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Obama’s letters for Rezko

June 13, 2007

As a state senator, Barack Obama wrote letters to city and state officials supporting his political patron Tony Rezko’s successful bid to get more than $14 million from taxpayers to build apartments for senior citizens.

The deal included $855,000 in development fees for Rezko and his partner, Allison S. Davis, Obama’s former boss, according to records from the project, which was four blocks outside Obama’s state Senate district.

Obama’s letters, written nearly nine years ago, for the first time show the Democratic presidential hopeful did a political favor for Rezko — a longtime friend, campaign fund-raiser and client of the law firm where Obama worked — who was indicted last fall on federal charges that accuse him of demanding kickbacks from companies seeking state business under Gov. Blagojevich.

The letters appear to contradict a statement last December from Obama, who told the Chicago Tribune that, in all the years he’s known Rezko, “I’ve never done any favors for him.”

On Tuesday, Bill Burton, press secretary for Obama’s presidential campaign, said the letters Obama wrote in support of the development weren’t intended as a favor to Rezko or Davis.

“This wasn’t done as a favor for anyone,” Burton said in a written statement. “It was done in the interests of the people in the community who have benefited from the project.

“I don’t know that anyone specifically asked him to write this letter nine years ago,” the statement said. “There was a consensus in the community about the positive impact the project would make and Obama supported it because it was going to help people in his district. . . . They had a wellness clinic and adult day-care services, as well as a series of social services for residents. It’s a successful project. It’s meant a lot to the community, and he’s proud to have supported it.”

The development, called the Cottage View Terrace apartments, opened five years ago at 4801 S. Cottage Grove, providing 97 apartments for low-income senior citizens.

Asked about the Obama letters, Rezko’s attorney, Joseph Duffy, said Tuesday, “Mr. Rezko never spoke with, nor sought a letter from, Senator Obama in connection with that project.”

Davis couldn’t be reached for comment Tuesday.

‘Boneheaded’ deal in 2005

Since announcing his presidential bid, Obama has faced repeated questions about his 17-year relationship with Rezko, one of his earliest political contributors, who has raised hundreds of thousands of dollars for Obama.Rezko backed Obama’s election to the Illinois Senate in 1996, his successful re-election bids and his 2004 election to the U.S. Senate.

Two years ago, the two men were involved in a real estate deal that Obama later apologized for, calling it “boneheaded” and a “mistake” because the transaction occurred while Rezko was widely known to be under federal investigation. Rezko’s wife paid full price for a vacant lot in Chicago’s historic Kenwood district on the same day Obama bought the mansion next door from the same property owner for $300,000 below the asking price. Rezko’s wife subsequently sold a sliver of the land to Obama.

Obama’s relationship with Rezko dates to the senator’s days as a student at Harvard Law School, when Rezko offered him a job, which Obama turned down.

After graduation, Obama returned to Chicago and joined Davis’ small law firm — then known as Davis Miner Barnhill & Galland — which specialized in helping developers build housing for the poor. Five of those deals included Rezko’s company, Rezmar Corp. Those Rezmar projects ran into trouble. Some buildings ended up being boarded up. Some went into foreclosure.

While Obama served in the Illinois Senate, he continued to work for the law firm, which Davis left in 1997 to become a developer.

Davis soon went into business with Rezko, creating a company called New Kenwood LLC to build the seven-story apartment building for senior citizens on a vacant stretch of land once occupied by a gas station at 48th and Cottage Grove. The city of Chicago owned the land — nearly two acres tainted by lead, benzene and other toxic chemicals.

Davis is a member of the Chicago Plan Commission. He was originally appointed to the commission in 1991 by his friend, Mayor Daley. Davis, like Rezko, has been a prolific campaign fund-raiser for politicians including Daley and Obama.

Soon after they incorporated New Kenwood in 1998, Davis and Rezko got letters of support from elected officials — Ald. Toni Preckwinkle (4th) and state Rep. Lou Jones (D-Chicago), whose districts included the proposed project.

Firm paid city $1 for land

New Kenwood LLC also got letters of support from Obama, who represented a nearby Senate district.”I am writing in support of the New Kenwood LLC’s proposal to build a ninety-seven unit apartment building at 48th and Cottage Grove for senior citizens,” Obama wrote in separate letters, each dated Oct. 28, 1998, to city and state housing officials. “This project will provide much needed housing for Fourth Ward citizens.”

At the time he wrote the letters, Obama was also a lawyer with Miner Barnhill & Galland, the law firm Davis formerly headed. Among the firm’s clients were several companies owned by Davis and Rezko. The firm did not represent New Kenwood.

Davis and Rezko hired Daley & George, the law firm of the mayor’s brother Michael, to help them get $3.1 million from bonds issued by the city of Chicago.

Rezko and Davis paid the city $1 for the land and spent more than $100,000 to clean it up, including the removal of an underground storage tank. Some tainted land was left behind, but state environmental officials approved construction after Rezko and Davis agreed to cover the polluted areas with parking lots, sidewalks or three feet of dirt, records show.

The $14.6 million Cottage View Terrace was funded entirely by city, state and federal taxpayers.

The project included $855,000 in development fees for New Kenwood. Records don’t show how Davis and Rezko split the money. Davis owned 51 percent of New Kenwood, Rezko 49 percent, according to the records.

In addition to the development fees, a separate Davis-owned company stood to make another $900,000 through federal tax credits.

Cottage View Terrace was supposed to be managed by Davis’ longtime business partner, William Moorehead. But Moorehead said last week that his company was dumped before the apartments opened in 2002. The apartments are now managed by Urban Property Advisors, a company owned by Davis’ son, Cullen Davis.

Moorehead is due to report to prison next month to begin serving a four-year sentence for stealing more than $1 million from the Robert Taylor Homes and other public housing projects he managed for the Chicago Housing Authority and the U.S. Housing and Urban Development Department, as well as from two developments he co-owned with Davis near Cabrini-Green on the North Side.



June 15, 2007 - Posted by | 2008 Election, Chicago, Clinton, Democrat, Liberal Democrat, Obama, POLITICS, Presidential Candidate, Senator

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