Officials with the Cary-based software company SAS have acquired a role in operating the state-owned Southport Marina even though SAS’s involvement was not publicly mentioned in January when Gov. Mike Easley coaxed a new lease through the approval process.
After repeated requests by Carolina Journal, SAS officials refused to disclose the new ownership of Southport Marina, Inc. (SMI), the company that now has control of the property until 2040.
The Town of Southport sold the 45-acre site on the Cape Fear River to the state in 1963. The property, under control of the State Ports Authority, is leased to SMI to operate for a profit. Unhappy with the previous owners of Southport Marina, Inc., state officials negotiated a tentative new lease contingent on the company being sold to new owners, but the owners have never been clearly identified. The state never put the contract for operation of the port out for bids.
Under the terms of the lease the state will receive $160,000 per year with a 3 percent increase per year after that. SMI must spend at least $2.5 million on improvements and be responsible for all maintenance, repairs and construction of new buildings. Jerry Miller, a member of a group of Southport citizens opposed to the new lease, told CJ that the current annual revenue stream from slip rentals and other services is estimated to be between $1 and $1.5 million, but CJ has been unable to confirm those numbers from another source.
On Jan. 12 the Council of State approved a new lease contingent on the sale of SMI to new owners. The private sale of the company took place sometime in February. The council, made up of the governor and the other nine independently elected executive branch officials, is required to approve most state real-estate transactions.
Public records filed with N.C. Secretary of State after the lease was approved show that SAS Chief Financial Officer Donald R. Parker and Chief Legal Council John Boswell have roles in two companies involved in the marina operation. Parker, the SAS CFO, along with Cary developers Julian Rawl and Tim Smith, appeared as member managers in the first annual report for Southport Acquisitions LLC, filed with the NC Secretary of State’s office on Feb. 22. The principal mailing address for the LLC, or limited liability corporation, is SAS Campus Drive in Cary, the corporate headquarters of the software company
Boswell appeared as the organizer for a new company named Southport Marina Operations, LLC on Articles of Incorporation filed with the N.C. Secretary of State on June 6, 2006. Both Boswell and Parker listed their address as SAS Campus Drive in Cary.
In a phone interview with CJ Boswell referred all questions to Parker. Parker told CJ that SAS as a company was not involved in the Southport Marina. When asked who were the investors or owners of the new marina companies, Parker responded, “I will not disclose the investors. I can’t give you the names.”
After repeated requests, he refused to disclose who at SAS had a financial interest in any of the companies involved in the marina. When asked if taxpayers had a right to know who was operating the marina, he declined to answer the question. When asked if SAS CEO James Goodnight owned all or a portion of Southport Marina, Inc., Parker again declined to answer.
As the Council of State was about to vote on the new lease for the new owners of Southport Marina, Inc. the only owners mentioned in news stories were Julian “Bubba” Rawl, Tim Smith, and Charles “Nick” Garret, Jr. All three are real estate developers. Smith and Rawl are from the Raleigh area while Garrett is from Wilmington. Rawl and Smith have acknowledged a role in the project but Garrett’s role remains unclear. Prior to the vote on the new lease, and for several weeks after the vote, Garrett was listed in several news stories as a new owner of SMI.
A March CJ news story suggested Easley might have had a conflict of interest in the lease approval process by not disclosing his personal business relationship with Garrett, who substantially remodeled Easley’s Southport home in 2001. Since that story was published, through various spokespersons, Easley has claimed that Garrett is not one of the new owners.
Raleigh attorney Gary K. Joyner, representing the owners of Southport Marina, Inc. (SMI), sent a letter on June 6 to Easley’s legal counsel C. Ruffin Poole stating that “as of Jan. 10, 2006 through the date hereof, Mr. Nick Garrett was not and is not involved, either directly or indirectly, in the ownership or operation of SMI or the Southport Marina.”
“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,” said Easley as reported by the Wilmington Star-News the day after the lease deal was approved. But Easley has never made it clear who all the owners are. Monday when CJ asked Easley spokeswoman Sherri Johnson if the governor knew the names of all the current owners of SMI, she did not respond directly to the question but sent a copy of Joyner’s June 6 letter about Garrett not being involved.
Another letter dated Feb. 17 from Joyner to Assistant Attorney General Dennis Meyers, who represents the N. C. Ports Authority, confirmed that the ownership change of SMI had been completed. Rawl, Smith and Garrett were noted at the bottom as receiving copies of that letter. CJ reached Joyner at his office late Monday to ask him why Garrett received a copy of that letter if he was not involved in the project at that time. “That is attorney-client privilege,” he said.
When asked to disclose the entire ownership of SMI, Joyner said, “I have no comment about who the owners are or are not. I have no authority to discuss who owns private entities.”
The Committee to Save the Southport Marina filed a complaint with State Board of Ethics about Easley’s role in the new lease. The complaint claimed Easley should not have participated in the lease decision since Garrett had remodeled Easley’s home. Easley’s office said he did not actually vote on the lease, but merely presided over the meeting, and that Garrett was not involved in the marina. The board dismissed the complaint at a June 7 meeting that was open to the public. Joyner’s Feb. 17 letter was not disclosed at the hearing.
Corporate filings available from the N.C. Secretary of State usually provide clues as to who owns, controls, or is involved in a company, but full disclosure is not required. Some documents such as the articles of incorporation for Southport Marina Acquisitions, LLC, filed in July 2005, identified only attorney Gary K. Joyner as the organizer. No other names were listed as investors, managers or members.
George Jeter, spokesman for Secretary of State Elaine Marshall, explained to CJ the limits of the information that companies are required to file with his office. “For the first LLC filing you only have to list an organizer. For any LLC the officers need to be listed on annual reports, but not necessarily the owners. We are putting into the record the corporate structure, not the ownership structure,” said Jeter.
CJ has not yet found a Council of State member who was aware of involvement by SAS officials in the marina deal. “There was no mention of SAS or anyone affiliated with SAS that I can recall. This is the first I hear of SAS,” State Auditor Les Merritt said when being interviewed for this story.
Labor Commissioner Cherie Berry also said she had not heard about SAS involvement in the marina until interviewed for this story. Spokesmen for Secretary of State Elaine Marshall and Lt. Governor Beverly Perdue were also asked about SAS. Both said they would try to get an answer but neither had replied at press time.
Garrett told the Wilmington Star-News on June 2 that he would be the general contractor of a new restaurant at the marina.
But back in February Rawl said, “We’re not in the restaurant business. We’re not eligible under the state to do anything but run the marina,” reported The State Port Pilot.
When asked about Garret’s restaurant comments, SAS’s Parker told CJ last week that Garrett was not involved in the project and was not building a restaurant. He then asked CJ to forward any information to the contrary. After receiving a copy of the news article he called CJ to reiterate that Garrett is not involved in the project in any way. He offered no explanation for Garrett’s comments and said he had never met Garrett.
Owed to Rawl
Even though Garrett’s role in the project remains unclear, he does have a significant financial relationship with Rawl and Smith. On Oct. 6, 2005, doing business as Jamesborough Properties, LLC, Garrett granted Rawl and his partner Tim Smith a deed of trust secured by a small housing project in Wilmington named Jamesborough Court Condominiums. The amount of the loan to Garrett was $2,900,000.
In an affidavit signed by Garrett on Feb 22, 2006, and filed in conjunction with a divorce property settlement case, Garrett listed his personal debts, which included two unsecured loans totaling another $1,050,000 plus interest to Rawl that Garrett received in March 2005. Garrett stated the money was needed to buy out his wife’s interest in his development company, NGDI. He also stated the money “must be repaid in the next year.”
Don Carrington is executive editor of Carolina Journal.