Special Report

ACORN Sells Out the Poor

Backing a developer and the use of eminent domain to remove poor people from their homes.

By 7.9.09

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The relentlessly sanctimonious Association of Community Organizations for Reform Now may not deserve its carefully cultivated image as a defender of the poor.

That's because the group has become the leading cheerleader for a controversial real estate development that is slated to use eminent domain to remove the poor people it claims to represent.

ACORN, which has long prided itself on fighting the so-called gentrification of neighborhoods as rising property values force the poor to move, has also taken money from the project's developer and signed a binding agreement forcing it to stand behind the project no matter what.

In the world of corporate shakedowns it is commonplace for liberal activist groups to use the money they extract from a supposed "donor" to fund operations, but it is very unusual for a group to take money in exchange for betraying those it is supposed to represent.

But the far-left activist group ACORN, which claims to defend the poor from what ACORN ally Rep. John Conyers (D-Michigan) last year called America's "capitalist predators," is doing precisely that.

In 2005, ACORN signed an agreement with Forest City Ratner Companies, LLC, a megabucks real estate development firm, pledging its support for the ambitious Atlantic Yards development in Brooklyn, New York.

The taxpayer-subsidized 22-acre mixed-use project is currently expected to cost $4.9 billion. The sprawling complex would be built in the neighborhood of Prospect Heights and would include the Barclays Center, a proposed sports arena that would become the new home of the New Jersey Nets basketball team.

In exchange for ACORN's support, the developer agreed to set aside 50% of the expected 4,500 rental housing units for what the agreement's income tables define as "affordable housing."

At a staged media event at Brooklyn Borough Hall, ACORN's Bertha Lewis publicly sealed the deal by planting kisses on the mouths of New York City mayor Michael Bloomberg and Bruce Ratner, CEO of the development company and principal owner of the money-losing New Jersey Nets.

ACORN hadn't wasted any time after the U.S. Supreme Court threw the door wide open for expropriation for private profit in the infamous Kelo v. New London eminent domain case. The Kelo decision was handed down June 23, 2005, and after the above-described bout of public osculation, the formal so-called community benefits agreement between ACORN (and other local groups) and the developer was signed on June 27, 2005.

Without ACORN's horse-traded support for the project, "it was unlikely the Atlantic Yards deal would prevail," John Atlas of the National Housing Institute wrote a few months later in Shelterforce magazine. "And if Atlantic Yards gets built, ACORN will need all of its muscle to ensure that promises are fulfilled and the poor are protected."

It's worth noting that the venal ACORN, which apparently supplied instant supporters for various public hearings on the project, and the government subsidy-seeking Forest City Ratner are a perfect fit for so many reasons.

"We like working with ACORN," an unnamed Forest City Ratner executive told the Brooklyn Paper in 2005. "They have that radical feeling, they really fight for what they believe in. We just love their history, how they started, and feel it really represents what we're working to do here."

Incidentally, left-of-center political activism runs in the Ratner family.

Bruce, who used to teach law, ran the Consumer Protection Division in New York City Mayor John Lindsay's administration. He was also Consumer Affairs commissioner under Mayor Ed Koch. "Bruce is an old lefty, he's an old hippie," one friend told New York magazine. He also worked for the Model Cities Program, an artifact of President Lyndon Johnson's ill-fated anti-poverty crusade.

His brother is Michael Ratner, a Che Guevara admirer who has long campaigned for the closure of the U.S. military's Guantanamo Bay terrorist detention center in Cuba. Michael heads up the Greenwich Village-based Center for Constitutional Rights, which has scored legal victories that undermined the Global War on Terror. Their sister Ellen is a left-wing journalist who said in 2002 it was "my hope" that President George W. Bush "messes up the war" in Iraq so he wouldn't be reelected in 2004.

Although in 2005, Forest City Ratner, struggling to move forward with Atlantic Yards, might have needed ACORN more than ACORN needed it, by 2008 the roles were reversed.

Stung by internal scandal, election fraud allegations galore, unprecedented nonstop negative media coverage, and cash flow problems, ACORN agreed to accept a cash infusion from the developer.

With millions of dollars in back taxes owing to the IRS, states, and localities across the nation, ACORN's continued backing for Atlantic Yards was apparently purchased for $1.5 million in 2008.

According to documents posted online by ACORN whistleblower Anita MonCrief, this bailout consisted of a $1 million loan and $500,000 in donations. The loan agreement stipulated that $500,000 would be paid to ACORN upon signing and a further $500,000 would be paid out on Oct. 1, 2008. A promissory note provided that interest would accrue at the rate of 4.58% with a final balloon payment of $100,000 due on May 31, 2011.

Forest City Ratner indicated in a letter to ACORN that it would disburse $500,000 in grants but the money wouldn't go to ACORN directly. The grants were to be made to the ACORN Institute, one of ACORN's 100-plus tax-exempt nonprofit affiliates.

Whether the money will stay at the ACORN Institute, which trains aspiring community organizers, is anyone's guess. ACORN routinely shuffles cash around its network. Its nebulous legal status and opaque corporate structure allow it to keep its activities largely hidden from public view.

And there's a powerful financial incentive for ACORN not to withdraw its support for Atlantic Yards. That's because the ACORN Institute was to receive $300,000 of the $500,000 grant up front, with the remaining $200,000 to be paid out in equal installments in August 2009 and August 2010.

Not surprisingly, as doubts have surfaced about whether Forest City Ratner will honor the promise it made to build 2,250 units of affordable housing -- the promise that helped it win the support of ACORN and the Prospect Heights community -- ACORN has remained silent.

Despite ACORN's acquiescence, local politicians are becoming increasingly nervous about the affordable housing component of the project.

"The sweeping promises of affordable housing made by the developer at the onset of this project have now evaporated to a mere whisper," Assemblyman Hakeem Jeffries, a Brooklyn Democrat who backed the original plan, told the New York Post last month. "At this point, it is not clear that the developer plans to build anything other than an arena and a few affordable apartment units, and that is simply unacceptable."

Although the officially approved plan called for 2,250 units of affordable housing to be built over 10 years, there is evidence that Forest City Ratner has been trying to renegotiate the deal for some time, noted an intrepid researcher named Norman Oder on a recent episode of CUNY TV's "Brian Lehrer Live."

"In September 2007, before the economic downturn, September 2007, the city and state signed funding agreements that require Forest City Ratner to build much, much less," said Oder, who maintains the encyclopedic Atlantic Yards Report blog. "They can get away with building much less without penalty, maybe three towers, only 300 units of affordable housing in 12 years."

The idea that the developer would construct only three residential buildings was floated by Bruce Ratner himself. In a rare New York Times report on the difficulties the project is facing, Ratner said in March of last year that the bad economy and credit crunch were delivering a double-whammy to his plans. "It may hold up the office building," he said. "And the bond market may slow the pace of the residential buildings."

So in the developer's hierarchy of priorities, creating affordable housing seems to be far down on the list.

"I would say their priority, clearly, is moving the New Jersey Nets, which they own in part, which are losing tens of millions of dollars a year, moving them from the Izod Center in New Jersey to the so-called Barclays Center in Brooklyn, where they'll have luxury suites, naming rights, they bring in new revenue, they stop losing and they can sell the team at a profit," Oder said.

A group of tenants, property owners, and business owners represented by South Brooklyn Legal Services is fighting Forest City Ratner in court.

In court documents they say that a state agency's study concluded that the project "could indirectly eliminate 2,929 at-risk households (defined as 'privately held units that are unprotected by rent regulations, whose incomes or poverty status indicates that they could not pay substantial rent increases.')" This means that "nearly 3000 low-income households will be displaced in exchange for the ever-dwindling possibility that the Project might create 2,250 'affordable' units -- a net affordable housing loss."

Although the litigants in Goldstein et al. v. Empire State Development Corporation lost at trial, New York's highest court has agreed to hear an appeal in October. This will be cutting it close for the developer whose right to take advantage of tax-exempt financing for part of the project expires at the end of the year.

If Forest City Ratner wins, ACORN will bear partial responsibility for the roar of bulldozers in Prospect Heights.

Although ACORN takes credit for saving residents of places such as Hurricane Katrina-ravaged New Orleans from having their property taken by condemnation, the potential displacement of Brooklyn residents doesn't seem to bother ACORN's chief organizer Bertha Lewis. As recently as February, Lewis patted herself on the back for her group's development work on the Brooklyn project, which she described as "sexy, sexy, sexy Atlantic Yards."

In the interview published in the current edition of Regional Labor Review, Lewis noted that when entering into talks with a developer, "You really have to know your sh--."

"You need to be big enough and have the strength and have enough expertise and be able to bring the political capital to the table," she said.

Lewis may not be bothered by her conscience, but the displacement of property owners and poor people to make way for private developments does bother prominent ACORN supporters.

Three months after the U.S. Supreme Court's widely condemned 2005 ruling that allowed revenue-hungry state and local governments to take private property and give it to private developers, lawmakers of every political stripe, including the very liberal Rep. Maxine Waters (D-California), were incensed.

Waters, who frequently speaks at ACORN events, said "the taking of private property for private use, in my estimation, is unconstitutional. It's un-American, and it's not to be tolerated."

"This is not a partisan issue," she said of the ruling in the Kelo v. New London eminent domain case.

Hilary O. Shelton, director of the NAACP's Washington, D.C., bureau, pointed out that eminent domain has long been a favorite tool of officials who want to make way for city-planned renewal projects that force minorities out of communities.

"The history of eminent domain is rife with abuse specifically targeting minority neighborhoods," he said. "By allowing pure economic development motives to constitute public use for eminent domain purposes, state and local governments will now infringe on their property rights of those with less economic and political power with more regularity."

Watchdog Norman Oder is upset that the New York Times hasn't paid enough attention in his opinion to the Atlantic Yards story, especially with respect to Forest City Ratner's payments to ACORN.

He finds this lack of interest in the ACORN bailout particularly troubling given the newspaper's dogged pursuit of the story of how the group covered up for eight years an embezzlement involving nearly $1 million by the ACORN founder's brother, Dale Rathke.

Oder notes that the developer's payments constitute the second bailout of ACORN. The first was covered in an August 16, 2008 Times article about how Drummond Pike of the secretive Tides Foundation personally covered the remaining restitution payments that the Rathke family was making to ACORN.

The Old Gray Lady's virtual news blackout might stem from the fact that the New York Times Company and Forest City Ratner were development partners in the Times Company's newly constructed headquarters on Eighth Avenue in Manhattan. Eminent domain was used in the project.

When the project was unveiled a few days after the 9/11 attacks, Bruce Ratner wrapped himself in the flag, saluting the newspaper's corporatist project as a "very important testament to our values, culture and democratic ideals."

Ironically, the New York Times wasn't always enthusiastic about using the power of government to seize property. In a 1909 editorial, the newspaper railed against the income tax: "When men get in the habit of helping themselves to the property of others, they cannot easily be cured of it."

ACORN, which in theory is opposed to eminent domain abuse, isn't likely to be cured anytime soon.

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About the Author

Matthew Vadum is an award-winning investigative journalist at a conservative watchdog group in Washington, D.C. Vadum is also author of Subversion Inc: How Obama's ACORN Red Shirts are Still Terrorizing and Ripping Off American Taxpayers.