Thursday, September 9, 1999

Questionable deal
on Clintons’ house

Bullet The issue: Terry McAuliffe put up $1.35 million to help President and Mrs. Clinton buy a house in New York, where Mrs. Clinton plans to run for a Senate seat.

Bullet Our view: By accepting such favors the Clintons put themselves in a compromising position.

HILLARY Clinton, an all-but-official candidate for a Senate seat from New York, has selected a house to live in and -- more important -- establish residency in the state. Her husband, the president, may have had something to say about the choice as well -- a $1.7 million home in Chappaqua, in suburban, affluent Westchester County. But the purchase is all about Mrs. Clinton's candidacy.

The decision was hardly a surprise, in view of the reports that the Clintons were house-hunting. What is noteworthy -- and disturbing -- is how the purchase was arranged.

Terry McAuliffe, a wealthy businessman and fund-raiser for the Clintons, put up $1.35 million of his own money to help them buy the property. McAuliffe will put the money in a bank account at Bankers Trust in New York to provide assurance that the bank's mortgage loan to the Clintons will be secure. The Clintons owe $5.5 million in legal bills.

Although the arrangement certainly was made to help the Clintons, the White House maintains that the money did not constitute a gift under government ethics rules. Regardless of the legal quibbling, it was clearly a favor, and of a munificent size.

McAuliffe says he raises money for the president because he likes him and expects nothing in return. Such selflessness, if sincere, is admirable -- and rare. That rarity is the reason for the legal restrictions on campaign contributions.

Fred Wertheimer, president of Democracy 21, an organization dedicated to overhauling the campaign finance system and former head of Common Cause, said of Clinton, "He's the president of the United States and someone is doing a million-dollar favor for him to help him with his personal financial needs. That creates an appearance problem, a potential conflict problem, and it's a dangerous kind of act."

Ellen Miller, executive director of Public Campaign, another group seeking campaign finance reform, said, "Probably no one has more and longer tentacles into the world of money and politics than Terry McAuliffe. It's an unhealthy relationship for anyone to have to the president and first lady. In a way, he has incredible power over them and incredible power through them as well."

The Clintons are not the only presidential couple to accept favors from rich friends. But they have a long history of questionable financial dealings, most notoriously the Whitewater scandal, in which their partners were convicted of fraud, and the illegal acceptance of contributions from foreigners in the president's 1996 re-election campaign.

They have also frequently accepted invitations to spend their vacations at the homes of rich friends. These invitations are not considered campaign contributions, but they are certainly gifts, even if legal ones. McAuliffe's act is in this category, although worth much more than most gifts.

The president cannot seek re-election again and presumably will never again seek public office. This means the voters will never have an opportunity to register to him any objection they may have to the latest bit of generosity by Terry McAuliffe.

But Mrs. Clinton almost certainly will be on the ballot in New York next year. McAuliffe's million-dollar favor may be on some voters' minds when they go to the polls. It should be.

Kewalo development

Bullet The issue: D.G. "Andy" Anderson says he is abandoning his development project on state land adjoining Kewalo Basin.

Bullet Our view: Finding an income-producing project for the site is a challenge for the Hawaii Community Development Authority.

People who objected to a Ferris wheel near Kewalo Basin are shedding no tears at word that D.G. "Andy" Anderson is abandoning his development project. Less than five weeks after winning state approval for his $138 million retail-restaurant-family entertainment project on state land adjoining the basin, Anderson says the project is dead.

The problem, says the developer, restaurateur, former state senator and city managing director, is that the Hawaii Community Development Authority, which selected Anderson's project on Aug. 4, has since imposed requirements he finds unacceptable.

However, Jan Yokota, the authority's executive director, says many of the requirements were contained in the original request for proposals but Anderson did not fully satisfy them.

The Ferris wheel proved to be the most controversial part of Anderson's project, which also was to include a carousel and a miniature golf course, surrounded by shops and restaurants.

It isn't clear whether the project can be salvaged. Michael Kawaharada, a member of the authority board, said Anderson has 60 days to meet the requirements. If he fails, the authority can seek a new developer.

Anderson says Walter Kupau, the Carpenters Union leader who sat on the authority board until his recent death, was instrumental in winning the board's OK. But since Kupau's death, he says, other interests have been trying to kill the project.

However, the authority staff had doubts about the project's financial feasibility all along and recommended against approval. Lack of a market study was a particular concern. Anderson should be held to all reasonable requirements, which certainly would include a market study.

Finding an income-producing development for the state land makai of Ala Moana Boulevard is a challenge, especially in view of its proximity to the Aloha Tower Marketplace, Restaurant Row, the Ward Estate properties and Ala Moana Center.

Despite the objections to the Ferris wheel, Anderson's concept of a family entertainment center seemed to have promise because it would offer a different sort of attraction. Now it looks as though the development authority may have go back to the drawing board.

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John M. Flanagan, Editor & Publisher

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Diane Yukihiro Chang, Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner, Assistant Managing Editors

A.A. Smyser, Contributing Editor

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