Law Firm Backing Luther Strange Set Up Sweetheart Deal for Bob Corker in Alabama Retail Development

A partner in the Alabama law firm whose members and political action committee donated $28,000 to the 2017 Senate campaign of Senator Luther Strange (R-AL) represented a real estate development company in which Senator Bob Corker (R-TN) has a 13 percent interest in a sweetheart deal that put over $100,000 of sales tax revenue paid by customers at the McGowin Park retail center in Mobile, Alabama in the pocket of the junior senator from Tennessee in 2016.

This revelation comes just days before President Donald Trump is set to campaign for Strange in Huntsville, Alabama, on Friday night–and the White House is distancing itself and the president from this real estate deal. Many media reports note that it was Corker–in a meeting with the president last Friday–who finally convinced the president to campaign for Strange ahead of the September 26 GOP primary runoff for the U.S. Senate. Corker, of course, is facing his own primary battle in Tennessee next year, something intricately connected to the goings-on in Alabama’s race politically and financially.

“It’s absurd to say that the President is responsible for actions of others,” White House Press Secretary Sarah Huckabee Sanders told Breitbart News in an email on Tuesday when asked if Senator Corker informed President Trump about his sweetheart investment in the Mobile, Alabama retail development when the two met in person at the White House on Friday.

“That’s like when someone gets shot and people say it’s the gun [manufacturer’s] fault. As a staunch conservative who I know must believe in personal responsibility I can’t believe you would argue otherwise,” she added.

While Sanders has not answered directly when asked whether Corker informed the president of this sweetheart investment deal during the meeting in which Corker convinced the president to campaign for Strange–in this quote or in follow-up emails–she generally said that the White House knows nothing about it.

“As for this alleged deal we know nothing about it, ” Sanders said of Corker’s sweetheart investment in McGowin Park, LLC.

In July 2013, Alvin Hope, a partner in the Mobile law firm of Maynard, Cooper, & Gale represented a real estate development company known as McGowin Park, LLC before the Mobile City Council and the Mobile County Commission and secured extraordinary deals in which both local governments agreed to allowed the developer to keep 28 percent of city sales taxes and 30 percent of county sales taxes collected from retail stores in the development for 20 years.

A year later, on July 11, 2014–still a year before the first retail store opened in the McGowin Park development–Corker purchased a 13.7 percent interest in McGowin Park, LLC for between $1 million and $5 million, according to financial disclosure documents he filed with the United States Senate. Six days later, on July 17, 2014, McGowin Park, LLC made a Uniform Commercial Code (UCC) filing in Alabama disclosing that it secured a loan of an unknown amount from Wells Fargo to finance the project.

At the time the deal was approved by the Mobile City Council and Mobile County Commission in 2013, Luther Strange was halfway through his first four-year term as Alabama Attorney General, a position he held until February 2017 when now disgraced former Governor Robert Bentley appointed him to the United States Senate, which Alabama developer Stan Pate referred to as a “corrupt bargain” when he filed a complaint against Strange with the Alabama Ethics Commission on August 9.

It is unclear what, if any, oversight responsibilities Strange may have had over the McGowin Park, LLC/Mobile City Council/Mobile County Commission deal in his role at the time as Alabama Attorney General. Nor is there any indication that Mr. Hope or any attorney with Maynard, Cooper, & Gale sought or received any formal or informal advisory opinion or guidance from Strange or any other lawyers in the Alabama Attorney General’s office when preparing to present the proposal to the city or county governments in Mobile.

Corker and Strange appear to be close political allies in the United States Senate.

Between May and June of this year, Rock City PAC, which is Senator Corker’s Leadership PAC, donated $10,000 to Senator Luther Strange’s campaign, according to FEC records.

Since 2007, Karen Hutton, CEO of the Hutton Company, the Chattanooga, Tennessee real estate development company that appears to be the majority partner in McGowin Park, LLC, has donated $18,300 to Rock City PAC and $6,890 to Senator Corker’s campaign committees, according to FEC records.

Then last Friday, in a meeting at the White House, Corker asked President Trump to visit Alabama in the last days before the September 26 Republican primary runoff election for the U.S. Senate seat previously won by Attorney General Sessions between Strange and his conservative opponent, Judge Roy Moore, to support Strange.

Though President Trump endorsed Strange prior to the August 15 Republican primary election in which no candidate obtained a majority and Moore and Strange qualified for the runoff, Trump had not been very visible in his support for Strange since that initial election.

“Strange’s Republican colleagues got in on the push, too. Tennessee Sen. Bob Corker, who is up for reelection in 2018 and faces the prospect of a primary challenge, spoke extensively with Trump on Friday. According to two people familiar with the conversation, Corker told Trump that Strange’s fate hinged on the president going to bat for him,” Politico reported about that meeting.

“Sen. Bob Corker (R-Tenn.) encouraged Trump to make the trip to Alabama when the two met at the White House on Friday, according to a source with knowledge of the discussions,” The Hill reported on Tuesday.

This Friday, President Trump and Strange will appear together at a Huntsville, Alabama campaign rally, an effort to reverse the tide currently favoring Moore. The latest Real Clear Politics average of polls shows Moore leading Strange by 8.8 percent.

Corker’s investment in McGowin Park, LLC appears to be one of those cases where behind-the-scenes knowledge has proved very lucrative.

In his Annual Report for Calendar 2014 filed with the United States Senate, Corker lists the value of his interest in McGowin Park, LLC between $1 million and $5 million. (see page 12)

In his Annual Report for Calendar 2015 filed with the United States Senate, Corker lists the value of his interest in McGowin Park, LLC between $1 million and $5 million. In addition, his interest in McGowin Park Shopping Center is also valued at between $1 million and $5 million, as is his interest in City of Mobile Limited Obligation Project Revenue Warrants and Mobile County Project Revenue warrants.

His 2015 income from McGowin Park Project Sales Revenue was reported to be $40,349, while he received rent/royalties from McGowin Park Shopping Center greater than $100,000 and less than $1 million.

In his Annual Report for Calendar 2016 filed with the United States Senate, Corker lists his interest in McGowin Park, LLC but places no value on it. However, he continues to list the value of his interest in McGowin Park Shopping Center at between $1 million and $5 million, as is his interest in City of Mobile Limited Obligation Project Revenue Warrants and Mobile County Project Revenue warrants.

His 2016 income from McGowin Park Project Sales Revenue was reported to be $108,682, while he received rent/royalties from McGowin Park Shopping Center greater than $100,000 and less than $1 million.

While it is not unusual for a private individual who makes an investment of between $1 million and $5 million in a large retail development to make a profit on that investment, the details of this particular investment are unusual in that the size and scope of the McGowin Park Project’s improvement districts deals between McGowin Park, LLC and the City of Mobile and Mobile County appear to be much larger than any other improvement district deal made in the State of Alabama before or since.

Authorized by the Alabama Improvement District Act passed by the state legislature and signed by the governor in 2000, an improvement district “allows developers to issue bonds to finance public infrastructure, usually in exchange for tax incentives,” as Lagniappe Weekly reported.

Thirteen years later, the McGowin Park Project became the first improvement district authorized by the City of Mobile and Mobile County.

“The Mobile City Council and the County Commissioners, during separate votes Tuesday, voted to unanimously endorse a development agreement that provides sales tax rebates for the construction of a new regional shopping center,” AL.com reported on July 23, 2013:

The votes support the development of the 600,000-square-foot McGowin Park shopping center along Satchel Paige Drive near Hank Aaron Stadium and abutting Regal Cinemas.

“We are very pleased with the progress with the city and county and look forward to a great project,” Steve Tingle, a partner with McGowin Park LLC, said after the votes.

The votes provide the developers of the project with 1.4 cents of the city’s 5-cent sales tax from new sales generated within the shopping center for 20 years. The county will pledge three-tenths of a cent from its 1-cent sales tax.

As proposed, if the project is completely built out and generates an estimated $200 million annually, the developers could get $1.4 million from the city’s sales tax portion. The project, which will attract at least three big-box retailer stores along with at least a half dozen “mid-size” retailers, is supposed to bring 1,200 new jobs to the city.

Tingle said ground could be broken to start construction in February 2014, with completion by July 2015.

The Mobile City Council also approved the formation of the Improvement District of the City of Mobile-McGowin Park Project when it met on July 23, 2013, according to the minutes of that meeting.

“The council, meanwhile, voted to endorse an initial board of directors for the McGowin Park Project that includes Tingle; Geoff Smith, a principle with project partners, The Hutton Co. of Chattanooga, Tenn.; and Josh Burmeister, a real estate broker involved in the project,” AL.com reported at the time.

At around the same date, the Mobile County Commission approved the formation of the Improvement District of Mobile County-McGowin Park Project.

“Since they were approved by state law in 2000, improvement districts have been cropping up around the state. In Baldwin County, similar public-private partnerships were used to create the Eastern Shore Center in Malbis, The Wharf in Orange Beach, The Spanish Fort Town Center and Colonial Pinnacle at Craft Farms in Gulf Shores,” Lagniappe Weekly reported:

Local economist Semoon Chang, director of the Gulf Coast Center for Impact Studies, said improvement districts may allow developers to construct higher-end shopping centers and attract new retail outlets to the region, but sales projections have to be realistic. In 2011, the Spanish Fort Town Center, which was incorporated with the authority to charge an additional district fee on top of local sales tax, fell into receivership after defaulting on a $17 million loan. There, developers had hoped a district anchored by a Bass Pro Shop would thrive, but today several of its storefronts remain vacant.

“What happened at Spanish Fort Town Center was they made sales predictions at the time that were a little rosy and actual tax collection was about a third of what was projected, so that’s when they got into trouble,” Chang said. “It is a really beautiful place, but the Bass Pro Shop didn’t play the kind of anchor role they anticipated and it failed to attract customers to the remaining stores in the Town Center.”

Though the intricacies of the deal are sometimes difficult to track, the sales tax revenues that under Alabama law are allowed to flow to the Improvement District of the City of Mobile-McGowin Park Project and the Improvement District of Mobile County-McGowin Park Project, appear to flow directly to McGowin Park, LLC, the development company controlled by the Hutton Company of Chattanooga, Tennessee.

According to bizstanding.com, The Improvement District of the City of Mobile – McGowin Park Project was registered as an Alabama domestic non-profit corporation on November 4, 2013, with three members and incorporators: Geoff Smith of Chattanooga, Tennessee (President of the Hutton Company); Josh Burmeister of Mobile, Alabama; and Karen Hutton of Chattanooga, Tennessee (CEO of the Hutton Company).

“McGowin Park, one of the largest retail developments in Mobile in recent memory, will not be a liability to the city or county despite a corporate partnership that will return millions in sales tax to the developers over a 20 year period, according to its manager. It may be the first example of an ‘improvement district’ in the county, which allows developers to issue bonds to finance public infrastructure, usually in exchange for tax incentives,” Lagniappe Weekly reported at the time:

“In the olden days, [developers] may go to local governments and say, ‘I need $5 million for water and sewer to lure in new businesses,’ but now it’s so much better,” said Phil Hunt, McGowin Park’s manager and financier. “There is no liability (to municipalities) and that’s the beauty of it, it’s a great tool for the developer to fund infrastructure without the city or county being on the hook. [Developers may say] ‘you give me the tools I need and allow me to form my own district’ and they are the one’s paying for it.”

In the case of McGowin Park, which will include 600,000-square-feet of retail space anchored by a 140,000-square-foot club store, the city will return 1.4 cents of its five-cent sales tax collection and the county will return three-tenths cents of its one-cent sales tax collection on revenues that are projected to be as high as $200 million per year.

The Mobile County Commission and Mobile City Council approved the district last summer with constriction originally slated to begin in February. But dirt at the 90-acre property near Hank Aaron Stadium has yet to be turned, although the developer, Chattanooga, Tenn.-based The Hutton Co., is still projecting an opening date sometime in 2015.

“The council was criticized for providing a sales tax incentive for McGowin Park in 2013. The former general manager at Bel Air, Tim Nolan, said at the time that city government should not be rewarding new shopping centers at the possible detriment of existing shopping centers,” AL.com reported last year.

In August and September 2014, both the City of Mobile and Mobile County took the unusual step of protecting the developer in which Corker now had a 13 percent interest, McGowin Park, LLC, from losing its sales tax rebate in the event the lender providing much of the financing to the project, Wells Fargo, decided to foreclose on the collateral pledged to secure that loan.

The September 19, 2014, minutes of the Mobile County Commissioners meeting spelled out those details:

McGowin Park, LLC pledged collateral to Wells Fargo bank for a construction loan. Mr. [Alvin] Hope [the attorney with Maynard, Cooper, & Gale representing McGowin Park LLC] said the Warrant issued by the County was not included as collateral. He said McGowin Park LLC wanted to transfer the County’s Warrant into a Special Purpose LLC named McGowin Park Incentive, LLC only as a precautionary action to prevent the Warrant from being attached as collateral in the future if an event was to happen out of their control.

Mr. Hope said they did not want Wells Fargo Bank to attach specific collateral to the construction loan if something were to happen. He said the Warrant issued by the County was purposely not included in the collateral that secured the construction loan for the project. Mr. Hope said McGowin Park, LLC created a Special Purpose LLC to house the Warrant and remove it from the possibility as collateral. He said McGowin Park, LLC was the only entity responsible for the project when they initially secured the loan.

Senator Corker lists McGowin Park Incentive, LLC as an asset in both his 2015 and 2016 Annual Reports filed with the U.S. Senate, but lists no value to the asset.

The first retail stores in McGowin Park opened for business in 2015. By the end of 2016, the project was completed and leased out.

In May of this year, rebusinessonline.com reported that “Hutton Co. has sold McGowin Park, an approximately 375,000-square-foot, open-air shopping center located at 3075 Government Blvd. in Mobile. Cole Credit Property Trust IV Inc. purchased the asset for $77.8 million.”

Completed in 2016, McGowin Park’s tenant roster includes Dick’s Sporting Goods, Field & Stream, HomeGoods, Ross Dress for Less, Hobby Lobby, Best Buy, Old Navy, Petco, Ashley Furniture HomeStore and Dollar Tree. The center is shadow-anchored by Costco and Regal Cinemas and features additional development opportunities with three outparcel pads and two restaurant pads.

It is unclear how much profit Hutton Co. and the related McGowin Park, LLC in which Senator Corker has a 13 percent interest, made in that transaction.

Breitbart News contacted both Senator Corker and Senator Strange for comment on this article but has not received a response from either senator.


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