By Katie Miars for Island Eye News
Isle of Palms’ Council is preparing to vote on the Marina lease assignment and numerous amendments to those leases. While I believe that the city should approve Marina Joint Ventures, Inc. and Marina Outpost, LLC’s assignment of the Marina and Outpost leases to Morgan Creek Marina, LLC, I do not believe that the current amendments to these leases are in the city’s best interest. This process began on April 20, 2022, when City Council was notified of the potential lease transfer. In the beginning, Council and the new potential tenants saw the lease amendments as a win-win for all parties. Unfortunately, as the amendments have evolved, the city has given more and more to the new tenant and has received less and less in return.
The amendments are available to the public, so I will not go into them here.
What I would like to share is some of what has gone on behind the scenes and my concerns with this process. The lease assignment negotiations began at the end of April when Council members met with Mr. Shuler.
During those meetings, Council members and Shuler discussed making minor amendments to the leases as part of the assignment process. The primary purpose of these amendments initially was to state that the shared parking lot between the public dock and restaurant lot was controlled by the city. City Council and Mr. Shuler believed these minor amendments were in the best interest of all parties. At the City Council meeting on May 6, 2022, I specifically requested that the amendments state that on-site consumption of alcohol would not be allowed at the Outpost. Attorneys for the City stated that it was unnecessary to add this language because the city ordinance clearly prohibited on-site consumption and adding it to the amendments would needlessly shine light on the issue. However, on May 20, 2022, the allowance of on-site consumption was added as an amendment to the lease, and Mayor Pounds and others started referring to this as a “minor clarification” rather than a change to the lease terms. On May 24, 2022, on-site consumption was discussed in executive session, but no vote was taken. On May 31, 2022, the lease amendments were made public. On June 1, 2022, I sent an email to many residents regarding the plan to turn the Outpost into a bar. In response to my email, Mr. Shuler sent an email to all Council stating the following: “The assertions made and shared now over countless emails and social media platforms are a gross misrepresentation of what I have clearly and consistently spoken to throughout all of our interactions, both public and individual, in regards to the provision of acknowledgement of the longstanding open and ongoing conditions surrounding on-premise consumption of alcohol.” I can’t see how referring to the Outpost as a “bar” is a gross misrepresentation, given that Mr. Shuler used Seabreeze Marina’s Island Cabana Bar as the example of how the Marina Outpost would be run. During these negotiations, Joe Rice, attorney for Mr. Berrigan, sent two letters to the city regarding “legal and financial risks to all.” (Both letters have been produced by the city pursuant to an FOIA request). On June 9, 2022, Mr. Halversen (attorney for the city of Isle of Palms) sent a memorandum to all Council regarding the “legal risks and consequences for failure to approve Mr. Berrigan’s request for lease assignments to Mr. Shuler.” In addition to providing Mr. Rice’s letters, Mr. Halversen’s memorandum contained the following: “Mr. Rice has since told me that the actions of Council members are, “reprehensible,” “unbelievable,” that he is, “building his [multimillion dollar] case,” and that our Council members have personal liability for already tortiously interfering with the assignment process for personal and/or financial interests.” In addition to Mr. Rice’s letters and statement’s, Mr. Halversen has informed the Council that Mr. Shuler has accused certain Council members of wrongdoing. In his memorandum, Mr. Halversen stated: “Prior to the meeting, on May 6, Mr. Shuler made me personally aware that in the two weeks since the request for the assignment had been pending, some of our Council members had been meeting privately with competitors of Mr. Shuler’s, as well as other third parties ‘over cocktails’ to discuss deliberately scuttling Mr. Berrigan’s purchase agreement with Mr. Shuler. Mr. Shuler would not tell me the identities of the Council members nor the names of the competitors.” In the weeks since this memorandum was sent, various Council members have attempted to obtain more information regarding these serious allegations. Mr. Halversen has stated that he now knows the individuals against whom the allegations were made but refuses to disclose their identities to City Council. Mr. Halversen concluded his memorandum with the following statements: As for the continued re-surfacing allegation that some Council members have been scheming with Mr. Shuler’s competitors while the consent requests have been pending (and are interfering with the request for consent process due to ulterior motives), I presently have no information to factually corroborate the allegations.
Assuming the allegations are true, the Council members involved would have individual liability exposure for tortious interference with prospective contractual relations if the transaction is not consummated between Mr. Berrigan and Mr. Shuler. Also, to the extent these allegations are true, individual Council members may not have insurance coverage under the city’s Public Officials policy of insurance to the extent the acts are considered exclusions by the insurance carrier as, “gain,” “intentional acts” or “wrongful acts.” Finally, at our special Council meeting on June 2, 2022, the question arose as to approving the leases now, without any amendments. As I stated to Council in executive session, Mr. Shuler told me point blank before the meeting started that this idea was not a possibility. …
It should also be noted that the same operative facts cited above regarding Mr. Berrigan’s potential claims for tortious interference also give rise to claims by Mr. Shuler against the city and Council members for damages occasioned by the failure to approve the lease assignment. I am sharing this information because I have serious concerns with this assignment and amendment process. I believe that the personal threats to Council members could have undue influence on the lease assignment and amendments. The city’s leases with the Marina are not perfect, but, after due diligence, I believe the assignment as the leases currently stand is appropriate.
The proposed amendments make the leases worse, without appropriate consideration or benefit to the city.