How and why homebuilder-entrepreneur Carlos Beruff converted from business to politics. It's all about taxpayers' money.
“It wasn't a business decision,” says Carlos Beruff, sitting at his marble-topped desk at the corporate headquarters of Medallion Homes Gulf Coast Inc. in north Sarasota County. “If it was ...” Beruff chuckles. “I wouldn't do it.”
On Monday, Beruff, 58, formally announced his candidacy for the Republican Party nomination for the U.S. Senate seat being vacated by presidential candidate Marco Rubio.
To one extent, Beruff's all-in conversion from business to politics can be viewed as a surprising decision. For the past 32 years, as founder, owner and CEO, Beruff has become known as a hard-core, say-what-he-thinks, unpolitically correct, driven entrepreneur who views much of life through the prism of black-or-white business decisions.
He exemplifies the disciplined, 24-7 CEO and business owner whose focus has been growing a successful company from grassroots to a formidable force. Like his longtime mentor, prolific homebuilder Pat Neal, Beruff became tirelessly competitive, and largely through on-the-job experiences (there are no college certificates on his office walls), Beruff evolved into a CEO who has laser-like analytical skills and manages by questioning the status quo. “He doesn't nibble around the edges,” says Bradenton attorney Tim Knowles, longtime legal counsel for Beruff and Medallion. “He's decisive in his analysis and the prosecution of what he does.”
Indeed, Beruff has built Medallion into one of the most successful homebuilding companies in the region, constructing more than 2,500 homes in Manatee, Sarasota and Lake counties. In 2015, Medallion revenues totaled $83 million and employed 72 people.
Along the way, Medallion has withstood three recessions — two of them devastating homebuilding crashes — a testament to Beruff's resiliency, determination and learned-on-the-job business acumen.
In the 1990-91 savings and loan crisis, Beruff nearly declared bankruptcy. To avoid losing his home, he rented it out and moved to a small apartment to keep current on his mortgage. He remembers that period as one of the most difficult and worst in his career.
But it taught him a lesson, one that helped him through the 2008-2012 housing meltdown: stockpile cash for the next crash. Beruff says that practice allowed Medallion to acquire during the downturn enough land for homebuilding for the next 20 years without overleveraging his company.
To another extent, Beruff's entrance into the U.S. Senate race and his conversion to politician are not so surprising. He has had a latent interest in political affairs since high school. At the Howey Academy boarding school in Howey-in-the-Hills in Central Florida, Beruff says the only A+ he ever received in his high school career was on a senior-year paper in 1976 on SALT II — the Strategic Arms Limitation Talks between the United States and Soviet Union.
For 24 of his 32 years with his company, Beruff avoided media notoriety, especially in political circles. Out of expected self-interest, of course, he participated as a contributor to local political and statewide races, but rarely rose on the radar as an influencer to be quoted in the media.
But in 2008, Beruff started the conversion of his public profile. That's when Knowles called Beruff saying the State College of Florida Board of Trustees needed someone with a business mind.
As Beruff puts it, with little homebuilding going on at the time and not much to do, Beruff asked Knowles a few questions about the time required and expectations, and then decided, “Let's do it.”
This became the first of three public board appointments for Beruff in the span of 15 months, from May 2008 to August 2009. Then-Gov. Charlie Crist appointed Beruff to the SCF board, Sarasota-Manatee Airport Authority Board of Commissioners and the Governing Board of the Southwest Florida Water Management District.
Unbeknown to him, the low-profile, private Beruff was soon to become the high-profile, controversial Beruff. And unbeknown to the boards was what kind of business mind they were getting.
Perhaps as a symbol of what that mind turned out to be, Beruff's colleagues on the boards each at separate times elected him chairman of their board.
It's taxpayers' money
When you hear Beruff tell it, he brought to the boards the same analytical approach he applied to operating Medallion.
Start with the least controversial of the three, the airport authority.
Ask Frederick Piccolo, CEO of the airport authority, about his experience with Beruff, and he says: “He's old school. His word is his bond.
“He always challenged the status quo,” Piccolo says. “He asked questions, and it was always non-confrontational. He expected: 'Have you done the best you can do?' And he believed you can always do things more efficiently.
“He always kept reminding us: 'This is some taxpayer's money,'” Piccolo says.
When Piccolo reported to the board the cost of a routine job to resurface the airport parking lot and that the authority planned to piggyback on a similar school district resurfacing contract at the district's price, Beruff suggested obtaining a new bid. Two months later, to his surprise, Piccolo obtained a bid whose price was 33% less than what the authority would have paid with the school board contract. The price of oil had dropped from $150 a barrel to $100 a barrel.
When the Transportation Safety Administration said airports could opt to hire private contractors to operate their security systems, Beruff suggested the airport make the change.
Piccolo resisted. But Beruff made two arguments: 1) By using federal TSA employees, the regulator was regulating the operator — a recipe for inefficiencies and poor service; and 2) in the event of poor service, it would be easier to switch private contractors than it would federal TSA employees.
The board opted for the private security contractor. Piccolo says Beruff was right.
“Carlos has taught me to be a better manager,” Piccolo says.
In 2010, after newly elected Gov. Rick Scott appointed Beruff to a transition-team for the state's water management districts and re-appointed him to the Swiftmud board, Beruff put himself and Medallion's CFO to work — at Medallion's expense — to review the agency's budgets and financial condition. The analysis revealed a state agency awash in excess taxpayer cash and staff payrolls that had not shrunk in spite of a 55% drop in permit applications.
Beruff took his findings to then-state Senate Appropriations Chairman JD Alexander of Lake Wales. As a result, the Legislature in 2011 agreed to reduce the millage rates of four of the state's water management districts, saving taxpayers $210.5 million. Swiftmud's payrolls eventually also shrank from about 850 to 560 employees, Beruff said.
While those savings caught the attention of Gov. Scott and state lawmakers, it wasn't until Beruff began applying his challenge-the-status-quo approach to State College of Florida that Beruff's low public profile mushroomed into high-profile notoriety, or as his critics might put it, high-profile infamy.
For starters, Beruff spearheaded efforts to end tenure at SCF. Predictably, that riled the college's professors and the region's education advocates, generating headlines and news stories in the daily press portraying Beruff as a Gov. Scott lickspittle and hit man. Asked why he pursued the end of tenure, Beruff said: “There's no profession that guarantees you a job for life. What applies to everyone else should apply to teachers.”
Compounding that controversy was Beruff's repeated challenges of SCF President Lars Hafner's fiscal management. Beruff and Vice Chair man Craig Trigueiro questioned the cost of four multimillion-dollar projects.
One involved the proposed purchase of 10 acres of property for an economic development center in Lakewood Ranch. The price was $1.6 million, $160,000 per acre. When Beruff showed Hafner the going rate for similar acreage elsewhere was much less, Hafner scrapped the deal.
Hafner also proposed constructing a 112,000-square-foot, $42 million library. Beruff says when he saw that plans included a three-story atrium for public events and receptions, he started asking questions. “I'm also thinking: with technology, the need for libraries is diminishing.”
The board scrapped the designs. Revised plans now show a 69,000-square-foot facility that is expected to cost $17 million — a savings of $25 million. “And in keeping with what we will need in the future,” Beruff says.
Beruff and Trigueiro's clashes with Hafner ultimately led to efforts to oust Hafner. This brought dissension to the board, students protesting in Hafner's behalf and two board members accusing Beruff of a lack of transparency in the way he handled meeting agendas and notification. Two board members resigned over their differences with Beruff's handling of Hafner, whom the board ultimately ousted.
Once again, local media reports portrayed Beruff as the Gov. Scott bully and bad guy.
Beruff makes no apologies. It was about taxpayers' money.
After seven years of sometimes contentious cost cutting on three boards, Beruff entrenched himself even more in politics and public service when he accepted from Gov. Scott last May his fourth chairmanship of a public board — Scott's Commission on Healthcare and Hospital Funding.
And then, in October, while Beruff and his wife, Janelle, were driving home one evening from Medallion's headquarters, Beruff took a call from a friend who wanted to talk politics. Beruff declines to identify the friend, but he says the friend talked about the Republican U.S. Senate race.
With none of the four current candidates surging ahead with name recognition, the friend suggested what Beruff was told seven years earlier about the SCF board: The race could use “a business guy.”
Beruff's response: “I'm sorry, do you have the wrong number?”
But the call triggered serious discussions among Beruff, his wife and close family confidants. This became six weeks of “do I do it, or don't do it.” Beruff and his wife discussed the inevitable media dumpster-diving into their pasts.
But Janelle was encouraging. “He has a record, and it shows people how he has stood on his principles,” she told the Business Observer.
When Beruff sought counsel from his older sister and two close cousins in Miami, one of his cousins told him: “You have an obligation to do this. This doesn't happen to everybody.”
In December, Beruff traveled to Maryland to meet with the principals OnMessage, a Republicans-only political consulting firm that helped Scott's re-election and the elections in 2014 of three first-time U.S. Senate candidates — Cory Gardner of Colorado, Tom Cotton of Arkansas and Thom Tillis of North Carolina.
Beruff sought OnMessage partner Curt Anderson's opinion on whether he would make a good candidate. They talked for four hours.
Asked what struck him about Beruff, Anderson says: “His principles. When you hear him talk, here's a guy whose attitude is how to fix things. He's got the right mindset. Pleasant, fun guy, built success on his own.”
Anderson liked one other quality: Beruff wasn't one of the elected political class.
Beruff waited three days. If OnMessage declined, he says, he was ready to drop out and not run.
It's the economy
For two months, Beruff has been preparing for the journey ahead.
He has honed his campaign message to focus on the issue that has mattered most to him while serving on three public boards — taxpayers' money.
“The economy is the key point without a doubt,” Beruff told the Business Observer. “Small businesses are the engine to our economy, and they and the middle class have been getting hammered. Because of things like Obamacare and all the regulations, small businesses can't raise salaries.”
Beruff also says the nation's security will be prominent in his campaign. But that, too, is tied to fiscal management. “You cannot be the most powerful nation unless you can afford to pay for it,” he says.
Getting that message out and becoming a household name among Florida's 4.21 million registered Republicans will be Beruff's challenge for the next six months.
“Florida is one of the most expensive states and one of the most difficult,” says Anderson of OnMessage. Without specifying how much of his money he will contribute to his campaign, Beruff says it will be “as much as necessary. But all the money in the world won't get you elected if the public doesn't relate to my message.”
On Monday, Beruff said, the journey begins.
“He's going to be shocked,” says former state Sen. Mike Bennett. “You're thinking, 'I can go three rounds, no problem.' But it's not three rounds. It's 10. Everything in his life is going to come out.”
“He has no idea what he's really getting into,” says former Florida Congresswoman Katherine Harris, who ran for the Senate in 2006. “Florida is so disparate” — in geography, its culture and people. “It's 13 unique regions,” she says, “and each one might as well be a different state entirely.”
Can Beruff be Beruff — the blunt, direct CEO? Bennett and Beruff's mentor, Pat Neal, say they separately advised Beruff to handle every question directly. “Don't skate around it,” Bennett told him. “The voters today say 'I just need someone to tell me the truth.'” Advised Neal: “Be yourself.”
“Carlos intends to be Carlos,” says Neal, Beruff's longtime mentor. “He will say what he thinks.”
Driven businessman on the road to driven politician.
Joan Lunden's advice
When Carlos and Janelle Beruff began discussing Beruff's run for the U.S. Senate last October, not surprisingly, their biggest concern was the effect it would have on their family.
She knows what to expect from the media coverage — every aspect of her and their lives would be exposed. She and Beruff vacillated for a month and a half.
But Janelle now says she has put aside her worries.
“I went to a luncheon and heard (TV personality) Joan Lunden,” Janelle says. “She spoke about how you need to remain positive. At that moment, I decided I'm not going to worry. I'm going to have a positive attitude.”
Janelle says that on the night she and Beruff began discussing the possibility of his running, the first thought that came to her was: “Wow, if Carlos does this, I really think he can win.”
The other candidates
Altogether, the Florida Division of Elections lists 24 candidates vying for Sen. Marco Rubio's seat. With Carlos Beruff's entrance Monday, the count goes to 25 — nine Republicans, seven Democrats, seven No Party Affiliates, one Libertarian Party of Florida.
Here is a snapshot of the leading contenders so far among the Republicans:
Carlos Lopez-Cantera — Appointed lieutenant governor in January 2014, elected in November 2014 on the Scott-Lopez-Cantera ticket; first Hispanic to hold the position; from 2004 to 2012, served as a state representative from Miami; in 2012 elected Miami-Dade property appraiser; graduate of the University of Miami, business administration; prior to public office, worked in his family's Miami-based real estate and development firm.
David Jolly — Republican congressman representing Pinellas; elected to fill the seat vacated by the death of Congressman Bill Young; native of Dunedin; graduate of Emory University and law degree from George Mason University; former lobbyist and former aide to Rep. Young; chose to run for Senate after redistricting converted his district to one that leans heavily Democratic.
Ron DeSantis — Republican congressman representing Florida's northeast coast; native of Jacksonville; graduate of Yale and Harvard Law; served as Navy JAG officer, deployed to Iraq during the 2007 troop surge as an advisor to a U.S. Navy SEAL commander; regarded as a Tea Party conservative, endorsed by the Club for Growth.
Todd Wilcox — Grew up in Tampa; eight-year Army veteran; former Green Beret and major in the Army's Special Forces; served as rifle platoon leader in 101st Airborne Division in Desert Storm; former CIA officer, serving in the Middle East and in counter terrorism task force; founded Orlando-based Patriot Defense Group in 2006, a defense contractor; since expanded to a holding company, Patriot Capital LLC, which provides security, intelligence and logistical services to businesses and the U.S. government.