memo-01-12-2016-11

January 12, 2016

MEMO TO:          Mayor Barber and Board of Commissioners

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

SUBJECT:           Proposed Demolition of The Rusty Pelican Inn, 8104 Emerald Drive

The Board of Commissioners is scheduled to consider two formal actions at the January 12 meeting that will result in the demolition of The Rusty Pelican Inn located at 8104 Emerald Drive.  The Rusty Pelican Inn, owned by Barbara A. Smith, has been in an unsafe condition since at least September 2014, and has not been occupied since that time.  Despite numerous attempts by Town staff (both informally and formally) in recent years to have the owner resolve the outstanding life safety issues, the unsafe condition has not been resolved. As a result, I recommend that the Board approve the attached resolution and ordinance formally authorizing the demolition and imposing a lien on the property to enable the Town to eventually recover the $21,875 expense associated with demolition and disposal.  The attached General Fund budget amendment formally appropriates this amount for this purpose.

As noted in the text of the attached resolution and ordinance, and in the attached memo prepared by Josh Edmondson, Town Planner, the Town has been attempting to resolve electrical deficiencies, fire hazards, mold, structural deficiencies, and other code violations at The Rusty Pelican Inn since at least 2009.  As is the case in nearly all Town enforcement actions, we initially attempt to resolve concerns in a helpful, cooperative manner, and that approach was utilized repeatedly in previous dealings with the owner of The Rusty Pelican Inn.  Due to the seriousness of the current deficiencies and the clear life safety hazards, the ~ 16 months that have elapsed since September 2014 with no progress, and the ceasing of return communications from the owner or her agents, the Town is left with no alternative than to proceed with the Town-initiated demolition of the structure.  The attached resolution and ordinance outlines the various deficiencies and life safety concerns, outlines the process undertaken by the Town (in accordance with applicable NC General Statutes and the Town Code of Ordinances) up to this point, and formally authorizes the demolition of the structure.  Because the Town will incur a significant expense to demolish and dispose of the structure, the attached resolution and ordinance also authorizes the imposition of a lien on the real property at 8104 Emerald Drive and the accrual of interest at a rate of 8% per annum.  The attached resolution and ordinance also authorizes the Town to foreclose its lien in the future if desired.

Town staff have secured three quotes for the demolition and disposal of the structure, and the lowest bid was submitted by Garrison Construction Co., Inc., Morehead City, NC, in the amount of $21,875.  The other two bids received include prices of $23,500 and $37,500.  The Board should note that the bids do not include any expenses associated with asbestos evaluation or abatement, however, Josh Edmondson is in possession of a report that indicates that asbestos is not present in the structure.  Thus, if the Board approves the attached resolution and ordinance and budget amendment we intend to award the demolition and disposal contract to Garrison Construction Co., Inc. in the amount of $21,875.  The scope of work is such that the end product will be a vacant lot, with the existing asphalt parking lot remaining in place.

The Town is on pace to exceed the FY 15-16 revenue estimate for development permit fees, and the attached budget amendment formally appropriates additional anticipated development permit fees for the demolition and disposal of The Rusty Pelican Inn.  The Board should note that the timing for the reimbursement of the $21,875 expense is highly uncertain.  Town staff will invoice the owner for this cost after the work is complete, and a lien will be imposed on the real property at 8104 Emerald Drive.  Depending on the eventual disposition of the real property at 8104 Emerald Drive, the Town may find itself waiting for several months or perhaps years to recover this cost.  As noted, interest will accrue at a rate of 8% annually, or $1,750 for the first year.  Additionally, the Town may decide to foreclose its lien in the future to recover the full amount of the Town’s cost, plus interest.  I am hopeful that the accrual of interest and the threat of foreclosure will encourage the owner to reimburse the Town for this expense sooner rather than later.

The Board should note that Josh Edmondson was informed several weeks ago by a demolition contractor that he had tentatively scheduled the demolition to begin on January 11, 2016.  We remain hopeful that may yet occur, however, we have received no communication from the owner or the contractor in several weeks.  If the Board approves the attached resolution and ordinance, I will task Josh Edmondson with contacting the owner and her contractor one more time before the Town executes the demolition contract.  If there is no response, the Town will then direct Garrison Construction Co., Inc. to proceed.

The entire formal process associated with the demolition of The Rusty Pelican Inn has been coordinated with Town Attorney Richard Stanley, and I believe the Town has far exceeded the minimum legal requirements to undertake this action.  Josh Edmondson, Richard Stanley, and I look forward to discussing this issue with the Board at the January 12 meeting.