Did High try to “snooker” Gray to pay $5M twice?

During a Thursday, October 29 debate, incumbent Mayor Rick Gray said that former mayor and campaign opponent Charlie Smithgall had saddled the City with a $5 million cash commitment to the Convention Center Hotel. When Charlie Smithgall denied making such a commitment, Gray handed him a letter (page 1; page 2) dated Oct. 18, 2000 —from the former mayor himself—to Tom Smithgall of the High Group, which included the following statement:

“When we last met, we outlined a few financial structures whereby the City could participate in making the hotel and convention center project at the Watt & Shand building a reality. We discussed the magnitude of this involvement being $5 million.”

And later,

“We all realize that this project contains a complex array of steps that must come together in order for the project to proceed. We trust that the City’s commitment of $5 million will be a cornerstone of this effort.”

Gray later told NewsLanc that the letter was given to him by Tom Smithgall in 2006, at a time when the hotel was facing a $20 million shortfall. During a meeting to discuss possible funding solutions, Gray said, he was first offered the document. “It wasn’t like, ‘you have to pay this,’” Gray stressed, “It was like, ‘do you know that the city made a commitment on this?’”

At that point, since the commitment was made with no legal authority, public discussion, or review by City Council, Gray decided that the City would not provide any part of this cash contribution. “It put me in a difficult position,” Gray said.

Charlie Smithgall, who still does not remember writing the letter, insists that the “$5 million” would never have meant a literal cash donation. He noted that the letter, dated October 18, 2000, predates a number of efforts on the City’s part to provide the hotel with tax abatement and special Tax Increment Funds (TIF). Furthermore, Charlie Smithgall asserted, the letter predates the City Redevelopment Authority’s 2005 purchase of the Watt & Shand building, securing a tax-exempt status for the hotel, which would be leasing the site from the City.

By the time Gray arrived in office, Charlie Smithgall concluded, “We more than fulfilled that part of the request.”

Charlie Smithgall indicated that, when presenting this letter to Gray, the High Group should have been well aware that the “$5 million” in question did not represent a cash commitment. As he told Gray during the morning debate, “If they came to you, you were snookered.” The former mayor said that, while he was in office, High representatives “were in every day with a different deal.”

At one point, Charlie Smithgall said, the High Group even pushed for the City pay for the hotel in its entirety.

As an aside, the former mayor noted that, had his secretary prepared this letter, it would normally have featured her initials—which the existing document does not. According to Gray, the City Hall staff has not been able to locate any record of this letter among files at the Mayor’s Office. Therefore, for the time being, the only known copy of this letter is the one provided by the High Group.

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Updated: August 4, 2016 — 3:15 pm
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