Monday, July 15, 2024

NHC commissioner pushes for negotiations with strip club over eminent domain

Cheetah Premier Gentlemen’s Club offered the county use of its 74 parking spaces during the day; commissioner Dane Scalise is encouraging the county to reconsider negotiations with the business before pursuing eminent domain. (Port City Daily/Shea Carver)

NEW HANOVER COUNTY — A week-and-a-half after New Hanover County commissioners approved a resolution to begin the eminent domain process on a property adjacent to its new government center, some officials are reevaluating the way forward.

READ MORE: ‘Our building is completely full’: NHC argues parking needs justify eminent domain of strip club

ALSO: Cheetah offers county 74 parking spots ‘at no cost to the taxpayer’ to avoid eminent domain

At a Nov. 6 meeting, commissioners approved a resolution — brought forth as a walk-on motion, not listed on the agenda — to exercise its rights to pursue eminent domain for 143 College Road, Cheetah Premier Gentlemen’s Club. County manager Chris Coudriet said the county needs the property for more parking. Commissionders agreed to hire Ward and Smith to explore the possibility.

The county commissioners simultaneously approved a budget amendment to spend $2.36 million to purchase the property, though Cheetah property owner Jerry Reid of New Hanover Golf and Travel LLC and the business owners’ lawyer Mike Barber said they were blindsided by the offer. Barber, who has served as Cheetah’s counsel for about a year, told Port City Daily he first learned of the county’s intention to use eminent domain to purchase the property at 1:30 a.m. last Tuesday, after the commissioners’ authorization Monday night.

Reid told Port City Daily he received the notice of condemnation Wednesday, Nov. 15, from Alex Dale with Ward & Smith, hired by the county to seek eminent domain. The letter is dated Nov. 7.

However, Commissioner Dane Scalise told Port City Daily Thursday he is encouraging the county and his fellow commissioners to set aside the legalities and have a conversation with the property owner and management of Cheetah’s instead. This comes after Cheetah management announced Monday, Nov. 13, it was offering the county 74 parking spaces to use “at no cost to the taxpayer” during the daytime, as the club opens at 6 p.m., an hour after the next-door government center closes.

“The best thing for everybody, and I think that’s what everybody wants, is we should sit down and find a solution that works for everyone,” Scalise said. “I’d love for us to find a mutual win-win without having to use eminent domain.”

He said he didn’t realize negotiation was a possibility at the time of the commissioners’ vote. Based on previous conversations between the two entities — which Scalise said he was not privy to, so the parties involved are unclear — commissioners were under the impression any discussions about Reid selling the property were off the table. He said the county made efforts to find a voluntary solution prior to exploring eminent domain.

“Maybe they actually were [agreeable to negotiations], maybe they weren’t, I don’t know,” Scalise of the property owner. “But it does seem clear now that they’re interested and I really appreciate them making that clear and being willing to talk this out.”

Reid, who purchased the property in 2011 for $1.3 million, told PCD he’d been approached before about selling but never had any intention. He added he never received a formal offer from the county about its proposal and said the broker who contacted him about a potential purchase did not identify themselves as a representative of the county or city.

Scalise called it a “telephone game,” with multiple entities involved — a broker to approach the property owner, lawyers on both sides and internal discussions.

The Cheetah legal team told PCD Thursday they had submitted a FOIA request to the county to determine when exactly it retained Alex Dale with Ward & Smith to handle the eminent domain matter.

“Because they’ve acted as though this has not been in the works,” Barber said.

Vice chair LeAnn Pierce said she would be open to discussing a compromise and Scalise said he wants to see where negotiations land.

“We do need some parking,” he said. “We’re going to have to figure this out long-term. But, clearly, the better outcome, at least for now, is for us to exhaust all efforts to work this out in a mutually agreeable way before we go to a lawsuit in an official capacity.”

Reid hired a separate attorney, John Floyd, to represent his interests as property owner, though Floyd and Barber are working together. The attorneys spoke Wednesday with Ward & Smith attorney Dale, who expressed a willingness to discuss options, Reid said, but did not explicitly respond to the club’s 74-space offer.

Scalise agreed it’s time for commissioners to get creative in working out a resolution: “That’s my preference, that’s always been my preference.”

“We did not file for eminent domain,” he said, saying that was a point “critical” to clarify. “We did not vote to file for eminent domain. We asked our lawyers to explore it as a possibility and report back to us.”

Pierce said county commissioners will take a final vote even in the event legal counsel wants to move forward.

County spokesperson Alex Riley confirmed Coudriet will reaffirm the commissioner’s intent to proceed before litigation is initiated.

A business attorney who handles civil matters, Scalise said lawsuits should be avoided at all costs based on the expense, time and difficult processes involved. Specifically, when it comes to eminent domain, it’s not something he views as a favorable resolution but rather to be used sparingly. Last week, he said he thought the urgent parking needs of the county warranted the measure. 

“This legal mechanism should be used very, very rarely,” he stated again Thursday. “Private property rights — you hear me talk about this at public hearings all the time — they always are and always will be of highest importance to me.”

Pierce upholds the same beliefs. She added she’s not in favor of eminent domain in this matter.

“We absolutely should be negotiating with property owners,” she said.

Last week, Reid expressed frustration the county did not anticipate its parking situation during the $52-million development of the government center, which opened earlier in the spring. The county partnered with Cape Fear FD Stonewater, a collaboration between Cape Fear Commercial and Virginia-based real estate firm FD Stonewater, to build the facility. 

The county’s 2021 development agreement with Cape Fear FD Stonewater was planned with 250 parking spots and stated “adequate, nonexclusive parking” as a government center improvement, “either on or adjacent to the property.” It also stated the county would subdivide the parcel it owns, with 7.5 acres to be sold to Cape Fear FD Stonewater for $8.84 per square foot. 

“They had an additional seven and a half acres that they sold off,” Reid said. “I mean, shouldn’t they have kept an acre as extra parking?”

State Treasurer Dale Folwell made a similar comment earlier this week to PCD: “If they need parking they should get the taxpayers of New Hanover County’s property that is next door back from Brian Eckel of Cape Fear Commercial.”

Jim Grago, another nearby property owner of Ten Pin Alley and Breaktime Billiards, shared he has a parking agreement with the government center. He told Port City Daily that county staff and visitors often park in his lot during the day. 

It has only been an inconvenience when his customers have nowhere to park, which he said has happened twice. Asked about his assessment of the government center’s parking, Grago said: “I don’t think it’s adequate enough.”

Grago expressed concerns over the county’s eminent domain authorization. Though the business owner was clear the county hadn’t reached out to him.

“There was a lot of speculation amongst myself and my wife,” he told Port City Daily. “We both own the business together and my employees, and even my customers, you know, were wondering when they were going to try to do something like that to us.” 

According to internal emails obtained by PCD, Grago wrote to Coudriet on Nov. 8 to ask about future plans involving his property.

“We recognize that the resolution in the case of Cheetah’s was extraordinary due to its unique circumstances,” Grago wrote. “However, we hope to avoid any unexpected developments regarding our property. Historically, there have been discussions about the county’s interest in our property, and while Brian Eckel offered an alternative parcel on Rogersville Road several years ago, we did not feel it met our business needs.”

Coudriet responded to Grago’s inquiry: “I can say without hesitation the only property the county has determined is critical to its public purpose is the parcel identified in the board’s resolution.”

The Gragos bought Ten Pin Alley and Breaktime Billiards in 2015. The business owners said they have never experienced issues with Cheetah or “anybody that’s ever come from there.”

Barber shared with Port City Daily that Cheetah paid more than $9,000 in property taxes in 2022 and remitted roughly $62,500 in sales tax to the state. It employs up to 65 people, including hosts, managers, bartenders, waitresses and entertainers. Barber stated in an announcement Monday regarding the company’s 74-space offer to commissioners that most of these positions include higher range salaries than the mean in Wilmington.

“At a time when the County Commissioners speak often of attracting high paying jobs, and giving tax payer incentives to procure them, to eliminate these jobs, and negatively affecting these lives, is illogical,” the release explained.

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