Eric Cortellessa and Lisa Snowden discuss new allegations that Larry Hogan siphoned money from public transit projects to build highways that benefited his real estate companies.
This is a rush transcript and may contain errors. It will be updated.
Jaisal Noor: Welcome to The Real News. I’m Jaisal Noor. Maryland governor Larry Hogan is a popular Republican in a deeply Democratic state who believes in climate change, has criticized Donald Trump, and handily won reelection in the 2018 midterms, where Democrats made major gains. But Hogan and Trump do have at least one thing in common besides being Republicans, of course, corruption, because they both use their positions of power for personal gain, argues the Washington Monthly’s Eric Cortellessa. Hogan steered millions in state road construction money to areas where his company owned property whose values were certain to rise. Like Trump, hogan has given control of his companies to close relatives, his brother. The Hogan administration says he complied with state ethics laws because he was never personally involved in decisions approving the projects. But Cortellessa writes at least one government official disputes these claims saying it “doesn’t pass the laugh test.”
While the governor has expanded highways to the benefit of suburban land owners like himself, he killed the multibillion dollar Red Line, a huge blow to Baltimore’s working class black neighborhoods, which have endured disinvestment for generations. The NAACP’s civil rights lawsuit against the cancellation of the Red Line was dismissed by the Trump administration.
Well now joining us to discuss this is Eric Cortellessa of the Washington Monthly, author of the piece Who Does Maryland’s Governor Really Work For? Larry Hogan has more in common with Donald Trump than his reputation suggests. And our own Lisa Snowden who also runs the Baltimore Beat. Thank you both for joining us.
Eric C.: Good to be here.
Jaisal Noor: So Eric, you spent months reporting on this article and you acknowledge you built on reporting the other publications sort of started, but you took it further than other places had before. Talk about what you found in this piece over this course of months you spent on it.
Eric C.: Sure, sure. Well before I had started, there were really two main articles that had been written about the governor’s real estate business, one in Maryland Matters and one in the Baltimore Sun. Maryland Matters story came first and that really built off of financial disclosure forms that the governor had submitted to the state ethics commission, which included sort of the real estate LLCs that are subsidiaries of the Hogan company, that if you went through public land records you could find some of the properties that they own. There are limits to that, by the way, because LLCs are notoriously non-transparent, they’re cloaked in secrecy. The only public information about an LLC is its resident agent. You don’t know who the partners are, you don’t know what the operating agreement entails, and you certainly don’t know if they are the minority owner and a property. So there’s a lot that we don’t know about the governor’s real estate business.
But what the Maryland Matters story did was it laid out the LLCs that he had ownership of at the time, story came out in 2018, and included some concerns from Democrats and a few ethics experts about the arrangement. The governor had not put his real estate holdings in a blind trust, the governor put his brother in charge of the company, and the governor obviously has a great deal of executive authority when it comes to transportation and other matters — giving out government contracts, et cetera.
So what my story did was it really delved into the very specific transportation decisions the governor made that had posed to benefit his real estate company. The main way that the governor does that is through the annual transportation budget. In Maryland, it’s called the consolidated transportation program. It’s a rolling budget that the governor puts out every year that’s supposed to last for six years. What I found through an extensive look at those documents was that there were a number of instances in which he advanced projects that were right nearby properties he owned.
One thing to make clear is that it is the governor’s authority to move projects up or down in the transportation budget. I spoke to a number of former and current officials in Maryland’s department of transportation and it’s very clear, nothing can move up in the transportation budget without the governor’s signing off on it at the very least.
One of the first big things he did in 2015 upon taking office, as you say, was he killed the Red Line. That was a $2.9 billion project, aim to bring mass transit to Baltimore. There was a lot of … there was hundreds of thousands dollars in sunken cost. It was already put into the construction program by Hogan’s predecessor, Martin O’Malley, and it had a $900 million guarantee in federal aid from the Obama administration. The governor killed that program, killed that, the Red Line, and by doing that, he freed up a lot of money to spend on roads, highways, and bridges.
One of the first things he did was he greenlit the construction of an interchange in Brandywine, Maryland. He allocated $58 million for that project to go forward. That was a decision that he made. Meanwhile, he’s got a number of real estate interest right nearby. He had a parcel of land right down the road and since then, he has increased his investment and also increased other projects in the area, including a new bridge, embankments, a park and ride, et cetera. So you know, as the Hogan administration has indeed investing heavily in transportation infrastructure in Brandywine, he’s also been investing heavily through his private real estate business.
There are other instances too. He bought a property, a parcel of land in Hyattsville, Maryland in 2015. Come 2017, he approved $23.5 million in road and sidewalk improvements right next to it, essentially, on Maryland Route 500. That was something that he did.
One thing he also did was in between running in between his election and assuming office, he went and bought a parcel of land from the state highway administration, which he’s now developing into apartment complex and a residential facility. Now it’s advertised on a site that he’s brokering at for $2.4 million.
What the story really did was get into the specifics of transportation decisions he made that benefited his private real estate business while in office.
Jaisal Noor: Hogan says … he hadn’t spoken with me directly, but through his administration, he says he’s complied with ethics laws, that his companies are in a trust and that he hasn’t approved, he hasn’t personally approved any of these road projects. That’s what his response has been to your reporting, how did your reporting flesh out? What did you find? Or those things stack up?
Eric C.: Well, the first thing that he hasn’t made the decisions, you know, I had a Maryland Department of Transportation officials say that that wasn’t true, that it didn’t pass the laugh test. Warren Deschenaux, who is the long time director of the Annapolis’ Department of Legislative Services called it a “ridiculous assertion” because the governor has the most broadest, most powerful authority over transportation compared to any other governor in the nation because they have the sole authority to move projects up or down on the consolidated transportation program, as I said.
Maryland Department of Transportation officials say, no, that’s not true. The governor did sign off on these decisions. Someone told me on background the notion that he doesn’t make decisions, by the way, belies a million things he said while in office. He’s taken … first of all, a tooth fairy didn’t kill the Red Line, right? Governor Hogan did. Second of all, the governor took credit for advancing the Purple Line into construction and that had been an engineering under the O’Malley administration. It only went into construction because the governor made that decision. It’s the same principle with all of these other decisions.
His communications director said that to me when I’ve been reporting the story, but since it’s come out he hasn’t been repeating that claim and I think there’s a reason for that. So there’s that. If you look at the ethics disclosure forms, there’s a lot of information that’s not there that state legislators that I talked to said they needed to know before voting on this transportation project and unwittingly approving projects that were going to boost the profits of the governor’s private real estate business.
So for instance, here are things you don’t know on governor’s financial disclosure form. He lists the LLCs that he has ownership in, but he doesn’t list the specific properties that they’re involved with or the dates of acquisition. That’s a really big problem, right? Because all it is is a schedule of the 43 LLCs he has ownership man, but we don’t actually know what properties that they are involved with. You have to do a lot of digging and there’s a lot of stuff that you don’t know even if you do comb through public land records because of course a bit of the minority owner in a property that’s only going to be in an LLC operating agreement, it’s not going to be in the public land records.
The other thing is that one thing that the Hogan administration does is it acts as a broker on deals and what that means is that he’s bringing in a lot of private income on undisclosed brokerage fees. The governor is in charge of regulating the real estate business in Maryland in a whole host of ways. He gives out contracts for a whole bunch of different projects, including like on the Brandywine interchange. He gave it to Facchina Construction, which was a big campaign contributor.
But a concern that I heard from legislators and Maryland government officials past and present was that he is getting paid by real estate developers all across the state and the public doesn’t know who they are. What contracts have they gotten, what favors have they gotten? These are things that we don’t know. What it really just shows is that there is a vacuum, a hole in the state ethics laws or the disclosure requirements that could make sure that the government isn’t using his public office for personal financial gain.
Jaisal Noor: Hmm. Lisa, some have argued that … and a lot of them made about Hogan’s popularity and some have argued, and there was a recent piece in New Republic by Alex [inaudible 00:09:58] who argued he is popular precisely because he is willing to take resources from black neighborhoods in Baltimore that would have benefited from the Red Line and use that money to invest highways into some of the wealthiest suburban counties in the country. At the same time while he’s claiming to believe in climate change, he’s expanding road infrastructure. What are your thoughts on that?
Eric C.: So yeah, I think that Larry Hogan is very much aware of racial tropes in this country, racial dog whistles. You see that in the way that, you know, when Donald Trump called Baltimore rat infested, it was very hard for us to, in Baltimore media here to get him to really refute that. I think that Donald Trump said that on like a weekend, and he finally got around to saying something about it Monday. He very much leans on heavy crime tropes and saying more policing after the uprising that happened following the death of Freddie Gray, he was willing to kind of let National Guard in and that’s something that he even ran on. So, yeah, I think that it’s something that happened way before Larry Hogan was born. This country’s kind of … in our DNA is the idea that people of color should have little and white people should have lots. But I think it’s something that is right in his playbook and that he’s willing to very much use.
Jaisal Noor: Eric, how have lawmakers responded in the wake of this, in your story? Many people you spoke to, including the current, the now Senate president said they weren’t aware of these conflicts when they voted on these transportation deals. That was inside … that’s now Senate President Bill Ferguson. I know he’s made some comments as well as the speaker of the house, Adrian Jones had made comments on what the legislator, the general assembly is going to do as far as tackling these possible ethics violations. At the same time, they still need to work together with Hogan to get their agenda passed.
Eric C.: Right. I mean it’s one thing to note is that we go into this session with two new presiding officers who don’t have the same sort of institutional knowledge that their predecessors had had and that would have been beneficial to dealing with revelations such as this. The reaction that I heard from legislators was that they didn’t really know. You know, they knew that he had a real estate business but they didn’t know the extent to which he had made decisions that posed conflicts of interest. I know that there are a bunch of them who would like to see an investigation from the general assembly. Speaker of the House, Adrian Jones, and indicated that a subcommittee was going to look into this and it was also going to be forward thinking when reviewing the more recent transportation budget that is going to be released today.
Senator Bill Ferguson, who when I spoke to him was extremely alarmed and wanted an investigation from the general assembly, now he’s saying he believes it’s under the purview of the state ethics commission. But I know that there are many members of both the Senate and the house caucus who are concerned about this and want follow-up and want questions that are going to be answered. You saw a number of them tweet that out the day the story came out, including Baltimore’s own, Brooke Lierman. So I would expect there to be a lot more scrutiny on the current transportation budget that he’s proposing. Whether or not there’s going to be a backward looking investigation into pass decisions, I don’t know. But I know that a bunch of legislators want this to be dealt with because it hasn’t in the past.
Jaisal Noor: All right, we’re almost out of time. But Lisa, I wanted to end with you and ask you how does … talk about your thoughts and you’ve commented this a lot online, but your thoughts on, you know, obviously Eric’s great work here, but the lack of this sort of reporting in the state of Maryland specifically when it comes to challenging Governor Hogan and even following up and really asking those tough questions have we seen that happen in the press corps in the state?
Lisa Snowden: I’ll start by saying the Maryland Matters piece was written by a former colleague of mine, Eric Erickson. You know, kind of [inaudible 00:14:10] City Paper guy. The piece that he would have possibly written for City Paper, I’m sure would’ve been very different than the piece that he wrote from Maryland Matters. Not saying nothing bad about Maryland Matters, but City Paper is kind of rooted in the more confrontational kind of journalism and the reason why Ed could not do that is because City Paper was closed. So part of the things is that journalism is not what it once was. You know, we have these shrinking newsrooms, we don’t have as many bodies on it, but also, you know, the people that we have on these stories now have to be worried about access. That makes for a weaker government for all of us.
The thing that I’m always going to rant about as any time you put a camera and microphone in front of me is the race factor. It’s very interesting to me that that New Republic piece that you mentioned, I believe it calls him a crook in the headline. You don’t ever, you very rarely see ….
Jaisal Noor: The most popular crook in American.
Lisa Snowden: Yes, and that’s shocking because you don’t always often hear about rich white men being called crooks. Look at the way that this is being covered or not being covered versus here in Baltimore when Catherine Pugh was recently called to the carpet for her involvement with her Healthy Holly books, the book that she was kind of selling to maybe do some more, you know, garner money or favor. It’s very different. We had the same local press camped out at our house, camped out everywhere, camped out at her consignment shop. I think that you have to say if we’re looking at a press that’s mostly white, how do you cover somebody who looks like you versus someone who looks very foreign to you? How do you cover someone that you’re like, “I can look at them and understand their background and kind of give them the benefit of the doubt,” versus someone that you know nothing about, that you’re born in this racist country that already tells you black people are bad, lazy, shiftless. I think that that’s a factor there.
Jaisal Noor: Especially when its impacts, these policies are disproportionately impacting working residents of the city and other working class neighborhoods across the state.
Well, I want to thank you both for joining us, Eric Cortellessa. We’ll link to your piece, Who Does Maryland’s governor Really Worked For on our website. Thanks so much for joining us. Lisa, it’s always a pleasure having you on.
Lisa Snowden: Great.
Eric C.: Thanks for having us.
Lisa Snowden: Thank you.