Originally published: Sunday, June 11, 2006
On the sparkling waters of Bogue Sound, just across from Emerald Isle, is a place developers call 287 acres of "pure paradise."
Construction vehicles plow through sand as workers clear land for Cannonsgate, a planned gated community of million-dollar homes on the Intracoastal Waterway, 16 miles west of Morehead City.
The choicest corner of paradise is a one-third-acre lot that fronts the waterway on high ground at the entrance to a 75-slip marina. Its owner: Democratic Gov. Mike Easley.
And he got a good deal.
One broker involved said the governor got his pick of lots. Easley bought it last year for $549,880. That was 3 percent above its assessed tax value. The Observer found that 49 adjacent waterfront lots in the development sold for an average of 20 percent above tax value; some were as much as 36 percent higher.
The Carolina Journal, published by Raleigh's conservative John Locke Foundation, suggested that Easley got "a bargain price" through political connections.
Easley's broker, the project's developer, and the man who helped finance the development are all friends and contributors whom the governor has appointed to high-profile state boards. One appointment came while Easley was in the process of buying the property.
The developer and his family alone have given Easley and other Democrats more than $300,000 since 1999.
"Obviously the financial transactions of private individuals are not the public's business," said Locke President John Hood. "(But) in this case we're talking about the governor. It is legitimate to ensure that no one is doing the governor any favors, and he is offering no favors in return."
Easley spokeswoman Cari Boyce said he got no special consideration.
"The governor paid the listed asking price for the lot," she said. "The price was set and non-negotiable."
Easley heard about the lot from Raleigh broker Mcqueen Campbell, a longtime friend and contributor. He insists the governor got no discount or favors. "Those lots are on a first-come, first-serve basis," he said. "Everybody's got a shot at every lot."
But Ronnie Watson, an Emerald Isle real estate broker who helped negotiate the sale of the development last year, disputes that.
"You wouldn't have been able to buy the lot, I'll tell you that," he said. "In other words, he had first choice."
Interviews with Carteret County officials, environmental regulators and an environmental watchdog suggest the governor pulled no strings for the developers.
Through his spokeswoman, Easley said he bought the land as an investment. And as an investment, it appears to have been a good deal for him, and for the people who sold it.
A blazing real-estate market
All along the Crystal Coast, real estate is booming.
In historic Beaufort, it's hard to buy a waterfront house for less than a million dollars. Communities such as Cannonsgate are popping up all over Carteret County. And across the sound on Bogues Banks, property values in Emerald Isle and Atlantic Beach have risen faster than a storm-churned tide.
"Last year the market was so hot I was selling stuff and turning around and selling it again, before it would close, for $100,000 more - and it wasn't just me doing it," said Judy O'Neill, a broker with Spinnakers Realty in Emerald Isle.
Even in Cannonsgate, where construction on the first of more than 500 Charleston-style homes won't start until December, buyers already have seen investments grow.
According to tax records, a lot just down from Easley's sold for $469,880 in January. In April, it flipped for $649,000. That's a 38 percent profit in three months and more than double the tax value.
Tax appraisals don't reflect market values. County officials say they're based on what appraisers believe a tract would have cost at the last revaluation in 2001. Because they're based on standard criteria, they offer a measure of a property's relative value. But most buyers pay little attention.
"All that matters is how much you paid for it and how much you can sell it for," said Brian Hilbrant, a Charlotte real estate broker. He bought a lot near Easley's, but half the size, for $500,000.
Those involved in Easley's deal are longtime supporters and campaign contributors.
Easley named Mcqueen Campbell, 35, to the N.C. State University board of trustees in 2001, the same year he appointed his father, Mac, to the state Board of Transportation.
Working for Cannonsgate's original owner, Campbell helped broker the sale of the development last year. The initial owner, Raleigh businessman Steve Stroud, said he negotiated the sale with Gary Allen of Charlotte-based Waterfront Communities. The developer is R.A. North Development of Matthews, run by Allen's brother, Randy.
While his own purchase was pending, Easley named Randy Allen to the state Wildlife Resources Commission last June. Gary Allen served in the same post after being appointed in 2002 by House Speaker Jim Black, a Matthews Democrat.
According to Democracy North Carolina, an advocacy group that tracks campaign money, Gary Allen and his family have contributed at least $197,000 to the state Democratic Party since Easley began running for governor in 2000. Randy Allen also has been a major contributor.
Another Easley donor helped finance the Cannonsgate sale. Investor Lanny Wilson of Wilmington loaned R.A. North $12.5 million. He has been on the transportation board since Easley appointed him in 2001.
Boyce, Easley's spokeswoman, said there's no connection between the sale and Randy Allen's appointment to the wildlife board. The governor, she said, "always seeks to appoint the most qualified and experienced individuals. This appointment is no exception."
Bob Hall, research director for Democracy North Carolina, said the appointment is another example of the cozy relationship between political donors and political appointments.
Neither Randy Allen nor Gary Allen returned repeated calls from the Observer. Wilson said that other than making the loan, he had "nothing whatsoever" to do with the project. Campbell said the governor "was treated just like any other investor."
"It's pretty common people are going to do business with people they know and trust," the real estate broker said. "I don't know too many people who do business with their enemies."
Banking on a famous name
Watson, the Emerald Isle real estate broker, said Easley is the kind of customer developers crave - a celebrity. They can spend their marketing money on ads or snare celebrities to help sell pricey developments.
"I'm sure they used his name to help them sell the property," he said.
Frank Tursi, Cape Lookout Coastkeeper for the N.C. Coastal Federation, who works just down the road from Cannonsgate, agreed.
"It was pretty clear they used it for their marketing purposes," he said. "A lot of people who attended their open houses said they were told by salesmen, `You know, the governor owns a lot here.' "
Tursi, who has followed the development's long pursuit of environmental permits, hasn't seen anything to suggest that the developers got favored treatment. As far as he knows, neither did Easley.
"He obviously got in the ground floor and knew people," Tursi said. "But how unusual is that? You can't fault him for a wise investment."
The Governor as Property Owner
Gov. Mike Easley and his wife, Mary, live in the governor's mansion on Blount Street in Raleigh. In addition to the Cannonsgate lot, the family owns other property:
The Easleys own a 3,200-square-foot home at 216 River Drive. It's valued at $643,600.
They own a 2,600-square-foot home at 2442 E. Lake Drive valued at $418,666.
Bald Head Island
Easley and his brother Sandy own a home on Bald Head. Its value could not be immediately determined.