1/10/21: OUTTEN SAYS DARE WILL ‘REDUCE’ EACH TOWN’S FUNDING FOR BEACH NOURISHMENT IN ORDER TO CONTRIBUTE TO NEW SOUTHERN SHORES, AVON PROJECTS; NAGS HEAD BOARD CHALLENGES COUNTY’S FUNDING EFFORTS, BRAINSTORMS OTHERS.

Beach nourishment in Kitty Hawk.

Dare County Manager Bobby Outten made the rounds of town council meetings last week to inform officials about how he proposes the County allocate its funds to their towns’ upcoming beach nourishment projects, and only one governing board expressed an independent judgment and questioned Mr. Outten’s methods.

We would like to thank the commissioners of Nags Head for their probing analysis of Mr. Outten’s proposal and their proactive suggestion that beach nourishment funding should be developed on a county-wide basis, with all of the towns working together. 

In their discussion, the Nags Head commissioners emphasized finding more money from new sources in order to continue maintaining all of Dare County’s beaches. 

The Duck Town Council also expressed concern about funding for beach nourishment “down the road,” as Mayor Pro Tem Monica Thibodeau put it, but it did not brainstorm where and how more money might be identified.

Mr. Outten told elected officials that the County plans to reduce by about $1.4 million its contribution to each town’s beach (re)nourishment project in order to have enough money to fund two first-time nourishment projects in Southern Shores and the unincorporated community of Avon on Hatteras Island. Each town recently received a State grant in the amount of about $1.4 million.

“There isn’t enough money” in the Dare County Beach Nourishment Fund (BNF) “to do both projects,” Mr. Outten said, unless the County “reduces the funding to each town by the [N.C. Dept. of Environmental Quality] grant.”

According to Mr. Outten, the BNF, which is funded by one-third of the occupancy taxes the County collects, currently has an “excess” of $8.5 million in it. (The occupancy tax is 6 percent.)

By “reducing” the funding that Dare County would have given to Duck, Southern Shores, Kitty Hawk, Kill Devil Hills, and Nags Head for their upcoming beach-maintenance projects by $1.4 million each, the County can add about $7 million to its available excess.

If this plan is approved by the Dare County Board of Commissioners (BOC) at its Jan. 19 meeting, Southern Shores can expect to receive about $7 million up-front from Dare County, and an annual contribution of $750,000 to its bond debt service, according to Town Manager Cliff Ogburn.

Mr. Outten visited the governing boards of Kitty Hawk, Southern Shores, Nags Head, and Duck last week, and gave them all essentially the same presentation, which he said at the start of his remarks he had discussed with the mayors in a recent conference call.

The County Manager will visit the Kill Devil Hills Town Council tomorrow, when it meets at 6 p.m.

Because the live-stream feed from the Southern Shores Town Council meeting last Tuesday was virtually inaudible—the voices were low, and a persistent hum further drowned them out—we viewed the videotapes of the Kitty Hawk, Duck, and Nags Head meetings to learn what we had missed.

We base this report/commentary on remarks that Mr. Outten made during these meetings, as well as the response he received. We will not attribute them to any particular town presentation, however, unless it is relevant to do so.

We were able to discern from the livestream of the Southern Shores meeting at the time that it occurred that Town Council members asked few questions of Mr. Outten, and none seemed to push back like some of the Nags Head commissioners did.

Nags Head had planned to apply its $1.4 million grant to a 2022 Hurricane Dorian damage-repair project.

After Mr. Outten’s presentation, Nags Head Mayor Pro Tem Michael Siers, a realtor® with Howard Hanna, said that the County was “taking” the town’s Dorian grant money, and also suggested that Mr. Outten “readjust” or “redevelop” his funding model so that it benefits all of Dare County as it is today, not as it was when the model was developed 10 years ago for Nags Head.

Mr. Outten replied that Nags Head’s NCDEQ grant was not designated for Hurricane Dorian damage repair, but was designated generally for beach nourishment, and the grant simply replaces a portion of what Dare County would have given the town. 

As for his funding model, Mr. Outten told Mr. Siers, “If there’s a better way to do this, we’d love to hear it. Our goal is to take care of the beaches of Dare County, as a whole. And if there’s a better way to do it, we want to do it.”

Mr. Ogburn assures us that the interference problem with the live You Tube feed will be resolved by the Town Council’s Jan. 19 meeting, when the Town’s coastal engineering consultant will be discussing “the results of the recent beach survey/monitoring report, as well as briefing [the Council] on the design of the 2022 project.”

We finally may find out at this meeting how much Southern Shores’ beach nourishment project is going to cost.

REDUCTION IN COUNTY FUNDS FOR TOWN PROJECTS

Mr. Outten last appeared before the Southern Shores Town Council on Nov. 6, 2019; he was accompanied by Dare County BOC Chairman Bob Woodard. The County Manager said then that the BNF had an excess of $7.5 million in unallocated funds.

In order to “put sand on the beaches in Dare County,” Mr. Outten said in 2019 and again last week, the County reserves BNF monies to ensure that “maintenance is carried going forward” on all projects that it funds and that it secures one year’s worth of debt service.

The $8.5 million excess is money over and above these costs.

The good news is that the BNF excess has grown by $1 million in 14 months. The bad news is, and has been for a while, that two applicants are vying for this funding: Southern Shores and Avon.

The Avon project was in the picture in 2019 well before Mr. Outten first spoke to the Southern Shores Council. (See The Beacon’s reports on 11/8/19 and 11/9/19 for background.)

As the County Manager explained in 2019 to the Council and again last week, Avon is in a “critical situation” with ocean overwash during storms that takes out N.C. Hwy. 12, its only means of access, and with oceanfront houses in danger of falling into the ocean.

In response to a question from Ms. Thibodeau, Mr. Outten said that Avon’s beach nourishment, “as a stand-alone project, would cost about the same as” the Southern Shores project, which has been estimated to cost between $14 and $16 million.

If the Avon project is done in 2022 contemporaneously with a Buxton renourishment project, it would cost about $11 million, he said.

The County Manager told Duck officials that Southern Shores is “proactively doing” beach nourishment. He did not characterize Southern Shores’ need as “dire,” as he did Avon’s.

Although Mr. Outten at no time ever committed Dare County to paying for 50 percent of the costs of Southern Shores’ 2022 beach nourishment, the Town’s financial consultants persistently referred in public presentations to the County’s contribution being 50 percent and members of the current and immediately preceding town councils also publicly assumed this level of contribution.

We regret that we could not hear the remarks made last Tuesday by Mayor Tom Bennett and Councilman Jim Conners, both of whom are carryover members from 2019. During public comments in 2019-20, we persistently corrected the 50-percent assumption made by both.

Assuming that the County funds both Southern Shores and Avon as it has proposed, and projecting the County’s funding model out to 2028, Mr. Outten said the BNF’s excess funds are likely to be around $5 million.

“The fund doesn’t grow as much as it once did,” he said.

THE NAGS HEAD BOARD STEPS UP  

A year ago, Mayor Pro Tem Siers said, Mr. Outten visited the Nags Head commissioners in their meeting room and showed no interest in their suggestion that the beach towns “come together as a county” and try to develop a cost-effective county-wide beach nourishment plan that would allow them to “hit the hot spots as needed.”

Last week Mr. Siers pointedly challenged the County Manager’s funding “plan” as being outdated and in need of being “readjusted” in order to “move forward” in a way that “benefits the whole county.”

It seemed to us upon listening to their exchange that Mr. Siers, whose arguments were buttressed by his fellow commissioners, and Mr. Outten were talking at cross-purposes with each other.

While Mr. Outten focused on how to divide up the money in the BNF, Mr. Siers focused on “where you’re gathering the money from” and on the “urgency” that exists in 2021 to do beach nourishment that did not exist in 2011, when Nags Head did the first project on the Outer Banks, and none of the other towns was interested. 

Although the County Manager said he had consulted with Dare’s “legislative delegation” about new “funding sources,” he did not elaborate upon these discussions. He told the Duck Town Council that “No one has been successful in creating a recurring beach nourishment fund” at the State level.

“Have you run a study on a one-cent sales tax increase or other ways of coming up with this money,” instead of taxing oceanfront property owners? asked Mr. Siers, who later mentioned raising the occupancy tax rate.

According to Mr. Outten, “oceanside” property owners in Avon will have to pay 40 cents more per $100 of property value, and other property owners in the Hatteras Island community will face a 10-cent tax increase—figures that Mr. Siers balked at as “detrimental to the residents,” especially the 40-cent increase.

(Mr. Outten did not speculate on the property tax increase in Southern Shores for its beach nourishment, when asked at the Duck meeting.)

In a similar vein, when informed about the County’s funding reduction, Duck Councilman Sandy Williams said: “We’re not getting money to reduce [the tax burden] on our MSDs [municipal service districts].” This view contrasted with Mr. Outten’s blunt comment to the Kitty Hawk Town Council that, because of the County’s reduction, taxpayers are going to “swallow a pretty significant tax increase.”

In response to Mr. Siers’s inquiry about the sales tax, Mr. Outten recalled the failed experience with the 1 percent sales tax increase—also known as a “sand tax”—that was enacted in 2005.

This tax—which the Dare County Commissioners imposed after receiving the N.C. General Assembly’s approval—was to exist for eight years, but it was overwhelmingly repealed by voters in a February 2006 referendum.

At the time the occupancy tax was 5 percent. It has been 6 percent since 2014. (Both Mr. Siers and Nags Head Commissioner Renee Cahoon, whose family has a long history in the rental business, commented that county occupancy taxes are declining as, according to Ms. Cahoon, “more houses come out of the rental market.”)

To reference this grass-roots protest that occurred 15 years ago, long before any Dare County town had performed beach nourishment, much less ALL of the towns and portions of unincorporated Dare County had done it, is to live in the past, as Mr. Siers suggested. Apples and oranges.

We vividly recall the sand-tax experience, including the “Beach Huggers” who opposed the tax. Most locals at the time thought the federal or state government should pay for maintenance of the Outer Banks’ public beaches, not consumers, including themselves.

Only Nags Head was even considering beach nourishment 15 years ago, and its inaugural project five years later had a $36 million price tag.

All of the Nags Head commissioners endorsed the idea of talking to their state legislators about increasing funding for beach nourishment through taxation or other means.

“We need a readily available source of money,” said Nags Head Commissioner Webb Fuller, a former interim town manager in Southern Shores, who also advocated for “equitable distribution” of the funds that the County has.

He suggested that “a formula” be developed that would “provide a degree of certainty as to how much money each [town or] area would receive.”

Mr. Fuller also proposed the formation of a “working group” of local “technical” professionals to consider “equitable distribution of what we have,” as well as “financial opportunities that we could pursue.”

Nags Head Mayor Ben Cahoon said he would try to schedule a gathering of the other town mayors to discuss beach-nourishment funding. This mayors’ meeting cannot happen too soon. It is already years too late.  

Duck Mayor Don Kingston noted that beach maintenance is among the legislative lobbying targets of the North Carolina League of Municipalities, which has defined the creation of a “permanent and adequate funding stream for local infrastructure needs,” including beaches, as a top goal. All of the towns are members of the League and are participating in its legislative goal-defining process.

That the State of North Carolina does not have “skin in the game”—a phrase invoked by Mr. Outten and many elected officials to describe the investment risked by the County and the towns in beach nourishment—is shocking, considering how much it profits from the tourism-dependent coastal economy.

Perhaps with momentum generated by the Nags Head Board of Commissioners, this unjust situation will finally change. Beach nourishment is not just a one-time event; it is a perpetual commitment.  

Ann G. Sjoerdsma, 1/10/21

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