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Back You are here: Home News Local and State News Local County To Discuss Beach Nourishment Funding: New Requirement Costly For County

County To Discuss Beach Nourishment Funding: New Requirement Costly For County

The New Hanover County Board of Commissioners will discuss beach nourishment funding at their September 4th, meeting. The Army Corp of Engineers is requiring the County to sign an agreement to be 100 percent responsible for cost overruns and any liabilities incurred with the project. Historically, the federal, state, and local governments share in unanticipated costs.  

By: Willard H. Killough III
Managing Editor

CAROLINA BEACH – The New Hanover County Board of Commissioners will meet Tuesday September 4. One major topic on the agenda is funding for local beach nourishment projects. Projects are scheduled for Carolina Beach and Kure Beach later this fall and may end up costing substantially more than originally anticipated. Dwindling federal and state funding has long been a fear for County leaders and the three beach towns. A contingency plan was adopted last year to allow the County to attain a permit similar to the Army Corp of Engineers permit for beach nourishment should federal funding fall short in the future. That plan splits the cost between the county and beach towns.

Unfortunately, federal funding was eliminated for Kure Beach’s project set to begin later this year. Since the federal government isn’t funding it, the State of North Carolina will not fund their share. Leaving only local room occupancy tax dollars available. Carolina Beach and Kure Beach leaders met with County leaders to find a way to shift funding from the Carolina Beach project to help fund the Kure Beach project. 

Now the State has said they will not sign a memorandum of agreement for funding because it would require them to pay for any increased additional costs above the original project cost.
County Commissioners have to decide if they are willing to pay substantially more than previously anticipated.
The Towns of Carolina Beach and Kure Beach traditionally receive beach nourishment projects at the same time. The project is called, "Carolina Beach and vicinity." Both projects are combined into one to save on mobilization and permitting costs.

Projects have historically been paid for by federal, state and local funds. Locally the County and the three beach Town’s of Carolina Beach, Kure Beach and Wrightsville Beach have a Room Occupancy Tax on all hotels, motels and vacation rentals. Over the years that fund has grown to $40,165,475 with another $711,189.00 generated from a room tax in the unincorporated area of the county.

According to New Hanover County Manager Chris Coudriet, beach renourishment projects have been authorized by the federal government for both Carolina Beach and Kure Beach. The United States Congress has authorized the federal government to spend $4,400,000 on the Carolina Beach renourishment project but has authorized no funds for the Kure Beach renourishment project. The state government is authorized to contribute $1,180,000 for the Carolina Beach project, for which Carolina Beach has been authorized to transfer to Kure Beach who is receiving no federal funds. Both beaches are on a three-year renourishment cycle where fiscal year 2013 is the next renourishment cycle for these beaches.

Coudriet explained under “contributory authority”, which was recently approved by Congress, projects can now be designed with an expanded scope above the minimum standards authorized by the federal government. Both the Carolina Beach and Kure Beach projects are designed with an expanded scope. However, under this design, the federal government is only responsible for 65% of the costs of the minimum standard and the state and local government are responsible for the remaining 35% of the minimum standard plus 100% of the costs above the minimum standard.

Further, under the contributory authority, the State of North Carolina is not willing to sign the Memorandum of Agreement with the United States Army Corp of Engineers to accept their share of the liability above the estimated project amounts. These liabilities could result from bids received at higher costs than the estimated project or other unforeseen risks such as dredged sand being inferior quality, lawsuits, insurance claims, etc. This translates into increased exposure to the County for those potential liabilities.

Coudriet explained county staff has estimated this could be as much as $3,525,000 excluding any unforeseen risks.

Town of Carolina Beach:
The United States Congress has authorized a beach nourishment project for the Town of Carolina Beach. It is estimated that this project will cost approximately $7,700,000. Congress has authorized the Federal Government to spend $4,400,000 on this project. The balance of $3,300,000 will be shared between the State of North Carolina and New Hanover County. New Hanover County's portion will be approximately $2,120,000 and will be paid from the Room Occupancy Tax (ROT) funds and the State of North Carolina's share will be $1,180,000. The existing permit for this project expires in 2014.

Town of Kure Beach:
The Federal government has authorized a beach nourishment project for the Town of Kure Beach; however, no funding is being provided from either the Federal or state governments. Therefore, the entire cost of this project would come from local funds. The Town of Carolina Breach has agreed to transfer the state's portion of the Carolina Beach nourishment of $1,180,000 to Kure Beach if the nourishment project at Kure Beach proceeds. The estimated cost of this project is $6,400,000. The existing permit for this project expires in 2043.
In order to reduce the overall costs, the United States Army Corp of Engineers plans to bid both projects as one. If these projects are bid separately then there could be increased mobilization costs.

Problems:

Previous arrangement: County was liable for 17.5% of costs above the estimated project amount. These additional costs could be the result of bids coming in higher than estimated, dredged sand being of inferior quality, lawsuits, insurance claims, etc.

New arrangement: County is responsible for 100% of costs above the estimated project amount. As previously mentioned, these additional costs could be the result of bids coming in higher than estimated, dredged sand being of inferior quality, lawsuits, insurance claims, etc.

Contributory authority: Previously, projects were designed to a minimum standard that did not allow for an expanded project scope. Under this arrangement, the federal government paid 65% of the cost with the remaining 35% being shared by state and local governments. Under contributory authority, which was approved by Congress, projects can now be designed with an expanded scope. Under this design, the federal government is only responsible for 65% of the costs of the minimum standard and the state and local governments are responsible for the remaining 35% of the minimum standard plus 100% of the costs above the minimum standard. The two beach nourishment projects as designed are expanded scope projects. The approximate cost of the minimum project for Carolina Beach is $6,900,000. Since the Federal government is not funding the Kure Beach project, it can be assumed that the minimum project costs for Kure Beach is zero dollars.

Memorandum of Understanding (MOA): This new arrangement will require that the county sign a Memorandum of Agreement with the United States Army Corp of Engineers which will expose the county to additional liability. Because of changes in the contract language, the State of North Carolina is not willing to continue to be the signatory on the MOA.

ROT Fund: The estimated beginning balance of the ROT fund for FY 2013 is $40,165,475. It is estimated that approximately $2,600,000 will be added to the fund during FY 2013.

If the Board of Commissioners decide to move forward and take action on the issue at their September 4, meeting, and the Army Corp moves forward, a 30-day public announcement period would begin the following day with receipt of bids following that period. A contract would be awarded on October 20. The nourishment projects would have to take place between November 15, 2012 and April 30, 2013 outside of sea turtle nesting season. 

On Friday August 31, County Commission Vice Chairman Jonathan Barfield sent out a statement titled, “Beach Renourishment, The lifeblood of our tourist economy”.

Here’s the statement in full:
The lifeblood for tourism in our community is our beaches.  Healthy, sandy beaches with easy access for visitors and residents alike lead to full hotels, diverse retail shops, and quality restaurants throughout New Hanover County.  Sustaining the quality and accessibility of our beaches is a key priority for our community’s long term success.
The best way to keep healthy and sandy beaches is to participate in what is called beach nourishment.  The idea with beach nourishment is a regular effort (every three to 4 years) to place sand that has eroded from our beaches back on the beaches themselves.  This coming winter represents one of those regularly scheduled nourishment events.
Traditionally, the federal, state, and local government partner in beach nourishment in New Hanover County.  When we begin nourishment later this year at Carolina and Kure beaches the partnership between the feds, the state, and the county will take on a different form, and the different form is an important policy topic for the board of commissioners at its meeting Tuesday, September 4.
What’s different this coming winter than nourishment projects in years past?  New Hanover County is being asked to sign a memorandum of agreement (MOA) with the US Army Corps of Engineers that makes the county 100 percent responsible for cost overruns and any liabilities incurred with the project.  Historically, the federal, state, and local governments share in unanticipated costs.
Why is the partnership model changing?  New Hanover County is the first community in the country to use what is called contributing authority.  Congress passed a bill allowing contributing authority earlier in the year.  The benefit of contributing authority is that we can use federal permits to conduct a larger nourishment project than Congress funded.  Doing so is good for the overall management of sand and protects more of the beach longer.  However, the consequence in using this new authority is the aforementioned exposure of owning 100 percent of any cost overruns or project liabilities.
The county manager has told the board of commissioners that beach nourishment projects managed by the federal government rarely exceed the budgeted amount.  That’s good news.  However, if the project exceeds its planned amount it could be as high 25 percent more than the plan contemplated. 
If we don’t agree to execute the MOA with the US Army Corps of Engineers then we lose not only the chance to nourish Carolina and Kure beaches this winter, we’ll lose the shared revenue the federal government and state government have authorized for the nourishment projects.  It could be another 3 years before Congress and the state fund nourishment projects at Carolina and Kure beaches if we don’t proceed this year.  In effect we could go 6 years without nourishment on Pleasure Island if we don’t proceed with signing the MOA.  That’s a lot of erosion and shoreline loss that we simply can’t afford.
Tuesday, September 4 represents a big night for the overall health of our tourism lifeblood.  Don’t miss the chance to participate in your county government as it chooses the way to deal with beach nourishment this coming winter.