Posted on December 13, 2023
Bald Head Island is planning its next beach nourishment project, which requires a vote from the public and could include an impact on property tax rates.
The Village Council is proposing a town-funded sand placement project along South Beach. The planned project is a two-pronged solution, which would add up to 100,000 cubic yards of material from the Jay Bird Shoal borrow site onto South Beach.
The east end of BHI’s South Beach — specifically the last mile — has seen very little sand since 2000, according to town manager Chris McCall. It also faces more significant erosion than the west end of South Beach. Each fall and spring surveys are taken of the beaches for the town engineer to determine where the most sand is needed based on erosion and accretion.
The first section would place 500,000 cubic yards from BHI’s terminal groin eastward about 7,500 linear feet to Muscadine Wynd. It also replaces 13 soft-tube groins, made up of a geotechnical material. This portion of the nourishment is estimated at $13.5 million.
The second section would dredge 500,000 cubic yards of sand and place it in the Flora’s Bluff and Killegray Ridge area eastward 6,500 feet to the Point at Cape Fear, where the Shoals Club is located. This would cost $4.5 million, significantly less than the other portion since mobilization costs would only have to be paid once and the projects would be done simultaneously.
On the March 5 primary election ballot, Bald Head Island voters will have the opportunity to decide if they want to fund one of the two projects, or both.
If only the $13.5-million bonds are approved for issuance, BHI would likely see no impact on taxes, finance director Zachary Hewett said at a town hall meeting Monday. This is because BHI’s debt service obligation from its $13.2 million 2018 to 2019 nourishment for 1 million cubic yards of sand would be paid off by 2025, the anticipated start date of the next nourishment.
If the $4.5 million bonds are also approved, totaling $18 million in general obligation bonds, town residents would likely see a spike in property taxes. A conservative estimate, Hewett said, would be a 3.5-cent increase island wide. However, the town applied for a federal grant to cover the $4.5 million and is confident it will receive it. Approval should be announced by February.
“The Village always has to work under the assumption we didn’t get the grant,” Hewett said when asked by a few board members why the town would include the second bucket of money on a referendum.
With incurring the $4.5-million extra debt, a home valued at $1.5 million could see a property taxes increase of about $525 annually.
Property owners who live closer to the shoreline — and therefore receive more direct benefit from sand placement — incur an additional tax rate: 7 cents for those directly on the oceanfront and 4 cents for parcels between oceanfront homes and the dune ridge line. Those property owners could pay an additional 1.25 cents in added taxes, if both projects are approved.
The proposed debt would incur a seven-year term at roughly 4.5% interest.
Right now, BHI residents pay 58 cents per $100 valuation, with 8 cents of that used to repay debt.
If the construction bids came in over budget, BHI has $2.2 million of debt already approved but not expended it can utilize. If this were to happen, island residents would likely see a 5.5-cent increase, with an additional 1.83 cents for each oceanfront zone.
Hewett said this is the “worst-case scenario.”
BHI currently has a gross debt of $83 million, 4.5% of assessed property value. The maximum allowed by the Local Government Commission is 8%.
Why does BHI fund beach renourishment?
The town began to take control of funding its own nourishment projects in the early 2000s.
“If we don’t, the tendency, historically, we’ve seen we lose all that sand between the next cycle,” McCall said.
Nourishment projects are typically planned when the United States Army Corp of Engineers dredges the Cape Fear River, keeping the navigational channel open for shipping vessels headed to the Port of Wilmington. It then provides the sand to one of three beaches — Oak Island, Bald Head Island and Holden Beach — during routine maintenance.
BHI receives sand every two out of three times maintenance occurs; the town has gone up to six years before receiving sand from the USACE and the schedule is not consistent. For example, Bald Head Island funded its own nourishment in 2018 because it had not received sand from USACE since 2015, and Oak Island was the recipient of the federal 2018 project.
It’s the same reason the town is proposing its 2025 project as well, since Oak Island will receive the USACE sand. McCall noted the Village doesn’t always have a say in where the dredged material is placed, so by funding their own projects, they can control where the sand goes. BHI is working with USACE on an agreement to allow the town to have future input on sand placement during the navigational channel dredging, typically 1.2 to 1.3 million cubic yards, McCall added.
This year the USACE regular maintenance project resulted in an additional 1 million cubic yards along 60% of South Beach. The proposed bonds for the 2025 project would cover the remaining portion of the shoreline.
“Shorelines consisting of public beaches are ever-changing and are dynamic,” McCall said.
The Village’s efforts for nourishment date back to 1991 when erosion first became apparent from USACE’s dredging of the Cape Fear River for the port. Bald Head Island has experienced 13 separate beach nourishment projects along various areas of its 14-mile shoreline; only four have extended past Killegray Ridge on South Beach, less than a mile from Bald Head Island Conservancy.
By 2001, the navigation channel had been reoriented closer to BHI, increasing shoreline destruction. As a result, the town invested in a 645-foot sandbag revetment in front of the BHI Club. It also installed 16 soft groins in front of the club.
The Village realized by 2009 it needed to invest in its own nourishment projects; staff decided to dedicate a portion of property tax revenues to the ongoing investment.
The next year, the Village funded its first engineered beach with voter approval for $18 million. It included 1.85 million cubic yards of sand. An engineered beach is FEMA approved, so if it takes a hit from a declared natural disaster, the federal government pays for the nourishment.
BHI also received legislative approval to construct an $8-million, 1,300-foot terminal groin in 2016 – the first one in North Carolina out of four authorized.
The town will host a public hearing Friday on adding the referenda to the March ballot. The Village council will need to approve the project if the bonds are voter-approved and public input will be required at that time. The ballot vote would just be to allow the town to take on the debt.
“What we’re doing now is going to the voters to ask, ‘What’s the largest amount of money we will authorize and give the Village the ability to issue later,’” bond counsel Brandon Loft explained at the meeting.
The public hearing is intended to educate residents on the need for the funding.
If not approved, the town will continue to monitor potential threats to the loss of public infrastructure from ongoing erosion. It’s also likely the Shoals Club, sitting on the oceanfront, would lose one of its pools, possibly two.
Lofton said the town also has the ability to negotiate the amount of sand that’s placed on the beach, without changing the scope of the project, if only one of the two financing terms is approved.
If all goes as planned, the project would be bid out in summer 2024, with a start date of January 2025 and completion by May 2025.
