June 21, 2012HIGH POINT – High Point City Councilmember A.B. Henley is at the center of a conflict-of-interest dispute that has fermented for months within High Point city government. The dispute is over Henley soliciting business from Ralph Lauren Corp., which gets economic Incentives, requests property rezoning and otherwise has issues come up before the City Council on a regular basis.
The dispute grew severe enough that both High Point City Manager Strib Boynton and High Point Mayor Becky Smothers intervened, telling Henley that he had to stop seeking business from Ralph Lauren Corp. And High Point City Attorney JoAnne Carlyle advised Henley to recuse himself from votes involving the company and to absent himself from hearings and meetings on the company's recent request for economic Incentives and to rezone land.
The dispute, kept quiet and handled between Henley, Boynton, Smothers and Carlyle, began in January 2012, and culminated in an angry May 10, 2012 email from Henley to Smothers, the other eight councilmembers, Boynton, Carlyle and former City Attorney Fred Baggett defending his actions and stating his determination to keep doing business as he has always done, despite the interventions by Boynton and Smothers.
Henley wrote that on Monday, May 7, under advice from Carlyle, he had asked to be excused from the City Council's consideration of a Ralph Lauren Corp. issue. He wrote, "The reason for my doing so has to do not with an existing conflict of interest but with appearance of a possible conflict surrounding the matter involving Ralph Lauren."
The May 7 meeting included a right-of-way encroachment case that would allow Carolina Investment Properties VI LLC, the owners of the Kivett Drive Industrial Park, to run communication lines between the Ralph Lauren facilities at 201 and 206 N. Pendleton Street. The request was approved by a 7 to 0 vote. Henley was present, but was excused by a vote of the council, and Councilmember Foster Douglas was absent.
The May 7 meeting was just one of numerous spring meetings in which the City Council considered or voted on requests by Ralph Lauren Corp.
The meetings began at least as early as April 2, 2012, when the City Council held a closed meeting to consider giving the company economic Incentives, and continued until May 14, when the City Council voted 7 to 0 to give Ralph Lauren Corp. up to $2 million in economic Incentives to add jobs among three company facilities already in High Point – two at 4100 Beechwood Dr. in Piedmont Centre and the fulfillment center for the ralphlauren.com internet sales site on North Pendleton Street, just off East Kivett Drive. Henley and Douglas were absent for that vote.
In between, on April 16, 2012, the City Council, on dual 6 to 0 votes, approved a land-use plan amendment and a rezoning request by Carolina Investment Properties to rezone 25 acres on the south side of Cedrow Drive. The land use plan and rezoning were to allow Ralph Lauren Corp. to expand its North Pendleton Street property to accommodate an expansion that would create 500 jobs and add $142 million to High Point's tax base. Councilmembers Mike Pugh, Henley and Smothers were absent for those votes.
At the May 14 meeting at which the City Council approved the economic Incentives, Ralph Lauren Corp. told the City Council that the Incentives would allow the addition of 500 jobs in Guilford County over five years, invest $30 million in construction or land purchases and increase the county's personal-property tax base by $112 million – so the jobs were clearly intended primarily for the North Pendleton Street site.
According to Henley's May 10 email, on Feb. 27, 2012, his real estate firm, RealtyAnalytix Advisors LLC of High Point, "responded to a request by Ralph Lauren and prepared at no cost to Ralph Lauren a Triad Market Survey of industrial real estate."
Henley's claim that Ralph Lauren Corp. approached him to do the job, rather than the other way around, is disputed, and important. Smothers said she was told by Boynton that Henley approached Ralph Lauren Corp. – although she said she did not question company representatives on the issue. If Smothers' information is accurate, it would mean that Henley approached Ralph Lauren Corp. with what city hall sources said was a list of properties for future expansions shortly before the City Council began considering millions of dollars in economic Incentives to fund just such an expansion.
If Ralph Lauren Corp. approached Henley first, it could be seen as an attempt to sway the vote of a city councilmember – although, in the end, Henley voted on none of this year's Ralph Lauren Corp. issues. It's hard to picture Ralph Lauren Corp.'s legal department approving such a contact.
Smothers said she approached Henley before the Pendleton Street rezoning hearing and that Henley said he had put together a list of properties for Ralph Lauren Corp. "I talked to him and said he can't be there," she said. "He wrote the email after I had talked to him."
Smothers and another city hall source said that, at some point, Boynton, too, told Henley he could not be involved in the Ralph Lauren issues coming up before the City Council because they would constitute a conflict of interest. Smothers said it may have been before the beginning of the closed sessions on the economic Incentives, or after one or more of the closed sessions.
Henley said all his contacts with Ralph Lauren Corp. were before the beginning of the closed sessions.
"It was long before," he said. "I don't know how many weeks or months, but substantially."
Henley also disputed Smothers' account of the events.
"Becky's a – what's a politically correct way to say this, Paul – she is mistaken."
Henley confirmed, however, that he was trying to get business from Ralph Lauren Corp. He said the company approached him and asked him what RealtyAnalytix Advisors could do, and he prepared what he called in his email a market survey.
"That's when the city manager and I had a conversation," he said. "I think what's operative is that's my business. Long before I was on council, I worked with all types of companies. Some of them don't seek Incentives and some do. My behavior has been consistent throughout."
Henley's May 10 email makes clear that he was seeking business from Ralph Lauren Corp. for RealtyAnalytix Advisors, while the city government was involved with the company on many levels, and defended the practice, although he wrote that he had no involvement with the company before or after doing the market survey and had no involvement at all in "the project coming before the City of High Point" – presumably the May 14 vote on the economic Incentives.
"Customary in my business, market surveys are often prepared complimentary in order to demonstrate to prospective clients the professional capability of a firm," Henley wrote. "The Mayor and the City Manager feel that I should not have even responded to the Ralph Lauren solicitation. I feel differently. So whatever you may hear about this any further, please understand that while I will not in any way use my position on Council to engineer financial gain, I will also not handicap the way I earn a living for my family by running away from prospective assignments that may or may not wind up inside the city limits of High Point. Moving forward, I will continue to embrace opportunities to provide real estate advisory services to best in class companies such as the Ralph Lauren organization. And will appropriately recuse myself or ask to be excused from any vote in my capacity as a council person when it is required."
That reasoning brings up two issues. One is the unanswerable question of whether or not Henley would have recused himself from all of the Ralph Lauren Corp. votes without the lectures from Smothers and Boynton. Another is that Ralph Lauren Corp. is not just any company "that may or may not wind up inside the city limits."
Ralph Lauren Corp., even without the planned expansion, is High Point's fourth-largest employer, with 1,400 employees in three locations in High Point. This year wasn't the first time that Ralph Lauren Corp. had asked for economic Incentives from the City Council.
The City Council on Nov. 29, 2010 – a week before Henley was sworn in for his first term as a councilmember – voted 8 to 1 in a specially called meeting to give Polo Ralph Lauren Corp. up to $1 million in economic Incentives to get the company to build a third distribution center in High Point, with a promised 400 jobs. The company is now adding that distribution center.
The 500 jobs promised this year, plus the 400 promised in 2010, would give Ralph Lauren Corp. 2,300 employees in High Point. When Henley did the market survey for the company, it was already expanding its facilities, and it was, according to Smothers, still actively drawing money from the $1 million in 2010 Incentives based on its performance under its expansion contract with the city.
At the time, it was not difficult to envision the company adding more employees, expanding its facilities further or asking for more Incentives, even from the outside – and, according to Boynton and Smothers, High Point staff members had been working on the expansion-and-Incentives deal for months before the first closed sessions.
In any case, at the same time that High Point was considering giving Ralph Lauren Corp. economic Incentives, both the State of North Carolina and the Guilford County Board of Commissioners were simultaneously considering additional Incentives for the company, which they eventually granted. Dozens of public officials were aware of the potential Ralph Lauren Corp. expansion at all levels of government.
Smothers said the High Point Economic Development Corp. staff doesn't usually tell the City Council the name of a company likely to get Incentives until negotiations are fairly well along, but they often know anyway.
"You don't have to be real smart to figure out some of them," she said. "I'm sure it wasn't all that secretive, except from the media."
Smothers said that Henley's potential conflict would be having information that Ralph Lauren Corp. was going to expand before providing the company with a list of properties to expand onto. Henley said he did not know of the expansion despite the activity in the city government on the deal.
"He had the opportunity to talk to the attorneys – his own attorneys and anyone else he wanted to talk to," Smothers said. "He's had an ethics course. It's an issue that comes up from time to time, particularly for people in the development area."
Henley said he could not see any potential for conflict of interest.
"I know what the definition of the conflict is," he said. "There was no conflict here, and if there is, I have already recused myself on one real estate matter."
Henley said that issue involved a property on Eastchester Drive.
The University of North Carolina School of Government's "Voting Guide for Local Elected Officials," which is used in ethics training, cites numerous North Carolina conflict-of-interest statutes that seem as if they could apply had Henley voted on any of the Ralph Lauren Corp. issues, particularly had his company been hired based on the market survey.
One statute prohibits voting if "the matter before the board/council involves your personal financial interest." Another prohibits voting on a zoning map or text amendment if "the vote is reasonably likely to have a direct, substantial and readily identifiable financial impact on you." Another prohibits voting on numerous types of zoning issues if "you have had secret communication with someone who may be affected by the decision," if "you have a family or business relationship with who may be affected by the decision," or if "you have a financial interest in the outcome of the decision."
Henley said Ralph Lauren Corp. contacted him and asked for the market survey. He would not provide the market survey or any written communications between the company and himself. He would not describe the contents of any contacts he had with the company.
Asked to identify the person at Ralph Lauren Corp. who approached him asking for the property market survey, he first asked, "Why should I?" Then he cited confidentiality between himself and his Ralph Lauren contact.
"I was contacted by an entity that consequently had business," Henley said. "I was never involved in any meetings between the city and Polo [Ralph Lauren Corp.] I never even knew that they were looking where they were looking. I received no compensation from anybody."