News: CJ Exclusives

Easley Ends Suit, Gets House Deal

Bald Head developer inks deal year after beach-erosion suit settled

In June 1996, one year after N.C. Attorney General Mike Easley settled a lawsuit and granted exceptions to state beach-erosion laws for homeowners at Bald Head Island, the island’s developer sold Easley and his brother a new home — for at least $70,000 less than a comparable home.

The Easleys’ $250,000 purchase is now valued at $1,129,270.

The lawsuit against the state was filed by millionaire Walter Davis, who was seeking to stop beach erosion at his Bald Head Island home. Davis, other beachfront homeowners, and development company Bald Head Island Limited all benefited when the attorney general’s office settled the lawsuit in 1995. The state made an exception to environmental laws and agreed to allow beach protection structures to be installed.

Bald Head Island Limited sold the new home to Easley and his brother Henry and their wives. Public records show a purchase price of $250,000 — $77,000 less than a comparable home on the same street, and sold at the same time by the same developer.

The Bald Head Island beach erosion issues were detailed in a 1996 Democracy North Carolina report, “The Pollution Lobby: Shoreline for Sale, Whatever Happened to the Year of the Coast?” The report claimed that political pressure was behind the state’s settlement with Davis. The organization is a nonprofit, nonpartisan organization that studies the flow of political money.

The report made no mention of the Easleys’ real estate transaction. Bob Hall, executive director of Democracy North Carolina, told Carolina Journal last week that he did not know about the Easleys’ home purchase until he was told by a reporter. The 1996 report can be found on the organization’s website.

In news stories published last year, CJ reported two other favorable real estate transactions that developers gave Easley.

In 2001, shortly after Easley started his first term as governor, Wilmington real estate developer and builder Charles “Nick” Garrett began remodeling the Easleys’ home at Southport. Garrett or someone else provided construction financing for the $250,000 project. Builders normally do not finance the construction of projects that large. Easley took out mortgages on the property, but not until eight months after the project was completed. The home has a current tax value of $1,149,510.

Easley later appointed Garrett to the N.C. Board of Architecture and to the Clean Water Management Trust Fund Board. The N.C. Department of Transportation awarded Garrett a franchise for a state license tag office, even though a DOT supervisor said a new office was unnecessary.

In December 2005, the same year Easley started his second term as governor, coastal real estate developer Randy Allen sold Easley a choice waterfront lot in the Cannonsgate community in Carteret County. Public records show that Easley paid $549,880. A recorded deed of trust shows he secured a $494,000 loan from Branch Banking & Trust Company. One year later the county tax office revalued the property to $1,198,245. Allen, whom Easley appointed to the Wildlife Resources Commission earlier in 2005, has four large coastal projects under development in North Carolina.

Easley also owns a home in Raleigh. He has mortgages on all properties except the Bald Head Island home. Easley’s press office will not make him available for an interview and will not respond to questions from CJ about the governor’s real estate transactions.

Bald Head Island

Bald Head Island is an incorporated village in Brunswick County with its own municipal government. It is normally accessible only by private boat or a private passenger ferry from Southport open to the public.

Bald Head was a separate island until 1999 when Hurricane Floyd deposited enough sand to turn it into an extension of the Fort Fisher State Recreation Area. It is now connected to the southern end of New Hanover County by a thin strip of land. Four-wheel drive Bald Head Island Police vehicles periodically patrol the connecting run along the beach, but signs warn private vehicles to stay away.

It is considered one of North Carolina’s most exclusive resort areas. Only 2,000 of its 12,000 acres are scheduled for development. The balance will remain natural areas. There are no high-rise buildings and no billboards. With the exception of a few construction and emergency vehicles, there are no cars allowed on the island. Transportation is by foot, bicycle, or golf cart.

In 1983 Bald Head Island Limited, owned by the George P. Mitchell Family, took control of the island. The company has more than 300 employees involved in real estate development, sales, and island operations.

1995 Bald Head Island environmental issues

According to Democracy North Carolina’s “Shoreline for Sale” report in 1996, the following took place:

Campaign reports show that Bald Head Island landowners donated at least $800,000 to state-level politics from 1989 to 1995. Gov. Jim Hunt received $100,500 and Easley received $50,600. Davis gave $169,500 during that period, including $12,500 to Easley.

Bald Head Island Limited bought the undeveloped land from Davis and his partner, James Harrington, in 1983.

The southern beach of Bald Head Island was rapidly eroding because of natural forces, possibly combined with the regular dredging of Wilmington’s shipping channel. Davis and other Bald Head leaders advocated periodic sand renourishment and the construction of hard structures, or groins, to impede the erosion. The groins are large, sand-filled tubes stretching 300 feet from the beach into the ocean. North Carolina had banned sea walls and other hard structures since 1985, and only a few exceptions had been made.

Frustrated with efforts to protect the beach in front of his beach house, Davis sued the state in 1994. Easley’s office led the state’s defense.

The same year, Bald Head’s government applied for a permit to renourish the beach. The state agreed to the renourishment, but not to the groins.

In early 1995, Davis met with Hunt to make his case for the hard structures. Later, Davis met privately with the attorney general’s lawyer leading the state’s defense. An agreement was worked out in which Davis agreed to drop the lawsuit and the state agreed to allow the groins along the beach as well as to lobby the U.S. Army Corps of Engineers to provide the sand.

By May 1996 the sand and 16 groins were in place. Periodic renourishment continues today.

CJ asked the N. C. Department of Justice for access to the file on the Davis lawsuit, but department officials said they could not find the file. “From what I have been able to find out, it appears the lawsuit was never filed, so our office would not have had a case file on it,” spokeswoman Noelle Talley said after searching for the file.

1996 beach home sale

In April 1985 Easley and his wife, Mary, bought a waterfront home at the mouth of the Cape Fear River in Southport. At the time, Easley was district attorney for Brunswick, Columbus, and Bladen counties.

In 1993, after he was first elected attorney general, Easley, and his wife bought a home in Raleigh. They consider the Southport home their primary residence. Bald Head Island sits about two miles across the river from the Easleys’ Southport home.

The Easleys’ home on Isle of Skye Crescent at Bald Head Island comprises 1,336 square feet and has four bedrooms. It sits on a bluff and appears to have an ocean view. A state-owned maritime forest preserve adjoins the rear of the property.

There is no recorded deed of trust associated with the purchase, indicating that no money was borrowed. Easley’s economic interest statements show no rental income from the property, indicating the property is strictly for the use of his and his brother’s families.

When the completed home was added to the tax records, the Brunswick County Tax Office assigned a value of $329,440, or $79,440 more than the amount the Easleys paid for the home.

The day after the Easleys’ deed was recorded, a deed from Bald Head Island Limited to another island resident, Donald C. Kolasch of Maryland, was filed. The 1,348 square-foot, four-bedroom Kolasch home was also new and situated on the same street as the Easley house. Records show Kolasch paid $327,000. The tax value assigned to his home was $335,360, or $8,360 more than he paid.

As of Jan. 1, 2007, the tax office conducted a countywide revaluation and placed the market value of the Easleys’ home at $1,129,270. The new value of the Kolasch home was set at a nearly identical $1,124,750.

Last week Bald Head Island Limited’s Sales Director Jeff Leonard told CJ he would research the price difference issue and try to provide an explanation. He subsequently called and left a voice message that said even though the properties were the same size, the Easley property sold for a lower price because it doesn’t have the same view. “Our company will stand behind anything we have done,” he added.

Don Carrington is executive editor of Carolina Journal.