Karl Baker|Delaware News Journal
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In late 2008,withthereal estate marketinfree fall, a land-hungry Delaware Department of Transportation purchased two parcels ofrural flatlandnext to Route 1south of Dover for nearly $2.8 million.
Ten years later, it sold the parcelsfor $270,000 toinfluential lawyer and developer John Paradee. It wasapricethe state says reflected a DelDOTdecreethat the land would nevergaina direct commercial turn-on or turnofffromthe adjacent highway– Delaware'sprimary north-south artery.
Today, those deals and their multimillion-dollar price discrepancies areattracting controversy, manifested aspolitical assaultsonDelaware's Democratic Partyestablishment just weeks before the November election.
The land salealso sits at the center of an ongoing lawsuitinDelaware'sbusiness court over DelDOT's potential granting ofaccesses fromRoute1 to new commercial real estate projects in the Milford-to-Frederica corridor.
The suitis amongthe latestjockeying betweendevelopersseeking to win arace to richesin anareaplanned asthe state's next exurban hotbed,one whose growth may hinge on the success of the nearbytaxpayer-subsidized youth sports complex, DE Turf.
At the center of it all isParadee,whoproclaims to be"widely recognized for his ability to secure approval for difficult or controversial projects." In December2018, he purchased the roughly 11 acresof DelDOT landwith ateam of investors.At 44%, Paradee's stake is the largest in the partnership.
Combinedwith adjacent parcels, the landwas intended toform theplatform on which to build Asbury Square,ahotel, restaurant and retail development. It is one ofthree ambitiously proposed projects designed tocapitalize on government's pushto encouragedevelopment in the corridor.
With theelection approaching,political attacks on Delaware Democratshave come from a Republican activistwho says he spent much of the past year investigatingthe DelDOT land deals.
As part of the effort, Sam Chick, chairman of Delaware's Young Republicans,obtained scores of internal state emails, land deedsand other documents that revealed the prices that DelDOT paid and then received for the land.
In September, Delaware Online/The News Journal requested from the state copies of all documentsprovided to Chick.It received them on Friday withsome emails within the documents redacted.
Days earlier, Chickpublishedawebsitethat turnedhis investigatory conclusionsinto a political attack. While notingParadee'sbrother is Dover Sen. Trey Paradeeand his sisterworks as legal counselforGov. John Carney, Chickclaimsthe dealshows a "political insider" who received "special treatment through a secretive and abnormal sale process."
Healsopoints to recent real estate listings showingParadee's combined 21 acresasupfor sale for $6.5 million, two years after 11 of the acres sold for $270,000.
Chick, who in years past mounted two unsuccessful campaigns for Delaware's House of Representatives, saidhe began investigating the deals after controversy last year envelopedAsbury Square, which sits across Route 1 from DE Turf.
Two days before John Paradee filed a state permit application for the developmentin July2019,Trey Paradee's bill authorizing a hotel taxthat would send nearly $1 million annually to DE Turf passed the state Legislature. The measure prompted abacklash andwas later repealed.
SECOND THOUGHTS: Delaware lawmakers undo Kent County hotel tax to fund DE Turf sports complex
In response to Chick, DelDOT saidthe land deals' price discrepancy wasa result of the dictates of the law, not of a secret sweetheart deal.
In order to preserve the efficiency of the Route 1 highway corridor, DelDOTbought the land in 2008 to prevent the seller from developing it and building a newcommercial turnoff to Route 1,agency spokesman C.R. McLeod said. It then sold the land with a limitation imposed in perpetuity.
Transportation Secretary Jennifer Cohantold Chick in a telephone conversation–which he recorded earlier this year and shared with The News Journal–thatDelDOT regularlypays more for land than it receives when subsequently selling itbecause the statemust appraiseproperty it acquiresunder a standard called"highest and best use."
"It's not abnormal, sadly to say," Cohan said.
Others are piling on to Chick's criticism, in particularexecutives fromNew Yorkcompany TransPerfect, whofor yearshave spent lavishly to criticizeDelawareinstitutions through various advocacy organizations.
Their latest, called Citizens forTransparency and Inclusion, said it isspending $1 million during the current election cycle to opposeCarney. A portion of the spend is funding an ad that claims the DelDOT deal shows Carney'spoliciesnot working "for us."
OUTSIDE INFLUENCE: Why this N.Y. businessman (and his mom) are still attacking Delaware — and Biden
Carney spokesman Jon Starkey said in a statement thatthe governor was not involved in the land sale to Paradee.
Carneyexpects his administration to followstate regulations while selling land, Starkey said, and there is no"reason to believe anything different happened in this case."
For his part, Paradeedismissedthe attacks, saying they are "obviously politically motivated garbage."
He and his partnering investors purchasedpropertythat was "landlocked," he said,an apparent reference to the surrounding parcels beingowned by either his teamor a neighboring landowner.
"The proper process was followed for lands of 'no independent utility,'as dictated by DelDOT," Paradee said in an email, but he did not note that the land could be used for residential development.
Paradee alsopushed back when asked about his combined 21 acresbeinglisted for salefor $6.5 million.
"The suggestion that we are 'selling the property for $6.5M'is recklessly unfounded and false, demonstrating just how dangerous it can be for anyone to swallow whole on baseless rumors spread by naysayers," he said, referencing the recent political attacks.
Paradee backtracked when shown a listing of the sale on acommercial real estate website. Hesaid it was apparently posted by hisbroker Jim Tancredi, but"honestly, this is the first time I’ve ever seen that listing."
The property also was listed asfor sale Thursday on another real estate site for $5 million.
Earlier this year, Paradeedecided to sell the Asbury Square land, before changing his mindin July or August, he said.
"It does not reflect our present plan, which is to develop and lease pad sites rather than sell the entire property," he said.
Other controversial development: How a fight over high-end development could cost Delaware more than $10 million
A history of controversialland deals
The uproar over the land sale follows years of controversies over development of Delaware's once-rural tracts.
Past controversies includedchummy relationships between bankers and developers that led to the downfall of Delaware's once-iconic Wilmington Trust. There was a legal tug-of-war between the state and a secretive developer over Millsboro waterfrontthat led to a more than decadelong lawsuit.
And, there were controversial DelDOT land deals that drew the suspicions of the FBI and tainted the legacy of former Gov. Ruth Ann Minner.
DelDOT's 2008 purchase of the Frederica land occurred toward the end of a handfulof such deals.
It also occurred just after Paradee purchased anadjacent propertyandlaunched his plans for thedevelopmenthe would later call Asbury Square.
DelDOT purchased the larger ofthe two parcels in October 2008 for$2.1million.The smaller onewas$670,000. The price tag was determinedbased upon a "highest and best use"appraisal conductedbyWilmington's Integra Realty Resources.
McLeod, the agencyspokesman, said the acquisitions were to further two separate state programs; one to preserve the efficiency of Route 1, the other to build an interchange south of Frederica.
"Basically, we denied a proposed development request as we did not want additional access points to Route 1 from this parcel, and knowing that we would likely need some of this property for the future project, DelDOT purchased the parcels to prevent that development from happening," McLeod said.
Beforethe purchase, thelarger, pricier parcelhad been held by an entity calledJordan Enterprises 2005 LLC.
COMPETING DEVELOPMENT: Water park, luxury cabins part of newly proposed development to support DE Turf
While the company's true owner is difficult to determine, the sales deed listsRodney Mitchell Jr. as the firm's manager.
Mitchell, a now deceased Dover developer, andJohn Paradee had a business relationship. Whenthe Delaware Supreme Court ruled in Mitchell’s favor in a regulatory dispute in 2010,Paradee was hislawyer.
On its 2008 sales deed,Jordan Enterprises also listsits address at 1164 Apple Grove School Road inCamden-Wyoming. In 2008, that propertywas owned by a Teresa Mitchell, Rodney Mitchell's wife.
According to Delaware business records, Jordan Enterprises previously had been called QWERTYUIOP ASDFGHJKL ZXCVBNM LLC. That company, whose namefollows the order of letters on a keyboard,held the parcel prior to thename change.
The companytook ownership of the parcel in May 2005with a transfer fromthe previous owners, Neil and Edna Dunn,for a nominal price of $10. A realty transfer tax of $12,300 was paid as part of the deal.
Three years earlier, Mitchell and an associate paid off a $230,000 mortgage ona separate parcel of land,money that had beenlent by the Dunns.
Neil Dunn died in 2010. His obituary called him a civil engineer who had worked “for the State Highway Department" andtaught at area colleges.An official with the Delaware Department of Human Resources said no records exist of Dunn working for DelDOTbetween 2001 and 2009.
A call to a phone number linked to Edna Dunn was not returned.
DelDOT purchased the smaller parcelalso in October2008from Robert I. Thomas, described on the deed asthe liquidating trustee for Mitchell andLloyd F. Arnold.
More: Sen. Paradee: My family did not plot to pass DE Turf bill. (Opinion)
Birth of DETurf
In the years after DelDOT's 2008 landpurchase, a group of Kent County power brokers, including Paradee, began topushthe state for approvals inthe construction of a youth sports complex onparcels of land just south of Frederica.
They also wanted a new interchange over Route 1 that would connect to the facility.
DEVELOPERS GET HELP:Interchange would benefit backers of sports complex
The youth travel sportsindustry had been booming, valued then at about $10 billion annually,moneyderived mostlyfrom parents paying for tournaments, hotels and food at complexes throughout the country.
But DelDOT's then-Secretary Shailen Bhatt was waryto rush planned highwayexpansions, wanting not to repeat the agency’s handling of highway land deals in the past. In 2014, he leftthe agency.
In subsequent years came additional debate, officialreviews and a new DelDOT secretary. In 2017,DE Turf officially opened and construction on the adjacent $18 million Route 1 interchange construction project was progressing.
In July of the following year,Paradee sent an email to DelDOT, with apetition to purchase the11acres of property directly across the highway from DE Turf.
The agency initially rebuffed the offer, with DelDOT's Land Services Manager Beth Rosebrooksstating in an email thatthe"excess land" could not be sold foranother year or morebecauseit was stillpart of the then-uncompletedinterchange project.
In an email, Paradee said, “I’m not willing to accept this answer” andinsistedhe meet with officials to discuss the sale of one parcel that he said “has absolutely zero to do with the interchange.”
He arguedthe land was purchased in 2008 as part of the state'sCorridor CapacityPreservationProgram, intendedto preserve the efficiency of the state highwaycorridor, not part of the interchange project. He would also state in a later email that he had no intention of "requesting access from the parcels in question to SR 1.”
McLeod in his statement last week saidthis acquisition was in connection with both theCorridor Capacity Preservation Program and the South Frederica Interchange project.
Nevertheless, the state ultimately capitulated, and inAugust 2018 Cohandirected her agency to expediteParadee's request, according to the internal emails.
First, DelDOTwould need to show the purchase proposal toadjacent landowners to offerthem a chanceto bid on the property.
In an Augustemail to Paradee, Rosebrooks suggested that if an adjacentlandownercould be taken "out of the picture, we may be able to negotiate a purchase without having an appraisal done."
In her understanding of the law, she said,avoiding an appraisal would “shave off some serious time and avoid the 85% of appraised value," referencing a law preventing the state from selling property at less than 85% of its appraisal price.
Paradee agreed and said that an appraisal could "grossly overstate" the true valueof the property.
While aneighboring landowner did ultimately waive his right to bid on the property, an appraisal occurredin September and valued it between$379,000 and $442,000 –a price based on a full denial of access to Route 1.
Days before the appraisal, Paradee said in an email to DelDOT that the parcels, stripped of their access to the highway, areworthless..
"If my partners and I do not buy them, no one else will, and DelDOT will continue to own two worthless parcels of vacant, land-locked, unusable ground," hesaid.
By October, Paradeeoffered the state $100,000 for the two parcels.
Weeks later, Cohan andParadee were "in a heated text battle” over the price. The next day,Cohan emailed Rosebrooksto say, “I have (Paradee) at $275,000.”
The sale finalized the following December with Paradee acknowledging thatAsbury Squarewould notbe granted the valuable turnoff from Route 1.
Instead drivers would use a web ofaccessroads that would be built linking new areadevelopments to the newhighway interchange.
Competing developments
Nearly 19 months after his land purchase, Paradee fileda lawsuitagainst Delawareafter DelDOT deniedconcept planshis project submitted, which includeda turnoff from Route 1.
In thedenial, DelDOT attorney Brad Eaby reiterated thatthe low price Paradeepaidfor the land“was commensurate to a pre-existing denial of access.”
Paradee'slawsuit demands now that DelDOT similarly not granta new or expanded Route1 commercial accessway toa competing development, south of Paradee's land, and controlled by the ownersof Meding's Seafood. Thecompany currently owns a right-in, right-out access from its property to Route 1.
The Meding family also owns land adjacent to its seafood business and in 2012secured a commercial rezoning of 20 acres there.
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Paradee in court documents saidAsbury Square has been "unable to secure" land leases or sales to aconvenience store or gas station that would anchor the site's finances.
He said investors are waiting on the sidelines to see whichdevelopments in the area offer the best access for drivers, and aturnoff from Route1 could become the asset that tips the balance.
"No lending institution will commit to finance construction of the core infrastructure required for the (Asbury Square) project unless and until the petitioner is able to secure a pre-lease or pre-sale of the convenience/gas pad site proposed," Paradee said in court documents.
As hislawsuit proceeds, other area developershavepushed forward withcommercial plans.
In June, Steven Martinsubmitted plans to the state tobuilda water park, luxury cabins, as well asstrip malls with a gas station and convenience storeon alargely rural stretch just north of Milford. A proposed service road would cut through his properties, leading to Route 1.
In August, Paradee sent a letter to a nearby landowner, urging him to oppose permitting the competingdevelopments byfightingthe service road that would offerquick accessto Martin's property for vehicles to and from Route1.
"It is important for you to recognize that DelDOT's proposed service road will dramatically impact the access, use, and value of your property – all in negative ways," Paradee said. "The only way to stop the proposed service road is to oppose development."
A month later, Paradee spokein opposition to Martin's development during a Kent County Regional Planning Commission meeting. He told the commission he was speaking on behalf of 50 property owners who opposed Martin's development.
As part owner of Asbury Square, he also was among the 50, he said. He said he hadpursued development"the right way."
"It is simply not fair to allow other property owners or developers to pursue the same sort of approvals without abiding by the same rules and standards," Paradee said.
The county commissionrecommended that Martin's request for arezoning ofparcels from agriculture residentialto businessbe denied, a decision likely helped bydozens of farmers and other longtime residents whoopposed his development.
Whether in alliance with Paradee or not, they are a likely powerful voice in a changingarea whosepolicymakerscling to its rural roots.
A.J. Jester wasone of those residents who attended the recent Kent County planning meeting to oppose the development. Hesaid it will split up farmers' lands.
"I'm just not big on the out-of-staters trying to come in,"Jester said, referencing Martin'sNew Jersey roots."I'm basically looking out for the farmer. This is their livelihood."
ContactKarl Bakerat kbaker@delawareonline.com or (302) 324-2329. Follow him on Twitter @kbaker6.
