Jay Rath’s August Post on the Edgewater

The firm seeking to redevelop the Edgewater Hotel could lose its lobbying privileges; the company has not reported what it’s spent for lobbying. Figures for all lobbyists during the first half of 2009 were released by the city on Tuesday.

The developer is also creating text for supporters to post on Internet blogs and forums, including those on this one, madison.com.

“We will assist you by drafting and distributing key message statements so you can tailor your comments for specific audiences,” the developer’s community relations director, Sarah Carpenter, wrote in an e-mail Wednesday.

(Text of the e-mail is reproduced at the end of this story.)

Lobbyists do not have to release amounts spent if the principal’s total is under $1,000. Given Hammes Sports and Entertainment’s sizeable Edgewater lobbying effort, it would seem likely that the firm has spent much more than that. Still, Carpenter confirmed the spending report today.

“The amount is accurate to the best of our knowledge,” she says.

While details of a new Edgewater are still sketchy, a fuller picture is emerging of Hammes, which seeks to expand the hotel:

Robert P. Dunn, of Hammes’ Madison office, does business under 18 company names and contributed $5,000 to an Illinois fund convicted of racketeering. The scandal led to a governor’s downfall. Dunn is traveling this week and was not available for comment.

As a political appointee, Hammes’ CEO came perilously close to insider trading in 2000; according to a former assistant chief counsel at the U.S. Securities and Exchange Commission, “It represents exactly the kind of conflict-ridden fund transaction that Congress intended to prevent.” Investors lost $62 million.
Then there’s Miami.

Hammes Sports and Entertainment, the Hammes Company subsidiary seeking to expand the Edgewater, sued that city for more than $2 million. Miami settled, leading the former city manager to say of Hammes, “They are getting away with murder.”

Controlling debate
Expansion of the Edgewater, 666 Wisconsin Ave., may be a great idea, but critics have questioned the developer’s lobbying and marketing in advance of formal presentation to the city. They fear that the project may be sold as-is to decision-making politicians before meaningful planning debate can occur.
So intent is Hammes Sports on controlling debate that yesterday it circulated an e-mail asking supporters to “Monitor and post comments on various blogs,” including those of former mayor Paul Soglin, former alder Brenda Konkel, and forums of The Wisconsin State Journal and Isthmus.
“Typically the first few comments are read, so it is important we get them posted as soon as the article appears on line. After 24-48 hours the posting activity virtually stops,” wrote Carpenter.
Asked today whether or not creating messages for others to post might be viewed as unusual, Carpenter had no comment except to ask, “Where did you get that? It was sent to a very select list of people.”
Hammes Sports is expected to ask Madison to change multiple ordinances, give up a right of way and request tax incremental financing. Like any good banker considering a loan request, taxpayers may want to know more about who’s asking for their money.
It’s a long story, but not really that complex. In fact, we can begin with a game:

Let’s play Monopoly
Some information is circulating. Lobbying has been underway since September, during which Hammes claims to have held “more than 225 meetings with community interest groups.” There have also been informational presentations by the developer to the city Landmarks Commission and the Department of Planning and Community and Economic Development.
Once all the information is officially presented, it still may be difficult for many to fully comprehend the scale of the proposal. That’s because it’s so big. But here’s one simple way to look at it:
In your left hand, hold a nickel.
In your right hand, hold a dollar bill, a nickel and seven pennies.
If each cent equals $100,000, your left hand is the existing Edgewater. Your right is what the developer wants to make it. Compared this way, the project may be viewed as a completely new entity with the original Edgewater as a relatively small annex.
That may not be a useful comparison, however. After all, the finished facility will be much more than a hotel. In fact, despite its size, it will have a net increase of only 123 rooms, the fewest of four proposed new downtown hotels. The expanded Edgewater will include condos, retail space, office space, meeting rooms, restaurants, a salon and spa. Madison has nothing like it, but let’s try one more comparison:
If the top of Wisconsin Avenue were a Monopoly Board, you could plunk down East Towne right next to the lake and add four current Edgewater Hotels, and you would still not reach the size of the proposed project.
The new Edgewater will be worth $107 million.
All of East Towne Mall is assessed at $84 million.
An awful lot of money is at stake.

“Officials were tricked”
Robert P. Dunn has been identified in the media and by a Hammes press release as “president of Hammes Company.” He is not.
Dunn is president of Hammes Company Sports and Entertainment, a subsidiary of Brookfield-based Hammes Company. Jon Hammes is chair and CEO of Hammes Company. Richard Galling is its president and chief operating officer.
The distinction between the companies turned out to be very important to the City of Miami. The mistaken identity cost them three quarters of a million dollars. It’s part of what’s known there as “The Hammes Contract Scandal.”
Miami wanted Hammes to do a $150 million renovation of the Orange Bowl. The city broke a project management agreement, according to the Miami SunPost, because it wanted to hire the parent company, not a Florida limited liability company set up by Hammes Sports. The perception was that “officials were tricked into a contract with a company that would be less liable for mistakes and mismanagement,” wrote reporter Ryan Brown.
Hammes Sports brought a compensatory lawsuit over the broken agreement “in excess of $2 million.” City attorney Jorge Fernandez feared that the final tab could run as high as $13 million. Hammes also asked for a court order forcing the city to honor the contract.
The City of Miami eventually settled for $750,000, in 2006. Brown reported, “Handing this large sum of money over to a company in Wisconsin, for no goods or services in return, may actually be a bargain, some city officials reason.“
Litigation by Hammes with the City of Miami may be worrisome in several respects. According to Amy Supple of Hammes Sports, the City of Madison already has similarly made promises regarding the Edgewater approvals process. More on this later.
Hammes Sports does seem to have bad luck with contracts. According to The Milwaukee Journal-Sentinel, the company is being sued there for $50,000 by JBK Properties Inc. JBK says Hammes Sports signed a contract for JBK consulting services. According to the newspaper, “Hammes’ court response said the firm initially sent an e-mail to JBK indicating that the consulting contract had been signed.
“But Hammes later sent another e-mail saying it hadn’t signed the agreement.”
Whoops.

Politics of the deal
There’s a long list of what appear to be irregularities in Edgewater lobbying documents. For example, former Madison city attorney Henry Gempeler, now at Foley and Lardner, is represented as one the Edgewater lobbyists registered with the city.
Gempeler did not sign his registration form.
Is Hammes Sports just sloppy or naive when it comes to working with government? That’s a notion that’s difficult to credit, given the firm’s interest and experience in politics.
The art of the deal often necessarily includes the art of politics. CEO Jon Hammes is adept in both worlds.
Just how adept is best shown by an example, such as when Hammes chaired the State of Wisconsin Investment Board. He was appointed by Gov. Tommy Thompson. In 2000 Hammes also served on the boards of two municipal funds. Hammes put together a deal by which the funds sold a porfolio of distressed bonds to the state, with the added benefit of a guaranteed 20 percent annual return and return of principal. Within two and a half weeks the funds were repriced twice, reducing their net asset values by as much as 70 percent. Exactly who the deal benefited is unclear; the funds collapsed and the state was left with bonds that apparently were overvalued.
One thing’s for sure: including the guarantees, shareholders were stuck with a $62 million aggregate loss.
“This carefully lawyered deal appears to pass legal muster,” wrote Mercer Bullard, former assistant chief counsel at the U.S. Securities and Exchange Commission. However, “shareholders saddled with the drastic losses surely have the right to ask whether they were further victimized by a disadvantageous transaction.”

“A criminal enterprise”
Lobbying is one way to affect legislation. Another is by making campaign contributions to candidates who represent your views.
The head of Hammes Sports, Robert Dunn, has had an interest in politics for many years. In 1996 he donated $1,000 to Robert Dole for President. In 1999 he and his wife, Julie, donated $1,000 to George W. Bush.
He does not appear to have contributed to John McCain, but in 2008 CEO Jon Hammes served as a McCain/Palin “bundler.” Bundlers are those who have reached their personal contribution limit, and then deliver associates’ checks in a large “bundle.” Jon Hammes delivered a bundle to McCain of $500,000 or more (reporting bundle totals above that amount is not required; McCain’s and Obama’s campaigns have both been criticized for not reporting details).
Some might wonder why Hammes requires tax incremental financing for its projects, when it has such considerable resources for campaign donations.
Over time, Robert and Julie Dunn appear to have been less interested in national politics and much more interested in regional campaigns of various parties — curiously, outside Madison and even out of state. (Hammes Sports’ letterhead indicates the company operates in 15 cities in 14 states.)
The Dunns have made contributions to campaigns including: Friends of Minnesota Congressman Jim Oberstar (Dem.-Farm-Labor, Dist. 8); to Wisconsin State Sen. Dave Zien for Congress (GOP, Dist. 23); and to Wisconsin Assembly speaker Rep. John Gard for Congress (GOP, Dist. 89) (Stuart Zadra of Hammes also contributed).
Most interesting of all, according to the Illinois State Board of Elections, in 1998 Robert Dunn donated to Citizens for George Ryan (GOP). Thanks in small part to this civic minded act, Ryan was elected governor of Illinois.
Then he was indicted.
According to the prosecutor, “Mr. Ryan steered contracts worth millions of dollars to friends and took payments and vacations in return.” In 2006 Ryan was convicted on 20 counts of racketeering, bribery, extortion, money laundering and tax fraud. In all 76 officials, lobbyists and others were convicted.
“For a period spanning seven years, Citizens for Ryan conducted itself as a criminal enterprise,” summed up U.S. Attorney Patrick Fitzgerald.
Madison resident and Hammes employee Robert Dunn donated $5,000 to Citizens for Ryan.
Ryan is scheduled to be released from federal prison in 2013.

Which Hammes?
Officials in Miami, smarting over their losses to Hammes, can perhaps be forgiven for their confusion as to which company they were hiring. Even setting aside the parent company, Dunn’s branch of Hammes operates as a welter of entities.
In Wisconsin alone, these include Hammes Company Sports and Entertainment, Hammes Company Sports Development, Hammes Company Sports Development International, Hammes Company Program Management and Hammes/Findorff. Dunn is also the registered agent for Dunn Investments I. His wife is the registered agent for Dunn Investments II, which shares Hammes’ Madison business address.
In all, according to the Wisconsin Department of Financial Institutions, Robert Dunn is the registered agent of 18 active state companies, most of them limited liability companies (LLCs).
The number of Dunn’s LLCs seems odd for Hammes enterprises. Jon Hammes, CEO of the vastly larger parent company, is registered agent of “only” 12 companies, two-thirds the total for Dunn, his subordinate partner.
Other area developers have even more companies. For example, Carol Mullins, of Madison’s Jerome Mullins and Associates, is the registered agent for 20 firms; however, most of her companies are specific to rental addresses.
Dunn, on the other hand, oversees companies that are not obviously tied to specific properties, including Madison Investment Opportunities, Landmark Development Services Co., and a whole series of other “Landmark” companies.
One of them — the one working on the Edgewater — is Landmark X.

Lobbying 101
Landmark X is the designated principal for Edgewater development lobbying. It has six registered lobbyists. Hammes also lists Landmark X as the “owner” of the completed Edgewater.
It’s not unusual for a developer to create an LLC to combine interests during construction. The LLC Hammes is using is not new, however. Landmark X was created Feb. 6, 2004. It is “managed by members,” according to its 1st quarter 2009 LLC report to the state. Whoever those members are, their business is “real estate, rental and leasing of property,” according to state reports.
We don’t know who those members are because the lobbyist registrations for Landmark X state that it is not an LLC, and therefore does not have to disclose that information.
According to the State Department of Financial Institutions, however, it is indeed an LLC.
According to the City of Madison’s lobbying ordinance (www.cityofmadison.com/clerk/lobbyistOrdinance.cfm), penalties for violations such as false statements include a $5,000 fine and suspension of “the privilege of any lobbyist to lobby.” Anyone may file a complaint with the city clerk. The city requires registration and — if more than $1,000 is spent — contact and spending reports, “to preserve the integrity of the City’s decision-making processes.” There
are what appear to be irregularities in Landmark X’s lobbying documents: * Landmark X reports six 2009 contacts with the mayor through June 30. The mayor’s office records eight.
* According to the ordinance, “Every lobbyist shall, within five (5) working days after the first lobbying communication made by the lobbyist, file with the City Clerk a registration statement.” Mayor Dave Cieslewicz’ first 2009 meeting with Landmark X lobbyists was Jan. 12. Landmark X’s six lobbyists did not file their 2009 registrations until Feb. 6.
* Landmark X did not report any of its lobby spending for the first six months of 2009. That’s allowed if the total spent on staff time, preparation of reports, preparation for meetings, overhead including utilities, etc., is less than $1,000 total for the principal, in this case Landmark X. (Landmark X discloses 69 contacts with “covered” city officials. Assuming just three active lobbyists attending hour-long meetings, paid only $10 an hour, the total is $2,070; an actual total is almost certainly more.)
* According to former alder Brenda Konkel, whose district included the Edgewater, she was lobbied by Landmark X starting the first week of September, 2008. However, Landmark X did not file 2008 registrations at all.
* Landmark X also did not file spending or contact reports for 2008. (Carpenter says she joined Hammes in January, and cannot address company actions before that.)

Coalition or another lobby?
Hammes development director Amy Supple is registered as a Landmark X lobbyist. Supple also chairs the Mansion Hill Neighborhood Coalition. Is this just another Hammes Sports or Landmark X interest?
According Ald. Michael Verveer, paraphrased in The Wisconsin State Journal, “The developer even organized a neighborhood group — the Mansion Hill Neighborhood Coalition — as an alternative to the existing [Capital Neighborhoods Inc.] neighborhood association.” According to The Capital Times, “Hammes Co. — along with several property owners and some residents — formed the Mansion Neighborhood Coalition.”
The Coalition first met at the Edgewater on March 26. The mayor’s office confirms that it was announced there that National Guardian Life Insurance — onto whose land the Edgewater would expand — retained Landmark X’s firm, Foley and Lardner, to create the organization. What that legal work entailed is unknown; the Coalition is not registered with the state as a corporation or company.
Hammes Sports and the Coalition are circulating a petition in support of the Edgewater development. The petition is also on Hammes Sports’ Edgewater website.
The Coalition appears to exist primarily to serve Hammes Sports.
If Coalition activities are actually on behalf of Hammes, as suggested by the daily press, or on behalf of Landmark X, or if one of Landmark X’s unnamed members is National Guardian Life, then there are what appear to be additional lobbying irregularities:
* If the Coalition is Hammes or Landmark X, it is not exempt from registering its members as lobbyists and filing contact reports. Furthermore, lobbying exemptions are not available for projects, such as the Edgewater, requesting tax incremental financing or which are more than 40,000 gross square feet.
* If the Coalition is actually working on behalf of Hammes Sports, Landmark X or National Guardian Life, then its members may have unwittingly been made liable under the lobbying ordinance’s section on “Corrupt Means to Influence Legislation; Disclosure of Interest.”
And remember the Miami agreement that didn’t work out? The Coalition is apparently already making agreements with Madison. In a June 20 e-mail to Coalition members Supple wrote that they should “get the city to memorialize what they said they would do,” including putting a hold on Capital Neighborhood’s own Mansion Hill-area development plan, half of which was paid for by the city.
“Memorialize” means merely to “preserve the memory of,” as in writing, but it’s perhaps disconcerting that this is a specific legal usage. It’s used, for example, in contract disputes, according to “A Dictionary of Modern Legal Usage.”

The price of silence
Lobby laws protect both lobbyists and officials from even the perception of a conflict of interest. Otherwise, meaningful and open debate cannot occur. It creates a healthy, positive political and business atmosphere, free of suspicion and wasted time, and it puts all developers on equal footing.
How much and what type of lobbying Hammes Sports did in Miami is unknown. According to one account, leading up to the suit “Miami leaders had made it clear to Hammes that the company was no longer welcome at city hall” (www.legalassistantblog.com/node/15201).
City supervisors there did not want any debate, especially over how they worked out the original deal with Hammes Sports. An amendment requiring public discussion before settling with the developer was never even seconded. “The sitting commissioners don’t have, or won’t give, the details,” reported the SunPost.
Miami city supervisor Tomas Regalado opposed the $750,000 buy-off. “The truth needs to be told,” he said at a meeting of the Miami City Commission. “The city needs to know what went on with that contract. [If you settle this case] you won’t be buying closure, you’ll be buying silence.”
The commissioners voted to buy silence. In the absence of discussion, The SunPost asked who would ever get the facts out?
City Attorney Jorge Fernandez replied, ” I don’t know . . . somebody.”
Miami, at least, is still waiting.
– # –
Landmark X lobbying documents may be viewed at www.cityofmadison.com/Clerk/lobbyistRegistered2009.cfm.
Forms including requirements for lobbying contact and expense reports may be viewed at www.cityofmadison.com/clerk/lobbyistForms.cfm.
The Miami SunPost has since gone out of business, but its archives are available via Internet searches of cached webpages.
The writer is a resident of the Mansion Hill neighborhood, and is not a member of any neighborhood organization.
Color project rendering courtesy Hammes Company. All other photos except document enlargements courtesy Wisconsin Historical Society.
Commentary c. 2009 Jay Rath

Text of Hammes Sports’ e-mail regarding social and other media, sent Wednesday, Aug. 5:
Dear Friends of the Edgewater –
We need your help with managing the world of social media and leveraging the social channels to benefit the redevelopment of the Edgewater Hotel. Most of you contribute to online forums, post comments on blogs, review Web sites, or register on sites like Facebook and Twitter. As the developers for the Edgewater, we need to understand, digest and invest in what our supporters and critics are saying in these social channels. Listening to, learning from, engaging and measuring these conversations will help us to present and promote the project in the best possible light.
Enlisting Your Support
All that is required is that you support the project and you are willing to assist us with reaching out to the community through various social channels. To get you started, I have outlined a few ways you can help.
1) After an article appears in any of the local newspapers we need you to post comments immediately in support of the project. Typically the first few comments are read, so it is important we get them posted as soon as the article appears on line. After 24-48 hours the posting activity virtually stops. We will notify you each time an article appears in the paper, and we will assist you by drafting and distributing key message statements so you can tailor your comments for specific audiences.
2) Monitor and post comments on various blogs. Listed below are a few blogs that we monitor daily. Please provide us with any positive or negative feedback that you think we may find useful by sending me an email with your thoughts.
Brenda Konkel:
http://brendakonkel.blogspot.com/ Laptop City Hall:
http://www.madison.com/tct/blogs/cityhall/ Mayor Dave Cieslewicz:
http://www.cityofmadison.com/mayor/blog/ Stuart Levitan:
http://stulevitanscoopsheet.blogspot.com/ The Badger Herald:
http://www.badgerherald.com/blogs/opinion/ Paul Soglin:
http://www.waxingamerica.com/ The Daily Page:
http://www.thedailypage.com/forum/viewforum.php?f=35 Madison.Com Forums:http://www.madison.com/wsj/forums/viewforum.php?f=58&sid=7d558fd5692750e2cbe096b9cafb044b/
Jack Craver- The Sconz:
http://thesconz.wordpress.com/ 3) Write a column for a magazine or one of the local newspapers, or write a letter to the editor in response to a featured story.
4) Register in support of the project on our E-Petition at
www.edgewater2012.com Please recruit your friends and family to register in support of the project. 5) Provide a project testimonial or letter of support to be used in promotional materials and presentations.
6) Become a fan of our newly created Facebook page Edgewater Hotel 2012.
It is unfortunate we have to take the time to constantly defend our efforts of restoring the Edgewater Hotel to its former glory. We will continue to stay the course and communicate the merits of the project. Remember additional information concerning the project is outlined on the Web site.
Thank you for helping us with managing the world of social media.
Sarah Dunn Carpenter
Director of Community Relations
Hammes Company
22 East Mifflin Street, Suite 800
Madison, WI. 53703
608-274-7447
608-274-7442 Fax
carpenters@hammescosports.com
PLEASE VISIT THE WEBSITE FOR THE EDGEWATER REDEVELOPMENT –
WWW.EDGEWATER2012.COM FOR MORE INFORMATION ON THE PROJECT AND TO REGISTER YOUR SUPPORT ON THE E-PETITION.