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The Philadelphia Inquirer, Sunday, March 14, 1999

Memo: Road to City Hall

He's learned a lesson

Samuel P. Katz: Working hard to stay loose

By Larry Fish,

Samuel P. Katz was a novice when he ran for mayor in 1991.

But the bookish-looking expert in the arcane world of municipal finance is a neophyte no more. He has a good shot at becoming Philadelphia's first Republican mayor since 1952. And he has taken to heart the lessons of '91.

He's working hard at staying loose.

In the '91 GOP primary, Katz was matched up against the towering personality of Frank Rizzo and Vietnam vet and former District Attorney Ron Castille. He came in last but only a respectable few percentage points behind his opponents.

But he says his campaign demeanor was ``like I was interviewing for the CEO's job.'' He was meticulously prepared, wore conservative suits, was always earnest - and saw himself tagged with labels like stiff, curt and overserious.

He understands now the importance of making an emotional connection with voters.

``People want to be able to touch the mayor,'' he says.

While Katz may not be cut from the extroverted cloth of an Ed Rendell, he has loosened up noticeably since 1991. The self-assured, businesslike mien - sometimes giving an impression of arrogance - has gotten softer.

Sizing up his chances of winning the Republican nomination in the May primary - no one else is on the ballot - he tells audiences, with a modest grin, that ``I'm counting on Unopposed not hiring a very good media consultant.''

Not boffo, perhaps, but enough to season the meaty substance of his public appearances. At a candidate forum for the Friends of Philadelphia Parks, Katz was still the one who knew the number of street trees in the city (250,000), but he also playfully tossed back a Frisbee that strayed up on stage.

Though he gets to coast through the primary while the five Democrats whale away at each other, Katz knows that a Republican nomination can be a dubious prize in a city where Democrats hold a 7-2 edge in voter registration.

But this year could be different. The Democrats may fatally wound each other before the November election. Katz's positioning as a Rendell-esque budget expert is especially timely. And he has more than $1 million in the bank and skilled political advisers, many with ties to Rendell.

The 1991 campaign did something else for Katz - it taught him that he liked the game. For all its personal attacks, impertinent journalists and long hours, it fueled his 1994 run for governor.

``I was really bitten,'' he says. ``I was this nerdy, number-crunching finance guy, reinforced by the image that I was dull and boring. . . . Then I was out doing the Mummers' strut.''

If that sounds as though Katz, 49, is basically an accountant clone who only recently discovered his politico alter ego, it overlooks a lifetime of ambition and deep involvement in Philadelphia - mostly Democratic - politics.

Katz became a Republican shortly before the 1991 race because, he says, he had grown to believe that solving Philadelphia's problems required lower taxes and other steps that could alienate many of the Democratic Party's traditional constituencies.

``I changed,'' he says.

Besides, he adds, ``I don't think I had any chance of being elected as a Democrat.''

He was born in West Philadelphia to Bernard and Aimee Katz, who grew up a few blocks apart in the same Wynnefield neighborhood. His father, now retired, ran an electrical-supply house; his mother worked in an apparel-design firm.

He was president of his elementary-school student council and, at age 7, had a meeting with Mayor Richardson Dilworth that so impressed him that he has wanted to be mayor ever since.

Katz was an honor student at Central High School and president of his junior and senior class and of his synagogue's youth group.

In 1967, a ``very straitlaced'' Katz entered Johns Hopkins University in Baltimore and got caught up in the antiwar protests sweeping American campuses.

Although he was playing guard (and was cocaptain) on the basketball team, he had a medical deferment from the draft because of a high-school sports injury to his leg. For this generation, few issues carry as much freight as how one dealt with the draft. Katz says he did not seek the 4F status.

``I had a medical deferment,'' he says. ``Somebody else made the judgment, and I'm glad they did.''

In 1994, while running for governor against Vietnam vet Tom Ridge, Katz would come under attack for his deferment. Wallace H. Nunn, a powerhouse in the Delaware County GOP organization, called him an opportunist ``politically unfit'' for office. Asked today about the Republican mayoral candidate, Nunn offers only ``No comment'' - except to note that he has never retracted his 1994 statements.

Katz says he has no regrets.

He remembers a ``very tough'' freshman year at Johns Hopkins - he got the first F of his life, on a political science midterm - but at least one thing made it easier: At a mixer, he met Connie Hackel, a pathologist's daughter and a student at Goucher College, outside Baltimore. She was smitten by ``his red hair and freckles.'' They were married four years later.

After his graduation and return to Philadelphia, Katz worked briefly for several State House committees and the Philadelphia Partnership, a civic group. He also earned a master's degree in urban policy and politics from the New School for Social Research in New York in 1974.

He began his political activity as campaign manager in Bill Gray's first, unsuccessful bid for Congress in 1976 and future Mayor Bill Green's run for Senate. With a streak of losses at the polls, Katz says, ``this didn't look to be like a career [in campaign management] in the making.'' He was not so directly involved in a campaign again until he became a candidate.

In 1976, he joined the company that was to make him rich, Public Financial Management. It advises municipalities, turnpike commissions and the like on cost-effective ways to do large projects, decisions always freighted with politics (think of the debate about new sports stadiums for Philadelphia).

``All financing decisions you make will have a political context,'' says F. John White, cochair of PFM, with Katz, until Katz left in 1994.

In 1985, PFM was under contract for the $523 million Pennsylvania Convention Center project. The Goode administration, however, suspended the contract upon learning that Katz and White had investments in properties that were to be part of the project. White and Katz were deemed to have no conflict of interest but chose not to pursue the contract.

Katz and Goode later had a political dustup. Katz supported Frank Rizzo's comeback attempt to unseat Goode in 1987 and wrote (and eventually apologized for) a fund-raising letter subtly linking Goode with Nation of Islam leader Louis Farrakhan. In another context, Goode called Katz a ``worm.'' Both say they long ago buried the hatchet.

Besides making Katz wealthy, PFM gave him a certain fame for the deals he helped produce - Camden Yards in Baltimore, Joe Robbie Stadium in Miami, First Union Center here - and indisputable credentials as a candidate who knows the political and fiscal realities of city government.

``I've been a student of cities my entire professional life,'' he boasts. ``I've forgotten more than most people will ever know.''

Since leaving PFM, Katz has continued his consulting and entrepreneurial ventures. He has also taken on one of the world's richest men.

Warren Buffett, the stupendously successful investor from Omaha, Neb., has an investment vehicle called Berkshire Hathaway Corp., which buys huge chunks of stock in blue-chip companies. A member of the public can buy shares of Berkshire stock - assuming he has roughly $70,000, the recent price of a single share of class-A stock.

In 1996, Katz and an associate tried to set up what amounted to a Warren Buffett mutual fund that would in effect allow individual investors to own a fraction of a single Berkshire share. Katz thought an elephant like Buffett would never notice a fly like Sam Katz and his little fund.

He was very wrong.

The struggle was mostly behind the scenes, but it is clear that Buffett brought every pressure that a $30 billion fortune and many of the titans of Corporate America can exert to stop Katz.

Now, Katz says only: ``I was rattled. He was prepared to stop us at all costs.''

One insider who asks anonymity says Katz got ominous communications from Fortune 500 companies. Buffett also attempted to get the Securities and Exchange Commission involved.

But Katz persisted.

Finally, Buffett did what he had vowed never to do. He offered a second class of Berkshire stock for about $1,000, then told the public it was a lousy investment. Katz's pool of potential investors instantly dried up.

``He took out an atomic weapon; the fly is dead,'' says Katz, clearly proud of having stood his ground.

And, he says, after tangling with Buffett, ``do you think John Street and Marty Weinberg scare me?''

Sam and Connie Katz have led ``a limited social life'' of homey domesticity since the birth of their daughter Lauren, now 18. The family also includes Philip, 16, Elizabeth, 13, and Benjamin, 10.

Katz was appointed to the school board by Mayor Green in 1981 but resigned in 1985, because he and his wife wanted a Hebrew-school education for their children. They are active members of the Germantown Jewish Center.

Katz volunteers that he does not have deep religious feelings but finds the cultural connection important. He says the household is ``moderately'' observant of Jewish ritual.

The Katzes socialize with a small group of ``nonpolitical'' friends and vacation at Connie's mother's place in a North Carolina golf development. They live in a French country-style house, on the wooded high ground of Cresheim Valley in West Mount Airy, purchased for $280,000 in 1985.

Katz's musical taste runs toward Rachmaninoff and Verdi, and he plays golf, but his passion is computers. His home office - his ``fabulous office'' - is loaded with computer power. Ever the number cruncher, he says he has been online since 1982.

He describes himself as deeply conservative in matters of his own family and social life but seeks to distance himself from the national social agenda of the Republican Party.

``I'm not a cultural conservative, not a right-winger,'' he told a Democratically inclined audience recently, suggesting Arlen Specter as his idea of ``a good Republican.''

J. Whyatt Mondesire, head of the NAACP, who has known Katz for more than 20 years, says Katz was warmly received when he appeared before the group in January. Mondesire is working to elect a black Democrat but says he would have few problems with Mayor Katz - the chief one being his support for school vouchers, which the NAACP opposes.

While the national GOP opposes affirmative action, Mondesire praises Katz's promise of an administration that reflects Philadelphia and his ``affability and ability to be around all kinds of people.''

Like most of the Democratic candidates, Katz has also courted the increasingly well-organized gay and lesbian community. He supports domestic-partner benefits for same-sex couples as a matter of fairness, since they cannot marry legally.

David Greer, head of the gay Log Cabin Republican club, says the community has been lukewarm toward Katz so far.

Katz's support for partner benefits seems less than robust, Greer says, and some gays and lesbians are troubled that Katz has appeared to have difficulty dealing with the life and death of his only brother. James L. Katz, gay and HIV positive, was a volunteer in Sam's gubernatorial campaign when he died in 1994 at age 42.

Sam Katz refrained from publicly discussing his brother, saying he wanted to protect his family's privacy, until he broke his silence in mid-February, before an AIDS group.

He now refers to his brother's death as evidence that AIDS issues are ``deeply personal and very real'' for him. And he pledges to fight for funds for AIDS prevention and for care for those with the disease.

In 1991, Katz tried to win the Republican Party's primary endorsement from the late William A. Meehan, who instead persuaded Castille, at virtually the last minute, to enter the race.

The three-way Republican contest abruptly degenerated, with Rizzo charging that Castille was a drunk who waved guns. Katz's unflappable demeanor and financial expertise breathed new life into the nearly aborted campaign.

After Rizzo won the primary, then died that July, Katz had one more chance, but Meehan chose Joe Egan as Rizzo's replacement. Egan lost, handily, to Rendell.

Had Philadelphia elected him then, Katz says, he would have done much of what Rendell has done, except for ``much deeper tax cuts and much greater focus on reform of the systems and size of government.''

If voters give him a chance this time around, he says, he would further reduce wage and business taxes, try to coax at least one major suburban employer into the city, take personal responsibility for the schools, and build more jail cells, if needed.

``I think Philadelphians are going to vote like they never have before,'' Sam Katz says, ``with a real concern about the future of this city.''

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