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Open Letter To Gov. Rendell: Why Your Approval Rating Is So Dismal

Open Letter To Gov. Rendell: Why Your Approval Rating Is So Dismal

BY CHRIS FREIND

Dear Gov. Rendell:

I noted with interest that your current approval rating stands at just 39% — the lowest point in your career. Despite denying my repeated requests for a one-on-one interview, I nonetheless offer my thoughts as to why you have fallen out of favor with so many Pennsylvanians.

Conflicts Of Interest

First and foremost, the citizens of the Keystone State are fed up with what they see as huge conflicts of interest permeating every level of your Administration, with you being the focal point of many.

The appearance of a governor showing favoritism and special treatment to his big-dollar political donors, close friends, campaign fundraisers, and, perhaps most disturbing of all, one’s former law firm, raises eyebrows and sinks people’s faith in government.

For example, Ballard Spahr, the law firm where you worked from 1999 to 2002, billed a total of $25,000 in legal fees to the Delaware River Port Authority (DRPA) in the three years which preceded your election as governor. Since then, Ballard has billed over $3 million. Considering that you were the self-appointed Chairman of the Authority during this bonanza time for Ballard, many still wonder at this peculiar arrangement.

Making matters even more suspect, your former Chief of Staff, John Estey, voted on your behalf as the Chairman-designate at virtually every meeting. Since you made him the outright Chairman three months ago, he continues to vote to receive and accept Ballard Spahr’s legal bills to the DRPA. As a partner at Ballard, Estey is, therefore, voting to put money into his own firm’s coffers — a situation that offends many of your constituents and would never fly in the private sector.

Additionally, Mr. Estey is also the chairman of the Philadelphia Regional Port Authority (PRPA), an agency of the Commonwealth which you control. Not surprisingly, Ballard Spahr also happens to be the PRPA’s outside counsel.

But what takes the cake is Ballard Spahr performing nearly $800,000 worth of legal work for the Pennsylvania Turnpike privatization initiative with no contract. That’s not a no-bid contract, mind you. It’s no contract at all. Must be nice to be Ballard Spahr.

From assisting Al Boscov (of Boscov’s department stores) with a $35 million taxpayer-funded bailout, after Boscov and his family contributed $164,000 to your campaigns, to awarding a no-bid contract to a Houston law firm, whose lead partner donated $91,000 to your campaign efforts, an increasing number of Pennsylvanians are, quite frankly, skeptical of your integrity. Addressing that should be your first priority.

Your Comcast “High-Speed” Connection

Earlier this year, you publicly scolded the Sunoco oil company for its decision to lay off 750 workers, calling the company’s action “unconscionable.” Yet you were notably silent concerning the 3,000 layoffs — four times the number at Sunoco — that Comcast has executed in the past year.

Why the disparity? A look at the campaign money trail might well provide the answer.

Since your 2002 election, Sunoco’s political action committee (PAC) contributed $55,000 to your campaign, with Sunoco employees donating an additional $2,650.

During that same time period, Comcast’s PAC, its employees, and the spouses of its top executives, have donated $634,350 to you. Additionally, Comcast spent at least $100,000 on your inauguration festivities in 2007, being designated a“Benefactor,” the highest level of contributor.

One of your closest allies, Comcast Executive Vice President David Cohen (and your former Mayoral Chief of Staff), has contributed $80,000 to your campaigns. His wife, Rhonda, donated an additional $156,000. Interestingly, Mr. Cohen served as chairman of Ballard Spahr prior to joining Comcast. (Comcast is represented by Ballard Spahr).

Speaking of Ballard Spahr, the firm has contributed $481,000 to the your campaigns, and its attorneys donated an additional half-million dollars. Also, the Philadelphia Future Political Action Committee, registered at the Ballard office, pumped $471,000 more into your coffers. Mr. Cohen serves as that PAC’s treasurer.

And the address on your campaign finance reports is the 51st floor of 1735 Market Street in Philadelphia — where Ballard Spahr occupies the entire floor.

It all ties together, doesn’t it?

No New Taxes

Being a member of the media means that I’m not very bright, but pushing for new taxes might not be the best idea for winning the budget fight. We have never taxed ourselves into prosperity, but to increase tax rates during a severe recession is simply ludicrous. Your budgetary math has been fuzzy, to say the least, further reinforcing the notion that you are completely out of touch with reality.

Just one more suggestion. The next time someone asks you the amount of your paycheck, you probably shouldn’t answer, “I wouldn’t have a clue what I get paid in a month.” It doesn’t come across too well for the 99.9% of Pennsylvanians who do actually need to know what their income is. After all, they have budgets to balance.

Your Teflon is fading, Governor. You need, for once, to forget your own interest and think of those whom you swore to represent. It’s time to get Pennsylvanians working again and re-instill a faith that their governor is a man of integrity.

Otherwise, the only legacy you will leave will be one of greed and personal ambition.

Chris Freind can be reached at CF@FreindlyFireZone.com

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August 5, 2009 at 12:02 pm Comments (0)

Fire Sale Of State Building Going To Rendell Backer?

Fire Sale Of State Building Going To Rendell Backer?

Auditor General Is Reviewing Rendell Administration’s DGS Sale Agreement
By Chris Freind

Eyebrows have been raised concerning the possibility that some of Democratic Gov. Ed Rendell’s high-dollar donors may be buying state property at “fire sale” prices in a depressed real estate market. The prospective new owner of the State Office Building in Pittsburgh is affiliated with a company whose two top executives contributed $221,000 to Gov. Rendell’s campaigns.

Pennsylvania Auditor General Jack Wagner, the commonwealth’s elected fiscal watchdog, announced he was reviewing the Pennsylvania Department of General Service’s (DGS) agreement to sell the State Office Building in Pittsburgh to River Vue Associates for $4.6 million because the transaction amounted to a “fire sale.” DGS is part of the executive branch of the Rendell administration.

River Vue Associates is an affiliate of Millcraft Industries of Canonsburg, Washington County.

Millcraft chairman Jack Piatt has contributed $186,000 to Democratic Gov. Rendell’s campaigns, and Lucas Piatt, Millcraft’s Vice President, has donated $35,000 to Mr. Rendell.

River Vue would acquire the State Office Building early next year and possibly turn it into residential units with some hotel, retail or other types of space, according to the Pittsburgh Tribune-Review.

In a letter hand-delivered to DGS Secretary James Creedon, Mr. Wagner said the Department of the Auditor General’s Office of Special Investigations would be seeking all available information pertaining to the sale, including lease terms and associated build-out costs at all privately owned buildings where DGS has relocated, or plans to relocate, 800 workers from at least 22 state agencies.

“I continue to believe this is the worst possible deal for the taxpayers of Pennsylvania,” Mr. Wagner said. “It makes no sense for the commonwealth to sell this prized asset — the signature building of state government in Western Pennsylvania — for the lowest possible price during the most depressed real-estate market in decades.”

Mr. Wagner asked DGS a month ago to take the State Office Building off the market until economic conditions improve, after another developer, the Buncher Co., withdrew its bid of $4.5 million. As an alternative to selling the building, the auditor general suggested the state investigate the possibility of using federal funds for green technology to rehabilitate the 52-year-old structure.

The 274,000-square-foot building occupies a prime, 1.3-acre location in downtown Pittsburgh, at the entrance to Point State Park, and offers sweeping views of the confluence of Pittsburgh’s three rivers. Along with the Gateway Center complex, the State Office Building is a symbol of the post-Word War II downtown renaissance envisioned by David L. Lawrence, the late mayor of Pittsburgh, who served as Pennsylvania governor from 1959-63.

“The land alone is worth more than the sale price,” Mr. Wagner said. He noted the state has agreed to purchase the City of Pittsburgh’s Municipal Courts Building, which is one-fifth the size of the State Office Building and is situated in a less desirable location, under the Liberty Bridge and next to the Allegheny County Jail, for $9 million.

The State Office Building sale is a bad deal, Mr. Wagner said, because there would not be enough profits from the sale to offset moving expenses and pay for the first year of leases at multiple locations in downtown Pittsburgh, saddling taxpayers with an additional spending burden.

“During these difficult economic times, with the state facing multibillion-dollar deficits for the next few years, we should not be saddling hard-working Pennsylvania residents with additional financial burdens they cannot afford,” Mr. Wagner said.

“In addition to being financially wasteful, it would be ludicrous for Secretary Creedon to decentralize state offices in Pittsburgh while other government agencies are moving to centralize other functions in order to save money,” Mr. Wagner said. “Under the terms of this sale, the only certain winners are the buyer of the building and the landlords of the office space where state employees will be relocated.”

Chris Freind can be reached at cf@thebulletin.us

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March 28, 2009 at 2:19 pm Comments (0)

Comcast and Rendell: A High-Octane Connection

Comcast and Rendell: A High-Octane Connection

Conflicts of Interest Pervade the Relationship

BY CHRIS FREIND

Democratic Gov. Ed Rendell’s recent decision to criticize the Sunoco oil company for laying off 750 workers raises a number of intriguing questions. While the governor saw fit to hold a press conference solely to excoriate Sunoco, calling the company’s decision “unconscionable,” he has been notably silent concerning 3,000 layoffs — four times the Sunoco amount — which Comcast has executed in the past year.

Since the governor’s election in 2002, SUN PAC, the Sunoco political action committee, has contributed $55,000 to Mr. Rendell, with Sunoco employees donating an additional $2650.

During that same span, Comcast’s PAC, its employees, and the spouses of its top executives donated $634,350 to the governor. Additionally, Comcast spent at least $100,000 on Mr. Rendell’s inauguration festivities in 2007, being designated “Benefactor” by the governor, the highest level of contributor.
The David Cohen Factor

The governor’s closest ally at Comcast is Executive Vice President David Cohen, who has contributed $80,000 to Mr. Rendell. Mr. Cohen is a longtime Rendell confidante and fundraiser, serving as Chief of Staff when Rendell was Mayor of Philadelphia. Prior to joining Comcast, Cohen was Chairman of the Ballard Spahr law firm, where Mr. Rendell worked while campaigning for governor. Ballard, which provides legal counsel to Comcast, has come under intense media and legislative scrutiny for the frequency and amount of secretive no-bid contracts it has received under the Rendell Administration. In addition, it received almost $800,000 for work on the Pennsylvania Turnpike without any contract.

Ballard Spahr LLP has contributed $481,000 to the governor’s campaigns, with its attorneys donating an additional half million dollars. Also, the Philadelphia Future political action committee (PAC), registered at the Ballard offices and whose treasurer is Mr. Cohen, pumped $471,000 into the Rendell coffers.

The address on Gov. Rendell’s campaign finance reports is the 51st floor of 1735 Market Street in Philadelphia. Ballard Spahr occupies the entire floor.

Cohen also serves as Chairman of the Greater Philadelphia Chamber of Commerce. Despite Mr. Rendell’s unprecedented intrusion into the private business sector by his attack on Sunoco, a major Philadelphia employer and Chamber member, no action was taken by the Chamber to defend the company.

The Comcast High Speed Money Connection

The Comcast money trail doesn’t end with Mr. Cohen. Ralph Roberts, Comcast’s founder, his son Brian, who serves as Chairman and CEO, and several other executives are strong Rendell backers. The elder Roberts contributed $52,500, and the son, $48,500. Comcast Chief Operating Office Stephen Burke donated $32,000.

According to Department of State records, the spouses of Comcast executives also made high-dollar contributions to Mr. Rendell. Rhonda Cohen donated $156,000, and the Roberts’ wives, Suzanne and Aileen, respectively, combined for another $25,250. Gretchen Burke contributed $5000.

The Comcast Corporation PAC contributed $93,500 to Rendell campaigns.

Rendell: On The Comcast Payroll

In addition to his $145,000 salary as governor, Mr. Rendell has also worked as a part-time football commentator for Comcast, earning a reported $20,000 per year. This arrangement has led many to question the apparent conflict, but the governor simply brushes off such criticism. As governor, Mr. Rendell has also collected a paycheck from the University of Pennsylvania, where Cohen serves as the Chairman-elect on the Board of Trustees, for his services as a lecturer. The university is a recipient of substantial state aid.

Comcast Aid: An End Run Around the Legislature

In constructing its new Center City headquarters, Comcast executives lobbied the state government for financial assistance. The firm sought a Keystone Opportunity Zone (KOZ) designation for its building, which would have provided local and state tax relief. Despite the fact that KOZ’s are intended to spur development in areas of blight, not prosperous Center City locations, the $30 billion company almost succeeded with the help of Gov. Rendell. Had the Comcast effort prevailed, the company would have been exempt from state and local business taxes until 2015.

Ultimately, the Pennsylvania legislature defeated the efforts of Comcast and the governor.

The governor then made an end-run around the legislature, funneling nearly $43 million in taxpayer money to aid Comcast and pay for infrastructure near the Comcast building, prompting outrage from many. Comcast’s direct incentives were nearly $13 million.

The economic development funds equated to roughly 10% of the building’s cost.

A Cynical Public

At a time when political corruption trials, pay to play scandals and conflicts of interest are rampant, polls show a public with an increasingly cynical view of their government and elected officials. The Pennsylvania legislature has responded by introducing a number of bills aimed at how state contracts are awarded.

Under the Rendell Administration, over $1 billion in no-bid contracts have been awarded.

Chris Freind can be reached at cf@thebulletin.us

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March 28, 2009 at 2:15 pm Comments (0)

Inquirer’ Bailout Talks Raise More Questions

Inquirer’ Bailout Talks Raise More Questions
Publisher, Governor Make Conflicting Statements
By Chris Freind, The Bulletin

The Bulletin and other media outlets have recently disclosed ongoing discussions between Pennsylvania Gov. Ed Rendell, D, and Philadelphia Media Holdings (PMH) Publisher and CEO Brian Tierney. A possible taxpayer bailout of the struggling media company stands at the heart of the issue.

PMH bought the Philadelphia Inquirer and Daily News in 2006 for $562 million, and approximately $400 million remains in debt. The company is in default because it has not made a payment on its loan since June of last year.

There has been significant public opposition to a media entity seeking financial support from the government, including a Wall Street Journal editorial labeling it “the worst bailout idea so far.” 

Despite this, the governor’s press secretary, Chuck Ardo, stated earlier this week that Mr. Rendell is still open to continuing the bailout discussions.

Complicating the matter are contradictory statements made by Mr. Ardo and Mr. Tierney. 

According to a story on KYW News Radio, Mr. Ardo said there were discussions about state agencies renting space in the newspapers’ building.

Additionally, Mr. Ardo stated that some bailout conversations involved two of Pennsylvania’s large state pension boards, the State Employees Retirement System (SERS) and the Public School Employees Retirement System (PSERS).

“I don’t know the specifics of the conversations, but the governor did suggest that Mr. Tierney speak with the pension boards to see what kind of arrangements could be worked out,” Mr. Ardo was quoted as saying on KYW.

Mr. Tierney made a contradictory statement, according to the news radio website, by claiming that discussions did not involve the use of pension fund dollars to buy any of the papers’ debt. 

Yet according to a Jan. 31 article in the Inquirer, “Gov. Rendell said he arranged a recent meeting between the publisher of The Inquirer and Daily News and the two largest state employee pension funds in hopes of helping the newspaper company lessen its large debt burden.”

The article elaborated on the bailout discussion timeline, stating that Mr. Tierney “…said that he first sought Rendell’s help about a year and a half ago. He wanted to see if there were any state agencies interested in moving into The Inquirer and Daily News Building.”

Mr. Tierney then approached the governor “to determine what, if any, economic-development funds were available from the state. As a result of those discussions, Rendell set up a meeting last autumn between the publisher and the pension funds.”

A spokeswoman for PSERS told The Bulletin that the pension board did not invest in companies such as Philadelphia Media Holdings, and was unaware of a leasing arrangement of PMH office space.

State Rep. Robert Godshall, R, Montgomery, who serves as a Board Member of SERS, told The Bulletin he too was not aware of any investment in PMH.

The Inquirer declined to comment, while calls from Ardo were not returned as of press time.

Chris Freind can be reached at cf@thebulletin.us

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February 13, 2009 at 9:11 am Comments (0)

Rendell To Veto No-Bid Contract Reform?

Rendell To Veto No-Bid Contract Reform?

By Chris Freind, The Bulletin
Wednesday, February 11, 2009

The Pennsylvania Senate recently introduced 10 bills aimed at reforming state government. Senate Bill 102, sponsored by Majority Whip Jane Orie, R-40th, of Allegheny County, deals with how no-bid state contracts are awarded. The proposed legislation would eliminate no-bid contracts for consulting services, including legal and bond work, instead requiring an open bid process.

Secretive no-bid contracts doled out under the administration of Pennsylvania Gov. Ed  Rendell, D, have come under intense scrutiny by legislators, grassroots organizations and the media. This is largely due to the frequency and high-dollar amount of contracts being awarded to the governor’s close friends and political contributors, including Mr. Rendell’s former law firm, Ballard Spahr.

A similar bill reform bill passed the senate 50-0 during the last legislative session, but languished in the Democratic-controlled House of Representatives.

The Bulletin discussed the proposed no-bid contract legislation with Gov Rendell’s Press Secretary Chuck Ardo.

The Bulletin: If the legislation reforming no-bid contracts were to make it to the governor’s desk, do you think he would sign it?

Chuck Ardo: He is not likely to sign it. 

TB: What would be the rationale?

CA: Well, for instance, take professional contracts. You wouldn’t want to hire a surgeon by determining the lowest bidder. You’d want to find the most qualified surgeon for the procedure. The same is true for lawyers and other professional services providers.

Also, sole-source contracts have saved the commonwealth significant money over the last several years. There is political gain to be had by advocating the end of sole-source contracts, but that’s not necessarily in the best interest of the commonwealth or its people.

TB: Would the governor be in favor of no-bid contracts that had a capped amount, such as $100,000?

CA: The problem is that some legal proceedings could require significant investment by the commonwealth. You want the best representation possible, not necessarily by those who submitted the lowest bid.

TB: In that regard, caps or not, would the governor be in favor of no-bid contracts being either approved or rejected by the state attorney general?

CA: We’ll have to see what the specifics of the legislation might be.  It’s hard to answer a hypothetical question like that until we know exactly what the language requires.

TB: Many eyebrows were raised when Ballard Spahr performed $773,000 of legal work for the turnpike privatization initiative — with no contract.  No-bid contracts are one thing, but how does the governor address this “no-contract” type of situation?  How was the turnpike lease issue “urgent”? 

(With no contract in place, Ballard was required to sign a  “Compromise, Settlement and Release” to get retroactively compensated.)

CA:  The needs that the turnpike lease was meant to address were urgent, and continue to be urgent.  There is very little doubt about the urgency of transportation funding needs.

TB: But was it urgent to the point where Ballard billed 2,300 hours over 84 days, utilizing 55 attorneys? Could the firm not have taken the necessary time to execute a no-bid contract?

CA:  I think that everybody was relatively assured that a contract could be worked out.

TB:  Not to seem like we are beating a dead horse, but…

CA:  You choose Ballard Spahr, but there are lots of law firms that have done work for the commonwealth.  There are law firms across the width and breadth of the state that have various relationships, which provide such services.

TB: Many people have inquired about a comparison of no-bid contracts between the Rendell and past administrations.  But it has been reported that such records were “lost” during a computer transition.  Is there any update on the lost records?  Is there any possibility the records might be found?

CA:  I didn’t know they were lost.  Let me find out.

Chris Freind can be reached at cf@thebulletin.us

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February 11, 2009 at 9:59 am Comments (0)

A Recap Of Ballard’s $773K No-Contract Legal Work

A Recap Of Ballard’s $773K No-Contract Legal Work
By Chris Freind, The Bulletin
In 2007, Ballard Spahr, Gov. Ed Rendell’s former law firm, performed $773,000 of state legal work without a contract.

Normally, a contract must be negotiated and executed before any work for the commonwealth can be performed. Because no contract was in place,  however, the firm had no way of receiving compensation. Consequently, it had to sign a  “Compromise, Settlement and Release” agreement initiated by the state Department of Transportation to receive payment retroactively.

While state law allows for work of an urgent nature to be performed without a contract, questions have been raised as to how the turnpike privatization initiative qualified an “urgent” matter, especially since the governor’s plan had been met with resistance in the legislature and had little chance of passage.

The hourly rates of Ballard’s no-contract legal work varied based on seniority. Firm Chairman Arthur Makadon billed $637.50/hour, with partners Ken Jarin and Adrian King Jr. billing $531.25/hour and $403.75/hour, respectively.

Mr. Makadon, a close friend of the governor, has contributed $87,500 to his campaigns. Mr. Jarin is listed as the “relationship partner” on the $773,000 project.  He is a longtime confidante and fundraiser to Mr. Rendell, having contributed $90,000 to the governor’s coffers.  He also serves as treasurer to the Democratic Governor’s Association, an entity that has contributed over $1.5 million to Mr. Rendell.

Mr. Jarin is married to Robin Wiessmann, who at the time of the Turnpike leasing project was serving as state treasurer.  Her office issued payments for the Ballard invoices. Adrian King Jr., served as the governor’s deputy chief of staff and as a cabinet member prior to rejoining Ballard as a partner.

The Ballard firm, a Limited Liability Partnership (LLP), contributed $481,000 to Gov. Rendell’s campaigns. The Philadelphia Future Political Action Committee (PAC), registered at the Ballard offices in Philadelphia and whose treasurer is David Cohen, former Ballard chairman and former chief of staff to then-Mayor Rendell, contributed $470,000.  Mr. Cohen donated $80,000, and his wife, Rhonda, contributed $156,000 to Rendell campaigns. Ballard associates contributed nearly a half million more dollars to Mr. Rendell.

There is no limit to how much an individual or an LLP can contribute to state candidates.  The majority of law firms are LLPs.

Additionally, on Pennsylvania Department of State campaign filings, the address of Gov. Rendell’s campaign treasurer is the 51st Floor of 1735 Market St. in Philadelphia.  The floor is occupied entirely by Ballard Spahr.

Chris Freind can be reached at cf@thebulletin.us

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February 11, 2009 at 9:56 am Comments (0)

Port Authority: $11 Million in Non-Bridge Projects

Port Authority: $11 Million in Non-Bridge Projects

DRPA Still Can’t Afford to Repair Bridges, but Funds 2008 Army-Navy game and historic house

BY CHRIS FREIND

The Delaware River Port Authority (DRPA) resumed its controversial “economic development” program yesterday, doling out millions of dollars to projects having nothing to do with the Authority’s primary mission of operating and maintaining the four major bridges in Philadelphia. Many politicians in Pennsylvania and New Jersey have close affiliations with these projects.

At its Thursday board meeting, the DRPA Projects Committee approved $11 million in grants to be spent on numerous initiatives in the cities of Philadelphia and Camden. The full board is expected to approve the expenditures at its Feb. 18 board meeting.

In Pennsylvania, the authority will spend $3.5 million for the restoration of an historic house in Philadelphia. An additional $2.5 million was allocated for several initiatives in the historic section of Philadelphia, including the development of a “permanent food structure” in Franklin Square and a technology update for the “Lights of Liberty” show. Lights of Liberty was the idea of then-mayor Ed Rendell to add an evening attraction to the historic district’s landscape.

The DRPA also authorized a resolution to give $250,000 to the Philadelphia Convention and Visitor’s Bureau “for expenses incurred hosting the 2008 Army-Navy game.” The military academies played the game almost two months ago.

According to the DRPA, Philadelphia hosted its eighth straight sellout Army-Navy game, had a national television audience of three million, and was the recipient of $35 million in “total economic output.” When questioned about why the DRPA felt it necessary to pay out a quarter-million dollars given the game’s economic success, the answer given by CEO John Matheussen was that the Army-Navy game was good for the Philadelphia region.

In New Jersey, the authority passed a resolution to spend $5 million for “educational and infrastructure improvements” in Camden. Projects include the demolition of a city-owned downtown building and recreational improvements related to Roosevelt Park. The DRPA will also be involved in the “site acquisition, demolition, relocation, and other costs in connection with the University of Medicine and Dentistry of New Jersey (UMDNJ)’s development of an Academic Research Facility.” According to discussions at the DRPA press conference, however, the decision by the UMDNJ to move forward with the research facility has not yet been approved.

A significant portion of the New Jersey economic development funds will be allocated to public infrastructure improvements along Admiral Wilson Boulevard in connection with the expansion of the Campbell Soup Company, a business with a market value of $11 billion.

The DRPA will also fund the West Jersey Line, a 17 mile private railroad in Salem County. It will primarily serve two companies in that region.

Port Authority Vice Chairman Jeffrey Nash, who voted in favor of these projects, also serves as an elected Camden County Freeholder. With the exception of the railroad, all of the New Jersey economic development projects approved at the board meeting are located within Mr. Nash’s district.

Commuters became enraged last year when tolls increased by 33%, a measure taken because DRPA didn’t have the $1.1 billion it needed for bridge repairs. While tolls will rise another 33% next year, the Authority will also be issuing bonds later this year to raise additional revenue for capital improvement repairs. The total bond amount could exceed $500 million.

The Port Authority’s nearly $400 million in economic development grants have come under intense scrutiny in recent months as politicians, the media, and watchdog organizations have increasingly questioned why the Port Authority continues to spend money on non-bridge related projects, especially in difficult economic times.

The Authority has a debt of more than $1.2 billion, and 76 per cent of every dollar is allocated to salaries, benefits and debt service.

Pennsylvania state senator John Rafferty, R-44, Chester and Montgomery Counties, expressed his concern regarding economic development spending by the DRPA.

“They can say all they want that they had this economic development money in reserve, but it should be allocated to rail lines and transportation. The purpose of the DRPA should be to fulfill the same mission of every other government agency— to provide safety, health and welfare to the people for whom they are responsible,” he said. “And you do that by having bridges and rail lines that are up to code and meeting the needs of the consumers. It’s not investing in all these other projects!”, he added.

Sen. Rafferty discussed how much the DRPA changed after being granted economic development authority in the early 1990’s. “We’ve gotten so far away from the scope of what was intended for that agency, that I think the best way to (rectify the situation) is have the federal government eliminate the economic development authority and give us (the state legislatures) the authority to start looking into this,” he stated.

“The DRPA should stop being a wish-list for governors to pull money for projects,” Sen. Rafferty stated.

A spokeswoman for United States Senator Arlen Specter, R-Pa, told The Bulletin that Mr. Specter is aware of concerns regarding the DRPA’s use of funds and is monitoring the matter.

The relationship of Pennsylvania Governor Ed Rendell, the Port Authority’s self-appointed Chairman, to his former law firm Ballard Spahr has also been called into question, as Ballard has received nearly $3 million in legal fees from the Authority since Rendell’s election in 2002. In the three years prior to that election, Ballard received only $25,000 from the Port Authority.

John Estey, former chief of staff to Gov. Rendell who routinely chairs board meetings on the governor’s behalf, is a partner at Ballard. He regularly votes to receive and authorize the DRPA’s monthly bills, including those from his own firm. Ballard’s invoice from December was over $33,000.

Chris Freind can be reached at cf@thebulletin.us

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January 23, 2009 at 10:33 am Comments (0)

Legislators, Citizens React to Ballard’s “No-Contract” Work

Legislators, Citizens React to Ballard’s “No-Contract” Work

By: Chris Freind

Pennsylvania state legislators and community activists expressed outrage this week in response to the Bulletin’s Jan. 9 revelation that the politically connected Ballard Spahr law firm performed $773,000 of legal work for the Pennsylvania Turnpike privatization plan without a contract.

Chester county Republican state legislator Curt Schroder stated, “I can’t understand what was so urgent to the public’s interest that the attempted privatization of the Turnpike suddenly merited that a large no-bid contract be awarded. And that prior to that, why 2300 hours of work was done by Ballard with NO contract.” Mr. Schroder added, “At the very least, the Administration owes the public a complete explanation. Leasing the Turnpike has been a politically dead issue, regardless of its merits or lack thereof.”

Wally Zimolong, a center city attorney and Republican activist, was equally skeptical, stating that questions need to be answered about why Ballard performed work without a contract, and how they knew they would receive compensation.

“This whole thing reeks. I see several red flags. First, no reasonable business, particularly top notch attorneys like those at Ballard, performs work without a contract, unless they know they are getting paid, especially when the work performed is worth close to a million dollars,” Mr. Zimolong said. “So the question is how did Ballard know it would get paid? Was it the result of some back room deal with Mr. Rendell?,” he asked.

Companies performing state work normally negotiate a contract before commencing any activity. Without a contract, Ballard could not be compensated for its work, and was therefore required to sign a “Compromise, Settlement and Release” agreement initiated by the state Department of Transportation to receive payment retroactively.

Authorization to pay Ballard in this manner was justified “due to the extreme urgency of the work required,” according to the document.

The Bulletin has repeatedly illustrated the intimate relationship between the Governor and Ballard (see sidebar).

“The Bulletin article describes an incestuous and tangled web of relationships that can only be helpful in attracting no bid contracts from the administration,” Mr. Schroder added.

The legislator explained that this situation exemplifies the need to prevent big donors from obtaining no bid contracts. “I will be re-introducing legislation to place strict limits on campaign contributions for those who receive such government contracts. Anyone exceeding the low limits would not be eligible to receive such contracts,” he said.

Reform legislation sponsored by Republican Majority Whip Jane Orie, Allegheny, will be introduced in the state Senate next week; a similar bill passed 50-0 last session, but it was stifled in the Democratic-controlled House.

The Pennsylvania General Assembly should do all it can to eliminate the appearance of impropriety in regards to “Pay-to-Play” in Commonwealth government. This can be done by creating an open bid process and providing for transparency in regards to who is receiving state contracts and their political contributions,” Senator Orie said. “This issue is receiving an enormous amount of national coverage at the current time and there is no better time than now to adopt legislation to restore integrity as to how public dollars are spent,” she added.

Mr. Zimolong questioned the fiduciary duty the Governor owes to the taxpayers. “Ballard could have run up the bill as much as they wanted to, as this was open-ended. Theoretically, nothing prevented them from doing that, unless there was a gentlemen’s agreement of which we are unaware. Also, the hours worked are absurd,” he said. “Remember this was proposed legislation. Essentially, the Commonwealth paid to set up an outside law firm with 55 attorneys working 27 hours per 24 hour day, for 84 straight days, to perform due diligence for proposed legislation,” he added. “Setting aside that it is doubtful these Ballard attorneys worked 24/7, doesn’t the Commonwealth have a large number of attorneys among all state agencies? What do they do?,” he asked.

“While it’s true the Procurement Code allows services to be obtained in urgent cases without competitive bidding, the Code does require a written basis for the emergency, and why the particular party was selected for the work, to be included in the contract file. Taxpayers should demand to see that written basis in this case,” Zimolong said.

“Whether or not ‘pay to play’ can be proven in any particular situation, the appearance is certainly a big problem and continues to erode trust in government. It is time we take a strong stand against this continued practice,” stated Rep. Schroder.

Chris Freind can be reached at CF@TheBulletin.us

The Bulletin has published an ongoing series detailing the frequency and high-dollar amounts of no-bid state contracts doled out to Gov. Rendell’s political donors and friends. Please see the website for reference. www.thebulletin.us

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January 17, 2009 at 12:02 pm Comments (0)

Ballard Spahr’s $773,000 “No-Contract” Work for PA

Ballard’s $773,000 “No-Contract” Work for PA

Gov. Rendell’s Former Firm Went Beyond “No-Bid” Contracts

By: Chris Freind

Pennsylvania Gov. Ed Rendell (D) has recently come under fire as more information emerges regarding the frequency and high-dollar amounts of no-bid state contracts doled out to his political donors and friends. The Bulletin has published an ongoing series on this issue, much of which centers on the Governor’s intimate relationship with his former law firm, Ballard Spahr. (See recap sidebar).

Many eyebrows have been raised on these lucrative no-bid contracts, especially since the records from past Administrations were “lost” under Rendell’s tenure—- ostensibly the only way to compare the frequency, amounts and recipients of these types of contracts.

The state Senate passed a reform bill 50-0 last session amending how contracts are awarded, but it was stifled in the Democratic-controlled House. The legislation, sponsored by Republican Majority Whip Jane Orie, Allegheny, will be re-introduced early this term.

While conflicts of interest abound, the awarding of no-bid contracts to political donors is not illegal, so long as no quid pro quo arrangement exists.

But in 2007, the ethical line was taken to a whole new level when Ballard performed $773,000 of state legal work with NO contract at all, leaving many questions unanswered.

On March 1 of that year, the firm began work on the proposal to privatize the Pennsylvania Turnpike. Over the next 83 days, Ballard utilized 55 attorneys (more than 10% of its legal staff), and billed the state for 2300 hours, which equates to an average of 27.38 hours per 24 hour day. The hourly rates varied based on seniority, with firm Chairman Arthur Makadon billing $637.50/hour, and partners Ken Jarin and Adrian King, Jr. billing $531.25 and $403.75 per hour respectively.

Mr. Makadon, a close friend to the Governor, has contributed $87,500 to his campaigns. Mr. Jarin is listed as the “relationship partner” on the $773,000 project. He is a longtime confidante and fundraiser to Mr. Rendell, contributing $90,000 to the Governor’s coffers. He also serves as Treasurer to the Democratic Governor’s Association, an entity which has contributed nearly $1.5 million to Rendell. Jarin is married to Robin Wiessmann, who until this week was state Treasurer. Her office approved and issued payment for the Ballard invoices. Adrian King, Jr., served as the Governor’s Deputy Chief of Staff and in a Cabinet position prior to rejoining Ballard as a partner. According to the Ballard press release at the time of Mr. King’s return, Mr. Makadon was quoted as saying, “Adrian was a star here at Ballard and has been a star for the governor. Upon his return, we expect him to play a large role in the future of the firm representing important clients and managing key client relationships.”

The Ballard firm, a Limited Liability Partnership (LLP), contributed $481,000 to Gov. Rendell’s campaigns. The Philadelphia Future Political Action Committee (PAC), registered at the Ballard offices in Philadelphia and whose Treasurer is David Cohen, former Ballard Chairman and former Chief of Staff to then-Mayor Rendell, contributed $470,000. Cohen donated $80,000, and his wife, Rhonda, has contributed $156,000 to the Rendell campaign efforts. Ballard associates contributed nearly a half million more dollars to Rendell. There is no limit to how much an individual or an LLP can contribute to state candidates. The majority of law firms are LLPs.

Additionally, on Pennsylvania Department of State campaign filings, the address of Gov. Rendell’s campaign treasurer is the 51st Floor of 1735 Market Street in Philadelphia. Ballard Spahr occupies the entire floor.

When performing work for the Commonwealth, the normal procedure is to negotiate and execute a contract before commencing any activity. But since the Ballard firm jumped headlong into the project without a contract, it had no way of receiving compensation for its work. Consequently, it had to sign a “Compromise, Settlement and Release” agreement initiated by the state Department of Transportation to receive payment retroactively.

The document specifies that authorization to pay Ballard in this manner was due to certain “circumstances”, among them that on March 1 the firm “was directed by the Office of General Counsel to provide professional services as special counsel to the Commonwealth of Pennsylvania in connection with the Pennsylvania Transportation Funding initiative.”

The document continues, “due to the extreme urgency of the work required, work began immediately at the Office of General Counsel’s direction prior to having a fully executed contract document in place.”

The Settlement also states that, ” the Commonwealth cannot otherwise pay the Law Firm for services performed during the period of March 1, 2007 and May 23, 2007 because no agreement was in place prior to performances of such services.”

A no-bid contract was executed on May 24, 2007 for future services on the privatization initiative. To date, Ballard has billed the state over $2 million in legal fees relating to the project.

While state law allows for work of an urgent nature to be performed without a contract, questions have been raised as to how the Turnpike privatization initiative qualifies an “urgent” matter. The Turnpike, the nation’s first, was in no danger of disappearing or being unable to continue operations. Additionally, the legislative process is typically slow, preventing political issues from moving with any sense of speed and urgency in Harrisburg. Since the Governor’s plan had been met with resistance in the legislature and had little chance of passage, why Ballard rushed into the project with no contract remains a question on many political observers’ minds.

On numerous occasions, Mr. Rendell has been asked if he has played a role in the selection of no-bid contract recipients, especially when political donors are involved. The answer typically given is that the Governor has no involvement in the process, and that firms are chosen based on their particular expertise, with no consideration being given to large dollar political donors.

However, legislators, political experts and the media have been increasingly questioning the close relationship of the Governor to these no-bid contract recipients, especially the Ballard firm and its partners. In particular, questions have been raised regarding the role of John Estey, Mr. Rendell’s former Chief of Staff and currently a partner at Ballard.

While he was not involved in the $773,000 project, Mr. Estey still maintains a position of enormous influence with Rendell. He is Chairman of the Philadelphia Regional Port Authority, an agency of the Commonwealth that in June of 2008 chose Ballard Spahr to be its outside counsel. In addition, Mr. Estey still chairs board meetings of the Delaware River Port Authority (DRPA), of which Gov. Rendell is the self-appointed Chairman. Ballard is the largest recipient of DRPA legal fees, receiving nearly $3 million since Gov. Rendell’s election in 2002. As a point of comparison, Ballard had received only $25,000 in the three years preceding Gov. Rendell’s election. As a board member, Mr. Estey receives and votes to approve DRPA legal bills, including those going to his own firm.

Many questions have also been raised as to why the state is utilizing outside counsel to such an extent, especially on the Turnpike project, given that that the Pennsylvania Department of Transportation (PennDot) has a large in-house Legal Department. Ballard’s 55 attorneys working on the project are larger than the entire roster at many firms, which some believe is akin to the state renting a high-value law firm for several months. Calls to PennDot revealed that there are 49 attorneys on staff. The Pennsylvania Turnpike Commission currently has five attorneys serving as in-house counsel, and had several more at the time of Ballard’s work.

The public’s cynicism and mistrust of government has become exacerbated by the numerous scandals and pay-to-play investigations on the state and national level. The debate surrounding whether there is a need to reform how no-bid and “urgent” non-contracts are awarded will intensify as the Senate reform bill is reintroduced.

The Bulletin will continue to seek responses from the Governor and legislative leaders to questions this investigative report raises.

Chris Freind can be reached at CF@TheBulletin.us

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January 17, 2009 at 11:07 am Comments (0)

Legislator to Rendell: “End Insider Contracts”

Legislator to Rendell: “End Insider Contracts”

Gov’s Relationship With Ballard Spahr Leads to Questions

By: Chris Freind

Last Friday, The Bulletin published a series of articles and a box chart detailing the intimate relationship between Governor Rendell and his former law firm, Ballard Spahr. The investigative report shed light on numerous conflicts of interest in the awarding of state contracts, leading a state legislator to remark that Gov. Rendell should join efforts to “end insider no-bid contracts.”

Brett Mandel, Executive Director of Philadelphia Forward, stated, “Even if these types of business arrangements are legal, I’m not sure I want my legislator and my governor to be engaged in them. You never want to
have a quid pro quo arrangement in business and politics, or even the
appearance of one.” He added, “Openness and transparency are essential for good government. A little ‘sunshine’ never hurts, especially when it involves taxpayer dollars.” Philadelphia Forward is an organization whose mission is to embrace issues of ethics, governmental integrity, and budgeting, in order to raise the level of public debate surrounding how public priorities are set.

The Bulletin’s repeated calls to the Governor’s office and the state’s Office of General Counsel were not returned. Additionally, several Democratic legislators declined to respond.

State House Reform Efforts

State Representative Doug Reichley, R-134, Lehigh County, has spearheaded the effort to reform how state contracts are awarded. He introduced a bill as part of a reform package aimed at restoring integrity and ethics in how state business is conducted. “The [Gov. Rendell/Ballard Spahr] articles describe a pattern of behavior, although legal, which is disturbing in its depiction of a mindset which looks to loot the public coffers. This is exactly the kind of stuff which is so regularly criticized when it happens at the federal level in Washington. The ethical accountability in Harrisburg and Philadelphia should not stoop any lower than that,” Rep. Reichley stated.

The legislator reiterated his relentlessness in pursuing this type of reform. “Although the legislation introduced by Reps. Turzai, Godshall, Grell, and myself did not move forward in this session, we will be re-introducing the bills again when we reconvene in January.” Rep. Reichley pointed out Gov. Rendell’s inconsistencies on fiscal issues. “The governor is publicizing the need for budget restraints, but seems to have a blind spot on how to reform the abuses within his own spending practices. He needs to get behind our efforts to end these insider no-bid contracts, and bring greater transparency to state government, which would save taxpayer dollars at the same time,” he said.

Rep. Reichley’s bill would require contracts to the executive, legislative, and judicial branches, and the legislative caucuses, with an initial value over $100,000, be subject to the requirements of the procurement code.

The package of bills addressed various aspects of contract reform. One would remove “legal services” from the definition of contracts which can be awarded under the emergency provisions of the Procurement Code.
Another would require extensions to current state contracts be posted on the Department of General Service website before submission to the Attorney General for review. Another proposal would ban contracts from being awarded to anyone who donated to political campaigns within one year of the date a contract is posted for public bidding. The bills are pending in Democratically-controlled committees.

The Representatives said that changes in the Procurement Code are needed “to help restore the integrity of state government against contract abuses.”

Action in the Senate

Members of the senate are planning to make reforming of state contracts a key part of the next legislative session. Since Republicans will control the chamber by a sizable majority (30-20), they are optimistic that such reform legislation will be given serious consideration by Senate leaders and committee chairs.

State Sen. Dominic Pileggi, R-9, Delaware/Chester counties, who serves as Majority Leader, addressed the issue by stating, “As former U.S. Supreme Court justice Louis Brandeis said almost a century ago, sunlight is the best disinfectant. The best way to ensure that government officials are acting in the best interest of those they represent is to make it easy for the public to review their actions.”

Sen. Pileggi sponsored the new Open Records Law, Act 3 of 2008, which includes a provision to post every state contract worth $5,000 or more online at the state Treasurer’s web site. “To my knowledge, Pennsylvania is the only state in the nation that makes so many state contracts so easy to review.”

(The contract database is available at http://contracts.patreasury.org)

“Our new Open Records Law, which dramatically strengthened Pennsylvania’s 50-year-old previous law, also makes it easier to obtain and review other official documents and records from both state and local government agencies,” the Senator added.

Earlier this year, the Senate passed Senate Bill 903 which would prohibit state agencies from contracting with outside individuals or firms for consulting work, unless the contract is reviewed by the Attorney General for legality and conflict of interest, or is opened to a public competitive bidding process. “That is a common-sense reform, and it is unfortunate that the House did not take it up,” Sen. Pileggi said.

“The package of bills introduced by House Republicans, described in one of your stories, also includes significant reforms which would improve the current process. Anyone interested in these kinds of changes should contact their own Senator and Representative to let them know that government reform remains an important issue,” said the Majority Leader.
Sen. John Eichelberger, R-30, expressed concern that the extent of no-bid contracts authorized during the Rendell Administrations is still unknown. “I don’t have any idea about the number of no-bid contracts or their dollar amounts under Rendell or how it compares to any Republican administrations. The Turnpike is another rumored hot-bed for these (types) of deals,” he stated. Ballard Spahr has received over $2 million in no-bid contracts for the Turnpike privatization plan, and performed nearly $800,000 worth of work with no contract at all.

The Department of General Services has stated that nearly all records prior to 2003 concerning no-bid contracts were “lost.” Consequently, there is no manner in which to compare the frequency, number and dollar amounts of contracts doled out under the Rendell Administration with those from prior Administrations. Governor Rendell was sworn in as Governor in 2003.

“I had an amendment prepared in the summer of 2007 to add to the transportation bill, now Act 44, that would require competitive bidding. The Senate leadership did not want it to run, and I did not get it to the floor,” Sen. Eichelberger said. “There was a commitment at that time to develop legislation to force competitive bidding across the board in state government, but it never got done. This is an indication of what the chances are for getting something passed,” he lamented.

When asked how the public views these types of business arrangements, specifically no-bid contracts, the Senator replied, “This business model is what people expect from a corrupt government, and, unfortunately they have become accustomed to it.” He added, “We couldn’t even get a bill passed this year banning bonuses to state employees. The Democrats in the House blocked it despite the continuous headline stories about “Bonusgate”. There appears to be no collective shame on the part of the Pennsylvania General Assembly.” The “Bonusgate” scandal refers to taxpayer-funded bonuses allegedly paid to legislative staffers who performed political campaign work while on state time. To date, twelve have been indicted by Attorney General Tom Corbett, and two are cooperating with prosecutors.

Asked how the average voter can make his opinion known on this issue, Sen. Eichelberger replied, “Interested people sitting at home today should write, email and telephone the Governor, as well as their House and Senate members, and let them know that they are not going to tolerate any unethical behavior on the part of people who’s duty it is to uphold the public trust. People with any specific knowledge of wrongdoing should contact the Attorney General and the State Ethics Commission.”

Chris Freind can be reached at CF@TheBulletin.us

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November 21, 2008 at 10:51 am Comments (0)

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