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He’s pushing to get a deal for DC United’s new stadium approved in what some say is a less than graceful exit from office. By Harry Jaffe

The DC Council will hold the first of many public hearings today on the proposed new home for DC United, to be built on Buzzard’s Point along the Anacostia River. The stadium would require a complicated set of land swaps and $150 million in public funds, and would mean trading the city’s Reeves Government Center for property at the proposed stadium site—a heavy lift for a mayor at the height of his powers.

But with just months left in his term, Mayor Vince Gray, who wants the soccer stadium as part of his legacy, has exhausted his influence—and his lobbying, according to council members and staff, has often turned into tirades.

“Because of the way he’s acting, he’s completely irrelevant,” one council staffer involved in the stadium deal says. “He’s the least graceful loser I’ve seen in my life.”

“He’s angry and feels disrespected,” another staffer said.

Gray lost the Democratic primary to Ward 4 Council member Muriel Bowser on April 1. That leaves him nine months in office to run the government and try to get the soccer stadium deal approved.

“Every week that goes by, his influence wanes,” a longtime council lobbyist says.

Meanwhile, agency heads are leaving the Gray administration. At this point the mayor has lost three cabinet heads and one deputy mayor, which will make it more difficult to run the government.

Pedro Ribeiro, the mayor’s spokesman, disputes the idea that Gray’s ability to secure the stadium is waning. “If he’s so powerless, why not say so on the record? That’s a clear indication he’s not as lame a duck as they would have you believe.”

Today’s council hearing will be the first of many on the proposed stadium for DC United, the District’s pro soccer team. Many aspects of the deal have not been nailed down. The council has dedicated $200,000 for a study of the deal.

Neither Bowser nor at-large council member David Catania, who’s challenging her in the November general election, have said they will support the proposed stadium.

Posted at 10:58 AM/ET, 06/26/2014 | Permalink | Comments ()
Graham’s sale of his family’s public trust felt like a sacrifice for the greater good. The mourning period is officially over. By Harry Jaffe
Photograph by Ron Sachs/Newscom.

On May 8, Donald Graham chairs his public company’s last annual meeting at the Washington Post’s longtime home on DC’s 15th Street, Northwest. The gathering ends a months-long parade of moist-eyed valedictories in the building where Graham’s mother, Katharine, built a media power from her father’s newspaper, which Graham sold last year to Amazon founder Jeff Bezos for $250 million.

But nobody in the room will be crying for Don Graham, least of all Graham himself. His renamed firm, Graham Holdings, is headed toward doubling its stock price in the past year. The day the Post sale went through, in October, the stock hit a five-year high.

In its most recent SEC filing, Graham Holdings reported $570 million in cash on hand. Since then, the company added $159 million from the sale of its headquarters (the Post is reportedly negotiating to move into 1301 K Street, Northwest, next year) and expects about $95 million from its share of Apartments.com, which sold in March. With steady profits from TV stations, Graham Holdings is a $5-billion company in the market for new ventures. Indeed, the company, which moves to Rosslyn’s Arlington Tower in August, has branched out into health care with a hospice firm; last year it bought Forney, a company that makes equipment for power plants.

Graham’s expansion counters the conventional wisdom that his fortunes are too much tied to Kaplan, the company’s for-profit education division. Once a cash cow, Kaplan has seen declining revenues, according to SEC filings. Federal regulators, Iowa Democratic senator Tom Harkin, and most recently President Obama have been questioning the high default rates on federal loans that support for-profit colleges like Kaplan’s. According to Graham Holdings’ recent SEC filing, Kaplan faces multiple lawsuits and investigations launched by attorneys general in four states. “It’s still a troubled sector,” says Liang Feng, an equity analyst with Morningstar. “It presents the most uncertainty.”

Graham clearly feels Kaplan can be salvaged. He has been lobbying senators and the White House on its behalf, meeting with regulators, and positioning himself as an expert on education reform. In a February 24 Post op-ed, he supported schools chancellor Kaya Henderson against meddling DC Council members, calling mayoral hopeful David Catania “a bully.”

Which brings us back to the loss of the Graham family’s institution. Don Graham has, in a real sense, been able to sell his paper and keep a grip on it, too. His niece Katharine Weymouth has stayed on as publisher of Washington Post Media while sitting on the board of Graham Holdings. And if he wants to publish an opinion piece, he can offer it to his friend and former employee Fred Hiatt, the Post’s editorial-page editor.

Graham, 69, lives in a lovely brownstone on DC’s Hillyer Place, around the corner from the Phillips Collection, near Dupont Circle. He declined to discuss business or personal matters, but word is he’s spending more time with his second wife, Amanda Bennett, who left Bloomberg News last November. He works with a daughter, Laura O’Shaughnessy, CEO of SocialCode, an advertising firm that’s one of Graham Holdings’ fastest-growing subsidiaries.

Among his friends, he counts Warren Buffett, to whom Graham recently traded a Miami TV station, stock, and cash for Buffett’s $1.1-billion stake in Graham Holdings. The deal, which will save both companies hundreds of millions in taxes, effectively takes the Berkshire Hathaway founder, a longtime investor in the Post, out of the Graham company.

If the two disagree, it may be over Buffett’s recent habit of buying newspapers. If stockholders ask at this month’s meeting if Graham is in the market for a print publication, the answer is likely to be no.

This article appears in the May 2014 issue of Washingtonian.

Posted at 11:00 AM/ET, 04/28/2014 | Permalink | Comments ()
A look at who wins in the campaign-finance scandal. By Harry Jaffe

Finding the winners in Jeffrey Thompson’s plea deal is not easy: In court this week, Thompson pleaded guilty to a rash of 2010 campaign-finance violations that implicated, by description if not by name, everyone from DC mayor (and mayoral candidate) Vincent Gray to bit players in Hillary Clinton’s failed presidential run. The losers—including Vince Gray, Michael Brown, who comes off as the slimiest politician we have, and the voters—are easier to figure. A roundup of who gains:

Jeff Thompson

He admitted corrupting the 2010 mayoral race with $660,000 in dirty cash and secretly contributing more than $3 million to two dozen local and federal campaigns between 2006 and 2012, but he cut a sweet deal with federal prosecutors. In return for ratting out Mayor Gray and fingering other DC politicians, Thompson will likely never serve a day behind bars. Prosecutors waived the 18 months he might have served on the federal charges, and odds are he gets house arrest for the six-month term on the DC charges. Thompson’s goal was never to set foot in jail, and he might have nailed it.

Ronald Machen

The US Attorney finally implicated Gray in his three-year probe into corrupt DC elections. In Thompson, Machen has notched his eighth public-corruption plea from District probes, taking out three DC Council members and four Gray campaign aides. But for Machen to score a true victory, he and his investigators have to build a case based on documents and evidence that will force Gray to accept a plea.

“Anyone but Gray”

Democratic candidates for Gray’s office have already been all but sporting “Not the mayor” campaign buttons. Though Gray is not out of the race, and still has high approval ratings, his support in African-American wards east of the Anacostia River is eroding. Undecided voters will be looking for a new favorite among the leading alternatives: Muriel BowserJack Evans, and Tommy Wells.

David Catania goes all in by declaring his candidacy as an Independent running in the general election. After a Democratic primary season that lacked leadership, inspiration, and issues, the at-large council member could bring all three to the November vote, the first truly competitive general election under Home Rule. He has the best chance of beating Gray one-on-one.

The Washington Post

Jo-Ann Armao and her editorial page look smart in their crusade against Gray. After Machen tied Gray to the corrupt cash, Armao pounded Gray with caustic editorials for three days. But will the Post’s diatribes and endorsement of Bowser knock off the mayor and make her the Democratic nominee? If not, the Post will look weak and ineffectual.

Phil Mendelson

If Machen builds a stronger case in the next nine months, Gray might be forced to resign. Under DC laws of succession, that would make council chair Phil Mendelson DC’s first white mayor, temporarily.

Posted at 01:36 PM/ET, 03/14/2014 | Permalink | Comments ()
After offering five buyouts in ten years and losing key names to other papers, the Post staff was deflated in every sense. By Harry Jaffe
Illustration by Steven Noble.

Washington Post executive editor Marty Baron doesn’t do giddy. He’s a measured man, level of gaze and demeanor. But he sounds almost gleeful about his paper’s prospects. “For the first time in 14 years as the top editor of a newspaper, I will not be doing any budget cuts,” says Baron, who oversaw downsizing at the Miami Herald and the Boston Globe before coming to the Post in January of last year. “It’s great,” he says. “I’m encouraged. I’m optimistic.”

When Jeff Bezos bought the Post in October for $250 million, the media world wondered if he had a plan to revive the paper. Having shed readers, revenues, and reporters for a decade, the Post seemed to have slipped below critical mass on all three. The question boiled down to this: Would Bezos open his wallet? The answer now seems to be yes. “We are hiring like crazy,” says writer and editor Marc Fisher. “It’s been an enormous morale boost.”

The talent drain hasn’t ended. The New York Times continues to treat the paper like a farm team—Nikita Stewart, who anchored coverage of corruption in DC mayor Vince Gray’s 2010 campaign; economics writer Neil Irwin; and politics scribe Jason Horowitz have all defected in the past six months alone. In January, Bloomberg News lured away federal-court reporter Del Quentin Wilber.

But the Post is doing its own poaching. Even as those stars departed, it recruited Adam Goldman, who won a Pulitzer with the Associated Press in 2012 for investigating the NYPD’s surveillance of Muslims; Robert Costa and his deep GOP connections from National Review; and Ben Terris from National Journal, replacing Horowitz. Last month, Wesley Lowery, a 23-year-old wunderkind from the Globe, came onboard to cover Congress.

Baron adds that Post watchers should stay tuned: “The hiring you see is just the beginning.”

Bezos is also footing a redesign of the website, where visitors fell to 24.8 million in December (compared with the Times’ 50 million) and which recently lost Ezra Klein, founder of the paper’s popular Wonkblog, when he departed to start a digital publication with Vox Media. Klein has lured away a handful of prolific writers who gave Wonkblog its zip.

Media chatter skewered Bezos and Post leadership for not surrendering the eight-figure start-up cost to keep Klein’s proposed new site under the Post umbrella. But those who know him say Bezos is a methodical investor, not a reactive one. “He’s patient,” says publisher Katharine Weymouth (who notes that the decision to let Klein go was hers). “He has a long-term view.”

It’s true that Bezos has built Amazon in part by plowing revenues back into fledgling programs. It remains to be seen how long his patience will last in the face of operating losses that came in at $49.3 million for the first six months of 2013. It’s worth asking, too, whether money alone will be enough to turn the Post around. But for now, happy reporters and editors are a step in the right direction.

This article appears in the March 2014 issue of Washingtonian.

Posted at 10:02 AM/ET, 02/27/2014 | Permalink | Comments ()
Eleven years after the project began, the Army is still digging up toxic waste in the neighborhood. By Harry Jaffe

On Monday workmen unearthed another crusty munition from its current excavation of the toxic-waste site on Glenbrook Road, a stone’s throw from the American University campus. The fourth such find pulled from the ground in tony Spring Valley since September, the artifact turned out to be a 75-millimeter shrapnel round buried when the Army abandoned a experimental warfare station after World War I.

The Army Corps of Engineers immediately shut down the Glenbrook Road operation, transported the bomb to a secure site behind Sibley Memorial Hospital, and checked it for explosives.

“The fill was determined to be a riot-control agent that was used during World War I,” the Corps announced Wednesday, saying that it “poses no danger to the workers or community.”

Christine Dietrich, who lives across the street from the dig with her husband and two young children, is not reassured.

“It’s absolutely unacceptable,” she told Washingtonian. “I cannot have my children playing in the front yard when they are digging up one bomb after another across the street.”

In November, after the Army denied her request that the federal government resettle her family during the excavation, Dietrich rented an apartment elsewhere in the neighborhood, where her toddler spends the day and her older child goes after school.

Meanwhile the Corps resumed digging this morning. The Army has spent $230 million already in what has become one of the country’s costliest military-debris removal projects, and says it expects to spend at least another a quarter of a billion to finish the cleanup.

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Posted at 05:25 PM/ET, 01/16/2014 | Permalink | Comments ()
The District's jobless rate is on the rise as a new chief financial officer prepares to take over the city's finances. By Harry Jaffe

Chief Financial Officer Natwar Gandhi’s parting gifts to Mayor Vince Gray include some coal for his stocking.

In one of his last acts as DC’s chief financial officer, Gandhi on Monday delivered a monthly report of economic indicators showing that DC’s employment rate is falling, based on October figures. Compared to the previous year, the District lost 500 jobs, the number of employed District residents fell 2.7 percent, and the unemployment rate ticked up a bit to 8.9 percent.

Gray’s opponents are sure to use the report as a blunt object to damage his reelection bid, as jobs remain a central issue in the current mayor’s race. 

Jobs in the federal government sector dropped by 6,000 in the past year, according to Gandhi’s monthly report. A more troubling number showed a loss of 300 jobs in health and education, two sources that had been strong in DC. Good news came from the hospitality and leisure sectors, where jobs rose 6.8 percent. There were more jobs in legal services, finance, and insurance, according to the report.

Employment fell 1.3 percent in the metropolitan area, according to Gandhi’s report.

The good news came on the revenue side. Tax revenues are looking good. Gandhi expects real property tax revenue to increase by close to 5 percent in 2014. He projects sales tax and individual income tax increases, as well.

Gandhi is serving his final days as CFO, a job he has held since 2000. Gandhi’s successor, Jeffrey DeWitt, who was CFO of Phoenix, Arizona, has spent the past few weeks visiting offices and meeting staff. DeWitt has told Gandhi he doesn’t expect to replace any top staff when he takes over.

The matter of DeWitt’s salary has been bouncing between the District and Congress, but it seems to have been resolved. The search committee that recommended DeWitt offered him $250,000, according to staff familiar with the negotiations. But the District could not pay him that salary without a change to the city charter, which requires congressional approval. Gandhi’s salary is just under $200,000.

Congress balked at the $250,000, according to sources in Gandhi’s office. The city council passed a bill to pay the CFO as much as $230,000, in line with the vice president’s salary. DeWitt could not be reached for comment, but sources say he’s accepted the $230,000 compromise. He was getting paid $176,000 in Phoenix.

Gray sent the bill to Congress, which passed it last week. Gray’s office says the bill awaits President Obama’s signature. Hopefully it will become law by January 2, when DeWitt is scheduled to start working.

Posted at 03:52 PM/ET, 12/23/2013 | Permalink | Comments ()
The incumbent is touting a citywide drop in crime, but will the numbers hold? By Harry Jaffe

Gray’s neighborhood of stately houses and quiet streets in Ward 7, east of the Anacostia River, has seen a rise in armed robberies and assaults, according to Metropolitan Police Department data on Police Service Area (PSA) 606, which includes Gray’s home. In the last 12 months, there were 11 assaults that involved a gun, up from two the previous year. Assaults with a dangerous weapon other than a gun fell from 17 to 13, so total assaults with dangerous weapons rose by five.

City officials shrug off the significance of the PSA 606 statistics. “Every crime is important,” Assistant Police Chief Alfred Durham tells Washingtonian. “But you’re only talking a few more crimes.”

Durham said most of the assaults were related to domestic disputes. “If we can reduce domestic violence,” he said, “we can drive that number down.”

The mayor’s spokesman, Pedro Ribeiro, calls the focus on the increase in robberies and assaults “selective cherry picking of the numbers.”

“Year to date violent crime citywide is down by one percent,” Ribeiro wrote in an email, “plus we’ve seen a drop in both burglaries and motor-vehicle theft.”

“The city is safer” has become a recurring phrase in Gray’s argument for reelection. It appears on his campaign website and he made the claim when he picked up his petition forms, though he has yet to hold forth on crime as he did last February in his State of the District speech: “We will not rest until every neighborhood is safe. No resident, regardless of ward or neighborhood, should live in fear. Crime, whether it’s petty theft or armed robbery, will not be tolerated in our city, period. No excuses.”

That kind of rhetoric may come as cold comfort for residents of Ward 7 in the MPD’s Sixth District, where the streets are less safe than they were last year by most any measure. Violent crime there is up 25 percent compared to 2012, according to police data. Robberies with guns rose 44 percent, from 270 to 389, and car thefts increased 20 percent, from 687 to 824.

Overall, violent crime in and around Gray’s neighborhood increased two percent even as total crime in the area fell 12 percent.

“We’re certainly aware of it,” says Ed Fisher, chief of staff to Ward 7 Council Member Yvette Alexander. “We are in constant contact with [6th District] Commander Robert Conte.”

Most troubling for Gray may be the reversal of a downward trend in homicides. Citywide, the annual murder rate has fallen from 186 in 2008 to just 88 last year, though the number for 2013 has ticked up. John Thomas Tillman, who was stabbed near Truxton Circle last Sunday night, was the 102nd person murdered in DC this year. (The MPD’s website puts the number of homicides at 103; an unnamed victim’s death has recently been reclassified as a homicide). Last year at this time the city had recorded 80. (The current year’s number includes 12 who died in the Navy Yard shootings. Excluding those deaths, there are still 10 more murders this year than last.)

Homicides are up on Gray’s home turf as well. This year police reported two homicides in PSA 606. The previous year there were none.

“Not to diminish that someone lost a life,” Assistant Chief Durham says, “but you are only talking about adding less than one homicide a month. If there are no more homicides this month—knock on wood—we will be up only three from last year.”

Even at that rate, the numbers and the bloodshed are heading in the wrong direction for a mayor who wants to run on his public safety record.

Posted at 11:54 AM/ET, 12/13/2013 | Permalink | Comments ()
Will Rock Newman back Andy Shallal in the mayoral race? By Harry Jaffe

Rock Newman and Andy Shallal showed up at Mayor Vince Gray’s office in September to talk politics. From Shallal’s telling, the 90-minute session boiled down to this: Newman—a DC political operative and entrepreneur who’s made millions as a boxing promoter—said he was ready to back Shallal’s campaign for mayor. But Shallal, the owner of the restaurant Busboys and Poets and a progressive activist, would not run if Gray announced for a second term. And both would support Gray.

Gray declined to commit.

Shallal has e-mailed Gray a few times since to get a sense of the mayor’s political plans. “I got the same, canned answers,” Shallal says.

The next few days, according to Shallal, may determine whether Shallal runs, with Newman as chair of the campaign. On Friday, November 8, Shallal will pick up petitions to gather signatures to get on the April ballot. On Saturday, Gray will be a guest on Rock Newman’s radio show, broadcast on WHUT and run out of Shallal’s restaurant on 14th Street, Northwest.

“Will he run?” Newman asked on his Facebook page.

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Posted at 05:16 PM/ET, 11/07/2013 | Permalink | Comments ()
It’s still unknown if Gray—or Clinton—knew directly about the illegal campaign contributions. By Harry Jaffe

The parallels between the clandestine campaign funds applied to Hillary Clinton’s unsuccessful 2008 primary campaign, revealed in Wednesday’s federal court proceedings, and Mayor Vincent Gray’s 2010 campaign are unmistakable and intriguing.

But do they get us any closer to connecting the candidates directly to the dirty money?

The latest development in US Attorney Ronald Machen’s ongoing corruption investigation exposed a pipeline of $608,750 in unreported cash to help drum up votes for Clinton in the Texas primary. New York City businessman Troy White pleaded guilty in federal court to one misdemeanor for failing to file corporate tax returns for the funds.

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Posted at 02:50 PM/ET, 09/12/2013 | Permalink | Comments ()
Despite increase revenue from the digital side, the company continues to lose money. By Harry Jaffe

Washington Post publisher Katharine Weymouth offered a broad view of her newspaper’s fortunes at Thursday’s lunch at DC’s Economic Club.

“We never got paid for the news,” she said to David Rubenstein, club president and moderator of an after-lunch discussion. But the Post had a “40 to 50 year period when it was incredibly profitable” because it was “effectively a monopoly” for local advertisers.

Then she said, “The monopoly is broken.”

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Posted at 02:47 PM/ET, 05/03/2013 | Permalink | Comments ()