Bald Head Island could buy ferry system for $ 52 million
The village of Bald Head Island is seeking $ 52 million in funding that will allow it to purchase the island’s ferry system instead of the Bald Head Island Transit Authority.
Since December, the authority has reached an agreement with the owner of the ferry system to buy the company for $ 48 million, subject to the authority’s ability to obtain funding approval from the NC Local Government Commission. .
But for months, funding approval was delayed by questions about public support for the sale and its price, which is much higher than the ferry system’s appraised value.
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The Ferry Transportation Authority Act that created the authority requires that ferry assets be purchased at or below appraised value.
The majority of the sale price comes from the appraisal of the 52-acre Deep Point Ferry Marina at $ 36 million, although Brunswick County puts the tax value of its 72-acre parent plot at just $ 16 million.
In order to gain clarity, the Local Government Commission has compiled questions that “need to be answered” before funding is approved, along with a list of questions for which the answers would be “good to know”.
But before they can answer these questions, the village tries to buy the ferry system itself.
According to a letter from the village, he expects the Local Government Commission to consider his request for funding approval at its August 3 meeting, which would depend on a referendum on bonds held before voters in November.
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The village would pay for the bond issue with the income generated from operating the ferry as well as from property taxes.
With both entities now looking to purchase the ferry system, the timing of the Local Government Commission decisions on funding approval will become crucial.
The earliest the authority could answer questions posed by the committee and obtain approval would be at its July 13 meeting. Authority President Susan Rabon said their list of questions would be answered by the August meeting.
Under a 1999 agreement between the village and the ferry system, the village has the right of first refusal to purchase the system. He waived that right last year until August, which allowed the ferry system and authority to come to an agreement last December.
The authority asked the village to extend this exemption, which the village refused.
If the authority’s funding offer is not approved within the next two months, the village may be in the best position to purchase and upgrade the system.
These are some of the most important questions the commission seeks answers from the authority.
Why is there such a big disparity between the appraised value and the tax value of the same properties?
According to the commission, due to the problems raised by the evaluation of the system, a completely new evaluation is necessary. Rabon said the assessment process is already underway.
“If the second assessment comes back with the same issues, I’m going to push as hard as I can to keep it from going forward,” State Auditor Elizabeth Wood said at the last committee meeting.
Did the assessor receive additional information that Brunswick County did not have?
This could explain the difference between valuation and tax value, but accounting for the information used is necessary.
Why is the valuation so much higher than the benefits of the ferry system?
According to the commission, the valuation of the ferry system is approximately 12 times its earnings before interest, taxes, depreciation and amortization (EBITDA), whereas typically transactions of this type would have a valuation of only 4 to 6 times its EBITDA.
Does the ferry’s cash flow projections take into account the overhaul of the baggage delivery system?
One of the concerns of community members about the purchase price is that they feel they will have to bear the costs of upgrading the ferry system, which the evaluation did not take into account.
This could mean that instead of paying the obligations out of operating revenue, taxpayers and ferry passengers would have to shoulder a greater burden than is allowed, especially if the ferry’s financial projections do not match its historic goodwill.
Is there sufficient community support, including from regular users of the ferry system, to fund the project?
The ferry will rely on the revenue generated from the fare increase to support its bond financing, making community support essential. Some of the evidence for support would come from comments given at community meetings.
Journalist John Orona can be reached at 910-343-2327 or [email protected]