Jekyll Island’s Nemesis, Senator Chip Pearson,
Quits Politics under a Cloud of Suspicion

On April 29, 2010, Senator Chip Pearson (R-Dawsonville), who has recently been the subject of several Atlanta Journal-Constitution articles questioning his business association with two Capitol lobbyists, announced that he would not seek another Senate term, even though just a week earlier he had filed the paperwork to run for reelection. The day prior to announcing his decision to quit politics, Pearson had been rebuffed by GOP colleagues who rejected his bid to become Senate Republican Caucus Chairman, naming instead Senator Bill Cowsert to that position. 

So, why should Jekyll Island’s friends care about Pearson’s departure from the Senate? Well, few if any Georgia legislators have as dismal a record on protective legislation for Jekyll Island State Park as Pearson does. As Chairman of the Senate’s Economic Development Committee and a member of the Jekyll Island Legislative Oversight Committee, Pearson was one of the leading proponents of expansive development of Jekyll Island State Park and an opponent of protective legislation for the People’s Park. 

  • Pearson opposed Senator Jeff Chapman’s 2007 legislation (House Bill 214) that called for a ban on further commercial development on the ecologically-sensitive south end of Jekyll Island. If Pearson had his way, which fortunately he didn’t, HB 214 would not have been passed, and Jekyll’s south end soccer complex and 4-H center would have been displaced by private development.
  • Pearson orchestrated the Senate committee hearing which witnessed the scuttling of Sen. Chapman’s legislation that would have preserved public access to Jekyll’s main beach, added some teeth to Jekyll’s affordability mandate, and closed a loophole in the law requiring that 65 percent of the Jekyll Island remains in its natural condition. While Chapman’s bills died in Pearson’s committee, his effort on behalf of public access to Jekyll’s signature beach nonetheless met with success, as developer Linger Longer eventually was compelled to abandon its plans to build a beachfront condo/time-share community on the land Chapman had defended. 

  • As an Oversight Committee member, Pearson remained silent about the partnership contract between the JIA and Linger Longer Communities—a company headed up by top Republican fund-raisers Mercer and Jamie Reynolds—even though the deal was so unbalanced in Linger Longer’s favor that the Attorney General’s office warned that it could be construed as an illegal gratuity and thus be in violation of Georgia’s Constitution.

  • Most recently, Pearson authored a bill that would have based the annual land lease fee paid by Jekyll residents on the assessed value of resort property on Sea Island and St. Simon’s Island. Known for his disdain of Jekyll residents who had supported Senator Chapman’s legislation, Pearson apparently was out for revenge in pushing a bill that would have punished residents who had been a thorn in his side. The bill, however, had so many flaws that it died before ever coming to a vote on the Senate floor.  

Pearson’s dismal record in dealing with the Jekyll development issue earned him a slot on IPJI’s “Remember in November” list of legislators, but in the end his apparent efforts to capitalize on his position as Chairman of the Senate’s Economic Development Committee are what cost him his political career.

The public owes a note of thanks to AJC reporters James Salzer and Cameron McWhirter for shinning a spotlight on Pearson’s apparent confusion of public service with self-service. 

Key sections of the three AJC articles below are highlighted in red. 

Senator’s firm capitalizes on his office
The Atlanta Journal-Constitution
By James Salzer and Cameron McWhirter  
April 11, 2010

It’s common for Georgia legislators to trade on their political connections at the state Capitol to make money.

But usually they leave office first.

Sen. Chip Pearson (R-Dawsonville), chairman of the state Senate Economic Development Committee, decided not to wait.

He co-founded an economic development consulting firm that promotes Pearson’s pull under the Gold Dome.

The Sandy Springs-based Pendleton Consulting Group states on its Web site: “We’re not lobbyists. But we do know who to call and how to get action from top management at Georgia’s companies (large and small), and influencers who work behind the scenes. We know how government works.”

In fact, two of the four founders are registered lobbyists with longtime business and political connections.

As chair of Economic Development, Pearson oversees any legislation relating to economic development, business, trade and tourism.

The consultants are telling business clients that they can grease wheels in the state and handle all aspects of the governmental process to get a project completed. In its promotional material the company says “Pendleton Consulting’s understanding and knowledge of political and business leaders” can help with “political policy & process” for a development project.

“Our rolodex is remarkable,” their ad copy declares.

Under state ethics law, public officials are not supposed to “take any official action with regard to any matter under circumstances in which he knows or should know that he has a direct or indirect monetary interest in the subject.”

Pearson said he has not crossed ethical lines by mixing his business and his legislative duties.

“We checked this out up front and I consulted (outside) legal counsel,” Pearson said. “They showed me where the bright line was and I have stayed on my side of the line.”

However, ethics watchdogs say it’s dangerous to have lawmakers working with lobbyists, who are paid to influence what legislators do during General Assembly sessions.

Bill Bozarth, executive director of Common Cause Georgia, a nonpartisan group lobbying for stronger ethics laws, said Pearson’s connections to Pendleton are “bothersome.”

“What we’ve been doing this session is trying to create distance between lobbyists who try to influence policy and those who create policy,” he said. “This would indicate that there is a very tight fit between how Mr. Pearson makes a living and his role as a legislator.”

Lt. Gov. Casey Cagle, the Senate’s president, said he isn’t worried about Pearson’s role in Pendelton.

“Senator Pearson has been an astute businessman, prominent civic leader and respected senator,” Cagle said. “I’m confident he is well aware of both his oath of office as well as the ethics laws that govern all legislators.”

The Pendleton Consulting Group was formed in 2008, according to Secretary of State corporation records. Pearson’s connection to the company — though long rumored — was not made public until recently, when his bio was published on the company’s Web site. The site touts Pearson’s political and state connections. Pearson’s photograph is posted next to the Georgia state flag.

For years, Pearson was a successful businessman in North Georgia with numerous businesses in development and construction. During the recession, however, many of these businesses contracted or collapsed.

One of Pendelton’s co-founders is Phil Jacobs, a former top executive at BellSouth and AT&T and former longtime member of the state economic development board. He is registered to lobby for the Georgia Alliance of Community Hospitals.

Jacobs declined to comment for this story.

Another co-founder is Craig Lesser, former commissioner of the Georgia Department of Economic Development under Gov. Sonny Perdue. Lesser was a lobbyist with McKenna, Long & Aldridge before setting up his own firm, JEL Group, which represented Kia Motors. Kia’s West Point plant has been among the Perdue administration’s biggest economic development successes.

Lesser currently lists his firms, JEL Group and Pendleton Consulting Group, as his only lobbying clients. But Lesser said neither he nor Jacobs lobby for Pendleton Consulting clients.

“What we agreed to do is anyone we had as clients before we came together we kept in our separate (companies),” he said. “We don’t mix that up. We keep that separate.”

The Pendleton Group’s other founding partner is Dwight Evans, a former longtime Southern Company executive who once served as executive vice president of, among other things, the group’s lobbying efforts.

Lesser said the group advises companies on “general strategy” and marketing.

“People are just interested in hearing what our years of experience have taught us,” he said. “We work with the highest level people in companies.”

A State Ethics Commission advisory opinion issued last October determined that “ ‘economic development consultants’ that deal with public policy decisions” must register as lobbyists and report regularly to the State Ethics Commission.

Pearson said he doesn’t do any lobbying. He said he consults on real estate and construction projects.
He said he had been thinking about going into the business for a while, using the connections he has made in business and politics.

“Twenty-five years in real estate and construction gives you a pretty good contact list and a pretty good sense of the industry,” the senator said.

Pearson’s major bill introduced this session, SB 374, calls for the creation of a Legislative Economic Development Council, which would have power to set state economic development policy. Under his bill, Pearson would automatically be one of the key members of the new council.

News of Pearson’s direct stake in an economic development consulting business with two lobbyists comes as the Legislature is wrestling with an ethics reform package that would tighten rules for lobbyists and legislators. The bill is now before the House Rules Committee.

Pressure for ethics reform arose last fall, when House Speaker Glenn Richardson (R-Hiram) resigned in disgrace after his former wife publicly accused him of an affair with a lobbyist. New House Speaker David Ralston (R-Blue Ridge) has proposed tighter rules on lobbying that would forbid lobbyists from even texting legislators while they are in committee.

For decades, legislators have used their political and governmental experience and connections to launch lucrative careers after they leave office. For example, former Senate Republican leader Skin Edge, top Senate Democratic leaders Pete Robinson and Wayne Garner, former Department of Natural Resources Commissioner Joe Tanner, ex-Secretary of State Lewis Massey and former Perdue counsel Robert Highsmith are all prominent lobbyists.

It is less common for a sitting lawmaker to launch a business on the exact subject that he oversees as a committee chair.

Still, for years, lawmakers in the insurance business have populated legislative insurance committees and lawyers have run the judiciary committees of the General Assembly.

Some MARTA officials raised questions last year when the engineering firm PBS&J hired state Sen. Doug Stoner (D-Smyrna). The company has had major contracts with MARTA for years. While he’s in the minority party and doesn’t have as much power as a Republican like Pearson, Stoner has been deeply involved in legislation affecting MARTA and transportation funding. The company said Stoner would work on water issues, not transportation.

Lesser said Pearson won’t be put into a position where his legislative decisions could be influenced by his role in the company.

“We’re not stupid. We’re not going to put him in any danger. We’re not going to put our clients in any danger and our firm in any danger,” he said. “By the same token, just because he’s an elected official doesn’t mean he can’t have a job.”

Senator’s bill helps partner
The Atlanta Journal-Constitution
By James Salzer and Cameron McWhirter  
April 25, 2010

State Sen. Chip Pearson is sponsoring legislation that would benefit a client of his partner in an economic development consulting business, The Atlanta Journal-Constitution has learned.

The legislation would let private developers build reservoirs with state approval without having to set up a partnership with local governments or water authorities.

Under current law, private companies can build reservoirs if they partner with local governments or authorities, which have water condemnation rights and can apply for permits from the federal government.
Pearson (R-Dawsonville) submitted legislation in January that would allow the state to take over that role. Pearson’s legislation allows the state to serve as the government partner with a private company in building a reservoir or water system.

Two months earlier, Republic Resources of Atlanta, a client of Pearson’s business partner Craig Lesser, abandoned talks with a water authority in Pearson’s district and set out to develop a $650 million reservoir in Dawson County without it.

Pearson told the AJC last week that he did not write the legislation for his partner’s client and that their consulting business, Pendleton Consulting, has nothing to do with project.

“The particular project in Dawson County, it’s not a client of Pendleton; it’s a client somebody [Lesser] had prior to Pendleton,” Pearson said.

Initially, Republic was working on the reservoir proposal with officials at the Etowah Water and Sewer Authority. Etowah officials were amazed when Republic left them and suddenly became a competitor. Then they saw a bill, SB 321, written by their own state senator, that would legally allow local water authorities to be cut out of such a reservoir project.

“I’m just astounded by the audacity of it all,” said Brooke Anderson, general manager of the Etowah Water and Sewer Authority.

This week the bill appeared to stall as the AJC began asking questions about it. Though it passed the Senate, as of Friday it was mired in a House committee. However, the bill’s language could still be added as an amendment to other legislation before the session is scheduled to end this week.

News of Pearson’s bill aiding Lesser’s client comes two weeks after the AJC reported that Pearson, chairman of the House Economic Development Committee, had set up Pendleton Consulting with three partners including Lesser, a lobbyist and the former state commissioner of economic development.

Lesser said he has never discussed SB 321 with Pearson. “I don’t discuss anything with him about legislation,” Lesser said.

Gerald Daws, the industrial developer who heads Republic, said he has met with Pearson several times to update him on the reservoir project, but only because he is a prominent official in Dawson County.
“I had absolutely no conversations about his legislative efforts whatsoever,” he said.
The bill, which Pearson labeled the “Georgia Public-Private Water Facility and Supply Act of 2010,” would aid Republic in its effort to develop the gigantic reservoir without the participation of the local water authority.

The legislation promotes at least a partial privatization of the water supply, though its main focus is limiting local water authority involvement in a project. That would presumably benefit Republic in any legal dispute with the Etowah Water and Sewer Authority.

The legislation would authorize the state Department of Natural Resources to:
  • Put out or receive unsolicited bids for private reservoirs. The state would become the de facto partner on the project for securing federal approvals.
  • Use state funds for project development of a private reservoir, though the funds would have to be paid back.
  • Approve reservoir projects without the participation of local water authorities, though those agencies would be informed and allowed to provide input. After criticism by county governments, a provision was added over Pearson’s objections that required local government approval for such projects.

Neill Herring, state lobbyist for the environmental group The Sierra Club, opposes the Pearson legislation because he believes a private business should not control such an important public resource as water.

“It sounds like these lobbyists have found a way to eliminate the middle man: They have elected a lobbyist,” Herring said.

The proposed Dawson County reservoir would be one of the largest water projects in Georgia since Lake Lanier. The plan is to buy 10,000 acres in the county (now owned by the city of Atlanta), then develop 2,200 acres into a reservoir that could provide water for 1 million people in the Atlanta region of 5.5 million.
Anderson, of the Etowah Authority, said his agency has been developing the plan for about two years as a way to expand the region’s water supply after recent court rulings that could limit drinking water drawn from Lake Lanier.

He said the authority had the right under the state constitution to use condemnation for water projects within Dawson County, so anyone working on such a project has to work with it. Anderson, the engineer in charge of the authority’s reservoir project, said he thought everything was going well.

He said Lesser was in many meetings with Daws. “We worked with Craig to gain an understanding of state-level issues,” he said.

Then one day in October, Anderson received a voice mail from Daws saying Republic was leaving to set up its own project.

Anderson hasn’t spoken to Daws since. He said Pearson never discussed his legislation. Lesser never mentioned to the authority that he had a business relationship with Pearson.

Daws, reached at his Atlanta office, said he left the project and launched his own effort because of a disagreement with some investors lined up by Etowah Water and Sewer. Asked about his reservoir project, Daws said, “We are moving full-speed ahead.”

How we got the story:
Two weeks ago, staff writers Cameron McWhirter and James Salzer reported that Sen. Chip Pearson (R-Dawsonville), chairman of the Senate Economic Development Committee, had formed an economic development consulting business with three other men, two of whom were lobbyists at the capital. After that story, the reporters received telephone calls and e-mails urging the AJC to look into Pearson, the Dawson County reservoir proposal and SB 321.

Controversial Senate chairman retiring
The Atlanta Journal-Constitution
By James Salzer and Cameron McWhirter  
May 3, 2010

Georgia Sen. Chip Pearson has decided that he will not seek re-election. His announcement comes just weeks after the Atlanta Journal-Constitution began raising questions about the consulting business he founded with two statehouse lobbyists.

Pearson, chairman of the Senate Economic Development Committee, filed paperwork early last week to run for another two-year Senate term. He was first elected in 2004.

On Thursday, Pearson was a candidate to become Senate Republican caucus chairman. But he lost a vote of his GOP colleagues, who chose to Sen. Bill Cowsert (R-Athens) instead.

By Friday, he had withdrawn from the race, saying in a statement, "At this time, my time needs to be spent with my family.”

The Dawsonville Republican was out of town Monday and unavailable for comment.

Pearson’s departure comes after the AJC reported his ties to a lobbyist working to promote a large reservoir project in Pearson's North Georgia district.

Five days before Pearson announced he was not running, the AJC reported Pearson sponsored a bill that would have benefited a client of his partner in an economic development consulting business.

The legislation would have let private developers build reservoirs with state approval without having to set up a partnership with local governments or water authorities.

Pearson submitted the bill in January. Last fall, Republic Resources of Atlanta abandoned talks with a water authority in Pearson’s district and set out to develop a $650 million reservoir in Dawson County without it. The company is a client of Pearson's business partner, lobbyist Craig Lesser. Pearson told the AJC that he did not write the legislation for his partner’s client and that their consulting business, Pendleton Consulting, has nothing to do with project.

Water authority officials told the AJC they were astounded to learn that their own state senator had proposed a bill that would have undercut their authority.

Pearson’s bill passed the Senate, but stalled in the House as the AJC asked questions about it. Earlier in April, the newspaper reported that Pearson, chairman of the Senate Economic Development Committee, had set up his economic development consulting business with three partners including Lesser.  The business markets itself to companies seeking assistance from state agencies in expanding or relocating in Georgia. Pearson said at the time that he did not see his new venture, which he started after he was appointed chair of the Senate Economic Development Committee, as a conflict of interest.