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Okatie Developer No Stranger to Controversy

Many South Carolinians may not recognize the name of the man associated with the controversial Okatie Crossings development project, but don’t underestimate his influence – or ability to generate controversy.

Mel Sembler, a Florida real estate developer whose company is seeking massive incentives to develop a $400 million, 262-acre outlet mall in Jasper County, played key roles in getting George H.W. Bush and George W. Bush elected president. He is the former finance chairman of the Republican National Committee and served as U.S. ambassador to Italy and Australia.

Sembler also served as chairman of the Scooter Libby Legal Defense Trust, set up to defend former Vice President Dick Cheney`s chief of staff; has been lampooned in a Doonesbury cartoon, and helped finance the 2000 Florida recount battle between George W. Bush and Al Gore.

There is little question that Sembler – whose company has been involved in hundreds of projects over the years, many dealing with strip shopping centers anchored by retail giants such as Publix, Target and Home Depot – understands how the lobbying game is played.

At present, Sembler and his company are seeking a 75-percent break on a portion of the state’s sales tax for the Okatie Crossings project. If approved, it's been reported that Sembler Co. could receive between $132 million and $175 million in incentives.

Last session, the House easily approved the tax break, and the measure got Senate support, making its way as far as a joint House-Senate conference committee in June, where it stalled.

Aiken Republican Sen. Greg Ryberg, for one, opposes the plan.

“The simple fact is that Sembler simply plans to steal tenants from across town by using low-cost infrastructure, paid for by taxpayers, to undercut the other mall,” Ryberg told The State newspaper. “This is taxpayer-subsidized piracy.”

To help gin up support, an entity called Sembler Family Partnership 32 hired a pair of well-known South Carolina lobbyists, Larry Marchant and Mary Dunning, and paid them a total of $30,000 through the first five months of 2009.

In addition, the Sembler Co. last September contributed $3,500 – the maximum amount allowed by law – to Lt. Gov. Andre Bauer. While Sembler and his company have donated hundreds of thousands of dollars to political candidates over the years, the Bauer contribution is believed to mark the first time Sembler has given to a Palmetto State politico.

Sembler and his company, which have handled projects throughout the Southeast, including several in South Carolina, understand the value of lobbyists in pushing through controversial projects.

In 2008, the Palm Beach Post reported that Sembler Co. was reportedly part of a federal corruption investigation in Palm Beach County after the company paid a lobbyist $100,000 to help obtain approval for a 400,000-square-foot Boynton Beach shopping center.

Sembler Co. hired Hugo Unruh in 2005 to lobby the Palm Beach County Commission after a community group formed to oppose the shopping center, but Unruh’s unusually high fee drew the interest of federal investigators, the Post reported.

The shopping center was unanimously approved months later.

“It is unclear exactly what Unruh did for such a big fee – more than five times what a rival lobbyist thought the job was worth,” the Post reported in May of 2008. “Unruh would not talk; Sembler would say only that he was paid to “coordinate” with its lawyers working on the development.”

Neither officials with the Sembler Co. nor the U.S. Attorney’s Office responded to questions from The Nerve for this story.

Mel Sembler, 69, who started by selling women’s ready-to-wear clothing in his father-in-law’s Tennessee store before moving to Florida in 1968, took some heat a decade ago when it was revealed he was among political fundraisers who promised donors access to politicians.

Republican Party documents released to The Associated Press and other media outlets in 2002 offered evidence of actions by Sembler that raised eyebrows.

“‘As you recall in our conversation some weeks ago, you agreed to upgrade your Team 100 membership to the Regent program ($250,000) when the merger was approved,’ Republican fund-raiser Mel Sembler wrote in 2000 to the chief of the now-bankrupt Global Crossing telecommunications company, which had already given $100,000,” The Associated Press reported on Dec. 7, 2002.

“‘Thankfully this has now been approved, so I am taking the liberty of enclosing an invoice for the additional upgrade,’ Sembler added in one of dozens of fund-raising memos the political parties turned over to a court hearing the first legal challenge of the nation's new campaign finance law,” the wire service added.

There’s other notoriety, as well. Among controversies involving Sembler or his company:



  • In 2008, Tampa officials threatened to sue Sembler/Ybor Ltd. and its partners for defaulting on payments of a $9 million federal loan used to help build the Centro Ybor retail and entertainment complex. The city took over those payments in 2004 when the developers said they could no longer make them because of financial difficulties. That cost taxpayers about $750,000 a year, the St. Petersburg Times reported. Sembler sold its shares in Ybor Centro in 2006.

  • Taxpayers in St. Petersburg, Fla., spent at least $20 million to build a downtown entertainment complex called BayWalk – significantly more than project developer Sembler Co., according to Times. While it cost the city $8.3 million to acquire the BayWalk properties, Sembler paid nothing for the land. And bank loans financed all construction costs. The loans, which totaled more than $14 million, went into default and virtually none of the original principal had been repaid as of early last year, the paper reported. Sembler told the Times that it invested heavily in the project, which was conceived in the 1990s to energize the city’s downtown, but conceded in January 2009 the company would make a small profit off the project even if were foreclosed on, which happened later in the year.

  • In what was described as a first for a living diplomat, Sembler had an annex to the U.S. embassy in Rome – an Italian palace no less – named after him. Sembler was serving as Ambassador to Italy. Florida Congressman C.W. “Bill” Young, long a recipient of Sembler cash, engineered that tribute. Cost to taxpayers for buying and re-doing the manse: $113 million, according to the alternative publication Creative Loafing Atlanta.

  • Creative Loafing also reported Sembler’s involvement with Straight Inc., a nationwide drug-rehab outfit he founded in 1976 that treated more than 12,000 addicts. (It has been reported that Mel and his wife Betty created the drug-treatment program after discovering that one of their sons smoked marijuana.)


“The U.S. Senate – citing ‘cruel and inhuman’ procedures – in 1993 shut down Straight by making it ineligible for federal subsidies,” Creative Loafing reported in 2007. “In media reports, books, numerous lawsuits and in testimony to the Senate, Straight was accused of utilizing beatings, starvation, sleep deprivation and locking children in closets for days dressed in clothes soaked in their own excrement. At least 40 people have committed suicide related to Straight ‘treatment,’ according to ex-patients.”

 

Creative Loafing added: “A state of Florida audit of Straight pointed to typical Sembler style: ‘It appears that pressure may have been generated by Ambassador Sembler and ... state senators to avoid scrutiny, the audit stated.'”

And Sembler Co. stirred up a hornet’s nest in the Atlanta area last year when it threatened to scale back its 52-acre Town Brookhaven mixed-use development unless it received a 100-percent property tax abatement on the project.

That abatement was initially valued at $52 million over 20 years, though the estimated value was later reduced. Sembler asked the DeKalb Development Authority for the expanded break after the authority had already granted a 10-year abatement worth $20 million.

Sembler officials argued that the tax breaks would be offset by sales tax revenue and jobs the site could generate. Critics said it would deprive DeKalb and its school system of tax money needed during the recession, and that the sales tax boost could come at the expense of other merchants. The request was later withdrawn.

Making the situation more controversial, individuals affiliated with Sembler Co. contributed thousands of dollars to the political campaign of an official with influence regarding the tax-abatement request.

The Atlanta Journal-Constitution reported that individuals with Sembler Co. connections spent $18,000 in 2008 helping Eugene Walker win his seat on the DeKalb School Board. Walker was also chairman of the DeKalb Development Authority, which has the power to give property tax abatements.

The donations did not exceed legal limits, but they did contribute to Walker’s financial advantage in the election, the paper reported. He had six opponents, and he raised four times more than all of them combined. Sembler Co. gave Walker, who later resigned his chairman’s post, about a third of his total.

Reach Dietrich at 803-779-5022, ext. 110, or kevin@scpolicycouncil.com.

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