Bridgegate: NJ Real Estate and Corruption

Bridgegate: NJ Real Estate and Corruption
Carol A. Hoernlein P.E.

One of the most intriguing theories advanced in Bridgegate by Steve Kornacki that seems most plausible to my political sources here in NJ has been the real estate angle.  That, as well as Port Authority Chairman David Samson’s possible role in the scandal and the utter silence of the Board of Commissioners. 

Still a Whodunit

Currently the feeding frenzy centered around Chris Christie by the national media is viewed here as not helpful to the investigation.  Partisans from across the country are trying to make this about Chris Christie and 2016 when the clues have not led directly to him just yet.  

I have spoken to NJ Legislative staffers who have been swamped with phone calls from across the country with  conspiracy theories. This whodunit has brought everybody out of the woodwork.  We still need to see un-redacted documents and get testimony from lawyered up folks facing serious jail time to understand what happened.  I am constantly surprised by the layers of corruption in NJ. The Prosecutors here are sophisticated and sometimes corrupt themselves, and so the criminals have to be even more creative.  Fortunately, the legislators investigating this are quite familiar with NJ corruption and just how complicated things can get.

Rod Blagojevich Prosecutor Called in 

A significant development in the investigation has been the addition of the investigator who helped convict Rod Blagojevich, the former Governor of Illinois.   I have written in the past about the similarities in the Blagojevich case and NJ.  Although he was most known for trying to sell President Obama’s vacated Senate seat, Blagojevich’s exploits often involved construction corruption. You have to read the charges to understand just why the prosecutors were so appalled at what he did while extorting real estate developers.

Location, Location, Location

In tiny NJ, where half of the land is swamp or pinelands, or protected mountain streams, and the buildable land is so near Manhattan, real estate is so expensive in some places as to be nearly priceless.  The 16 acres near the GWB is just such a parcel. The vacant urban blight look of that piece has irked residents of Fort Lee for decades.  Aside from the yearly annual St. Rocco Festival where the depressing patch of vacant lot turned into a brightly lit carnival with the scent of sausage and pepper sandwiches and frying zepoles in the air, the patch was an eyesore.  Mayor Sokolich hoped to turn the page on the sad history of that area by encouraging a brand new development that improved the downtown area.  Many Fort Lee residents appreciated that.

The Jam

Things looked like they were going well, and it appeared that the Town and the Developers were on the same page.  But something scary happened on the way to urban renewal.  A massive traffic jam occurred on the access lanes touted in brochures for the development mere days before the financing deal was inked.  After Executive Director Patrick Foye ordered the lanes reopened on Friday the 13th, on September 16, the very next business day, as pointed out by Steve Kornacki – the financing deal for the billion dollar development came through. 

Meanwhile in the Meadowlands....

There seemed to be a connection, but it was hard to see how closing lanes could be related to the real estate story, but another event occurred on September 11, after the lane closure plan had been put in place that may be instructive.  A former employee (and former partner) of Port Authority Chairman David Samson’s law firm Wolff & Samson, was indicted on racketeering charges for extorting large sums from a developer of one of the largest developments in North Jersey in the past decade.

The former partner of Chairman David Samson was none other than Loretta Weinberg’s former nemesis and the biggest politician Chris Christie indicted for corruption.   (You can’t make this stuff up). Former Bergen County Democratic Organization Chairman and Pay to Play practitioner who elevated it to an art form, land use attorney Joe Ferriero.  According to the indictment, Ferriero stands accused of trying to extort money from the developers of what had been called Xanadu.  The ugliest unfinished monstrosity visible from way too much of the Meadowlands and sitting just off the New Jersey turnpike.

According to the Record article by Peter J. Sampson:

“The unnamed Virginia trust, which is identifiable as the Mills Corp. by details in the indictment, was vying against other developers in 2002 to develop land owned by the New Jersey Sports and Exposition Authority in East Rutherford.

Ferriero and two of his law partners at the time allegedly informed an attorney for Mills that they had been asked to represent a competitor who intended to use “scorched earth” tactics to defeat Mills. But they offered to work for Mills instead for $35,000 a month, the indictment says.

Fearing it could lose out on a substantial investment, Mills agreed to pay a consulting company run by Ferriero and his law partners, the indictment says.

The payments bought Ferriero’s “assistance in obtaining endorsements, public support and other official action and inaction” from Bergen County Democratic Party officials and others “with whom he had influence,” prosecutors alleged.”

Now, if that was going on just a few towns over in the Meadowlands and this 16 acre development was scheduled to be built in Fort Lee on a much more lucrative and easily buildable land (i.e. – not in the “swamps of Jersey”), the temptation for folks schooled in Joe Ferriero’s brand of Pay to Play was probably tremendous to use the levers of government to extract something of value from the developers at the western side of the busiest bridge in the world.  Location  Location  Location. 

 The “Traffic Study”

What struck me as odd, being a civil engineer who does site plans for construction in North Jersey, was the curious phrasing used by the Port Authority political appointees not familiar with the laws on lane closures. Wildstein called it a “test” which was odd enough, but Baroni called it a “traffic study”.  There are two meanings to that term in North Jersey. One is governmental in nature and carried out by government agencies and the other is paid for and carried out by applicants hoping for a building permit. 

The government version includes simply counting cars or timing lights. Counting cars on straightaways is done unobtrusively by either laying a thin counter wire across the road, or by camera. No need for the driver to even be aware he was counted.  Intersections are more  complicated because of the turning movements and that is still best done by human observation.  You can’t conduct a traffic study by stopping traffic, then your data would be useless.

The other “traffic study” is a description of how a proposed real estate development, based on the number of square feet of each particular use and how many trips generated by those uses, would impact the already existing traffic on a nearby road. It is in some ways biased, and dependent on the honesty of the developer as to what he intends to build and the “traffic study” is paid for by the developer – who presents the finding to the planning board when they are hearing the application to build.  Baroni’s presentation had all the earmarks of a planning Board hearing which is exactly how it struck me.

Pay to Play Corruption

As I have blogged extensively on NJ corruption, and based on my own experience dealing with contractors, and developers, I have discovered there are two basic flavors of NJ Pay to Play corruption.  Public and Private but they both need politicians with their hands out.  As we began to fight against Pay to Play, by focusing on those people who got no-bid Public contracts with towns, it was obvious that Borough attorneys engineers and architects hired for public projects were suspect if they gave to political campaigns or the County Party. Even that is complicated and I created charts to show how it happened in Bergen County.

But as I have been in private practice in Bergen County for over ten years now, as well as Councilwoman on a Planning Board and in liaison to a building department, I have seen the private side of the Pay to Play corruption and it is insidious and much, much harder to prosecute.  This private form is what occurred at the development formerly known as Xanadu.  Unfortunately, when the victim is a developer, they can’t really complain, because they get little sympathy from the public in NJ.  The conventional wisdom says the developer is always the corrupting influence on the politician, not the other way ‘round. 

Here is how it works based on a real conversation I have had with a client of mine in a different town (which shall remain nameless) where the building department was corrupt.

Suppose you are a developer. You buy a piece of real estate and decide to build on it.  You round up an architect you like, and an attorney you like, and an engineer you like.  You have them develop very preliminary concept plans. Then you go to the Building department in town. This is where you sense trouble.  The building department person asks you – who’s your attorney? Who’s your engineer? Who’s your architect? Even though it is none of their business.  They shake their head and hand you a little slip of paper with just a phone number on it and they say – “call this guy.”

In NJ Building Department personnel are not allowed to recommend a particular contractor.  They are allowed to have a list of licensed contractors, but they are not allowed to steer you to a particular one. However, this is what is happening in NJ and what Rod Blagojevich also got into trouble for, and what was often shown on the Sopranos. 

But it isn’t just about lazy no-show construction workers and subcontractors. It is more sophisticated when you are talking hiring an engineering firm or an attorney.  These attorneys and architects, themselves are being shaken down (although some of them don’t mind it) for political contributions, and because of the new Pay to Play laws that provide greater scrutiny of PUBLIC contracts, the corruption has morphed and gone underground to PRIVATE contracts. 

Who cares what firm a private general contractor hires to get his approvals? Isn’t that his choice? It isn’t public money involved. Why should we care? The public thinks developers in North Jersey are just made of money.  But in recent years, the developers are the ones being shaken down as the pool of money to run elections is drying up from no-bid public contracts protected by anti-Pay to Play laws. The Bergen County Democrats on the Freeholder Board are trying mightily to weaken the Pay to Play laws to bring back the good old days when they didn’t have to shake down all the private contractors.

And so the cycle looks like this now. Private contractor realizes the town building department just told him he has to hire a certain engineer or attorney or he will never get his approval, said attorney shows up to represent the contractor at the hearing and all he has to do is show up with his smiling face and the Planning Board, all of the members of which are appointed by the Mayor except one, know how they should vote. No words need to be exchanged and no envelopes. It all looks on the up and up.  And then the attorney turns around and gives as much as possible to the County Organization – which doles it out to their favorite Mayors including the guy who stacked the Planning Board.

Fort Lee

Now, in the case of Fort Lee, the town had been under Ferriero’s rule when he was still Chairman of the County Democratic Organization and Mayor Sokolich, an honest guy, had avoided “asking for anything” from the County democrats because he knew that asking for help from Ferriero meant you had to sell your soul to hire Borough Attorneys’ Engineers, etc.  But this new type of corruption may have surprised him.  When the lanes shut down, he may have suspected a shakedown of the developers was happening from somewhere inside the Port Authority, which has been under fire for their recent adventures in Real Estate (see the September 13 report), rather than simple petty vengeance for a non-endorsement.

Still Confused?

What does all this mean? It means that Chris Christie may actually be innocent here and that Ferriero’s old partner, David Samson may know a lot more about how this happened than he is telling.  Which may be why Senator Weinberg is focusing on Samson, and the Port Authority Commissioners as well as their liaison in Christie’s office. 

Chris Christie may be looking haggard because he rose to fame by fighting Joe Ferriero and convicting him only to possibly be betrayed by a  Ferriero-style real estate shake down scheme that may reach into his Administration.  Which may be why Senate Majority Leader Loretta Weinberg – who took down Boss Joe, looked like Christie’s new best friend yesterday.   

Because so many people were involved, this thing may have layers upon layers and the cover story told to folks inside the Christie Administration may be different than the actual truth here.  Which is why we really need to withhold judgement on Chris Christie until we know more.  The non-endorsement vengeance theory may be a red herring and the truth far worse than us hardened NJ political junkies could even imagine.   







Carol Hoernlein is a licensed Water Resources Civil Engineer practicing in Northern NJ. In 2007, she became known statewide in N.J. as an elected official/political blogger by raising awareness of N.J. political corruption not being covered by the local press. Before switching careers, Ms. Hoernlein studied Food Science and Agricultural Engineering at Rutgers and worked as a Research & Development food process engineer.
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