Hamilton County developer works for the city — and himself

The afternoon sun glares down on dozens of workers in bulldozers moving dirt. The rolling hills of the countryside are taking a new shape. And Steve Henke has a smile on his face.

He asks what kind of car I drive.

A compact SUV. That's no good, he says.

Henke, 64, invites me to step up into his 2015 four-wheel-drive Chevy Tahoe. He wants to show me the Chatham Hills golf course community he's developing in northern Westfield.

He's taking me on this rugged tour because I've been asking how he navigates a potential conflict of interest: Henke is not just a developer; he also was a contract employee with the city of Westfield. He helped plan the city's Grand Park sports campus. While Henke was being paid $675,000 to advise the city, he was also buying up nearby land and making deals of his own.

The concern is that his city contract gave him the opportunity to steer the public project in a way that would benefit his own development interests.

After all, his fingerprints — or his tire tracks, if you will — are all over the rural farmland northwest of Ind. 32 and U.S. 31; the area he recommended for the park. His city-paid plan placed Grand Park next to the natural extension of the Monon Trail, which will connect to Henke's Chatham Hills Golf Course development. What's more, he has acted as an agent for landowners in development deals around Grand Park. His own company will develop land near Grand Park, as well.

Recognizing his private and public roles were in potential conflict, Henke's city contract specifically allowed him to make personal deals even if they are adverse to the city.

Developer Paul Estridge, who also bid on the city's Grand Park project, said he's never seen a contract like that between a city and a developer: "Steve Henke is a professional guy and I don't blame Steve Henke. But as a citizen and a community leader, I find it unconscionable that the executive branch of the city of Westfield would offer to pay $675,000 to a person who does land development. That's a lot of money."

In the Chevy Tahoe, and in follow-up phone calls, Henke confidently answers my toughest questions without being defensive or resentful, but also without concern about his dual roles.

"I don't think that's a conflict of interest," Henke told me. "Basically they wanted us to be able to develop at the same time we were building Grand Park. We were not 1,000 percent on that one project."

To Henke, he simply has a job to do. Or, in this case, two jobs.

Quaker roots

Henke has taken countless people on the tour he is offering me, rambling off road, bouncing over hills, through foliage-filled fields, surprisingly close to steep ravines. He passionately points out every stream, every lake, every stand of trees. He urges me to envision each fairway, the rows of expensive houses, the rising greens, the potential hazards.

Most people I talked to about Henke, who is doing more than almost anyone to reshape Westfield, seem to like him. Many call him a visionary, even some of those who don't like what he's doing.

On the day of my tour, a Thursday in June, Henke's Tahoe is rocking over rough terrain; he's trying to get to the emerging 4th hole in the far southwest corner of Chatham Hills.

He says it's a great piece of ground. His people are digging a new lake there.

"If you weren't in this to do a really quality development," he says, "you probably could have knocked it out pretty quickly with some production houses. You wouldn't do a golf course. But when you have a piece of ground like this, you owe it as a developer to develop it in the best manner you can."

Henke tells me the idea for his Chatham Hills development started with a for-sale notice he saw about eight years ago, long before he started working for the city.

Henke drove north from his home in the Bridgewater golf course community he also developed in Westfield. When he got to Hortonville, at 206th Street and Horton Road, he couldn't believe the rolling terrain and flowing streams. It reminded him more of Michigan than Indiana.

Henke bought the property. But he wanted more. He knocked on doors with For Sale signs. He knocked on doors without For Sale signs. He bought another property. And another.

Over eight years, Henke acquired 750 acres for a $500 million project unlike anything Westfield has seen. Pete Dye, the well-known Hoosier golf course developer, is laying out the course.

Jeff Stewart remembers when Henke rolled into his mother's driveway the first time about eight years ago. He says Henke wasn't pushy.

"At the time, my mother was still alive but had been incapacitated by a stroke. My sister and I decided we wouldn't do anything at that point."

Eventually, Jeff Stewart and his sister did sell. Their mother had died. Stewart and his wife were living in the old farmhouse, farming the land. But the price came up. They closed in November.

"I would consider Steve to be one of the better people at what he does," Stewart said. "He has been very professional."

Driving past the farmhouse, Henke says the buildings will be torn down. This will be the 14th hole, a short par 3, he says. But he wants to show me a fire pit in a ravine.

The Stewarts, he said, used to have picnics down there. Driving to the edge of a hill overlooking the ravine, rolling along inches from the edge, Henke says he's going to make that a park-like spot where people can sit by the fire again. I'm eyeing the edge, somewhat concerned we're going to roll down there.

Henke also plans to build several dog parks and to sell plots for gardens. For an added price, an area farmer will plant, fertilize or harvest for you.

Henke says Chatham Hills isn't just a trendy, wealthy-sounding name.

He drives through the ravine in back of the Stewarts' old property east of Hortonville and winds through the woods to an 1886 brick farmhouse — the inspiration for the name.

Aaron Lindley built the home, after moving from Chatham County, N.C. He was a Quaker, one of many who moved to the area. Quakers founded Westfield.

Henke has spent $50,000 to restore the home and plans to open a restaurant, or perhaps a bed and breakfast.

Pete Dye

Pete Dye, 89 and active, doesn't sell the place nearly as hard as Henke. Dye drives up from his home at the Crooked Stick golf course community to plan out the holes.

Henke said persuading Dye to get involved was easy. The two had worked together on the Bridgewater Golf Club community and Dye loved the lay of the land. During our drive, Henke tells me Dye initially couldn't believe that the land was in Hamilton County.

Reached by phone at a second home in Florida, where he's recovering from surgery, Dye talks in short bites. He's feeling a bit cantankerous, says he's working on 13 golf courses right now. Says he's built 81. Does everything by eye. Never drew up a set of plans in his life.

Says Henke is "a nice guy." Prodded a little, Dye says: "He's all right, easy to work with."

Dye picks up a little bit when discussing Chatham Hills.

"Land up there is very flat where they have the park," Dye said. "But as soon as you get to Henke's place, which is a mile away, it turns into an entirely different topography."

And the golf course? "It'll be all right," he says.

Home, golf membership sales are strong

Sales have been unexpectedly brisk at Chatham Hills, Henke says.

He has sold 90 lots in the first section of 190 homes. He plans 650 to 700 total lots and more sections will be rolled out over time.

The homes, from various custom builders, range from 2,500 square feet to 9,000 square feet and from $400,000 to more than $1.5 million.

He's also sold 190 golf club memberships and plans to sell from 325 to 350. Membership costs $12,500 up front, plus $385 monthly.

The course has hardly taken shape. But Henke says he will have to hold back selling memberships to ensure future home owners get a chance to buy them.

Maybe the sales are not so surprising. Henke, his son Brad Henke, and his daughter, Betsy Garfield, give prospective customers the same off-road tour.

Henke tells me he bought the Tahoe last year and it has "a hard 24,000 miles on it." He says his SUVs generally take a beating. This one will be no exception.

"It comes with a spoiler on the front," Henke said. "The dealer always knows to take that off and to store it for me. And a couple of times a year, I have to go in and have my front bumper straightened out."

Financial adviser Steve Merrick, 59, is moving to Chatham Hills from Evansville. He and his wife are now empty nesters and they bought a house with a walkout basement on a small, wooded hill overlooking the 18th green — all of which only exists in the mind's eye.

Merrick says the Henkes are friendly, welcoming. And they've shown him the potential through those off-road tours.

"We've been out there touring that thing probably six times," Merrick said. "A lot of this was done basically on the feeling that Steve Henke is a first-class guy who has done this before."

Monon Trail winds by Chatham Hills

During his tour, Henke praises one major city amenity.

He points to a tree line slicing through the property. It's an abandoned rail bed, a future extension of the Monon Trail. While employed by the city, Henke told officials that trail was crucial when they were considering where to build Grand Park.

The city is paying almost $7 million, mostly in federal funds, to extend the rail trail over Ind. 32, through Grand Park, to about 196th Street this year. Westfield is inquiring about rights of way to extend it north from there through Chatham Hills.

Mayor Andy Cook always has planned to extend the trail that far north. But the amenity is one more drawing point for Chatham Hills, and as the city's consultant, Henke was instrumental in locating Grand Park along the same route.

Kim Paino says an appraiser has been visiting her neighbors along the trail in Hortonville to the north of Chatham Hills.

She fears Chatham Hills and the Monon will draw commercial or higher density production homes. She moved from Indianapolis to get away from that, and from crime.

"It's just completely upsetting a way of life," she said, "it's very country out here."

But, she says, some of her neighbors have gone to work for Henke, staking out golf holes and such. Or sold their land. Or sold their land and invested with him.

She agrees the land is beautiful. As is.

"He's completely destroyed everything that was beautiful about it," she said.

Marla Ailor, 43, doesn't particularly like Henke's plans, either. Ailor said she is worried about a north-south thoroughfare the city eventually plans to build from Ind. 38 through her area to Grand Park.

She said Henke has met with her a number of times to work through those concerns. She said he's told her the city can acquire right-of-way without going through her property.

His confidence in speaking for the city blurs the lines between his role as a developer, Ailor says.

Henke, though, tells me he has a land contract for a chunk of land adjacent to Ailor's, and has told city officials they can build through there.

Ailor would rather see the area remain rural. Still, she says she likes Henke in spite of herself.

"I think that he probably is the true visionary of the city," she said. "I think he has been the one that masterminded a lot of what is happening in Westfield."

Consulting on Grand Park

When I ask about Grand Park, Henke says he'll show me. He steers his Tahoe back to the road and heads south a few miles.

Westfield paid Henke $675,000 to develop the park via a monthly $12,500 fee paid over four and a half years, according to a contract from October 2010 obtained by The Star. The city hoped the park would spur development throughout Westfield and increase the property tax base.

The city chose Henke's proposal over one from Chris White, which proposed the sports campus farther north, near U.S. 31 and Ind. 38. Estridge a month earlier had withdrawn a proposal to build the park north of 146th between Towne and Ditch roads, saying the project's scope had grown too large.

Henke wowed city officials. He told them the park, to be successful as an economic driver, had to be near the major intersection of U.S. 31 and Ind. 32. And the Monon.

He said he could secure rights to the land, which he did not own.

Todd Burtron, the mayor's chief of staff, said Henke helped the city secure purchase agreements on 400 acres for Grand Park.

Burtron said Henke worked with landowners, contractors and other parties involved with the development. He and his staff also visited sports campuses in several other states and worked with future tenants and stakeholders. Essentially, he was paid to develop the park.

If Henke had not been retained, Burtron said, the city would have had to hire a full-time employee to guide the project.

"We outsourced this," Burtron said. "We could have insourced it and come up with a higher (cost) number."

Estridge was surprised the city paid Henke to act as developer. He said he never envisioned receiving such payments for his proposal for Grand Park, nor was it discussed. He said the deal appears not to have been made "in the light of day."

As Henke drives through the park, the baseball diamonds are packed with players. He says he's proud of his work.

Henke says he, and his paid staff, spent long days working on Grand Park. He says the hourly income was miniscule.

"I didn't make anything from that," he said. "I knew we weren't going to make any money compared to what we could developing. But it was building something for the future."

Henke's involvement didn't end there. As I ask about his development deals, he takes me south of Grand Park, turning off road through a field where even he seems somewhat concerned he may get stuck.

He represented two area landowners — Craig Wood and Kevin Day — as development consultant on projects that are emerging now. He's helped them land deals for a Cambria Suites, a fieldhouse, a long-term care facility and two 17,600-square-foot buildings for restaurants and retailers.

"I lay out the vision, and assist the family in the sale of their land," Henke said.

Henke drives further south to a bustling commercial area he developed along Ind. 32 that includes a Big Red Liquors, McDonald's, Taco Bell, Subway and Dairy Queen. A Culver's is coming soon. He points out extended outdoor eating spaces that will accommodate crowds coming from Grand Park.

Henke says more commercial development will be built south of the park, and east of the park, along 191st Street. He owns land at 191st and U.S. 31, the future gateway to the community.

Suspicion of incentives

During a contentious recent political campaign, Henke was accused of tapping into water and sewer lines extended for Grand Park to reduce the costs of developing Chatham Hills. Henke says that's untrue.

On our tour, Henke drives me past Monon Trail Elementary School and points to a manhole, and to a fire hydrant.

"Right here is where the sewer has been since they did the school. ... The water was already here. It had to come here for the schools."

He says he's paying $3 million to connect water and sewer lines to Chatham Hills, with no city incentives.

"I pay what everybody else does," Henke said. "I don't get any discounts."

Henke also downplays his connections with the city. He said he and Cook both live in Bridgewater and are on friendly terms. But they don't have a social relationship. Henke says he has never contributed to Cook's campaign. No donations from Henke appear on Cook's campaign finance records.

He says he doesn't ask for city incentives for any of his projects.

He was at Cook's campaign headquarters after his primary victory. He also attended the mayor's yellow-tie ball, a fundraiser for a youth assistance program.

Managing conflicts

In several hours, Henke's driven me over more than 1,500 acres that he's helped to develop. He's willing to keep driving.

I have another story to write, though, other deadlines to meet. As we head back to the clubhouse, he says he's not sure what comes after Chatham Hills.

Henke plans to open the golf course by September 2016. He figures he'll be having fairways mowed by this Labor Day. He may be developing in the area for another 10 years, or more, because he owns interest in land around both Grand Park and Chatham Hills.

His contract with the city stipulates that he has the opportunity to develop land in the city's jurisdiction, even in and around the park, "even in matters potentially adverse to the city." The contract cites examples such as seeking city incentives, land-use and zoning approvals and variances to city rules.

Henke says he's never used that clause.

Grand Park, he says, always was planned as an economic driver and he doesn't see a conflict in developing both the city project, and his own projects.

The debt the city accrued to build the park will be paid back by property taxes from that development, through a tax-increment financing district.

He says he will benefit from Grand Park, but so will other developers and builders.

"In working for the city, we simply were developing Grand Park for them," he said. "Grand Park was not my idea. ... the whole purpose of Grand Park was to create economic development."

Steve Henke

Age: 64.

Company: Henke Development Group.

Education: Bachelor's degree from the Kelley School of Business at Indiana University. Law degree from the Indiana University Robert H. McKinney School of Law in Indianapolis.

Family: Wife, Kathy Henke. Children, Brad Henke and Betsy Garfield.

Portfolio: Various commercial and residential projects in Anderson, Whiteland, Carmel and Westfield. His most notably past project is The Bridgewater Club.

Past career: Attorney at Coots, Henke, Wheeler law firm in Carmel.

Volunteerism: Past president of the Carmel Dads Club and the IU Varsity Club. Board member of the IU Foundation and IU Varsity Club Presidential Advisory Committee.

Chris Sikich is The Star's Hamilton County watchdog reporter. He has covered Hamilton County issues for more than a decade. He also has covered Indianapolis City Hall, the Statehouse and business.Call Chris at (317) 444-6036. Follow him on Twitter: @ ChrisSikichand atFacebook/chris.sikich.