Newark’s Booker Lures Wall Street Millions to City Few Have Seen
Cory Booker strides to the lectern at a June reception honoring hedge-fund founder Bill Ackman. Pershing Square Foundation, Ackman’s philanthropic organization, had pledged more than $25 million since 2007 to help Booker’s poverty-wracked Newark, New Jersey, improve schooling, enhance parks and find jobs for ex-convicts.
Now, in Manhattan’s Mandarin Oriental ballroom, the 43- year-old mayor salutes one of the titans of finance he had persuaded to revive a city in which some have never set foot, Bloomberg Markets magazine reports in its November issue.
“The room is packed; you had every major hedge-fund, private-equity person,” recalls Joseph Shenker, chairman of law firm Sullivan & Cromwell LLP.
Booker holds guests spellbound using the Hebrew phrase “tikkun olam,” or fixing the world, to describe Ackman’s generosity. It’s a notion Booker has adapted to his city 12 miles (19 kilometers) west of Wall Street, and the moneyed elite are buying in.
“One of the things Cory Booker has done is turned Newark into a national cause,” says Shenker, 55, a New Yorker who remembers watching TV footage of the 1967 riots that left 26 dead. “He has made it a serious issue for the United States.”
Booker, midway through his second four-year term, has raised more than $250 million in donations and pledges for a city where the previous three mayors were convicted of or pleaded guilty to felonies after leaving office.
Mining a network stretching back to Stanford University and Yale Law School, Booker is promoting New Jersey’s largest city as a lower-cost alternative to New York and overseeing nonprofits to fund everything from security cameras to midnight basketball tournaments. Benefactors view Booker as somebody they can work with after decades of corruption, says Larry Sabato, director of the Center for Politics at the University of Virginia.
Facebook Chief Executive Officer Mark Zuckerberg pledged $100 million for education to aid a school system that’s been under state control since 1995 and where just 61 percent of students graduate high school. The Silicon Valley billionaire chose Booker’s cause of school reform in 2010 after meeting him at the Allen & Co. conference in Sun Valley, Idaho, that year.
Billionaires Nicolas Berggruen, founder of investment firm Berggruen Holdings Inc., and Leon Cooperman, CEO of New York- based investment partnership Omega Advisors Inc., are among others funding what Booker pitches as “a city of emergent hope.”
Developers are responding by turning long-vacant land into corporate headquarters, factories and housing, with more than $700 million invested.
“The feeling is, if we can turn Newark around, we can turn anything around,” Sabato says.
Booker, a lifelong Democrat who lives on the top floor of a three-family rental, reaches across party lines.
“He has the personal touch, whether he’s communicating with 1 million Twitter followers or with the financial industry,” says Margie Omero, a Washington-based Democratic strategist.
An incessant fundraiser, Booker has delivered on his commitment of $200,000 to $500,000 for President Barack Obama’s re-election campaign and rallied the faithful to the party platform at September’s Democratic National Convention.
Julian Robertson, 80, whose Tiger Management LLC was among the most successful hedge funds in the 1990s, backs Republican presidential nominee Mitt Romney. That didn’t stop him from giving the maximum $26,000 to the campaign fund for Booker and his city council allies.
‘Salesman of the Year’
“He actually does attract people of all political stripes,” Shenker says.
Nobody expects Booker’s ambitions to end in Newark.
“From the day I met him, I thought he would be our first black president, but I was wrong,” says Whitney Tilson, who co- founded both New York-based hedge fund T2 Partners LLC and Democrats for Education Reform, which advocates for charter schools and higher standards in public classrooms. “He’ll be our second.”
“He’s certainly going to run for higher office,” Sabato says. “He is salesman of the year in politics.”
Private Equity Flap
Booker’s wooing of Wall Street can land him in trouble. He infuriated Democrats in May when he said on public affairs show “Meet the Press” that he wasn’t “about to sit here and indict private equity.” Weeks earlier, a steelworker in an Obama ad had described Bain Capital LLC, the foundation of Romney’s personal fortune, as a vampire.
Booker responded to his gaffe with a four-minute YouTube video lauding the president.
“He was out of line,” says Bob Shrum, the Democratic strategist who helped Ted Kennedy defeat Romney in Massachusetts’s 1994 U.S. Senate race. It was a misstep Booker hasn’t repeated -- and won’t, Shrum says.
‘We Choose Inclusion’
Booker stayed on script at the Charlotte, North Carolina, convention, espousing affordable health care and good-paying jobs. Another platform plank, same-sex marriage, is dear to Booker, who says he won’t officiate at weddings until gay marriage is legal in New Jersey. The Republican Party favors the fortunate few, Booker said.
“We choose inclusion,” he roared, as delegates erupted in applause.
Booker uses every opportunity to cultivate connections.
“I don’t believe there are accidents in life,” he says before flying to keynote a Democratic fundraiser in August. “When you meet people, it’s important to remember them, and often a little later down the line, you can connect dots that become very helpful both for them and the community.”
Booker’s money and clout haven’t yet resolved the social ills that plague his city of 277,000, where 86 percent of residents are black or Hispanic.
Newark suffers from the 10th-highest poverty rate among major U.S. cities, and crime has remained stubbornly resistant. In 2012 through Sept. 2, murder was down 17 percent from a year earlier, but rape soared 29 percent.
On Oct. 2, Christie said he will order spending cuts in Newark because the city has yet to pass a budget for the year that began Jan. 1. Booker proposed a spending plan in February. The City Council hasn’t approved it.
Business Administrator Julien Neals said in a statement that the city has reduced its workforce and is looking to end its reliance on state aid. He called Booker’s proposed budget a “step forward.”
“Has the city turned around?” asks Brad Tuttle, author of “How Newark Became Newark: The Rise, Fall and Rebirth of an American City” (Rutgers University Press, 2009). “Everybody would say no.”
Booker, speaking on his mobile phone as his security team drives him to an appointment in April, ticks off accomplishments.
“The first two new hotels are downtown in 40 years,” he says. “The first office towers are going up in 20 years.”
Construction began in February on Teachers Village, a $150 million complex featuring charter schools, housing and shopping, the work of architect Richard Meier, the Newark native who designed Los Angeles’s Getty Center.
Berggruen and Goldman Sachs Group Inc.’s Urban Investment Group provided financial backing. Panasonic Corp. of North America, aided by $102 million in state tax relief, broke ground on headquarters in May. Prudential Financial Inc. scored a $210 million state tax break for the $444 million tower it plans to open by 2014.
“The legacy I want to leave is to be the first time in a generation that the city’s not dependent on big lump-sum government payments,” Booker says in Jersey City during a May heat wave, dabbing his shaved head and gulping Diet Pepsi over ice.
The state, which has reduced budget grants to distressed cities since Christie took office in 2010, helped Newark last year with $32 million in aid. Booker says such gifts won’t be needed as Newark’s tax base broadens.
Omega Advisors’ Cooperman lauds Booker’s approach. He gave more than $5 million to Project GreenSpaces in 2007 to renovate 13 parks.
“Cory is a very hot commodity,” says the 40-year resident of Short Hills, an area 9 miles west of Newark whose median household income averaged $211,989 from 2006 to 2010, six times that city’s. “He could be an important lawyer making a lot of money. Instead, he made the determination to try to make a difference and dedicated himself to public life.”
Ackman, who lives in Manhattan and met Booker through Tilson, likens the mayor’s job to the task his own hedge fund, Pershing Square Capital Management LP, took on as majority shareholder of J.C. Penney Co.
“A lot of what I do for a living is finding really super- talented people to step into a turnaround situation and make it better,” he says. “Newark’s a turnaround.”
Robertson doesn’t recall where he first encountered Booker, but he remains a fan.
“I don’t think I’ve ever walked around Newark,” says Robertson, who has a residence on Central Park South. “I know Newark has lots of problems, and I’m hopeful that Cory can solve some of those.”
‘Domestic Emerging Markets’
Booker pitches Newark as the greatest urban-renewal opportunity among cities, including Pittsburgh and Rochester, New York. He calls them “domestic emerging markets” and paints Newark’s location and infrastructure as compelling lures.
Port Newark-Elizabeth is the East Coast’s busiest marine terminal. Newark Liberty International Airport offers direct flights to London, Shanghai and Tokyo. A 20-minute train ride connects the city to Manhattan’s financial district.
“From investment banks to private equity to VC firms, more and more, they’re going to be looking to places like Newark,” he says. In Booker’s view, real estate investors win when benefactors pour in money, boosting the value of their holdings or collecting rent on new properties.
A once-great hub for leather, plastic and chemicals, Newark fell into decay after World War II. Booker, born in 1969 to activist parents at the close of the turbulent decade, caught his first glimpse of the riot-scarred landscape growing up in nearby Harrington Park. That town was so white that his father, Cary, described himself, his wife, Carolyn, and their two sons as “four raisins in a tub of vanilla ice cream.”
The family worshiped at an AME Zion church in Newark. One Sunday, young Cory spotted a man painting a house and asked his father whether they could paint the whole ugly city.
Booker, who stands 6 feet 3 inches (1.9 meters) tall, won an athletic scholarship to Stanford, where he was an all- American football tight end. He earned a bachelor’s degree in political science and a master’s in sociology.
“It occurred to everybody at Stanford: This guy is going to the top,” recalls Jody Maxmin, a professor of arts and classics. Stanford’s alumni association honored him for tutoring and peer counseling. “He just lifted everybody up, including me,” Maxmin says.
Booker was a Rhodes Scholar at the University of Oxford before enrolling at Yale Law School. He accepted a fellowship to study community activism in Newark, trying his hand at fixing the town where he’d worshiped as a child.
He was elected to the city council at 29, two years after Time magazine ranked Newark as America’s most dangerous city. He made headlines at 30 by living in a tent for 10 days to agitate for policing of violence-prone apartments.
Booker, who is single, won the mayoral race in 2006. Four years later, he faced an $83 million deficit in a $605 million spending plan. He raised property taxes 16 percent, sold 16 city-owned buildings and eliminated about 800 jobs, including 167 police officers.
Moody’s Investors Service cut Newark’s credit rating one step, to A3, that December, the fourth-lowest investment-grade level. The gloom stretched into 2011, when violent crime rose 12 percent and the year’s 90 homicides totaled four more than in 2010.
‘Tweeting About It’
Still, Booker enjoyed a knack for good press. Returning to his apartment one night in April, he saw flames next door and rushed in to rescue his 47-year-old neighbor. He described the feat on Twitter en route to the hospital for treatment of smoke inhalation and minor burns.
Such public relations antics rile state Senator Ronald L. Rice, the Democrat whom Booker defeated in 2006. Booker’s interest lies in self-promotion, Rice says, not city hall.
“If we have a homicide, he’s out of town tweeting about it so people get the impression he’s still here,” Rice says. “Then he pops in for a ribbon cutting, and he’s gone.”
Some residents view Booker as a tool of corporate interests.
“They see him as somebody who is not working on the behalf, necessarily, of people who have been living there for generations,” author Tuttle says.
Even Zuckerberg’s $100 million pledge designed to support teachers and promote charter schools has sparked controversy. The American Civil Liberties Union, representing Newark families seeking disclosure on how the money may be spent, sued the City of Newark last August. The lawsuit is pending. Zuckerberg didn’t respond to a request for comment.
Booker says he’s on track to raise the $100 million Zuckerberg requires in matching funds. So far, Ackman’s Pershing Square Foundation, the Bill & Melinda Gates Foundation, the family of hedge-fund manager Ravenel Curry and Silicon Valley venture capitalist John Doerr have pledged a total of more than $40 million.
Should Booker take on Christie, whom he calls a friend, New Jersey’s governor’s race would reprise the issues of wealth and taxes dividing the presidential candidates. Christie has vetoed Democratic lawmakers’ tax increases on millionaires, while Booker told convention goers the rich should pay their share.
Strategist Shrum imagines Booker aiming for the governor’s office, then a possible White House run.
“It could happen very fast,” he says. “It happened with Obama.”
The high-profile New Jersey mayor has already cultivated an enviable calling card: his ability to charm Wall Street.
To contact the reporter on this story: Elise Young in Trenton at firstname.lastname@example.org
To contact the editor responsible for this story: Stephen Merelman at email@example.com