Sand plan could put new borrowing power to use
Comfort Inn South
Town Manager Cliff Ogburn has proposed using “special assessment bond authority” to cover an $8 million funding gap in Nags Head’s plan to pump sand onto 10 miles of its beaches.
The authority, which was created by the General Assembly in 2008, has been used for water projects and roads, but never for beach nourishment.
Basically it takes the idea of a special assessment district a step further. The town could issue bonds that would be backed by the promise of revenue collected from the special district, in this case oceanfront and possibly oceanside properties. That way, the town could get the money up front for the initial nourishment project rather than waiting for the tax to be collected over a period of years.
The legislation allows it to be used for shoreline management. The town would be “blazing new territory,” Ogburn said.
The town would first have to clear two hurdles. A majority of property owners in the district — more than 50 — percent must sign a petition asking for the assessment. That majority must also represent at least 66 percent of the value of all property to be assessed.
Property owners affected by the assessment would have to be treated equally. For example, if oceanfront lot footage is the basis, all oceanfront property owners must be assessed the same amount per linear foot. The same would hold true if lot size or assessed value is the basis.
Once the assessment rate is set, it cannot be changed during the term of the project period. Also, the town would need to create a Special Assessment Improvement District.
Discussion among the commissioners Wednesday focused on three major areas: the basis for the valuation, the geographic composition of the improvement district and the duration of the debt instrument.
Mayor Bob Oakes said he preferred basing the assessment on property value since multi-story properties such as hotels would receive greater benefit from nourishment but pay the same rate as a single-family dwelling under the linear foot method.
Commissioner Anna Sadler expressed concerns that since current valuations are much higher than actual market value, an assessment on that basis might be unfair. She also said an existing assessment on a property listed for sale might negatively affect new buyers who would inherit the assessment costs.
The duration of the debt instrument concerned Commissioner Wayne Gray. While a longer assessment period, such as 10 years, would require small annual payments by property owners, Gray expressed fears that the sand funded by the project would wash away before the debt was paid. He said he preferred a five-year period for the term of the project.
A limited discussion also centered on what properties to include in district. It was generally agreed that the project area would run from Blackman to McCall streets and would include 712 oceanfront parcels and another 383 parcels east of N.C. 12 or Old Oregon Inlet Road that are not on the oceanfront. The 428 parcels west of Old Oregon Inlet Road were discussed, but sentiment appeared to lean toward excluding them.
The estimated cost of the project is $36 million. Oakes told the board that he expected $18 million from the Dare County Shoreline Management Fund. The town would borrow another $10 million from the fund, he said, and pay it back with proceeds from an additional 1 percent of the occupancy tax, if it is authorized by the General Assembly. That would leave about $8 million to be funded from the special assessment district. Over five years, $1.6 million would be needed annually from the new assessment.
Oakes said the petition process would provide out-of-town property owners a “vote” on beach nourishment, a sore spot in the past among many of them. He also said that if those in the district were not willing to help fund “less than one third of the project costs, we have a problem.”
Even if the town secures the necessary petitioners, the issue of obtaining easements from oceanfront owners still remains as another hurdle before sand could be placed on the beach fronting those properties. Consensus seems to be in favor of obtaining the petitions for the special assessment first and dealing with the easements later.
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Mico says:
“…Gray expressed fears that the sand funded by the project would wash away before the debt was paid. ”
Enough said. Do they listen to themselves?
Ray says:
Russ, your final paragraph on easements calls for additional information. Readers should be reminded the county (out of the beach nourishment fund) has already spent over $2 million paying Lee Wrenn & Assoc.(Wrenn is now a county employee) to get beach nourishment easements for the no longer viable Army Corps project. Many of them are in the Nags Head project area. Of course, some objected and had to be taken to court. And, of course some in the “historic district” want no part of beach nourishment. Those easements are all worthless, and Nags Head will be starting anew in that area. No one knows for sure how that will be handled at this time. Some think a simple paper signature will suffice. Time wil tell.
Russ Lay says:
Ray–I am watching the easement issue. Since it looks like they will defer it, we will report when it comes back ’round.
Selena K says:
By hook or by crook, as they say…
Mabel Choate says:
Nice to see NH doing this on their own without asking for any state/federal support. Any benefits that accrue from nourishment will be local, so this is the way to go!