Tuesday, July 23, 2024

County paid Ward & Smith $25k for legal counsel on eminent domain of strip club

New Hanover County spent $25,695 on legal fees regarding the eminent domain purchase of Cheetah Premier Gentlemen’s Club. (Port City Daily/Peter Castagno)

NEW HANOVER COUNTY — Though the county rescinded its decision to pursue Cheetah Premier Gentleman’s Club via eminent domain, it wasn’t without first doling out more than $25,000 to legal counsel. 

READ MORE: County rescinds Cheetah eminent domain authorization, wants to negotiate buying the property

ALSO: County: Cheetah’s free parking offer is not a ‘viable permanent solution’

According to New Hanover County, it spent $25,695 in legal fees to Ward & Smith on the eminent domain case as of Dec. 12. Spokesperson Josh Smith said the county contracted the firm to explore the eminent domain possibility before the Nov. 6 authorization but did not know the date legal fees began.

The county commissioners voted Dec. 11 to stop the process in favor of negotiating directly with the property owner, Jerry Reid, the business tenants, and their legal team consisting of law firm Brooks Pierce and Mike Barber of Barber & Associates.

Nearly one-eighth — or $3,500 — of the total was paid to a valuation consultant retained by the law firm. Port City Daily asked which consultant the firm used but the county said it could not share more information.

PCD filed a public records request for the law firm’s invoices with the county earlier in the month. Spokesperson Josh Smith provided the sum spent but noted the legal invoices are not subject to public records law based on North Carolina General Statute Section 132-1.1 because they are written communications concerning a litigation matter.

However, Amanda Martin, general counsel of the NC Press Association, told Port City Daily a trial court cited in the 2007 case Womack Newspapers, Inc. v. Town of Kitty Hawk found “billing records sent to a public agency are not exempt from disclosure.” The ruling required the defendant “to produce, without redaction, all billing records from the Town Attorney to the Town for fiscal year 2003-2004, with the exception of specific entries which the trial court found were subject to the attorney-client privilege.”

Reid previously told PCD he wasn’t interested in selling the property, which the county valued at $2.36 million, a figure the property owner said seemed low. Reid was considering hiring a third-party appraiser earlier in the month, but has been clear he wants to stay at the College Road location, which has housed a strip club in some form or fashion since 1997. The county moved in as neighbors in 2002.

Earlier in the spring, the county relocated to its new government center, constructed as part of a public-private partnership (P3) with Cape Fear FD Stonewater. The county sold the neighboring land where its former building was located to Stonewater — comprising local firm Cape Fear Commercial and Virginia-based real estate company FD Stonewater.

Its 7.5 acres is located adjacent to Cheetah and the new county building. It’s slated to become residences and a mixed-use development, but the P3 was agreed upon with the county under several conditions. The 2021 development agreement states the purchase and sale of the property is contingent on the developer’s fulfillment of “government center improvements,” including “adequate, nonexclusive parking,” which must be provided “on or adjacent to the property.”

Yet, in the last few months the county said its parking needs have escalated. 

Reid and Cheetah’s legal counsel Mike Barber said they were unaware of the county’s desire to purchase the property before the eminent domain authorization, despite the county saying it made an offer before going that route. 

As a counter to the county’s intent to explore eminent domain, Cheetah offered the county use of its 74 spots during the day for free. The club is closed during daytime hours when the government center is open. Little did Cheetah and Reid realize, the county actually owns 30 of those spots, so it would only benefit from 44 additional spaces. The county responded that it’s “not a viable option.”

Reid told PCD previously he thought the county’s strict reliance on communication through the law firm brought unnecessary complexity to negotiations and slowed deliberations between parties. 

As well, commissioner vice chair LeAnn Pierce expressed concerns about rising legal fees on the case and its impact to taxpayers. She seconded Commissioner Dane Scalise’s Dec. 11 motion to rescind the eminent domain authorization in favor of direct negotiations.

PCD reached out to Ward & Smith and the county to ask if they are still working together for voluntary purchase, something Scalise and commissioner Rob Zapple advocated for during the last commissioners’ meeting of the year. According to the county it ended its contract with Ward & Smith on the matter and county attorney Jordan Smith is leading negotiations. 

Barber told PCD Thursday he thought lawyers were asked “to put pencils down for a while to stop the meter from running.” Smith said Ward & Smith is still finalizing administrative tasks related to the case but did not anticipate the firm would be involved with upcoming meetings.

Attorneys on both sides, according to Barber, are planning a meeting for mid- to late-January to evaluate all potential resolutions. He told PCD earlier this month “everything is on the table.” 

“The hope is to balance long-term parking needs and respect for existing jobs and businesses, while we minimize the impact on the taxpayers,” Barber said. “We remain hopeful for a mutually beneficial solution.”

A memo on the county’s parking needs

(Port City Daily/Shea Carver)

The county told media the day after the eminent domain authorization it would not be able to answer questions due to legal deliberations. Since dropping lawyers from the eminent domain process, it still hasn’t answered how many spaces the county currently has access to.

However, a memo written by chief facilities officer Sara Warmuth to county manager Chris Coudriet sheds a bit more light on the matter. It indicates the county’s parking demands have exceeded earlier estimates. 

She noted the previous comprehensive parking study — provided by engineering firm SEPI in January 2021 — estimated a daily peak need of 395 spaces and an event peak need of 500 spaces. 

“However, the reality of our parking needs has far exceeded those initial projections due to different organizational changes and parking lot uses since the study was conducted,” Warmuth wrote.

She advocated the purchase and demolition of Cheetah to alleviate parking inadequacy and access made apparent in the months since the county moved into its new 95,000-square-foot facility in April 2023, due to a number of contributing factors:

  • Remote work decreased for eligible county employees from 32% at its peak to 14% at the time of the memo
  • 270 employees reporting daily to the building are anticipated to grow by 20%, or 54 employees
  • Parking will be strain by the upcoming completion of the board of elections building
  • A net reduction of approximately 60 spots once the site is fully built

Smith told PCD the government center has also hosted a larger number of events than it originally anticipated when it moved in.

Warmuth added the closing of Cardinal Lanes on Shipyard Boulevard caused a tremendous growth in demand for Ten Pin and reduced its shared parking spaces. 

Ten Pin and Breaktime Billiards have a shared parking agreement with the county; Smith told PCD the county had not considered removing their shared parking agreement to reduce overflow into the government center lot because it is beneficial to the county during high-volume events.

“That gives us a kind of give-and-take relationship,” he said. “And from our perspective, it needs to remain that way for our benefit.”

He also argued demolishing the Cheetah property would provide benefits beyond parking by increasing accessibility. 

“It’s not as if something goes away and it’s now simply X number of additional parking spaces,” he said. “The entire entrance and parking arrangement could be reconfigured in that case to create new access points and additional parking.”

PCD asked the county how removing Cheetah would provide another access point because College Road can only be accessed one way; the communications officer could not offer specifics.

Warmuth also raised the accessibility concern in her memo: “To improve wayfinding for our customers traveling from the main thoroughfare, South College Road, customers would benefit from an additional access point. Congestion would also be improved by providing multiple access points.”

She argued purchasing Cheetah would help the county with overcrowding, safety, and customer service, and improve access in advance of the site’s future growth, including the addition of the new board of elections facility. Approved by commissioners in January 2023, it’s slated to be built next to Breaktime Billiards with completion by the first half of 2024. 

The new BOE facility will add to parking needs in the area by requiring eight daily spaces and 50 spaces during peak voting periods; however, developer Mike Brown told the Assembly it would add 88 spots upon completion.

“Considering the pressing access and parking needs and the projected growth of our facilities, we propose purchasing the property that is west and adjacent to the government center to address the situation effectively,” she wrote in August to Coudriet.

PCD asked if Warmuth’s solution was primarily her idea or if it was raised to her by someone else from the county, but the question went unanswered by press.

MORE: NHC commissioner pushes for negotiations with strip club over eminent domain

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

What about overflow parking as part of the county’s P3?

(Port City Daily/Shea Carver)

Brian Eckel, co-founder of Cape Fear Commercial, said in a June 2020 commissioners meeting the private component of the P3 would be able to help with overflow parking from the newly built government center, if needed. 

Mid-month, he told Port City Daily the offer still stands.

“Yes, we agree we will be able to help with overflow parking and our parking study suggests the same,” Eckel told Port City Daily Dec. 12, one day after the county abandoned the eminent domain route. 

He also applauded commissioners for forgoing the eminent domain process.

“We were not involved in any of the discussions leading up to the eminent domain November vote,” Eckel clarified. “However, it should be noted that the club and the county have been neighbors for a very long time on that site. As strong private property rights advocates, we are happy that both parties are talking and the issue of eminent domain has been resolved.”

According to Cape Fear Commercial vice president Mike Brown, as reported by The Assembly, the completed public and private portions of the development will contain 890 parking spots, sufficient to accommodate peak demand of 750 spaces.

Upon inquiring if the county sought the assistance of Cape Fear FD Stonewater as a primary solution to its growing parking needs, Eckel deferred the question to the county.  PCD asked the county if it considered reaching out to Eckel for help between the Aug. 15 memo and Nov. 6 eminent domain authorization; Smith said he did not know.

Cape Fear FD Stonewater purchased the old government center property, 7.5 acres, for $8.84 per square foot from the county. Even if the county didn’t take up Eckel’s offer to utilize free overflow parking and decided to purchase land back to create more parking, 40 spots would be less than 1/20th the cost of buying Cheetah, by rough estimates. 

PCD took the measurement of an average parking space, 320 square feet, as an example (though the county didn’t answer by press how large its parking spaces are). If utilizing the standard measurement and multiplying it by 40, it would equal 12,800 square feet for a cost of $113,152.

State Treasurer Dale Folwell, Barber, and Reid have all raised the usage or buy-back of some of Cape Fear FD Stonewater’s private property as an ideal solution for the county to consider.

PCD reached out to the county commissioners to ask if Eckel’s offer would impact their consideration of continuing its pursuit to purchase Cheetah. Only Scalise — who led the motion to rescind the eminent domain authorization earlier in the month — and Zapple replied. 

“I am absolutely willing to talk about and explore any and all potential solutions to the county’s parking needs,” Scalise said.

When he read the motion earlier this month, it included language that negotiations would continue to “consider the voluntary purchase of the property in question.”

Zapple followed up with Scalise at the meeting, clarifying he would support the motion if the county continued the voluntary purchase of the property.

Before Christmas break, Zapple seemed enthusiastic about working with Eckel on parking needs.

“Brian Eckel, of course, and his company were the ones that did the development of the government center and are continuing now with their portion of it,” he said. “So he’s the logical person to go to and I’m just glad to hear he’s still helping us sort through the parking issue.”

In addition to asking if it had considered utilizing Eckel’s offer for overflow parking or buying back property from Cape Fear FD Stonewater, PCD asked the county how long it would take to purchase, demolish, and repave Cheetah versus redesignating some of the private portion for parking. The county responded it would provide more answers soon.

Tips or comments? Email journalist Peter Castagno at peter@localdailymedia.com.

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