Donations, Leverage, and the Thin Line Between Incompetence and Willful Ignorance

What exactly is going on with this new "donation" from the Luter Family and how it reflects a troubling trend in local politics

This past Friday, the Smithfield Times broke a story regarding the potential of Smithfield Town Council pledging additional Smithfield taxpayer funds to match new funds offered by the Joe Luter family.  The article seems to stem from two letters Smithfield Mayor Steve Bowman authored.  The Times does a good job of laying out the details, so I recommend reading their story.  The quick synopsis is that Joe Luter III asked Steve Bowman to meet in Florida. While there, Mr. Luter III presented Mr. Bowman with an offer of a $6 million “donation.” However, the town will have to match with an additional $6 million in taxpayer funds to receive the funds from Luter.

Letter from Steve Bowman to Joe Luter III that seems to recap their conversation/agreement in principle:

Letter from Steve Bowman to Town Council members about the trip:

Mayor Bowman took issue with the article and complained that the Times emailed him questions that “looked like a bill of particulars from a court case” instead of calling.  The Times promptly provided a copy of the email:

Mayor Bowman later provided answers to all of Mr. Faleski’s questions in the same Facebook thread, which you can find on the Smithfield Times Facebook page under the original Times article.  For ease of reading, I have merged the questions and answers:

FALESKI:  If the Town Council votes to accept the donation, where would the town’s matching funds come from?

BOWMAN:  The Smithfield Times The funds could come from our reserves or be borrowed. That decision would be made by the entire Council.

FALESKI:  Will taxpayers be given an opportunity to give feedback to Town Council members before a vote is taken to accept the donation and pledge $6 million of taxpayer money?

BOWMAN:  I truly believe that our citizens should have significant input on how these funds are spent and how much.

FALESKI:  How will the $12 million ($6 million each from taxpayers and Luter III) be allocated among the listed projects? (Farmers market, streetscape at 10 and Main, brick sidewalks, parking for Main St. Baptist)

BOWMAN:  I would anticipate that the monies spent on the agreed upon project would be on a 50/50 share.

FALESKI:  Has the town received any update on when the farmers market building or any other component of the Grange will break ground?

BOWMAN:  I have not received any update on any timeframe for the Grange.

FALESKI:  If the Town Council votes to accept the money and contribute matching funds, does the vote remain binding in the event that there’s turnover from the November election or would any new members have the option of revoting in 2025?

BOWMAN: I would presume that the Town Council has the authority to vote to countermand a previous decision.

FALESKI:  Will the $6 million that taxpayers must pay be in addition to, or in place of, the $1.4 million the Town Council pledged to the farmers market in December 2022?  What’s the status of the $1.4 million the council and the county each voted to commit in 2022 to the farmers market?

BOWMAN:  I would presume the up to 6 million would be in addition to the 1.4 million that the previous Council allocated. I think it is important to remember that this contribution is up to 6 million. If Council should decide otherwise, it could decide not to accept any monies and return the entire 6 million. Also, please remember that as mayor, I cannot make a motion on this issue....only break a tie.

FALESKI:  In the case of taxpayers’ matching contributions to the farmers market and anything else related to the Grange, will the checks be written to the developer?  Or directly to the contractors who do the work on the farmers market and other infrastructure on the list?

BOWMAN:  First, I do not consider this as infrastructure for the Grange. I have always spoken against providing public funds for any infrastructure for any development. This entrance corridor would be owned by the Town and placed on Town right of way. The Town would bid the job and the Town would compensate the contractor. No funds would be given to the developer.

FALESKI:  Has there been any further talk of potential reimbursement from the town for extending infrastructure to the Grange since the rezoning vote in December?

BOWMAN:  There has been no discussion by Council to pay for infrastructure. I would strongly advocate against such a move.

It is a common tactic for officials to prefer phone calls over written responses because it allows room for dispute about what was stated and it avoids leaving an official record of correspondence. Good on the Times for sticking to written responses.

From all that, you can decide what to make of the situation.  I am not a Smithfield taxpayer, so I don’t really have a dog in this fight regarding how Smithfield tax money should be spent.  However, this is full of great examples of how local politicians are victims of manipulation in their blind pursuit to chase revenue or how local politicians attempt to manipulate their constituents through words and procedural actions.  And as always, two things can be true at once. Below is a closer look at some of those examples with my thoughts:

Mr. Bowman’s Trip to Florida:

Mr. Bowman's letter to the Town Council members clearly shows that he knew this would look bad.  He clarifies that he did not use Town funds for his travel and has been friends with Joe Luter III since the late 1980s.  Mr. Bowman also clarified that he did not solicit funds and did not know Mr. Luter intended to discuss anything related to the proposed donation.  It is perfectly fine to visit your wealthy friend of 30+ years in Florida on your own dime.  It is also perfectly fine to visit a wealthy benefactor of Smithfield to discuss town business (frankly, in that scenario, officials should travel at the Town’s expense).  However, it is not okay to mix the two.  Unless Mr. Bowman routinely visits Mr. Luter in Florida at the drop of a hat, it should have been evident that The Grange would come up during the visit. 

Regarding expenses, since Mr. Bowman opened that door, he states he purchased his plane ticket with personal funds. However, he also admits that he stayed at Mr. Luter’s residence, so presumably, he was gifted lodging, meals, incidentals, and transportation.  Using the Federal Office of Personnel and Management (OPM) as a guide (I don’t believe Smithfield is not required to follow Federal per diem and I don’t know how they set their rates), Mr. Bowman received $172.50 in meals and incidentals and $322 in lodging, or just under $500 total in value from Mr. Luter as part of this visit.  Once Mr. Luter started discussing town business, the nature of this trip changed.  Mr. Bowman, who I assume had a significant amount of ethics training in his previous public service, should have known this.

The Transfer of Funds:

Mr. Bowman essentially already accepted $1 million from Mr. Luter.  In fact, he states that he waited for the deposit of the $1 million into the Town’s account before informing the Town Council.  Typically, elected bodies vote to accept a donation before receiving the funds.  A cursory search of Virginia code revealed § 15.2-1108, which states “A municipal corporation may accept or refuse gifts, donations, bequests or grants from any source, which are related to the powers, duties and functions of the municipal corporation.”  And § 1-224 states, “"Municipality," "incorporated communities," "municipal corporation," and words or terms of similar import mean cities and towns.”  Smithfield Town Council members should ensure they clearly understand what Mr. Bowman is and is not allowed to do unilaterally on behalf of the Town to determine if he overstepped his bounds here.

More concerning is that Mr. Luter insisted on immediately depositing the $1 million.  Did Mr. Luter really need to demonstrate to the Town of Smithfield that he is good for the money?  This immediate deposit seems very odd unless it is a tactic to make it more difficult for Town Council members to vote to “remove $1 million from the town coffers.”  This behavior makes you wonder if this is a “donation” or an attempt to gain political leverage.  The Town should have refused to accept the transfer until the Town Council took action.  Who is providing the “donation” to the Town is irrelevant to the process of accepting unapproved funds.  Put another way, substitute any other politically charged personality or organization for Joe Luter, and it becomes clear accepting the money into a Town-controlled bank account before Town Council action is at least unethical and potentially illegal.

Maybe the most bizarre item in this whole affair is this portion of Mr. Bowman’s letter to Mr. Luter, “It is further understood that should the Town decide not to allocate the entire six million dollars, the amount that we choose not to match will be subtracted from your donation and that amount will be refunded to your wife, Mrs. Karin Luter.”  It is unfortunate that Mr. Luter III appears to be in poor health.  However, the best way to ensure his final wishes are known is through his estate documents, not a spur-of-the-moment conversation with the Mayor of Smithfield.  Town Council needs to understand from their attorney (who potentially could have a conflict of interest considering his previous ties to the Luters) if this letter from Mr. Bowman to Mr. Luter is legally binding.  If so, the Town has now potentially inserted itself into a possibly messy situation if Mr. Luter III were to pass away between now and any situation in which the Town does not match funds.    If the Town Council surprises everyone and votes not to accept this deal next week, does that mean the deposited money from Mr. Luter is returned to Mrs. Luter, and the town has essentially acted as an intermediary to make a financial transaction between Mr. and Mrs. Luter happen?  Also, does the Town keep the interest that the $1 million accrued during that time?  Accepting the money before a vote was gross negligence on many levels, and someone needs to answer to what end?

Mr. Bowman’s Commitment to Transparency:

Mr. Bowman states in his letter to the Town Council, “I intend to apprise, in open session, the Council and public of this occurrence during Council Comments on June 4.”  He also carefully answers Mr. Faleski’s question about whether the public will have a chance to give feedback before the Council votes to accept the donation by saying, “I truly believe that our citizens should have significant input on how these funds are spent and how much.”  Allow me to translate for Mr. Bowman: The plan is for the public not to have the opportunity to provide input before the Council votes to accept the donation.  Words and actions are crucial to understanding what Mr. Bowman wanted to do until the Smithfield Times blew this up.  Look at the agenda for June 4th:

Mr. Bowman planned to conveniently “inform the public” in the agenda section that comes after “Public Comments” meaning the public would not have a chance to comment on the topic during the meeting.  It is clear that he would like the Council to take action on accepting the donation since he cannot make the initial motion.  Mr. Bowman dodges Mr. Faleski’s question by saying the public should have input on how the funds are spent, Mr. Bowman does not state whether the public should have input on if the Town Council should approve the overall financial scheme.  If Mr. Bowman were genuinely committed to this decision being void of “innuendo of any impropriety,” then he would introduce the issue this month and ask the Town Council to consider action on it the following month.  Also, for those who haven’t noticed, this is a favorite tactic of developers, and the Luters specifically, to use timing and urgency to pressure elected bodies to make rushed decisions.

So Clearly, This is Evidence of Financial Corruption Right?

Well, no.  And it is incredibly unhelpful to public discourse to insinuate without evidence that Mr. Bowman or any other elected, appointed, or otherwise employed Town or County official benefits financially from their behavior or decisions.  Many people were excited about Steve Bowman coming in as Mayor of Smithfield.  They thought he would clean up some of the sloppiness and naivety of the Carter Williams years.  However, he seems to have only made it worse so far.  It is sometimes difficult to determine if Mr. Bowman is the mayor or performing the functions of a lobbyist for the Luters and Smithfield Foods.  That said, there has been no definitive reason to believe Mr. Bowman has benefited financially from the Grange or other projects.  Even the roughly $500 in travel benefits mentioned earlier in this article are much more a process foul than insinuating that Mr. Bowman could not afford that cost alone.

Mr. Bowman and other leaders in the county (yes, I am talking about you, Board of Supervisors) are guilty of assuming that the masses are incapable of understanding decisions and that, as leaders, they need to be the adults in the room.  Sometimes, this manifests itself in approving projects despite strong objections from the public because leaders assume that the public doesn’t understand the long-term need for tax revenue or the concept of “grow or die.”  Other times, leaders candidly don’t like the citizens publicly disagreeing with them and do not want to provide dissenting voices with a platform.  These public leaders spend a lot of time on that thin line between incompetence and willful ignorance, and which side they fall off that line is the difference between being in over their heads and being corrupt.