Dual roles as athlete, businessman present tough balancing act for Heath Shuler

Photo by Erin Brethauer/Asheville Citizen-Times

U.S. Rep. Heath Shuler throws the ball during a charity football game Sunday, Nov. 8, 2009 in Asheville, N.C.

Fifteen years ago, local radio station WIVK entered a football broadcasting deal, but the programming didn't involve the Orange and White.

Instead, the AM-FM powerhouse agreed to carry games of the Washington Redskins.

Why would a prominent East Tennessee radio station pay so much attention to a National Football League team that plays its home games more than 400 miles away?

The deal had a simple motivation, according to Bobby Denton: "Because of Heath."

The station's former general manager was referring to Heath Shuler, a star quarterback for the University of Tennessee in the early 1990s who was drafted by the 'Skins in 1994.

"That's probably the only reason," Denton added, "because he was one of the most popular Tennessee players … in history at that time."

Shuler's professional football career never matched his college exploits, but the story is indicative of the impact caused by UT's gridiron heroes: Even after they leave town, their impact still is felt in Knoxville.

In recent years, the ex-quarterback, now 37, has returned to his home state of North Carolina and launched a political career that has seen him oust a long-serving congressman and then win a second term in the U.S. House.

But even though he is at home in western North Carolina, Shuler's accomplishments in Knoxville as an elite athlete and a prominent businessman still loom large as formative events in his life - and they continue to have an impact on his political career.

Gibbs Knotts, head of the Political Science Department at Western Carolina University in Cullowhee, N.C., said Shuler was a high school football star and indicated that the acclaim from his days at UT and the NFL also were a benefit to his political ambitions.

"It's so hard for people to get their name recognition out. … The fact that he started out ahead with this, as a sports star, has been a big advantage for him," Knotts said.

By 2006, Heath Shuler Real Estate had grown to more than 150 employees and ranked fifth on a list of the largest area real estate firms based on the number of Realtors.

'All the right things'

A highly touted schoolboy quarterback from Swain County, N.C., Joseph Heath Shuler's coming-out party as a college signal-caller came in the second game of UT's 1992 season. Making the first road start of his career, the sophomore led the Volunteers to a thrilling 34-31 upset over 14th-ranked Georgia, scoring two touchdowns and racking up 233 yards of offense in the process.

The bravura performance was a prelude to bigger things. Shuler went on to set numerous records for the Vols, earning All-SEC honors in his junior year and finishing second in the Heisman Trophy balloting before jumping to the NFL prior to his senior season. Picked third in the 1994 pro draft, Shuler signed an eight-year, $19 million contract with the Redskins, but his professional career was marred by injuries, and he retired from pro football in 1999 at age 27 after stints with the New Orleans Saints and Oakland Raiders.

By then, Shuler already had launched the second act of his Knoxville career, founding a company in 1998 - Heath Shuler Real Estate - that would put his name into the front yards of homes all over the Knoxville area.

Asked about Shuler's pitch, Robert Phillips, a founding member of the real estate company, recalled that the quarterback and his fiancee took Phillips and his wife to the Copper Cellar restaurant, where Shuler "said he wanted to do it first-class … (he) said all the right things." Phillips helped design the firm's iconic yard signs - decorated with an orange-and-white, checkerboard pattern reminiscent of the end zones at Neyland Stadium - and said it was easier than he expected to recruit new real estate agents.

Within a couple of years, Phillips said, the firm had more than 100 agents, drawn in part by state-of-the-art equipment including copiers and computers. Phillips said Shuler's football earnings paid for the perks, and that the quarterback often would sit in on interviews with potential agents - "that made it a little bit easier to get them to transfer."

Sandy Beeler, a longtime ReMax Preferred Properties agent who was president of the Knoxville Area Association of Realtors in 2000, mentioned the "nice new equipment, and lots of it" that Shuler's firm made available. Beeler said she believes the Shuler firm offered a better split, or portion of the sales commission, to agents, although she said she didn't know what that split was. Those factors weren't the only draw, though.

"One associate told me that she would go there just because it was Heath Shuler," Beeler said.

Why? "Well, she thought … he was handsome," the real estate veteran recalled with a laugh.

By 2006, Heath Shuler Real Estate had grown to more than 150 employees and ranked fifth on a list of the largest area real estate firms based on the number of Realtors. Shuler also had begun campaigning in North Carolina for Congress, running as a Democratic challenger looking to unseat eight-term Republican Charles Taylor.

Dealing with TVA

That race provided an early glimpse of how Shuler's East Tennessee ties could affect his life as a politician. In March 2006, the News Sentinel highlighted reports that the North Carolina candidate was selling his Knoxville-based real estate business and wanted to cut ties "to temper criticism about his out-of-state fundraising."

Later that year, The Associated Press reported that companies associated with Heath Shuler Real Estate belatedly paid more than $69,000 in unpaid taxes after the AP began asking questions. According to that story, Heath Shuler by then held only a 20 percent stake in Heath Shuler Real Estate, and a Shuler lawyer said he threatened legal action against the three principal owners on Shuler's behalf if the owners didn't immediately pay the taxes.

The GOP has repeatedly blasted Shuler over the TVA flap, and a Congressional watchdog has criticized him as well.

The tax tiff didn't prevent Shuler from ousting Taylor in the 2006 election, and in 2007 Heath Shuler Real Estate was acquired by a Charleston, S.C., agency, which has since left the Knoxville market.

By then another real estate deal was in the works that would eventually cause grief for the budding politician.

In 2005, Shuler joined a partnership wanting to develop a piece of waterfront property in Roane County. A Tennessee Valley Authority employee had said the land included water-access rights, but shortly before the group closed on the property's sale, TVA reversed course, saying the land didn't have water-access rights after all.

In December 2006, just weeks after his election, Shuler's group submitted an application under TVA's Maintain and Gain program to open up 150 feet of shoreline access. The application sparked lengthy bureaucratic wrangling, but on June 3, 2008, TVA CEO Tom Kilgore approved a deal in which The Cove at Blackberry Ridge LLC would receive 145 feet of water-access rights along the shoreline of Watts Bar Reservoir in Roane County. In exchange, The Cove agreed to relinquish 150 feet of water-access rights in Rhea County and also provide approximately $15,000 for a bank stabilization project at a different location on Watts Bar Reservoir.

By then, Shuler was serving on the House Transportation Committee's Subcommittee on Water Resources and Environment, one of two congressional panels that provide formal oversight of TVA. After the News Sentinel reported on the transaction, TVA's inspector general began looking at the deal and eventually issued a report saying that while there was no evidence Shuler used his position in Congress to pressure TVA on the water-access deal, the situation "created an inherent conflict of interest that gave rise to the appearance of preferential treatment."

Earlier this month, the House Ethics Committee cleared Shuler, saying in a letter that "your actions in these matters were not improper in any way and did not violate House Rules." But the story flared up again last week after a second inspector general's report revealed that Shuler had called Kilgore and discussed the matter, contradicting his previous declaration that he had no contact with the agency regarding the transaction until after Kilgore approved it.

Knotts, the Western Carolina University political scientist, said the TVA issue probably won't have much influence on Shuler's re-election bid in 2010.

"You haven't heard a lot of people making much of an issue (of it). … If a really strong Republican candidate were to challenge him, it'd be interesting to see how much that comes up," Knotts said.

The GOP has repeatedly blasted Shuler over the TVA flap, and a Congressional watchdog has criticized him as well. Melanie Sloan, executive director of nonprofit group Citizens for Responsibility and Ethics in Washington, or CREW, was critical of Shuler's call to Kilgore, saying it "seems really wrong to me."

"How do you take off your … Congressional hat when you're making a phone call to someone over whom you have oversight jurisdiction?" she asked. "How is there not pressure there?"

A spokesman for Shuler declined to comment for this story, but his office previously said the TVA IG, the House Ethics Committee and the FBI found no criminal, improper or unethical behavior by Shuler in connection with the matter.

Teddy Phillips, vice president, Phillips and Jordan Construction.

A change in assets

Whatever the political impact, Shuler's decision to move into residential development may have had an impact on his bottom line. Earlier this year, Washington, D.C.-based Roll Call said he had dropped off of the political newspaper's 50 Richest Members of Congress list, although the precision of that list is limited since lawmakers only report assets in broad ranges.

In Shuler's case, the story said he dropped off the list in part because three development companies were no longer listed as assets on his 2008 personal financial disclosure. A Shuler spokesman told Roll Call that three limited liability companies - River Crest Development, based in the Cocke County community of Del Rio; River at Shining Rock, based in Haywood County, N.C.; and The Cove at Blackberry Ridge - had been consolidated into a single entity called The Highlands Property Group.

Shuler is one of several legislators who pushed for federal funds to aid in the I-40 cleanup, and he serves on the House Transportation Committee's Subcommittee on Economic Development, Public Buildings, and Emergency Management.

According to Shuler's personal financial disclosure for 2007, those LLCs were real estate development companies.

The Roll Call story said Shuler reported a minimum net worth of $2.28 million for calendar year 2008.

The congressman isn't the only Shuler family member involved in real estate development. And the real estate downturn may have impacted Shuler's brother, Benjie, a former Vol who had been part of the team at Heath Shuler Real Estate.

In October, Benjie Shuler filed for Chapter 7 bankruptcy protection, indicating that his assets were valued at $265,630 while his liabilities were valued at nearly $10.2 million. According to the Chapter 7 filing, Benjie and Heath Shuler are listed as co-debtors on a $36,670 debt to Bank of America. Among Benjie Shuler's creditors are Greeneville-based Green Bank, with a $5.4 million claim.

Benjie Shuler has been involved in several businesses, including real estate development firms called Buckingham Properties, Cedar Hills Back 9 and Creston. The bankruptcy filing also lists a commercial property firm called Broadway Square, which the filing indicated has closed. In 2008, Heath Shuler, his wife Nikol, and the trustee of a family trust sold a building at 5034 N. Broadway for $2.5 million to Broadway Square LLC and Brackfield Associates Partnership.

While The Cove at Blackberry Ridge project has received plenty of attention over the last year, one aspect of the endeavor has gone largely unnoticed. Last year, Shuler brought a new partner into the deal, Knoxville businessman W.T. "Teddy" Phillips Jr., whose contracting firm, Phillips and Jordan, is well-known for working on big government cleanup projects. (Teddy Phillips is no relation to Robert Phillips.)

In April 2008, The Cove at Blackberry Ridge deeded its Roane County property to the Highlands Development Group, whose chief manager is Phillips. Then last June, according to an agreement filed in Roane County, Highlands Development Group assumed payment of a loan that had been executed by The Cove at Blackberry Ridge in April 2007.

According to the agreement, the loan originally was worth $4 million, but only $3.6 million was outstanding when Highlands assumed the loan. That agreement was signed by Shuler, as chief manager of The Cove at Blackberry Ridge LLC, and by Phillips as chief manager of the Highlands Development Group.

In interviews, Phillips said his group was approached by Blackberry officials about participating, and that negotiations lasted for a year or so. Phillips said his construction firm has done some work on Blackberry and that the Highlands Development Group also is involved in The River at Shining Rock and River Crest.

In 2008, an official involved in the project said Highlands Development Group owned the Blackberry property, and that Highlands Property Group owned 50 percent of Highlands Development Group. The official said Shuler owned 80 percent of Highlands Property Group.

Phillips said in an interview that a trust related to his family owns 50 percent of Highlands Development Group.

Phillips also is CEO of Phillips and Jordan, whose specialties include land-clearing and disaster recovery. In 2005, the construction company was awarded a U.S. Army Corps of Engineers contract worth up to $1 billion for cleanup work following Hurricane Katrina, and the company also is prime contractor for the cleanup effort at a recent Interstate 40 rockslide under a contract with the North Carolina Department of Transportation.

Shuler is one of several legislators who pushed for federal funds to aid in the I-40 cleanup, and he serves on the House Transportation Committee's Subcommittee on Economic Development, Public Buildings, and Emergency Management.

Asked if he talks to Shuler about his firm's contracting work with the government, Phillips said, "No, not really."

"We don't work for FEMA in any of our work," Phillips said, referring to the Federal Emergency Management Agency. "We work with municipalities, the state, and we also carry a contract for the Army Corps of Engineers, which works under FEMA."

Phillips also said he has known Shuler "ever since he was a little toddler."

"(I've) known his family all his life," Phillips said. "Known his dad and mom real well."

Sloan, of the watchdog group CREW, said that while questions can be raised when a member of Congress has a lot of private business interests, the fact that Shuler is in business with someone who does government work isn't a problem unless Shuler is involved in awarding those contracts or earmarking money for them.

"The main thing (legislators) should do is they should recuse themselves from any decisions that might influence their private financial dealings," she said. "And then they should be very transparent about the dealings they do have."

The role model

Shuler's name was floated as a possible Senate candidate in 2010, and a Washington Post Magazine story in 2008 imagined a future in which he had been elected president. But for now, the ex-quarterback is simply seeking re-election to the House.

Whatever his political future, though, it appears likely that his ties to Rocky Top will continue. He recently was tapped as an alumni member of UT's Athletics Board, for example, and a recent Asheville Citizen-Times story highlighted his praise for the performance of current Vols quarterback Jonathan Crompton, a Shuler protege and another native of western North Carolina.

And while politics is a rough, divisive business that takes a toll on reputations, the memories of youthful heroics on golden fall afternoons will undoubtedly be the dominant impression that some East Tennesseans retain of Shuler. Denton, the former executive at WIVK and longtime voice of Neyland Stadium, said a former Vol's football popularity carries over into life after the gridiron.

As for Shuler, Denton said that Shuler "always had time to stop and, you know, talk to people, sign autographs. … Heath was like parents want their son to grow up to be."

Business writer Josh Flory may be reached at 865-342-6994.

© 2009, Knoxville News Sentinel Co.
Want to use this article? Click here for options!