Pataki’s Man in Harlem


A stroll along 125th Street from St. Nicholas Avenue to Lexington Avenue is an odyssey revealing radical changes from a decade ago, when the so-called Gang of Four—former mayor David Dinkins, Congressman Charles Rangel, businessman Percy Sutton, and former New York secretary of state Basil Patterson—were the most powerful politicians in Harlem. A new generation of leaders, led by current secretary of state Randy Daniels, has wrested power from the old guard.

Until recently, no major retailers were willing to risk putting a store in Harlem. Today, with millions in support from the Upper Manhattan Empowerment Zone (UMEZ), the site called Harlem USA has an HMV, a Modell’s, an Old Navy, and a Disney Store as well as a New York Sports Club, a Magic Johnson Theatre, and Hue-Man Books, the largest black-owned bookstore in the state. One block over are Duane Reade, Krispy Kreme, the “new” Apollo Theater, Banco Popular, and Fleet Bank.

The next block finds an H&M, Blockbuster, a new Washington Mutual bank, and as part of the Harlem Center on Lenox Avenue—at one time the proposed site for the Harlem International Trade Center (HITC)—there are a Marshall’s, a CVS drugstore, and a soon-to-open Staples.

The Harlem Center, a project connected to the Abyssinian Development Corporation (ADC), an arm of Reverend Calvin Butts’s Abyssinian Baptist Church, was partly financed by loans from a source less well-known than the empowerment zone called the Metropolitan Economic Revitalization Fund (MERF), a revolving loan created by Daniels. MERF has also given a few million for the city’s largest Pathmark, on Lexington Avenue, another ADC project.

While empowerment zone figures such as Rangel are rightly credited with much of the development in Harlem, Daniels has had a significant role in the area’s commercial boom. As secretary of state, Daniels, 51, has oversight of all business incorporations and various licenses, and works with local officials to implement the state’s building code, the operation of the coastal management program, and the training of firefighters. But Harlem development has been perhaps his real career.

In Harlem, Daniels has been the main emissary for the governor and Empire State Development Corporation (ESDC) chair Charles Gargano, employed to shake up the business-as-usual Democrat control of housing and commercial development. (A longtime Democrat, Daniels used to cite his position as proof of Republican governor Pataki’s inclusiveness, but shortly before Pataki’s re-election, he quietly became a Republican.) Some laud Daniels as a hero whose efforts have helped open the way for new housing and commercial investment in Harlem. Others think that he is simply a Pataki hatchet man, releasing unbridled privatization and gentrification on Harlem.

After two decades as a journalist and press adviser for politicians ranging from Andrew Young and Mark Green to Andrew Stein and Bahamas prime minister Sir Lynden Pindling, Daniels was selected by Dinkins as a deputy mayor in 1992. In the late 1980s he left Stein’s staff because, as he told Newsday in 2001, he thought Stein was “afraid intellectually” to challenge then mayor Ed Koch. With the Clarence Thomas-Anita Hill controversy still fouling the airwaves soon after Dinkins hired Daniels, someone from Stein’s office apparently felt it was time to make Daniels pay for his desertion.

Barbara Wood, by then a reporter with NY1, had worked with Daniels in Stein’s administration, and accused Daniels of sexual harassment during that time. Within one week of the charge—later proved to be false—Daniels resigned the deputy mayor job. “Randy is a very gifted person we thought could be enormously helpful to our administration,” the former mayor told the Voice. “When the accusations came from Andy Stein’s office, he couldn’t very well be helpful to our administration when we were bringing him on to try to improve our image.”

Daniels told the Voice, “I understood the mayor’s political needs. And I accommodated them. . . . So that’s not the issue for me. It’s the way it happened. And I think a lot of people regret a lot of things they did.”

Some Harlem observers claim that the lack of support for Daniels from Harlem Democrats began a vendetta played out over years. Whether or not his work for Pataki in Harlem is based on payback, some of it was and is certainly personal. He’s lived there for 24 years with his wife and two daughters. His pastor and fellow Pataki ally, Butts, said that he is a “trusted friend, neighbor, and a family man. I consider him someone who is interested in the community we live in—Harlem.”

George Goodwill, chairman of Community Board 9 in Harlem, says Daniels and other Hamilton Heights folk formed a neighborhood federation in 1983 to address numerous local issues. Daniels is now a SUNY board vice-chair and in 1999, Butts became president of SUNY Old Westbury, with Daniels’s strong support. But over the years, Daniels has also bumped heads with the old-school Harlem leadership.

In 1998, Daniels and the Empire State Development Corporation, the Apollo’s lessor, were responsible for ending the theater’s longtime management deal between Percy Sutton’s Inner City Theater Group and the Apollo Theater Foundation. Rangel was forced to step down as the Apollo’s board chair and recently AOL Time-Warner took over the theater’s management. The final straw for Sutton came last summer when the new board chose another group to produce and distribute the popular Showtime at the Apollo. “I’ve always respected Percy Sutton,” said Daniels. “I had a public obligation to make sure the situation at the Apollo was rectified. It was, and the fact that they agreed to that was an indication that I was correct. It’s never personal with me.”

“People have to be mature and sophisticated enough to understand the difference between a political fight and a personal vendetta,” he said. “And the farther people get away from the principals, the less informed they are about what has happened. If they need me, they call me.”

The transformation of Harlem really began with the formation of the Harlem Urban Development Corporation (HUDC) in 1971 as a subsidiary of the Urban Development Corporation (UDC), which then governor Nelson Rockefeller devised in memory of Martin Luther King Jr. The goal was to spur economic development in the state’s urban areas in the wake of the late-’60s riots, and the abandonment of cities by the federal government and the private sector during the Nixon years. With over $1 billion, UDC could establish bonds, condemn buildings, override zoning, and change building codes. HUDC’s charge, said former president Donald Cogsville, was to “work with other community-based institutions to come up with an overall re-development plan, and implement that plan.”

According to agency records provided to the Voice, over a 24-year period HUDC transformed approximately $89 million in state funds into an estimated $500 million worth of housing and commercial development by providing seed money. Yet in a smear campaign spurred by Pataki administration leaks to the Daily News two years after HUDC’s 1995 demise, the agency was burned in effigy. Accounting irregularities, political cronyism, gross incompetence, and worst of all, having nothing to show for the millions of dollars it received, were a few of the charges—and they persist.

In 1995, the Pataki administration, as black Republican lawyer and politician Joseph Holland put it, “did not eliminate HUDC; they revamped it to the Harlem Community Development Corporation (HCDC), bringing in new people, who brought a new direction.” No matter the spin, according to inside sources, even though HCDC has had several executive directors in its eight-year existence, Daniels in effect ran the group from 1995 to 1999, while serving as ESDC’s deputy commissioner.

Daniels gives Pataki credit for the new Harlem, saying economic activity “really took off when the governor said, ‘I’m going to reform economic development by closing down the ineffective HUDC, and funding the Empowerment Zone, holding it accountable, and telling ESDC that we should do on 125th Street what we have done for 42nd Street.’ ”

Diane Philpotts, HCDC’s current director, returned Voice calls, but was unable to give an interview without an OK from the ESDC, and the state agency never granted that permission. This we-can’t-trust-you-Negroes thinking is, in part, why HUDC had sought and obtained fiscal freedom in 1982 from its parent agency, UDC. In 1995, when HUDC was “revamped,” UDC became the Empire State Development Corporation, and overseer of the agency. “They [HCDC] can’t make any independent decisions,” said Jim Capel, Rangel’s chief of staff. “They must go through downtown for anything they want to do. That was one of the issues with HUDC: Let the people in the community decide what they want to do with the money.” He also said that HUDC’s problems began when it became independent.

HUDC, on average, received approximately $4 million per year. According to Cogsville, over its 24-year tenure, HUDC hired qualified minority architects, general contractors, auditors, insurance firms, and others in 65 to 90 percent of cases. The new agency’s budget was put at half that of HUDC’s at inception in 1995, and, according to state records, has remained between $2 million and $2.5 million.

When asked about HUDC, Daniels mentioned a 1989 published report by former city auditor general Karen Burstein. The report concerned HUDC’s management of a city-owned parking garage on 125th Street and Lenox Avenue, below the site for the then planned Harlem International Trade Center. Burstein found that gross operating revenues were understated, that basic rents were due, and that operating expenses were overstated. Few people interviewed for this article, even those with good things to say about HUDC, would defend its management of the garage. “Most of the money went for payroll and overhead. It didn’t go into development,” charged Daniels. “Nobody is saying that they stole the money. It was mismanaged. When 80 percent of your money goes into administration and overhead, and only 20 percent goes into projects—it’s supposed to be the reverse. It was a jobs program, not an economic development program, and we changed that.”

In its last years, HUDC had 50-60 people on staff, many of whom were professionals with long tenure. If staff members averaged $40,000 to $60,000 per year in 1995, salaries would total $2 million to $3 million, an amount Cogsville confirms. Even if one argues that HUDC was overstaffed, it is important to acknowledge that HUDC did lay the foundation for today’s wildfire of development in Harlem. Elois Banks, a former district leader with Councilman Fred Samuels and current head of the Strivers Row Block Association, said, “HUDC started the renaissance in Harlem by re-modeling buildings and bringing in co-ops.”

HUDC was responsible for the rehab or building of thousands of housing units for moderate- and middle-income families, spruce-up work on thousands of brownstones, and organizing the local groups that began the Bradhurst development project in a blighted area between 144th and 155th streets. The agency made a neighborhood-by-neighborhood plan in 1979, and helped design the Upper Manhattan Empowerment Zone. Two other HUDC projects, Harlem on the Hudson and the Harlem International Trade Center, did not happen, but Pataki and Mayor Bloomberg issued a plan for the West Harlem Piers just before the gubernatorial election.

Congressman Rangel faults the Pataki administration for the trade center failure, which a Pataki-stacked HCDC board voted to dissolve in 1996. “They wiped out HUDC as soon as they got in office, and they sent Reverend Butts over to be on the board of HCDC to abolish the Harlem International Trade Center,” said Rangel. The trade center had been funded since 1988, but the day before the vote, Pataki appointed Butts to HCDC’s board. Perhaps this move was simply for insurance, since 13 other Pataki board appointees (out of 25) voted to abolish the $83 million project. According to the New York Voice, it was the right reverend who introduced the resolution for dissolution. Today the Harlem Center sits on the site. Butts’s ADC and Forest City Ratner, an Ohio firm with projects across the city, developed the retail venue.

Similar infighting attended the birth of the Upper Manhattan Empowerment Zone. “They decided that they wanted to abolish HUDC before wiping out the trade center,” said Rangel. “Pataki wanted to put their people in there, and did. To save the empowerment zone, we had to bring in [HUD Secretary Henry] Cisneros to threaten to take the whole thing away if they didn’t agree to what Dinkins and [former governor Mario] Cuomo signed.” That’s an important point, as the Pataki administration often takes credit for the state’s role in the EZ. “That was there before they came to office. They couldn’t have done anything but allow the federal money to go away, and they damn near did that,” said Rangel.

At first Pataki wanted to allocate $1 million to the empowerment zone. This figure was later upped to $7 million. Cuomo had allocated $10 million per year from the state, over 10 years. But before deciding to provide any support to the overall $300 million project, Pataki called Butts. “When the empowerment zone was being set up, the governor called me and asked me if I thought the state should really participate. I never will forget that,” Butts said. “I said that I appreciated him asking for my advice, and to move forward. I don’t think you can discount the work of Charlie Rangel and others, but I think that without the state’s participation, a lot of what you see now would not be happening.” This is true in that the EZ is a feds-state-city funding agreement in which the state has veto power. Yet, according to Rangel, it took several years to draw the funds allocated in 1994 because of two men, former mayor Giuliani’s rep, Rudy Washington, and Pataki’s man, Daniels.

In a dispute that highlights the differences of view between Democrats and Republicans, Washington and Daniels insisted the EZ funds be used for economic development as opposed to social programs. They got their wish, and to many folks uptown, Harlem went up for grabs to the highest bidders.

During Daniels’s influential period in HCDC’s first four years, he was a key player in the creation of the East River Plaza at the old Washburn Wire factory site. According to Manhattan Borough President C. Virginia Fields, who served on the boards of both HUDC and HCDC, actual development took priority over planning at HCDC, with a few exceptions. “HCDC has been involved in development itself,” she said. “I think that’s a detriment to the community. This was the main section of Manhattan that had not been built up. There was a lot of vacant land, and city-owned buildings that had to be torn down. That needed to have been guided. Now it’s taken on a life of its own. That was a missed opportunity.”

One opportunity not missed by the Pataki administration is the use of the $65 million in escrow established for the Harlem International Trade Center.

“The dollar amount allocated for that site was not invested in that site,” said Fields. “Monies were taken away and used for other funds that have nothing to do with that community.” This is not totally accurate. Of the funds for the trade center, the Port Authority of New York and New Jersey put in $50 million. Reverend William James, HUDC chair for 17 years, and now a board member at the Apollo and UMEZ, says that through investment HITC increased the fund to $68 million, with $3 million used for staff work. When the project was aborted, the Pataki administration moved at least $20 million to the EZ, and $25 million to a fund created by Randy Daniels—MERF. At press time, no state agency has been able to account for the remaining $20 million.

A 2001 Pataki administration press release on the Harlem Center described MERF as “a revolving loan fund created to encourage private investment and create jobs in distressed areas with financing at or below market rate.” In addition to $5 million loaned to the Harlem Center developers, the release claimed Daniels’s fund was involved in “11 projects . . . in Upper Manhattan representing $304.7 million private sector investment and 2429 new full-time jobs with $32.9 million approved from MERF.” So some of the funds rerouted from HITC have been invested in Harlem. MERF has also provided loans in other urban areas across the state.

No matter what one thinks of his political actions in Harlem on Pataki’s behalf, Daniels has shown a definite dedication to urban revitalization. This fact, coupled with his political pragmatism and charismatic speaking ability, may portend a run for high-level state or federal office. When asked last fall about the chance of switching parties, he said, “I want to do it in a way that sends a signal to the African American community. You don’t do it for expedience, you don’t do it to get an appointment or to get elected. You do it on the basis of principles.”