April 10, 2018

MEMO TO:        Mayor Barber and Board of Commissioners

FROM:             Frank A. Rush, Jr., Town Manager

SUBJECT:       Islander Drive Redevelopment - (Summary & Suggested Motions)

The Board of Commissioners is scheduled to consider formal Board actions associated with the sale and redevelopment of 203 Islander Drive at the April 10 meeting.  If approved by the Board, the 1.85 acre tract that previously included an abandoned go-kart track and bumper boat facility would be sold to A-Team Enterprises, LLC for $804,000. 

As discussed at the March 13 meeting, A-Team Enterprises, LLC would construct a mixed-use development project on the 1.85 acre tract and an additional adjacent tract (0.77 acres).  The A-Team proposal also includes public boardwalk and public parking improvements in the Louise Avenue and Islander Drive right of way adjacent to the proposed development. 

Upon the sale of 203 Islander Drive, the Town will realize a significant profit from this initiative.  As discussed in March, the Town’s total investment in land acquisition and clean-up costs is approximately $691,000.  Thus, including a $100,000 State grant awarded for this initiative and the Town’s equity in this initiative, the Town will have a total of approximately $263,000 available for re-investment in public beach access improvements at the Western Ocean Regional Access and streetscape improvements along the remainder of Islander Drive.  The Board expressed support for this strategy at the March 13 meeting. 

Following a required public hearing, the Board will formally consider the attached Development Agreement that outlines a sale price of $804,000, specifies A-Team’s proposal to construct a mixed-use development project on the property, and outlines the terms and conditions of the sale and the mixed-use development project.  If the Board approves the attached Development Agreement, the Board will formally consider the attached Resolution Authorizing Sale of 203 Islander Drive, Pursuant to NCGS 158-7.1(d).  The text of NCGS 158-7.1(d) is noted below:

NCGS 158-7.1 (d)

(d) Interests in Real Property. – A county or city may lease or convey interests in real property held or acquired pursuant to subsection (b) of this section in accordance with the procedures of this subsection. A county or city may convey or lease interests in property by private negotiation and may subject the property to such covenants, conditions, and restrictions as the county or city deems to be in the public interest or necessary to carry out the purposes of this section.  Any such conveyance or lease must be approved by the county or city governing body, after a public hearing.  The county or city shall publish notice of the public hearing at least 10 days before the hearing is held; the notice shall describe the interest to be conveyed or leased, the value of the interest, the proposed consideration for the conveyance or lease, and the governing body's intention to approve the conveyance or lease.  Before such an interest may be conveyed, the county or city governing body shall determine the probable average hourly wage to be paid to workers by the business to be located at the property to be conveyed and the fair market value of the interest, subject to whatever covenants, conditions, and restrictions the county or city proposes to subject it to.  The consideration for the conveyance may not be less than the value so determined.

Public Hearing

The Town utilized NCGS 158-7.1 when it acquired 203 Islander Drive in 2017, and conducted a public hearing (as required by the statute) in March 2017.  As noted above, the Town is also utilizing this same statute for the sale and redevelopment of 203 Islander Drive, and an additional public hearing is required prior to Board consideration of the sale. 

A public hearing has been scheduled for the April 10 meeting, and the public hearing notice appeared in the Carteret County News-Times on March 30 and has also been posted on the Town’s website since March 29.  A copy of the public hearing notice is attached.

Development Agreement Between A-Team Enterprises, LLC and the Town of Emerald Isle

The attached Development Agreement was drafted by Town Attorney Richard Stanley with input from the Town Manager, the principals of A-Team, and the A-Team’s attorney.  The proposed agreement has been approved and executed by A-Team. 

The attached Development Agreement is consistent with Option 3(a) of the A-Team proposal reviewed and identified by the Board of Commissioners at the March 13 meeting.  Although the future is always somewhat uncertain for all of us, the attached Development Agreement should provide reasonable assurances for the Town that the property will be developed as proposed by A-Team and as approved (in concept) by the Board.  The key provisions in the agreement are as follows:

  • the sale price is $804,000, which is $4,000 higher than discussed on March 13 due to the fact that a new appraisal (attached) indicates a value of $804,000,


  • the closing will occur no later than August 31, 2018, and A-Team may not borrow more than 65% of the sale price for the land,


  • no later than January 31, 2019, A-Team will also acquire the adjacent 0.77 acre tract owned by Cape Emerald Properties, LLC (previously described as “the McLean property”), and will develop the proposed mixed-use development project on the combined 2.62 acres,


  • A-Team may not transfer the rights under the Development Agreement until such time that all development permits for the project have been obtained and building permits for the first phase of construction have been obtained, unless otherwise approved by the Town,


  • A-Team must apply for all development permits by November 30, 2018, and must secure all development permits and building permits for the first phase of construction no later than January 31, 2019,


  • A-Team will construct approximately 30 three-story buildings developed as condominium units with commercial use on the first floor of approximately 10 of the units (fronting Islander Drive and Louise Avenue), and residential use on and in the remaining floors and units,


  • A-Team will also construct amenities associated with the mixed-use development project, including a pool, the required number of parking spaces, and specified public improvements (a public boardwalk feature on the private property, and public parking spaces in the Islander Drive and Louise Avenue public street right of ways) included in the A-Team proposal (which is also attached to the Development Agreement as an exhibit),


  • the Development Agreement calls for the completion of the first phase (1/3 of planned condominium units, the public boardwalk, and public parking spaces) within 18 months of the August 31, 2018 closing date, the completion of the second phase (an additional 1/3 of the planned units) with 24 months, and the full completion of the project (the final 1/3 of the planned units) within 36 months,


  • A-Team must provide construction financing approvals to the Town no later than January 31, 2019,


  • the Town agrees to construct additional streetscape improvements along the remainder of Islander Drive to improve the overall appearance of the area within 18 months of the August 31, 2018 closing date,


  • the mixed-use development project must comply with all applicable Town development regulations, and project buildings may not exceed a mean roof height of 40 feet,


  • if A-Team has not secured necessary approvals and permits by January 31, 2019, they shall be in default and the Town shall have the option to repurchase the tract for $804,000,


  • if A-Team defaults after January 31, 2019, the Town shall have the right to recover its actual costs for Islander Drive streetscape improvements, and other remedies available under North Carolina law (the Board should note that there will likely be various liens on the property by lenders at this time, and it will not be as straight-forward for the Town to reacquire the property after construction begins).

The Board and the public should note that both the Town and A-Team would enter into the attached Development Agreement in good faith, with a goal to work cooperatively to achieve the vision outlined in the A-Team proposal and achieve the desired public improvements in this area of Emerald Isle.  The concepts outlined in the A-Team proposal and formalized in the Development Agreement are considered to be reasonable, achievable, and consistent with applicable State and Town development regulations, however, it may be necessary to consider various minor modifications once more detailed design work is undertaken in the coming months.  It is anticipated that minor modifications will be permitted, and the Board should note that it will also have the final approval authority for the development plans as part of the Town’s typical development review process.  As is typical, the proposed mixed-use project will be reviewed by Town staff, the Town’s consulting engineer, the Planning Board, and the Board of Commissioners in late 2017 / early 2018, and it is anticipated that such minor modifications will be approved as part of that formal process.  A more significant deviation from the A-Team proposal and the attached Development Agreement (i.e., a completely different vision, significantly more or less units, significant changes to the planned public improvements, etc.) would need to be considered as a formal amendment to the attached Development Agreement, which the Board will ultimately have full authority over if that approach becomes necessary or desired.

Resolution Authorizing Sale of 203 Islander Drive, Pursuant to NCGS 158-7.1(d)

The attached resolution formally authorizes the sale of the property for $804,000, and incorporates the formal Development Agreement.  The resolution directs the Town Manager and Town Attorney to take all necessary actions to complete the sale of the property and implement the attached Development Agreement. 

The attached resolution also includes certain legal requirements, including a determination of the value of the property ($804,000; as outlined in the attached appraisal report prepared by Realty Services of Eastern Carolina) and a determination of the probable average hourly wage to be paid to workers by the businesses located on the property (ranging from 10.34 per hour to $42.63 per hour, as referenced in the attached memorandum from A-Team Enterprises LLC). 

As discussed previously with the Board, I intend to work with Town staff and others in the coming weeks to develop a “menu” of potential beach access improvements and Islander Drive streetscape improvements (with estimated costs for each item on the “menu”) for the Board’s consideration sometime this summer.  After the Board determines the desired improvements, I will seek the appropriate concurrence from the Carteret County Board of Commissioners, and our goal will be to construct the selected improvements during fall / winter / spring of 2018 – 2019.  The Carteret County Board of Commissioners recently expressed strong support for the Town’s efforts on Islander Drive, and I am optimistic that they will approve the full use of the land sale profits for the planned public improvements after these improvements have been formally identified by the Emerald Isle Board of Commissioners.

As you know, the Town has been working diligently to improve the appearance of the Islander Drive area and promote quality redevelopment in this area for many years.  I have attached a copy of a March 13 memo and PowerPoint presentation that includes a detailed explanation of the history of these efforts, along with a summary of the other proposals considered by the Board on March 13.  I have also attached a copy of the Town’s official Request for Proposals, an aerial photo of 203 Islander Drive prior to clean-up by the Town, and an aerial photo map of the entire Islander Drive area.

I am pleased to present these formal Board actions to the Board for consideration at the April 10 meeting.  Although the route to this outcome has been more interesting than originally envisioned, in the end the Town’s efforts will result in significant improvements for our community that current and future generations of Emerald Isle residents, property owners, visitors, and businesses will benefit from for many, many years.  These efforts will ultimately result in:

  • the elimination of a long-term eyesore in our community (already achieved),


  • the construction of attractive new building(s) in the Islander Drive area, with low building heights and consistent with existing quality development in Emerald Isle,


  • vibrant activity in the Islander Drive area of Emerald Isle, including additional retail opportunities in close proximity to the Western Ocean Regional Access that will likely result in greater convenience for patrons of this facility,


  • additional property tax revenues for Carteret County and the Town, and 


  • significant public improvements at the Western Ocean Regional Access and along Islander Drive, at essentially no or very minimal cost to the Town’s taxpayers.

Town Attorney Richard Stanley and I look forward to discussing this issue with the Board at the April 10 meeting.