* Congressman Gutierrez’s self-professed love of quickie real estate deals has landed him back in the headlines…
U.S. Rep. Luis Gutierrez personally lobbied Mayor Richard Daley to back a controversial multimillion-dollar development for a campaign contributor who had just lent the congressman $200,000 in a real estate deal, a Tribune investigation has found.
Now the congressman’s unusual gesture of support is under federal scrutiny as authorities investigate how developers overcame city planners’ objections to convert the West Side industrial site into a more profitable residential and commercial development.
Authorities have obtained Gutierrez’s July 7, 2004, letter to Daley—written on U.S. House stationery—as part of their grand jury investigation into how zoning works inside City Hall, sources told the Tribune.
Gutierrez said there is no connection between the loan and his letter of support for the Galewood Yards project, which is not in his district. In a written statement, the congressman said his involvement was “extremely minimal” and “entirely appropriate.”
He said he has not been contacted by federal authorities.
The federal investigation comes as the Tribune’s “Neighborhoods for Sale” series documents an insiders’ game in which politicians rake in millions in campaign cash from developers and other real estate interests while often overriding concerns of homeowners and city planners. It is a system that has fundamentally reshaped the character of city neighborhoods.
Go read the whole thing. Fascinating.
* Gutierrez does provide a thorough response. Here is his reasoning for writing to Mayor Daley on behalf of the developer who had loaned him the cash….
“Any fair analysis of the Galewood Yards development would show that my involvement was extremely minimal. Though my involvement in Galewood Yards was extremely minimal, this was a positive development that was deserving of support. This development is adjacent to the 4th Congressional District, and my constituents would be directly affected by any plans or developments in this area.”
“Specifically, the Galewood Yards development included a Laborers International Union job training center that is currently under construction. It is specifically targeted to helping the community’s significant Latino and African American population. This was an important and virtually unprecedented development, as many jobs in the trade unions have often excluded minorities. Moreover, it is my understanding that half of the total land use of Galewood was dedicated for the purpose of job training, and that as a precondition for approval of the project by the City of Chicago, the developer was required to transfer the land for the training center without receiving any profit.”
“The development also included moderate income housing and a multiplex movie theatre that would bring needed jobs and economic development to the community. I supported a project that included affordable housing, job training and job creation for Latinos and African Americans on a parcel of land that had been unproductive for years.”
He also claimed the loan was at an above-market rate of 7 percent and that he lost money on the flip.
More background here.
* Always remember when reading stories like these that smoke doesn’t necessarily translate into fire. For instance, the Tribune ran this letter to the editor about a big story it ran in a recent Sunday edition…
I would like to help clarify the facts regarding “Real estate success is scrutinized” (News, Oct. 19), a story about Illinois first lady Patricia Blagojevich and her relationship with North Star Investment Management. While Ms. Blagojevich was sponsored by our firm to take her licensing test that would allow her to become an investment adviser, she never did any work for our firm. North Star does not manage money for state pension funds and we have never pursued that kind of work.
We also want to apologize to her and to your readers for comments made by our chief compliance officer, Peter Contos. He misspoke when he suggested Ms. Blagojevich proposed bringing state pension fund business into our firm. She never proposed doing that or using any connection with the State of Illinois to benefit our company in any way.
—Peter Gottlieb, president, North Star
Investment Management, Chicago0
I’m not sure whom to believe, but the original story is here.