CommentsSPECIAL TO CITYWATCH-The current uproar over Los Angeles City Council member Jose Huizar’s arrest for corruption reminds me of the famous distinction between “dishonest graft” and “honest graft” made by George Washington Plunkitt, a flamboyant New York City politician in the early 1900s.
Dishonest graft, Plunkitt explained, involves bribes and blackmail. Honest graft, in contrast, involves using one’s political and business connections, and inside knowledge, to make a fortune. Plunkitt described the principle behind “honest graft” in his motto: “I seen my opportunities and I took ‘em.”
Huizar is in the news because he allegedly engaged in dishonest graft. He could face up to 20 years in federal prison as a result of a multiyear federal investigation of his corruption and his pay-to-play operation. Federal prosecutors have alleged that Huizar took cash, casino trips and other bribes from real estate developers who had business before the city. One businessman provided Huizar with access to free “massage services” as well as hotel accommodations that allowed him to conduct “discreet encounters with a woman with whom he was having an affair.” A developer who wanted to build a 35-story project in the city's Arts District bragged in an email that thanks to Huizar, the city required “minimal” affordable housing units in the project compared with other housing developments.
Huizar – whose Council District 14 includes downtown LA – has had enormous influence over development projects, particularly in his role as chair of the powerful Planning and Land Use Management (PLUM) Committee which, the criminal complaint notes, “controlled which projects were slated for a vote in the approval process.”
What Huizar allegedly did was clearly illegal.
But Huizar, like many politicians, was also adept at “honest graft.” That has to do with the legal bribery that’s known as campaign contributions. Since he first ran, successfully, for the City Council in 2005, Huizar has received $3,704,628.56 in contributions, according to data on the L os Angeles Ethics Commission’s website.
One thousand dollars of that amount came from LA mega-developer Geoff Palmer (photo right) -- a $500 check in 2006 and another $500 contribution in 2010. (Palmer’s brother Dan -- his one-time partner, who started his own real estate development firm – kicked in another $500 to Huizar’s war chest and Dan’s wife Ashley wrote her own check to Huizar for another $500).
And therein lies a question about the dubious distinction between “honest graft” and “dishonest graft.”
Palmer’s firm, G.H. Palmer Associates, owns 15,039 Southern-California apartment units, valued in excess of $5 billion dollars, according to the company website. His ten projects in Los Angeles include 5,735 units, making him one of LA’s largest landlords.
He is also LA’s most controversial and least-respected apartment developer. His projects are universally attacked by architects, city planners, and affordable housing activists. Although Palmer claims that each of his Los Angeles projects is unique, most of them are overly large, cookie-cutter apartment complexes. Most of them have Italian names, including the Orsini, the Medici, the Piero, the Visconti, the Lorenzo, and the Da Vinci, which together Palmer has dubbed "the Renaissance Collection." As Los Angeles Times columnist Steve Lopez quipped: "Can the Biscotti be too far off?"
The blog LA Curbed called Palmer’s buildings "vacuums designed to suck the life out of a neighborhood that has worked so hard to become lively in the past decade." These short, squat, stucco buildings face inward. Palmer’s complexes violate LA’s aspiration to become a more pedestrian friendly city.
In recent years Palmer has built several more conventionally named and slightly less offensively designed projects, including Broadway Palace and Skyline Terrace. But he’s also returned to his old ways with his latest project, the Ferrante, a sprawling 1,150-unit development, currently under construction and scheduled to open next year.
For several decades, Palmer has been a divisive political force, using his money and political muscle to thwart efforts to create more affordable housing in a city that faces a severe affordable housing shortage and that has the nation's largest homeless population. He has been an unrelenting critic of mandatory affordable housing policies, calling them “immoral” and “not American.”
Palmer made his fortune by flouting government rules and being both the defendant and plaintiff is many lawsuits.
In 2006, after city officials insisted that he comply with the affordable housing set-aside for his Piero project at Sixth and Bixel Streets, Palmer refused. Instead, he took the city to court.
Around the time Palmer launched his lawsuit, then-Councilmember Ed Reyes tried to talk to the developer about affordable housing. Reyes told Steve Lopez, the Times columnist, that Palmer "reminded me of Charles Dickens, with the rich people in fur coats stepping over beggars to get into their homes. That's the whole attitude, and it just doesn't seem to matter to him." Palmer told Reyes: "That's not my problem. That's your problem."
In a 2006 editorial the Times criticized Palmer's resistance to complying with the city law. "Builders who invested in the land, such as Palmer, did so with their eyes open. They can't now credibly claim that the area's development template is government regulation run amok."
But the courts disagreed. In 2009, the Second District Court of Appeals ruled in Palmer's favor, claiming that LA's affordable housing set-aside rule violated the state Costa-Hawkins law. The ruling made Palmer a hero to real-estate developers and landlords throughout the state, but anathema to housing advocates. In 2015, the California Supreme Court reversed that ruling, allowing cities to adopt “inclusionary zoning” laws that require new market-rate housing developments to include homes that are affordable to people with low or moderate incomes.
By suing the city, Palmer was playing by the rules, using the courts to challenge a law he didn’t like. But Palmer also has a long track record of engaging in “dishonest graft” – breaking the law to get what he can’t accomplish through legal means.
After starting his real-estate company in 1978, Palmer pursued his first major development in the then-remote exurb of Santa Clarita, on the northern border of Los Angeles County. At the time, local residents were mounting a campaign to incorporate Santa Clarita as a separate city. Palmer's company wanted to exchange some infrastructure improvements for the right to build 1,452 condominiums, a plan bound to face stiffer regulations should Santa Clarita win new status as an incorporated city. He was caught reimbursing his employees through his company for their contributions to the anti-cityhood committee.
In 1991 the California Fair Political Practices Commission (CFPPC) charged Palmer with 15 campaign-finance violations for illegally obscuring the source of contributions to the Southern California Caucus, a PAC opposed to Santa Clarita cityhood. The CFPPC slapped Palmer with a $30,000 fine, the maximum allowed. Palmer has built ten projects totaling 4,525 units in Santa Clarita, according to his company's website.
The CFPPC also found that six Palmer employees and the mother of one employee each gave checks totaling $500 apiece -- then the maximum that council candidates were allowed to accept from one source under city law -- to Los Angeles City Councilwoman Joy Picus. All the "donors" were later reimbursed by the company in violation of state law that requires the actual source of campaign contributions to be publicly disclosed. According to a 1992 Los Angeles Times story: "At the time, the company was building a large condominium complex in Woodland Hills, which is part of Picus's council district."
In 1998, Palmer purchased land for his first downtown project, the Medici. Palmer objected to a city rule requiring that 15 percent of the units be made affordable to low-income households. Palmer wrangled his way out of the requirement by negotiating with city officials, reluctantly agreeing to put 60 (9 percent) below-market units in the project, but he balked at setting rents affordable to the poor. Instead, the city allowed him to market the 60 units to moderate-income residents, in violation of both the spirit and substance of the set-aside rule.
In 2001, Palmer sought approvals for another downtown project-the Visconti at Third and Bixel Streets -- but still refused to comply with the affordable housing mandate.
"Why should one developer be responsible for all of society's ills?" Palmer told The Los Angeles Times at the time. "I'm a businessman. I want to build what the market dictates. Don't tell me who we should build for."
In 2003, LA's chief code enforcement officer found Palmer guilty of illegally demolishing the Giese House, the last 19th century home on Bunker Hill, without a permit. Palmer had been using the Queen Anne-style cottage-built in 1887 at what is now West Cesar Chavez Avenue and Figueroa Street-as a staging area for his Orsini apartment complex. Then one day, a bulldozer "accidentally" knocked the home down. Ken Bernstein, then the preservation director for the Los Angeles Conservancy, called Palmer's act a "willful and egregious demolition." As punishment, city officials barred Palmer from building on the site for five years.
Palmer sued the city, claiming that the ban was illegal. In what many decried as a display of cowardice, the City Council agreed to settle the case by requiring Palmer to create a $200,000 trust to loan low- and middle-income residents money to preserve their historic homes. After some additional pushback from the city’s Community Redevelopment Agency, Palmer eventually got the green light to build the second and third phases of the Orsini project, which now includes 1,072 units.
Last year Palmer was accused in a class action lawsuit of illegally withholding the security deposits of some 11,000 former renters that should have been returned to the tenants. The lawsuit claims that Palmer “systematically and in bad faith, retained security deposits by failing to properly document the work that they charge tenants for when they move out.” According to the lawsuit, Palmer charged tenants for generic repairs after they had left their apartments, but which he failed to document, in violation of state law that requires a detailed explanation of the work.
Given all of Palmer’s nefarious and controversial activities, how has he been so successful in getting his mega-projects approved? As a case study, let’s consider how Palmer managed to get a skybridge approved at his Da Vinci apartment complex with Huizar’s help.
In early 2014, I was looking into Palmer’s background and political influence-peddling when I learned that he was seeking approval to build an elevated pedestrian bridge over Temple Street to connect two buildings of the 526-unit Da Vinci luxury apartment project, then under construction. It would allow residents to travel between the buildings without crossing the street below.
Palmer argued that he needed the bridge so that his future tenants would not have to "use the street and interact with the homeless population" in the area.
According to Palmer, “homeless encampments” threatened the safety of his future tenants. In documents submitted to the city, Palmer’s company, G.H. Palmer Associates, claimed that “potential incidents that could occur during the evening hours, when the homeless population is more active in the surrounding area.” Palmer’s representatives argued that they didn’t want to force residents to “use the street and interact with the homeless population.”
The City Planning Department staff rejected Palmer's request, explaining that it conflicted with downtown design guidelines and could even make the sidewalk less safe by diverting pedestrians to the bridge above the street. In a 2014 interview, city planner Blake Lamb told me that the Planning Department's policies do not support "the physical segregation of people" to address public safety and homelessness. “More pedestrians enhance safety,” Lamb said. “They add eyes on the street.”
The Central Area Planning Commission, which oversees downtown development, agreed with the planning staff and rejected Palmer’s appeal at an April 8, 2014 meeting.
But on April 29, Huizar introduced a motion asking his City Council colleagues to overturn the Planning Commission’s recommendation and allow Palmer to build the skybridge.
“The proposed pedestrian bridge is necessary to provide circulation within the separated elements of the overall project and to address resident public safety concerns, particularly during the evening hours,” Huizar stated in his motion.
Huizar was echoing Palmer’s concern that residents of his luxury buildings might have to cross the street if they wanted to get from one building to the other. Had they looked closely at the plan for the project, they would have noticed that both buildings in the Da Vinci project would have swimming pools, along with a third pool on the roof of building A. Both buildings also would have fully-equipped fitness centers. It is true that if tenants in Building B wanted to use the Da Vinci’s professional basketball court, they’d have to make the trek over to Building A. And if tenants in Building A wanted to use the movie theater, they’d have to find their way over to Building B.
But in 2014, Jeanette Rowe, outreach director of LA Homeless Services Authority, which conducts regular counts of the homeless in different parts of the city, explained that their most recent count found only four homeless people living under the 110 overpass in an encampment, and that there were no homeless people found near the site where Palmer wanted to build the Da Vinci.
Apparently not much has changed in that regard in the last six years. I recently called the Da Vinci sales office to find out if the homeless “problem” near the complex has gotten worse since then. The nice woman who answered the phone told me that “homeless people are not an issue” in the area. The company employs 24-hour security officers who patrol the area around the Da Vinci buildings. If they happen to see any homeless people, she said, the security officers would “make them move,” but she wasn’t aware of any such incidents. “None of that happens here,” she said.
Nevertheless, Palmer prevailed. In May 2014, at Huizar’s request, the City Council overturned the Planning Commission’s recommendations by an 11-0 vote.
Back then, Lamb told me that the City Council rarely overturns a decision by the Planning Commission. “We don’t see this that often, but we see it from time to time.”
How did Huizar get an 11-0 vote? Generally, City Council members go along with what each member wants when it comes to land use and development projects in each of the 15 districts.
To make his City Council colleagues’ vote more palatable, Huizar provided another justification for Palmer’s skybridge. Huizar explained that Palmer had agreed to donate $25,000 into a fund to maintain other downtown pedestrian bridges. I called Huizar’s office and talked to two top staffersto find out if Palmer ever parted with that $25,000 or, if so, whether it ever found its way to repair or maintain other pedestrian bridges. They didn’t know.
For Palmer – whose net wealth is $3.1 billion -- the $25,000 was arguably not an act of charity or civic goodwill, but a minor business expense.
Ironically, on December 8, 2014 – seven months after the City Council approved Palmer’s skybridge -- the Da Vinci development was destroyed by a massive fire. The fire shut down freeway traffic and quickly spread to nearby buildings, shattering windows at the Los Angeles Department of Water and Power building 400 feet away. Other city-owned buildings suffered water damage and melted computers, although nobody was injured. Huizar urged his colleagues to allocate $75,000 to match Palmer’s reward to anyone who provided the LAFD with information leading to the arrest and conviction of the persons responsible for the blaze.
Palmer quickly began rebuilding the project with proceeds from his insurance policy. But the City of Los Angeles filed a lawsuit against Palmer for $20 million for his failure to secure an adequate fire protection plan at the Da Vinci, which was constructed with a wood frame cheaper than the traditional steel and concrete used in most large downtown buildings and which burns much quicker. In 2017, the city settled the suit, collecting $400,000 from Palmer. But the city recouped its losses by collecting nearly $62 million from its insurance carrier.
Why was Huizar willing to go to bat for Palmer? It is hard to believe that Huizar, who has a master’s degree in city planning from Princeton, championed Palmer’s project because he admires the developer’s taste in urban design. It is equally hard to believe that Huizar has done Palmer’s bidding as a thank-you gift for Palmer’s lousy $1,000 donation.
Perhaps Huizar, who once had ambitions to run for mayor, city attorney, or another higher office, and whose wife was running for his Council seat this year because Huizar had reached his 16-year term limit, hoped to cash in on Palmer’s largesse in the future.
Or perhaps there’s a piece of this puzzle that isn’t readily apparent from official documents like the information collected by the city’s Ethics Commission.
Palmer is one of the richest individuals in the Los Angeles area, but based on Ethics Commission public records he’s not one of the most generous campaign contributors in local politics. Over the years, he contributed $23,900 to candidates for Los Angeles Mayor, City Council, and City Attorney. For a developer whose projects are universally condemned as ostentatious and ugly, and who has a controversial reputation for repeatedly violating city laws and suing the city to get out from complying with its regulations, Palmer hasn’t had to dig very deep into his pockets to win approvals of his many developments.
On the other hand, Palmer has paid more than $2.9 million to lobbyists to help grease the skids for his developments. Those lobbyists, in turn, provide contributions, organize fundraisers, and do other favors for City Council members.
Palmer has chosen to build most of his projects on the periphery of the downtown area where they are not subject to City Planning Commission or City Council approvals. Because they fall within the existing zoning guidelines, these projects don’t require a design review, which is how he’s able to get away with building such ugly sprawling developments.
But several Palmer projects, including the Da Vinci, were within the downtown district that required considerable city oversight. Even so, he still got greenlights to build them with few revisions to his original plans. One of them is the 649-unit Broadway Palace, a fortress-like complex in Huizar’s council district, which opened in 2016. It was part of Huizar’s “Bringing Back Broadway” initiative to revitalize the area with apartment buildings, retail stores, and more pedestrian traffic. Nevertheless, Palmer got the OK to build another skybridge over Olympic Boulevard.
Perhaps Palmer, who is a right-wing libertarian and Republican, balks at the idea of throwing money at Democrats, like Huizar, who dominate Los Angeles politics.
Palmer clearly has a very different attitude when it comes to emptying his wallet for Republicans. In 2016, he was one of Donald Trump's biggest sugar daddies. He contributed $5 million to the pro-Trump super PAC, Rebuilding America Now. He’s already donated $8 million to the America First Action super-PAC dedicated to Trump’s re-election, including a $2 million donation in February. Last September, he hosted a fundraiser for Trump’s re-election at his 6,889 square foot Spanish Colonial mansion on North Arden Drive in Beverly Hills that he purchased for $10.3 million in 2017. With tickets ranging from $1,000 to $100,000, Trump raised about $5 million at Palmer’s event.
As a reward of sorts, in April Trump included Palmer on a committee of mostly wealthy Republican business executives called his “Great Economic Revival Industry Group,” to offer advice on how to re-open the economy in midst of the COVID-19 pandemic. There is no evidence that since that announcement the group has actually met or done anything.
Over the years, Palmer has contributed $17.1 million to candidates for President, U.S. Senate, and U.S. House, the Republican Party, and Republican political action committees, according to my analysis of data on the Center for Responsive Politics’ Open Secrets website. He’s donated to George W. Bush, John McCain, Mitt Romney, Newt Gingrich, and dozens of other Republicans. Between 2015 and 2017 he gave $300,000 to a national security-focused super-PAC founded by John Bolton, George W. Bush’s United Nations ambassador and Donald Trump’s former national security advisor and current nemesis. In March he wrote a check for $1 million to the Senate Leadership Fund run by Majority Leader Mitch McConnell to dole out to Republicans running for the Senate.
Palmer's libertarian proclivities reflect his strong opposition to government regulation of his development projects, as do his donations to the ultra-right-wing Tea Party Express and FreedomWorks political action committees. In 2012, Palmer also donated $100,000 to Americans for Job Security, which the Los Angeles Times described as a "dark-money" group that funneled massive sums into efforts to oppose Proposition 30, a tax on millionaires designed to raise funds for California’s public schools.
All of Palmer’s contributions to candidates for president and Congress have gone to Republicans except the $1,000 he donated to Ben Cardin, a Democrat running for the U.S. Senate from Maryland in 2005, and the $12,900 he gave to Ralph Nader’s independent presidential campaigns in 2004 and 2008. Ralph Nader? This was arguably less a reflection of the Palmers' support for Nader’s left-wing views than it was a calculated bid to help George W. Bush and Arizona Senator John McCain by slicing votes away from Democrats in key swing states. Other big Republican donors did the same thing. Palmer’s wife Anne has thrown in another $221,100 in donations – all to Republicans except the couple’s favorite third party spoiler candidate, Ralph Nader, who got $10,600 of Mrs. Palmer’s pocket change.
In addition to his Beverly Hills mansion, Palmer also owns a $17 million beachfront house in Malibu with, according to the LA Times, "solid bronze doors, teak cabinets and his-and-hers bathrooms." He also has an estate in St. Tropez, a $12.7 million mountaintop mansion in Aspen, Colorado, and a Boeing 727 to jet between them all. In his spare time, he plays polo -- he is an internationally ranked player and sponsors several teams -- and, like many wealthy Angelinos dogged by controversy, he engages in philanthropy. His reputation-burnishing causes include the Los Angeles County Museum of Art (which appointed him to its board of trustees), the Los Angeles Music Center, and his alma mater, the Pepperdine School of Law.
It is amazing that a man worth over $3 billion, who lives a lavish and expensive lifestyle with multiple mansions, and who is willing to spend more than $17 million in campaign contributions to Republican candidates for president and Congress, only donated a thousand dollars to Jose Huizar, who did Palmer’s bidding in securing his Da Vinci skybridge and supporting his other mega projects.
Was there any dishonest graft involved in the relationship between the plutocrat and the politician? We may never know. Palmer may not have had to buy Huizar’s favors at all. As a smart landlord, perhaps he knew that he could rent Huizar for a miserly one thousand bucks.
(Peter Dreier is E.P. Clapp Distinguished Professor of Politics and chair of the Urban & Environmental Policy Department at Occidental College. His books include Place Matters: Metropolitics for the 21st Century, The Next Los Angeles: The Struggle for a Livable City, and The 100 Greatest Americans of the 20th Century: A Social Justice Hall of Fame. Peter is an occasional contributor to CityWatch.)
-cw
