The Mayor Daley - Barack Obama - Pension Connection?

The Chicago Sun-Times reports on the ethically challenged city of Chicago:

A nephew of Mayor Daley stands to make millions of dollars from city-connected pension funds.

In winning business from pension funds for city workers, cops, teachers and CTA employees, Robert G. Vanecko said he never told anyone he's Daley's nephew.

But officials with those funds knew who he was, interviews and documents show.

Vanecko and his partner, Allison S. Davis, a top mayoral ally, also asked pension funds outside Chicago to invest with DV Urban Realty Partners, a company they formed two years ago. None did.

It's a risky venture, Vanecko and Davis warned potential investors.

Still, the city-related pensions opened their checkbooks, giving DV Urban $68 million. They did so even as they face growing financial worries, according to a recent state study.

Vanecko and Davis plan to use the pension money in a real estate venture to redevelop some of Chicago's most-neglected neighborhoods. Among those could be the area around Washington Park, which is central to Daley's plans for the 2016 Olympics.

The pension funds represent 180,000 retired and current employees. So far, they've lost money on the deal -- $1.5 million since they invested in April 2006. That's to be expected, pension officials say, because real estate deals typically make money only when the property is sold.

The biggest reason for those losses is the $1 million in management fees Davis and Vanecko have gotten from the pension funds. They're guaranteed at least $3 million in management fees and could make as much as $8.4 million before the pension deal ends on Dec. 31, 2014.

Besides those fees, Davis and Vanecko also will share in any profits from the real estate deals. And they can earn a 3 percent fee on property they develop. And their management company is now running the only building they have purchased so far, a high-rise apartment building in the South Loop.

Davis and Vanecko declined to be interviewed by the Sun-Times, but offered this statement:

"We are confident that DV Urban will produce good returns for its investors over its long-term investment horizon. Our investors have partnered with us because of our track record and our focus on urban revitalization in Chicago.''

The Chicago pension funds defended their investments, saying they invested a small portion of their assets with a minority-owned company that aims to build up struggling city neighborhoods. Davis, who is African-American, owns 51 percent of DV Urban. Vanecko owns 49 percent.

Vanecko said he never told potential investors he's Daley's nephew. "As a matter of practice, I don't disclose this relationship,'' Vanecko wrote in an e-mail to the Sun-Times. "He is my uncle. I don't trade on his name.''

The mayor had nothing to do with his nephew getting city pension business, Daley spokeswoman Jacquelyn Heard said. "He doesn't do things like that. It's just not his way."

One pension official worried that investing with Daley's nephew could draw criticism. "This relationship may prove troubling in today's climate where the press is looking to attack any politician, but especially Mayor Daley,'' Kevin Huber, executive director of the Chicago Teachers' Pension Fund, wrote in a Sept. 26, 2005, e-mail to his board members.
The first grandchild
Bob Vanecko is the first of the late Mayor Richard J. Daley's 22 grandchildren. He's the son of Mary Carol Daley and Dr. Robert M. Vanecko, a former physician for a city pension fund that has invested with his son. Vanecko was raised in Chicago's tony Sauganash neighborhood and lives there with his wife and children.

Vanecko, 42, has a bachelor's degree in economics from Yale University and a law degree from Northwestern University. He began his career in the early 1990s at Mayer Brown, a Loop law firm where his uncle, William M. Daley, was a senior partner. Vanecko joined Everen Securities in 1998 and became a vice president in real estate banking.

In July 2003, Vanecko joined Davis' small real estate development company, the Davis Group, according to a corporate biography they gave city planners. Davis is an attorney-turned-developer who builds low-income housing with tax subsidies from the city, state and federal governments.

Davis, 68, has a long relationship with the Daleys. The mayor appointed Davis to the Chicago Plan Commission in 1991 while Davis was running a small law firm. It's the law firm where Sen. Barack Obama worked.

Davis gave up his law practice in 1996 to become a developer. He continued to serve on the Plan Commission until last January, while collecting millions in city subsidies for his developments. Among his real estate partners was Tony Rezko, the businessman now facing federal charges that he demanded kickbacks from companies seeking state business under Gov. Blagojevich.

Davis often turns to the law firm of Daley & George, run by the mayor's brother, Michael Daley, to help his projects win approval from City Hall.

Despite his clout, Davis ran into trouble earlier this year, when city inspectors accused him of failing to clean up sewage in his New Evergreen/Sedgwick Apartments near Cabrini Green. Davis owns the building. His son runs it.

Barack Obama is really proving he's every inch an old style Chicago politician.Here's more on Saint Obama from the Boston Globe.