My report for today once again centered on the controversy that surrounds the Gallants Channel property (click this link for video). I can't tell you how many times I've reported on this controversial 36-acre tract of land in sleepy Beaufort-by-the-sea -- but I can tell you why I and Nine On Your Side continue to focus on it.
Back in 1997, the State of North Carolina gave the Friends of the Maritime Museum group more than $3 million (of YOUR money) to purchase the property. The understanding was that the Friends group would develop an annex to the North Carolina Maritime Museum on the property and turn the property into a real showplace. When the time was "appropriate," the Friends would simply turn the land back over to the state -- all the hundreds of documents we've got in relation to this issue say "appropriate," but they don't specify what exactly that means -- there was no sort of definite timetable when this all began.
In order to turn the property into the type of showplace it envisioned, the Friends group felt it necessary to borrow money against the land. The group took out two loans -- one for $3.9 million and the other for $995,000 -- using the land as collateral. The Friends claim they used that money to build parking lots, bulkheads, docks and any number of improvements. They also admit they used part of that money to fund the Tall Ships event. The Friends group released a letter last month saying it lost about $2 million on the event -- and in my opinion, it's hard to view the Tall Ships fiasco as anything other than a disaster. Nearly a dozen businesses claim the Friends (and the company they created -- Pepsi Americas' Sail, LLC) STILL owe them money -- we're talking nearly a million dollars here. Several lawsuits have been filed, and it seems like the Friends group could be in serious financial trouble.
That's where the Gallants Channel property comes in. Many folks I've talked to (including several state officials in Raleigh) believe someone at the state level is trying to protect the Friends group. With millions of dollars in debt piling up and businesses filing liens on the property for unpaid bills, October was the perfect time for the Friends to dump the property. When the state accepted it in October, all the debt came with it -- transferred to the state and away from the Friends. A letter by the Friends group says the head of the Department of Cultural Resources promised them she'd "make the debt go away." It looks like it worked.
Here's where you get shafted -- the state accepted a piece of property with nearly $5 million in debt attached to it. It had already paid $3 million to buy the land in the first place -- that's $8 million ponied up by the state for this piece of land. The kicker? Carteret County released its 2007 tax evaluations -- and says the land (including all the "improvements" made my the Friends) is only worth $3.6 million! Taxpayers are looking at a potential loss on this land of more than $4 million.
State Property Director Joe Henderson and Governor Easley both pushed really hard for this deal to go through at the October Council of State meeting. When Labor Commissioner Cherie Berry expressed some reservations about the transaction, he flippantly dismissed them. Both the governor and Henderson claimed the land was worth $36 million! They used that as justification to accept the property, claiming the state was making a great deal and getting "out of this for pretty close to nothing."
Today the state told me Henderson's figure was just a "preliminary estimated value" -- and that a November appraisal showed the land was worth $27 million. But Carteret County Tax Administrator Carl Tilghman is sticking by his numbers, saying they're accurate.
Labor Commissioner Berry called me back late this evening, and when she heard what the tax value of the land is, she was "flabbergasted." She says she plans on talking to Tilghman and Henderson tomorrow, hoping to figure out how there's such a huge difference in their respective appraisals.
A lot of people say the state inflated its numbers to make the deal look more appealing to the folks who had to approve it. That subsequently protected the Friends group from mounting debt. It seems like someone is not being honest about your taxpayer money -- and that's why we continue to dig on this story.
A big THANK YOU goes out to the folks who've chimed in and expressed their opinions about the last couple of posts. I very much appreciate your involvement! You can get involved, too. Just click the "Comments" button below.
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