News: CJ Exclusives

Easley Didn’t Disclose Relationship Before Vote

Governor had home remodeled by man who won marina contract

Gov. Mike Easley failed to disclose a personal business relationship — a $150,000 home-remodeling contract — with Wilmington developer Charles “Nick” Garrett, Jr. before calling for a Council of State vote to approve a lease of the state-owned Southport Marina to Garrett and his associates, Carolina Journal has learned.

In addition to involvement in the marina and the remodeling of Easley’s Southport home, the well-connected Garrett managed to get a plum automobile license tag franchise in Wilmington from the N.C. Department of Transportation despite a recommendation by a DOT official against granting the franchise.

The vote on a new marina lease came at the January 2006 monthly Council of State meeting. The council is composed of the governor and the other nine independently elected state officials such as the state treasurer, lieutenant governor, and agriculture commissioner. By law, the council is required to approve state real estate transactions.

The council made the new marina lease contingent on the sale of Southport Marina, Inc. to Garrett and his partners, Raleigh-area developers Julian “Bubba” Rawl and Tim Smith. The council awarded a new 15-year lease with extensions that would tie up the property through 2040. It was Nick Garrett Development that remodeled Easley’s Southport home shortly after Easley became governor in January 2001.

On Friday, Easley spokeswoman Sherri Johnson told Carolina Journal, “The governor did not vote to approve the lease. The governor only votes in the event of a tie and did not vote on this matter.”

Johnson also maintained that Garrett is not a principal in Southport Marina, Inc. This is contrary to news reports for several months that have referred to Garrett as one of the new owners of Southport Marina, Inc. The News & Observer, The State Port Pilot of Southport, and the Wilmington Star-News all have reported Garrett’s involvement with the company, and Garrett has never said anything publicly to the contrary. Johnson did not reveal the source of her information.

If Garrett’s role in the project has changed, it was recent. “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 State Ports Authority,” stated a Feb. 28 letter from Southport Marina, Inc. to all marina slip holders.

Garrett has built luxury condos across the street from the marina and has been trying to acquire additional adjacent property. He tried to buy the marina property in 2005.

At the January meeting one agenda item was a new lease for the state-owned property known as the Southport Marina. The 46-acre site, under control of the N.C. State Ports Authority, had been leased to a private operator, Southport Marina, Inc.

State Auditor Les Merritt, when told about Easley’s business relationship with Garrett, said it was not important whether Easley voted on the item or not. “Maybe he didn’t vote but he was certainly involved in the discussion,” said Merritt. Merritt voted against awarding the lease.

Voting in favor of the lease were Lt. Gov. Beverly Perdue, Insurance Commissioner Jim Long, Secretary of State Elaine Marshall, State Treasurer Richard Moore, and Agriculture Commissioner Steve Troxler. Labor Commissioner Cherie Berry and State Auditor Les Merritt were opposed. Attorney General Roy Cooper and Public Instruction Superintendent June Atkinson were absent.

“We all recognize that the previous lease was a bad one, but all new people have come in. These are different people you’re dealing with, though the company name is the same,” Easley said, as reported by the Star-News. The newspaper also reported that the vote was 6-2, apparently including Easley as a voting participant.

The vote angered a group of Southport residents who traveled to Raleigh to attend the meeting. “That council is extremely ethically and morally bankrupt — the group personifies that,” said Southport resident Woody Wilson as reported by the Star-News. Wilson and other opponents told CJ last week they believed the agreement was a sweetheart deal for the developers who were buying Southport Marina, Inc.

“There was no doubt that the governor was pushing for the Garrett group as the answer for the future of the marina,” Wilson said.

Several news reports indicate Easley has been closely involved in discussions over the future of the marina. In May 2005 the Ports Authority received an unsolicited offer to purchase the 430-slip marina for an undisclosed amount of money. The Ports Authority never disclosed who made the first offer. The authority decided to seek bids from other parties. It received bids ranging from $2.5 million to $16 million. Garrett offered $5.1 million.

Several local residents expressed concern that a private owner would convert much of the land to condos and significantly raise the fees for renting a boat slip. In the midst of the discussions on the future of the marina, Garrett and his partners began negotiations to buy Southport Marina, Inc., the company that held the existing lease.

On July 29, 2005 the Wilmington Star-News reported that N.C. State Ports Authority Board Chairman Carl Stewart “learned of the impending leaseholder change during a call from Gov. Mike Easley’s office late Wednesday. That call followed a public hearing in Southport regarding the possible sale of the property.” Shortly after that news story appeared, CJ contacted Stewart and asked him to identify the person from Easley’s office who had called him. He refused to identify the person.

On Aug. 4 Easley released a statement declaring that “the state marina at Southport is not for sale.” In December 2005 the City of Southport offered $6 million for the property. The Star-News reported that “if given the chance” Garrett “would beat the city’s offer.” The Ports Authority rejected the city’s offer.

The port deal comes amid state elections board hearings and legislative concern over the ethics of state officials.

Garrett and his close associates are significant political contributors to Easley and other Democrats. An analysis of campaign finance reports shows they have given more than $300,000 to Democrat campaigns and committees since 2000, including more than $60,000 to Easley’s campaigns.

Ethics guidelines ‘probably not’ applicable to governor

“Our citizens have a right to demand and expect the highest ethical conduct from their leaders,” said Easley at a March 2 press conference announcing his appointment of retired Superior Court judge Robert Farmer as chairman of the N. C. Board of Ethics. Easley has also asked Farmer to make recommendations to strengthen the state’s ethics law prior to the May legislative session. The Ethics Board is the state’s primary conflict-of-interest watchdog for high-level employees and appointees in the executive branch of state government.

Ethics guidelines for all employees under the control of the governor are outlined in Executive Order No. One that was issued by Easley on Jan. 12, 2001. The guidelines state, “Officials should be prepared to remove themselves immediately from decisions, votes, or processes where even the appearance of a conflict of interest exists.”

During a phone interview on March 9, Farmer said that any Council of State member who had a conflict-of-interest concern should consult with the Ethics Board. “All they have to do is ask for an Advisory Opinion,” said Farmer. When asked whether Easley was subject to his own ethics guidelines he said, “Probably not.”

“I don’t know if that has come up before the board or not. I’ll ask them at the next meeting,” he said. Farmer offered no comments after being informed about Easley’s failure to disclose his relationship with Garrett prior to the discussion to approve the Southport Marina lease.

The remodeling project

In 1985, Easley and his wife Mary purchased a home on the Cape Fear River in Southport, built in 1970, for $125,000. At the time Easley was the local district attorney. The Easleys bought a home in Raleigh after he became attorney general in 1992, but they kept the Southport home.

On June 6, 2001, six months after Easley became governor, Nick Garrett Development applied to the Town of Southport for a building permit to remodel Easley’s Southport home. Garrett has been building new homes in the Wilmington and Wrightsville Beach area for more than 20 years. CJ was unable to determine how extensive his home-remodeling business is in the Southport area.

The permit application stated the job involved remodeling the Easleys’ existing home, removing an existing room, and adding 824 square feet of living space. The stated value of the project was $150,000. Public records show the project was completed in December 2001. The Brunswick County property tax office currently values the property at $643,600 — $450,000 for the land and $192,670 for the structure.

The renovations apparently were substantial. “In my opinion it was a significant remodel based on the size of the house and the value of the permit,” Brunswick County Tax Administrator Boyd Williamson said. Williamson also noted that his office would have inspected the home twice in 2002 — once after it was completed and again for the normal revaluation cycle — indicating the relationship between the improvement project and the market value of the property should have been accurate at the time.

Attempts to discuss the renovation project with Garrett or Easley were unsuccessful. Garrett did not return phone messages left with an assistant at his Wilmington office. Easley spokeswoman Johnson said, “Any renovation of the Governor’s private residence would involve a personal business transaction and I do not have any information about it.”

The license-tag franchise

While Garrett’s current involvement in the Southport Marina project remains unclear, his successful efforts to obtain a state license tag franchise are more certain.

Prior to 2003, New Hanover County had one license-tag franchise located in Wilmington, and there was another located close by in Hampstead in Pender County. Since citizens are increasingly renewing their registrations online or via the mail, the demand for services from a physical location is decreasing.

In September 2003 Garrett applied to the Department of Transportation to open a license plate office franchise in Wilmington. Records show that on Oct. 10, 2003 Motor Vehicle Registration Field Supervisor Linda Parke met with Garrett and his father Charles N. Garrett, Sr. at the Garrett Development Office to discuss Garrett’s request to open an agency.

In a memo to her supervisor, Tonia Stevens, Parke summarized the meeting:

“Mr. Garrett [Sr.] stated that now he had the information I had provided he would have to do additional studies. I mentioned to him that in most likelihood the Hampstead Agency would feel the impact of the opening of another office. I asked him why he wanted to open up an agency, his reply, it would give him some place to go … I do not recommend that this agency be opened at this time. Its opening would have a negative impact on an already struggling agency less than 15 miles away. I feel that we should help the contract agents who are representing the state in a very positive manner,” she concluded.

On Oct. 28, 2003 the N. C. Department of Transportation awarded Nick Garrett, Jr. a license tag office franchise for a location at the Market Plaza Shopping Center, despite Parke’s recommendation against it. The new location is approximately five miles from the other Wilmington franchise.

The NCDOT file on the Garrett franchise obtained by CJ contained no documentation on the need for an additional office, nor any indication on who made the decision to award a franchise to Garrett. In July 2004 Garrett’s father applied to be the contractor and was granted a contract to run the franchise in the same location.

Family, friends, money, and appointments

On the same day in December 2005, Lanny Wilson, his wife Jill, and his sister Linda Wilson gave a total of $10,000 to Lt. Gov. Beverly Perdue. On the same day in November 2005 Nick Garrett gave $4,000, and Linda Wilson gave $1,000 to Attorney General Roy Cooper.

Like many major political donors, Garrett and the Wilsons are involved in several state boards and commissions. Easley appointed Garrett to the N. C. Board of Architecture and to the Clean Water Management Trust Fund Board.

Easley appointed Lanny Wilson to the N. C. Real Estate Commission and later to the N. C. Board of Transportation. State Sen. Marc Basnight appointed Lanny Wilson to the N. C. Turnpike Authority Board and his mother Laura to the N.C. Ports Authority Board.

Garrett has a close relationship with the Wilson family. Garrett shares an office building with Lanny Wilson. Garrett, Lanny Wilson, and Linda Wilson are partners in Southport Trading Company, LLC, the company that built the Village at Southport, advertised as “luxury condos” across from the Southport Marina.

Public records indicate that Garrett and Linda Wilson have a possible relationship other than business. In June 2005, Garrett’s wife Lee Brewer Garrett filed a complaint against Linda Wilson in New Hanover County Superior Court. Garrett and his wife Lee now live apart.

The complaint alleges that Linda Wilson engaged in sexual relations with Nick Garrett on numerous occasions since December 2003. Lee Garrett seeks to recover damages in an amount determined by a jury. In her response to the complaint, Linda Wilson refused to “admit or deny” allegations about sex, but acknowledged that she and Garrett took a trip to Maine together and appeared together at several Wilmington-area events in the spring of 2005.

Garrett and his close associates, including the Wilson family, are substantial contributors to Democrat political campaigns. An analysis of campaign finance records shows they have given more than $300,000 since 2000. Recent contributions were made to Council of State members.

Don Carrington is executive editor of Carolina Journal.