Investigative report: An offramp to nowhere
BY JOE DEJKA AND C. DAVID KOTOK
OMAHA WORLD-HERALD
March 25, 2007
Despite its inelegant name, Pflug Road carries the traveler back to a bygone era of pastoral beauty in Sarpy County.
A new bridge that is part of the intended interchange straddles I-80 beneath the glass-walled Holy Family Shrine.Pflug - pronounced Floog - Road lies well south of the development wave rushing southwest from Omaha. It's a rutted dirt-and-gravel ribbon running east and west, ambling past squat steel grain silos and fields of silty loam. It rides heaving hills and dips into dales, till, at its western end, it plunges 120 feet in elevation, down the corner of an ancient bluff to the Platte River flood plain.
There it stops at Interstate 80, just north of a freshly built bridge - a $3.3 million concrete bridge connected to dirt roads. The overpass was built as the first piece of an Interstate interchange that, if completed, would bring sweeping changes to this rural landscape.
The $10 million Pflug Road interchange project is the taxpayer-funded handiwork of a private Omaha developer, Ted Seldin, whose development company owns 935 acres at the site and is poised for a big payday.
Seldin gathered allies among county officials and business promoters who expect federal money to bankroll most of the interchange and from state highway officials who put aside their doubts about its need. He persuaded Nebraska lawmakers in Congress to earmark federal funds for the folks back home.
Paying for Pflug
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Total cost . . . . . $10 million
Bigger bridge . . . . . $3.3 million
State share . . . . . $2.8 million
Sarpy share . . . . . $500,000
Interchange access . . . . . $6.7 million
Earmark share . . . . . $4 million
Sarpy/other source . . . . . $2.7 million
Note: $500,000 environmental study included in cost of interchange. But Sarpy taxpayers have a separate $3 million cost to bear for paving Pflug, which now is a gravel road.It's all legal.
What's set to happen in Sarpy County is happening in hundreds of communities across the country, costing U.S. taxpayers billions of dollars for projects of debatable merit and prompting calls for change from the White House and the new Democratic congressional leadership.
Money for Pflug includes $4 million in four of the more than 6,300 earmarks for individually funded projects contained in the 2005 transportation bill - legislation that many people see as a case of congressional porkbarreling gone hog wild.
Motorists pay the price. The $4 million in federal highway funds would come from the gas tax you pay every time you fill up.
Nationwide the gas tax isn't keeping up with basic highway needs. By 2025, the shortfall in roads funds for Nebraska alone is expected to top $5.7 billion.
Pflug itself is not fully funded. Another $2.7 million is needed from somewhere. The interchange also must pass muster with environmental regulators, a process that could take a year or longer, raise the project's cost or even cause a cancellation.
Seldin has downplayed his role in the Pflug project during interviews with The World-Herald. He said his lobbying has been aimed only at supporting the county's goals for development.
"Everybody will benefit," Seldin said. "We were only being supportive of the county."
Yet the Pflug project is instructive on how public spending can wind up helping the private financial interests of well-connected individuals.
How well connected?
Seldin is a regular campaign contributor to federal, state and local elected officials of both political parties - including the members of Congress who pushed through Pflug's earmarks.
He leases farmland near Pflug to the family of Tim Schram, who represented western Sarpy County on the County Board until last fall. Schram helped Seldin lobby county and state officials to support the interchange.
Seldin also is an active supporter of the Greater Omaha Chamber of Commerce, which endorsed the Pflug interchange.
The Seldin Co. purchased the majority of its land near Pflug in 1973, for less than $600 an acre, adding more in the 1980s. Today, the hillside property and bottom-land farm ground is worth about $4,000 an acre.
Commercial land and industrial land at existing interchanges in Sarpy County sell for $100,000 an acre or more.
"It's kind of like winning the lottery if you own the land at that interchange," said Cecil Steward, the former dean of architecture at the University of Nebraska-Lincoln, who has studied the Omaha-Lincoln corridor.
Seldin and executives of his company saw an opportunity, personally lobbied members of the County Board and Chamber of Commerce and hired a prominent Washington, D.C., lobbying firm to keep up pressure in Congress.
Every step along the way, public officials willingly championed Seldin's case. They envision dollar signs in the form of new property tax revenues. Seldin has shown them plans that include commercial development on the farmland and home lots on the hillside.
Toby Churchill, executive director of the Sarpy County Economic Development Corp., an affiliate of the Chamber, said the flat farmland could be used to attract large regional distribution warehouses.
While Pflug proponents emphasize the potential for development and tax revenue, no public agency has examined in any detail the cost of delivering sewer, water and other public services to the interchange area.
Nor has anyone done a neutral, comprehensive analysis of whether another I-80 interchange is needed along the Platte River valley and, if so, whether Pflug is the best place for it.
Pflug Road was not in the long-range plans of the Nebraska Roads Department or the Metropolitan Area Planning Agency.
In an assessment based on future transportation congestion, Sarpy County studies suggest an interchange at 180th Street, six miles closer to Omaha, would best meet the emerging traffic demands. County Roads Director Tom Lynam says flatly that 180th is a better location than Pflug.
But Pflug leapfrogged 180th on the projects list. Seldin seized a moment in 2001 as the state planned its widening of a nine-mile stretch of I-80 from Nebraska Highway 370 to the river.
"The stars kind of lined up on Pflug Road," Lynam said.
A wider I-80 wouldn't fit underneath two old overpasses - Pflug and nearby Ruff Road. With no access to I-80, the overpasses were used by farmers and others to crisscross the Interstate.
The two overpasses had to come down. And though they were little used, Sarpy County officials wanted both replaced. The state agreed and was about to award contracts when Seldin sprang into action.
His company hired an engineering consultant, Kirkham Michael, to figure a way to build one interchange near Pflug rather than replace both overpasses.
On Sept. 5, 2001, a senior vice president of Kirkham Michael named Kyle Anderson sent a letter to the Nebraska Roads Department. Anderson identified a possible interchange location 1,100 feet west of the existing Pflug overpass. He also asked the state to delay awarding contracts to rebuild the existing Pflug and Ruff overpasses.
Seldin's engineer also talked to Lynam and Sarpy County Board members. Two weeks later the board endorsed the delay. Sarpy officials let state officials know that they would give up replacing Ruff to get a bigger Pflug bridge, one suitable for an interchange.
In October 2001, the roads department scuttled plans to replace both Pflug and Ruff and moved instead to build a single, larger bridge at the location spotted by Seldin's engineer.
State Roads Department engineers didn't see any need for an interchange there, but they were willing to go along. Completed last December, the three-lane bridge cost the state roughly the same amount it had planned to spend on the two smaller bridges.
The Roads Department wound up with only one bridge to maintain and the flexibility to build an interchange - as long as someone else pays the added cost.
The interchange "must be funded by others and no state funds will be used," John Jacobsen, a Roads Department engineer, wrote in 2003 to an inquiring taxpayer in Gretna.
At the end of 2001, Seldin turned his attention to the congressional delegation.
U.S. Rep. Lee Terry recalls meeting with Seldin Co. President Randy Lenhoff in either late 2001 or early 2002.
About the same time, then-U.S. Rep. Doug Bereuter attended a meeting at Kirkham Michael's office in Omaha as he took over representation of western Sarpy County following congressional redistricting.
By 2002, Seldin also was busy lining up backing from the business community.
He met with Greater Omaha Chamber of Commerce representative Dick Jeffries at Seldin Co.'s west Omaha office, along with Lenhoff, who had just finished a term the year before on the chamber's board of directors.
Jeffries, an attorney, was a full-time chamber fundraiser at the time. But at this meeting he listened as Seldin and Lenhoff touted the development potential of a Pflug interchange.
It "seemed like a no-brainer," Jeffries said.
The chamber formally endorsed the interchange in the fall of 2002 with a letter from thenChamber President Louis Burgher to members of the Nebraska congressional delegation.
On March 11, 2003, the Sarpy County Board sent a letter to Terry expressing full support for the interchange to "relieve future congestion." The county also hired Anderson, the Kirkham Michael engineer who had worked for Seldin. He prepared an application for a federal earmark and a study to justify the interchange. The application was done before the study was completed.
In 2004, both the U.S. House and the Senate included Pflug Road earmarks in transportation bills. But the two congressional chambers couldn't agree on a final bill.
Virtually no opposition to Pflug had reached Nebraska's congressional delegation when work resumed in 2005.
Despite its own engineers' misgivings, the Roads Department in January sent a one-sentence letter of support to Terry and Rep. Jeff Fortenberry, who had been elected to replace the retiring Bereuter.
Just to be safe, though, Seldin used lobbyist Kyle Gilster to look after the earmarks. Gilster worked at the Washington office of Blackwell Sanders Peper Martin. Former Omaha Mayor Hal Daub, a partner in the firm's Omaha office, has done real estate work for Seldin on and off for decades.
Gilster himself was another familiar name to the Nebraska delegation, having just left his job as a legislative aide to Bereuter. Gilster met with the staffs of Sens. Ben Nelson and Chuck Hagel as well as Terry and Fortenberry.
All four lawmakers came through: Terry, $800,000; Fortenberry, $1.6 million; Hagel, $600,000; and Nelson, $1 million.
The bill passed Congress in July 2005. President Bush signed it into law in August.
From the perspective of the lawmakers, the earmark request looked legit.
Gilster had made sure all the paperwork was in order. The application came with the support letters from the Sarpy Board and the State Roads Department and one from the Sarpy County Economic Development Corp.
"This was by the book," said David DiMartino, spokesman for Nelson. "It seemed like everyone wanted it."
When Pflug won a place in the five-year federal transportation plan, it beat a potentially serious opponent to the punch.
The Nebraska Legislature created a commission in 2005 to plan for the best possible blend of development along I-80 between Lincoln and Omaha. The commission's first meeting came after the transportation act was signed into law.
The commission has never taken a position on the Pflug interchange, said Kathy McKillips, the commission director.
"We are glad there are not more" planned, she said. "We don't want a Band-Aid effect every five miles."
Seldin paid his congressional lobbying firm $70,000 for the work on Pflug and an unrelated housing issue. Gilster minimized his Pflug role, saying: "The project was so good it sold itself."
As did Seldin.
"That earmark came about because the county had the desire to have an interchange for economic development," Seldin said. "We should give credit to the County Board and the officials of Sarpy County."
But an attorney for Seldin Co., Pat Sullivan, voiced a different view last spring when the Sarpy County Board took up the question of how to pay for a $500,000 environmental study. Sullivan reminded the board that the company had spent "tens of thousands" of dollars lobbying Congress and said the company's efforts had been "instrumental" in obtaining the earmarks.
At the time, Sullivan was explaining why Seldin Co. would not contribute $50,000 toward the cost of the study, something suggested by the county surveyor Lynam. Without a donation, taxpayers will pay the full $500,000 bill.
Sullivan told the board that a contribution from Seldin to the study was "not in the cards."
In an interview, Seldin explained that an interchange would benefit all nearby property owners.
"If it's of general benefit to everybody in the area," Seldin asked, "why should we pay more than our share?"
Meanwhile, other costs to taxpayers are beginning to mount. Sarpy County would have to pay an estimated $3 million to pave Pflug Road to connect an interchange to nearby highways.
And Sarpy County already has paid Seldin $65,000. The county needed some of Seldin's land to relocate the Pflug bridge for the interchange.
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Six reasons to question the Pflug Road interchange
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1. The publicly funded project is the brainchild of a private developer, Ted Seldin, who owns 935 acres at the site.
2. The interchange would do less to ease traffic congestion than one closer to developed areas at 180th Street.
3. As a Sarpy County Board member, Tim Schram promoted the Pflug interchange while his family leased nearby farmland from Seldin.
4. The same engineering firm paid by Seldin to promote the interchange, Kirkham Michael, has been hired by Sarpy County to study its merits.
5. Pflug's federal funding was won through congressional earmarks, not prioritysetting by highway administrators.
6. Four Nebraska lawmakers who helped get the earmarks - Sens. Ben Nelson and Chuck Hagel and Reps. Lee Terry and Jeff Fortenberry - received $20,350 in political contributions from Seldin and Randy Lenhoff, president of Seldin Co.The fact that a single developer owns much of the land and has a plan is a plus, Churchill said, because he doesn't have to worry about assembling land from multiple owners.
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