Stretching Out: John Delaney Interview #2

by Shelton Hull

Recorded May 4, 2005 at University of North Florida.

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Shelton Hull: How is UNF [University of North Florida] fundraising looking this year?

John Delaney: Out here? Record year, this year. Well, we’re just a couple hundred thousand from a goal, but it’s a record year already, and we’ve got until June 30. Last year was the second-best year we’ve ever had, which was an accomplishment because we’d just finished a $100 million campaign, so you kind of have to rest – you’ve tapped everyone out. That was the year before I got here. My first two years are the third- and first-best years of fundraising. In Tallahassee, it’s a record year of funding for buildings, and for the budget. We got the biggest percentage of the higher ed budget than we’ve ever got. The money part is decent. You’d always like more – you know, all of us would, in our personal accounts – but it’s pretty good.

I saw you on TV yesterday – you seemed a bit agitated. Why was the [Shipyards] report wrong? What was it in the methodology that led to it?

Well, number one, the State Attorney said they weren’t even investigating the TriLegacy Group – not even looking at that, he’s looking at the City. Then, he had a number of key witnesses he did not call. To give you an example: one guy who was in the discussions with TriLegacy on this contract, said it was clear the contract didn’t allow them to spend money the way they spent it. That guy worked for TriLegacy, and was paid $1.6 million by TriLegacy to help put this deal together – and he’s saying, “They’re wrong.” And I quoted the guy. I called him on the way up, and he said, “That is exactly my position.” I said, “Well, the grand jury is letting them off,” and he said “You’re kidding!” This is a guy who became a millionaire off of TriLegacy – Harry [Shorstein] never even called him. His name’s Jim Gilmore.

The treasurer for the City talked to TriLegacy the day before they released some money. TriLegacy said, “We’re using this money to buy steel.” [How much @ price?] The next day, the money went off in all these places – personal accounts. Didn’t call the City treasurer. They refer to a section in the contract language, and they say, “The contract says ‘the money should be spent on these items in Article C.’” The contract says that the money “shall be spent on these items in Article C.” Another section says “…and only on these items in Article C.” And the difference between “shall” and “should” in the law is a big deal. It’s a more permissive thing.

You get to the end of it, and he says, “TriLegacy, didn’t do anything wrong, but the City, you should’ve caught them sooner.” That doesn’t even make any sense: He criticizes the settlement, says the City didn’t get enough money, but TriLegacy didn’t do anything wrong. “You should’ve gotten more out of them, even though they didn’t do anything wrong.” It’s just absolutely wrong.

And then he wouldn’t do an audit. The General Counsel and I said, “You can’t understand why the City did what they did unless you look at where that money went.” There’s a fundamental thing here: there’s $22.5 million that the Grand Jury and the State Attorney can’t tell you where it went, after a six-month investigation. They can not tell you where that money went, because they refused to do an audit.

Where do you think it went?

I’ll show you right now where it went. [flips through papers] I know where it went; why it went there is where the audit comes in. Just read that first paragraph [Delaney to Moran, 3/3/05, p. 2] and that’s provable, documentable.

“$7 million to the personal account of one owner, $1.5 million to another personal account, $2 million to a personally owned plantation in Georgia, $3 million to a personally owned trading company, $2 million to a personally owned local company, and $6 million to pay off a mortgage.”

And the mortgage was supposed to have been paid off before we even got into the deal. They provided a document saying the mortgages had been paid off.

What were the mortgages on?

On this property! Because we wanted to be the first mortgage document. And they provided a fictitious document to the City saying the thing had been paid off. Now, look, I think the contract was done well, and Harry says, “I don’t understand, and I don’t follow this, the other side says ‘no,’ you say ‘yes,’ so there’s confusion in the contract so that endorses to the benefit of TriLegacy,” and that’s baloney. But I can tell you this: there’s no way you can read into that contract that it says you can send $2 million down to a plantation in Georgia. There’s just simply no way.

And then, where I think the Times-Union really missed it in the news last night was: a mayor, the General Counsel, the Deputy General Counsel and bond attorney all filed a response saying the grand jury report is flawed. And that barely got coverage. I’ve read every grand jury report for 40 years, and I don’t know of any – there was one, I’ve got one vague memory of somebody responding [in that way].

So, of the $36.5 million that the City apparently gave TriLegacy, how much do you think was really spent on the project according to the terms of the contract?

Nobody knows that, because they haven’t done an audit. $10 million? $5 million? $15 million? I don’t think anybody thinks more than $20 million was spent the way it was supposed to be spent.

Were there loopholes in the contract as written that would have allowed it, or was it a gaming of the system?

They gamed the system. Yeah. You said “a loophole.” On this contract, we learned from the Berkman [Plaza] and the Adams Mark [Hotel] that we could do what they call a “traditional draw schedule,” which is every few days they come to you with a stack of receipts, and you say “These are good – I’ll give you the check.” But it really slows a project down when government is involved. So, what we did on this one was did them [in increments of $17 million] and you had to have a list of things that you had done. And they dummied-up that list, so you go: “Is it a loophole?” They did not want to be caught, so they covered it up.

The City Council auditor said there was “deceptive and misleading activity” by TriLegacy; their findings were completely the opposite of this grand jury. Now, why would theirs be better? They were auditors who were able to at least partially look at the books before they were booted out by TriLegacy and they stopped the audit.

What is it about TriLegacy that would get them basically a free pass on this issue?

Well I’ll say it this way, how I ended my letter. I think there’s a number of offensive things in the grand jury – and I’ll answer your question in this answer. One of the things are that it attacks dozens of City people that work on this project that are considered experts in their field, that made no personal money off this deal, didn’t do anything wrong but hope that they could make the city better. The people that misused the money are praised by the grand jury report, and the people that just did the best they could are criticized. That is hideous. That’s hideous to me. City employees didn’t have a high-priced criminal defense lawyer in there buddying up to the State Attorney to try to get the thing to turn out the way it turned out.

How would the State Attorney benefit from putting the blame onto–

I’m not saying he’s benefiting. Your question is, “How did they get off?” They had some real high-powered criminal defense attorneys, well-known, peers of the State Attorney, and he listened to them. He bought that line. Basically it’s a whitewash of TriLegacy, and the story’s not over, because the feds and the IRS are looking at it, and I’m not sure if it’s done with the state. I’m not sure that there won’t be a further state investigation with this.

On a scale of one to ten, how confident are you that the project will be completed?

Oh, 100 percent – a ten, if ten’s the most. There’s going to be something nice done in that Shipyards eventually. … My original vote was to make it a big huge city park, but I couldn’t buy it. I got outbid by TriLegacy at the time, then I said I wasn’t going to have anything to do with TriLegacy. But they came in with what was a pretty good deal. Basically, they said “Look, we’re gonna put up a $700,000 set of towers, apartments, retail, etc., but what we want to do is, if you will privatize the construction of a riverwalk and a riverpark, we’ll build it for you – with your money, but we’ll build it for you, and then we’re gonna do all this other stuff.” Well, why not do that? We got the land for free, you know, and $40 million worth of improvements that they would do so the architecture fit with their stuff.

But what they did was, they took the City’s money and used it on their side. They used it on the private development. What they hoped is that they’d sell enough condos to go back and do the City thing last, but what happened is they never sold the condos. Now, it’s a clear violation of tax law, which is what the IRS is saying: they’re saying they moved the money from a tax-exempt purpose to a taxable purpose, and you can’t use the bond money that way. So the City is going to have to pay a couple-million dollar penalty that they’re going to try to get out of TriLegacy for what they did.

Do you think local media blames your administration for things, in hopes that blame will be deflected onto Peyton’s, or vice versa?

Nah. I didn’t have to go on media yesterday. Only one reporter called. I’m not hurt by that report personally. I mean, the JEDC [Jacksonville Economic Development Committee] gets slapped around pretty good, and in my letter I basically said, “Look, the buck stopped with me.” In other words, I stood out there. The State Attorney didn’t zap me, necessarily. Every now and then, [the media] loves to try and stir me against the Mayor, and I try not to bite.

How confident are you that John Peyton will run for reelection?

I think he runs. I think he’s going to open a [campaign] account at the end of this summer. It’s not an easy job; everyone questions themselves partway through. And he hasn’t had a – someday he’s going to have one, because it’s just the nature of serving in that kind of position – he hasn’t had a scandal, somebody caught doing something corrupt, somebody stealing at a fairly high level. He’s going to have those. Those are not good days. I mean, I’m not saying that anything’s going on; I’m just saying that the nature of government is that somebody’s going to screw up on your watch.

Government’s too big not to.

Correct.

Do you have any new insights into the Governor’s race?

No, no. I hear Toni Jennings is going to drop out, and I think Charlie Crist probably pulls that one out on the Republican side. Tom Gallagher’s been there forever. He’s served in just about every cabinet position, run for Governor once or twice, but in a funny way, I don’t know if he’s that well-known. A fresher face is Crist. He kind of has a knack for getting into the newspaper. He’s a real personable, personable guy. Every time he comes to town, he calls – he may have a list of 50 or 100, I don’t know, but he works it. He’s not afraid to work.

Where’s he from?

The Tampa-St. Pete area. He was in the State Senate for a while. I think he’s got a real group of bright people around him, too. I don’t know where the Democrats are going to sort out – the state’s evenly split, but it’s harder for a Democrat to win. Not impossible, but it’s harder.

Institutionally, they’ve fallen on hard times. There’s not a lot of organization. Like the local elections that just happened [Feb. 29]: There’s no reason the Democrats couldn’t have pulled out one of those.

Eric Smith was – yeah, an organized party would have won that for him. And, for the Democratic Party, Eric was really their best shot. It was a modestly high-profile race; a higher-profile race, I don’t think a Democrat could win. But Eric was outspent almost four-to-one, and still it was just a couple hundred votes apart.

What can the younger people of this city do to assert their own interests?

You’ve got to be active. If it’s public policy you want to impact, that means campaigns and events that get the attention of people who are going to vote, or write a check, or authorize a check to be written. If you don’t do that, you can’t win. You can’t have influence. Sad but fundamental: If you want to change the world, you’ve got to be part of the process. A lot of that is building relationships with the people in that loop. You do hope that there are people that are listening, even if maybe you haven’t been involved in politics or in getting people elected, if you can get in the office and say, “Hey, here’s the issue – this is how we’d like you to help.” I tried to keep the door about as open as I could and have a lot of different listening posts. You’ve got to make sure that you’re seen there, that you’re in touch.

Do you think the City’s ever going to be able to generate revenue at the rate it did in your administration, with the way the national economy was thriving then?

Well, they’ve had record ad valorem years, and they had a record sales tax year this year, so their revenue isn’t the problem. It’s a huge increase in the property tax money, year-to-year. The real problem is the spending. Some of it was coming, you know? If you’re expanding your library system, you’re going to hire librarians. If you want to improve the quality of your parks, you’ve got to add more park attendants. The city keeps growing, you’ve got to hire more garbage collectors. But they’ll work it out. I remember Lex Hester saying once, “You can’t shut this government down.”

What kind of impact do you think Susie [Wiles] has had?

Oh, positive. She’s been there and lived it, you know? She’s a talent.

I’m really skeptical about the talent pool, politically, in this area, and if he didn’t run again we’d have a situation with a bunch of guys that couldn’t pull 30 percent. If Peyton, say, were to not run, do you see her being mayor?

I’ve talked with her about it, and she’s really an introvert. She actually lives in Ponte Vedra, but that’s easily remedied. She can do anything.

How would you compare the situation Peyton came into, versus the situation you came into, in terms of challenges, advantages and so forth?

The big advantage that I had (he had some, too) was that I’d worked in City Hall for four years (1991-95) with Ed Austin, and it was kind of like on-the-job training. When I started, I knew who I was going to replace. I got rid of 90% of the top managers; I only kept one or two. Then, the next level, got rid of half of them, and then had a transition process team set up for each of these groups. I remember one of these groups coming back to me and saying, “Okay, John, we know we’re assigned to recruit for parks. Who do you want us to hire?” And I said “Give me the best person.” They said “You’re kidding – we just assumed we were a cover,” kind of like a face. Not everyone worked out, but by and large I think the system really advanced.

So that experience really helped. Not every businessperson makes that transition to politics easily. It’s a different world. It’s a world where you’ve got to compromise, a world where all your mail and your e-mails are public records. Most businesspeople aren’t used to that. I remember one time Mayor Peyton was asking me, “How do you handle leaks?” I said, “You don’t handle leaks – it’s going to happen.” Ed Austin used to joke: “Sometimes, before I even say anything, if I’m thinking about it, it leaks out.” Because somebody else has already figured out, “See, this is what his next chess move has got to be,” and sure as heck it gets to that point.

[Peyton] had a lot of other advantages; some of them are personal. Not having kids at home gives you a whole lot more time. Having a lot of money in the bank helps. I cut my own grass, you know? He doesn’t have to spend a Saturday out in the yard; he can hire somebody to do that. He has more energy than me, walking in. I can work 12-hour days and I can work 14-hour days, a number of them back-to-back, but he’s done it for two or three years! You go back, and he was campaigning hard for over a year [before being elected]. He has been in the business sector, which gives him a little bit different perspective on organizations. And he’s got a new wave of people that haven’t really been involved in City Hall before – you see a number of them on boards and those kinds of things. I think he’s got a good heart, too – I really do. I think he’s a really nice, nice, classy man. He’s still getting his sea legs, but I think he’s going to get them, I hope, for the city – we need the mayor to do well. Whether they voted for him or not, the people need him to do well. And the Sheriff, Sheriff Glover, we just had lunch right over there for nearly three hours–

How’s he doing?

God, he looks like a million bucks, I think God kind of picked that day – there’s a few things he was telling me that I needed to hear, and maybe vice versa. I wish he had just kept running for Sheriff, personally. He would have been elected Sheriff as long as he wanted. He could have run for mayor in four years if Peyton didn’t, or he could have run in eight years and he’s still a fairly young man. Or he could have gone ahead and stayed Sheriff until he was 70 or so.

Him being Sheriff would’ve made things a lot easier for Peyton.

Absolutely. And that was another big advantage I had; he and I, we were friendly, but we quickly became really, really, really close, and it really helped racial tensions. He helped me understand racial tensions, too. But, you know, he and I, we didn’t do any big thing without talking to the other. Sometimes, when we didn’t have the chance to talk to each other, somebody would come up and say, “The Sheriff is doing this, what do you think?” He knew that I would back him up 100%, even if I didn’t know anything about it, until we had a chance to sit down, and I knew that he would back me up 100%, without even asking about it. That’s hard to top. That was really a special, special relationship that’s hard to beat.

It’s kind of like the Cheney-Rumsfeld thing.

[laughs] I like to think of it more like Batman and Robin, but I don’t know who’s Batman and who’s Robin! Starsky and Hutch –

– Miami Vice –

Yeah, that’s probably better.

How would you rate Glover and Peyton as negotiators?

I don’t know about Peyton – I haven’t seen him. Nat’s good.

You came in with a good reputation as a negotiator.

Well, I had been a prosecutor. He’d been a cop, so he’d seen the stuff going on, where you had to be able to give-and-take with the defense lawyer or something like that. Where he was good was he was so darned honest, and he also was so moral that he knew how far he would go, and he wouldn’t go any beyond that. His big strength is judgment, and at the core he wanted to do the right thing. I know I’ve told you this, but he’s the best human being I’ve ever met – the best person I’ve ever met. That kind of came up last time you were here. He’s a special guy.

What’s it like in the job, politics, when you have to be not nice?

I never had a problem making a tough decision. You just say, “I’ve got to do what’s right.” I was also lucky, in that the people backing me politically never wanted anything. A portion of their income wasn’t coming from City Hall. They didn’t want you to hire their son or daughter or something, so it was so liberating to be able to govern that way. And Nat had a similar thing, because nobody backed him. He didn’t owe anybody anything when he went in. As you know, the two parties lined up with their stars, and he whipped them. So, less politics were going on, but the hard things are kept hard. That’s true in politics and in real the real world – those are really, really hard.

It’s easy if they’re disloyal. It’s easier if they are incompetent, but it’s tough to fire somebody who is maybe below average but is very loyal and is a decent person to boot. It’s easy to fire somebody who’s not much of a human being; that’s very easy to do. They’re harder when they’re just not performing what you need. I had a few of those, and I had a few of those that were not fun. I’ve got one that bothers me to this day. It was the right thing to do, but–

How did they react?

Absolutely classy. Absolutely classy. Sad story.

In your opinion, how should an effective leader handle disloyalty?

You’ve got to separate them from the team. There was a book called Everything I Need to Know, I Learned in Kindegarten; well, about everything I learned not from my parents came from Ed Austin. He used to say that when the FBI would investigate the backgrounds of people for ambassadorships, judges, all kinds of positions, they’d run this list, and the last question was, “Are they loyal?” That doesn’t mean they don’t disagree with you behind closed doors; it means they don’t try to go out and gut you or gut your other people. So, loyalty’s a huge deal. You can’t keep that – you can’t keep a bully, who pushes people around, who’s mean. The reverse of those aren’t necessarily qualities you’ve got to have. You need somebody bright. You need somebody with a good work ethic, good judgment. The first thing I tend to look for is, are they good people? Do I like ‘em? That just makes the work environment so much better. You hope they’re creative. But they’ve got to be loyal, and they can’t be a bully. If they’ve got one of those two, you can’t hire ‘em.

This is fun. I feel like I should just stretch out on the psychiatrist’s couch here. ◼