A complex of 125 apartments had fallen into such disrepair that Bush administration housing officials had foreclosed on the building and transferred it to a group they and Mr. Donovan had come to trust: the New York Acorn Housing Company.
“These renovations will transform this once-troubled property into a remarkable asset,” Mr. Donovan declared in a city news release trumpeting the apartments’ “rescue” by Acorn and its development partners.
Now in Mr. Obama’s cabinet, Mr. Donovan is unwilling to speak publicly about that project or any other work with Acorn, a group with which he at times worked particularly closely during his five years as Mayor Michael R. Bloomberg’s housing development commissioner but whose missteps have allowed conservatives to cast it as a symbol of liberalism run amok.
Congress is pushing legislation ordering Mr. Donovan to cut off all Acorn-related grants, something he has declined to address. And he is staying clear of the organization’s leaders.
“I can’t get near him,” said Bertha Lewis, the Acorn chief executive, who frequently interacted with Mr. Donovan as Acorn’s New York leader until 2008.
The arc of Mr. Donovan’s relationship with Acorn traces the broader trajectory of its affiliation with the Democratic Party, exhibiting how deeply the group has been enmeshed in urban politics in New York and other large cities and how members of the Obama administration have been put on the defensive over past relationships with the group.
The relationship between Democrats and Acorn has always been as productive as it has been uneasy. In Acorn’s 40-year history, its voter registration drives and policy proposals on behalf of mostly poor and minority constituents have often redounded to the benefit of Democratic politicians and policy makers.
But its hot rhetoric, frequently heavy-handed approach and occasional legal stumbles have just as often proved an alienating liability easily exploited by Republicans.
That is especially the case now, with the presentation of videotapes in which conservative advocates posing as a pimp and a prostitute elicited advice on tax evasion at Acorn-affiliated offices — including one in New York — bringing a new round of recriminations and investigations. Many of Acorn’s onetime Democratic allies, including Mr. Obama, appear to have fled its side.
In publicizing Acorn’s foibles, conservative radio and cable television hosts frequently mention Mr. Obama’s previous interactions with its affiliates in Illinois, including a 1995 ballot-access lawsuit where he represented the group alongside the Justice Department. Mr. Obama’s campaign also hired an Acorn-affiliated get-out-the-vote subsidiary last year.
Yet the Obama administration’s closest contacts with Acorn come by way of New York.
Patrick Gaspard, the White House political director, worked with Acorn in New York to set up the Working Families political party and sat on the party’s board with Ms. Lewis when he was the top strategist for its ally, 1199 S.E.I.U. United Healthcare Workers East. Secretary of State Hillary Rodham Clinton, in her campaigns for the Senate, and the White House urban policy czar, Adolfo Carrión Jr., formerly the Bronx borough president, ran on the party’s ballot lines.
Perhaps no administration official has had more interaction with Acorn than Mr. Donovan, Mr. Obama’s secretary of housing and urban development.
“We grew to respect him, and he grew to respect us,” Ms. Lewis said in an interview.
Mr. Donovan’s work with Acorn’s New York housing arm, glimpsed through two dozen interviews and a review of city documents, was by most accounts mutually beneficial, and showed a side of the group at variance with depictions of it by opponents as a “criminal enterprise.”
Even Bush administration HUD officials came to view some Acorn divisions as credible, awarding more than $40 million to national affiliates.
But throughout, there were hints of the side of Acorn that has made it politically toxic, “a less tightly run ship” — in the words of one city official — that engendered the same sort of suspicion and resentment dogging it now.
By the time Mr. Donovan joined the Bloomberg administration in 2004, Acorn’s housing wing was a well-established partner with the city in rehabilitating its affordable housing stock.
Under its leader, Ismene Speliotis, New York Acorn Housing Company Inc. developed an expertise that even officials in the Republican administration of Mayor Rudolph W. Giuliani — no fan of the group — grew to respect during the 1990s.
“These affordable-housing deals get really complicated, and you need a partner with a certain level of financial sophistication,” said Jerilyn Perine, a commissioner of the Department of Housing Preservation and Development under Mr. Giuliani and Mr. Bloomberg. “Ismene’s one of the best people for that.”
Mr. Donovan included Ms. Speliotis in a group of affordable housing specialists with whom he consulted frequently, current and former city officials said.
They worked closely to keep Starrett City in Brooklyn the nation’s largest federally supported middle-class housing complex when it went up for sale last year.
And she and Ms. Lewis appeared to help Mr. Donovan deliver a coup for Mr. Bloomberg in 2005 when Acorn endorsed a huge Brooklyn development he was supporting in the face of local opposition.
Acorn backed the plan in return for an unusual promise from the developer, Forest City Ratner, to make half of the 4,500 rental apartments that it was proposing — along with a new Nets basketball arena — available to poor and middle-class families at below-market rates.
The city’s agreement to help finance the plan, hammered out among Mr. Donovan, Ms. Speliotis and others, was hailed as a breakthrough for subsidizing a substantial amount of housing for an unusually broad range of middle-class tenants.
Ms. Lewis — a supporter of Mr. Bloomberg’s challenger that election year, Fernando Ferrer — celebrated by exuberantly kissing the mayor at a public ceremony.
The project’s opponents accused Acorn of selling out. (More recently, Forest City Ratner — a development partner with The New York Times on its new Manhattan headquarters — complied with Acorn’s plea for $1.5 million in grants and loans to help it restructure after an internal embezzlement scandal involving Dale Rathke, the brother of its founder, Wade Rathke.)
Friends said it was not the only time when Mr. Donovan felt as if Acorn had forced itself into an outsize role in development negotiations because of political power derived in part through its Working Families Party; the party was affiliated with many officials the developer was wooing.
“One difference with Acorn was their strong political connections to the influential Working Families Party,” said Ingrid Gould Ellen, a professor of public policy at New York University who is friendly with Mr. Donovan and served on the presidential transition team that selected him. “That sometimes helped in creating affordable housing, and sometimes made negotiations more difficult.”
Soon after Mr. Donovan left for Washington, a city-supported nonprofit he helped the mayor and the City Council start to stave off home foreclosures suspended a grant to Acorn’s mortgage counseling center based in Brooklyn because of incomplete record keeping.
It would become the least of the Brooklyn office’s troubles after the conservative filmmakers posing as a pimp and a prostitute — James O’Keefe and Hannah Giles — elicited advice from two of its counselors on how to secure a mortgage for a brothel.
Acorn fired the counselors and is reviewing its supervisory structure; the counselors reported to Acorn Housing’s national branch in Chicago, but fell under the supervision of Ms. Speliotis, in spite of her primary focus on development issues.
With the Brooklyn district attorney’s office investigating, one longtime Acorn ally, the City Council speaker, Christine C. Quinn, has suspended all of its Council money.
Some friends, like Councilman Bill de Blasio of Brooklyn, called on Mr. Donovan to speak out. “It’s time for people to say, ‘Wait a minute, Acorn has played a crucial role here,’ ” he said.
Ms. Lewis said she had no such expectations.
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