John McCain's Real Estate Pal

The NY Times takes another shot at John McCain, this time conclusively establishing that (a) real estate development can be a politically arduous process involving politicians, and (b)
John McCain is a politician.  The Times also spends time on some corollaries - politicians need money, and real estate developers often have it.

What the Times does not bring forward is any evidence of anything like corruption.  Relatives on the payroll?  secret investments in land being swapped?  Nahh, that sort of thing is for the Senate Majority Leader to do, and the Times to ignore.

But that's OK!  McCain's critics want to pretend that McCain's standard is "If you write me a check I will never talk to you again".  My (unreasonably sympathetic) understanding of his position is that he won't do for a donor what he wouldn't otherwise do for an ordinary constituent.  (Whether ordinary constituents get their phone calls returned promptly and their problems dealt with crisply, I cannot say.)

The Times tries to hang McCain with some land swaps, and with the redevelopment of Fort Ord.  The funnier bit is in the land swap, so here we go:

The first two swaps involving Mr. Diamond that Mr. McCain helped sponsor were initially supported by local governments and conservationists, and Mr. Diamond argues the land would be worth far more today. But many Arizona conservationists later protested that the federal deals gave away too much.

That dastard McCain - supporting deals being pushed by conservationists!  The humanity.

And later, when they discover the private side of the public-private partnership made money, they go into a tizzy.  Oh, boy.  If only private developers would consistently and reliably lose money, like those nice sub-prime lenders.  No, they're bad guys too... baffling.

The more puzzling piece revolves around two deals tied up in the closing of the military base at Fort Ord.  The first deal:

In the mid-1990s, Mr. Diamond set his sights on Monterey County, Calif., where the Army was closing Fort Ord. It was a dream property — hundreds of undeveloped acres and two golf courses in the ocean-misted hills overlooking Monterey Bay, one of California’s great tourist destinations.

Tipped off by a fellow Tucson developer, Mr. Diamond had snapped up a housing complex there that had been built on land leased from the Army, giving him the inside track to buying the land when the base shut down.

After the Army did so in 1994, Mr. Diamond asked Mr. McCain, a member of the Senate Armed Services Committee, for an introduction with an Army official who could work out a sale. Mr. McCain’s legislative aide, Ann Sauer, arranged a meeting with Paul W. Johnson, a deputy assistant secretary, a Diamond executive involved in the deal said.

When the talks stalled over price and water supply, Ms. Sauer interceded with the Army, according to Mr. Diamond’s deposition and others involved. “She showed up and got the thing resolved,” Mr. Diamond said.

Mr. McCain’s campaign aides said in a statement they did not believe Ms. Sauer’s involvement went beyond setting up the Pentagon meeting. Ms. Sauer, who no longer works for Mr. McCain, said she could not recall details of her role. A spokesman for the Army declined to comment.

Mr. Diamond finally bought the land for $250,000 in 1999. He obtained an unusual guarantee from the Army that provided a generous water allowance outside the standard allocation process — a bonus that continues to rankle municipal officials on the dry Monterey Peninsula.

“Those guys got a sweetheart deal,” said Michael Keenan, whose family bought the housing complex from Mr. Diamond for nearly $30 million two years later. Mr. Diamond acknowledged turning a profit of $20 million.

First, as to this being a "dream property" take a breath.  Here is one consultant's view:

Progress toward production of new workforce housing has been slow. Barriers to housing development such as complex regulatory procedures and approvals, antiquated infrastructure on the former Fort Ord, and environmental contamination and costly building removal have made the reuse of Fort Ord a particularly difficult challenge for any kind of development, including workforce housing.

Secondly, it is absurd to think that McCain and his developer buddy pulled a fast one - the closing and redevelopment of Fort Ord got Presidential attention, was subject to Senate legislation, and had a member of the California Congressional delegation overseeing it.  In addition, the Fort Ord Reuse Authority won a planning award in 1998, so they weren't utterly stupid and corrupt, at least that year.

Third, the redevelopment has been a political quagmire caught up in a tussle over affordable housing.  On that point, if the Times would tell us the name of the leased housing complex purchased by Diamond we would be a step closer to pinning down some details.  The Fort Ord Reuse Authority, under "Housing", shows pictures of Preston Park and Schoonover Park.  Schoonover Park is now college housing; Preston Park was leased to "Mid-Peninsula Housing, ... a non-profit organization that develops high-quality affordable housing communities".  Which one was the developer's dream - the college housing, or the affordable housing?  Or was there a third choice of properties?  I am running out of time and Google, unfortunately, but if anyone can help me out here, that would be lovely [Progressing...  See HERE WE GO, below].

More background on the golf course deal is here, and it sounds less savory.  Of course, McCain's involvement was to write a letter of introduction, but still.

MORE:  Did I include this link to the Fort Ord Reuse Authority, FORA?  Sorry, no link to FAUNA.

HERE WE GO:  The Times gives this clue:

“Those guys got a sweetheart deal,” said Michael Keenan, whose family bought the housing complex from Mr. Diamond for nearly $30 million two years later [i.e., 2001].

Michael Keenan is, we assert, the son (mentioned here) of the late Robert Keenan, founder of a winery and the Buena Vista Land Company.  And this article from 2001 says that the Buena Vista Land Company bought

...a 300-unit resort property called SunBay on Fort Ord for $28 million and converting the luxury hotel suites there to apartments and closing escrow last Thursday. Something like that.

$28 million, $30 million, what's a couple of million among friends.  SunBay has to be the deal.  So let's summarize - a wealthy Arizona developer buys the land for $250,000, puts $10 million of purchase and improvements into the leased properties, and then flips them to a wealthy California developer for a nice profit, presumably after various environmental, regulatory, and legal clouds cleared.  Scandalous!

Comments

[Thomas Collins]

Has the NY Times ever published an article analyzing in such detail B_O's ties to Ayres, Rezko and Wright?

[Paul Zrimsek]

I'm afraid this time my bitterness is tempered by McCain's own history of seeing corruption wherever money exists when it comes to anyone other than his noble self.

[Walter]

Tom,

An typo above:

Nahh, that sort of thing is for the Senate Majority Leader to do

Should read:

Nahh, that sort of thing is for the Speaker of the House and the Senate Majority Leader to do

[Mikey NTH]

An army base is a small city (maybe a big one). There may be on-base housing, but there are also plenty of industrial sites where machinery was stored, repaired, disposed of. Lots of fuel, solvents, and other fluids were spilled and in some places, dumped. Ranges are full of pieces of metal, including heavy metals.

Getting into one of these as a re-developer can be very, very messy.

[David Walser]

I'm glad the Times ran this story. Will we be favored, next, by an expose of the big newspaper in NYC and the political strings it pulled to get its new building? I forget the name of the paper, but I'm sure it couldn't have gotten its new building without using political clout. /snark

In all seriousness, the greater the control government has over the economy, the greater the incentive there will be to try and influence government. If the Times is concerned with influence peddling, it should start advocating a smaller, less intrusive, government.

[Brainster]

The Times is conflating two separate transactions here; the property Diamond bought for $250,000 is not the property he sold for $30 million, although the way the article is worded doesn't make that clear.

[gabriel]

If this is the caliber of what the Times and its ilk are going to be going after McCain with, he will most assuredly be our next President.

[Larry]

Late 70's, seven buds and I played Spyglass Hill Friday and Bayonet Saturday. At the time, Spyglass was rated #2 course in Ca and you all know it's one of the four courses the big proam is played on. Bayonet was just as tough, maybe because it was tighter, but not as picturesque. Not certain, but I think Bayonet was considered better than Blackhorse. Anyway, the golf courses involved ain't chopped liver, probably worth tens of millions on their own.

[cathyf]

Well, "on their own" would be the operative phrase there... How much are the golf courses worth if they are intertwined with liability for a superfund-sized toxic waste cleanup project?

[Larry]

Generally, military golf courses are situated on remote parts of bases, away from the industrial-type ops. That's my vague recollection of Ft. Ord, too. Also, Ord was primarily language school in its latter incarnation, so industry wasn't as intense there, at least not for many years. I may have misunderstood, but aren't the courses a separate transaction? (For which I saw no evaluation at the link.)

[M. Simon]

If the Times is concerned with influence peddling, it should start advocating a smaller, less intrusive, government newspaper.

There. Fixed. Although I must say it seems the smaller paper is already in the works.

[real estate]

There is a word that can be closely related to what is happening to the world in the twenty first century: corruption. corruption is a process of decay, decomposition, destruction of a body, any body existing on earth.

[Cort Moore]

Let me get this straight, McCain smoothed the way for his finance advisor/consultant to buy gov't acreage in a way-prime California region for 250,000!.... in 1994? I would've liked to have had a piece of that! Is Gov't property usually dealt selectively to millionaire minions of polticos? The guy "flipped" 20 million on a deal greased by McCain. It was sweet deal but it smells really funky.
-Cort Moore

[battery]

that! Is Gov't property usually dealt selectively to millionaire minions of polticos? The guy "flipped" 20 million on a deal greased by McCain. It was sweet deal but it smells really funky.
-Cort Moore

[sophy]

Welcome to our game world, my friend asks me to buy runescape .