The Washington Beacon is reporting that House Minority Leader Nancy Pelosi steered over a billion dollars toward projects of a hedge fund owned by billionaire Tom Steyer. At the same time, Steyer has been a constant donor to the political efforts of Pelosi.
Ten years ago, the hedge fund Steyer founded and led until late 2012, Farallon Capital Management, bought large plots of real estate in Mission Bay, an up-and-coming neighborhood in San Francisco. Since then Mission Bay has blossomed, while Farallon has sold most of its property there. Steyer has used his fortune to donate to Democratic senators and governors and has promised not only to raise $50 million for global warming causes, but also to convince other money men to donate another $50 million. The Beacon reports:
By last year, Pelosi had steered more than a billion dollars in federal financing to San Francisco’s Third Street light rail project, which provided Mission Bay with previously unavailable public transit access.
The bulk of that financing came in 2012, months before Steyer gave up day-to-day control at Farallon (he remains invested in Farallon funds). Pelosi announced that she had helped secure $967 million to expand San Francisco’s Central Subway system.
“With nearly $130 million from the Recovery Act and $18 million from across the federal government, the project will use public investments to spur and stimulate the private sector; adding jobs and creating a better environment for business,” Pelosi said in a statement announcing the funding.
Her support was more than just financial. Pelosi went out of her way to expedite federal backing for the project in the face of bureaucratic hurdles designed to ensure responsible stewardship of taxpayer funds.
Obviously this brought additional value to the two parcels of Mission Bay property Farallon still owns. But in 2005 the city’s Municipal Transportation Agency’s analysis of the Third Street light rail expansion found that the project would be wasteful and inefficient.
“As proposed, this project … promises to combine high capital costs with higher operating costs and … does not, apparently, effectively meet the market needs in the corridor it is intended to serve,” found Thomas Matoff, the former director of transit planning for the city who led the study.
That finding posed a problem for the project, which was required to meet Federal Transit Authority standards for cost-effectiveness in order to secure federal subsidies.
Pelosi got the project an exemption from those standards in a 2005 transportation funding bill.
Despite projected inefficiencies, the project was expected to stimulate real estate prices in the surrounding area, even if it did so through de facto taxpayer subsidies.
By the time Pelosi gathered and distributed the pork for the project, Mission Bay real estate values were soaring.
Steyer ended up donating more than $100,000 to Democrats during the 2012 election cycle.