Executive Summary

When the politically powerful, not the competitive marketplace, determine winners and losers in America’s business decisions, taxpayers take on all of the risk and crony companies extract the profits. The cycle of political profiteering is born when politicians exchange public subsidies for campaign contributions. This method of using the government to profit has become a trademark of one of the largest publicly traded real estate development companies in the United States: Forest City Enterprises.

Forest City Enterprises (FCE) is a $10.6 billion company that most Americans have likely never heard of, even though the public finances twenty-three percent of FCE’s revenue. The FCE business model is dependent upon political profiteering: relying on public money and government influence to reap millions in profit.  Using highly paid lobbyists, political connections, campaign contributions, and strategic hiring of government officials, FCE obtains lavish public subsidies, tax-exempt financing and the seizure of private land from eminent domain condemnations.

The following report exposes the money trail between FCE and its political friends that have resulted in a decade of kickbacks for both FCE and politicians. Between 2002 and 2012, FCE, its subsidiaries, and its employees spent $23 million on campaign contributions and lobbying at the federal, state, and local level. FCE even went so far as to coordinate donations among employees in its project locations: $15.4 million of the $23 million in contributions were made by multiple employees of FCE on the same day. During that same time frame, FCE and its subsidiaries received or signed agreements for fifty-two direct and indirect government subsidies or financial benefits with a total value of at least $2.6 billion. The subsidies amounted to twenty-three percent of FCE’s $11.4 billion revenue during that time period.

The FCE business model is one that damages competition in the market by abusing market mechanisms in ways that capitalizes off government handouts. This report is Part One of a three-part series examining how Forest City Enterprises uses politics to profit.

FCEGraph

 

FCEtable

FCWDonate

Preview of subsequent reports:In the reports that follow, resulting from Cause of Action’s two year investigation, CoA will show how FCE took public benefits under the premise of providing jobs for minority workers but failed to deliver as well as how FCE enriched itself through bribery and political graft, without ever being subject to investigation or oversight.

Subsidy and Political Spending Data:

Forest City Enterprises Data

Emails from Forest City Washington’s Alex Nyhan to former colleagues at the District of Columbia (D.C.) Office of the Deputy Mayor for Planning and Economic Development

Forest City Washington Emails

Full FOIA Production

 

PDF

Comments

  1. Same as it ever was. Here in New Rochelle NY, we see the same modus operandi in the land grab of Echo Bay. We’ve seen it in Brooklyn, Yonkers and right here before our eyes. Politicos get indicted/ convicted all while FC remains the un-indicted co-conspirator. Coated in teflon, they plod along gobbling up subsidies and leaving the taxpayer on the hook to make up for broken promises. How do they get away with it?

  2. We’ve seen thousands of dollars in campaign contributions to our Mayor just around the time FC gets picked as the developer of choice. All from Ratners. Who knows what other contributions were made on their behalf. Now as the Mayor tries to move up politically into County Executive office, we see him touting self proclaimed benefits of the project even though local finance experts/ hedge fund managers and forensic accountants have proven the benefits don’t exist. Smoke, mirrors and political pay to play wins every time.

  3. Nancy Calderon-Cruz says:

    It is unfortunate the Mayor and City Council members have no real insight to the struggles and needs of our great City. They have also forgotten they represent the citizens of New Rochelle and clearly a majority are not in favor of this development project. We urge our politicians to STOP with supporting this project and meet with key community leaders to discuss alternative projects that would be beneficial to New Rochelle. Thank you.

  4. T.J. McCormack says:

    We’re talking about this every day on Good Morning Westchester. anybody who wishes to chime in, please call the studio line while we’re on the air 6-9am.

  5. Paul Johnson says:

    You are wrong, unfortunately….the city politicians have the insight to the struggles and needs of our city and they have not forgotten who they represent. Problem is, those that support the mayor and his political endeavors don’t appear to care! In their minds it not about the citizens, its about political advancement from city to county….just like the last mayor when Ikea was killed….New Rochelle Mayor to County Clerk! In part, some city leaders have arrogantly and historically acted first and worried later, putting personal agenda before the best interest of constituents. Citizens for a Better New Rochelle should consider a mass rally outside of city hall or anywhere they can grab media attention to shut down this project. Consider engaging a commercial appraiser to develop a “Highest and Best Use” appraisal of the proposed lot(s) as if vacant and one likely determine that a park and rental project is not the Highest and Best Use of the site. The proposed Echo Bay project is an outrage and injustice to all citizens of New Rochelle and an under development of the last jewel of the city! Entering New Rochelle on Pelham Road from Pelham Manor and leaving through Boston Road on East Main Street one would NEVER know that New Rochelle is the “Queen City of the Sound.” The proposed development would do ZERO for property values and ZERO to attract good sustainable businesses…maybe just another dollar store! Signed John Doe for good reasons……

  6. Herbert N. Posner says:

    There is no need for residential units at the Echo Bay site. What the city needs, there, is commercial development of worthwhile name brand stores.

    The land should not be given away, and tax rebates for many years is not something that New Rochelle can or should allow.

    Seems that Forest City’s assets are sufficient without having the residents and taxpayers of the city giving away the land.

  7. Dewey Chaste says:

    When does Campaign donations to Mayor Bramson’s war chest begin to cross the line and raise eyebrows within NY State and the Federal Government. We have Mayor Bramson so desperate for accomplishment that he is will to cross the line. His desire to travel down the Path with Forest City no matter the cost to the tax payer should cause signals to go off all over NY as the stench is started to elevate to a level where by the tax payers feel like they are being accosted by those with a mask and a Gun.
    Wake up and close in on the Mayor of New Rochelle.

  8. Much has been written and analyzed about what turns out to be a relatively simple situation which has plagued New Rochelle and other communities for many years and administrations. Many bright people in city government have brought into the fallacy that form is more important than substance. It is an unequal battle pitching skilled business developers and inexpert local politicians. You can go higher in the chain and see the same sort of thing at our national level.

    What is interesting to me is that Forest City has no qualms in admitting that they support those who have a prior history with them as well as those whose officials are in an election period. It is Caveat Emptor; an unfair battle because these rascals understand simple human weaknesses. The most pronounced is Hubris or excessive pride and coupled with a lack of business acumen as well as sheer self interest, you get the sort of nonsensical explanations our Mayor and some others in Council give for saying that a mud hole is a waterfront project, a community is stupid enough to buy into extraordinary increasing costs of bonding to support a totally mis-analyzed and insufficient substitute DPW yard, and a developer with years of feeding off of naïve and greedy administrations, can essentially write his own ticket on any planned initiative. Throw in an apathetic community, too many opponents who are actually harmful or antagonistic to confront, and you have Forest City, Monroe, and too many others.

    Fortunately we have groups like Concerned Citizens of New Rochelle and public minded groups like Cause of Action who present the apathetic with hard core facts and the administration with a very narrow path for doing what is needed and correct.

    If the Administration simply puts a foot on this path they should see a lack of assessment and long term planning, a failure to follow the excellent 1996 Comprehensive Plan, a foolish look at Investment and Development that ignores a lack of a process that ignores establishing a formal arrangement with its School District, a reliance on a posteriori tax assessment meaning using Certiorari as its method of avoiding planned property evaluation, a financial management system promoting a fee based revenue system, a lack of solving even simple issues like providing necessary parking facilities for expansion, and an unwillingness to move community protective services and other government services in part at least, down to the business district.

    Perhaps the great work done by Cause of action will lead to that.

    warren gross