INVESTIGATIVE REPORT

THE HIGH COST OF LOW COST
A Look At Building Hurricane's Wal-Mart
Story by Lawrence J. Smith
Photos by Mark Hallburn
Publisher
PutnamLIVE.com

Putnam County’s attempt to develop a controversial piece of property in                                          Hurricane has cost                                          taxpayers nearly                                            $750,000, records show,                                        while heavily-damaging                                           the county's ethical                                         reputation.

In July of 2006, nearly                                           two years after signing an                         "       "option to buy" the                                            Putnam County                                              Development Authority finally closed a deal with Wal- Mart to develop about 25 acres of hillside land above the Courts Motors dealership overlooking Interstate 64, and adjacent to Hurricane Creek Road.  The finalization of the deal for the retail giant to build a supercenter there stopped the accruing on interest the Authority was paying on a $2.85 million loan it took out nearly five years ago to buy 45 acres of property to lure the West Virginia Lottery headquarters away from Charleston.

According to Gary Walton, the Authority’s executive director, $709,000 in interest accumulated on the life of the loan.  The loan, Walton said, was obtained from Rock Branch Community Bank with the interest rate fluctuating between five and seven percent.

Once the deal with Wal-Mart was finalized, the Authority paid-off the interest with money borrowed from the county commission, Walton said. To date, the Authority has reimbursed the commission $40,000.

That amount, Walton says, came from the proceeds of its sale of the old community service building on W. Va. 34.

The interest is only thing the county had to pay, Walton says. The $119,812 per acre Wal-Mart paid for the 25 acres was more than enough to cover the principal amount of the loan. An additional sale of land to build the “Hurricane Marketplace” adjacent to the Wal-Mart has helped reimburse the interest paid by the PCDA.

 

The Rock Branch Bank connection

There are numerous banks in Putnam County. The loan for the PCDA purchase of the land was done with Rock Branch Bank. Some of the people involved with the bank as well as county government have Putnam County citizens questioning the situation. The president of Rock Branch Bank is Alan Otey. His wife, Sherry Otey, is the Putnam County Commission's Secretary. According to the West Virginia Banking Commission former Putnam County Commissioner Jim Withrow also sat on the Board of Directors of Rock Branch Community Bank.

Alan Otey hung up when PutnamLIVE.com called him seeking comment on the loan. Sherry Otey called our question about the situation "ridiculous." Former PCDA Board of Directors President Robert Pennington says he "cannot recall" if other banks were allowed to bid for the loan.

 

A money shuffle and dirty politics

PutnamLIVE.com has learned that $500,000 of the interest came from funds diverted from Parks and Recreation that was targeted for a new park near U.S. 35. When the money was diverted, the park project fell through.

After then Putnam County Parks and Recreation Director Cordie Hudkins, Jr. protested the diversion, then Putnam County Commissioners Stephen H. Andes, James H. “Jim” Caruthers, Jr., and Raymond “Joe” Haynes played political hardball. They signed a letter asking the Parks and Recreation Commission to fire Hudkins. When the Parks and Recreation Commissioners stood behind their award-winning director, Andes, Haynes, Caruthers, and Haynes played more hardball. They removed numerous Parks and Recreation Commissioners, including longtime Commission President Sally Holliday, appointed Haynes, and stacked the Parks and Recreation Commission with enough members to fire Hudkins.

One of the Parks and Recreation Commissioners that voted to fire Hudkins, was Dennis Prisk. PutnamLIVE.com learned that he moved to Cabell County months before that vote. Despite a state law that says Prisk should have been disqualified, Andes, Caruthers, and Haynes refused to remove Prisk from the Putnam board for months. Prisk also informed the Parks and Recreation Commission that he changed his last name to Anderson. He has since left the Parks and Recreation Commission.

 

The high cost to Putnam County’s reputation

PutnamLIVE.com’s research learned that there are more costs than interest involved in the Wal-Mart project. Walton did not disclose the legal fees involved in the project, totaling more than $20,000, until PutnamLIVE.com obtained information through Freedom of Information Act Requests-which he resisted. In addition to the financial cost of the Wal-Mart project is the cost to Putnam County’s reputation. The PCDA’s repeated resistance to FOIA requests, the nasty way it has treated nearby neighbors to the project, and its admission to The Daily Mail that it tried to keep the Wal-Mart project quiet has showed the world that Putnam County officials flushed ethics down the toilet to land a Wal-Mart.

Gamble to land Lottery headquarters unlucky

In 2001, the Authority acquired the land in an attempt relocate the Lottery’s headquarters from Charleston.  The Kanawha County Commission filed suit to halt the move.

In 2003, Kanawha County Circuit Judge Irene C. Berger, a locally elected judge, ruled that under the West Virginia Constitution, the main offices of any state department must remain in Charleston. Critics say her ruling was driven by politics, not the law.

With interest continuing to accrue for the $2.85 million loan, the Authority continued to look for prospective buyers for the property.  In March 2005, plans were revealed by PutnamLIVE.com that the Authority had agreed to an option to buy in November of 2004 with Wal-Mart to locate a supercenter on the property.

Information about the proposal was acquired from the Authority via the Freedom of Information Act.  Records show the Authority consulted with Putnam County attorney Harvey Peyton on how to reply to the request submitted to it by PutnamLIVE.com publisher Mark Hallburn when the publisher broke the story about the Wal-Mart deal.

The Authority paid $250 for Peyton’s legal advice, Walton says.

 

"A risk worth taking"

Despite the nearly $750,000 spent on the Wal-Mart project, one PCDA Board of Directors member defends the situation. Scott D. Edwards, who also is Hurricane’s Disputed Mayor puts a positive spin on the sins, saying, “It is a risk worth taking” and will bring hundreds of jobs to the area.

Edwards willingness to take a risk apparently stops with government money. He has turned down offers to buy one of the neighbor's homes next to the Wal-Mart construction site leaving some of his constituents to endure more than 16 months of excessive noise, smoke, dust, power and water outages.

 

Freedom of Information Act Requests a “Pain in the Ass"

After Walton told Hallburn that rumors of a Wal-Mart deal were false Hallburn learned the truth. The option to buy contract was actually signed months prior to Walton denying its existence, Hallburn relied on Freedom of Information Act requests to gain truthful information from Walton and the PCDA. Several weeks after Hallburn’s first FOIA was filed, Walton sent an E-mail to Putnam County Attorney Jennifer Scragg calling Hallburn’s requests “fishing” and a “pain in the ass.”

Later, when Hallburn stopped by the PCDA to review records as entitled by West Virginia and federal law, Putnam County Sheriff’s Department records indicate Walton threw Hallburn out of his office and struck him with a door as Hallburn was leaving. Walton says Hallburn refused to leave. Hallburn says he was on his way out of the office when Walton struck him with the door. No charges were filed against Walton or Hallburn who each called the Sheriff’s Department, however several important questions remain: Why wouldn’t Walton allow Hallburn to review the agency’s public records? What is the PCDA trying to hide from the public? Why won’t the PCDA fire Walton for his behavior? And, most importantly, why won’t the PCDA act in an ethical and professional manner?

 

$23,000 in legal bills

In addition to paying for Peyton’s services, the Authority also contracted with the Charleston law firm of Bowles, Rice, McDavid, Graff and Love to handle negotiations with Wal-Mart.  The negotiations, Walton says, took place mostly via mail and fax, and no money was expended hosting Wal-Mart representatives.

“We have never dealt with any Wal-Mart officials,” Walton says.

The Authority, Walton says, dealt exclusively with East Coast Development Corporation which acted as Wal-Mart’s agent.

Records obtained via the Freedom of Information Act show Charleston Attorney Charles Dollison handled the matter for the Authority.  He has billed them $20,064.06.

However, at the time this article was composed, records show $17,770.21 remains unpaid.

In addition to paying for legal services to Dollison and Peyton, records show the Authority also hired Michael Basile to draft a FOIA policy.  When sent a FOIA request to inquire about how much Basile was paid to consult on its FOIA policy, Authority, as well as other county officials, were reluctant to reply.

 

More PCDA resistance to Freedom of Information Act Requests

On December 20th, 2006, Walton was called to inquire about the existence of the Authority's FOIA policy. Acknowledging the existence of the policy, Walton Michael Basile, with the Charleston law office of Spilman, Thomas and Battle wrote the policy, but he didn't know how much Basile was paid.

He promised that information would be made available on January 2^nd, 2007 when Gloretta Bishop, the Authority’s secretary, returned from vacation.

A Freedom on Information Act request was e-mailed December 21^st, 2006 respectfully asking him for the information. Walton, again, said the information would not be available until Ms. Bishop's return.

On December 25^th, 2006, a reply to Walton’s December 21^st, 2006 e-mail was sent reminding him that as custodian of the Authority’s records, he had until December 29th to reply the FOIA request, or risk the Authority being in violation of West Virginia  law. A carbon copy of this message was sent to several members of the Authority’s board of directors and county officials, including County Attorney Jennifer Scragg.

When Walton didn't reply by December 29^th 2006, calls were made to Scragg at both the county commission and prosecutor’s office. Clerks who answered the phone said Scragg was on vacation, and not expected to return until January 2^nd, 2007.

When asked who within the county administration could lend assistance, a clerk said possibly County Administrator Brian Donat.  However, at 1:30 p.m., the clerk said Donat had left for the weekend.

The clerk said she would call Donat at home and relay a message about Walton’s failure to respond to the FOIA and its legal implications for the county. No calls were returned.

However, on January 2nd, 2007, Walton finally replied to the request stating the “entire amount paid to Mr. Basile’s firm (Spilman Thomas and Battle), in 2006, including dealing with most recent requests total $2,897.69

In a follow-up message, Walton confirmed that Basile was paid for the total amount he invoiced the Authority.

Add the $250 paid to Harvey Peyton and the PCDA has agreed to pay more than $23,000 in legal fees related to the Wal-Mart project and fighting FOIA requests.

In its summer 2006 edition, West Virginia Executive magazine ranked Basile 28^th in a list of the 50 most powerful people in West Virginia.  According the biographical sketch it wrote about him, West Virginia Executive said “Spilman Thomas and Battle's rise to one of West Virginia's most respected and sought after law firms can be directly linked to Mike Basile's leadership. Basile has quickly established himself as a man who can be trusted and who can pull together the resources needed to overcome any challenge.”

 

Commissioners dodge tough, but fair, questions

Reaction from Putnam County Commissioners about the Wal-Mart price tag was mixed. Former President Haynes says he was “not familiar with all the details,” but was “glad that there’s some development going on there.”

Current President Andes dodged questions about the cost saying only “I inherited it when we came in, and we made the best of a bad situation.”

That statement isn’t true.

Research shows Andes did not inherit the Wal-Mart situation. The deal was actually signed while he was an active member of the Putnam County Commission. And the Putnam County web site listed Andes as one of the members of the board of directors of the PCDA.

Departing commission president Caruthers did not return repeated phone calls seeking a comment.  Caruthers was defeated for re-election by Gary Tillis in November of 2006 and no longer sits on the Putnam County Commission.

 

         Out of state jobs?

         The current contractor working on the Wal-Mart site is Cleveland Construction, is based in Mentor, Ohio. The company rented a building near the site and reportedly hired up to 150 workers from Ohio to build the Supercenter. Subcontractors hired to work on the job included Mastec, a Miami, Florida company, to do electrical work. Cleveland Construction has not returned calls to PutnamLIVE.com about the out-of-state workers.

New Putnam County Commissioner Gary Tillis says he is concerned about the use of out-of-state workers to build the store.

“I am hoping they will hire as many Putnam County and West Virginia workers as possible,” says Tillis. “We have many qualified workers who can build the store, and many of them are forced to work in other states away from their homes and families. I hope Cleveland Construction hires as many Putnam County workers as possible. If Wal-Mart wants us to shop in their store, they need to make sure our people build their store.”

 

The high cost to the environment

PutnamLIVE.com reported that Wal-Mart was issued five Notices of Violation in October of 2006 by the West Virginia Department of Environmental Protection for stream pollution, permit and signage issues at the Hurricane site. Those violations were signed off by a Superintendent from Hudson Construction, of Tennessee, who was working on the site initially. Wal-Mart responded by firing Hudson Construction Company which declined to respond to PutnamLIVE.com’s request for comment. “We take the environment very seriously,” says Wal-Mart executive Patrick Hamilton. “We quickly removed that contractor from the project.”

Neighbors living next to the construction site, including Hallburn, have repeatedly complained to Hurricane and Wal-Mart officials about excessive construction noise, but have been told to “move” by Hurricane City Manager Benjamin Newhouse, who doesn’t live in Hurricane. In December, Acting Putnam Circuit Judge Robert Chafin ruled that Hurricane’s noise ordinance was “unconstitutional” leaving neighbors no legal recourse against the noise, except to sue for damages, a long, arduous process that doesn’t stop the noise. Hallburn has filed suit and is frustrated by hearing delays that he blames on Presiding Judge Norbert “Ed” Eagloski who Hallburn says is “politically motivated and incompetent.”

On the afternoon of Friday, January 12th, 2007, Environmental Resource Specialist Fred Teel of the WVDEP ordered workers to stop burning trees with an apparatus located just feet away from the homes where Hallburn, John Clay, and his son, “Jay” Clay live. Ash from the burning covered all three homes, and numerous cars owned by John Clay and Hallburn. The men report they could smell the smoke indoors with their windows close. Hallburn evacuated his 81-year-old mother-in-law because he was concerned about her health in the smoke-filled home. Both say in addition to the trees, “it smelled like tires were being burned,” however no evidence of tires were discovered by Teel. Hours later the smell of smoke lingered in the area.

“They have 25 acres, I don’t understand why they positioned the burning machine next to our homes,” says Hallburn. “They shouldn’t burn anyway. It would be better to grind the trees into mulch and donate that mulch to Parks and Recreation or Putnam County Schools or homeowners and churches.”

Teel, who warned workers about the smoke when he was investigating the site in January of 2007 issued an additional Notice of Violation for the excessive smoke and ash. Teel was also called in early February to investigate burning at night at the construction site. Teel tells PutnamLIVE.com that burning at night is not allowed under the issued permit. Calls to his inquiring about whether a Notice of Violation was issued for the burning at night have not been returned.

In addition to construction noise, Hallburn says the hill where the store will sit used to be a buffer from noise from Interstate 64. “Now, with the hillside chopped down and the trees removed, it sounds like the freeway is in our front yard. It used to be we could lay in our hammock out front and watch the deer. Now the deer are mostly gone and the noise from tractors and the interstate is overwhelming. Common sense says people are entitled to peace and quiet on their property but Hurricane officials demand we endure the construction noise. They call it “progress” but the noise is offensive, and so is their incredible insensitivity to residents who have lived here and paid taxes for decades.”

 

Hallburn arrested after reporting facts about development

While research was being conducted for this story, Hallburn pressed Hurricane city officials and representatives of Cleveland Construction, the contractor hired by Wal-Mart, about complying with the city’s noise ordinance.  Hallburn’s quest to obtain a comment for a news story resulted in his arrest in January for one misdemeanor charge of “telephone harassment.”

Over several weeks, Hallburn wrote and published several articles detailing blasting done by Cleveland Construction and its subcontractor Kanawha Stone disrupting nearby resident’s lives, Notices of Violation issued to Wal-Mart by the state Department of Environmental Protection for violation of environmental regulations and the failure of city officials to enforce its own  noise ordinance.

Calls made to former Hurricane Mayor F. Raymond Peak and City Manager Ben Newhouse resulted in both becoming abrasive with him and abruptly hanging up the telephone.  One article detailed that Newhouse did not live within the city limits of Hurricane.

Hours after Hallburn published the report about the blasting and Newhouse living outside the city, he experienced small-town payback.

Two officers from the Hurricane Police Department showed up at Hallburn’s home around midnight, and arrested him on a charge of telephone harassment. The complaint was initiated by Cleveland Construction’s site supervisor David Koon who alleges Hallburn screamed and sounded an air-horn through the phone’s receiver. Hallburn denies the allegations and says he does not own an air horn.

“These are ridiculous charges,” says Hallburn. “Someone is trying to shut down reporting about all of the construction noise, pollution, and blasting.”

Hallburn was booked and released from the Western Regional Jail in Barboursville on a $1,000 personal recognizance bond a few hours later. 

“We’re going to fight this vigorously,” Hallburn said. “I called them to get their side of the story for a [construction] blasting story and they chose to turn that into a harassment call.”

             Hallburn was acquitted in April of 2007 and is suing Cleveland Construction as well as Koon. He plans to add the City of Hurricane and its police department to that suit in the coming weeks. 

 

          The unlicensed blaster

          On January 18th, 2007, the West Virginia Fire Marshal's office issued a citation to a blaster for blasting without a license. The citation was later dismissed in Putnam County Court after court records indicate the man blamed his employer for failing to renew the license. The blaster has since renewed his license, according to Deputy Fire Marshal Anthony Carrico.

          Fire Marshall Sterling Lewis, Jr., a Putnam County resident, says he empathizes with nearby residents whose homes are being rocked by the blasts. "The legislature sets the blasting standards," says Lewis. "We can only enforce what the law allows." Still, Lewis says that if residents around the state push for stronger legislation, and contact his office, he is willing to promote laws that protect the rights of those living beside construction sites.

 

        Completion date projection

        While the Wal-Mart project is controversial, with people around Putnam County taking sides, one thing many agree about is that they will be glad when the store is completed. The Grand Opening was projected for September of 2007. However, delays have moved that grand opening to March of 2008, forcing neighbors to endure more excessive construction noise. The store is expected to provide hundreds of jobs to Putnam County residents. A hiring center has been opened in Teays Valley. Eventually, it is hoped Wal-Mart, Hurricane Marketplace, and other expected stores will attract shoppers from Cabell County. Many Putnam County shoppers commute to Nitro and Barboursville to shop at Wal-Marts in those communities. Keeping those dollars in Putnam County is one of Walton's goals. Bringing more property tax revenue to Putnam County as well as Business and Occupation Tax revenue to Hurricane are also the goals of Putnam County leaders.

       "This is progress for Hurricane and Putnam County," says Hurricane City Manager Ben Newhouse. "This will be good for everyone," adds Edwards, "The benefits are huge."

 

       Crime, not customers

       While the Wal-Mart remains vacant, it has become a target for criminals. Through the construction process, thieves have stolen construction equipment, and targeted the store for vandalism. Lack of security at the site as well as expensive tools and its location near Interstate 64 have made it vulnerable for crime. Critics say this crime is only the beginning, that once the store opens, Hurricane PD will be spending many hours dealing with shoplifters and other criminals that are attracted to Wal-Marts.

 

        More development for Hurricane?

       Walton says he hopes the remaining PCDA land as well as surrounding homes and acreage will be developed for more stores and restaurants. He sees Wal-Mart as only the beginning of a retail-restaurant district that will provide more jobs and revenue to Putnam County. And, he hopes, that the debate generated over the ethics and concerns about the Wal-Mart project will be drowned out by an enormously successful complex that will pay off for Putnam County for generations to come. Years after Walton signed the option to sell the land for the Wal-Mart, none of those things have happened. Instead, both the Wal-Mart and Hurricane Marketplace storefronts remain vacant.

Publisher's note: This article was originally published in 2007. It was updated for re-publication.

 

 

 

Gary

Walton