Memo-11-13-2018-Item-10

November 13, 2018

MEMO TO:        Mayor Barber and Board of Commissioners

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

SUBJECT:       Resolution Amending Development Agreement Between A-Team Village West LLC and Town of Emerald Isle - (Summary & Suggested Motions)

The Board of Commissioners is scheduled to consider the attached resolution amending the formal development agreement between A-Team Village West LLC and the Town at the November 13 meeting.  The attached resolution simply extends the various deadlines for the redevelopment of 203 Islander Drive by an additional 6 months in order to provide ample time for both parties to recover from the significant impacts of Hurricane Florence.

A copy of the formal development agreement, executed in April 2018, is attached for the Board’s information.  The proposed First Amendment of Development Agreement is also attached for the Board’s review.  If approved, the various deadlines included in the formal development agreement would be extended as follows:

                                                            Original April 2018         November 2018

                                                                Agreement                    Amendment

 

Article I, Section 4 -                              January 31, 2019           July 31, 2019

deadline for A-Team

acquisition of adjacent

property from Cape Emerald

Properties LLC

 

 

Article 2, Section 2 -                               January 31, 2019           July 31, 2019

deadline for A-Team to

secure project and building

permits for initial phase

 

Article 3, Section 2 -                               January 31, 2019           July 31, 2019

deadline for A-Team to

secure project and building

permits for initial phase

 

Article 3, Section 2 –                              February 28, 2020          August 31, 2020

deadline for A-Team to

complete project infrastructure,

including septic system,

on-street parking, and public

boardwalk, and to complete

first one-third of residential

units

                                                            Original April 2018         November 2018

                                                               Agreement                    Amendment

 

Article 3, Section 2 –                           August 31, 2020             February 28, 2021

deadline for A-Team to

complete second one-third

of residential units

 

 

Article 3, Section 2 –                           August 31, 2021             February 28, 2022

deadline for A-Team to

complete all structures,

details, and requirements of

project

 

Article 4, Section 2 –                              January 31, 2019           July 31, 2019

deadline for A-Team to  

provide financing commitments  

 

Article 4, Section 3 –                             January 31, 2019           July 31, 2019

deadline for A-Team to  

submit financing plan to Town

 

Article 5, Section 1 -                              February 28, 2020          August 31, 2020

deadline for Town to

complete public improvements

along Islander Drive

 

Article 6, Section 1 -                              November 30, 2018        May 31, 2019

deadline for A-Team to

submit detailed project plans

and permit applications for

formal review by Town

          

Article 6, Section 1 –                             January 31, 2019           July 31, 2019

deadline for A-Team to

secure project and building

permits for initial phase.

In light of the need for both parties to focus efforts on Hurricane Florence recovery tasks, it appears reasonable to extend these deadlines by 6 months.

As discussed previously with the Board, I had been working to develop a menu of potential public improvements along Islander Drive and at the Western Ocean Regional Access for the Board to consider this fall, with a goal to construct the selected public improvements prior to May 2019.  Due to Hurricane Florence, this process has been suspended, but will now begin again, with a new goal to construct the selected public improvements between September 2019 and April 2020.  As noted above, the proposed amendment would require these improvements to be completed by August 31, 2020, however, it will be important to complete these improvements prior to the 2020 summer tourism season. 

Ark Consulting Engineers, Greenville, NC, has been working for the past several weeks on conceptual plans and cost estimates for the potential public improvements, and I am scheduled to meet with Ark Consulting Engineers, A-Team representatives, Interim Town Manager Randy Martin, and Town staff on November 13 to review Ark’s progress.  I am hopeful that the Board will formally consider and select the desired public improvements sometime this winter so that construction can begin as early as September 2019.  The Board should note that the Town has remitted Carteret County’s portion of the sale proceeds from 203 Islander Drive back to the County, and will need to request the release of these funds from the County Commissioners after the Board identifies the desired public improvements this winter.  The Town is currently reserving approximately $197,000 ($100,000 State grant and approximately $97,000 of the Town’s sale proceeds) for the planned public improvements, and will need to request an additional approximately $67,000 from the County after the Board identifies the desired public improvements later this winter.  Thus, the Town will have either approximately $197,000 or approximately $264,000 for the construction of the selected public improvements.   

As indicated in the amended development agreement, if A-Team has not secured necessary approvals and permits by July 31, 2019, they shall be in default and the Town shall have the option to repurchase the 203 Islander Drive tract for $804,000.  If A-Team defaults after July 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).

I recommend approval of the attached resolution amending the formal development agreement.