- Published on Wednesday, 23 January 2013 00:27
- Written by Super User
By ROBERT LEWIS
Carolina Beach Mayor
The editor of this publication in his editorial last week brought up a number of questions around the parcels of land which were purchased in the 2008 for the unfunded NC Aquarium Pier project.
As most of you know the current council did not create the problem but has been providing short and long term solutions to significantly reduce the down side risk and cost to our taxpayers as it relates to this property. To understand the current challenges with the property you have to know the land parcels themselves were acquired and loans secured by the town in 2008 with the property titles and loans setup in a non-profit holding company CBP3, LLC.
The hope of that council at that time was that the NC Aquariums would move forward with a planned educational and fishing pier as the centerpiece of the central business district. Unfortunately council went ahead and approved the purchase of this land without any formal signed agreement with the State of North Carolina agreeing to build a pier on the site.
The parcels of land are currently where the Surfside and Guy Johnson Motel sit and a couple parking lots in the area and all were purchased for $3.6 million dollars and change. The note taken out by the town at the time for the purchase was closer to $4.3 million in change to pay for attorney fees and include financing for another parcel of land for parking.
The entire property is now part of the CBP3, LLC a holding company and the town of Carolina Beach has the right to exercise the purchase of those properties and still qualify for state and federal grants to help pay for some of the cost. A caveat in this process is grant monies are targeted to the purchase of property for public trust like for a park or green space area but these grants are not provided to pay the town for property it currently owns and that is the only reason the LLC was formed.
As the editor pointed out now the pier is not coming and the state is in fact looking to privatize the Aquarium’s. The town still has some state grants which we can possibly be utilized if we wanted to build a park of some sort on the property but the challenge there is these are mostly matching grants which means the town would need to come up with close to $2 Million of our tax dollars to pay off the loan and would need to demolish buildings on the land and build a park at an additional cost. A park which cost the taxpayers between $3 and $4 million dollars just does not seem to be a good investment when we have Freeman Park, Mike Chappell Park and the Lake which serves us well for recreation and open green space.
As you know a couple of our current council representatives secured a reduction in the interest rate and terms of the financing of the property in question significantly reducing our annual debt payment. Thinking out of the box and at the direction of the bank holding our note on the property, council also restructure how we managed the revenue and expenses on the two operating motels on the property reversing our financial exposure on a yearly basis so we now find ourselves in a situation where the current revenue income basically covers our annual costs. This however is just a short term strategy which was targeted to get us through the next 5 years or so with little or no cost to our taxpayers.
The plan is that during the next 5 years the property value of these parcels may return to a closer number to what we paid for it originally. Council never planned to keep the property long term as the mission of a public entity is not to be in the hotel business and that is not in the best interest of the town to keep the property. We also made the decision in October, 2012 to begin the process of selling off this commercial real estate if possible without taking a huge hit and have recommended the board members of the CBP3, LLC execute an agreement to hire a professional commercial real estate company to do so. CBP3 interviewed a number of commercial real estate companies in November and signed a listing agreement with Paul Loukas and Café Fear Commercial in December of last year to market the properties.
Cape Fear Commercial is experienced in marketing and selling both public and private commercial real estate in the Eastern NC marketplace. After studying the market Paul Loukas is presenting his marketing plan to the board of the CBP3 LLC and providing a breakdown of the various parcels, pricing them out individually and as part of an entire package. CBP3 will be sharing with council this marketing plan and anyone with the money can bid on or make an offer on the property in an open and public process. No one has been working behind the scenes or behind closed doors in the sale of the property to date. The process took a little longer than expected because of the focus on moving the operations area out of the buffer zone, replacing open seats on council and bringing new members of council up to speed.
The reality is that the property value in today’s market may not bring the $4.3 million dollars needed to retire the note. It is not our intention or interest at this time to take a $1.5 - $2 million dollar hit on our town’s revenue reserves to quickly sell off this property. We will offer the property for sale but are prepared to hold out for our price as the market continues to improve with the plan that as we get to a breakeven on the sale of the property versus our pay off we would take action.
We have been presented with a proposal to exchange one parcel of land in this group for that of another where we could house our fleet maintenance and waste disposal facilities. There a several hurdles to overcome to work an exchange of property out but council will entertain the merits of the proposal and we will have public hearings and be open to all counter bids for this parcel of land as well.
The editor clearly understands that the only reason we are discussing real estate issues in closed sessions is so we can negotiate the best deal possible without a prospective property seller or buyer and under state allow we are allowed these discussions. That being said, in today’s real estate market I am not so sure that there is any real benefit to discussing real estate in closed session meetings. I am not in the real estate business, but my thoughts are when real estate is discussed in open session and made public discussions could open up the possibility that other potential buyers in the marketplace might jump in and present the town with a more attractive offer. I will bring this up as a point of discussion for council to consider at our next meeting.
I think every member of our current council will agree we are not fond of going into closed session meetings except as dictated by federal law concerning personnel because it does not have the appearance of total local government transparency which we all totally support.
TWO WAY COMMUNICATIONS ARE IMPORTANT FOR A GROWING COMMUNITY…. I am looking forward to working with a town appointed communications committee to develop and deploy a new town website and a Facebook page so our local town government can be more interactive with our residents using Internet based media. We are currently working on installing a video camera in council chambers so we can provide live video streaming to residents to watch our meetings live.
Again these are my views and do not reflect those of other members of council.