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This article appeared in the Philadelphia Inquirer on June 1, 1998

Office leases granted to Ridge contributor

The rent tops $10 million for two state agencies.
Officials say contributions made no difference.

By Ken Dilanian
INQUIRER STAFF WRITER

HARRISBURG - The Ridge administration has made a pair of real-estate decisions that will benefit one of the governor's biggest political contributors.

Administration officials say campaign money played no role in their plans to move two state agencies and 300 of their workers into a Harrisburg office complex co-owned by the family of Alex Grass, former chairman of Rite Aid Corp. Grass has given Ridge's campaign fund $90,000 and has helped raise tens of thousands more.

The office complex is to house the state Board of Probation and Parole's headquarters, and the state Human Relations Commission's regional office.

The leases likely will cost Pennsylvania taxpayers more than $10 million over the next decade.

Administration officials say they examined numerous competing proposals for the coveted 10-year leases -- the state is not required to take the lowest bid on rentals -- and decided the Grass building, though not the cheapest, was the best.

Taxpayers will have to take the administration's word on that: Ridge aides declined to release the losing proposals and their written evaluation of those bids, saying Pennsylvania's Right to Know law does not require it.

Grass rejected the notion that his political ties helped to win the leases.

"I assume that [the Ridge administration] will first of all, do what is best for the state," Grass said. "I think they're getting a fair deal."

The rent is in line with prevailing local rates, experts said. One losing bidder, Eric Hudson, whose company offered the state three different buildings, said Grass' political ties "couldn't have hurt him, but I don't think politics drove their decision. ... They took the time to consider other sites."

At the same time, the new lease awards, like numerous other Ridge administration decisions, result in the state doing business with one of the major funders of the governor's campaign machine -- a machine that has raised about $24 million since Ridge first launched his candidacy in 1993. He is seeking reelection this fall.

A similar pattern of giving and getting existed under previous governors. But Ridges fund-raising, the most prodigious in state history, has drawn particular interest in an era when campaign money is a subject of national debate. With no limits on individual giving in Pennsylvania, a small group of wealthy donors has been able to pour large sums into the governor's election efforts.

When asked last year to comment about his campaign's unparalleled money chase, Ridge said the numbers reflected the popularity of his programs. He has said repeatedly that there are no paybacks for donors and that "government isn't for sale."

State Auditor General Robert Casey, a Democrat, said last week that in light of who won the latest office leases, it was "ridiculous" for the administration to not release supporting documents.

"Whenever there is a large contract awarded to someone who has been a significant campaign supporter, it raises questions," Casey said. "At a minimum, you have to provide as much detail as possible to justify that decision."

The leases are for 70,000 square feet in the five-story Riverfront Office Center. Grass and another investor, now deceased, built the complex on the Susquehanna River in 1995, after the two won a $31 million office lease with the Pennsylvania Department of Transportation.

The building is now for sale. Because commercial office buildings' value is based on projected rental revenues, experts say the two new government leases -- each with two five-year renewal options -- will add millions of dollars to any sale price.

Another top Ridge backer, longtime lobbyist William A.K. Titelman, is part of the buildings ownership as well. Titelman, who became Rite Aid executive vice president earlier this year, is listed as a vice president of a separate company that co-owns the building with the Grass family. Titelman said he was an unpaid adviser and did not lobby for the new leases. He did, however, help negotiate the PennDot lease in 1995 -- earning about $10,000 in legal fees, he said.

Titelman and his wife. Maria Keating Titelman -- who is Ridge's cabinet liaison -- have made $111,425 in individual and political-action committee contributions to the Republican, governor's war chest, campaign records show.

Titelman, who was a freelance lawyer-lobbyist in Harrisburg before joining Rite Aid, said he was tired of answering questions about whether his campaign fund-raising was connected to state contracts, leases and other items he has helped secure for clients.

"You know what I say? Screw you guys." he said, referring to newspaper reporters. "You guys are great at casting innuendoes."

Titelman added: if the taxpayers got a good building and a terrific rent, what's wrong with that? It seems to me that maybe everybody's a winner here."

Under the parole board's 10-year-lease, taxpayers will pay the building's owners $8.5 million. The Human Relations Commission's lease is still being negotiated. so officials would not discuss details.

Officials at both agencies said they decided to move because they outgrew their prior homes. They said political favoritism played no role in the lease awards.

There was no pressure from Ridge. It was done by our folks," said Laura Treaster. a spokeswoman for the Human Relations Commission, an antidiscrimination agency that is part of the Governor's Office.

"Out of all the offers we got, this was the best."

The new leases are a stroke of serendipity for the building's owners. Although the riverfront center has worked out well for PennDot, it has not attracted private tenants, and one floor is currently vacant.

In February. a partner who had been managing the facility died. As a result, Titelman and others said, the owners decided to sell, and are currently negotiating an expected sale to the Dauphin County General Authority, a quasi-public agency.

Grass, who is no longer Rite Aid's chairman but remains a major stockholder, and Titelman, who joined the company this year, are members of the Ridge campaign fund's inner circle, a group of $50,000-plus donors known as the Governor's Club Board of Directors,

The Inquirer reported last year that more than half the 228 members of the larger group known simply as the Governor's Club (minimum pledge: $25,000) had received something tangible from the state: a grant, a loan, a lease, legal work or an unpaid seat on a state board.

Titelman and Grass have been on the winning end of several state decisions in recent years.

Earlier this year, Titelman represented a Rite Aid subsidiary, Eagle Managed Care, in its successful bid for a $13 million contract to provide prescription drug benefits to nearly 300,000 state employees. Eagle was selected against the advice of an independent consultant.

Ridge officials said politics played no role in that decision, and that labor representatives on the board that awarded the contract played a key role in choosing Rite Aid.

Grass' opportunity to lease office space to the state arose in June 1994, when the Department of Transportation building, next to the capitol, burned down.

In April 1995, the Titelmans and Glass held a party at the Titelmans' Harrisburg home that raised $230,000 for Ridge, the governor's campaign has said. The state solicited PennDot lease proposals in May and awarded the 10-year, $31 million lease to Grass and his partner in October 1995.

Ridge officials said the PennDot leasing decision, too, was untainted by politics. Then, as now, officials declined to disclose the competing proposals or written evaluation.

©1998 Philadelphia Newspapers Inc.

Our thanks to Philadelphia Online for their permission to post this article
www.phillynews.com


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