Memo-10-10-2017-Item-12

October 10, 2017

MEMO TO:           Mayor Barber and Board of Commissioners

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

SUBJECT:           Future Beach Nourishment Efforts - (Summary & Suggested Motions)                 

I have scheduled time on the Board’s October 10 meeting agenda to update the Board on preliminary plans for the Town’s next beach nourishment project in FY 18-19, and also a subsequent Bogue Inlet channel realignment / beach nourishment project tentatively scheduled for FY 20-21.  Assuming the Board is comfortable with the preliminary plans, I expect to begin working in earnest with the County, other towns, and our consulting engineers in the next few months on design and permitting for the next beach nourishment project. 

Brief History of Beach Nourishment in Emerald Isle

The Town has now completed 5 significant beach nourishment projects since 2003 (with one also involving the realignment of the Bogue Inlet channel), and has established thoughtful long-term plans for future beach nourishment efforts.  A brief recap of Town projects is noted below:

  • Spring 2003 – Eastern Emerald Isle - (See Photos - 1, 2, 3)

~ 1.87 million cubic yards of sand placed between Indian Beach town line and Scotch Bonnet Drive; approximately 6 miles

~ $11.7 million total project cost, funded primarily by general obligation bonds retired with special district tax revenues, small amount of room occupancy tax revenue

Total cost per cubic yard = ~ $6.25 per cubic yard

  • Spring 2004 – FEMA Isabel Project

     

    ~ 156,000 cubic yards of sand placed intermittently in eastern and central Emerald Isle; approximately 2.5 miles

    ~ $1.9 million total project cost, funded by FEMA to replace sand lost during Hurricane Isabel

    Total cost per cubic yard = ~ $12.18 per cubic yard

  • Spring 2005 – Western Emerald Isle / Bogue Inlet Channel Realignment - (See Photos 1, 2)

~ 690,000 cubic yards of sand placed on the beach between Scotch Bonnet Drive and Lands End; approximately 4.5 miles

Additional ~ 300,000 cubic yards of sand used to construct “dike” in Bogue Inlet complex to divert inlet flows away from Emerald Isle

~ $ 10.9 million total project cost, funded by primarily by general obligation bonds retired with special tax district revenues, direct appropriation of special district tax revenues, and State grant (~ $3.8 million), small amount of room occupancy tax revenues

Total cost per cubic yard = ~ $11.01 per cubic yard

Moved main ebb channel in Bogue Inlet approximately 3,300 linear feet west of The Point vehicle ramp

  • Spring 2007 – FEMA Ophelia Project

     

    ~ 650,000 cubic yards of sand placed in two reaches in eastern and western Emerald Isle; approximately 5 miles

    ~ $6.8 million total project cost, funded by FEMA to replace sand lost during Hurricane Ophelia

    Total cost per cubic yard = ~ $10.46 per cubic yard

  • Spring 2013 – FEMA Irene Project

~ 650,000 cubic yards of sand placed in two reaches in eastern and western Emerald Isle; approximately 4.5 miles

~ $9.9 million total project cost, funded by FEMA (~ $4.1 million), Carteret County (~ $4.4 million), and special district taxes (~ $1.4 million) to replace sand lost during Hurricane Irene

Total cost per cubic yard = ~ $15.23 per cubic yard

In total, the Town has placed in excess of 3.6 million cubic yards of sand on the ocean beach and in the inlet complex since 2003, at a total cost in excess of $41 million.

There are many factors that impact the cost of a beach nourishment project, including the total sand volume (economy of scale), the length of the placement area (shorter is more economical), the mobilization and demobilization costs (usually in the $3 - $4 million range per event), the availability of other partners to share in the mobilization and demobilization costs, fuel prices (dredging requires significant fuel), the dredging calendar “window” available (most projects constrained to November 15 – April 1, or perhaps a shorter time period), and simple supply and demand (there is often more work than dredge fleet capacity available). 

Overall, the Town’s experience with beach nourishment has been very positive, and these efforts prevented the loss of homes, prevented significant hurricane damages, and provided a wide beach for recreation and environmental habitat.

Brief History of Funding Mechanisms

Historically, the Town has relied on a combination of special district tax revenues, General Fund tax revenues, County room occupancy tax revenues, State grants, and FEMA funding to meet its beach nourishment needs. 

In 2001, the NC General Assembly amended the Carteret County room occupancy tax to allocate funding for beach nourishment efforts in Carteret County.  Over the years, and via subsequent amendments, the amount allocated for beach nourishment has increased to 50% of the proceeds (equal to 3% of the total 6% tax), which now generates in excess of $3.5 million per year. For the first 4 years, a total of $540,000 per year was statutorily allocated to Emerald Isle, and these funds were used toward debt service associated with the 2003 and 2005 projects.  All other room occupancy tax revenues that were credited for beach nourishment purposes began to accumulate in a special reserve fund that has now grown to approximately $16 million as of June 30, 2017.

In 2002, the Town established two special tax districts that ultimately funded the majority of costs associated with the 2003 and 2005 beach nourishment projects (used primarily to retire $17 million general obligation bond issue).  At the recommendation of a special citizen committee, the Town established an oceanfront tax district that paid an additional tax rate of 48 cents per $100 of valuation (later reduced to 16.2 cents after 2007 revaluation), and a non-oceanfront tax district that paid an additional 3 cents per $100 of valuation (later reduced to 1.1 cents after 2007 revaluation).  These special district taxes were in effect for 9 years until 2011, when these districts were abolished.  These special tax districts generated approximately $2 million annually.

In 2011, the Town established two new special tax districts to reserve funds for future beach nourishment efforts in Emerald Isle.  The Board established a new oceanfront tax district that paid an additional 4.5 cents per $100 of valuation and a new non-oceanfront tax district that paid an additional 1.5 cents per $100 of valuation.  These rates were established specifically to generate nearly $700,000 annually, and were / are intended to fully fund the Town’s anticipated share of costs for future nourishment projects - with an expectation that the County would provide an average annual amount of approximately $2.1 million for Emerald Isle’s future beach nourishment projects.  At that time, the Town conservatively estimated that total average annual costs for beach nourishment over the long-term would be approximately $2.8 million per year. 

In 2014, for greater simplicity, the Town abolished the non-oceanfront special tax district (which had been 1.5 cents) and reduced the oceanfront special tax district from 4.5 cents to 3 cents.  The Town simply transferred this 1.5 cents on the tax rate from the special tax districts to the General Fund, and began allocating the amount generated by the 1.5 cents ($450,000) from the General Fund to the Future Beach Nourishment Fund.  This change resulted in the same amount (nearly $700,000) reserved annually for future beach nourishment efforts, with the same property tax burden on all property owners.  In 2015, in order to equitably account for revaluation impacts, the oceanfront special district tax rate was increased to 4 cents, and the annual General Fund transfer was reduced to $400,000 annually.  This approach remains in effect today and is expected to continue in the future, generating nearly $700,000 annually that is reserved in the Town’s Future Beach Nourishment Fund.

The Town’s Future Beach Nourishment Fund has a balance of approximately $2.5 million as of June 30, 3017.

Long-Term Plans

The Town, in partnership with the other towns on Bogue Banks and Carteret County (Beach Commission / Shore Protection Office) participates in the Bogue Banks Beach Nourishment Master Plan (“master plan”), which outlines a 50-year strategy for future beach nourishment needs.  This document is an important foundation for an ongoing effort to secure a 50-year permit authorization from the Federal and State governments that has been underway for the past several years.  This 50-year permit authorization is expected to cover all future beach nourishment efforts in Emerald Isle (within defined parameters), and also enable future channel realignment efforts in Bogue Inlet (within defined parameters).  The County and our consultants are nearing completion of this process, and they remain optimistic that the 50-year permit authorization will be issued by June 2018.  This permit authorization should dramatically reduce the time and expense needed to secure authorization for individual beach nourishment projects in the future, and should theoretically enable Emerald Isle (or other towns on Bogue Banks) to complete a project as early as winter 2018-19.

As noted above, the Town is currently reserving nearly $700,000 annually for future beach nourishment efforts in Emerald Isle, and is anticipating an average annual contribution of approximately $2.1 million from Carteret County (from room occupancy tax proceeds).  This model assumes that the County will provide 75% funding for future costs, with the Town providing 25% funding.  Theoretically, these amounts should enable the Town to fund all future beach nourishment efforts with reserved funds, and enable the Town to avoid the issuance of general obligation bonds or other long-term debt for future beach nourishment efforts.  The Town deliberately established the new special district tax rate (4 cents) and the annual General Fund contribution ($400,000) at these levels to specifically avoid the need to issue debt for beach nourishment in the future. 

Ideally, the Town would nourish the beach as infrequently as possible.  However, both the 50-year permit authorization and the Town’s long-term financing plan were pursued specifically to insure that the Town has the ability to nourish the beach when needed, where needed, and as needed in the future – without the need to issue debt.  Essentially, the Town intentionally sought to “normalize” beach nourishment as a Town expense many years ago, and now views beach nourishment like every other Town service (public safety, trash collection, street maintenance, parks maintenance, etc.) – it’s just one more of the many services we provide.

Eastern Emerald Isle Project Included in 5-Year Capital Replacement / Improvement Program For FY 18-19

It has now been nearly 5 years since the FEMA Irene beach nourishment project was completed in spring 2013, and the Town has been contemplating the “next beach nourishment project” in recent months.  The Town’s recently adopted 5-Year Capital Replacement / Improvement Program includes “placeholders” for both a new Eastern Emerald Isle project in FY 18-19 and a Bogue Inlet Channel Realignment / Western Emerald Isle project in FY 20-21.  In both cases, these dates are fluid, and may be shifted earlier or later at the Board’s discretion.   

Generally speaking, the beach remains in reasonably good shape, however, the flat beach berm is narrower than desired in some locations and the Town occasionally receives concerns from oceanfront owners, particularly in eastern Emerald Isle.  As you know, the County conducts annual beach profile surveys on behalf of the Town, and the “master plan” has established new nourishment “triggers” intended to provide reasonable protection for the 25-year storm event.  Based on the most recent (April 2017) survey event, nearly the entire length of beach in Emerald Isle exceeds the necessary volume of sand in the profile that is necessary to withstand the 25-year storm event.  However, due to the fact that it’s now been nearly 5 years since the last beach nourishment project, the concerns about the flat beach berm width in eastern Emerald Isle, the desire to be as proactive as possible and avoid a future “crisis” condition, the desire to provide as much storm protection as possible, and the potential for State funding in the near-term, it appears to be prudent to plan for the next beach nourishment project at this time. 

Moffatt & Nichol, the County’s and the Town’s consulting engineers, has completed a preliminary analysis of the areas with the greatest need for beach nourishment in Emerald Isle, and have identified a potential FY 18-19 project that would involve the placement of nearly 500,000 cubic yards of sand along an approximately 2.5 mile stretch of beach in eastern Emerald Isle, roughly between the Indian Beach town line and the Eastern Ocean Regional Access.  This additional sand placement would provide reasonable protection for the 50-year+ storm event, and would add significant width to the flat beach berm in this area.  Under the “working scenario” (that will be refined in the next few months), similar work would also occur in Pine Knoll Shores and Indian Beach, and this would enable Emerald Isle to share the significant mobilization / demobilization expense with these communities, resulting in a more economical project for all 3 communities. 

The total estimated cost of this effort for Emerald Isle is estimated at approximately $8.7 million, and the Town would seek 50% of this amount, or approximately $4.35 million, from the State via the new Coastal Storm Damage Mitigation Fund approved by the NC General Assembly earlier this year.  As discussed previously with the Board, I remain hopeful that Emerald Isle will be one of the first oceanfront communities to benefit from the new State fund.  Of the remaining $4.35 million, it is anticipated that County room occupancy tax funds would cover 75%, or nearly $3.3 million, and the Town would cover the remaining cost of nearly $1.1 million, or 25%, with funds reserved in the Town’s Future Beach Nourishment Fund. 

The Board should note that the “placeholder” in the 5-Year Capital Replacement / Improvement Program includes a total Eastern Emerald Isle project cost of $15 million, with $1.875 million from the Town’s Future Beach Nourishment Fund.  Thus, the Board should note the cost of the “working scenario is significantly less than originally indicated in the 5-Year Capital Replacement / Improvement Program.  With a current (as of June 30, 2017) balance of approximately $2.5 million in the Future Beach Nourishment Fund, the Town has sufficient funding in place for this project if the Board chooses to proceed in FY 18-19.  If the Town is not able to secure State funding via the new Coastal Storm Damage Mitigation Fund in FY 18-19, I would recommend that the Town submit a new request in FY 19-20 and delay this project until FY 19-20.

Bogue Inlet Channel Realignment / Western Emerald Isle Project Included in 5-Year Capital Replacement / Improvement Program For FY 20-21

As noted earlier, the Town successfully realigned the main ebb channel in Bogue Inlet to a position roughly equidistant between Emerald Isle and Bear Island in 2005.  The main ebb channel was positioned approximately 3,300 linear feet west of Emerald Isle at that time, and the Town’s engineers predicted that it would take approximately 15 years for the channel to gradually migrate back to the area adjacent to The Point vehicle ramp.  It has now been nearly 13 years since that project was completed, and the main ebb channel is currently located approximately 1,400 feet west of Emerald Isle.

The “master plan” and 50-year permit authorization include a “safe-box” strategy whereby the Town would have the ability to relocate the main ebb channel in the future at such time that the channel migrates within 1,000 feet of Emerald Isle.  This “safe box” strategy should enable the Town to avoid the “crisis” situation that occurred in the early 2000s when the main ebb channel was positioned directly adjacent to the homes on Bogue Court and The Point simply did not exist.  Assuming a 15-year migration cycle, considering historical channel migration rates, and in an effort to be proactive, the 5-Year Capital Replacement / Improvement program includes a “placeholder” for the next Bogue Inlet channel realignment in FY 20-21.  The recently adopted 5-Year plan includes a total estimated project cost of $15 million, with $10 million provided by the State’s Shallow Draft Navigation Fund, $3.75 million provided by County room occupancy tax funds, and $1.25 million provided from the Town’s Future Beach Nourishment Fund. 

As part of this potential project in FY 20-21, the sand dredged to realign the main ebb channel would be placed on the ocean beach in western Emerald Isle.  The beach profile survey will surely change over the next 3 years, however, (based on the 2017 survey) Moffatt & Nichol has identified a need for approximately 375,000+ cubic yards of sand to provide the 50-year storm protection level in western and central Emerald Isle. We anticipate that as much as double this volume of sand will be removed from the realigned Bogue Inlet ebb channel and placed on the beach in western and central Emerald Isle as part of this project. 

As is the case with the Eastern Emerald Isle project, the Board will have some discretion to shift this project earlier or later, depending on conditions over the next few years.  If the Town completes the Eastern Emerald Isle project contemplated in FY 18-19 and secures the necessary State funding for that project, the balance in the Future Beach Nourishment Fund is projected to be approximately $3.6 million prior to beginning work on the Bogue Inlet Channel Realignment / Western Emerald Isle project in FY 20-21.

Board Direction Sought

As you know, beach nourishment is critical for Emerald Isle, and the Town and County have worked hard over the years to position the Town for future beach nourishment activities in order to avoid future crises.  At this time, I am seeking the Board’s general concurrence with the approach outlined above so that more formal efforts can continue for an Eastern Emerald Isle project during the winter of 2018-19.  If the Board concurs with this approach, I will solicit a formal design contract from Moffatt & Nichol in the coming weeks, and will present a formal contract recommendation to the Board in January 2018. 

If the Board concurs with this approach, I envision the following general schedule:

                January 2018 – consider design contract for eastern Emerald Isle nourishment project

                April 2018 – submit State funding request via Rep McElraft and Sen Sanderson 

                June 2018 – County anticipates receipt of 50-year permit authorization

                July 2018 – (hopefully) State funding included in new State budget

                July 2018 – solicit construction bids from dredging companie

                August 2018 – receive construction bids

                September 2018 – award construction contract

                November 2018 – begin construction

                March 2019 – complete construction.

I look forward to discussing the Town’s future beach nourishment efforts with the Board at the October 10 meeting, and await your direction.