Augusta’s mayor, his two hats, and $400,000 A $1.2 million public/private deal in the state capitol suggests questions worthy of debate BY LANCE TAPLEY
	Next week in our look at corporations and politics in the era of Baldacci: In Maine, business and politics have always had a cozy relationship. In the 1970s, a book, The Paper Plantation, described how the pulp and paper industry blatantly dominated state government. These days there seems to be a new phase of brazenness in corporate political power. Questions are circulating in the state capital about this influence, some of them about one well-connected corporation. In our two-part series, next week the Phoenix will look at these questions: • What does it mean that Harper’s Development — the real-estate company based in Winthrop, run by former Maine Democratic Party executive director Kevin Mattson, and owned by some of Governor John Baldacci’s foremost campaign contributors — has obtained close to half of state contracts for office space in the Augusta area for the past few years? Harper’s and state officials say it’s just that the company provides good prices and good space, but a landlord in competition with Harper’s can’t believe it. • Is there any significance that Harper’s partnered with Robert Baldacci, an influential government consultant and the governor’s older brother, in a sizeable Saco business venture that theoretically could profit from a biotechnology bond issue the governor is pushing? The older Baldacci, who also is involved with a Portland biotech firm, denies any possibility he could profit from biotech bond issues, and he says he is now out of the Saco deal. • The state helped Harper’s secure Access Worldwide Communications as a call-center tenant, and Governor Baldacci also tried to help another call-center company, T-Mobile, build on Harper’s land by promising publicly to ensure that it received all necessary building permits within 45 days. Was this promise appropriate when there is a quasi-judicial process required for state and local permits? In answer, the governor’s spokesman said Baldacci "will go to any length to ensure that these jobs come to Maine." • From a public-policy perspective, should there be more disclosure of, and restrictions on, the corporate-government connection? For example, should there be campaign-contribution limits that restrict both the reality and the perception of what in many states is referred to as "pay to play" government contracting? That is, the perception or reality that you must contribute to candidates to get the contracts. In several states, a wall has been erected between politicians seeking campaign contributions and businesses seeking government contracts, most recently in scandal-plagued New Jersey. • More broadly still, should there be a more careful attitude among government officials, high and low, in doling out taxpayer money — detractors call it "corporate welfare" — to any business that says the magic word "jobs," which seems to make politicians salivate? John Baldacci has set a new tone in largesse to business in the two and a quarter years since his inauguration. He has expanded government generosity both in tax breaks and in specific assistance to such companies as Georgia Pacific and Casella Waste Systems. His and other politicians’ aid to the corporate world is always promoted under that universally saluted flag of securing more employment for Maine workers, but it would appear that some people in business and government have difficulty believing that problems could exist no matter how tight the business-government relationship. — LT

Part one of two: business as usual in the era of baldacci?

William Dowling wears two hats. He’s mayor of Augusta and chief operating officer of Harper’s Development, a big real-estate company owned by influential citizens, many of whom are campaign contributors to Governor John Baldacci.

Acting in both capacities, sometimes as mayor and sometimes as COO of Harper’s, he helped arrange for the state of Maine to distribute almost $400,000 in federal funds so that the city of Augusta could grant that money to Harper’s. It would buy a high-tech telephone switch that would allow Harper’s to secure a five-year lease worth $700,00 from a Florida-based call center operator, Access WorldWide Communications.

Access, for its part, said the center would employ as many as 350 people. At the time, the deal was announced in the press as a public-private partnership that would deliver much-needed jobs in a region where employment is a challenge and tax revenues from jobs worrisomely scarce.

The total bill to taxpayers comes to $1.2 million when federal, state, and local incentives are factored in, and an on-site visit revealed that today only about 135 people are employed at Access.

But the story of how the deal came about and the way in which is was executed tells a lot about the way government business is conducted in Maine, at all levels. Most of this business was conducted in public or in documents that the public can access. But reasonable questions remain about who was watching out for the public’s interest. The story will suggest that legal oversight over the deal was virtually non-existent, and that has caught the interest of the federal Department of Housing and Urban Development, which says it will be reviewing the deal.

At the center of it all is a group of political players who in one way or another are often in the news. Harper’s is owned by some of Democratic Governor John Baldacci’s chief campaign contributors, including political fundraiser and super-lobbyist Severin Beliveau; John Orestis, former Lewiston mayor and proprietor of a string of nursing homes; and Chris Harte, former president of the Portland Press Herald and Maine Sunday Telegram and, some people think, Maine’s richest man as an heir to the Harte-Hanks newspaper fortune.

One day in the fall of 2003, Michael Duguay, the City of Augusta’s economic development director, received a call from a Portland-area real-estate broker who was on the road, Duguay recalled, showing executives of Access Worldwide some locations in Maine where it might establish a call center. Duguay quickly set up appointments to show the Access people a couple of buildings.

Access became interested in the vast (300,000-plus square feet) structure on 200 acres in Augusta’s western outskirts that Harper’s Development had purchased from Sanmina-SCI earlier in the year for $4.5 million. Harper’s had recently named it the Central Maine Commerce Center. SCI — and previously, Digital Equipment — had had a computer-parts factory in the building. When it closed in 2002, it laid off 440 workers.

Talks progressed among Access, city officials, and potential landlord Harper’s, and as a condition of the deal the telemarketing company insisted on special assistance in buying a telephone switching device, which Access said cost $400,000 — in addition to the usual tax breaks that Duguay offered corporate prospects.

The switching device was a complex automatic dialer, a key piece of equipment for telemarketers, that Access had learned a similar company had gotten the state to purchase in the past, Duguay said.

To see if such aid was available, Duguay, a can-do kind of person, called Orman Whitcomb, head of the community development office in the state’s Department of Economic and Community Development. Whitcomb was optimistic about the possibility, Duguay said, although the state couldn’t give the money directly to a private company. The funds had to come from a community development block grant (CDBG) of the federal Department of Housing and Urban Development’s business-assistance program, which Whitcomb administers, and federal rules stated the cash could only go directly to a town or city.

The municipality then could give it to a private company, although the company had to be one that would use the money to obtain something that could be considered "real property"; that is, part of a building. Harper’s, the landlord, fit that bill.

Furthermore, for the state to grant the $400,000 for the switch, under federal rules at least 40 people would have to be employed at the new call center, and over half of them would have to have low or moderate income. Since call centers pay rather poorly, these requirements easily could be assured. In correspondence with city and state officials, Access talked of employing up to 350 people. A preliminary deal was worked out to have the city buy the switch and give it to Harper’s, which would then let Access use it. (See sidebar, "Easy Money from the Government," on page 2 of this story, for more on the Access deal.)

Enmeshed in these conversations, by many accounts including his own, was Augusta Mayor Dowling — as a city official and as COO of Harper’s. He was particularly helpful, interviews and correspondence in city files reveal, in moving the deal along in early 2004 when a snag developed with Access’s refusal to guarantee the number of jobs, which the city also balked at. Eventually, Harper’s partners agreed to guarantee the jobs for a short period, putting up a $400,000 letter of credit, until enough employees could be hired to fulfill the federal requirements.

Dowling negotiated with the state as mayor and then with the city as a Harper’s executive, said Ralph St. Pierre, the city’s assistant city manager and finance director. "I remember Bill being active with the CDBG grant," he said — in particular, "to get the city off the hook" on the jobs-guarantee question.

"Sure, I did speak with him" about the project, said Duguay. He talked with Mayor Dowling in his capacity as the Harper’s property manager, he said, "a fair amount of time."

Copies of city emails also show how Dowling performed two roles at the same time. For example, on February 6, 2004, Duguay sent an email to William Bridgeo, city manager, with this opening: "Bill: Wasn’t sure if you had a conversation with the Mayor yet as to where we stood on this call center client." In an undated fax to Kevin Mattson, Harper’s president, Duguay wrote, "Kevin: Bill Dowling will be explaining this to you in greater detail." He would be explaining some legal papers pertaining to the deal.

In an early report on the project to his superiors, the "Mayor and Council," on the last day of 2003, City Manager Bridgeo celebrated the deal: "Kudos go out to Bill Dowling, in his capacity as the executive for Harper’s who negotiated the deal with Access."

In a February 26, 2004, report, Bridgeo lauded (to Dowling and council members) "the extraordinary perseverance and hard work of several individuals, including Bill Dowling (in this case, in his capacity as a Executive Officer for Harper’s Development Company)," for bringing along the deal.

Bridgeo’s words indicate there was in City Hall an awareness of conflict of interest. When on March 15 the city council voted 7 to 0, with one councilor absent (the mayor only votes in case of a tie), to ratify the contract between the city and the state for the $400,000 grant, Mayor Dowling stepped down from the council platform because of conflict of interest, he and others said. He relinquished the presiding gavel to Councilor Karen Foster — his sister.

At this moment, too, another conflict of interest was declared. City corporation counsel Stephen Langsdorf had to recuse himself from dealing with this item of council business. "The reason is Severin," he later explained. Langsdorf is a partner with Severin Beliveau, one of the Harper’s owners, in the big statewide law and lobbying firm Preti Flaherty Beliveau Pachios & Haley.

After the vote, in his regular report to Mayor Dowling and the council dated March 26, 2004, Bridgeo once again praised Dowling for his "superior work" that went "well beyond the ordinary call of duty."

Bridgeo again raised the issue of conflict of interest. Working "with great care to avoid even the slightest appearance of a conflict of interest in this matter, Michael Duguay and I [Bridgeo], for the City, and Kevin Mattson and Bill Dowling, for Harper’s, have interacted daily in the development of solid documents that meet all of the federal and state requirements," he wrote. "It has only been the determination of Bill Dowling, Mike Duguay and others that have led us to a point where we succeeded." All of these laurels from the city manager to the mayor were bestowed for work, of course, on behalf of "jobs."