In a recent article published by the Tribune Star, David Hannum and his wife Kathy are praised for their donation of a $1 million dollar scholarship to Rose-Hulman University, David is also praised for his past presidency of the Chamber of Commerce, his role in the Economic Development Corporation, and his involvement in his church, baseball, and school activities. What the article fails to mention is that two of David’s companies, Garmong Construction and HWC Engineering, have made millions of dollars from public projects. Many of them were not chosen through a competitive bidding process, but through nearly exclusive selection by several local boards and commissions made up of members who stand to directly benefit from the Garmong Construction and HWC Engineering jobs. Although there are many, let’s focus on just one of those public projects.
There is a federal program that gives Terre Haute approximately one and a half million dollars a year to invest in low income housing. For the past several decades the Terre Haute Redevelopment Commission (THRDC) has overseen how that money has been spent. If you look at the THRDC annual reports you will see that every year HWC Engineering has been paid to design “infrastructure improvements” for a few blocks of real estate in Terre Haute’s most impoverished neighborhoods. This money comes from Community Development Block Grants (CDBG), which is spent by other cities to provide low income housing, but Terre Haute spends a large percentage of it’s budget to fix “streets, curbs, gutters, storm sewers, trees, and sidewalks” in a few specified areas throughout the city (see image below).
In fact, in 2019 83% of the city’s non-administrative CDBG funds were used on infrastructure, while 9% was spent on demolition, and only 8% on rehabilitation. In comparison, the city of Bloomington spent only 12% of it’s non-administrative CDBG funds on city infrastructure projects, while the rest was spent on their goal of developing “viable urban communities.” While speaking about the use of CDBG funds, a local city leader explained that it was tragic that the community had to spend such a high percentage of the funds fixing streets, but the city just doesn’t have the money to make the necessary repairs. That is tragic, but let’s also take a look at how HWC Engineering and other contractors are being chosen for these jobs.
What you will often see on major city projects is that an engineering firm is chosen to create the designs that are necessary to send to developers in order for the developers to properly bid on the projects. As I’ve reported previously, the Capitol Improvement Board has recently adopted a new method for choosing a project developer without a bid, but that is still not the most common method. The engineering companies, however, are often chosen through a procurement process where the local board or commission receives proposals and choses the company they think is best suited for the job. Obviously, this makes the decision highly susceptible to fraud and bribery, and the engineering firm chosen is often involved in choosing the developer and inspecting the developers work, which makes it even more susceptible to corruption.
As mentioned earlier, HWC Engineering has been exclusively chosen for redevelopment work for the past several years. When you take a closer look at the work being done, it appears as though HWC is being paid every year to design improvements for a few city blocks. In conversations with city planners, however, they explained that it would be very unusual for an engineering firm to create designs for just a few blocks at a time, and that type of patchwork design would lead to numerous problems. Usually engineering firms will create designs for an entire area to ensure that the project flows smoothly. So again, it appears HWC has created designs for “redevelopment target areas” and receives yearly payments. Public records requests have been submitted for invoices received from and paid to HWC Engineering for design work related to CDBG projects.
It should be noted that David Hannum, Ralph Wagle, and Mike Cline sold their majority share of the company in 2013, but Hannum and Wagle still hold minority stakes in ownership. If these names sound familiar it’s because many people involved in Terre Haute projects are involved in multiple boards, commissions, and companies, and many of them are major donors to Duke Bennett’s campaigns. Hannum and Wagle are both executives at Garmong Construction, and Cline continues to work as an engineer, but has also served as a commissioner on the Muncie Sanitary Board and is currently the defendant in a law suit filed by the State of Indiana for refusing to give up his position after a massive corruption scandal was discovered in Muncie resulting in the arrests of several individuals including Muncie’s mayor and Muncie’s director of the Sanitary District.