Hall County land deal benefits governor’s campaign chairman

Land connected to Gov. Nathan Deal’s campaign chairman has increased in value substantially because of planned taxpayer-funded improvements as well as the decision by a commission headed by the governor to buy property on the site, state and local records show.

The decision by the State Properties Commission to place the $13.6 million State Poultry Laboratory at the planned Gateway Industrial Centre near Gainesville, Deal’s hometown, could provide the linchpin tenant needed for such a development to succeed.

Deal chairs the properties commission, and his campaign chairman, Philip Wilheit, is a partner in the 518-acre industrial park land. In addition to the state’s buying 10 acres of the site for $690,000, Hall County officials have agreed to front about $10 million in local taxpayer funds to improve the property. Money from the poultry lab sale will be spent on infrastructure for the project.

Both Wilheit and Deal say they did nothing wrong and believe the state got a good place for its lab at a good price. The minutes of the State Properties Commission meeting on Aug. 24 show that Deal presided over the session in which the commission voted to approve the purchase of the poultry lab property. But as chairman he does not typically cast a vote on commission business and did not vote on this purchase, the commission said.

“This was not looking at who owned land where,” said Deal’s spokesman, Brian Robinson. “It was looking at what met the criteria. The governor’s interest, the state’s interest is in providing the best deal for taxpayers. After an extensive, transparent, open process, this was the property that was selected.”

The deal hinged on taxpayer funds in two steps: First, the Hall County Commission agreed to put up about $10 million to build roads and put in sewer and other infrastructure on the land. Second, the state would agree to spend $690,000 to become the first buyer in the Gateway Centre. The first buyer is important because it shows other potential buyers that the industrial park is viable.

The carefully choreographed deal closed in late August: The county commission voted to use taxpayer money for infrastructure on Aug. 23; the same day, Wilheit and his partners transferred the property to the local development authority; the next day, the State Properties Commission voted to buy its 10 acres from the authority. The owners would get their money back from the development as the lots in the industrial park are sold. The county would also be repaid its infrastructure costs through lot proceeds.

Wilheit, who is chairman of the development authority, told the AJC that he did not take part in discussions of selling the property to the state.

“I even told the governor I was backing away until they decide what they want,” he said. “I just didn’t feel from a conflict-of-interest standpoint that it would be a proper thing for me to [be involved in the negotiations]. My integrity and the governor’s integrity means too much to me to get involved in something like that.

“I will stand behind what I did here and not bow my head one bit.”

But Doug Aiken of Murrayville, a Hall County government activist, said the deal is a bad one for taxpayers.

“This is good ol’ boys helping good ol’ boys at taxpayer expense,” Aiken said. “When I started looking at this, it smelled like a rat.”

Bailout or bargain?

Aiken calls the deal a bailout for Wilheit and his partners and says it’s simply a matter of friends looking after friends.

Wilheit is a longtime backer of Deal. In one of his first acts after taking office in 2011, Deal appointed Wilheit to the University System Board of Regents. Wilheit, his family and businesses have contributed about $60,000 to Deal’s gubernatorial campaigns. Wilheit is also a partner, with Deal’s private company, in an airplane that Deal used to fly around the state in his 2010 bid for governor.

Wilheit and his fellow investors in Gateway Centre project formed a group called WW 365 LLC: Their property lies along Ga. 365, a major roadway running north-south through Hall County. A purchase option for the poultry lab property – obtained through the Georgia Open Records Act - lists the owners as WW 365, Wilheit Family Properties, LP, Philip A. Wilheit Jr., Hart Wilheit Payne, LJN Associates, LP, Hillside Management, LLC, Emlico Investors, LLC, and James H. Moore. Several of the owners were Deal contributors, although none gave as much as Wilheit.

WWW 365 paid almost $11 million for the Gateway Centre land in 2007, according to county records. However, the next year the Great Recession kicked in and property values plummeted in many areas. This year, the county valued the land at less than $5 million. However, that is without the improvements the county has pledged to make. With the improvements, two state appraisals set the value of the poultry lab site at $80,000 and $93,000 per acre. The county valued the larger of the two tracts of Gateway property — unimproved — at less than $9,000 an acre.

Under the deal with the industrial authority, however, Wilheit and his partners could get all the money they put into the property – now more than $11 million – plus interest and possibly other profits.

“I don’t think for a minute we’re going to get 100 percent of our money back, at least not in my lifetime,” Wilheit, 68, said. “Hope we do. “

The State Properties Commission paid $69,000 an acre for its chunk of the industrial park, but development authority officials said most lots in the park would go for $50,000 to $55,000 per acre on average. Money from the sale of the lots would go to help pay back the county, but the owners will get back more than they paid for the property if all goes as planned.

Tim Evans, vice president of economic development for the Hall County Chamber of Commerce, said the state is paying more per acre — as much as 20 percent to 30 percent more than the expected average — because the land is a prime site just off the highway and will be graded and ready to build.

He said typically the first tenant in a development is one of the toughest to land and called the poultry lab a “lead-off hit for us” in an industrial development that could provide thousands of jobs and $1 billion worth of investment.

“You have to convince the first tenant that, ‘Hey, we really are doing this park and we need the first tenant to kick it off,’” Evans said. “Sometimes that’s challenging for somebody to get the first one. There might not be a lot of development around and they are going to be a pioneer.”

Hall County Commission Chairman Tom Oliver said fronting the money for the development made sense.

“Sometimes that’s the responsibility of government, to create these opportunities for the people of this county,” he said before the commission vote in August.

‘Glad we got [it]’

A new state poultry lab has been in the works since before Deal became governor.

State lawmakers approved a $13.6 million bond in 2009 to build a new poultry lab in Hall County. The current lab in Oakwood, near Gainesville, was built in 1962. Officials said it badly needed to be replaced – it is partially condemned - and it made sense to keep it in Hall County and near Gainesville, which bills itself as the “Poultry Capital of the World.”

Records show State Agriculture Commissioner Gary Black conferred with Deal’s office about the siting of the new lab. Black said, however, that he didn’t know the owners of the property and that Deal’s office did not influence the selection.

Originally, it was going to be built on the same land, but agriculture department officials noted that the Oakwood site is now in a residential area. Black said building on the 18-acre site also would have disrupted the lab’s work, and the configuration of the new building didn’t fit well on the property.

Building somewhere else would actually cost less, he said. So agriculture officials asked State Properties Commission staffers to find about 10 acres in Hall County, preferably located on or near Ga. 365 with no immediate proximity to a residential area.

The commission looked at about 20 sites, and eventually found two that looked promising. Black said “everybody” wanted to build on property in another industrial park. But the two properties were tied up in litigation, bankruptcy or other issues and the deals had fallen through by the fall of 2011.

An email in October 2011 said Black planned to meet with Chris Riley, Deal’s chief of staff, and others to discuss the issue. Black said he was merely keeping the governor’s office informed of what was going on.

In late December 2011, Properties Commission staffers said they were contacted by an agent for WW 365 LLC about the future Gateway Industrial land, and eight months later, the commission was agreeing to buy the land. The property was not on the original list of sites.

The commission wouldn’t release many of the documents on its decision, arguing that the final contracts hadn’t been signed and therefore the records were exempted by the Georgia Open Records Act.

State Agriculture Department records were also sparse in giving any explanation for the decision, although Black said it fit the department’s needs and officials were anxious to get started on the project.

“It was in the best interest of the Poultry Lab and the industry to get this construction under way,” Black said.

Black said he didn’t know who owned the property the state was buying.

“Glad we got a good piece of property, and that’s all I know about it,” he said.

‘An awful lot of weeds’

Harvey Newman, a Georgia State University public management and policy professor, said with the slow economy for manufacturing, there aren’t that many large-scale industrial park projects being started.

“There are an awful lot of weeds growing in industrial parks across the Southeast and the country,” he said. “Just baecause they build it doesn’t mean they will come. You hope good things would happen, but there is no guarantee. In this climate, you wonder if there is going to be demand.”

Most Hall County commissioners backed the county spending money to make the park “site ready,” but Commissioner Craig Lutz voted against it. Lutz said he wasn’t concerned about who owned the land. He’s just afraid the county could be on the hook for as much as $20 million in improvements by the time the project is completed. He worries about how long it will take for taxpayers to get their money back for building roads, providing and maintaining landscaping, putting in utilities and a host of other improvements to the property.

“The question is the proper role of government,” Lutz said. “These are all things I don’t think county government should be financing.”

Aiken, the citizen activist, argues that the owners will wind up making a tidy profit on undeveloped land they bought just before the real estate market went bust.

“A bunch of good ol’ boys got under water and they are being bailed out by the taxpayers at taxpayer expense,” he said. “The losers are the taxpayers of Hall County. They winners are the owners, and I will assure you Deal is involved.”

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