Realty Partners with Allison Davis. Vanecko also happens to be the nephew of Richard M. Daley, the mayor of Chicago.

He and Davis have successfully engineered one commercial real estate deal. Despite this, they were able to land a deal to build a new Dominick's in that space along with Condominium high rise of more than a hundred units. Not only this but this company was also able to use city pension funds as collatoral for this project. The project is worth in excess of $60 million with DV getting a commission of $8 million. Now, a grand jury is asking exactly how these two were able to use pension money for such a risky proposition.

City pension officials have been hit with subpoenas from a federal grand jury trying to determine how a start-up company co-owned by Mayor Daley's nephew won $68 million in pension investments.

The grand jury issued the subpoenas Wednesday, nearly two months after city pension officials refused to comply with similar subpoenas issued by the City of Chicago's inspector general, David Hoffman.

In fact, as the article continues to point out, this isn't even the first subpoena to be issued into a business associated with Vanecko.

This is the second joint investigation that Hoffman and federal authorities are conducting into Vanecko's businesses.

The other investigation involves the hidden ownership stake Vanecko and the mayor's son, Patrick Daley, held in a sewer-cleaning company that won millions of dollars in no-bid contract extensions from City Hall. Vanecko and Patrick Daley have said they sold their investment in the company in late 2004 when Patrick Daley enlisted in the Army and Vanecko went into business with Davis.

Let's put this into perspective. Pension funds should be as safe as possible. After all, they secure the retirement benefits of thousands of city employees. These are not funds meant for anything more risky than the bluest of blue chip stocks. In this case, not only were they used to secure a major real estate development during a real estate downturn, but they were used to back a brand new real estate investment company. This is the opposite of the sorts of investment a pension fund should invest in. So, how did it happen?

To me, to ask just how the mayor's nephew was able to secure $68 million in pension funds for such a risky investment is in fact a rhetorical question. He's the mayor's nephew and so all questions end there. That's how the city of Chicago works. Those with connections get city resources. Those that don't...well they don't. It's really all very simple. This is the Chicago Way. What's really shocking about all of this is just how ordinary this is.

June 17, 2009

BY FRAN SPIELMAN City Hall Reporter/fspielman@suntimes.com
Chicago aldermen on Tuesday demanded to know why the city has paid nearly $500,000 to lease space at a South Side industrial site co-owned by Mayor Daley's nephew without City Council approval required for city leases.

As chairman of the City Council's Committee on Housing and Real Estate, Ald. Ray Suarez (31st) should have signed off on the lease at 3348 S. Pulaski.

» Click to enlarge image

As chairman of the City Council's Committee on Housing and Real Estate, Ald. Ray Suarez (31st) should have signed off on the lease at 3348 S. Pulaski.
(Rich Hein/Sun-Times)

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Daley's tale hard to take
But, the Daley administration's decision to make it a month-to-month lease -- and continue that temporary arrangement since November, 2007 -- denied Suarez' committee and the full City Council the right to approve the deal.

"Things have to be done the right way. Right is right. Wrong is wrong. You can't skirt" the rules, Suarez said.

"Why didn't we get a long-term contract? I want to know what their justification is for giving them a month-to-month lease. You could do month-to-month for a while," but not for 15 months.

Unless the city can prove it needed flexibility to get out of the lease quickly, it appears that the month-to-month lease was designed to get around the City Council, said Ald. Joe Moore (49th).

"It would seem to me that someone was trying to hide something," Moore said.

He added, "One of the reasons we have these meetings is so the public and ... media can know who's getting these leases. It begs the question why, in this particular case, it was done in what appears to be a secretive fashion. We are owed an explanation."

Anthony Pascente a spokesman for the city's Department of General Services, did not return repeated phone calls on the lease.

Despite weeks of questions from the Chicago Sun-Times, City Hall yet to produce a lease document or invoices to justify the monthly payments, at a rate of $3.83-per-square foot for 70,565 square feet of space, 20 percent of the warehouse.

Nor have city officials provided an explanation for the month-to-month arrangement with mayoral nephew Robert Vanecko and his partners, developer Allison Davis and Davis' son Jared.

The Sun-Times reported earlier this month that Vanecko and Davis used $4.2 million of the $68 million they manage for five city employee pension funds to help buy the mostly vacant warehouse and surrounding land.

On Sunday, the newspaper disclosed that the lease was linked to the demise of Chicago's scandal-plagued Hired Truck program.

The Department of Water Management says it needed a place to park dozens of dump trucks leased by the city to replace Hired Trucks.

In October, 2006, they found the ideal spot in the massive industrial property on Pulaski Road, just north of the Stevenson Expy.

After parking the trucks outside for a year, they decided to move them inside the warehouse on the 15-acre site.

As they negotiated a lease for that building, it changed hands, officials said. And City Hall insisted it had no idea that the new owners of the building included an investment company co-owned by the mayor's nephew.

Last week, Vanecko abruptly announced that he would "end his involvement with DV Urban Realty Partners, both as a general partner and as an investor," effective July 1. He cited a desire to minimize "unwarranted distractions.

He bowed out two weeks after a federal grand jury issued subpoenas seeking details of why the pension funds invested with Vanecko's start-up firm three years ago.

Parking lease deal weakens city, study says
Active Transportation Alliance says Chicago gave up its ability to plan and pay for traffic upgrades
Tribune staff report
June 24, 2009
Chicago relinquished its ability to plan and pay for much-needed traffic improvements when it signed over control of on-street parking to private operators, according to a study released Tuesday.

The 75-year parking meter privatization deal that took effect in February will hamstring efforts by the city to improve traffic flow, reduce congestion and pollution, and make streets safer for drivers, pedestrians, bicyclists and mass-transit riders, said the study by the Active Transportation Alliance, which promotes reforms in transportation and land-use policies.

The study marked the latest criticism of the Daley administration's $1.15 billion lease of the city's more than 36,000 on-street parking spaces to Chicago Parking Meters LLC.

The privatization prevents the city from using continuing parking revenue collections to invest in necessary improvements, the study said.

"Increased revenues should go to filling potholes, repairing sidewalks, planting trees, replacing streetlights and funding more efficient transportation options," the study said.

Chicago officials said the parking deal will help solve a severe budget shortfall and professionalize management of on-street parking.

June 24, 2009 (WLS) -- The Teamsters union has voted to reject a move by the city of Chicago to cut its members' pay by one-third by making them take furlough days and cutting their overtime.
The Teamsters represents the city's largest labor union. As part of drastic budget cuts, the city wants union members to forgo overtime and take 16 days off without pay.
Union members say it's not fair for the mayor to break their 10-year contract.
Last week, the Daley administration sent out layoff notices to 1,500 workers. The mayor says he'll be forced to layoff the workers unless the unions accept his budget plan.