Purchase Agreement Invalidated by Secretive Manipulation

This is the 5th post in the “The Privatization of Public Land” series by Jack Guerin, concerning the saga of  the Fort DuPont Redevelopment and Preservation Corporation (FDRPC). Jack Guerin is an anti-corruption advocate with FightDECorruption.com. This series currently consists of 10 posts, and may grow to more. A post will be published every day Monday through Friday over the next two weeks (April 22, 2024 to May 3, 2024). Click Here for access to all published posts.

FDRPC staff and board debated whether the enabling legislation empowered the Fort DuPont Redevelopment and Preservation Corporation (FDRPC) to sell protected Open Space Land to the campground developers. FDRPC decided not to test this proposition by admitting to a “Title Defect” which could not be corrected.

However, the debate over the enabling legislation is moot because a convoluted process invalidated the more than 100 page Real Estate Purchase Agreement. This Agreement was never approved by the FDRPC Board as expressly required by contract language.

In addition, the Real Estate Purchase Agreement was never finalized and remains incomplete. A total of 29 exhibits and due diligence documents are either missing or incomplete, lacking signatures, dates, and other information. Only one document supporting this agreement is appropriately signed and dated.

Our lawsuit argues that FDRPC lacks the statutory authority to privatize protected Open Space Land without action by the General Assembly. However, more than statutory authority is required. The FDRPC Board would also need to assert its authority through an approved, completed and appropriatelly executed legal contract. That never happened with the campground project.

FDRPC Board Never Approved the Campground Sale

The Real Estate Purchase Agreement for the campground sale was “expressly contingent upon the approval and consent” of the FDRPC Board as stated below:

^{“Section 9.15 Approval of Board of Directors
This Agreement is expressly contingent upon the approval and consent of the Board of Directors of the Seller.”}

A FOIA response from FDRPC Counsel stated that the contract was approved at the Board meeting on December 3, 2019. However, the minutes of that meeting reveal that a majority of the board refused to approve the contract raising five issues which they wanted addressed. Below is quoted from the December 3 meeting minutes.

^{IV. Adjourn to Public Session
A motion was made to return to public session by Mr. Parets, seconded by Mr. Diliplane. Motion carried.}

_{Mr. Walton outlined the five conditions relating to the Blue Water Development draft agreement as discussed in Executive Session. Those conditions are as follows:}

_{1. Financials & Tax Return from Todd Burbage to be submitted to the Finance Committee for approval during the Approval Period and the necessity for ensuring that the Guarantor remains financially able to back the Note.}

_{2. Clarification of Design Guidelines during the Approval Period to address the concern/objection to the Kampgrounds of America reference.}

_{3. Completion of the Exhibits as referenced in the Agreement.}

_{4. Clarification that the improvements to N. Reedy Point Road will be per DelDOT specifications.}

_{5. Corporation’s right to extend would be changed from 90 days to 180 days.}

The campground sale was seller-financed with the Fort Corporation extending a $2.1 million loan to Todd Burbage and the purchasing group. The board members’ most prominent issue was a request for Burbage’s financials and tax records to ensure that he “remains financially able to back the note”. The board was also requiring that the contract exhibits be completed.

Jeff Randol, former FDRPC Executive Director, signed the contract without board approval on December 30, 2019, less than a month after the December 3rd meeting. There were no additional board meetings in December, and the board didn’t meet again until February. There was no further discussion of the campground contract at subsequent board meetings. The contract was never approved by the FDRPC Board.

Shawn Garvin and Higher Authority

The FDRPC Board minutes for May 8, 2019 report that a few board members visited Blue Water’s Massey’s Landing RV campground in Millsboro. During the discussion, Secretary Garvin raised the following question:

“Mr. Garvin questioned whether the Massey’s Landing model translates to the Fort DuPont site as the fort site does not have a beach.”

Mr. Garvin’s question focused on the economic viability of a luxury RV campground at Fort Dupont, which is a fundamental issue.

As Secretary of DNREC, Mr. Garvin has a unique role on the FDRPC Board. The General Assembly made DNREC the sole shareholder in FDRPC, which makes Mr. Garvin’s agency the governmental parent responsible for this public-private partnership.

Eleven board members participated in the Executive Session at the December 3, 2019 meeting. Shawn Garvin is the only one of these eleven members still serving on the board except for Bert Scoglietti, who is a non-voting member.

Following this Executive Session, board members shared with members of the public that Secretary Garvin spoke in vigorous opposition to the campground proposal.

I’m shifting to italics, indicating that the following scenario is presented as a hypothesis to explain how, after the board rejected the campground contract, the Executive Director signed the contract which was never mentioned again at a board meeting. What is the back story which could explain this strange episode?

Mr. Garvin is at the highest level of state government reporting directly to Governor Carney. Mr. Garvin’s professional experience and responsibility argued against executing a multi-million-dollar contract without any due diligence or a complete contract document.

My hypothesis is that FDRPC Board Chair, Bryon Short, who served in the General Assembly for 12 years and was appointed by Governor Carney, went over Secretary Garvin’s head and appealed directly to the Governor.

Mr. Short was the first FDRPC Chair appointed by Governor Carney. The second Chair Mr. Carney appointed was John McMahon. Mr. Short is Executive Director of the Delaware Contractors Association. Mr. McMahon was Executive Vice President of the same association for 27 years. The Delaware Contractors Association has been Governor Carney’s go to organization for FDRPC Board leadership.

A “Swiss Cheese” Draft Purchase Agreement

The FDRPC Board also demanded that the contract document be completed. Another FOIA response revealed that the contract document was never finalized and remains incomplete. A total of 29 exhibits and due diligence documents are either missing or incomplete, lacking signatures, dates, and other information. Only one document supporting this agreement is appropriately signed and dated.

Multiple FOIA responses revealed that none of the missing and incomplete documents were ever addressed almost three years after the Purchase Agreement was executed. That’s a lot of holes in this “Swiss Cheese” contract. Following is a review of what was missing from the draft Agreement. The following six exhibits are missing:

_{B    Approved Site Plan
B-1 Final Approved Site Plan
C    Personality
D    Permits
F    Utility Contracts
I     Assignment of Contracts}

These missing exhibits are referenced in the text of the Agreement and focus on critical issues. They represent 40% of the 15 total exhibits. Even the exhibits are missing exhibits. The three exhibits listed below are all missing “Exhibit A Legal Description.”

_{Exhibit K Form of Mortgage
Exhibit L Assignment of Rents
Exhibit M Form of Collateral Assignment}

Exhibit G also references three exhibits “AA”, “BB” and “CC” which are also missing.

There are a combined total of twelve missing exhibits. All these missing exhibits are labelled “To Be Attached.” This terminology would only be used in an incomplete draft.

Below is a list of seven exhibits which are included in the Agreement, but are unsigned and undated. (Exhibit A has no signature page) Many of these exhibits are missing other information:

_{Exhibit G is the Bill of Sale, Assignment and Assumption. This exhibit is unsigned and undated.}

_{Exhibit H is the Certification of Non-Foreign Status. This exhibit is unsigned, undated, with blanks for missing content.}

_{Exhibit J is the Purchase Money Promissory Note. This exhibit is unsigned and undated, and the term is blank.}

_{Exhibit K is the Personal Money Mortgage and Security Agreement. This Agreement is unsigned and undated. 7(b) is “Omitted.”}

_{Exhibit L is the Assignment of Rents. This exhibit is unsigned, undated, and is not notarized.}

_{Exhibit M is the Form of Collateral Assignment. This exhibit is unsigned, undated, and is not notarized.}

_{Exhibit N is the Guaranty and Suretyship Agreement. This exhibit is unsigned and undated.}

Only one of the 15 contract exhibits was signed and dated. This was Exhibit E—the DNREC/SIRS Agreement. This was an internal FDRPC document which Jeff Randol signed in 2016. As an internal document, this was the only exhibit which didn’t require a signature from Todd Burbage representing the purchaser group. Todd Burbage signed none of the exhibits in the draft contract.

This contract is also missing virtually all of the due diligence documents. There are 11 due diligence documents listed in Schedule I at the end of the Agreement. Only one of these documents is included and ten of them are missing. The cover letter from FDRPC Counsel stated, “FDRPC does not have a record of the actual due diligence documents which were provided to Blue Water, and further notes that many of the items/documents listed…either are not in FDRPC’s possession or do not exist.”

This letter is ambiguous regarding whether the documents were provided and then lost, or whether they existed at all. In any case, the absence of these documents indicates an extremely casual attitude toward due diligence. The letter only mentions due diligence documents “provided to Blue Water.”  Apparently, there were no due diligence documents provided to FDRPC.

Conclusion

On December 30, 2019, former FDRPC Executive Director, Jeff Randol, affixed his signature to one page of a large stack of paper which was not a valid legal agreement. Regardless of statutory authority, FDRPC needs a valid agreement to sell the campground property.

Jack Guerin is an anti-corruption advocate with FightDECorruption.com. He is plaintiff in a lawsuit to stop the development of the campground. Click to send an email to legislative leaders asking them to pass the Joint Resolution and return this protected land to the State Parks Department.