OXFORD — Several financial ties connect Mayor Leon Smith and the board promoting the city's commercial development.
Smith sees nothing wrong with these links between his political fundraising, one of his business interests and the city's Commercial Development Authority. But an Alabama Ethics Commission official said, depending on the facts, these relationships could violate state ethics laws.
Smith received campaign money in 2004 and 2008 from one CDA board member and in 2004 from the employer of two board members. The mayor also received donations from a businessman who received a large CDA contract, and donations from a company that bought property from the board for commercial business. Smith also sits on the local advisory board of a bank that was involved with $4 million in commercial development bonds the CDA used to develop property.
Smith noted he's never tried to hide these relationships.
Some of the information uncovered in The Star's months-long investigation of the CDA came from public records produced by Smith. These included campaign finance statements and Alabama Ethics Commission forms.
At present, Smith does not have an apparent active role related to the CDA, aside from running the city that partly bankrolls its projects. (The CDA also receives money from sales of property, which is used for development.)
The mayor said he can introduce potential business prospects to the CDA, and in the past he could vote on its membership. Oxford's form of government changed in 2004, giving more authority to the council and taking away Smith's vote.
Hugh Evans, the general counsel for the Alabama Ethics Commission, spoke about these relationships in general terms when they were posed to him by a reporter. Even though a mayor may not be involved in the CDA's activities, the official's political and financial interests pose potential ethical problems, he said.
Six degrees of Leon Smith
Evans said each individual instance could be a potential ethics violation, depending on how the facts fit together.
The connections between Oxford's mayor and its Commercial Development Authority start at the board level.
Chairman Dwight Rice, an Oxford attorney, has made at least two campaign contributions to Smith. He gave Smith $500 in 2004, and his law firm gave Smith $1,000 in 2008, campaign finance records show.
Attempts over the last two weeks to reach Rice were unsuccessful. Two other CDA board members, Mike Watts and Barney Turner, both work at Cheaha Bank, which gave Smith $500 in 2004. There were no records indicating Cheaha received business from the city related to the CDA, however.
Cheaha Bank president Shad Williams said there was no connection between his bank's contribution and its two employees' service on the board.
"We gave Mayor Smith a political contribution because we feel that he has been good for Oxford and we want to keep him as mayor," Williams said. "We're for good government."
The law firm of City Attorney John Phillips, who also serves as CDA attorney, gave Smith $500 in 2008. Phillips said he did not know if that presented any conflicts of interest.
Evans said any ethics issues would depend on whether these donations were made in exchange for a seat on the CDA board.
"If the board member is making the contribution in exchange for being appointed to the board, there's an issue," he said.
Smith said he did not see a conflict.
"They were friends of mine long before they served on those boards," he said. "Some of those people I coached (in Little League) when they were 13."
The connections between Smith and the CDA branch out from the board level to the board's commercial development activities. Unlike Oxford's City Council, the CDA is exempt from competitive bid laws. This means the CDA can award contracts to whatever company it wants.
Oxford-based Taylor Corp., for example, has a $2.6 million contract to develop property for a new Sam's Club near the Oxford Exchange. The company, under the ownership of Tommy Taylor, has received thousands of dollars worth of contracts from the city for non-CDA-related work since Smith became mayor, records show. The city also purchased property from Taylor for the city's new library. The city paid $576,549, including closing costs, according to city records.
Campaign finance records show Taylor gave Smith $1,000 in 2004 and $1,000 in 2008.
Attempts over the last two weeks to reach Taylor were unsuccessful.
Smith called Taylor a "good friend" and said he sees nothing wrong with these contracts.
"I sure don't," he said. "He's a businessman and a very good one."
Evans said the key for determining an ethics violation would be if Taylor's donations were meant to steer contracts his way.
"You'd have to look at several aspects," Evans said. "How close in proximity were donations made in granting of the award? Does it appear to be a quid pro quo? The mere fact that a contractor may have contributed in and of itself wouldn't violate the ethics law."
Taylor received the $2.6 million contract in 2008, CDA records show. Taylor donated money to Smith in May of 2008. His company received the contract in fall of that year, records show. A letter from Taylor Corp. detailing the site prep work is dated Sept. 22, 2008.
Montgomery-based Goodwyn Mills and Cawood provided engineering services related to the Exchange, and its political action committee donated $500 to Smith's re-election in 2004. The city reported paying the engineering firm more than $20,000 in 2005 for work on the Exchange. The company recently received the first of several contracts from the CDA for more work at the Exchange, city project manager Fred Denney said. The city gave the CDA $150,000 for the engineering contracts, but Denney said all of the the work would not necessarily go to Goodwyn Mills and Cawood.
Attempts for the last two weeks to reach a representative for the company were unsuccessful.
Smith said the money was approved by the City Council and that he saw nothing improper about the payments.
Evans said the standard for determining an ethics violation in cases such as this is the same as cases like Taylor Corp.'s. There must be evidence that donations were made in exchange for contracts, he said.
Sales and bonds
Georgia-based Abernathy and Timberlake Investment Group in 2005 bought land from the CDA that would become the Exchange, according to newspaper archives. The year before that, the company contributed to Smith's re-election campaign, giving the mayor $1,000, records show. The Star attempted to contact the company for this story, but an employee who answered the phone there refused to identify himself and declined to comment.
Smith said he saw no problem with the contribution and subsequent land purchase.
"They had that before I ever run," Smith said of the deal. The CDA records contained a 2003 option agreement between the developer, the city and the Oxford Water Works and Sewer Board for the Exchange property.
Evans said the CDA provides a cushion between the mayor and its activities, making it harder to draw a direct line between the two.
In 2004, the CDA borrowed $4 million in a bond issue to develop property across from Wal-Mart. The city agreed to repay the bond issue, Oxford Finance Director Alton Craft said. The "paying agent" for the bonds listed on CDA documents is Branch Banking and Trust, which is based in North Carolina. In 2005, after the proposed project for the site fell through, the City Council authorized the transfer of the money for the development of the Exchange.
Each year since 2004, Smith has made between $1,000 and $10,000 serving on a local advisory board for BB&T, state ethics forms show.
A.C. McGraw, a media relations manager with BB&T, referred all questions about the bonds to the CDA. Evans said for the situation to be ethical, Smith must be far removed from negotiations about the bond.
"The mayor would have to remove himself from any dealings or any interactions … more specifically if he is an employee," Evans said. "He can not use his position to make appointments that are going to be beneficial to his bank. He can't use confidential information to benefit them in making the (bonds.) The mayor would have to remove himself from the process."
Smith said he was not involved in those negotiations.
Tracy Roberts, assistant general counsel to the Alabama League of Municipalities, did not see anything wrong with these situations from a legal standpoint, per se, as long as the contributions were not meant to influence decisions of the CDA or the city. He agreed Smith should recuse himself from discussions about bonds involving banks he's affiliated with.
"As long as he doesn't own 50 percent or more interest in the bank, then there's not a problem with the city doing business with the bank," Roberts said. "The CDA is a separate entity altogether. It's tough to find any problems with that association."
CDA members also have a right to contribute money to political candidates, he said.
"Every citizen has the right to participate in the political process," Roberts said. "You're asking if the fact they make contributions creates any conflict. I would have to say that fact alone would not create a conflict.
"… As long as it wasn't done for the purpose of private gain," he added.