New Grand Prix chief has been a big city contractor, campaign donor

Baltimore businessman J.P. Grant discusses the 2012 Grand Prix of Baltimore during a news conference.

Despite financing more than $140 million city contracts in the past 12 years, donating tens of thousands of dollars to Democratic candidates and being a member of Mayor Stephanie Rawlings-Blake's inner circle, J.P. Grant III has largely avoided the limelight.

Then this week Grant, a West Baltimore native, stepped into the public glare as one of the latest saviors of the troubled Baltimore Grand Prix.

City leaders, of course, already knew him. When he walked into a meeting of Baltimore's spending board this week, they greeted him warmly. From his seat at the board's dais, City Council President Bernard C. "Jack" Young flashed a broad grin at the financier. Comptroller Joan Pratt, who had voted against a previous contract for control of the Baltimore Grand Prix, announced she would support the current contract because of Grant's involvement.

"I'm not used to this," Grant said of the publicity surrounding the high-profile Grand Prix contract. "My natural inclination is to help the city, just as we have done for over 30 years."

Wearing a crisp white shirt emblazoned with the Grand Prix's new logo — a clipper ship floating on a blue checkered flag — Grant said he and a business partner, construction contractor Greg O'Neill, would fund the race, while leaving the day-to-day operations to racing superstar Michael Andretti's sports marketing company.

Grant arrived at this moment after growing up in Baltimore, attending Harvard University but not graduating, and working for IBM Corp. in sales before starting his own company to help governments finance capital expenditures. Along the way, he became a major backer of Democratic candidates, including Rawlings-Blake, and developed a close working relationship with her younger brother, Wendell Rawlings, a subcontractor on two of Grant's projects outside the city.

But when his role funding the Grand Prix race preparations brought him in front of TV cameras and other media this week, Grant directed attention elsewhere. "This is really about the Andrettis," he said. "If you need something financed, call me."

Grant says his Columbia based-company, Grant Capital Management, has financed as much as $1.2 billion in deals over the past two years. His clients include several state agencies, Prince George's and Howard counties, Baltimore City, the city housing authority and the city school system — and that's just in Maryland. He has financed more than 150 contracts totaling more than $4 billion nationwide over 15 years, according to his company's website.

"Most governments, not just Baltimore, don't have a large capital budget," Grant says. "Yet, they have requirements: They have to have garbage trucks, police cars, fire trucks, things essential to running the city. To come up with $10 million, $20 million at a clip eats up your budget pretty quickly."

Grant says he first became aware of this market — referred to as capital leases — when working for IBM.

"We were selling computers to city and state governments, but they needed financing. I said, 'This might be a good idea.' And so, 20 years later, I'm an overnight success," Grant said with a wry smile.

While Grant maintains a low profile outside government circles, local politicians — and their fundraisers — know him well.

He has contributed more than $160,000 to the state Democratic Central Committee over the past decade. All three of the city's top officials have been the beneficiaries of his largesse: Grant, his relatives and employees have given $37,000 to Rawlings-Blake, $15,000 to Pratt and $4,000 to Young in recent years. Grant, his family and associates have also donated to Gov. Martin O'Malley, Lt. Gov. Anthony Brown and former Mayor Sheila Dixon.

Those who grew up with Grant, the son of a physician and a school administrator, said he was marked for success at a young age.

Wayne Frazier, president of the Maryland Washington Minority Contractors Association, said he attended what was then called Roland Park Junior High School with Grant in the 1960s.

"J.P. was the leader of the pack," said Frazier. "Everyone followed behind J.P. back then. He was one of the brightest guys in the school as well."

Pratt, the city's comptroller, said she has known Grant since they were both in high school, and she spoke glowingly of Grant and his "long record of community involvement."

"I've known him from teenage years," said Pratt. "I knew him as a friend for years."

Grant graduated from City College. He said he left Baltimore to attend Harvard University for four years but that he did not graduate.

Years later, his long-standing friendships with the city's elite would help catapult his firm's success. Rawlings-Blake, for one, has leaned on Grant for both advice and donations to city programs.

The city has awarded 13 financing agreements to Grant Capital Management over the past six years for landfill equipment, fire vehicles, a computerized bidding system and several energy conservation projects, said Ryan O'Doherty, a spokesman for Rawlings-Blake. The largest deal Grant is financing is a $33 million purchase of a police communications system, he said.

But the company's name has rarely appeared on the city spending board's public agenda. That's because Grant Capital is one of two companies that holds a "master lease" with the city, enabling deals to bypass the Board of Estimates, which approves most contracts. That's also where most contracts become known to the public.

O'Doherty said the individual financing agreements do not pass through the spending board for the sake of expediency. He noted that the board does approve the broader master lease deals. Grant Capital was first given a master lease contract in 2003. Prior to that, GE Capital Public Finance Corp. held the city's sole master lease. Now Grant Capital and GE Capital compete by bidding on individual deals under the master lease.

The Board of Estimates "understands that lease bids are time sensitive," O'Doherty said in an email, explaining that the arrangement allows for deals to be approved more quickly. "Market interest rate forces move daily, and the winning bidder needs to know if they are selected in order to lock in the rate of interest. Delays would subject the city to the risk of higher interest rates."

Pratt said that the individual deals are approved by the city's Board of Finance, of which she is a member. The panel approves the contracts at its monthly meetings, she said. The city's treasury department does "due diligence and they bring us all the facts," about the financing deals before the panel votes, Pratt said.

The city is scheduled to pay Grant Capital Management a total of $10.5 million annually under its financing agreements for the next several years, when the payment amount will begin to decline, O'Doherty said.

Although Grant's government contracts have not made the news in recent years, his charitable donations have garnered a handful of headlines.

In 2008, then-Council President Rawlings-Blake announced that she had facilitated an $8,400 donation from Grant to fund scholarships for city students. Two years later, Mayor Rawlings-Blake thanked Grant for a $90,000 donation to keep pools open amid a $120 million budget shortfall. He has also funded a Little League team for the past three years.

Meanwhile, court records show that the state has filed liens against Grant five times since 2000, for a total of more than $170,000. The largest lien was filed in 2009 for $111,000. All of the liens have been paid, records show. Grant attributed the liens to "a tax dispute" and pointed out that he made more than $300,000 in charitable donations in 2009.

Grant founded First Municipal Credit Corp., his first capital lease business that's still operating, in the late 1990s and soon scored a state contract that helped lead to other deals.

In 2000, Grant became enmeshed in a Baltimore City Public Schools scandal involving a no-bid contract awarded to him by a friend who worked for the system.

The school system's business officer at the time, Wilbur C. Giles, had vacationed with Grant at a luxury resort in Puerto Rico shortly before giving him a contract to finance energy efficiency upgrades for 30 schools. The school system later found that the $1 million Grant was paid for the transaction was eight times greater than the industry standard.

At the time, Giles turned over receipts to the school system, showing he had paid his own way. But both Giles and a supervisor, Roger Reese Jr., resigned from their positions within months of the matter being brought to light.

It was during this energy efficiency project that Grant first worked with Wendell Rawlings, the mayor's brother. Rawlings oversaw the capital project for Carnegie Morgan, a firm which has since merged with another company and changed names.

Rawlings started his own energy efficiency consulting company, the Khepra Group, in 2004. Rawlings-Blake served on the board of the company as recently as 2007, according to her campaign biography.

Grant said he got to know Rawlings' work during the school system project, and they have teamed up several times since then on energy efficiency contracts.

"These are contracts that actually save municipalities money," said Grant. "We finance so many of these deals, we use Wendell Rawlings to do the engineering. … In Prince George's County, because of the engineering work that Wendell did, we saved the county over $1 million."

In addition to the Prince George's County project, Rawlings is working with Grant Capital on an energy efficiency project in Allegheny County in Pennsylvania, Grant said.

Both Rawlings and his wife, Teminka, work for Khepra, which is headquartered at their Reservoir Hill home. He is the CEO and she is the chief operating officer, according to online state incorporation records.

In an emailed statement, Rawlings said, "Khepra Energy Group does not do any business with the City of Baltimore in order to avoid any potential conflict."

He did not respond to requests for further comment.

When asked about her brother's work with Grant, Rawlings-Blake said, "My brother has run his own energy company for years. He has deliberately not done work for the city to avoid any conflict."

"I remain in compliance with all ethical requirements with the city and the state," Rawlings-Blake said.

Baltimore Sun reporters Liz Bowie, Justin Fenton, Andrea Siegel and Steve Kilar contributed to this article.

James Preston "J.P." Grant III

Age: 58

Occupation: Founder, president and CEO of Grant Capital Management and principal of Race On Baltimore

Born: Baltimore

Lives: Columbia