Haney's Influence Reaches Far and Wide

The allure of Washington stayed with him, however, so he ran for Congress in 1966, but lost. The Tennessee Valley Authority had just abandoned plans to build its own offices in the Chattanooga area, so Haney announced he was starting his own real estate development company, hired two experienced federal employees and secured a 20-year lease from the TVA.

His eyes opened to the benefits of becoming a landlord to a government agency, Haney mastered the ins and outs of using the proceeds of tax-exempt bonds issued by government agencies to finance or refinance commercial properties at lower-than-normal interest rates. With that money, he developed hotels, parking garages and office buildings throughout the Southeast, opening offices in Knoxville and Memphis, Birmingham and Atlanta, which he then rented to the TVA, the Internal Revenue Service, the General Services Administration and the Social Security Administration.

He was aboard a Delta DC-9 jet on a rainy Nov. 27, 1973, returning to Chattanooga from Atlanta, when a wind shear caused the plane to crash as it approached the airport. Haney crawled out of the wreckage with a broken back. He reassessed his life and decided to run for governor in 1974.

He lost in the Democratic primary, packed away his campaign signs for good, and turned to behind-the-scenes politicking, based on his friendship with Gore and his increasingly generous campaign contributions. By the end of the 1970s, Haney was managing a $200 million to $300 million business.

Haney, who had developed a reputation as one of the country's most adept exploiters of tax-free bond financing, had a business setback when in 1979 the IRS banned the use of tax-exempt financing for private buildings leased to government. Many cities turned to industrial development bonds, which are federal tax-exempt bonds often used to jump-start new business in deteriorating urban districts. Within two years, Haney convinced leaders in five Southeastern cities to approve bond sales that allowed him to acquire money at below-market interest rates to build convention and airport hotels. He backed the payments with revenue generated by hotel guests.

But a double-whammy of bad news hit in the 1980s, when a bank through which Haney financed some of his projects collapsed, and a tax reform law further limited the benefits of tax-exempt financing. He lost or sold office buildings and hotels, and his firm defaulted on $163 million in bonds. No investors lost money, he noted through a spokesman, because he had insured the bonds.

Yet even in that difficult decade, Haney bought a Coca-Cola bottling company and a Miller beer distributorship from the family of Sen. William Fulbright (D-Ark.).

Realtor to the Feds

In the early 1990s, he bought a bankrupt Colorado residential development whose landowners had the authority to issue tax-exempt bonds. He turned his $130 million investment into bonds that resold for $148 million, the Denver Post reported. Then, through complex steps using several companies he created, Haney put the land up for sale, bought it back, and invested the proceeds in the Portals, an office complex in Southwest Washington that the FCC was scheduled to occupy. The Wall Street Journal chronicled this series of transactions in a front-page article in 1998.

The Smith Barney Managed Municipal Fund sued him over switching from Treasury securities to lower quality federal bonds in one of those Colorado transactions. Smith Barney claimed the swap devalued the deal. A jury agreed and Haney was ordered to pay Smith Barney $12.7 million in damages and $2 million punitive fines. Haney paid the fine, but then negotiated a separate settlement, said D.C. lawyer Stan Brand, who represented Haney in a separate case.

"Every businessman at his level has had lawsuits, scrapes with the government and brushes with authority. That's true about everybody in this bidding process," Brand said. "I can say he's been fortunate in that every one of those [lawsuits] has worked out and has not been a problem in the end."

Haney entered the Portals project because its Canadian owners were bankrupt. With proceeds from the Colorado land sale, he refinanced the deal, negotiated favorable lease terms with the FCC, converted the lease into a security and sold the lease-backed bonds to institutional investors in a private placement, BusinessWeek magazine reported.

How he came into the Portals deal was the subject of a Justice Department probe because after the FCC agreed to move into the buildings, he paid Peter Knight, a Gore associate and chairman of the Clinton-Gore re-election campaign, a $1 million retainer for legal advice. Attorney General Janet Reno concluded in 2000 that there was no specific and credible information to support the allegation that Knight illegally helped Haney secure the Portals lease.

However, Haney was indicted in 1999 on federal charges that he illegally reimbursed friends, relatives and business associates for making more than $200,000 in contributions to the Clinton-Gore campaigns in 1992 and 1996, and to Tennessee members of Congress, thus evading the $1,000 limit on individual contributions.

After six hours of deliberation, the jury cleared Haney on all 42 counts, persuaded by his defense that he didn't realize federal law bans giving money to others to make the contributions. That same year, Haney donated $10,000 to the renovation of the vice president's residence at the Naval Observatory.

In 2001, he proposed to his old tenants, the TVA, that he float $1.3 billion in bonds in a complex lease deal to enable the TVA to restart a mothballed Alabama nuclear power plant. He would then lease the plant back to the power agency. The TVA has so far turned down the offer.

Just as he hired federal contracting officials in his first real estate venture and an aide to the vice president in his Portals venture, Haney hired Corey Busch, a former baseball executive close to Commissioner of Baseball Bud Selig, for his bid to buy the Nationals. He has donated $600,000 to the Nationals' charitable foundation.

It's a separate deal, but Haney, who is developer and part-owner of the Dulles Greenway, is also offering to pay Virginia $5.7 billion for the right to take over the Dulles Toll Road and build four express lanes on it. He'd kick in $717 million to pay the state's share of extending Metrorail to Dulles International Airport.

Brand, who is also vice president of the governing body for the minor leagues but who is not a formal partner in Haney's bid group, said the businessman would be a good pick to own a baseball team in the nation's capital.

"He has the means and financial wherewithal to stand behind the team," Brand said. "He has been an active player in Washington for over a decade. He's lived here, his children live here and I think he has the kind of business acumen that would serve him well in the baseball world."