BY JOE SHAHEELI/ The Committee of 70 is among the better-funded nonprofits in this city. Once a good-government workhorse devoted only to helping keep elections clean, it has since grown to become the propaganda force for those who stand to gain from reorganizing City government. Now it is focused on ending the existence of the City’s remaining three row offices. These are the offices of the City Commissioners, the Sheriff and the Register of Wills.
Nevertheless, “Seventy” relies on its old reputation for impartiality to engage voters, donors and media in its attempt to reach those goals. Its President, Zachary Stalberg, says over and over again, “We are looking for professionalism in government offices so they will run efficiently and with less favoritism.”
Yet, the way it moves to seek its goal leaves a lot to be desired. It feeds a host of charges to the local press, regardless of merit, which deliver them to the general public as gospel. Its surrogates – individuals such as John Kromer, a former head of the Office of Housing & Community Development – feed the mill with clean-sounding pieces aimed at furthering 70’s goals. (More on Kromer in a later issue.)
Why is it whipping up voter sentiment through these methods?
Maybe a look at just who is in bed with the Committee of 70 may give the reader some insight into the answer.
The Committee of 70 raises the bulk of its donations at an annual breakfast fundraiser well attended by real-estate companies, banks and law firms with heavy real-estate practices.
Nearly seven out of every 10 contributors who attended the last breakfast fundraiser in November have financial ties to the local real-estate market, or provide professional or consulting services to the public sector.
The Committee of 70 touts its “independence” from special interests on its website and takes great pride in the fact it does not seek government funds.
Yet its take from the real-estate sector raises questions, in a city where Sheriff sales have emerged as a major target for the local giants in that industry.
This has become evident with the forecast by commercial real-estate experts of a second huge wave of foreclosures and defaults which will now involve the commercial real-estate sector, including multifamily residential projects and signature buildings.
Without a Sheriff to keep bidders honest – with no way to ward off foreclosures except through a substitute entity set up under the control of a pliant City administration – it is evident heavy donors will benefit in the decision-making by that substitute authority. Hundreds of millions of dollars are at stake in this enormous field of financial play.
Citizens Bank, a Royal Bank of Scotland subsidiary, was among 70’s top contributors, and just one of five local banks listed as sponsors. Its parent company in 2008 admitted it was under investigation by the Securities & Exchange Commission for its role in the American subprime-loan crisis. RBS took a terrible dive in the mortgage bubble, sucking up a massive taxpayer bailout; it is now 84% owned by the British government. A Philadelphia subsidiary, Citizens Financial Group, has also been under investigation. In January of this year, a Philadelphia developer sued Citizens Bank for a whopping $8 billion, charging it had manufactured “sham accusations of default” in order to prop up its multinational parent, which was deep under water in 2009. Citizens Bank President and CEO Daniel K. Fitzpatrick serves as chair of the Committee of 70 Board of Directors.
John McKeever, Esq., a partner in DLA Piper, is one of two vice chairs. DLA Piper is a real-estate group with over 3,500 lawyers in 30 nations around the world. In 2008, it was the most-lucrative law firm in the United States, according to The Lawyer.
Other financial donors included Wachovia/Wells Fargo and Countrywide, which have been seen by consumer watchdog groups as instruments with “troublesome” racial disparities in the rates charged for their loans.
This heavy reliance on firms with financial interests in real estate raises ethical questions about 70’s campaign to shut down the Sheriff’s office. Incumbent Sheriff John Green has taken a hard line with banks and attorneys during the present foreclosure crisis. He has taken extraordinary steps to protect homeowners, drawing nationwide praise for his innovative programs.
Green, an activist African American Sheriff, has been on the frontlines of the crisis. In 2004 he established a Mortgage Foreclosure Prevention Committee and charged it with making recommendations to reduce Sheriff sales. The following year, Sheriff sales in Philadelphia fell 21%.
Twice, Green has postponed scheduled monthly sales of Sheriff-owned property in the city, pitying the challenges and complaints of constituents who were finding it difficult to get in contact with their mortgage companies to get loan-workout agreements or modifications. Lenders and local law firms representing these companies opposed the Sheriff’s effort initially. But as a wave of foreclosures washed over Philadelphia, they eventually joined in the effort to save homes.
Despite this record, the Committee of 70 has again launched its campaign to have City Council eliminate the independently elected Sheriff. It has been beating the drums for this cause, stimulating articles and editorials calling for the abolishment of his Office, which appear in local newspapers as though the fate of this branch of government is the only news that matters. Councilman Frank DiCicco has introduced a proposed amendment to the City Charter that, if approved by the voters, would eliminate this Office.
The Committee of 70 has scored a big one with that introduction. In Philadelphia, the overwhelming number of questions that appear on the ballot usually win by huge margins. It’s a fact most voters don’t even read the questions, but vote yes. The fight now goes to Council members who find themselves barraged with story after story, fact sheet after fact sheet, all orchestrated by Zachary Stalberg, with reasons why the Sheriff’s Office should be eliminated.
And what has the Sheriff’s Office done to become the 70’s target?
The subprime-loan foreclosure crisis has devastated poor and minority neighborhoods, like to one in which Sheriff Green lives in. It has siphoned off wealth and capital from communities that didn’t have much of either to begin with. At the same time, the crisis has created lucrative new profit centers for real-estate companies and loan firms. Foreclosed properties taken back by lenders often are turned over to these companies to sell, often with tidy profits. Foreclosures and defaults have proved to be a boon for some local law firms as well.
But it’s not just the homes of struggling working folks that have set Sheriff Green at odds with local developers and attorneys since the foreclosure crisis rocked the nation. Some developers who built high-rise luxury condos are now in trouble, as mortgage funding has dried up and consumer confidence and spending has fallen. Some of them will default, providing opportunities for investors seeking high-end property at rock-bottom prices. Some of the Big Boys saw tempting opportunities in this looming catastrophe.
Developers and attorneys recently asked the Sheriff to all them to bundle these high-end units into one sales package. Instead of bringing 130 different condos to sale, they sought to create a single sale of 130 condos.
Green, who has campaigned on a platform of making Sheriff sales more open to local investors, average homebuyers and small-time builders – so more people could have a shot at purchasing properties – nixed that idea.
The Sheriff’s office, citing legal advice from its attorney, told the bankers and lawyers (some of them contributors to the Committee of 70) they cannot package more than five condos together for one sale.
This is precisely where an elective office serves the citizenry best. An elected Sheriff owes his first duty to the people who elect him, even if they don’t have much money. His job includes shrewd management of big real-estate business – but in the public interest. He must balance the goal of maximizing revenues with the needs of ordinary Philadelphians.
This perspective isn’t always convenient for private-sector interests. Perhaps that’s why the Committee of 70 has been encouraged to keep throwing half-truths or untruths, indifferent to the law, at the Sheriff’s Office.