Oct. 28 (Bloomberg) -- Bill Ackman’s first tour of Newark ended at aspiring Mayor Cory Booker’s apartment in a housing project plagued by drug dealers and rats. The hedge fund manager still recalls a sinking feeling as graffiti-covered elevator doors closed and they rode to the 16th floor in pitch darkness.
Now the founder of Pershing Square Capital Management LP is leading retired hedge fund manager Julian Robertson, Omega Advisors Inc.’s Leon Cooperman and a growing list of Wall Street investors backing Booker as he tries to revive New Jersey’s largest city, where one in four residents live at or below the federal poverty level.
“This guy has the same or greater talent than the vast majority of my peers who are working on Wall Street and making millions of dollars,” Ackman, 44, said. “Here’s this guy making nothing and living in a housing project, who is motivated for all the right reasons. That’s what made him compelling.”
Booker, 41, a Rhodes Scholar and son of International Business Machines Corp. executives, has raised $240 million for parks, schools and police since taking office in 2006 by convincing some of the wealthiest business people in the U.S. that Newark can be a model for urban renewal.
With the support of New Jersey’s Republican Governor Chris Christie, Booker, a Democrat, obtained a $100 million pledge last month from Facebook Inc. founder Mark Zuckerberg and a $25 million promise from Ackman.
Booker’s drive to rebuild Newark, a city of 280,000 that has yet to recover from five nights of shootings, looting and fires during the race riots of July 1967, has drawn endorsements from television’s Oprah Winfrey and Hollywood director Steven Spielberg. Newark is the subject of a Sundance Channel documentary series, “Brick City.”
“There’s a star quality, a celebrity quality” to Booker, said Newark native Steve Adubato Jr., a Democratic political consultant and anchor at WNET/Channel Thirteen in New York. “That can be a good thing for the city as long as Cory continues to understand that the job is still on the streets.”
Booker and the city council are proceeding with a plan to plug an $83 million deficit in part by selling off 17 city-owned buildings to the Essex County Improvement Authority. His $605 million budget also calls for a 16 percent property-tax increase and firing as many as 850 city workers, including 167 police and firefighters.
More than 100 people and 7 television cameras showed up on the morning of Oct. 20 as Booker took the podium at a City Hall event to combat childhood obesity. The assembly included two groups of children from charter schools, with boys dressed in white shirts and ties and girls in blue jumpers.
Booker, gesturing and pacing, told the crowd that Newark citizens helped win World War II and put a man on the moon, and the city’s children needed to contribute to society and not become “couch potatoes.”
Later, sitting in his office on the second floor of City Hall, where a stack of books on his desk includes the Bible and Koran, Booker described the investors who write checks to Newark as “venture philanthropists.”
“Help me innovate in Newark,” the mayor said he tells people as he seeks money for the city. Newark is small enough that improvement is possible in everything from public education to prisoner rehabilitation and infrastructure repair, he said.
Stanford to Oxford
“Bill Ackman is like me,” Booker said of the investor known for pressuring companies to take action to raise their stock prices. “He’s impatient. He wants to solve problems and he wants to solve them now.”
Booker has degrees from Stanford University in Palo Alto, California, and Yale Law School in New Haven, Connecticut. He developed an interest in Judaism while at the U.K.’s University of Oxford, where he became the president of a Jewish student organization, L’Chaim Society. He remains a practicing Baptist.
Booker met Ackman in 2001 through Whitney Tilson, the founder of hedge fund T2 Partners and a board member of the National Alliance for Public Charter Schools.
Tilson met Booker in the 1990s when the future mayor camped out in a tent on the grounds of a Newark housing project and staged a hunger strike to convince city government to fight drug dealing more aggressively.
“Whoever it was who introduced us said to me: ‘You’ve got to meet this guy’ and that’s exactly what I said to Bill: ‘You’ve got the meet this guy,’” Tilson said.
Tilson likens the chain of introductions Booker has had since then to the support for a one-time senator from Illinois.
“The only other person I can think of where it has happened on this scale was Barack Obama,” said Tilson. “It’s exciting to support someone who you think has unlimited potential.”
Ackman, who manages about $7 billion, started raising money for Booker in 2001, hosting the aspiring mayor at his apartment in The Majestic, a 1929 Art Deco building in Manhattan with views of Central Park and an elevator attendant. Ackman sold the apartment this year for $7.1 million, public records show. The building where Booker lived, Brick Towers, was condemned and demolished in 2007.
Ackman told guests that while contributions to a social program may benefit a few hundred people, electing Booker could help every Newark resident.
He backed it up with a check for $15,400 to Booker’s campaign on Dec. 23, 2001, according to campaign finance reports. Neil Crespi, founder of New York-based equity research firm Monness Crespi, Hardt & Co., gave $15,000 on the same day. John Fisher, a San Francisco-based investment manager who oversees the fortune his family built after founding retailer Gap Inc., gave $1,000, according to public records.
Booker lost the 2002 election to incumbent Mayor Sharpe James after raising $2.5 million, campaign records show. He won in 2006 with $7.5 million.
Lee Ainslie, the founder of hedge fund Maverick Capital Management LLC and a former protégé of Tiger Management LLC’s Robertson; and D. Ian McKinnon, the managing partner of Ziff Brothers Investments, run by the heirs to the Ziff-Davis publishing empire, both contributed the legal maximum to Booker’s campaign in 2006, according to public records.
Booker outspent his 2010 opponent, Clifford J. Minor, 20-to-1, campaign records show. He kept the money flowing in non-election years by creating organizations including Newark Now, which collects private donations to provide everything from Thanksgiving turkeys to assistance filing income tax returns. Contributions between 2006 and 2008 totaled $7.3 million, according to filings on Guidestar.
Project GreenSpaces, which fixes and maintains the city’s parks, drew more than $5 million from Cooperman, who manages $6 billion as chief executive officer of Omega and is chairman of the initiative.
“He is known as a guy to be supported,” Cooperman said in a telephone interview from his office in New York. “He’s a young man who is doing what is right to make a city, a state, the country a better place to live.”
Cooperman called up Booker after the former head of Goldman Sachs Asset Management funded the renovation of a park in the South Bronx where he grew up. “I told him ‘this is something you should consider doing’,” Cooperman said. Project GreenSpaces is restoring 15 ball fields in Newark, he said.
After three Delaware State University students were murdered execution-style on a playground during the summer of 2007, Booker sought money for the Newark Police Foundation. Ackman pledged $1 million, which Booker used in part to buy police equipment, including a device that allows authorities to track criminals by their cell phones.
Improving education has been one of Booker’s highest priorities. Newark’s public schools have been under state control for 15 years. Almost half the students don’t graduate.
The Newark Charter School Fund raised $18 million from foundations set up by Microsoft Corp. founder Bill Gates and his wife Melinda; Doris & Donald Fisher, who founded Gap; the Walton family, founders of Wal-Mart Stores Inc.; and Robertson.
Booker is “a bit of a hero to me,” Robertson said in a telephone interview.
The Gates family, Elizabeth and Ravenel Boykin Curry III, founders of New York-based Eagle Capital Management LLC, and the NewSchools Venture Fund, made a combined $15 million pledge toward matching Zuckerberg’s contribution.
‘Not for Sale’
Bari Mattes, an aide to Booker who oversees fundraising, declined to give a breakdown of how all the private contributions are spent. Some of the money is used to fund city jobs including the post of full-time philanthropy liaison.
Booker’s fundraising from wealthy individuals outside Newark spurred criticism in 2002 from James’ supporters, who heckled him with cries of “Newark is not for sale.”
“There will always be an element of people who want to criticize,” said Booker.
During a walking tour on the night before the obesity event, Booker said, a woman asked him why he was letting outsiders privatize the school system. Booker said he told her that wasn’t the plan. She asked why he wasn’t suspicious about donors’ motives.
Private contributions bought the security cameras that safeguard the woman’s street and they cleaned up the local park, Booker said he told her. These people are investing in Newark because “it’s a city with a special calling,” he said.
“Cory could bring in $500 million and people will still question his commitment,” Adubato said.
Booker’s upbringing in the suburb of Harrington Park, 20 miles from Newark, also makes him someone Wall Street financiers can relate to, though there are limitations to the relationship between a hedge fund manager and a politician.
Ackman recalls inviting Booker to the Turks and Caicos Islands, south of the Bahamas, where he rents a house for a few weeks each winter. The mayor declined.
“He would have had to pay for his accommodation and his meals and he just couldn’t afford it,” Ackman said.
In the fall of 2007, Ackman pledged to transfer all his personal profits from trades that benefited from a drop in the shares and creditworthiness of bond insurance companies, including MBIA Inc., to his Pershing Square Foundation. As confidence in the companies collapsed early in the credit crisis, Ackman made $150 million.
Afterward, the investment manager talked with Booker about making a contribution to Newark. Booker told him to hold off, that he had something in the works, Ackman said.
Booker described his plans to turn around the Newark public schools during a presentation at Pershing Square’s offices in September. He told attendees, including the hedge fund manager’s wife, Karen Ackman, who is a trustee for the foundation, and fund advisers, including Tilson and Ackman’s father Lawrence, about the Zuckerberg gift and how he would be seeking matching contributions.
On Sept. 23, Ackman received a call from Booker who was on his way to Chicago with Zuckerberg. He asked Ackman for $50 million to kick off the matching campaign. Ackman agreed to $25 million. It got him a mention on the Oprah Winfrey Show.
“Cory has invested a lot of time cultivating these relationships,” said Tilson. “And, it’s paid off for him and it’s paid off for Newark.”
To contact the reporter on this story: Christine Richard in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Alan Goldstein at email@example.com