VIDEOS: FBI INVESTIGATION INTO THE TALLAHASSEE CRAWatch it: Federal grand jury subpoenas city for CRA documents | 0:48
A federal grand jury has asked the city of Tallahassee for records involving the Community Redevelopment Agency involving top local developers and business people. Wochit
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VIDEOS: FBI INVESTIGATION INTO THE TALLAHASSEE CRAWatch it: What is the Tallahassee CRA? | 0:52
An explanation of the Tallahassee Community Redevelopment Agency. Democrat staff
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  • Watch it: Federal grand jury subpoenas city for CRA documents
    Watch it: Federal grand jury subpoenas city for CRA documents
  • Watch it: What is the Tallahassee CRA?
    Watch it: What is the Tallahassee CRA?
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A massive federal probe into the records of several prominent business people and companies and their dealings with the Tallahassee Community Redevelopment Agency points to a nexus of public money, private enterprise and government officials.
Two FBI-penned subpoenas landed on the desk of city and CRA records custodians last week asking for a wide range of records going back five years targeting a group of people at the center of at least two high-profile downtown projects.
The records requested include everything from emails to and from city commissioners, who also serve on the CRA board, their voting records on applications, bids, and other submissions to the CRA, as well as payments to any of the named individuals.
Photos: Those under the federal microscope and those related to them
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Kim Rivers
Kim Rivers Visit A Tangled Web http://data.tallahassee.com/tangled-web-cra/ for a look at those under the microscope of federal investigators and their connections to the city, businesses and each other.  Special to the Democrat
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Photos: Those under the federal microscope and those related to them
Those people also have ties to local elected officials, fundraisers and advisers, and some sit on government advisory boards. They include a close friend of Mayor Andrew Gillum, who is running for governor, and a former aide to City Commissioner Scott Maddox. 
Because of their influence and political ties, the reports about the subpoenas are raising alarms throughout the community about who is really being targeted and which elected officials have the most to fear.
There also is a perception that the CRA and the people being investigated are corrupt before the FBI has received a single record.
“We are very concerned whenever a CRA is besmirched,” said Carol Westmoreland, executive director of the Florida Redevelopment Association. “A lot of people do a fantastic job, including the Tallahassee CRA, with amazing success and projects.
"And all that is wiped out with these news features that say, ‘Uh, oh. Somebody screwed up.’ The public jumps to the conclusion that they are crooks.”
To meet requirements under Florida Statute, CRAs are required to file five reports a year to the state and post their annual reports to the public, she said.
Dr. Edward Holifield, who has frequently criticized the CRA for not being transparent enough, said he was not surprised by the investigation.
"I knew it was going on, but I never anticipated anything like this," Holifield said.
CRAs were established in Florida to eliminate blight and serve the poor with affordable housing, health care and improved public safety services. But a grand jury report out of Miami-Dade found that CRA boards have directed millions of taxpayer dollars on pet projects of elected officials and come close to providing slush funds.
Holifield said it's no different here. Millions of dollars have been handed to developers to build luxury hotels, commercial buildings and other projects in non-blighted neighborhoods that have not helped the poor.
"What is the consequence of these millions of dollars?" Holifield asked. "It certainly hasn’t been to help the community."
Downtown developers
The investigation is targeting developers responsible for several high profile downtown projects. The largest group, about six of the eight people listed by name, participated in the renovation and resale of the Hotel Duval, the Gateway Center on the northeast corner of Monroe and Tennessee Streets and the DoubleTree hotel on the corner of Park Avenue and Adams Street. 
Under Hunter & Harp, John Thomas "J.T." Burnette and Chad Kittrell, along with Frank Whitley, started off developing many trendy restaurants and nightclubs in the mid-2000s, according to a 2011 Tallahassee Magazine profile.
Burnette and Kittrell recruited Kim Rivers to their team after she moved back from Atlanta several years ago, the latest issue of 850 magazine reported. An attorney, Rivers has partnered with Burnette on a financial investment firm called Inkbridge, also named in the subpoena. They filed for domestic partnership status in 2015 and own a $1.5 million home together. 
RIvers is also CEO of Trulieve, one of the state's first Florida medical marijuana companies.
Among the clubs and restaurants Burnette and Kittrell opened and closed are the Winery and Tapas restaurant, and the subsequent Midtown Filling Station and Alchemy in the same location, the magazine reported. They opened Genghis Grill on Apalachee Parkway, too. 
But before they became restaurateurs and club owners, Burnette and Kittrell had a federal contracting firm under the name of SheltonDean, according to Tallahassee Magazine.
SheltonDean brought in $20 million in federal contracts between 2008 and 2015, according to USASPENDING.GOV,  a federal contractor database.
SheltonDean is run as an interior design company by Burnette's ex-wife, Catherine Baker, who worked on the Hotel Duval and other projects.
Burnette and company bought the Duval for $4.75 million in 2007 and spent $10 million renovating it. They received no CRA money but did get a $5.25 million small business loan from the federal government.
Four years after its 2009 grand opening, they sold the hotel to the Louisville, Kentucky Schulte Group in 2013 for $23 million — a net gain of more than $8 million.
Gateway project
The boutique hotel with its rooftop Level 8 bar and upscale Shula 347 restaurant on the ground floor put them on the map as big-time developers. With an assist from local contractor Melissa Oglesby of KaiserKain, also named in the subpoena, they ultimately secured $1.8 million to build the 50,000-square-foot Gateway Center.
Some of that money was in the form of a tax reimbursement for a portion of the increase of the tax increment and two vacancy grants. 
Construction began in 2013 and it opened with much fanfare in 2014 with Walgreen's as its most prominent tenant. The chain drug store moved out earlier this year, leaving a gaping vacancy in the corner of the first floor of the building.
The Gateway has been criticized as a failed retail project, but CRA director Roxanne Manning said it is a beautiful building "that replaced a horrifying gas station" with tenant income that adds thousands of dollars to the city's tax roll each year.
"The building wasn't put there for Walgreen's," Manning said. "Walgreen's has a 25-year lease and is still paying rent and and taxes."
The building also is home to a branch of Morgan & Morgan law firm, whose owner John Morgan, was a chief promoter of the Amendment 2 medical marijuana approved by voters last November.
The building also is occupied by a GEICO office and the law offices of Berger Singerman.
Rising expectations
From there Burnette and team moved several blocks south to take over the DoubleTree by Hilton.
Under the name of IB Tallahassee, they bought the 243-room hotel lodging for $21 million in 2014. Work on the 16-story, 243-room hotel began soon after.
The CRA granted the developer $883,000 reimbursement for sidewalk improvements in 2014.
After spending $8 million on renovations completed last year, Burnette and team decided to add a pre-fabricated 17th floor to the hotel that will be built on street level and hoisted to the top once finished. It will house a patio, lounge and restaurant.
Improvement Authority
Rivers is chairwoman of the Tallahassee Downtown Improvement Authority, a special taxing district that generates about $195,000 -- most of which is spent on salaries, benefits, marketing and operating costs.
Vice chairman of the group is Adam Corey, a lobbyist and restaurateur who is also a longtime friend of Mayor Gillum and was his campaign manager in 2012. 
Corey received $2.1 million city and CRA money to help renovate the old electric building in Cascades Park. Despite a sweetheart rental deal with the city, the Edison restaurant he opened there has struggled financially, prompting a city audit. Corey and the Edison are both named in the federal subpoenas.
The executive director of the TDIA is Paige Carter-Smith, a former aide to City Commissioner Scott Maddox and longtime associate of his.
She was hired last year at a salary of $65,000 a year.
Carter-Smith also owns Governance Inc., a strategic planning firm founded by Maddox but sold to Carter-Smith in 2010 for $100,000 when he ran for state agriculture commissioner to avoid an apparent conflict of interest.
Her other company, Governance Services, owns Maddox's home and office building on Adams Street. Carter-Smith and both Governance firms are subjects of the FBI investigation.
Nesting dolls
The investigation is also looking at about a dozen corporations. Several are affiliated with Burnette, Kittredge, Whitley or Rivers and seem to fit into one another like nesting dolls. Some of the corporations listed in the subpoena, like Duval Holdings, are defunct.
One of those companies is Sunnyland Solar. Burnette, Whitley and Rivers are affiliated with the company, according to state records.
Sunnyland received city and county tax credits in 2010 to build a solar farm at Innovation Park with two Florida State University researchers to generate up to 3 megawatts of solar energy for the city.
A lease signed in 2011 is still in effect through 2018, said Ron Miller, executive director of the Leon County Research and Development Authority at Innovation Park. The rent on the 9.8-acre parcel is $7,000 a year.
The solar tubes were up and running at one time and research was conducted, he said. But the equipment doesn't appear to be up anymore and was never connected to the grid as promised.
To sweeten the terms of the lease, Inkbridge entered into a separate agreement with Innovation Park to pay $100,000 into an escrow account to help support the park.
In turn, Innovation Park paid $10,000 into Imagine Tallahassee, a nonprofit LLC that Burnette and Rivers run. Imagine Tallahassee makes recommendations to the city about how to spend the money raised by a 1-cent sales tax increase approved in 2000.
“I know the players involved. My dealings with them have been above board and very professional,” said Ed Murray, the principal at NAI/TALCOR a real estate company that is the leasing agent for Gateway. "The real question should be who is behind this and what is their motive. I believe it is all smoke and will result in nothing.”
Contact Schweers at jschweers@tallahassee.com