Memo-09-12-2017-Item-10

September 12, 2017

MEMO TO:           Mayor Barber and Board of Commissioners

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

SUBJECT:           Surfside Realty Tract (29.7 Acres) Land Acquisition - (Summary & Suggested Motions)

The Board of Commissioners is scheduled to consider 5 formal actions to finalize the Town’s acquisition of the Surfside Realty tract (29.7 acres) at the September 12 meeting.  If the Board approves all actions on September 12, the Town Attorney and I will proceed with required administrative actions and the initial closing on the land acquisition later in September or October.  The Town’s purchase contract stipulates that closing will occur no later than October 31.

I have attached the following documents to refresh the Board and the public on the property features, the public benefits, and potential future park amenities:

  • an April 11, 2017 memo that was presented when the Board approved the land purchase contract, including an explanation of MCAS Cherry Point / MCALF Bogue’s significant interest in preventing additional development on this tract (which is located directly in the Bogue Field flight path),
  • an aerial photo map of the tract, which is located directly north of the Town government complex,
  • a boundary / wetland survey of the property that was submitted with a previous grant application,
  • a conceptual park development plan that was submitted with a previous grant application, which notes that 20 acres would be preserved as natural area and 9.7 acres would be reserved for future active recreational facilities as determined by the Board in the future, and
  • a copy of the purchase contract.

As outlined in April, the purchase price is $3 million, and the financing plan for the land acquisition relies on significant Federal and State grant funding that the Town has been working to secure since April.  I am pleased to report that that Town has received commitments for a total of $2.545 million, as indicated below:

US Department of Defense

Readiness and Environmental Protection Integration Program (REPI)      $ 1,500,000

(through MCAS Cherry Point / MCALF Bogue)

NC Parks and Recreation Trust Fund (PARTF)                                          $    500,000

NC Clean Water Management Trust Fund (CWMTF)                                 $    545,000

TOTAL                                                                                                         $ 2,545,000

As discussed in April and committed by the Board, the Town would provide the balance of the purchase price, or $455,000, and this amount would likely be financed over a 10-year period.  Additionally, as noted below in more detail, the Town will likely incur additional miscellaneous expenses associated with a partnership with The Conservation Fund of NC that are estimated at approximately $75,000.

The specific Board actions to be considered on September 12 are outlined below.  A total of 5 formal actions are required on September 12.

Resolution Accepting Federal REPI Funding

As you know, the Federal funding for this land acquisition through the REPI program is the most critical element of this project, and I am pleased to report that MCAS Cherry Point has provided assurances that a total of $1.5 million has been secured for this project.  The attached letter indicates that the funding is available, and that Federal REPI funds should be released in spring 2018.  The attached resolution for Board consideration formally accepts these funds, and authorizes the Town Manager to execute all necessary agreements to coordinate receipt of these funds for the land acquisition.

As discussed previously, The Conservation Fund of North Carolina, a non-profit organization that assists communities with strategic land acquisition projects, is partnering with the Town on this land acquisition.  The Conservation Fund’s participation is critical for two reasons – 1) they are an authorized grant recipient for the Federal REPI program, and this greatly expedites the land acquisition, which would potentially have taken 1 – 2 years longer without their participation, and  2) there remains a lengthy Federal bureaucratic process to release the Federal funds that will likely not be completed for up to 6 months.  The Conservation Fund will essentially provide interim financing ($3 million) for the purchase of the land later in September or October, and then hold the land until the Federal funds are released, at which time the land will officially be conveyed to the Town.  The Town will incur administrative, legal, and interest expenses as a result of the arrangement with The Conservation Fund, and these expenses are not expected to exceed $75,000 (as indicated earlier).  The Town will, however, have full rights to use and develop the land as soon as The Conservation Fund has completed the acquisition in the coming weeks.

The use of REPI funding for this land acquisition will require the Town to execute a military easement and/or deed restrictions on the property that will restrict the construction of any significant buildings on the property in the future.  This easement, will, however, allow for the development of active recreation facilities, including the various facilities contemplated in recent months (i.e., baseball field, soccer field, tennis courts, dog park, skate park, splash park, pickleball courts, etc.) as well as associated facilities such as a small storage building, bathroom building, etc.   

Resolution Accepting NC Parks and Recreation Trust Fund Grant

As communicated previously, the FY 17-18 State budget (Session Law 2017-57) includes a special provision that awards the Town a $500,000 PARTF grant for this project, and an excerpt of Session Law 2017-57 is attached.

The attached resolution formally accepts the PARTF grant, and authorizes the Town Manager to execute all necessary grant agreements and restrictions.  As is customary for PARTF grants (the Town has received PARTF grant funding for the Emerald Isle Woods Park and Public Boating Access Area projects in the past), the Town will be required to execute an easement and/or deed restrictions that limit the use of the property to public recreation in the future.  These restrictions will be entirely consistent with the restrictions required by the Federal REPI funding and the Town’s stated intent for the property from project conception.

Although efforts will be made to take receipt of PARTF grant funds sooner, it is likely that PARTF funds will not be remitted until the Federal REPI funds are released (up to 6 months).

Resolution Accepting NC Clean Water Management Trust Fund Grant

As is the case for the PARTF grant, the FY 17-18 State budget (Session Law 2017-57) also includes a special provision that awards the Town a $545,000 CWMTF grant for this project.  An excerpt of Session Law 2017-57 is attached.

The attached resolution formally accepts the CWMTF grant, and authorizes the Town Manager to execute all necessary grant agreements and restrictions.  As is customary for CWMTF grants (the Town received CWMTF grant funding for the Emerald Isle Woods land acquisition in the past), the Town will be required to execute an easement and/or deed restrictions that require the preservation of a buffer along Archers Creek and the preservation of 20 acres as natural area, with allowances for passive park development (nature trails, etc.).  These restrictions will be entirely consistent with the restrictions required by the Federal REPI funding and the PARTF grant, and the Town’s stated intent for the property from project conception.

Although efforts will be made to take receipt of CWMTF grant funds sooner, it is likely that CWMTFT funds will also not be remitted until the Federal REPI funds are released (up to 6 months).

Resolution Authorizing Closing on Land Acquisition by The Conservation Fund

As noted above, The Conservation Fund’s participation in this project is critical, and they will initially take ownership of the Surfside Realty Tract in the coming weeks, hold it for up to 6 months, and then convey the land to the Town when REPI funds are released.  The Town’s purchase contract envisioned this partnership when it was executed in March, and specifically includes a provision allowing the Town to assign the contract to The Conservation Fund. 

We have made arrangements for the Town Attorney to handle the entire closing process, including the conveyance from Surfside Realty to The Conservation Fund and the conveyance from The Conservation Fund to the Town.  The attached resolution specifically authorizes the Town Manager and Town Attorney to take all necessary actions to complete the acquisition. 

The Board should note that the easements and restrictions associated with the REPI, PARTF, and CWMTF funding will not be executed until The Conservation Fund conveys the land to the Town.  The only restrictions that will be executed when the land is conveyed from Surfside Realty to The Conservation Fund are the Town’s commitment to use the land as a public recreation park in perpetuity and the Town’s commitment to assign the name “McLean-Spell Park” to the new park.

Capital Project Ordinance

The attached capital project ordinance formally establishes the project budget for the acquisition of the Surfside Realty tract, and includes the Federal and State grant funding ($2.545 million) described above.  The Town contribution included in the attached capital project ordinance is $530,000, and includes the Town’s $455,000 commitment for the land purchase and up to $75,000 for administrative, legal, and interest expenses as a result of the arrangement with The Conservation Fund.

As discussed in April, the Town would enter into an installment financing agreement for the Town’s total cost associated with the land acquisition.  The Town would not actually execute such an agreement until the Surfside Realty tract is conveyed from The Conservation Fund to the Town in spring 2018, and formal Board action on any new debt would not occur until that time.  The attached capital project ordinance assumes a $530,000 installment financing agreement, and although the specific term and rate will be determined at that time, we anticipate a 10-year term with an annual interest rate of approximately 3%.  These assumptions result in an annual debt service payment of approximately $63,000.  A longer term would reduce the annual debt service payment, while a shorter term would increase the annual debt service payment.  Town staff will carefully review installment financing options as that date approaches, and recommend the most prudent financing instrument at that time.

I look forward to discussing the Surfside Realty tract acquisition with the Board at the September 12 meeting, and will be happy to answer any questions you may have.  As discussed in recent months, this land acquisition represents a long-term investment in the environmental conservation, overall community development, and the youth of Emerald Isle.  It also represents the Town’s continued strong partnership with MCAS Cherry Point / MCALF Bogue to work together to effectively balance the military’s training and readiness needs with the quality of life for Emerald Isle residents and property owners.  Finally, all of this will be accomplished for the ultimate benefit of the people of Emerald Isle, both current and future generations, at minimal cost to the people of Emerald Isle.  I am thankful for the generous financial support of the REPI program, PARTF, and CWMTF, without which this initiative simply would not be possible.