{"id":51,"date":"2021-03-09T17:20:11","date_gmt":"2021-03-09T17:20:11","guid":{"rendered":"http:\/\/dcfeedback.com\/whj\/?p=51"},"modified":"2021-03-09T17:40:32","modified_gmt":"2021-03-09T17:40:32","slug":"part-2-up-fluming-the-detroit-hedge-fund-that-eat-adams-morgan","status":"publish","type":"post","link":"http:\/\/dcfeedback.com\/whj\/2021\/03\/09\/part-2-up-fluming-the-detroit-hedge-fund-that-eat-adams-morgan\/","title":{"rendered":"Part 2: up-FLUMing & The Detroit Hedge Fund that Eat Adams Morgan"},"content":{"rendered":"

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In June of 2010 Harvard Drug Group located just outside of Detroit Michigan has its license immediately suspended for distributing over 13 million dosage units of oxycodone products to Florida pharmacies between March 2008-2010<\/a>.   The DEA contends Harvard’s system should have flagged that it was supplying Florida opioid mills in Florida.   In 2007 the  CEO of Harvard Drug Group Rand Friedman brought in private equity partner H.I.G Capital<\/a> to fund the growth and expansion<\/a> of Harvard Groups’ generic drug business in time to benefit from the opioid explosion.  <\/p>\n

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In April of 2010 just over two months prior to Harvard Drug’s license suspension for its connections to Florida opioid mills, Friedman and H.I.G Capital orchestrates the sale of Harvard Drug to Court Square Capital Partners<\/a>, a private equity firm based in New York, NY..   Harvard Drugs’ sales having doubled to over $50 million (EBITDA) since the 2007 acquisition and during the opioid mill investigation period.  Shortly after the sale, Friedman Capital also led by Randy Friedman in partnership with Foxhall Partners applies for $27M in Tax Increment Financing (TIF) from D.C. to support building a high end luxury hotel Adams Morgan. <\/p>\n

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In July 2010 at the urging of the Ward 1 Council Member Jim Graham, the TIF request would be dropped and replaced by a $46M property tax abatement.  It is at this point that a series of hedge funds likely fueled by opioid profits and interconnected by their ties to Detroit begin to set their sites on eating Adams Morgan.  While the $46M in local tax dollars is great bait for a hedge fund, this is not enough.  Hedge funds need their targets to first be up-FLUMed and under go a values change.  <\/p>\n

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By December of 2010, Friedman Capital and its partner out of the Detroit area Beztak Properties<\/a> had conned the DC government into investing $46M in public dollars into their Edition brand Hotel by Marriott.   To urge the public investment along, Friedman argues that the city most hurry and approve the tax abatement else Edition and Marriott will walk and the investment will be lost.   However, soon after securing the public investment Friedman with Matt Wexler through their Foxhall partnership begins to shop the deal around and drops Marriott in favor of The Line brand by Sydell owned at the time by Andrew Zobler<\/a> and Billionaire Ron Burkle<\/a>.  The Foxhall deal with Sydell would close sometime in the Summer of 2012. As I mentioned in Part 1, Foxhall is backed by Charles E Davidson’s Wexford Capital<\/a> hedge fund.  Beztak would as well leave the Edition Hotel deal, but partner with Foxhall to develop a luxury multi-family project across the street from The Line<\/a>.<\/p>\n

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So, what does all of this mean when our city effectively transforms a neighborhood such as Adam Morgan into Monopoly Game Board<\/a> via instruments of public policy?  In effect the city invested $27M via a $46M tax abatement into an unregulated private equity fund, Friedman Capital.  This problematic on many levels as cities have prohibitions and limitations for investing public dollar in such unregulated funds.  Especially given the interlocking nature of these funds with no visibility.  <\/p>\n

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Compounding this public policy crisis, Friedman Capital interlocking partner Matt Wexler as been working to leverage control of the Adams Morgan BID<\/a> a quasi government instrument which is being given greater control over streets and public spaces under Vision Zero transportation policies and the The Adams Morgan Commercial Development Coalition<\/a>.  This similar to controlling the railroads, public utilities even community chest and get out of jail free cards in the Monopoly Game.  Have these private equity funds so consumed Adams Morgan, that we can no long distinguish fund interests from public interests?<\/p>\n

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We received answer to the private equity interests vs. public interests this past November, when our city Attorney General (AG) ruled that The Line was compliance with the law for the $46M tax abatement<\/a>, even though the hotel was not<\/a>.  <\/p>\n

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\u201c[Racine] concluded that all apprenticeships were reserved for District residents because no District resident who requested an apprenticeship was turned away\u201d<\/em><\/p>\n

According to the Morris-Hughes, Director DC Employment Services.<\/p>\n

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In part 3, we will continue to grabble with the Adams Morgan example of private equity funds such as edge funds (Commercial & Housing) and venture capital funds (MaaS\/publicspace) consuming a neighborhood.  What it means when our Comp Plan is being rewritten to facilitate private equity.  And private equity is able to bind our laws at will.  And what does this mean for Racial Equity in Adams Morgan, the Ward and city?  <\/p>\n

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William<\/p>\n

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—–Original Message—–
From: whj@melanet.com<\/a>
Sent: Sunday, February 21, 2021 4:55pm
To: “adamsmorgan@groups.io<\/a>” <adamsmorgan@groups.io&gt<\/a>;, “HearUsNow!” <hearusnow@googlegroups.com&gt<\/a>;
Subject: Part 1: up-FLUMing & The Detroit Hedge Fund that Eat Adams Morgan<\/p>\n

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On October 27th of 2020 the Mayor<\/a>  with the acquiescence of the City Council(with the seeming exception of CM Silverman), and the DC’s Office of the Attorney General (OAG) effectively ceded the planning and development the future of Adams Morgan to two Hedge Funds Friedman Capital<\/a> (Detroit) and  Wexford Capital<\/a> via commercial real estate firm Foxhall Partners<\/a> when they failed to enforce the terms of the $46M Adam Morgan Hotel Tax Abatement<\/a>.   It’s frightening enough to see a historic neighbor such as Adams Morgan effectively sold-off to hedge funds, but also how impotent our government was when it came to enforcing our laws and protecting our most venerable. <\/p>\n

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Hedge Fund<\/strong> – a limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realizing large capital gains<\/a>.<\/p>\n

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In 2019, The Atlantic did an article on some of the possible dynamics when a hedge fund buys your neighborhood, “When Wall Street Is Your Landlord”<\/em><\/a>.<\/p>\n

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Next month our city will again address this matter of effectively selling off larger portions of our city neighborhoods to hedge funds when it takes up the Mayor’s (OPs) proposed amendments to our Comprehensive Plan.    The active ingredient of the Mayor’s amendments to the Comp Plan is something called mass up-FLUMing.  In the context of our Comp Plan mass up-FLUMing effectively turns large areas of our city over to hedge funds to plan and development, as they are the only ones have the capacity to benefit from mass  upFLUMing.   And as we learned from the case of Adams Morgan Hotel once up-FLUMing occurs our city’s political and legal infrastructure WILL NOT<\/strong> be able to project existing residents and provide effective legal oversight, basically ending self-government in these areas.   This is especially true in DC  predominantly Black neighborhoods the primary targets of up-FLUMing.<\/p>\n

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up-FLUMing<\/strong> – in DC this is the process of modifying the city’s Comp Plan in order to radically change our  city’s Future Land Use Map (FLLUM) to increase development density in city neighborhoods.  Typically, allowing the development of large\/tall mix use luxury projects in formally low and moderate density residential neighbors while minimizing or eliminating current resident’s say in the development process.<\/p>\n

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The Mayor, Council Members such as Cheh, Nadeau and others, developers and many members in the so-called Smart Growth movement argue that these Comp Plan amendments which turn large portions of our city to hedge funds will result in greater numbers of affordable housing and a more racially equitable city.  And will make our city more financially sound as revenues from hedge fund controlled development trickles down residents. We know from the former Donatelli Project at Hill East neither affordable housing or trickle down results, in fact the opposite.<\/p>\n

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For persons such as myself, the above Smart Growth profeers are ridiculous on their face. As the intent of hedge funds is to capture all the trickle have as much public investment (tax abatements, TIFs, public land dispositions) as possible funned through the coffers. <\/p>\n

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In fact, I believe CFO Dewitts’ suddenly announced resignation affirms my view<\/a> that up-FLUMing large portions of the city for hedge funds via Comp Plan amendments WILL NOT<\/strong> trickle down nor produce affordable housing as the smart growth crew proffers.  So, he is getting out of dodge before the chickens come home to roost.   In short, Dewitt believes the Council will raid the city’s reserves in the coming budget season to force a trickle down that the city’s edge fund focused development policies do not produce. This raiding will cause the city’s bond rating on Wall street to drop down from AAA-ish ratings. And he does not want that on his record and his watch, so he’s getting out of dodge.<\/p>\n

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The Council unlike the CFO is more vulnerable to citizen up roar given the city had nearly a $600M budget surplus this past year, our Apartheid-like racial, economic, and  social system that COVID-19 exposed and the coming eviction crisis which will occur as edge fund backed projects will need to horde vacant units to maintain prices.  And while our Mayor fiddles with a solution that depends on keeping everyone drunk and high while we can make it through recovery in 2022\/3.<\/p>\n

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To better understand the potential impact of mass up-FLUMing, we can study how a Detroit began consuming Adams Morton in 2010. <\/p>\n

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William<\/p>\n

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  In June of 2010 Harvard Drug Group located just outside of Detroit Michigan has its license immediately suspended for distributing over 13 million dosage units of oxycodone products to Florida pharmacies between March 2008-2010.   The DEA contends Harvard’s system should have flagged that it was supplying Florida opioid mills in Florida.   In 2007 the  CEO of …<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-51","post","type-post","status-publish","format-standard","hentry","category-thoughts"],"_links":{"self":[{"href":"http:\/\/dcfeedback.com\/whj\/wp-json\/wp\/v2\/posts\/51","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/dcfeedback.com\/whj\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/dcfeedback.com\/whj\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/dcfeedback.com\/whj\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/dcfeedback.com\/whj\/wp-json\/wp\/v2\/comments?post=51"}],"version-history":[{"count":0,"href":"http:\/\/dcfeedback.com\/whj\/wp-json\/wp\/v2\/posts\/51\/revisions"}],"wp:attachment":[{"href":"http:\/\/dcfeedback.com\/whj\/wp-json\/wp\/v2\/media?parent=51"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/dcfeedback.com\/whj\/wp-json\/wp\/v2\/categories?post=51"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/dcfeedback.com\/whj\/wp-json\/wp\/v2\/tags?post=51"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}