The Randy Parton Theater: A Comedy of Errors That Has No One Laughing
Updated March 9, 2010
Stating that a taxpayer who challenged the constitutionality of the financing scheme for the Roanoke Rapids Entertainment Complex lacked the "standing" to sue, in January of 2009, the North Carolina Business Court dismissed a lawsuit filed on the taxpayer's behalf by the NC Institute for Constitutional Law (NCICL) against Randy Parton and others involved in the failed deal.
If an individual who is forced to pay for the failed policies of government through his tax dollars cannot achieve "standing" in the courts to challenge these policies, who else might possibly have the right to sue? The question looms large, as courts continue to reject challenges by taxpayers.
The project (formerly the Randy Parton Theatre) was borne by virtue of the approval of the highly misunderstood "Amendment One," and it has become the poster child for everything that is wrong with this type of public financing. Here's what happened.
When voters approved the controversial Amendment One to the North Carolina constitution on the 2004 ballot, they gave local governments a powerful new economic development tool: the ability to partner with private developers without having to bother the taxpayers with the details. Proponents – mostly local government officials and private developers – claimed that they needed the amendment as a time-saving measure that would allow them to more efficiently close development deals in their cities & towns, and that it would not cost taxpayers. Critics of Amendment One (tax-increment financing) argued that it would encourage secretive backroom deals that put more risk on the taxpayers than the private developers.
In the ensuing four years, only a handful of projects have attempted to take advantage of Amendment One’s benefits. In February of 2007, the first project was approved: the Randy Parton Theater in Roanoke Rapids. A secretive deal between politicians and developers that inevitably turned sour, the project paired a country superstar’s brother with a government bureaucrat who had one foot in government service and one foot (and both hands) in the business world. This pair’s efforts won them a significant financial windfall, while sticking the taxpayers of Roanoke Rapids with a big bill – all while demonstrating everything that is wrong with tax increment financing deals.
Let the politics begin
This story began when Rick Watson, president and CEO of the Northeast Partnership, a state-funded non-profit economic development organization serving the northeastern quadrant of North Carolina conceived the idea of a theater for Roanoke Rapids in August 2004, and immediately began lobbying state officials about his idea. Watson foresaw a the creation of a tourist destination in Roanoke Rapids similar to that in Branson, Missouri, which would feature Randy Parton, brother of country superstar Dolly Parton, as the showcase attraction. While Parton had a moderately successful country music act at Dollywood, the Tennessee-based theme park owned by his sister, he had no record as a successful headliner when he connected with Watson on the Roanoke Rapids project.
In October, Watson and Parton got together in Raleigh for a
series of meetings with aides to House Speaker Jim Black, Senate President Pro-Tempore Marc Basnight, and Governor Mike Easley. According to public records, Watson and Ernie Pearson, staff attorney for the Northeast Partnership also began aggressively seeking endorsements for the project.
Speaker Black was quick to respond. “I was sincerely pleased to learn of your company’s interest in locating an entertainment facility in the Northeast region of the state,’’ wrote Black in a January 2005 letter to Parton. “Please know that I am very supportive of this project, and I will certainly do what I can.”
Black was instrumental in helping to attain the approval of the General Assembly in 2005 to create a special “entertainment district” in Roanoke Rapids, which allowed the Local Government Commission to consider Roanoke Rapids’ request to borrow $21.5 million in “TIF’s” to finance the Parton theater project. Almost immediately, Parton and his new company, Moonlight Bandit Productions, signed a contract with Roanoke Rapids to build a new 1,500 seat theater. Under the terms of the contract, Moonlight Bandit Productions would make monthly payments to Roanoke Rapids until the bond debt was paid off – at which point the theater would transfer ownership to Moonlight Bandit. The
agreement also allowed for a $1.5 million “artist’s fee” for Parton, a $500,000 cash “advance,” and a free home and cars for both Parton and his wife for a period of three years.
The City of Roanoke Rapids promised to provide 100-percent of the start-up funds for the venture with no investment by Watson or Parton. Moreover, neither Watson nor Parton produced any evidence of prior theater management experience, yet the City would be solely responsible for the bond debt if the theater venture failed.
Nevertheless, both State Treasurer Richard Moore and the Local Government Commission signed off on the deal. Ground was broken, and the game was underway.
In 2006, Speaker Black and Senator Basnight allocated $500,000, from special “slush funds” they controlled under the state Department of Transportation budget, for improvements to roads near the theater. Transportation Secretary Lyndo Tippett authorized the appropriation of an additional $2 million for road improvements at the theater.
Conflict? What conflict?
There is a growing industry of government-funded economic developers recruiting new businesses all over North Carolina every day. What makes the Parton story so unique is that the government official who recruited Parton to build his theater in Roanoke Rapids also had a financial interest in the project.
The North Carolina corporation called Moonlight Bandit was formed in February 2005 to manage the proposed Randy Parton Theater in Roanoke Rapids. Records show that while Randy Parton was the majority stakeholder, Rick Watson, a state employee, also held a 33-percent interest in the company, and the staff attorney for the Northeastern Partnership had a 3-percent interest. (Watson later claimed that his ownership stake in Moonlight Bandit did not commence until March 2006.)
The Elizabeth City Advance reported in November 2005 that Watson helped draft legislation seeking $500,000 earmarked for marketing and promoting the Parton Theater. The paper reported that Watson was going to work simultaneously for the Northeastern Partnership and Moonlight Bandit for 18 months, before moving over to Moonlight Bandit full-time.
Former US Senator and NC Attorney General Robert Morgan reviewed Watson’s dual employment for The Northeast Partnership. Morgan found no conflict of interest because “no public funds will be expended or benefits provided to the private entity.”
State Auditor Les Merritt issued a report in Spring 2006 finding Watson had a conflict of interest “by any reasonable person’s definition” by working for the Northeast Partnership while planning future employment with one of the Partnership’s clients -- Parton and Moonlight Bandit.
This was not the first time that Watson has ended up on
both sides of deals promoted by the Northeast Partnership (now called the Northeast Commission). The
Carolina Journal has reported on a number of instances where Watson and other Northeast Partnership officials have sought personal benefits from businesses they have recruited to their region. In 2001 and 2002, Watson urged a biotechnology company to give the Partnership equity ownership in their business in exchange for help obtaining financial incentives. In 2002, Watson reportedly sought a stake in an ethanol plant planned for Martin County. In 2003, Datacraft Solutions alleged that Northeast Partnership representatives sought a 15-percent stake in Datacraft in exchange for services offered by Partnership representatives’ side businesses. Datacraft officials said they were told that Watson owned 50-percent of one of the side businesses in question, and that Watson would “close deals” for Datacraft.
Is that the fat lady singing?
Randy Parton performed his first show in the new theater on July 26, 2007. City officials, counting on significant ticket sales to pay off the bonds, were dismayed at the small crowds showing up for Parton’s shows. Just four months into the life of The Randy Parton Theater, many observers could see that this taxpayer-funded venture between Rick Watson, Randy Parton and the city of Roanoke Rapids was in deep financial trouble.
On December 6, city officials barred Parton from performing at the theater after Parton reportedly showed up for work intoxicated. On January 8, 2008, Roanoke Rapids stripped Parton’s name from the theater, renaming it “The Roanoke Rapids Theater.” City officials began working on separating themselves from Randy Parton.
In February of 2008, the City of Roanoke Rapids reached an agreement with Moonlight Bandit Productions which was described by Mayor Drewery Beale as a “divorce.” Parton would walk away with $546,986 from the city and $203,013 from three bank accounts that were in his name (approximately $75,000 of the funds in those accounts was set aside to pay local creditors).
John Hood, president of the Raleigh-based
John Locke Foundation, provides the
moral to the Parton theater story: “To put it bluntly, the citizens of North Carolina did not form a government, draft and approve a constitution, and build a centuries-old tradition of republican governance for the purpose of showcasing country music talent … Government has a role to play in economic development, but only indirectly. If it performs its appointed tasks properly, its community will become an attractive place to live, work, and invest. It may even become an attractive place to showcase country music – just not on the taxpayers’ dime.”
Cutting its losses
In the spring of 2008, after separating themselves from Parton, the city of Roanoke Rapids made several moves to attempt to improve or recoup revenues from the declining theater venture, including retaining a new management company, the South Carolina-based Gilmore Entertainment, to produce shows. But in July 2008, the theater’s employees found themselves out of work as the theater went dark. Meanwhile, the various public officials who had once so fervently supported the debacle prepared to defend themselves against a
lawsuit filed by the
North Carolina Institute for Constitutional Law (NCICL).
The lawsuit was filed even as the Roanoke Rapids City Council announced that they had no choice but to raise property taxes for citizens by almost nine-percent, and more increases may be coming. The $21.5 million bond debt must be paid, even though property owners had no say in the making of the deal.
Meanwhile, city leaders began negotiating with Gilmore Entertainment, which runs the highly successful Carolina Opry in Myrtle Beach, to keep the project afloat. But Myrtle Beach has one thing that Roanoke Rapids doesn't have: a beach.
In July of 2008, lawyers for Parton asked that the lawsuit be moved to North Carolina's business court. Stating that the plaintiff, a North Carolina taxpayer, lacked "standing", the court ultimately dismissed the suit in January 2009.
If those who are forced to pony up the tax dollars which are being used to pay for these projects lack the "standing" to sue the government for misusing their tax dollars, one wonders if anybody has the requisite background.
In any event, having run out of options, the city of Roanoke Rapids entered into an agreement in October of 2008 to sell the theater to Chicago businessman Lafayette Gatling for a paltry $12.5 million - leaving taxpayers (who lack "standing" to challenge the decision) holding the bag for the enormous losses. The city financed the sale, for which Gatling was to pay $98,000 per month, though the project debt will require a payment from the city of $142,000 monthly, with the last payment in May of 2023. The deal still leaves Roanoke Rapids
$10 million in debt.
But blaming the slow economy, in February & March of 2010, Gatling
failed to make his scheduled lease payments, potentially putting taxpayers another $196,000 in the hole.
The entire project, from concept to the court to the ongoing settlement, illustrates just how badly things can go wrong under the use of tax increment financing (Amendment One). Should this method of incurring debt without the vote of taxpayers, who will ultimately be responsible for the bill, be repealed?
Read more about the Randy Parton Theater story in the exclusive investigative series on the project by the Carolina Journal.
