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Carr Wrecks

Richard Lloyd Carr wants the state to allow his company, Interwest Management, Inc., to build one of Arizona's first toll roads. As unlikely as tollways sound in Arizona, the South Mountain Toll Road would go one better: It wouldn't be state-owned. A special district would be formed to acquire the...

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Richard Lloyd Carr wants the state to allow his company, Interwest Management, Inc., to build one of Arizona's first toll roads.

As unlikely as tollways sound in Arizona, the South Mountain Toll Road would go one better: It wouldn't be state-owned. A special district would be formed to acquire the right of way, design the project and issue the estimated $350 million in bonds to build it. Tolls paid by motorists using the road would retire the debt. Once the debt was retired, the district would turn over the road to the state.

It is an idea that cash-strapped highway departments throughout the nation are beginning to view favorably; it's one way to fulfill their mandate without raising taxes.

Interwest president Richard Carr no doubt sees low risk and high reward in such "public-private" infrastructure improvements--and, increasingly, politicians are adopting similar views. That's because the bond buyers assume all the risk; even if the project ultimately can't pay for itself, the infrastructure isn't going to be torn apart.

Carr has shown a knack for recognizing needs, ginning up demand and selling himself as the path to progress--often in obscure, politically unsophisticated burgs. He sold Apache Junction a sewer system. He tried to sell Quartzsite a sewer and a prison, but Quartzsite only bought the sewer. The City of Douglas was poised to let Carr build a private prison, but city fathers got spooked and backed away.

An urban tollway would be a crown jewel for Carr.
The South Mountain Toll Road would loop around South Mountain, effectively allowing Interstate 10 travelers to bypass Phoenix. It could also make property along its path--including the Gila River Indian Community--ripe for commercial development.

Phoenix-based Interwest, which Carr says is a wholly owned subsidiary of Omaha-based architecture/engineering powerhouse Dana Larson Roubal (DLR), is the only company that responded to a February 1996 Arizona Department of Transportation request for proposals to build the tollway.

The state is determining whether to proceed with the project, and, if it does, whether Interwest should be entrusted with the responsibility of building it.

The latter question should give ADOT pause. The toll-road project isn't the first "public-private partnership" Carr has attempted, and his track record to date has been anything but sterling. In fact, nearly everywhere he treads, Richard Carr seems to leave a wake of litigation, political intrigue, bankruptcy and dubious characters. Consider:

* A year after Apache Junction's $32 million sewer system became functional, the special district that Carr organized to build it has declared bankruptcy. Claims of fraud, forgery and lawsuits are flowing like, well, wastewater. And the FBI is poking around.

* Carr convinced the town of Quartzsite to build a sewer system. The project helped polarize the community and spawn a thicket of lawsuits. One local politico was even tried for hatching a murder plot.

* Carr has allied himself with characters who can be charitably described as questionable, including a man who went to federal prison for insurance fraud; former government transportation officials who were forced to resign after they were caught taking bribes from contractors; and the very contractors who lost their licenses for bribing those officials.

* In his July 1995 proposal to ADOT, Carr claimed he was "currently managing development of" toll-road projects in Washington state and Nevada.

That was news to Frank Csiga, Nevada's chief highway engineer.
"They [Interwest] aren't managing a thing for us," says Csiga. "They just submitted a proposal." A proposal, Csiga adds, that was scrapped more than two years ago.

The only thing Carr managed in Washington was to provoke the wrath of residents.

Still, if Carr can reel in just one toll-road project, he stands to make a lot of money, regardless of that road's viability. Carr would get a good chunk of his money up-front, simply for putting the deal together. And with budgets in the hundreds of millions of dollars, what may seem like a modest percentage--Carr has demanded at least 8 percent in the past--could be a bonanza.

"That's where the scam can come in," warns C. Richard Lehmann, who tracks bond defaults for the Bond Investors Association, a nonprofit industry watchdog group based in Miami, Florida.

Lehmann says Carr's method--creating a special district to issue bonds--has proved a recipe for disaster in the past.

"You set these things up, and no one's left minding the store," Lehmann says. "And since there's no equity, the bondholders take the loss."

It would seem that Richard Carr, 59, was bred to build.
Born in Nebraska and raised in South Dakota, Carr earned a bachelor's degree in engineering from South Dakota State University. After graduation, he married fellow alum Marie Tyler and went to work in 1963 as general manager for his family's construction firm.

Seven years later, Carr became construction manager in South Dakota for DLR.
In 1977, Carr moved to Arizona with his family. Five years later, he and Richard Reese became partners in Reese-Carr, a construction-management firm. Carr bought out Reese in 1988. Two years later, Carr's new company, Project Control, Inc., was the subject of a glowing profile in the Arizona Republic. Carr explained that Project Control specialized in salvaging large construction projects that had run into budget problems.

"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.

The district promptly hired Interwest to put the deal together and manage the project. All the players who would get the district up and running--bond underwriters, engineers, construction managers who would oversee bids and deal with the subcontractors, and attorneys--were selected by Carr. Everyone Carr invited in on the deal agreed to work on a contingency basis--they would get paid only if the bond sale went through.

Next, Interwest began a campaign to get property owners within the district, which covered roughly a third of Apache Junction, to agree to hook up to the sewer system. This was crucial, because unless enough people pledged to hook up, the deal couldn't advance.

Another of Carr's hand-picked companies, Mesirow Financial of Chicago, was charged with finding the money to make the deal fly. In its limited offering memos--paperwork shown to potential investors in which the risks of a municipal bond issue are outlined--Mesirow signed off on the project. In fact, everyone enlisted by Carr--well-known firms with seemingly impeccable credentials--signed off.

In December 1994, Mesirow sold Allstate Insurance Company the sewer district's first bond issue of $21.9 million. The next year, the insurance giant snapped up a second offering for $10.2 million.

With the infusion of cash from the bond sales, construction proceeded at a breakneck pace. Apache Junction streets soon resembled war zones as contractors dug trenches to install the sewer lines. Overseeing the trench work for Interwest was Cecil Ross, whose resume listed extensive background in construction.

But there was more than construction in Ross' background. During the war in the Persian Gulf, he was jailed for his role in a foiled plot to bomb chemical-storage tanks near a U.S. naval base. Ross served three years of a five-year sentence for his role in the 1991 bombing plot in Norfolk, Virginia, to which he pleaded no contest. The plot was actually a scam to collect insurance money using the guise of terrorism. At the time he was hired by Carr, Ross had been out on parole for less than three months.

Carr later admitted to reporters that he hadn't delved deeply into Ross' history. Ross said he hadn't told Carr about his conviction because Carr had never asked.

The Ross revelations made Apache Junction city officials nervous. Already, the project was plagued by cost overruns and allegations of fraud and forgery.

In April 1996, Apache Junction police seized records from four offices, including Interwest's, after a man complained that his mother's signature had been forged on a form certifying that her empty septic tank had been filled in. Police found at least 20 other suspected forgeries on the certification forms, which were required by the state and the city. The forgery investigation continues, a police spokesman says.

One of the contractors hired by Interwest to fill in the old septic pits, and to dig trenches for new sewer lines, was Lee's Backhoe of Chandler.

According to sewer district officials, Lee's was awarded a $3.5 million contract to do some of the work. But the district wound up paying Lee's Backhoe about $6.5 million.

In a lawsuit it has filed against Interwest and other firms involved in the Apache Junction project, Allstate alleges negligent misrepresentation, consumer fraud and both state and federal securities fraud.

The suit also claims that Ross, the Interwest project manager, received a $20,000 pickup truck from John Lee, the owner of Lee's Backhoe.

Claudio Ianitelli, an attorney representing Lee's Backhoe, calls the pickup-truck allegation "chicken shit."

As for the $3 million in additional work, Ianitelli says Lee's was merely performing work it was under contract to do He says Lee's is still owed $1 million by the district, and that all payments to Lee's were approved by Interwest, the district board and the district's attorney, Jeffrey Zimmerman.

Zimmerman stepped down as the district's attorney after disclosing he had entered into a business venture with Lee's Backhoe, officials say. Also going to work with Lee's Backhoe were Ross, the project manager, and Kay Deakman, the Interwest employee responsible for collecting signatures from property owners certifying their septic tanks had been filled in.

Zimmerman did not return a call seeking comment. Neither Ross nor Deakman could be reached for comment.

Deakman also was responsible for gathering signatures certifying that property owners would hook up to the new system. Allstate's lawsuit claims that at least one third of the 3,100 people who signed the forms did not own property within the district's boundaries.

The Allstate lawsuit also alleges that Interwest factored into its user projections housing developments that had not been built and might never be built.

And, finally, the lawsuit alleges that the plant cannot process the amount of sewage that Interwest claimed it would in the business plan it presented to Allstate.

When Charles Lotzar was hired as the district's new attorney, he disclosed that the district's books had never been audited, and he recommended that the board delay paying the $1 million claim from Lee's Backhoe.

Lotzar also convinced the board to sue Interwest and Mesirow. The district's suit makes the same allegations as Allstate's.

It still is not known how many of those old septic tanks were actually pumped and filled, or where all of the money from the bond sale actually went.

Sewer district board chairman Tony Vehon admits that he and his fellow board members did little more than approve checks.

"We had Interwest telling us everything was fine, we had Metcalf and Eddy [the construction management firm] telling us everything was fine, we had Jeff Zimmerman telling us everything was fine . . . and there was never any disagreement," Vehon says.

Vehon says Interwest's share of the deal was 5 percent of the project's roughly $32 million budget--or $1.4 million.

Michael Lavelle, an attorney representing Allstate, is eager to learn how the bond money was disbursed. "A lot of times in these deals, these guys are getting paid six different ways," Lavelle says. "That [Interwest's compensation] is still a matter of great interest to us."

In January, one year after going online, the Superstition Mountain Community Facilities District filed for protection under Chapter 9 of the U.S. Bankruptcy Code. The filing came after Allstate twice agreed to restructure the district's debt.

Today, the district takes in about $160,000 per month--a figure that covers operating expenses but can't begin to touch its debt payments of $234,000 a month.

Allstate's allegation that Interwest and its partners engaged in federal securities fraud has piqued the interest of federal investigators.

Several sources contacted for this story say they have also been questioned by the FBI. Jack Callahan, spokesman for the FBI's Phoenix bureau, confirms that agents have been looking into Interwest's activities.

"But we're still in the extreme early stages [of an investigation]," Callahan says.

So was this public-private partnership a "win-win" all the way around?
Discounting the bondholders who got soaked, one could make an argument that in the long run, the district, even in bankruptcy, will benefit Apache Junction. Or at least landowners within the district.

"The people behind these things [improvement districts] never usually care too much if the deal goes belly up or not," explains Lavelle, Allstate's attorney. "Usually, you've got your board, and they're often real estate types who're tied to the landowners and the developers. And the landowners win either way. If the thing's viable, so be it. If it goes belly up, they still have their road, or their sewer, or whatever, and their land values go up."

Apache Junction City Manager Curtis Shook confirms that, despite its problems, the sewer system has allowed the city to lure commercial development, including several hotels.

"The idea wasn't bad, but the implementation definitely left something to be desired," Shook says.

In addition to the Allstate and sewer district lawsuits against Interwest and its partners, Apache Junction is suing Lee's Backhoe and another contractor hired to lay sewer lines. The city alleges the contractors failed to backfill their trenches properly, resulting in sagging spots in the roads. Both contractors are suing the district, claiming they were never paid for work they performed.

Richard Carr of Interwest has been quoted as saying the lawsuits against his company and others in on the deal is "a bunch of nonsense." Another Interwest official told a reporter that the fact that toilets in Apache Junction flush is proof that Interwest upheld its end of the agreement.

All of which sounds like so much crap to sewer board chairman Tony Vehon.
"Sure, the toilets flush," says Vehon, a real estate agent and former city councilman. "The real question is, will they still flush five years from now?"

One city's trash is another's treasure, and nothing illustrates this more poignantly than the recent boom in jails. Small towns have been known to fall all over themselves to lure a jail. (A privatized jail proposal was part of Richard Carr's original pitch in Quartzsite, but it was dropped for reasons that aren't entirely clear.)

Just as the Apache Junction project was ossifying, Richard Carr set his sights on the southeastern Arizona border city of Douglas, which in its heyday was the western headquarters of Phelps Dodge Corporation. Like the Phelps Dodge smelter stack that once loomed over the city, Douglas' economy had come falling down.

"Interwest President Richard Carr--calling the deal a 'public-private partnership'--told a gathering of 40 people that the 250-bed minimum to medium-security jail would be built at no cost to Douglas," the Douglas Daily Dispatch reported in October 1992.

To build and run the jail, Carr proposed a mechanism similar to one he had pitched in Quartzsite: a municipal property corporation that could issue bonds, which would remain the obligation of the corporation--not the city. Carr suggested that bondholders would be repaid from revenue generated by fees paid by the agency he said would use the facility, the U.S. Immigration and Naturalization Service.

According to the article, one council member expressed reservations about the impact the jail would have on the image of the city, already home to two state lockups. All others said they saw it as a clean industry that would create badly needed jobs.

Once again, things were going Carr's way. He had a compliant council that saw only good in his proposal, and it is reasonable to think that Interwest's jail would be standing on the outskirts of Douglas today had it not been for two unrelated developments.

The first was a mysterious letter that made its way to the Douglas City Council from Quartzsite in October 1992. The letter was signed by "Mrs. Robert L. Balke," whom no one in Quartzsite had heard of. But everyone in Quartzsite knows Rex Byrd, the man who threw Carr out of town. Byrd, who is named in Carr's lawsuit against Quartzsite, would not comment for this story. But he did admit that he drove to Phoenix and paid "about $250" for copies of Carr's bankruptcy filing.

Enclosed with the Balke letter, addressed to the Douglas City Council, were papers from Carr's bankruptcy filing.

The Douglas council halted negotiations with Carr, who was forced to stand before the council and defend his personal and business affairs. Carr told the council that when he purchased Los Angeles-based Project Control, Inc., in 1987, he was forced to personally guarantee the company's debts. He said a series of legal entanglements ensued when auditors discovered the seller owed several hundred thousand dollars in unpaid taxes. He added that he opted to declare bankruptcy to protect his home and wages.

"It was the only thing I could do to survive," he said at the time.
Carr produced a letter of credit from an Omaha bank, as well as a letter of support from DLR, according to reports in the Daily Dispatch.

Glen Gimbut, Apache Junction's city attorney, wrote to Douglas officials that Carr was a visionary capable of "intriguing different approaches to problems."

Mollified, the council voted to resume negotiations with Carr.
Two months later, two inmates in the Cochise County Jail near Bisbee managed to loosen one of the 9-by-16-inch concrete blocks in the exterior wall of their cell, knock it free and escape. Both were quickly recaptured.

Officials soon determined that the escape wouldn't have been possible if the contractor who built the jail in 1985 had followed specifications and installed reinforcing metal bars in the cores of the hollow concrete blocks.

The company which oversaw the jail's construction: Phoenix-based Reese-Carr. The Douglas Daily Dispatch jumped on the story, quoting Carr as saying that it was "premature to know . . . who the hell was responsible."

Regardless, the shoddily built jail was a scandal. The Douglas City Council had heard enough and broke off negotiations with Carr.

In 1995, Richard Lloyd Carr turned his interest to toll roads.
Before submitting his South Mountain proposal to ADOT last year, Carr had pitched at least four other toll roads--in Nevada, Washington, South Carolina and Minnesota. The South Carolina and Minnesota roads might actually get built.

Carr told ADOT last year that he was "currently managing development of" the other two.

But both of those projects had fizzled well before Carr submitted his proposal to ADOT. In Nevada, transportation officials pulled the plug after deciding that a toll road near Carson City was not needed.

In Washington state, however, residents who saw the toll road as a form of double taxation, and who thought they were being kept in the dark, helped sink a proposal to widen a 10.5-mile stretch of Highway 522 near Seattle.

At a meeting with road officials in February 1995, more than 100 toll-road opponents presented petitions containing 15,000 signatures. According to a Seattle Times account of the meeting, the only person who spoke in favor of the project was Richard Carr.

"Carr told stories of his childhood in South Dakota, when private enterprise built infrastructure," the Times reported.

"In recent decades, the government has funded and directed highway projects. Now, it's time again for private industry to take over, he said.

"'We all became addicted to the milk of the breast of government,' Carr said.

"The response from the public was a volley of disbelieving giggles and none-too-friendly suggestions to 'go back to Arizona.'"

Carr's most promising toll-road project is the so-called Southern Connector, near Greenville, South Carolina. Running through hilly, wooded terrain between two interstates south of Greenville (population 200,000), the road has been touted as an economic panacea.

All of the area's major players--legislators, transportation officials, developers and the local newspaper, the Gannett-owned Greenville News--endorse the project and seem intent on downplaying anything that may reflect badly on it.

When news of Interwest's Apache Junction fiasco made its way to South Carolina, a group of Southern Connector opponents asked the state attorney general to look into Interwest's record. The AG said he saw no need for an investigation, a judgment the Greenville News applauded in an editorial.

"While the distant [Apache Junction] lawsuits are a matter of legitimate interest to state transportation officials," the News opined, "the dissatisfaction they represent isn't material to the management firm's [Interwest's] conduct in South Carolina." The editorial went on to say that the project was backed by "reputable local business leaders."

Many of those supporting the Southern Connector are, no doubt, reputable. But one of Interwest's biggest partners in the deal only recently emerged from a scandal that rocked the Greenville area--ironically, it was chronicled by the News, which published more than 80 stories about it stretching back more than six years.

Thrift Brothers Construction, which has signed on to build the Southern Connector, lost both its state and federal contractor's licenses in 1991 after investigators determined that the company's principals had given payoffs and gifts to state highway officials. After a lengthy legal battle, the company has since had its licenses restored.

Herman Snyder, South Carolina's chief highway engineer at the time, pleaded guilty to violating state ethics laws after accepting $2,000 from the Thrifts.

Joel Wilson, a state highway construction engineer, resigned in 1992 after investigators determined he had traveled to Las Vegas and Atlantic City with the Thrifts. Wilson repaid the Thrifts after being questioned by both the IRS and the FBI.

According to documents obtained by toll-road opponents, both Wilson and Snyder now figure prominently in Interwest's road-building team.

A November 30, 1995, document titled "Southern Connector Team Meeting Agenda" lists Wilson as a representative for Wilbur Smith & Associates, a Connecticut-based traffic-engineering firm. A September 13, 1995, agenda lists Snyder as the Wilbur Smith & Associates representative.

Wilbur Smith and more than a dozen other companies, including the Thrifts and Mesirow Financial, are partners in the Interwest Carolina Transportation Group, a limited liability company that acts as a legal umbrella for the consortium that hopes to build the Southern Connector. (Wilbur Smith has also signed on to conduct traffic studies for the South Mountain Toll Road.)

Dave Wettland, who leads the citizens' group opposed to the road, is under no illusion about his chances of success. "We're just the little group that has to pass the hat every time we meet," he says. "We're not gonna win."

So why did he get involved?
"Basically, I looked at the road and saw who was gonna benefit from it, and I realized this wasn't for the people at all, like they said it was, and it made me mad," Wettland says. "It's a developer's driveway, plain and simple. If the road goes through, all those developers who bought land out there in the middle of nowhere in anticipation of this are gonna suddenly find themselves holding onto $88,000-an-acre prime industrial land."

In Minnesota, an Interwest proposal to build a toll road has won the blessing of state highway officials. But only two of the three communities through which the $220 million road would pass supported it at the polls. Interwest is mounting a legal challenge of the holdout community's vote.

Like their counterparts in South Carolina, Minnesota transportation officials seem unconcerned by what happened in Apache Junction.

"We've been trying to get this road built for 30 years," says Adeel Lari, who heads Minnesota's office of alternative transportation financing. "If we do it this way, there will be no liability to the state, or any other public association. The whole risk is born by the people who buy the bonds."

Lari is not alarmed by the reports from Apache Junction.
"I'm not saying Interwest didn't sell it [the sewer project] aggressively," Lari says. "But Allstate, those are big boys. Why didn't they do the due diligence?

"I always find that the people who buy the bonds are looking for someone to blame."

Toll roads are a hot topic in Arizona. Last week, ADOT officials gave their blessing to a plan by MetroRoad, another road-building consortium, to construct high-speed express lanes on five existing Valley freeways. Users would pay a $50 monthly toll. MetroRoad also proposes to build the Santan Freeway across Chandler and Gilbert and up to the Superstition Freeway.

ADOT officials remain circumspect in their assessment of the Interwest proposal.

"Naturally, in light of what happened in Apache Junction, we'll be studying it very closely," says ADOT spokesman William Rawson.

Interwest has already set up the South Mountain Community Highway Association, the nonprofit group that would theoretically own the road.

In its proposal to ADOT, Interwest billed the association as "a group of dedicated and concerned citizens" who believe in the need for a toll road. The association shares an address with Interwest.

While ADOT mulls the proposal, many with a vested interest in the South Mountain Toll Road--including the Gila River Indian Community--will be holding their breath.

ADOT's original plan for the road, developed in the 1960s, consisted of one alignment, near Pecos Road. That alignment would have cut through several hills in the southwestern tip of South Mountain Park. The excavation work, which drew fire from park preservationists, would have added at least $30 million to the project's overall budget.

When ADOT floated the toll-road project in 1994, its requests for proposals only included the Pecos Road alignment. In September 1995, after two proposals fell through, Gila River Indian Community Governor Mary V. Thomas asked ADOT to consider moving the road south and onto Indian lands.

"On behalf of the Gila River Indian Community, I would like to extend this invitation to the State of Arizona . . . to explore the potential for developing the South Mountain Freeway as a toll facility on our community's lands," Thomas wrote.

A reservation alignment has immense appeal to park preservationists and Ahwatukee neighborhood activists.

"It seems like a win-win situation all the way around," says preservationist Dave Gironda, who fought ADOT in 1994 over its plan to move mountains.

And what would the Gila River Indian Community stand to gain?
Officials with the community did not return numerous phone calls seeking comment. But government officials familiar with the deal say they believe the community would consider building a massive golf and gambling mecca if the road goes through. The same officials said the toll road could also be an impetus for building a domed stadium.

Another who could stand to benefit from the South Mountain Toll Road is Phoenix developer William Robert Burns.

Burns is best known for proposing Sun Valley, a $34 billion master-planned community he envisioned north and west of the White Tank Mountains.

The $30 million Sun Valley Parkway paved the way for a financial debacle. The road, which connects Bell Road with Interstate 10, was financed with $83 million in industrial bonds secured by the Sun Valley property. When those bonds went into default, some 1,000 people who had invested in Sun Valley property lost their holdings to foreclosures or bankruptcy.

Today, Burns is negotiating to buy a quarter of a 600-acre parcel of prime state land bordered by 19th and 27th avenues, South Mountain Park and the Gila River Indian Community. The land lies immediately west of a subdivision being developed by UDC Homes and east of a partial section of land in which Burns has an optioned interest.

Like their counterparts in South Carolina, developers, the Indian community, the park preservationists and the neighborhood activists have nothing to lose and much to gain if a toll road is built on reservation land.

All of which has apparently made Michael Lavelle, the Allstate attorney who blew the whistle on Interwest, a bit of a spoiler in some people's eyes.

"Right after we filed our suit, I started getting calls from some of the folks with land out there around South Mountain," Lavelle says. "Boy, were they pissed!

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