Carr Wrecks

Richard Carr, president of a firm that wants to build the $350 million South Mountain Toll Road, has extensive experience in "public-private partnerships." Unfortunately, most of those experiences have been bad.

"We get called in to put out fires after things have gotten out of hand," Carr told the Republic.

In the article, Carr said that Project Control had 40 employees and annual revenue of $3 million. He and his wife shared a palatial home in Flagstaff's exclusive Forest Highlands development.

But things were not what they seemed. Court documents indicate that Carr was swimming in debt, his company insolvent. Shortly after the Republic article was published, First National Bank called in a $700,000 loan that Carr could not repay. Within a month, Carr filed for both personal and professional bankruptcy, and Project Control, Inc., ceased to exist.

Carr saw public-private partnerships as his ticket back to the big time. As lawyers worked to settle his bankruptcy, Carr proposed three deals in quick succession.

His first stop was Quartzsite, a newly incorporated town of 1,800, an hour west of Phoenix, where he pitched a sewage treatment system in June 1990.

Business leaders in the town, desperate to do away with leaky septic tanks and get environmental regulators off their backs, introduced Carr to the town fathers.

Over lunch at a local diner, Robert Cappi, a Quartzsite restaurateur who sat on the town council seven years ago, recalls how Carr wooed the locals with his fantastic tales of sewage treatment. And progress.

"We couldn't do enough for him," Cappi says. "We were convinced that a sewage treatment plant was the thing that was gonna put us on the map. We gave him an office, gave him $10,000 to get started. . . . We just fell in love with the guy."

Carr proposed a municipal property corporation that could issue bonds. But as the financing deadline loomed, the town quickly polarized; one faction backed Rex Byrd, a councilman, the other backed Richard Oldham, the mayor.

Quartzsite agreed to pledge its meager sales-tax revenue as collateral on the sewer system. Carr and Quartzsite began negotiating with the Phoenix bonding house of Peacock, Hislop, Staley and Given to secure financing. After months of negotiations, though, the firm abruptly and inexplicably pulled out.

Carr approached the San Diego bonding house of Stone and Youngberg. In July 1993, as Quartzsite was poised to sign a pact allowing Stone and Youngberg to sell $4 million in bonds on its behalf, Byrd sued to halt the deal. The next month, Oldham and two council members were recalled, and Byrd became mayor.

Byrd's first task was to fire Carr. Next, the town approached Peacock, Hislop, Staley and Given to restart negotiations. The town managed to get a $1 million federal grant and swing low-interest government financing for the sewer project through the federal Farmers Home Loan Administration.

Cappi, a Byrd ally, maintains that Carr spurned low-interest government financing and grants because they would have cut into his percentage.

Carr gave no explanation. He agreed to be interviewed for this story, but broke the appointment and did not respond to numerous subsequent requests.

Carr, ultimately, sent Quartzsite a bill for $261,000. When the town, which only had $100,000 in its general fund, said it couldn't pay, Carr took it to court, where arbitrators ruled that the town indeed owed Carr for the work he had performed.

The arbitration, however, was nonbinding, and Byrd would not relent. At one time, the town offered Carr $108,000. Carr refused the offer, and still awaits a settlement.

Carr also sued Mark Reader, an investment banker at Peacock, accusing him of ruining Carr's deal with Quartzsite, but the suit has been dismissed twice. Carr is appealing. Reader declined to discuss the case.

As rancorous as the travails over the sewer project seemed, they pale when compared to what followed.

In 1995, Byrd, an irascible 74-year-old retired driller, was convicted of conspiring to kill his political rival Oldham in a murder-for-hire scheme. Byrd was sentenced to 25 years to life in prison, but that conviction was overturned and a new trial was ordered--although prosecutors apparently have decided against retrying Byrd.

Like their counterparts in Quartzsite, merchants in Apache Junction were convinced that a sewage system was crucial to the well-being of their community of 22,000. But Apache Junction's voters had rejected two attempts by the city to build and operate its own system.

Shortly after the second referendum failed, Glen Gimbut became Apache Junction city attorney. Richard Carr was right behind him.

Gimbut had been Quartzsite's attorney at the time Carr first approached Quartzsite. He saw Carr as the man who might be able to help Apache Junction get what it wanted.

"I just knew that Apache Junction was interested in finding a way to build a sewer system outside the regular channels," Gimbut says. "I said, 'I know of one screwy way--I can't guarantee it'll work.'"

In August 1991, members of Apache Junction's chamber of commerce asked Carr to do for Apache Junction what he was doing for Quartzsite, where everything looked rosy at the time.

Things looked promising in Apache Junction, too, thanks to overhyped financial projections and feasibility studies.

Carr's first step was to convince the city council to create the Superstition Mountain Community Facilities District, which it did in July 1992. The district, which had the authority to issue tax-exempt municipal bonds, was run by a board of five unpaid city council appointees.

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