Inside Brady's business deals - Governor hopeful has been through economic ups and downs

Inside Brady's business deals - Governor hopeful has been through economic ups and downs
By David Heinzmann and Rick Pearson
Copyright © 2010, Chicago Tribune
May 23, 2010
http://www.chicagotribune.com/news/elections/ct-met-brady-business-20100523,0,1606406,full.story


On the southwest fringe of Champaign along Interstate Highway 57 stands the Curtis Road interchange, its ornate limestone overpass and decorative red-brick towers surrounded by acres of open farmland.

It was envisioned as the catalyst for a massive residential and retail development that would start with new homes built by Bill Brady, the state senator and Republican candidate for governor. Instead, it's an overpass to nowhere.

Brady, a developer for 25 years, underestimated the cost of his leading role and then backed away when city officials refused to provide more taxpayer money. The deal fell apart in 2007, stalling other development, and the land remains vacant.

The interchange represents the crossroads of Brady's political and business careers. As the first part-time politician running for governor in nearly 30 years, Brady contends that his experience running a successful business will help him solve the state's financial problems.

"I think people are looking for someone who understands the intricacies of business, how you manage people, how you perform services," Brady said.

But his family firm's recent struggles and the failed Champaign development offer voters a more complicated picture.

Public records and interviews with city officials show that Brady mishandled the sewer project he promised to build, improvements that other developers were counting on. In November, Brady sued the engineering firm he hired. But last week he quietly dropped the lawsuit and placed the blame on the city.

The Curtis Road mess added to the hard times for a company that had made Brady and his two brothers wealthy as they capitalized on a population boom in Bloomington-Normal.

The Brady family has been well-known in Bloomington's business community for nearly a half century. Bill Brady Sr., the candidate's father, started building homes in the mid-1960s.

The company grew into a multimillion-dollar enterprise, but Brady's father overextended himself in the early 1980s. Years of losses and sky-high interest rates pushed the company into bankruptcy in 1984 when the elder Brady couldn't keep up payments on about $2 million in debts to banks and contractors, according to court records.

At the time, Bill Jr. was just out of college, married and working at the family lumberyard. When the company emerged from bankruptcy in 1987, young Bill was running the development side of the business, while his father took a back seat running the lumberyard.

As Bloomington flourished in the late 1980s and 1990s, the family built subdivisions with names like Waterford Estates and Fox Hollow. They expanded their real estate sales business, developed a shopping center to feed the new neighborhoods and created a bustling office park where their own businesses are based.

"That time frame was just booming years for Bloomington," said Jesse Smart, who was mayor from 1985 to 1997 as the area's population was heading from 80,000 to more than 120,000 today. "It was just the hot spot of the state. Those were the heydays for developers."

Public records and interviews with downstate development professionals paint a picture of a businessman who prospered from his deep roots in the city. Known even to low-level city workers as "Billy," Brady became the very public face of his family business, a member of Bloomington-Normal's civic and business elite. That success translated into political capital for Brady, who was elected to the Illinois House in 1992.

Ken Emmons, who retired as Bloomington's city planner early last year, said Brady was careful to maintain a solid public image.

"He doesn't want to have a bad reputation, doesn't want to alienate his customers or the neighbors," Emmons said.

In fact, Brady has sometimes artfully avoided controversy.

When he bought a parcel zoned for industrial development near an area of single-family homes, he planned to develop the land with apartments. Instead of doing the work himself, he sold the land to an Indiana developer who built subsidized housing in 2001. There was a rash of opposition from nearby homeowners, but it was absorbed by the out-of-town firm, Emmons said.

At its peak in 2006, Brady Homes had 34 employees and built nearly 200 homes, according to Brady. But in the recession that started in 2007, Brady Homes, Pinehurst Development and a handful of related firms the family operates have stumbled.

Brady's personal tax returns, which he at first resisted disclosing, showed that the company has lost enough money over the last two years that he has not paid any income tax, even on his $78,000 salary from the General Assembly.

In an interview last week with the Tribune, Brady said he started re-examining the company's future during his failed 2006 campaign for governor. He said he looked at the firm's fundamentals and reorganized the business, with his brothers and partners laying off all but nine workers who last year built nearly 100 homes.

As demand for new housing waned in McLean County over the last decade, Brady has looked harder for new business in other downstate markets. He built in Peoria and suburban Springfield. On the western border of Champaign, Brady Homes started with a subdivision of houses and townhomes called The Cove.

Brady's next big project in town would be a more than 300-home subdivision called Prairie Creek designed to capitalize on plans the state announced in 2002 to build a new I-57 interchange at Curtis Road. Planners and developers saw the Curtis Road corridor as the next wave of expansion in Champaign. Brady saw the potential as well, and sought to secure options on 120 acres of farmland adjacent to the interchange site.

The homes Brady planned would lead the way for additional development that would include shopping centers, restaurants and office buildings the city had earmarked for the four quadrants surrounding the highway intersection.

In 2003, the state legislature gave the local government authority to take land for sewers along Curtis Road east of Brady's property. A final vote to enact the law occurred Nov. 4, as Brady was securing options on the land he planned to develop. He voted for it.

Three years later, when the legislature re-authorized the sewer plans, well after Brady began acquiring the land, he again voted in favor of the measure. In 2007, Brady also voted for similar legislation allowing Champaign and other local governments to seize property to build their share of the interchange.

Although the actions would help move the interchange project along, and affect the value of his land, Brady did not recuse himself.

"If I felt I had a conflict, I wouldn't have done that," Brady said. Later, in an e-mail, Brady said he believed the legislation had no direct effect on his Champaign property.

Champaign officials were originally hesitant to allow developers into the area because there was no sewer service. But when Brady offered to build the pumping station and sewer connection to jump-start his development, the city cut a deal with him with provisions to pay Brady back a portion of the costs down the road.

But problems started early because Brady moved forward without an accurate understanding of what the work would cost, said Bruce Knight, Champaign's planning director. Brady's original $1.27 million cost estimate was based on faulty assumptions, Knight said.

When proper bids were finally done, Brady's share of the cost grew by more than $1 million, and he balked at doing the work without getting more money from taxpayers, public records show.

"We made a deal with Brady, in which clearly we were capping our investment at (a certain) level," Knight said. More money from taxpayers was not "justifiable," Knight said.

Brady contended Champaign officials were supposed to cover the higher costs.

"Our attorney said the city had the right to nix the deal if they didn't like how the bids came in. The city nixed the deal," Brady said. "They told us they didn't have the money to pay it at the cost it came in. We said, 'That wasn't our agreement. You agreed to reimburse us,' and they said 'No.'"

Knight said Brady's assertion is incorrect.

As Brady backed away from the plans, Champaign officials met with two other developers who had planned to piggyback off the sewer system for their own residential projects.

Soon, one of the other developers, Darren Rogers, was taking the lead in trying to get the development back on track. In an e-mail to a city engineer, he blamed Brady for the mess over pumping station costs.

"Engineering costs are too high primarily due to Brady changing the design so many times. He needs to pay for a significant portion of those costs," Rogers said to Roland White, Champaign city engineer.

In the end, no one could put a deal together to build the pumping station, and as the bottom dropped out of the economy in 2008, the whole project was put on a back burner.

Throughout the process, city officials said they had difficulty getting Brady's attention at critical times.

"He was often hard to reach because he was busy with other things," Knight said.

dheinzmann@tribune.com

rap30@aol.com