By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
Auto racing tycoon Bruton Smith stood in a massive parking lot helping direct traffic away from his brand-new Texas Motor Speedway six years ago. He wasn't happy about it. The first-ever NASCAR race at the speedway just north of Fort Worth had arrived in a mess and ended the same way. Traffic was crawling onto the only available freeway interchange.
Interstate 35W and other roads near the speedway were jammed to a near standstill. Officials from nearby Roanoke lodged a formal complaint about the mess. Neighbors complained. Worst of all, the fans, who left urine, litter and their cars on the roadside, complained.
The speedway badly needed another freeway interchange, one to the north of the track to complement the existing one at the south. Unfortunately for the speedway, as far as federal and state governments were concerned, the proposed interchange was in the wrong place and unjustified for the typically light everyday traffic and sparsely populated farmland around it. Salvador Deocampo, urban programs engineer for the Dallas/Fort Worth area with the Federal Highway Administration, says federal funding for interstate projects is based on public need, and the speedway interchange did not meet the criteria.
"If it's strictly a benefit to the developer, or in this case the Texas Speedway, I don't believe we have [provided funding], but if there actually is a need, I think we can pay," Deocampo says. "In this case we did not."
Although no federal or state dollars were used, today a brand-new interchange sits on the site. It was built quickly and paid for mostly by Denton County taxpayers, and it connects to a state-financed road that leads to just one place, the speedway. How did that happen? A lawsuit filed by a man who said the interchange project was partially built on his land without permission offers a partial explanation. Public records, including campaign donation and expense reports and official correspondence, calendars and diaries from the project fill in much of the rest of the picture. In a nutshell: The speedway wanted the interchange badly, but rather than pay for it itself, race track managers and supporters instead wooed county officials who made the decision that the $6.4 million interchange was a vital public project.
The speedway could not get any money from the feds or the state, but Denton County had just approved $85 million in bonds to improve county roads. The myriad bond projects in the 1999 bond vote did not include the speedway's interchange, but a load of road money was suddenly available, and Denton County commissioners had some discretion in how to spend it.
About the time speedway owners were looking for public financing for the interchange, county commissioners started getting campaign donations from those with an interest in the speedway and surrounding developments. The speedway paid a consultant $100,000 in "success fees," with success based on how much he could milk from the county--at the same time he was on the county's payroll.
The county commissioners who would talk for this article said they did not know that Jeff Carey, the consultant they had hired to secure more road money for the county from the state for other projects, was also on the speedway's payroll to secure county funding for the interchange.
"I really did not know that Jeff Carey was being paid by the speedway," Commissioner Sandy Jacobs says. "To be quite frank with you, it's quite a surprise to know that he was getting something called a 'success fee' for money on the interchange."
Carey wasn't the only person on the county payroll to benefit from the speedway's largesse, however. Eddie Gossage, speedway president, and Bruton Smith, who built the speedway and owns another one like it in North Carolina, treated the county's commissioners like VIP guests, providing them with entry to the exclusive speedway club overlooking the track for lunches and meetings with political backers. Until about that point, the summer of 1999, the speedway's only interchange-financing agreement with the county said the speedway would pay for everything.
"SMI (Speedway Motors Inc.) agrees to provide 100 percent of the costs of all non-donated right of way, including acquisition costs, clear of obstruction and free of cost to the county or the State of Texas," the 1996 signed agreement between Denton County and the speedway says in part. "SMI agrees to provide 100 percent of the construction cost, estimated at approximately $3.3 million to construct the interchange and connecting ramps on Interstate 35W."
Then, with hardly any public discussion or any justification of urgent need offered by officials, Denton County's commissioners in 1999 volunteered to pay for most of the project. Before the interchange was done, the county would spend about $4 million. The state would spend $1.7 million on a frontage road leading to it and waive a $200,000 engineering fee usually paid by developers when they build a road. Incredibly, at one point, speedway owners would complain about being "over budget" and having to pay too much for their share of their own project.
Consultant Carey was paid his "success fee" on the same day the county commissioners voted to approve county money for the speedway project. He then dumped thousands of dollars into commissioner campaigns, money with little government restriction and even less general public oversight.
Bill Trantham is one of two Denton lawyers who forced the county and speedway to pay more than $1 million because the new interchange was built before one landowner at the site had even sold his property. Trantham, who became well acquainted with the project's history, describes the county's commissioners who approved the project as "rubes" whose heads swam with the prospect of being included among the speedway's rich and famous.
"Everybody in this county thinks that they are going to be a big deal someday. Important people. They are not just county commissioners; they are important. It's an important project," Trantham says. "Flattery, cajolery, egos and money built the entire thing."
In unincorporated areas of a county, a wet/dry distinction is decided by justice of the peace district boundaries. Commissioners, particularly Scott Armey, now regional director of the U.S. General Services Administration in Fort Worth, were receptive to the idea of making the speedway wet.
On behalf of the speedway, in 1999 commissioners created a new justice of the peace district, and early the next year the county held a special election, which ultimately made the area wet. Ninety-nine voters participated.
The district was supposed to be quickly disbanded after the alcohol election, but befuddled county officials learned they couldn't legally dissolve the district so quickly, especially after the district's residents filed to run for the newly created justice of the peace and constable offices.
Before they could dissolve the new district, commissioners learned they had to let the elected officials serve out their terms. It took four years to abandon the district with final payment of salary made in December 2002. The process cost the county $365,000, mostly in salaries and office equipment.
In April 1999, about the same time commissioners accommodated the speedway for the justice of the peace district, Carey arrived on the scene. Carey, president of RAMP Development and who did not respond to repeated interview requests for this article, was a familiar face in Denton County's political landscape. He had raised money for Commissioner Jeff Krueger's campaign, worked as a fund-raiser on Kirk Wilson's campaign for commissioner in the early 1990s, as Wilson's administrative assistant and later was hired to a newly created post of economic development director. He quit that job after allegedly offering the county's budget director tickets to the Colonial golf tournament in exchange for recommending him for a raise in 1997, an incident that was recounted in numerous published reports and confirmed by a county official. Carey was also a longtime friend of two sitting commissioners, Wilson, who had become county judge over commissioners court, and Scott Armey.
Despite the well-publicized circumstances behind Carey's previous departure from the county, commissioners hired Carey again, this time as a subcontractor to John Polster, the county's road consultant.
Commissioners said they hired Carey because he was uniquely qualified to secure a loan through the state's department of transportation for work on State Highway 121. No one publicly questioned his credentials as an expert on securing the obscure loan. But there he was ready to help the county get the loan and later to give commissioners hefty campaign donations. No one says they knew it, but Carey would be there to help the speedway get county taxpayer money for the interchange, too.
In June 1999, interchange planning was moving ahead. Speedway owners and consultants met with owners of rights of way necessary for construction. They asked landowners to donate their land for the new access roads, which not all of them wanted to do. Speedway owners and consultants were still saying that the speedway was footing most of the bill for the project. But, sometime that summer, the speedway started pushing the tab across the table toward Denton County.
Commissioners Court Judge Kirk Wilson scheduled lunches at the speedway club with speedway-area property owners and a day at the horse track with Carey. His date book from the time shows one weekday meeting with Wilson, Carey and a speedway-area developer. The subject of the meeting with Carey is Wilson's possible run for Congress. Wilson did not respond to requests to be interviewed for this article.
At the time, the summer of 1999, Wilson had already started spending the thousands of dollars it would take him to explore running for Congress, according to his federal campaign records. He had been the county's commissioners court judge only a few months, since April 1999.
Armey, another sitting commissioners court member with aspirations for higher office, would later run a failed campaign to replace his father, U.S. Representative Dick Armey. All the sitting commissioners intended if not for higher office, then to at least keep their jobs during the next election. Records show that all of the commissioners at the time, the fall and winter of 1999, also accepted campaign money from Carey, Gossage or speedway-area developers.
On September 30, 1999, the Federal Highway Administration said the project wasn't needed, according to federal guidelines. Among other things, the administration stated in a letter, the interstate by the speedway was in a mostly rural area that probably would not have enough traffic to justify the interchange based on projections. It also said that the new interchange would be too close to the existing one. An interchange in a rural area should be located about 1.5 miles north of where the speedway was proposed, according to federal guidelines. A report prepared by consultants hired by the speedway was supposed to explain to the federal government why a new access point should be built on the public highway, but it failed to do that, according to federal reviewers.
"The text of the report, along with current and future traffic data, does not appear to identify a need for a new interchange," the highway administration letter says. "Based on your data, it appears that a new access point will not provide an appreciable betterment for regional traffic."
In the case of the speedway interchange, the initial justification report did not show public benefit, says Deocampo, one of the federal reviewers.
"It didn't address an analysis of the interchange and what it was going to do and how it was going to benefit. I pretty much told them they had to follow the criteria," he says.
During the weeks that followed the arrival of the feds' letter, Wilson was scheduled for meetings with property developers and with Gossage. He was invited to be a guest of Gossage and Bruton Smith at the Bluebonnet 300 at the speedway, according to Wilson's calendar from the time. Other commissioners also received--and still receive--the special invitations to the speedway.
One insider, who spoke on the condition that he not be identified, says the races that commissioners attended are well-appointed affairs with plenty of good food and liquor and where politicians, wealthy Texans and special guests socialized. He says the list of invitees to the VIP suites is exclusive with strict security and only "certain" very particular people allowed entry.
In fall 1999, Wilson and other county commissioners started getting money from those with an interest in the interchange and the area around it, too. Between Carey, Gossage and speedway-area developers, a total of about $8,000 was spread out to commissioner campaigns.
Carey was, unknown to the commissioners, working with Gossage and was talking about trying to get money from the county for the project, and he was meeting with commissioners to talk about it. In a letter dated November 22, 1999, Carey tells Gossage, "I cannot get more than $3.3 million. As it is, I think John Polster [the county's road consultant who hired Carey] may present some resistance. I think I can smooth it over."
Gossage tells Carey in another letter that for their meeting with county officials the following day, they should point out to commissioners that the county could get valuable advertising at the speedway, like the words "Denton County," which could be placed on a raceway wall. He thanks Carey for his hard work.
Carey billed Denton County $325 for meetings the next day with Wilson, Armey and Polster. Carey says the meetings were related to the state infrastructure bank (SIB) loan that he was originally hired to try to obtain.
All the talking and meeting apparently had an effect on commissioners. During the last commissioners court meeting in December 1999, Jim Carter, commissioner presiding over the district where the speedway is located, introduced a new road plan. He called it a "preliminary plan to improve the safety and traffic flow for residents and commercial entities in southwest Denton County." The speedway interchange was nestled neatly among Carter's other road projects in the plan. Denton County's share of the interchange was proposed to be $3.3 million, just as Carey had promised in his letter to Gossage the previous month.
Money would come from "excess funds" in other road bond projects and from "special projects" funds or separate bond accounts that commissioners could spend on road projects of their own choosing. Wilson and Jim Carter each donated $125,000 and Sandy Jacobs donated $50,000 from special projects to the speedway interchange.
"I think that it answers a problem that is created during races and at other events there at the speedway that inhibits local residents' ability to travel," Carter says. "Is it a benefit to the speedway and the properties there? Yes, it is. But it has a multiple purpose...The state is the one who made the final decision, and obviously they thought so as well."
Carter gave fellow commissioners the official request to use $3.3 million in taxpayer money for the interchange. Carey gave Gossage his request to be paid his $100,000 "success fee" for securing $3.3 million from Denton County, according to a letter from Carey to Gossage. Carey asked Gossage to pay him on January 18, the day commissioners were scheduled to vote to approve project funding and legally bind the county to pay.
An attachment to Carey's letter to Gossage shows a pay schedule and lays out the amounts Carey was to be paid with the amounts decreasing the longer it might take to secure funding. If Carey had only gotten $2 million in tax money for the interchange, for instance, Gossage would have owed him $50,000. But, Carey was entirely successful and got his full payment from Gossage. The county's taxpayers were on the hook for the $3.3 million and state taxpayers for $1.7 million for a frontage road, but the speedway was still looking at paying $1.7 million unless Carey could work his magic again.
Two days after he was paid his success fee, he wrote Gossage: "We got the $3.3 million, the agreement with TxDOT and agreement making Denton County responsible for the ROW [right of way]. I have a few ideas on how to reduce the $1.7 million for TMS [Texas Motor Speedway]. I will be sending you an invoice and an additional contract tomorrow. I will continue to work vigorously on all other aspects of the project. You have my loyalty."
Also for his work as a county subcontractor in 1999, Carey was paid $21,000 in Denton County money. The money the county paid for the speedway's interchange and for Carey came from the same voter-approved road bonds.
During the immediate months after getting his "success fee" check from the speedway, Carey donated a total of around $23,000 to the campaigns of the county's commissioners and to Sandy Thurman, who was running for Armey's soon-to-be-vacant commissioner's seat in the March primary. Thurman received $16,796 in February and March. Commissioners Jacobs and Armey each received $1,000, Carter received $500 and Krueger got $4,000. In a Dallas Morning News article that pegged Carey as a top donor to the county's commissioner campaigns that year, Carey explained the donations by saying he'd done well in the stock market.
Gossage got into a giving mood after the vote, too. He gave $1,000 to each of the four sitting commissioners and Thurman $500 during the two to three weeks after the money was approved.
The interchange still needed to get the go-ahead from the federal government and fast-track approval from the state to get onto the approved-projects list by September 2000. The federal government had no financial interest in the project, but the highway administration oversees the interstate system and enforces construction standards.
In February 2000, the interchange-enthusiastic Carter wrote U.S. Representative Dick Armey for help. A meeting was called with the speedway and county consultants and state and federal officials. A representative from Congressman Armey's office attended the March 8, 2000, meeting, which was hosted by the speedway. The feds were concerned not because they were paying for it but because their job is to ensure that an interchange built so close to an existing interchange in a rural area would not cause traffic problems, Deocampo says.
"If they can demonstrate the proposal, in this case the interchange, would not impact the safety and operation of 35W, then we can approve the access point," he says.
Deocampo says that the point was clarified during the meeting and that congressional intervention was never necessary and would not have done any good anyway. The presence of a representative of Dick Armey's office would not mean the project would get "special preference," he says.
"Whether or not Dick Armey's representative was there or not, they would have had to go through the same procedure. I think they were interested in what actually was the procedure to get the interchange approved," he says.
In a second report to the highway administration, project engineers hired by the speedway argued that the interchange was not just needed for race days, it was needed for the future of the area. While the project site is rural now, it has huge potential for growth, they said. The March 16, 2000, report also said that the speedway was picking up the tab and cited the "majority of the construction funding to be provided by the private sector" as one of the reasons the project should be approved.
"The total cost of the proposed interchange is estimated at $6.5 million for right-of-way acquisition, utilities and construction. The Texas Motor Speedway will fund the construction of the interchange and associated ramps," the report says. "Additionally, it is expected that the approximately 18.2 acres of right-of-way required for the project will be donated by adjacent landowners."
That wasn't true, and the benefit to the general public was still murky, but after the second report was submitted that addressed federal concerns, the project's unjustified status quickly changed. Representative Armey wrote Carter to say that the project had been approved by the federal government and that it was "exciting whenever private entities step forward to fund a significant portion of a public transportation project."
Carey had also been in contact with Dick Armey about this time, and he billed Denton County for it as part of the work on the state loan that he was supposed to be doing. A representative of the state infrastructure bank department says Dick Armey had absolutely nothing to do with the Denton County loan that Carey was working to secure.
Even though the feds finally gave the project the nod, at one point it appeared that the interchange might not make it onto the state's department of transportation projects list in September 2000. That meant the interchange, which would take 274 days to build, might not be done in time for the speedway's NASCAR race in 2001. Polster told Gossage that the project might be delayed and that he would have to "push the matter to the 'nth' degree."
The state was legally required to preside over construction after the federal government approved. Once federal and state engineers signed off, then the interchange had to be approved by the three-member Department of Transportation commission. The commission meets just once a month, a department spokesman says.
Gossage responded in an e-mail obtained by the Dallas Observer, "Very alarming! I have some state senators, state reps, ready to weigh in. What do I need to do? This cannot be pulled from September. Please advise immediately, and I will mobilize the state elected officials. Enough is enough." On September 7, 2000, the state approved the project just as speedway owners had hoped.
Gossage's agreeable tone toward the county was changing in summer 2000, just before the project got under way. He was bemoaning the amount of money that the speedway had already spent on the interchange. In an e-mail to the commissioners, Gossage said the speedway committed $1.9 million as its share of the project and that he did not want to pay an additional $350,000 in engineering fees. Carey reviewed the letter for Gossage.
"This brings Texas Motor Speedway's contribution on this project to more than $2.3 million since we have already paid for engineering and design work," he said. Then, with the speedway's original promise of paying "100 percent" apparently long forgotten, he wrote in all uppercase letters, "FROM THE SPEEDWAY'S PERSPECTIVE, WE ARE ALREADY $700,000 OVER BUDGET."
The $350,000 fee, which ended up being about $200,000 because it's a percentage of the total final project cost, eventually was waived, a state official says.
Land was being cleared for interchange roads even while questions about rights of way continued. Gossage claimed that the county had assumed responsibility for getting the rights of way, which wasn't something the county has ever agreed it did.
"This project has been a difficult one from the beginning...It has also gone well over budget, all at the speedway's expense," Gossage wrote in another e-mail to Polster. "This is hardly an acceptable track record. We would urge the county to quickly secure the land parcels, utility easement and the movement of utilities at no cost to the speedway. Additionally, we would hope that Denton County would assume a leadership role in making sure this interchange is open in time for the mid-September race weekend."
Polster responded in kind, telling Gossage that the county never made a deal to buy rights of way, and a flurry of e-mails between them followed.
Ray Roberts, a former candidate for county judge in 2000 and a frequent critic of the county's politicians, got a copy of Gossage's letter and e-mailed the commissioners court. Roberts, a Denton resident, said then that it appeared Gossage was angry about money he had to spend on his own project. Roberts says he still feels the same way.
"We threw away 3 million bucks there, three-and-a-quarter, and my road right out here is terrible. That's what bothers me," he says. "They took our money that we had voted for bonds to take care of our county roads and literally gave it to the speedway. Right down the line. That was intended for...that speedway, and that's all you can use it for."
Luther "L.J." Lee, the 84-year-old owner of the property where the new "Dale Earnhardt" exit was built, says he never agreed to donate his land for the project. He allowed engineers onto the property, but he didn't agree to sell it.
County commissioners in August 2001 thought they could buy Lee's property for as little as $8,000 an acre. At one point, the county tried to get Lee to sell his 11.3 acres for $91,000.
Lee refused. He filed a lawsuit against Denton County and then threatened to close off the access road to the interchange during the next big NASCAR race.
"It took an incredible tour de force, political power to get the state of Texas, the Department of Transportation, the federal department of transportation, Denton County, Tarrant County, Northlake and everybody together to help condemn this land, and they did," says Trantham, Lee's lawyer. "They had to convince the feds to allow them to build an intersection closer than it ought to be done at what at the time was cow pasture and still is for the most part."
The property was actually worth at least 10 times what the county offered, and in June 2002, before Eddie Gossage was scheduled to give a deposition in Lee's case, Denton County settled. Behind closed doors, the county commissioners met and agreed to pay Lee $556,000, bringing the bill for the interchange up to about $4 million. As part of the settlement, the speedway also paid Lee $556,000.
"I think it solved a transportation problem in that area and is an element of the southwestern Denton County transportation plan," says Commissioner Jim Carter, who originally called for funding the interchange as part of his plan to improve traffic in the county's southwest corner.
Scott Armey is among those county officials who approved funding for the project, and he maintains that it has general public value.
"I looked at it as far as, is this a public improvement that's number one; is it justified and is it worth the investment on that globular scale? I thought it was," Armey says. "We're talking about public improvements and public safety. Sure the speedway enjoys those benefits a couple of weekends a year, but the rest of the 360-some days it's for the general public to utilize."
"We took a three-year process and did it...in about 14 months, give or take a month," Polster says.
Today, more than three years after Carter introduced his multimillion-dollar traffic plan, the speedway interchange is the only project of the plan that is completed. The other projects that are supposed to link up with the system of roads around the interchange for future growth are still in various stages of planning but will eventually be completed, Polster says.
No one can say or will explain clearly why the speedway interchange was suddenly deemed critical in late 1999 when just a year before it was not even included in the $85 million road bond package. A specially appointed committee had devoted many hours judiciously drawing up a list of Denton County road projects proposed for inclusion in that bond election. The list was not static, and the total bond election amount grew during the planning process along with the list of "important" projects for "better, safer roads" in the county. Besides that, the interchange had been planned and known to officials since at least 1996, when the speedway agreed to pay "100 percent."
It was only after voters had approved the bond package and its list of projects that commissioners found "excess" bond funds that could be devoted to the interchange. There is nothing illegal about that, but there is a chance that the projects that were tapped for funds could end up costing more than originally thought, which is happening on at least one project.
A bridge and road project between Interstate 35 at Lake Dallas and the North Dallas Tollway, unrelated to the interchange, was one of the four that was pumped for interchange money. It is now known that the bridge will cost much more than commissioners thought it would back in 2000 when they agreed to transfer $1 million from it to the speedway interchange. The bridge project on Lake Lewisville is not being delayed, but commissioners will now have to borrow more and shuffle funds from other voter-approved road bond projects.
Several commissioners said they believed the money they devoted to the interchange is justified and that it represented making good on a previous commitment by Denton County to "give" the speedway $5 million for roads around the speedway.
"We had committed in the original MOU [memorandum of understanding] up to $5 million or up to $10 million in road construction," Armey says. "It was up to $5 million in road improvements, and of course no tax dollars went into the speedway itself, which was kind of a feat...I think that underlying commitment was still there."
In reality, that original commitment was money that was to be part of a loan that the speedway would be required to repay over 40 years with 6.25 percent interest. Gossage in 1996 announced that the speedway had decided that it wanted to speed up the road construction process without government restrictions and turned the loan proposal down.
"I don't think it was a loan," Armey says. "I think we committed to do up to $5 million in road improvements to make the whole deal and then at the time of the construction of the speedway they didn't need it, but I think that there was still a feeling that there was a commitment to get them here that we would look to help them out and the speedway interchange; this particular road, I think, came up later as far as this is an improvement that would be beneficial and necessary."
Armey says he did not use bond money that he controlled for the project, so he paid little attention to it.
"I did not put any dollars toward the speedway interchange because I didn't have any to spare," he says. "My philosophy has always been that I didn't tell the other commissioners how to spend their money and they didn't tell me how to spend my money."
Of the county officials that would talk to the Observer, all say that there was nothing wrong with the way the project was funded. They also say they didn't know Carey was under contract with the speedway while he was working on the state loan for a different road project.
If true, that means commissioners could not have known with any certainty if at any given time Carey considered himself to be working on behalf of the county for the state loan or on behalf of the speedway to get county money--an issue that apparently concerned Armey just before his congressional bid and Polster once he learned of this article.
Late January Polster sent a $2,430 check to Denton County to pay for questionable hours that Carey billed to the county back in 1999. Polster says he made the payment with interest in response to questions posed by Scott Armey several years before and after the inquiry for this article jogged his memory.
Claude "Buz" Elsom, Texas Department of Transportation area engineer in Denton, supervised the speedway interchange. He says the project was originally proposed as "third-party or not state-financed" and that's the only way it could have been financed based on traffic demands. The state just does not fund projects with public money to benefit private developments, he says.
"I don't think the state would ever want to come in and add an interchange without demand. I don't think we've got that kind of money," he says.