A lot of people in New Bern are furious at Governor Mike Easley and Lt. Governor / Governor Candidate Bev Perdue over a plan to sell boat slips at the marina at the Sheraton. To understand why, you need to know about the ethics complaint filed because of a similar deal involving the marina in Southport.
The Carolina Journal has a whole series of fascinating articles about how changes at the state- owned marina in Southport led to an ethics complaint against Easley. (Thanks to the hard-nosed research of Don Carrington.) The ethics complaint was of course dismissed by the Governor’s friends, but most members of the public who learn the facts find the transaction fishy.
(“To say that a fish rots from the head down is to say that "bad leadership leads to a bad organization or that a corrupt organization is the result of a corrupt ruler or leader."”Merriam-Webster Online)
The Carolina Journal’s archive describes the Southport marina deal this way:
“Gov. Mike Easley was the subject of a complaint, now dismissed by the N.C. Board of Ethics, over his relationship with owners of Southport Marina, Inc., who received a long-term lease to operate the state-owned marina. Opponents of the lease called it a "sweetheart deal" for Easley's friends. Meanwhile, business partners of those involved with the marina also own a coastal development called "Cannonsgate," where Easley purchased a valuable lot at a seemingly bargain price.”
The Southport reports contain too many disgusting items to even begin to list them all, so I’ll just recap the basics. A Mr. Garrett, with whom Easley had prior business dealings and who, with his associates, is described as a well-known contributor to Democratic candidates, was building luxury condos in Southport across from the marina and wanted to buy the marina. Unfortunately, when the Ports Authority solicited bids, he only bid $5.1 million and the high bid was $16 million.
Apparently the marina was only for sale to the right buyer and the wrong buyer had the high bid, so instead Mr. Garrett and his associates were given a lease that permits them to control the marina until 2040. Since bidding didn’t work for them, no bids on the lease were even solicited. The well-documented efforts to conceal the identities of the principals make it clear that the parties to the deal had something to hide, and it’s a shame the major papers didn’t do more to help the Carolina Journal expose the sleazy facts.
But now the press has a chance to make up for past transgressions, because a deal that looks even shadier is being pushed through right in Bev Perdue’s hometown, adjacent to the amazing bridges that make drivers from other areas wonder who managed to misallocate so much money.
Not surprisingly, as in Southport, the folks developing condominiums near a marina would like to be able to market slips at the marina. Some suggest they would like to be able to convert the Sheraton to condominiums in the near future. It is hard to see how either could be done under the terms of the development and operational agreement, but as in Southport, you never know what might happen.
Watching insider real estate deals is like looking at one of those paintings that shows one image morphing over time into another through a series of pictures. There’s never a noticeable change from one picture to the next, but, for example, in the first picture you see a cow and in the last you see a barn. Or, in the first picture you see an a public marina and in the last privately owned slips with the public excluded or in the first a hotel intended to work with the convention center and downtown businesses and in the last private condominiums.
In the case of New Bern, there is no question that the city acquired a large tract of waterfront property for urban renewal and wanted to sell most of it for commercial development, but there’s also no question that the city wanted a name hotel with an adjoining commercial marina operated by the same owners, both intended to serve visitors, support the convention center, and improve the business climate in downtown New Bern. They also clearly wanted to preserve a public easement all along the river on the property they owned. The city and the developers signed legal documents that were meant to accomplish those goals.
Recently the LLC which purchased the Sheraton and adjacent property in order to build condominiums has advertised “Deep Water Marina Slips Available for Sale.” While the ads now say “Not part of SkySail Condominiums,” the slips are clearly part of the marketing plans for the condominiums, just as in Southport.
And, just as in Southport, when local citizens objected to what they saw happening, they formed a group to raise public awareness. The New Bern Group is called New Bern Aware, and their web site offers a ton of information about the history of the project. The City of New Bern’s website also offers a helpful array of documents establishing the history of the project.
The city’s documents clearly show that the original agreement obligated the buyer of the property “to construct upon Tract No 1 a hotel facility consisting of no less than 100 rooms a meeting center with a main hall of no less than 10 000 square feet capable of seating comfortably no less than 400 persons 10 000 square feet of retail space and a 100 slip marina with related facilities and to manage and operate the same as hereinafter provided.”
Why then did the LLC that acquired Tract 1 along with all the rights and duties of the original developer not acquire the marina? Instead, the new deed went to Marina Business Ventures, LLC, along with any easements required to utilize the docks. Was that because of the plans to sell dockominiums?
While New Bern Aware has raised questions about the validity of the easement transferred to the new owners of the docks, it is hard to understand how the original agreement even permits the ownership and management of the marina to be severed from the hotel. Taking it a step farther, can the owner of the hotel sell the rooms as condominiums if they agree to continue to manage the property and encourage the owners to rent the rooms? That does seem to be where this is headed.
The management agreement also requires the hotel planned as part of the project to be operated “for so long as it is reasonably possible to do so, but, in any event, during a period of twenty-five (25) years from the date of closing.” Yet legal documents prepared for the town which discount the claims of New Bern Aware state: “It would be appropriate at the same time to ask the current owner of the Hotel to extend its commitment to operate under the flag of a national franchise for an additional period of time. This would be prudent in light of the separation of ownership now existing between the owner of the Hotel Trent Neuse Hotel LLC and the owner of the Marina Business Ventures LLC.”
Let’s see. The owners already have a contract calling for them to operate the hotel “for as long as it is reasonably possible to do so,” but apparently that requirement has been erased. Or does the owner get to independently decide what is reasonable?
Apparently they do as long as Easley/Perdue make the rules. The easement they had the state grant to enable the new marina owners to proceed with their plans “says the company should make temporary or transient dockage available, "but only to the extent determined by (the company) to be commercially practicable."” (New Bern Sun Journal, August 27, 2008)
So who are the investors in the New Bern deal and what are their ties to Perdue and Easley? And isn’t it funny that, just as in Southport, when private citizens made a stink about selling the slips, suddenly sales were out and long term leases were in. Déjà vu all over again.
Rules to remember: Conflicts of interest should be fully disclosed by public officials. People who try to hide business relationships probably have a good reason for doing so. Leopards do not change their spots. Criminals tend to be creatures of habit.
Editor's Note:
Fern Shubert (R-Union) is a former State Representative, State Senator, Town Manager and Candidate for Governer. She currently serves as the NC State Director of the National Right to Read Foundation. She frequently writes for The County Edge.
Your blogger grew up in New Bern and is a graduate of New Bern Sr. High, class of 1985. Her parents remain nearby and she still visits frequently and loves her hometown. She knew Beverly Perdue back when the Lt. Governor was a hospital administrator.
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