State contractors hire Madigan's law firm - Illinois House speaker: no laws broken, no conflict of interest

State contractors hire Madigan's law firm - Illinois House speaker: no laws broken, no conflict of interest
BY CHRIS FUSCO and TIM NOVAK
Copyright by The Chicago Sun-Times
August 31, 2009
http://www.suntimes.com/news/watchdogs/1743915,CST-NWS-watchdogs31.article


Over the past nine years, Illinois House Speaker Michael Madigan's law firm has made $171,000 by seeking property tax breaks for developers who get state financing to build low-income housing, records show.

His firm's payments came through the Illinois Housing Development Authority, the state agency that financed those projects.

HOW'S THIS FOR BIPARTISANSHIP?

The law firm of House Speaker Michael Madigan, who is also chairman of the Illinois Democratic Party, won a property tax break for Andrew McKenna Sr., whose son Andy McKenna was chairman of the Illinois Republican Party at the time.

Two years ago, the elder McKenna hired the Madigan & Getzendanner law firm to fight a 70 percent increase in the assessed value on his $4 million mansion in Winnetka.

Madigan's firm got Cook County Assessor James Houlihan to scale back the increase to 60 percent.

That saved McKenna $4,898 in property taxes.

Records also show the firm of Madigan & Getzendanner helped another state contractor save about $300,000 in property taxes on the Atrium Mall and food court it operates inside the James R. Thompson Center, the state's main office building in Chicago.

The mall operator is now suing the state over that deal -- a case that involved Madigan's daughter, Illinois Attorney General Lisa Madigan.

The speaker has never disclosed any of his firm's clients on ethics statements Illinois legislators must file every year. Instead, the South Side lawmaker and head of the state's Democratic Party discloses only that he provides "legal services for various individuals, partnerships and corporations."

Madigan -- the longest-serving House speaker in Illinois -- "complies with the law and often goes beyond that," says his spokesman, Steve Brown.

Madigan, Brown adds, never has represented a law client on state government matters. Nor, he says, has Madigan argued on their behalf in Springfield, only representing clients on property tax cases that involve county governments.

"The only thing they handle is property tax stuff, which is at the local level," says Brown. "There's no conflict because the firm does no work before state agencies."

The Chicago Sun-Times identified hundreds of Madigan's law firm's clients by reviewing property tax cases the firm has handled in Cook County.

Among its clients: TPG Realty Co.'s State Building Venture, which has been managing the 64,000-square-foot mall on the lower floors of the Thompson Center since 1984.

The mall has been plagued by vacancies. Madigan & Getzendanner -- which has represented TPG for at least 10 years -- has argued the company should pay less in taxes because of those vacancies.

In 2003, records show, the law firm was successful, persuading Cook County Assessor James Houlihan to lower TPG's assessment. The change saved the company about $300,000 in taxes over the next three years.

There are no public records that show how much TPG paid Madigan's firm.

In 2006, TPG -- using a different law firm -- sued the state, arguing that the Department of Central Management Services was trying to renege on a 1983 promise to let the company manage the Thompson Center mall for as long as 60 years under a 15-year lease with nine five-year renewal options. State officials argued those renewals weren't automatic and that the deal could be canceled.

As Illinois attorney general, Madigan's daughter, Lisa Madigan, had to defend the state. But she later dropped out of the case because then-Gov. Rod Blagojevich's administration wanted an outside law firm to handle the case.

TPG has prevailed in court so far, but the state is now trying to appeal the case to the Illinois Supreme Court.

Besides its involvement with the Thompson Center mall, the speaker's law firm has sought property tax reductions for six low-income housing projects in Chicago managed by four different developers, according to Illinois Housing Development Authority records. Madigan & Getzendanner billed the developers for a total of $171,000 since 2000 -- invoices that the developers then submitted to IHDA to approve for payment.

Why is IHDA involved in paying Madigan's firm's bills? Mary R. Kenney, the agency's general counsel, explained it this way:

"The authority holds a tax-and-insurance escrow for all developments in which the authority acts as the primary lender. This escrow is actually the owner's funds," Kenney said. "Expenses related to a tax appeal are also eligible expenses that may be charged against this account."

So even though Madigan's law firm isn't being paid with state money, it's still getting payments through a state agency whose budget Madigan helps control.

Brown says that's not a problem because the law firm's payments have "nothing to do with the developers getting financing from IHDA."

MADIGAN CLIENTS
Illinois House Speaker Michael Madigan also heads a law firm -- Madigan & Getzendanner -- that represents clients seeking cuts in their property tax assessments.

Among clients the firm has represented:

* John Hancock Center
* Hyatt Corp.
* Walgreens Corp.
* CVS pharmacy
* New Frontier Management, owned by indicted Republican Party power-broker William F. Cellini
* Harlem Irving Companies, owned by Michael Marchese, a friend of Mayor Daley's and shopping-center magnate
* The Columbian, a city-subsidized condo building built by developer Allison S. Davis
* East Lake Management Corp.,owned by developer Elzie Higginbottom
* State Rep. Monique Davis
* Ali D. Ata, a former state official who has pleaded guilty to tax charges