Highway Robbery

Linville, N.C. — When Governor James Martin visited the Blue Ridge mountains one July day in 1988, the summer residents of Linville Resorts threw a grand outdoor party. A well-heeled group of stockbrokers and doctors, real-estate developers and retirees, they gathered under a pavilion to drink cocktails and shake the governor’s hand. Republicans and Democrats alike dined on grilled trout and roast tenderloin, served with peanut rice.

William Lippitt, a retired surgeon from Savannah, Georgia, remembers forking over $125 to attend the dinner with his wife. And he remembers why. A long-time resort member, Lippitt had grown tired of the traffic whizzing past the golf course and lodge. Like many of his neighbors, he wanted the state to build a new highway to steer cars and trucks around the country club.

“We were trying to get a road,” says Lippitt. “So we gave a donation.”

For 20 years, highway engineers had argued that the road Lippitt wanted would not “serve any useful purpose.” Still, the next winter, the state Board of Transportation awarded a contract to build the Linville Bypass — a $2.9 million road designed solely to divert traffic away from a resort whose members include some of Governor Martin’s closest political allies.

Campaign dollars rule the roads. That’s the inescapable conclusion of an eight-month investigation into the insider deals and political connections that shape the state highway system.

Sponsored by the Institute for Southern Studies, the non-profit research organization that publishes Southern Exposure, the investigation examined thousands of pages of documents, interviewed more than 150 people, and checked hundreds of names against a campaign-finance database. The results make clear that the people who donate big money to political campaigns maintain a tight grip on the state Department of Transportation (DOT), steering millions of dollars to specific roads to help themselves and their friends.

The political favoritism wastes public money, robbing taxpayers of millions at a time when the legislature has been cutting education and raising taxes. What’s more, the inside deals harm the environment and pave over human communities.

DOT denies the connection. “I don’t see there is a link between contributions and road-selection process,” says Transportation Secretary Thomas Harrelson. He asserts that the state spends billions on highways to create jobs and stimulate growth.

But the investigation into campaign finances shows that political influence — not economic development — drives much of the state road system. A trip to the mountains and coast of North Carolina offers a look at two roads paved with campaign dollars: a bypass around a country club, and a beach road moved to make way for an oceanfront villa.

 

The Bypass Around the Country Club

Linville Resorts is an island of graceful living amidst one of the poorest counties in North Carolina. A century old development of $400,000 summer homes with stone chimneys and rough-hewn wood siding, the alpine resort is set among wildflowers, tall pines, and thick rhododendron.

The 155 members have the use of tennis courts, a croquet greensward, and an 18-hole championship golf course. They can take their meals in a dining room that serves nightly five-course dinners of French and New American cuisine (coat and tie required for gentlemen), and then stroll along stone walkways and over red footbridges that traverse a small creek. The resort also has a 30-room hotel called the Eseeola Lodge.

The members come from all across the South — Charleston, Birmingham, Coral Gables. But the biggest bloc, about 40 percent, comes from Charlotte. Members of old-line families, they make up the city’s business elite — the people who helped Governor Jim Martin launch his political career. Together, the current members of Linville Resorts and their families have contributed more than $308,900 to the Republican cause since 1983 — including $71,300 to Martin.

“We have some folks who are pretty influential in the state — I won’t deny it,” says resort general manager John Blackburn.

Their leader — the president of Linville Resorts — is one of the most influential of all. Alan Dickson serves as president of the Ruddick Corp., a Charlotte conglomerate that owns the Harris Teeter supermarket chain and three other companies.

A self-described “Republican purist,” Dickson headed the last county campaign to re-elect U.S. Senator Jesse Helms. And he has used his network of Charlotte business contacts to raise money for the governor. Since 1983, Dickson and his family have contributed $5,700 to Martin and at least $32,395 to other GOP candidates and committees. Ruddick Corp. kicked in $2,000 to help pay for Martin’s first inauguration, and the company’s directors and their wives contributed $13,125 to Martin’s gubernatorial campaigns.

“I don’t look for anything,” Dickson says of his campaign contributions. “Hopefully, it’s a good investment in a good person to do the right job.”

 

Frat Boys

Life at the Linville Resorts was a “golden world,” in the words of manager Blackburn — except for one problem. U.S. 221, a two-lane road that meanders through the mountains, divided the resort. The lodge, golf course, and most of the homes were on one side, while a parking lot and swimming pool were on the other. Truckers routinely broke the 35 mph speed limit, according to resort members, menacing pedestrians and other drivers alike.

“You pull out of your driveway and see a truck coming down at 50 mph, and you see the last 50 years of your life flashing before you,” says Blackburn.

As far back as the 1950s, Linville Resorts had proposed a solution to this problem: The state should build a new road to divert traffic away from the country club.

The 1.3-mile bypass would skirt Pixie Mountain along undeveloped land donated by the resort. It would cross the Linville River and then come to an abrupt halt. Drivers who once had a straight shot into Boone would now have to make two turns.

Until Governor Martin’s election, no one inside state government took the idea too seriously. Avery County direly needed improvements to its existing roads; many were winding, shoulderless highways with close outcroppings of rocks right at road’s edge. But U.S. 221 was smooth and safe as it passed the resort. Federal officials scoffed at the notion of paying for the rerouting of the U.S. highway because — according to one state DOT document — the “project did not go anywhere.”

“It appears entirely possible to build a road through the proposed corridor,” wrote DOT engineer Tony Comacchione in 1984. “However... it does not appear the proposed bypass would serve any useful purpose.”

All that changed within days of Martin’s inauguration.

As soon as he settled into office in 1985, Martin took a cue from his predecessors and rewarded some of his most generous campaign contributors with seats on the Board of Transportation. The 24-member board, among the most coveted appointments in state government, has absolute control over which roads get built in North Carolina (see “Road Hogs,” below).

Near the top of that list of contributors was Seddon “Rusty” Goode, president of University Research Park in Charlotte. As a Davidson College freshman in 1954, Martin was Goode’s “little brother” in the Beta Theta Pi fraternity. As the older boy’s pledge, Martin served at Goode’s beck and call, shining his shoes and performing other daily tasks.

p>Goode outgrew his frat-boy ways to become a major force in Charlotte’s business and political circles, working the corporate community for big campaign contributions. He and his family have contributed at least $30,595 to the Republican cause since 1983, and he raised more than $200,000 for Martin’s re-election campaign. Martin rewarded Goode with a seat on the Board of Transportation, where he earned the nickname of “Rusty God” for the power he held.

Hammer Time

As one of the 100 top-paid executives in North Carolina — the president of a $1.4 billion business — Linville Resorts head Alan Dickson knows an opportunity when he sees one. After Martin was elected governor, Dickson decided “it was time to turn up the burner” on the Linville Bypass. “I did that as a good loyal Republican.”

Dickson lobbied everyone he knew within DOT, but he focused his efforts on Rusty Goode. Though not close friends, the two men belong to the same business and political circles. They attend the same cocktail parties, belong to three of the same country clubs — even run into each other in the elevator of the First Union office tower where they work on adjoining floors. And they raise money for the same Republican candidates. In 1990, Dickson and Goode co-chaired a Charlotte fundraiser for Helms that raked in $1 million in one evening.

“I guess I hammered him pretty hard,” Dickson remembers.

The hammering paid off. “As you know, I am most interested in seeing this project started as soon as feasible,” Goode wrote in a letter to DOT deputy secretary Billy Rose just days after Martin took office.

“Rusty was instrumental in pushing that project through when it was a marginal project,” recalls Rose, now retired from state government. “When you look at the other road needs in that area, you couldn’t justify doing that project.”

Other government professionals noted that the proposed bypass would degrade the Linville River, a clear swift-moving trout stream that flows into Linville Gorge, one of the finest wilderness areas in the nation.

Still, DOT’s top brass sent out a clear signal: The Linville Bypass would be built. R. Wilson Laney, a U.S. Fish and Wildlife Service biologist, says he received “personal communication from DOT that it was a political project — that it didn’t matter what the environmental effects were. It was going to go ahead as designed.”

 

Golf-Cart Road

News of the Linville Bypass hit a raw nerve among the full-time residents of Avery County.

Cecil Crawford, a former zoning board member in the town of Banner Elk, can tick off the names of several acquaintances who died on a single twisting road near his home. Yet Avery, a small and poor Republica county in a state long dominated by Democrats, got short shrift when it came to road improvements. And now, the new Republican administration proposed to build a bypass around the straightest, smoothest road in the county.

In a spontaneous response, 300 angry citizens turned out at a public meeting to oppose the bypass. County commissioners passed a resolution opposing the road. The usually tame local newspapers editorialized against the bypass. Letters and petitions flooded DOT.

“There are roads where school buses run which would give the average person a heart attack, yet we propose to build a bypass for this affluent neighborhood so that they... can run their golf carts and walk in the middle of what has always been a U.S. highway,” wrote local resident Patti Setzer.

By May, DOT had received 197 letters — all but six opposing the bypass. Four opposition petitions contained 803 signatures. “We thought we’d killed it,” says landscaper Mike Hughes, who led the anti-highway effort. “Little did we know.”

Then, at Rusty Goode’s suggestion, DOT did something to defuse the opposition. With the consent of Linville Resorts, it moved up two road projects on its schedule — $8.4 million worth of improvements to two of the county’s most treacherous highways. Mike Hughes calls the maneuver a bribe to buy off the opposition; nonetheless, it worked.

“I wish we could recall all the dollars that they squandered,” says Crawford, who led one of the petition drives. “But I lost interest in it after we got the other roads because I no longer wanted to stir up a hornet’s nest.”

At the same time, Linville Resorts launched an effort of its own. Resort manager Blackburn wrote to his members, urging them to mount a “vigorous” letter-writing campaign. “We do not want political contributions, only letters this time around,” wrote Blackburn. “We do not think it would be advisable for people to mention their political contributions.”

Summer residents bombarded DOT with letters; they also packed a second public hearing. DOT claimed that public opinion had turned around, and the Board of Transportation approved the bypass.

That’s how the Linville Bypass got built — at a cost to taxpayers of just under $3 million. Blackburn says the bypass has removed most of the traffic from the old road, but some cars still speed past the resort. “It’s not the smashing success I thought it would be, but it’s been a success,” he says.

 

Fueled by private money, the state does more than simply waste public funds on unneeded roads like the Linville Bypass. When it comes to building highways for big-money campaign donors, the DOT also runs roughshod over the environment.

New River Inlet Road was one of the few remaining coast roads that ran right along the beach, with no buildings between the asphalt and the surf. It traversed most of North Topsail Beach, one of the most fragile stretches of the Carolina coast.

North Topsail is so fragile that the federal government will no longer spend money that might encourage building on the undeveloped parts of the island. Duke University geologist Orrin Pilkey calls Topsail the most dangerous barrier island on the East Coast in terms of hurricane evacuation. As recently as the 1970s, just three or four beach cottages dotted the northern end of Topsail. Then a handful of developers began erecting high rises and condos. Today dense thickets of tall buildings hover over the ocean. “If you’d’a come here 15 years ago, you’d’a have to sleep in your car,” says developer Marlow Bostic. “Now a thousand families can come here and enjoy the beach.”

New River Inlet Road has changed as well. Starting at the coast, it now veers toward the sound side of the island until it comes to the stucco walls and terracotta roof of Villa Capriani, a development of mock-Italian condominiums that sits right on the water where the road used to be.

The new road passes between palm trees and tennis courts. After it leaves Villa Capriani, it turns back toward the sea. Suddenly, the pavement grows narrower and wetter. Artificial sand dunes sit bulldozed against the road to hold back the sea. On stormy days, travelers heading for a complex of condominiums further north must detour inland onto a makeshift gravel road.

This seaside tableau — the new road, the “villa” with its palm trees, the bulldozed dunes — are the only visible signs of an inside deal between DOT and businessman F. Roger Page Jr. Thanks to political favoritism, Page was permitted to move New River Inlet Road to make way for his condo development. Page got a parcel of oceanfront land worth millions. The DOT got to ignore regulations designed to protect the environment. And Governor Martin got more than $15,000 for his 1988 re-election campaign.

 

“Monster” High Rises

Roger Page and his partner, developer Marlow Bostic, had big plans for North Topsail in the days when it was undeveloped. Page once said he wanted to turn the beach into “Page Island,” a four-mile stretch of motels, condo towers, and shops — “like Gatlinburg, Tennessee.” One brochure describes Page Island as “a spirited rejection of the predictable, even a daring blueprint for the future.” Bostic, not quite so mellifluous, hoped to build “monster” high rises, 18 to 25 stories tall. Bostic is best known among state regulators for his poor environmental record — 24 citations for various projects from 1978 to 1987, including the illegal storage of toxic chemicals. Page is a developer and oilman who gives generously to small Christian colleges and rides around in a chauffeured Rolls Royce. The FBI and the IRS have investigated his business dealings but never charged him with wrongdoing.

For some people, New River Inlet Road was one of the most magnificent highways in the state. For Page and Bostic, it just got in the way. The two men wanted to build Villa Capriani right on the ocean. But the road interfered.

So Page and Bostic offered to spend their own money to reroute the road to the sound side of the island. In exchange, the state would give the two developers much of the old roadbed, a piece of oceanfront real estate that would increase the value of their investment by tens of millions of dollars. The state liked the prospect of a free road. After all, part of the existing road often washed out and needed to be relocated. But environmentalists thought it was a terrible idea. Parts of the road needed to be moved, but relocating the whole road would open the island to development and wreck its fragile ecosystem.

“The beautiful public beaches on the island will be ruined as large buildings encroach,” Jim Kennedy of the N.C. Coastal Federation warned in a letter to county commissioners. “The buildings will gradually collapse on the beaches or else the state will succumb to political pressure for sea walls. The beaches will be ruined either way.”

What’s more, environmentalists cautioned, Page wanted to run the road through creeks, salt marshes, and canals — a move that would worsen the runoff of gasoline, oil, and other poisons into prime seafood nurseries. The pollution could destroy oyster beds and ruin the livelihood of shellfishers.

The Coastal Federation asked the state to study how the move would harm the environment, but DOT refused to compile even the minimum document required for state-built roads. Since Page was building the road privately, DOT maintained, no impact statement was required.

Billy Rose, the retired DOT deputy secretary, believes the state intentionally used a private developer to avoid studying the environmental impact. “I’m sure that was a factor. That’s bad, when you use a procedure to circumvent the law,” he says. “You’re breaking the law, as far as I’m concerned.”

 

The 14^th Floor

When Page first approached DOT about moving New River Inlet Road, he was a strong financial supporter of Democratic gubernatorial candidate Rufus Edmisten. But when Republican Jim Martin beat Edmisten in 1984, Page went to see the governor’s new local Board of Transportation member, Republican B. Tommy Pollard.

A Jacksonville businessman who was once convicted of attempted murder stemming from a truck-stop brawl, Pollard had become a major player in eastern North Carolina politics, coaxing GOP dollars from the Democratic stronghold. He and his family gave $3,950 to Martin’s first gubernatorial bid, and he went on to raise $350,000 for the governor’s second race four years later. “Mr. Page said, ‘I know we were on the wrong side of the election, but this is a good viable project,”’ recalls Pollard, now a state senator. Pollard agreed — and rallied the Martin administration behind the deal.

Because North Topsail is covered by state laws protecting the coast, Page had to get permits from the N.C. Department of Natural Resources and Community Development (NRCD) to build the road. David Owens, former director of NRCD’s Division of Coastal Management, remembers the special treatment Page received.

Fifty-one times, Owens received calls from NRCD’s top brass on the 14th floor of Raleigh’s Archdale Building. That was highly unusual; the top brass usually trusted its professional staff to do their job without political interference. “This is one of the very few projects in my 10 years in coastal management that was handled that way — out of about 10,000 permits I was involved in,” he says. Sometimes the political leadership intervened to request a relatively modest permit change. Other times it pushed the staff to move the permitting along quickly. ‘The 14th floor was not saying, ‘You’ve got to give these people exactly what they want.’ It was a much more subtle proposition,” Owens says. Sometimes the governor’s office intervened too, complaining in one memo of the “bureaucratic problems we are having with the Topsail Beach matter.”

“When you’re going over to meet in the governor’s office — no one ever brings out the checkbook and says, ‘This person is a big campaign contributor,’” Owens says.

Then came the big request. Page wanted to divide the road into two separate projects. That would allow him to move the portion of the road he needed to make way for Villa Capriani right away—and to hold off on rebuilding the part that was in immediate danger of washing out until he acquired all the right-of-way land from the various property owners along the way.

Both the Coastal Federation and the Division of Coastal Management warned against splitting the project, predicting that Page would move the road around Villa Capriani and then stop. “We told DOT: If you allow this to be split, you’re giving up your leverage and these people may walk away from Phase 2,” said Owens, the state director of coastal management.

Attorney General Lacy Thornburg also wrote a pleading letter to the Martin administration, saying he had “grave reservations about the lawfulness” of dividing the project.

But DOT said it trusted Page to build the whole road, even if he split the project into two segments. “A lot of people were skeptical, but I was not one of them,” says Tommy Pollard of the Board of Transportation. “I felt Mr. Page was an honorable man and he would do what he said he would do.” After several meetings, including one in the governor’s conference room, Owens believed he had no recourse. Under pressure from his superiors, he issued the permit.

 

Rattlesnakes and Elephants

Page built the first phase of the road — the part he believed would profit him. Along the way, government regulators cited him for taking shortcuts that imperiled the environment. “They wanted to fill in wetlands rather than building bridges over them,” Owens recalls. “They said, ‘Ooh, our engineers now tell us it will cost us five times as much to build a bridge as to fill the wetland in.’” One letter from NRCD ordered Page to “cease and desist” from 24 violations.

Page refused to comment on the road. But Bostic says the state required Page to build bridges over wetlands he considers marginal. “They built the rattlesnakes a nice home, but it cost millions of dollars.”

Then, even before Page completed the road, Board of Transportation member Pollard convinced his colleagues to accept the new road into the state system without a final inspection. Pollard explained that Page was in a hurry to open Villa Capriani because his sales deadlines loomed, with $20 million riding on the deal. “It seemed at the time that the state ought to help him consummate the project,” Pollard says.

So Villa Capriani opened. Then, after the state accepted the portion of New River Inlet Road that benefited Page, he announced he could not acquire the land to build the second phase. What’s more, he had hit financial hard times. Units at the villa were selling at bargain-basement prices, as low as $45,000.

Page walked away from the road, refusing to build the part that most needed relocating. “His defaulting on the agreement surprised no one in the world except DOT,” says Jim Kennedy of the Coastal Federation.

Actually, DOT knew that there was a good chance Page would default. After a 1987 meeting with the developers, state highway administrator William Marley Jr. wrote, “If developer can’t get this remaining right-of-way, state may have to step in and do the work.”

Now DOT plans to move the portion of the road Page walked away from. The state has sued Page, demanding that he pay for the relocation. But the department doubts it will ever see the $4.6 million it plans to spend.

In the meantime, a temporary gravel road prevents islanders from getting stranded during storms, and signs warn tourists to keep off the artificial dunes. Along the new road — which the state has already spent $25,000 to repair — the signs are more inviting. “Watch us grow,” promises the CEPCO group, owned by a Page associate. “Last available ocean-to-sound parcels,” boasts Ocean Ridge Realty, owned by Bostic.

At election time, Page remembered his friends. The developer and his wife gave $8,250 to Governor Martin. His lawyers threw in another $3,725, and two associates contributed $4,000.

In 1989, the state GOP held its Elephant Stampede fundraiser at North Topsail. The Stampede was organized by Tommy Pollard, the man who went to bat numerous times for Page. As part of the deal, Republicans visiting North Topsail for the event — a golf tournament and $15-a-plate barbecue dinner featuring Governor Martin — got reduced rates at the St. Regis Resort. St. Regis was owned by — whom else? — Marlow Bostic and Roger Page.