For the past year the issue of exactly who controls the state-owned Southport Marina has proved to be controversial for Gov. Mike Easley. Tomorrow, Labor Commissioner Cherie Berry hopes the public will learn who will benefit from a new lease that Easley coaxed through the approval process in January.
Berry told Carolina Journal last week that she has asked Easley’s budget Director David McCoy to place the ownership issue on the agenda of the July 11 Council of State meeting. She wants the individuals involved in the marina deal positively identified because she said the public has a right to know. She also said full disclosure is necessary so state officials can avoid a conflict-of-interest when voting on real estate matters.
Proof of ownership remains a secret because the lease does not require the names of new owners to be revealed.
From July 2005 through Feb. 2006 several news reports stated that Wilmington real estate developer Charles ”Nick“ Garrett, and his two partners, Raleigh-area developers Julian ”Bubba” Rawl and Tim Smith, were in control. Since March, Easley’s office has insisted that Garrett is not involved. Recent news reports have identified officials with the Cary-based software company SAS as controlling the facility. But confirming the actual owners is a challenge to reporters since the identities of individual stockholders are not listed on any public documents.
The marina property is under the control of the North Carolina State Ports Authority (NCSPA), which leased it to Southport Marina, Inc. (SMI) to operate for a profit. In May 2005 the NCSPA received an unsolicited bid to buy the marina property and later sought proposals from others who had expressed interest in previous years. In July, Garrett, who had made one of the offers to buy the property, announced he and his partners had also bought SMI.
Talk of a potential sale raised concerns among many Southport residents. Easley intervened in August and declared that the marina was not for sale. But NCSPA officials began negotiating a new lease with SMI with the understanding that SMI would be sold to new owners. NCSPA approved a new lease on Dec. 29, subject to approval by the Council of State.
Awarded without a competitive bid process, the new lease turns over control of the 45-acre property to the new owners of the SMI through the year 2040. The Council of State, made up of the governor and the other nine independently elected executive branch officials, is required to approve most state real-estate transactions. On Jan. 10 the council approved the new lease contingent upon the sale of SMI to new owners. Berry and State Auditor Les Merritt voted against the new lease. Attorney General Roy Cooper and Superintendent of Public Instruction June Atkinson were absent from the meeting.
Garrett’s involvement became controversial for several reasons. He was a major contributor and fundraiser for Easley’s campaigns for governor. Easley appointed him to the North Carolina Architecture Board and the Clean Water Management Trust Fund Board. The N. C. Department of Transportation awarded Garrett a state license tag franchise in 2003 even though a DOT official said a new franchise was not needed.
But Garrett had another significant relationship with Easley. Five months after Easley became governor, Garrett’s construction company began a substantial remodeling of Easley’s Southport home. Easley did not disclose the remodeling job during the council meeting when the lease was approved.
In March, after Carolina Journal began investigating the details of the remodeling, Easley spokeswoman Sherri Johnson claimed Garrett was not involved in the ownership of the new company. In spite of her claims at least three documents have surfaced that place Garrett in the middle of the deal.
The day after the Council of State approved the lease, the lease document was transmitted to Garrett. “As I am sure you are aware, the Council of State approved the lease between the State Ports Authority and Southport Marina, Inc. on Tuesday, January 10. However, the approval of the lease was made contingent upon the completion of the transaction whereby ownership of the corporation is transferred to you and your associates,” wrote Assistant Attorney General Dennis Myers, an attorney assigned to the NCSPA.
Garrett was also marked for a copy of a Feb. 17 letter from SMI attorney Gary K. Joyner to Meyers stating the capital stock of SMI had been transferred to Southport Acquisitions, LLC.
A third document also referenced Garrett’s role. “As you all know by now, investors Tim Smith, Julian ‘Bubba’ Rawl and Nick Garrett purchased Southport Marina as of January 2006 and subsequently assumed the property lease from the North Carolina Ports Authority,” stated a Feb. 28 letter From SMI to all marina boat slip holders.
Easley’s office and SMI representatives claim all the references to Garrett were mistakes. But, as if to provide additional insurance against conflict-of-interest claims, Johnson maintains Easley did not vote on the new lease. The “not voting” claim may be irrelevant since the lease document states, “the execution of this Lease has been duly approved by the Governor and Council of State at a regularly scheduled meeting in Raleigh, North Carolina, on the 10th day of January, 2006.”
On June 27 Carolina Journal and the N&O published separate stories revealing that officials with SAS, the Cary based software company, were involved in the marina. Speaking to the N&O, Rawl said SAS executives Jim Goodnight and John Sall were the new owners but the men wanted to conceal their involvement with the project. According to records from the N. C. Secretary of State, SAS officials have set up at least three new companies that have some control over the marina.
Last year Southport citizens concerned about the future of the marina formed The Committee to Save Southport Marina. The group’s main concerns were that a new operator would eventually take over the place, build condos on the site and raise fees so high that many people could not afford to use the facility.
On March 30, 2006, two members of the committee filed an ethics complaint against Easley over the way the new lease was handled and over Easley’s relationship with Garrett. The Ethics Board, where all appointees serve at the pleasure of Easley, reviewed the complaint but dismissed it in June.
Don Carrington is executive editor of Carolina Journal.