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Charlotte real estate developers shaken by Patrick Cannon corruption case

  • http://media.charlotteobserver.com/smedia/2014/03/28/19/23/zId1c.Em.138.jpeg|316
    Davie Hinshaw - dhinshaw@charlotteobserver.com
    Attendees mingle before the start of The Charlotte Business Journal CREQ Live Event, Fridayat UNC Charlotte's Center City Campus.
  • http://media.charlotteobserver.com/smedia/2014/03/28/19/23/QVPZP.Em.138.jpeg|260
    Davie Hinshaw - dhinshaw@charlotteobserver.com
    Keynote speaker Peter Pappas, who is founder and president of Pappas Properties andCEO of Terwilliger Pappas, discusses real estate development at The Charlotte Business Journal symposium Friday at UNC Charlotte's Center City Campus.

Charlotte property developers, shaken by the FBI’s real estate investment sting of former Mayor Patrick Cannon, declared Friday that the corruption case hasn’t tainted their industry and won’t slow economic progress.

As developers and brokers gathered at UNC Charlotte’s uptown campus Friday for a symposium on commercial real estate trends, the FBI’s case against Cannon wasn’t far from their minds.

FBI agents arrested Cannon on Wednesday after posing as commercial real estate developers and businessmen willing to pay a politician thousands of dollars to get their projects approved.

Before the symposium, Fred Arena, a partner and CEO of Vision Properties, pondered the implications of the case for developers.

Asked whether he thought it would hurt the development climate in Charlotte, he said he didn’t think so.

“Not unless it comes out that there were developers who were having conversations” about illicit activity with the undercover agents, he added.

Ray Wethington of Saratoga Asset Management said he’s seen no indication that illegal influence-peddling goes on between politicians and Charlotte’s developers.

“Maybe he (Cannon) just got a little ahead of himself,” he said.

Cannon, according to the FBI affidavit filed in his case, claimed to have the ability to influence local government staffers involved in planning and zoning, construction permits and alcohol licensing.

The FBI said the agents gave Cannon $48,000 in cash and gifts, including $20,000 delivered in a briefcase in the mayor’s office in February.

Friday’s panel discussion, sponsored by the Charlotte Business Journal, also featured a question-and-answer session with prominent Charlotte developer Peter Pappas.

Pappas’ real estate firm developed the Metropolitan mixed-use project near uptown. In the affidavit, the FBI said Cannon tried to impress foreign real estate investors – who were really undercover agents – in Las Vegas last year by saying he pushed the Metropolitan through the city permitting process.

An officer portraying a “skeptical investor” met Cannon in the mayor’s 15th-floor office uptown on Feb. 21, the affidavit said, and Cannon pointed out the Metropolitan’s location.

Pappas has called the story about the Metropolitan “despicable” and untrue. During Friday’s question-and-answer session, Pappas was asked whether Cannon’s case poses reason for concern in the development community.

“We will move past this. This is an aberration,” Pappas said. “This is not something people who want to do business here for the long term are going to be concerned about. … It’s not going to slow the momentum.”

Developers have long played a major role in Charlotte political circles, often serving as a strong source of campaign contributions for politicians of both parties.

Last year, Realtors, developers and architects donated at least $68,400 to Cannon’s campaign, county data show.

They include some of Cannon’s largest contributors. In 2013, Cannon collected 25 donations of $1,000 or more from the group and 10 donations of $2,000 or more.

But the affidavit accuses Cannon of going far beyond accepting lawful contributions to fund his campaign. According to the affidavit, Cannon sought a $1.25 million payoff to help advance a mixed-use development that would be built along either the city’s streetcar line or Blue Line extension, which are under construction.

In a meeting last fall, the affidavit said, Cannon offered to introduce the undercover agents to a “prominent Charlotte developer” who owns a lot of real estate on the streetcar line. The developer’s name and company are withheld in the affidavit.

The affidavit also says an undercover agent was introduced “to certain business figures” in Charlotte during the investigation. One unnamed local businessman drove around with Cannon and an undercover agent scouting locations for a bar or nightclub, according to the affidavit.

The Observer asked the Charlotte chapter of NAIOP, a national commercial real estate development group, about whether the case will have any impact on local real estate development.

The organization responded Friday afternoon with a statement saying its membership is “saddened and shocked” by Cannon’s arrest.

“Commercial real estate companies embrace and support ethical business practices in all aspects of our work,” Chris Thomas, a partner at Childress Klein and president of NAIOP Charlotte, said in the statement.

“We respect and honor the zoning and permitting processes in our city and are accustomed to working diligently through the checks and balances that ensure the integrity of the process.”

Staff writer Gavin Off contributed.

Frazier: 704-358-5145; Twitter: @Ericfraz
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