Memo-04-11-2017-Item-11

April 11, 2017

MEMO TO:           Mayor Barber and Board of Commissioners

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

SUBJECT:           Real Property Acquisition – Surfside Realty Tract (29.7 Acres Adjacent to Town Government Complex) - (Summary & Suggested Motions)

The Board of Commissioners is scheduled to consider 4 formal actions associated with the Town’s potential acquisition of a vacant 29.7 acre tract of land (the Surfside Realty tract) located directly adjacent to the Town Government Complex.  The property would be acquired for future park development, with both active and passive recreational facilities.  The total purchase price for the Surfside Realty Tract is $3 million, and would be funded by a combination of Federal ($1.5 million), State ($1.045 million) and Town funds ($455,000).   (Copy of Appraisal)

The Surfside Realty Tract

The Surfside Realty tract is the last remaining large vacant parcel available in Emerald Isle, and is strategically located directly adjacent to the Town Government Complex.  The total land area is 29.7 acres, and is approximately 1,100 feet by approximately 1,100 feet.  The property is bounded by Archers Creek to the south (which separates it from the Town Government Complex), residential units along Live Oak Street to the west, residential units along Sound Drive to the north, and residential units along Archers Creek Court and Coral Court to the east.  The property includes significant maritime forest, and the vast majority of the property (approximately 26 acres +/-) is upland area with sandy soils that are suitable for significant residential development.  An estimated 4 acres of coastal wetlands are located in the southeastern corner of the property adjacent to Archers Creek. 

A preliminary subdivision plat with 57 single-family residential lots was approved by the Town more than 25 years ago, however, the subdivision was never constructed.  With the exception of very limited clearing completed to delineate the new streets planned for the residential subdivision, the property is completely vegetated and includes many significant pine and live oak trees and dune features.  The Surfside Realty tract is currently zoned Residential Multi-Family (RMF), and it is the only undeveloped parcel anywhere in Emerald Isle on which new condominium units would be permitted (other than the Village East, Village West, and Marina Village districts that are targeted for redevelopment and allow mixed-use development).  RMF zoning allows up to 8 condominium units per acre by right, and the Surfside Realty Tract could accommodate as many as 237 condominium units. 

Potential Park Plans, Benefits to the Community, and Limits on Town Use

Although the Town has no immediate plans for the property, it would likely be very beneficial for the Town in the long-term.  As you know, the Town currently does not offer any athletic fields to our residents, property owners, and visitors.  The Town’s recently adopted Comprehensive Land Use Plan includes a goal to develop a large park facility with athletic fields in the future, and the Surfside Realty tract is likely the only parcel in Emerald Isle that could accommodate such a facility.  The property is strategically located directly adjacent to the Town Government Complex, and would complement other public recreation facilities offered by the Town.  If the Town completes the acquisition of the Surfside Realty tract, I envision the property ultimately being developed with some combination of a baseball field, soccer field, tennis courts, dog park, and/or any other active recreational facilities desired by the community.  In essence, if the Town is ever going to have such a facility, this is likely the only place it would / could be located.  In addition to future active recreation facilities, I also envision maintaining much of the Surfside Realty tract as a nature park, including the construction of new nature trails throughout the property.     

Additionally, and most importantly from a financial perspective, the Surfside Realty tract is located directly within the Bogue Field flight path.  The Town’s Comprehensive Land Use Plan also includes a goal to acquire land to reduce the potential for conflicts between Bogue Field and residents in Emerald Isle.  The acquisition of the Surfside Realty tract by the Town would prevent future residential development and thereby prevent additional encroachment that could limit or restrict military training, testing, and operations conducted at Bogue Field.  The Town has maintained a cooperative relationship with MCAS Cherry Point, which utilizes Bogue Field, over the past 15 years, and MCAS Cherry Point has often noted its desire to prevent development of the Surfside Realty tract.  Federal funding for up to 50% of the land acquisition cost is available through the military’s Readiness and Environmental Protection Integration (REPI) program, and officials at MCAS Cherry Point have expressed high confidence in securing these funds to assist in the acquisition of the Surfside Realty tract.  The use of REPI funds for the land acquisition would limit the Town’s use of the land for recreational purposes only, and MCAS Cherry Point will require a limited use easement on the property to insure that no significant new buildings are constructed on the property.         

Additionally, the acquisition of the Surfside Realty tract would also assist promote the Town’s water quality goals and natural preservation goals by maintaining a significant portion of the property in its natural condition.  As noted later in this memo, another potential source of State funding is the NC Clean Water Management Trust Fund, and if CWMTF grant funds are awarded the Town will be required to preserve a significant portion of the property in its natural condition.  I expect that the CWMTF will require a conservation easement on a portion of the property, primarily along the approximately 1,100 ft. shoreline of Archers Creek. 

Ultimately, after balancing the Town’s goals, MCAS Cherry Point’s goals, and other grant funding restrictions, I envision the Town allocating approximately 10 acres for future active recreational facility development (athletic fields, etc.), with the remaining approximately 20 acres preserved in its natural condition (including the development of nature trails, etc.).  This allocation should provide the Town with several options for future park development, and should provide significant benefits for the residents, property owners, and visitors of Emerald Isle for many years.  To provide a general understanding of the possibilities, I have listed the required land area for various athletic fields and other recreation facilities:

  • baseball field – approximately 400 feet by 400 feet, or 3 – 4 acres,
  • soccer field – approximately  300 feet by 400 feet, or nearly 3 acres (could potentially be constructed in the outfield of a new baseball field),
  • tennis court – approximately 60 feet by 120 feet each; or approximately 1/6 of an acre,
  • dog park – sizes vary, but could likely construct very nice park on approximately 1 acre (could potentially be constructed within the natural area component of the new park, among existing trees),
  • skate park – sizes vary, but could likely construct very nice park on approximately ¼ - ½ acre, and/or
  • splash park – sizes vary, but could likely construct very nice park on approximately ¼ acre or less.

Additionally, it will likely be necessary to provide some amount of additional parking for park patrons.  On average, including access driveways, each parking space will require approximately 400 – 600 sq. ft.  It is likely that approximately 80 +/- parking spaces could be constructed within a 1-acre area.

The Board should note that the ideas presented above are provided simply to give the Board and the community an idea of the range of possibilities.  Ultimately, I would envision the Board soliciting additional public input on desired park amenities in the future, and using that public input to develop a specific park plan. 

Funding Plan for Land Acquisition

As Town Manager, I have executed a purchase contract for the Surfside Realty tract for a total purchase price of $3 million.  The contract is contingent upon formal Board approval at the April 11 meeting. 

As detailed later in this memo, the following potential funding sources are identified for this land acquisition:

NC Parks and Recreation Trust Fund                              $    500,000

MCAS Cherry Point – REPI Program                               $ 1,500,000

NC Clean Water Management Trust Fund                     $    545,000

Town of Emerald Isle                                                          $    455,000

TOTAL                                                                                  $ 3,000,000.

The Town’s acquisition of the Surfside Realty tract is essentially contingent upon our ability to secure significant grant funding.  The executed contract includes a due diligence period that extends until October 2, and I expect to receive a funding decision from each of these grant funding partners prior to that date.  Based on historical funding decisions and recent discussion with various officials, I am optimistic that the Town will ultimately secure the necessary grant funding.  If, however, the Town is unable to secure sufficient grant funding, the Town will likely not proceed with closing (scheduled for October 31). 

Unless the Board wishes to identify other Town funds for this purchase, the required Town funds ($455,000) would be financed over a 5-year or 10-year term later in 2017.  The initial debt service payment would not be due until FY 18-19, and would be included in the FY 18-19 budget.  Depending on the length of the term and the exact interest rate, I estimate the required debt service payment will be approximately $53,000 – $99,000 annually.

Resolution Authorizing NC Parks and Recreation Trust Fund Grant Application

The attached resolution formally authorizes a $500,000 grant application to the NC Parks and Recreation Trust Fund (PARTF).  PARTF is a popular grant program, and the Town has received previous PARTF awards for park improvements at Emerald Isle Woods, land acquisition for the Emerald Isle Public Boating Access Area, and land acquisition for the Senator Preston Memorial Park.  The maximum grant award under PARTF is $500,000.

PARTF applications are due by May 1, and a public hearing is required before submitting a grant application.  A public hearing has been advertised for the April 11 meeting.  If approved, the PARTF application will be submitted prior to the May 1 deadline, and I would expect to receive a PARTF funding decision by early September. 

PARTF will require that the Town execute an easement or deed restrictions on the property that will require the property to be used for public recreation in perpetuity.

Resolution Authorizing Funding Request to MCAS Cherry Point

The attached resolution formally authorizes a $1.5 million funding request to MCAS Cherry Point through the Readiness and Environmental Protection Integration (REPI) Program.  REPI is a Federal program that provides funding to enable military bases to acquire nearby land to prevent additional encroachment that could limit or restrict military training, testing, and operations.  As noted earlier and indicated on the attached map, the Surfside Realty tract is directly within the Bogue Field flight path.  Thus, MCAS Cherry Point is very interested in acquiring this property, and MCAS Cherry Point officials have expressed high confidence that REPI funds will be made available for the Surfside Realty tract. 

MCAS Cherry Point officials have initiated the internal Federal process to secure the REPI funds, and it is a long and cumbersome process that will likely take several months to be completed.  Based on discussion with MCAS Cherry Point officials, we expect to have a definitive commitment no later than September, however, the actual cash for the land acquisition may not be available until a few months later.  If the actual cash is not available by the planned October 31 closing date, the Town will enter into a short-term financing arrangement with The Conservation Fund of North Carolina. 

The Conservation Fund of North Carolina is part of a national organization whose mission is to assist communities in the acquisition and conservation of public land, and they are serving as the Town’s partner on the acquisition of the Surfside Realty tract.  Under the REPI program, MCAS Cherry Point can only provide Federal funding to previously authorized partners, and The Conservation Fund has been involved in previous deals with MCAS Cherry Point and is thus an authorized partner.  Although the Town is the lead entity on this land acquisition, and will ultimately hold title to the Surfside Realty tract, The Conservation Fund will be the actual entity that will purchase the property from the owners.  The Conservation Fund will acquire the property from the current owners, as an authorized partner for REPI funds, and will then subsequently convey the property to the Town of Emerald Isle for future public use. 

The REPI program will require that the Town execute an easement or deed restrictions on the property that will limit the use of the property to public recreation facilities, and also limit the extent of building construction that may occur on the property.  I anticipate that the Town will have the flexibility to construct a small bathroom building, storage building, concession building and / or other similar features, however, the Town will not be permitted to construct other, larger buildings on the property.

Resolution Authorizing Clean Water Management Trust Fund Grant Application

The attached resolution formally authorizes a $545,000 grant application to the NC Clean Water Management Trust Fund (CWMTF).  CWMTF is also a popular grant program, and its primary mission is to protect and enhance water quality though land acquisition and storm water management initiatives.  An additional component of CWMTF’s mission is to protect land adjacent to and near military bases to prevent additional encroachment.  Because the Surfside Realty tract has approximately 1,100 linear feet of frontage on Archers Creek and will provide significant water quality benefits, and because of the importance of this acquisition to MCAS Cherry Point, the Town’s CWMTF application should be very competitive. 

CWMTF grant applications were due on February 6.  As you know, the Town was involved in negotiations for the Surfside Realty tract at that time, but no contract had been executed.  In the interest of not missing the 2017 CWMTF grant cycle (which would have required the Town to wait an additional year), the grant application was submitted at that time.  The Board is thus asked to approve the attached resolution retroactive to February 6.  I expect to receive a CWMTF funding decision by early September.

CWMTF will require a conservation easement on a portion of the property, primarily along the approximately 1,100 ft. shoreline of Archers Creek, and this portion will essentially be required to remain in its natural condition.

Resolution Authorizing Real Property Acquisition

As noted above, I have executed the attached purchase contract, contingent upon formal Board approval at the April 11 meeting.  The attached resolution formally satisfies this contingency. 

The significant terms of the purchase contract are as follows:

  • the contract is assignable to The Conservation Fund, and it is anticipated that they will be the actual entity that purchase the Surfside Realty tract on the Town’s behalf,
  • the purchase price is $3 million,  
  • the contract includes a $5,000 due diligence fee that is fully refundable up until Board approval of the contract on April 11, and not refundable thereafter,
  • October 2, 2017 is the Town’s deadline to complete due diligence; the Town should have a definitive answer on the 3 grant funding sources by this date,
  • the scheduled closing date is October 31, 2017, and
  • the Town commits to use the land as a public park, and to assign the name “McLean-Spell Park” to the new park in perpetuity. 

As noted above, the Town’s acquisition of the Surfside Realty tract is essentially contingent upon our ability to secure significant grant funding, and I am optimistic that the Town will ultimately secure approval of the necessary grant funding by the October 2 due diligence deadline, and proceed with closing no later than October 31.  In the event that the Town does not receive approval for the entire amount requested, and/or the Board would like to secure additional time to enable the Town to apply for additional grant funding, it will likely be possible to have The Conservation Fund proceed with the acquisition on the Town’s behalf.  The Conservation Fund would provide the balance of funding necessary to acquire the property, and would then hold the property for some mutually agreeable time period.  Because the Town would not yet own the property, the Town would remain eligible for grant funding, and could apply for funding from the same grant programs in 2018 or could apply for funding through other eligible grant programs.  In essence, The Conservation Fund would be financing the balance of the purchase price for the Town until the necessary grant funds are awarded, and the Town would simply cover the interest cost associated with the outstanding balance.  If it ultimately becomes necessary or advantageous to consider this approach, I will present relevant information for the Board’s consideration in September.

As explained above, there are many moving parts associated with the Surfside Realty tract acquisition, however, I remain optimistic that the Town will ultimately succeed in securing significant grant funding to acquire the property.  Eventually, the residents, property owners, and visitors of Emerald Isle will be able to enjoy a beautiful new park that will further enhance the quality of life in our community.

I look forward to discussing the Surfside Realty tract acquisition with the Board at the April 11 meeting.