THE LOCAL AREA WATCH

NO AGREEMENT ON SALE OF CITY ATTORNEY'S OFFICE

As I have stated earlier, we should be concerned when a private parties can "rent out" the Grand Rapids City Attorney's Office to litigate their private agendas.  This is what is happening with the initiative of Judy Rose of the Black Hills Citizens for a Better Community to establish a $100,000 fund to reimburse the City for its costs in defending a proposed adult entertainment ordinance targeting at driving Mark London's new strip joint out of the section of downtown targeted by "Mystery Developer" Duane Faust for a residential-retail-entertainment complex.

London has renewed his commitment to opening his strip club in May.  Meanwhile, the Grand Rapids City Commission seems set on approving the ordinance to oust him next month.  However, the courts have not been kind to efforts like the City's, especially when they are specifically focused upon a particular business.  So with passage of the ordinance, the City is likely to be sued by London, and City taxpayers stand a good chance of picking up a hefty tab as they did in the wake of the Velvet Touch fiasco.

But maybe not, because the City Attorney's Office has been "sold" to Ms. Rose and unnamed cohorts to ply their agenda to run London out of town.  They're going to pick up the tab if this thing goes south.  Well, no.  According to a statement by Assistant City Attorney Catherine Mish, there is no agreement between the City and Ms. Rose's group (or anyone else for that matter) to reimburse the City for its legal expense.  The $100,000 legal fund Ms. Rose has promised to the City is just that, a promise.  In fact, it doesn't exist except $1,043 in a bank account.  All of the rest of the money, according to Ms. Rose in a letter to City Attorney Phillip Balkema, consists of pledges of area businessmen who want to remain anonymous.  It is on this basis the City Commission will charge forward with another foolhardy assault on a business that the courts have repeatedly protected from most local regulation.

Of course, even if Ms. Rose's fund were real, no private party should be able to purchase the standing of the City government to ply their own agenda in the courts.  Letting this happen will a set a dangerous precedent that will let any angry neighbor with enough cash and enough clout to threaten your liberties.  Think about it.

WHO IS HEARTWELL WORKING FOR?

I finally received a response from the Grand Rapids City Attorney's Office to my Freedom of Information Act request for documents related to the Mystery Development proposed for the southwest corner of downtown -- now revealed to be a residential-commercial project by California businessman Duane Faust.  With the exception of a single press release from Faust's local agent, Grubb & Ellis, Assistant City Attorney Catherine Mish says that no such documents are "reasonably known" to exist by the City.

This is important.  Ms. Mish is not claiming that documents related to the Faust project are confidential and therefore exempt from FOIA disclosure.  She says they don't exist -- or least, no documents in the City's possession or control exist connected to it.  Ms. Mish specifically denied such existence of the confidentiality agreements that Mayor George Heartwell, City Manager Kurt Kimball, and Assistant City Manager Eric Delong signed on behalf of Faust's project.  However, we know from Heartwell's public statements that these agreements do in fact exist.

Ms. Mish's official certification that these confidentiality agreements do not exist as public records is valid only if Heartwell, Kimball, and Delong signed them strictly as private citizens.  If that is true, then Heartwell, Kimball, and Delong have been secretly using their public offices to marshal support for Faust's project without disclosing the private interest they have taken in it.  That is clearly a conflict of interest and an abuse of the public trust.  However, if they did sign the confidentiality agreements as public officials, then Ms. Mish has made a false declaration that they are not public records.

On top of all this, there remains the fact that the City, per Ms. Mish, says it has no records of the Faust project.  That means Heartwell and gang have been enlisting the City's support for a project without any written records of what it is -- not even a written statement from Faust or his agents.  Perhaps this is just another example of how Heartwell likes to play make-believe as mayor.

HOW A SHARK BECOMES SHARKBAIT

A bit of information from the Wall Street Journal that probably won't make it into the Grand Rapids Press:  Institutional Shareholder Services, a preeminent advisory firm, urged shareholders of Fifth Third Bancorp to withhold support of embattled CEO George Schaeffer and other directors who are up for election this year.*

As reported here, Schaeffer led the big bank from Cincinnati through its go-go years until a declaration of bank fraud from your friendly neighborhood watchdog, the Local Area Watch, triggered a federal investigation of Fifth Third in the wake of its botched acquisition of Old Kent Bank in 2001.

That stopped Schaeffer's running-on-water strategy of buying up smaller banks quicker than the financial irregularities of these mergers (think of the financing of the Boardwalk project) could catch up with Fifth Third.  Dead in the water, the bank sank losing over 40% of shareholder value during the next three years.  With a bit of poetic justice, Schaeffer's crash and burn turned the tables on Fifth Third and now made the shark sharkbait.  Wells Fargo and US Bank have both looked into buying out Fifth  Third.

Click here for a list of past articles about Schaeffer and his bank.

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* However, most shareholders ignored the advice, as they too often do regarding mismanaged public corporations.  Think Enron.  So Schaeffer and his cronies were voted back in today, though with considerably less support than before.

CONFESSIONS OF A FORMER PYRAMID BUILDER

Caught an interesting political spot on t.v. tonight.  Dick Jr. in his run for governor ran an ad in which an Alticor (f.k.a. Amway) employee admitted that the company had been in serious trouble recently.  Then other employees lauded Dick Jr. for turning Scamway around.  Apparently he feels the need to establish his bona fides as a real businessman.  For reasons I have stated elsewhere, I think this is an uphill battle for the young DeVos.

Of course, you heard it here first about Amway's financial problems.  We covered how the Amway/Quixtar pyramid was crumbling and the Fixer helped the DeVoses and Van Andels with a financial workout of their multi-level marketing scheme.  We explained how these alleged benefactors of River City got their hooks into tax dollars and other public revenue streams to fund their workout payments.  And we showed why that indicates that there is no multi-billion-dollar Amway fortune.  (We're still waiting for the Van Andel heirs to commit Dad's billions to the Van Andel Institute, while son Dave is making sure he nails down that $30,000 pension for heading up the institute.)

Because of all this, for the past twenty years there has been an ethical sewer flowing from Ada down Michigan Street hill into downtown G.R.  Even though it stinks to high heaven, the local media has ignored it all, especially DeVos suck-up Danny Gaydou, publisher of the Grand Rapids Press.  So why did Dick Jr. run counter to the family's 11th commandment to hype Amway at all costs?  Maybe he thought the hostile Detroit media would eventually catch up with the Amway's financial troubles and report them an at inopportune moment doing the campaign.  So he's making a virtue out of a vice in a pre-emptive move.  Clever politicking to ensure smooth sailing, I suppose.

LET'S MAKE BELIEVE

The Grand Rapids City Commission met this morning as it usually does in a "Committee of the Whole" session.  The commissioners were briefed on the budget the City staff prepared for the FY2007 budget.  To make the numbers for more spending work (primarily wages and benefits for City employees and retirees), the staff figured that income tax receipts, the City's government biggest revenue pot, would increase by 3%.

Mayor George Heartwell would have none of this nonsense!  He charged that the staff did not put any thought into that assumption of a 3% increase.  Now maybe you're thinking that the mayor, as the elected guardian of the public's interest, was chastising the staff for positing a rosy scenario.  If so, you're forgetting that Heartwell isn't happy if he isn't spending more and more of your money, folks.  He was p.o.'ed with the staff because they hadn't forecast even higher tax revenues.  They wouldn't give Santa Heartwell enough make-believe money to give away to all the progressive boys and girls.

The staffer briefing the City Commission reminded the mayor that big job losses from Steelcase etc. mean a large outflow of income tax revenue, among other things.  He even admitted that a 3% increase was optimistic.  Indeed, Second Ward Commissioner Rick Tormala pointed out that presently income tax revenues are increasing only at a rate of 1.9%.  Already the staff's semi-rosy scenario is off by almost 60%.  Yet, Heartwell wants more make-believe tax dollars to squander -- and certainly not on your parks and pools, cops and firemen, and streets.

HEARTWELL EXPOSED

Mark London wanted to open a strip joint on the south end of downtown Grand Rapids.  Then the Grand Rapids City Commission under the lead of Mayor George Heartwell proposed to enact a new "adult entertainment" ordinance that would effectively put London's proposed strip club out of business.

However, the last time the City crafted such an ordinance targeting a particular strip club, the Velvet Touch on 28th Street, the City Attorney's office got slapped down hard by the courts.  Not only did City taxpayers have to pick up the City's costs for that fiasco, they had to pay the Velvet Touch's legal bills too.  So, Judy Rose, a protege of ex-mayor Boss Logie, puts together a group called "Black Hills Citizens for a Better Community" with a promise to raise a $100,000 legal fund to pay the costs of the City Attorney's office to defend this new ordinance against challenge by London.  So, under Heartwell's leadership, the new "adult entertainment" ordinance begins to work its way through the City Commission for approval.

Unknown to everyone until a few weeks ago, Heartwell was keeping a big secret.  London's new strip joint was located right smack in the middle of the area targeted by the Mystery Developer.  A year ago Heartwell, City Manager Kurt Kimball, and Assistant City Manager Eric DeLong signed confidentiality agreements with the Mystery Developer to keep his plans secret while they worked behind the scenes to provide the City's support for his plan.  Plainly ousting London's strip joint with an ordinance targeted right at him was one leg of this support.

Whatever one thinks of the so-called adult entertainment industry ("juvenile" would seem more on the mark), it should be disturbing to citizens who value ordered liberty and open government that:  [1] Our elected officials are using the force of government to run a lawful business out of town, [2] the use of that force is being paid for by a private fund which is keeping secret its donors' identities, [3] top City officials are orchestrating this use of force in concert with a unknown developer who wants the business's property, and [4] they are keeping the developer and his plan a secret from the public they have sworn to serve.

This is seriously wrong, folks.  Our city government is not at the service of developers and busybodies.  Their private agendas do not constitute a public purpose that obligates City officials to act on their behalf.  I'm not sure which is worse:  Heartwell's back-room assistance to a secret development downtown or that the City Attorney's office is for sale to anyone who can raise the cash?  I have filed Freedom of Information Act requests with the City to get the public records about these matters in hope of exposing the truth of what is going on behind closed doors, allegedly in the name of the public.  Of course, we all know the utter contempt the City Attorney's office has for the City's FOIA obligations, so I am not confident of success.

However, we at least have Heartwell's statements to the Grand Rapids Press yesterday to expose his sheningans.  He said that the City Commission's "zeal" to pass the new adult entertainment ordinance may have been dampened.  Last week London gave the Mystery Developer an option to purchase the strip joint property.  So the rationale for an ordinance targeted at driving London's business out of town is quickly disappearing.  Indeed, Heartwell admitted, "It's a fight we don't necessarily have to pick right now."  Got that, boys and girls?  If you surrender, then the City won't come after you.

Just goes to show that the defining trait of so-called progressives like Heartwell is arrogance.

JUDGE RULES IN FOIA LAWSUIT

Today I attended the hearing Judge Redford of the Kent County Circuit Court scheduled to announce his decision in the FOIA lawsuit my brother and I filed against the City of Grand Rapids to obtain the release of public records that may be evidence of either tax fraud or bank fraud by the developers of the Boardwalk project in the Monroe North district of downtown.

The judge decided that he could not summarily dispose of the lawsuit in favor of either us or the City.  He said that there remained certain issues of fact that only a bench trial could resolve.  So that's it, folks.  We're going to trial against the City.  Probably sometime in June.  We'll keep you posted.

However, even if the City gets yet another reprieve from providing these public records to us, you can get them for yourself.  Catherine Mish of the City Attorney's office has acknowledged to the court the existence of both of the key records.  If you want to know how to get copies sent to you, let us know and we'll give you instructions.

FOIA FIGHT UPDATE

As many of you know, we have been embroiled in a legal battle with the City of Grand Rapids to compel the disclosure of public records which reveal conflicting valuations of the Boardwalk commercial-residential complex in the Monroe North district of downtown.

The City has one written statement from the Boardwalk's developers claiming that $31.5 million was invested into the project.  This high valuation was used to obtain three huge loans from local banks and meet the City's investment threshold to qualify the project for a $2.5 million taxpayer subsidy.  The developers got the loan, but did not get the subsidy when they refused to turn over to the City invoices for the project to prove that the investment had actually been made.

So the Boardwalk developers made a second written statement to the City claiming to have invested only $20 million into the project.  On that basis the City Assessor's Office slashed the Boardwalk's assessed value down to less than $20 million.  Thus, the developers still got their tax break with this low-ball assessment.  However, public records and the agreement the developers signed with their bankers plainly state that at least $31.5 million was put into the Boardwalk project.  Furthermore, the developers recently sold the Boardwalk after listing it for $38 million.

It is clear that the taxpayers and residents of Grand Rapids have been had.  The Boardwalk developers got a big political favor with this low-ball tax assessment, and it's a serious matter that two of the City officials involved in trying to win a tax subsidy for the project worked for law firms that represented the owners of the Boardwalk.  So the City Attorney's Office has refused to release either of these written statements, despite our lawful requests for them under the Freedom of Information Act.

The matter now lies with Judge Redford of the Kent County Circuit Court.  He was supposed to have a decision ready on Friday, March 3rd, but a criminal matter, which has priority on the court dock, intervened.  The judge has rescheduled the announcement of his final decision on Friday, March 17th.  Meanwhile, we have asked City Commissioners Rick Tormala and Rosalynn Bliss to look into the evidence we already have of the low-ball tax assessment.  Tormala has promised to act and has pressed City Manager Kurt Kimball to release the documents.

Nothing from Bliss so far.  Let's hope that's not a sign of her embracing the penchant Mayor Heartwell, her political mentor, has for secrecy.  That's problem with so-called progressives.  They are so sure they know what is best for us little folks, they don't think they need to be bothered to keep us in the loop.

THE JOB MAKER

Last night I caught another Dick DeVos campaign ad for governor.  Dick is one of the scions of the Amway/Quixtar fortune who has been touting his expertise as a "job maker".

Well, I've got an idea.  Why doesn't Dick promise to give each and every Michigander a Quixtar starter kit, and that way -- if all the motivational materials of the kingpin distributors are correct -- we can all become millionaires!  That's the ticket!

CLASS ACT

At Tuesday's weekly meeting, the Grand Rapids City Commission was deadlocked on which candidate to appoint to the Third Ward commission seat that Robert Dean is vacating to run for the state legislature.  Sharp debate divided the commissioners over Stephen Deems, a certified public accountant, and Elias Lumpkins, a retiree from Grand Rapids Community College.  They were at odds over whether to pick Deems who has a special expertise in financial matters at a time of a budget crunch or Lumpkins who would bring sound experience and racial diversity.

Second Ward City Commissioner Rick Tormala led the charge for Deems.  He argued that the City Commission needed its own accounting savvy to critically scrutinize the budget recommendations of the City staff.  His second ward colleague, newby Rosalynn Bliss, teamed up with her political mentor, Mayor George Heartwell, to take at offense at the implication that the City Commissioners rely too heavily upon the dictates of the City staff (which they do).  Of course, the real reason Heartwell and Bliss blasted Tormala was because they were backing Lumpkins as they stumped for "diversity".

In the end, the City Commission was reduced to drawing lots to select a candidate.  At that point, Deems stepped forward and withdrew his name.  He stated that winning the commission seat by chance would not give him the mandate to represent the Third Ward.  He further stated that Lumpkins was an excellent candidate who would serve the Third Ward well.  By all accounts, Lumpkins is well-respected around town and we hope he does a good job filling out the rest of Dean's term, which expires at the end of 2007.  We also commend Deems for putting the public interest ahead of his political ambitions to heal a breach ripped open in no small part by Heartwell's grimy race-mongering.