SPECIAL ANNOUNCEMENT from Claude Pope - 10/19 Claude and Melissa Pope <cpope@maritimemarketbhi.com> Tue 10/19/2021 11:26 AM
Fellow Islanders, First - many apologies to those receiving this note who have no interest in this upcoming election; who owns the Ferry System; or the Go Bonds discussion. If that is you, please simply delete this email, but if you click “unsubscribe” or “do not contact”, you’ll also be unsubscribing to my daily or weekly emails, and the spam laws prohibit me from adding you back to the list. The issues of today are broad and complex, but the single issue that is on the minds of most voters is the issue of which entity is best positioned to own and operate the transportation system (ferries, barges, parking, trams, etc.). My perspective on this issue comes from three different vantage points. First - as a full-time islander; second, as a business owner (and one of the largest customers of the transportation system), and third - as a member of the BHI Transportation Authority appointed “at large” by the Village council just over a year ago. I’ll take this third perspective head-on and out of the gate. First, some history. Most of the work of the past three (plus) years of the Authority has taken place under NDA’s - in that no Authority member (not even the Mayor or Pro-Tem) could share or disclose the proceedings, pricing, terms or negotiating positions taken during the process. Under NDA, the Authority negotiated a $47.75MM deal to acquire all the assets of the Transportation System from BHI Limited. The elevenmember board voted 7-4 to pass the deal. All four “no” votes were islanders, with the seven “yes” votes coming from non-islanders. The deal became “public” only after the Authority submitted the deal to the Local Government Commission (aka the “LGC”) for approval. The LGC approves all bond financing by any local governmental entity in the state of North Carolina, and the LGC legitimately questioned the deal, along with the valuations and assumptions put
forth by the Authority. The LGC has not yet approved the Revenue Bond financing submitted by the Authority. Enter the Village. After the deal became public, the Village Council - once a supporter of the general concept of an Authority - became rightly concerned with the terms of the agreement and began exploring its own options - including considering acquiring the assets of the transportation system and running the operation itself, rather than having the Authority run the system. As to the Transportation Authority, I believe that the general concept of a Transportation Authority is a good one, and a model that could work just fine under the right circumstances. At present, those circumstances don’t exist - but they could. In short, the Authority needs a majority of islanders on its Board. It’s OK to have folks from Brunswick County or Southport due to shared resources, benefits, and common interest, but patronage appointments, that have no connection whatsoever to the island, have no business trying to dictate what’s best for our island period. And that can only change if the legislature changes the law as written on who gets to serve on this very important Authority. The Authority and the Village also have other issues to work through. I will note three: First, the Authority is an Authority only on paper. It presently has no assets, no employees, and no experience running a complex transportation system. The Village - while having much more experience in the business of governing - also has no experience running a transportation system, but certainly has experience as a large customer of the existing system. Either entity would likely contract with BHI Limited for a period of time to manage the system until they can get their own management teams in place. Second, both entities have governance issues as well. The Authority as too few islanders on its board, and the Village has too many (all of them, in fact). With the Authority, it takes six individuals (a majority) to make it work (or mess it up), and with the Village, it only takes three individuals (a majority) to do the same. Thus both entities need to figure out a better governance
solution if they’re going to be successful operators of our island’s most important infrastructure asset. As noted above, without legislative action, which I believe will be difficult to obtain, the village remains in an unacceptable minority position. But for the Village to succeed in good governance, I believe it should establish a “Fiduciary Board” (rather than simply an “advisory” board) to actually run the system. This new board would therefore be somewhat shielded from the possibility of an “extreme regime change” at the council level - one that if left unchecked, could wreak havoc on a system by the mere election of new councilors. The Fiduciary board could (and should) certainly include a representative of Southport, and Brunswick County, but the majority of this board must absolutely consist of property owners (full or part-time). My third concern remains the “price”. In my humble opinion, the price is too high, putting pressure on any entity to perform the necessary maintenance and operations going forward. But if the price remains as is, then the most economically feasible buyer would be the Village (due to the savings generated by the lower interest GO bonds). I encourage the village to continue to look for support for this, or any, price, with the hope that the ultimate sales price is fully supported by the collateral being sold. So - the biggest variable at present is the status of the GO (General Obligation) bond vote on the ballot this fall. If the voters approve the bond, then it makes the Village a legitimate suitor to acquire the transportation system, and their submittal will then get a serious look by the LGC. It may or may not pass muster at that point, but the LGC would at least have an alternative acquisition proposal to consider. On the other hand, if the bond fails to pass, then Authority ownership is left as the only viable proposal on the table. While some may cheer this scenario, I would maintain that passing the bond would not only assist the Village in their efforts, but it would also improve the Authority’s negotiating position. Passing the bond would actually help both sides - and would further empower the LGC to look at all of the nuances of each proposal in order to decide in which one - in their opinion - would be
for the best interests of all islanders and all parties in general. One last comment on the Go Bonds. Yes, a GO Bond is secured by the taxing power of the entity. But the bond should be, and it will be, repaid from the available revenue from ferry – barge - parking revenue. the fear of raising property taxes for this purpose is to me, a red herring. As a Republican, I typically have much indigestion over any discussion that involves tax increases, but I have no queasiness about this particular GO bond vis a vis taxes - given the adequate (and growing) revenues from the transportation system to make the principal and interest payments without having to rely on a tax increase to do so. None of this may mean a hill of beans to BHI Limited as they hold the ultimate negotiating card. They can simply walk away - they’re not compelled to sell to anyone - and while they continue to bring up the prospect of selling the system to a third party, the possibility of Utility Commission regulatory authority over future rates (for ferry, parking, or barge) would give pause to any third party wanting to chase that rabbit. Limited’s best - and most stable buyers - are right here in their own backyard. That’s a lot of words in order to read this one sentence: Vote FOR the GO BONDS. Now, on to a more delicate subject. It’s been a while since I’ve made a public endorsement in any of our local races or issues. The last time was during the 2015 election cycle, and the big issue of the day was getting a council that was willing to fire Calvin Peck - the Village Manager at the time. I knew every candidate on the ballot, but during that election cycle, there were three challengers who were committed to making that happen, and I endorsed all three (Kit Adcock, John Pitera and John May). Thankfully, all three were elected, and Calvin resigned shortly after our new council was sworn in. Our current Village Manager - Chris McCall - was then installed as our new Village Manager. Chris is doing an outstanding job. He’s assembled a terrific team at all levels of the Village organization, and we’re grateful for his leadership!
Today, I’m endorsing the three incumbents. I know all six candidates, and I consider each to be a friend. I’m grateful for their willingness to get “into the arena” and fight for what they believe in, and I’m thrilled to see new faces show interest in the governance of our island. They care deeply about BHI, and they each have the passion to take on the job. I hope they’ll consider running again in the future, and I may very well endorse one (or all) for some future race. However, for this race, at this time, I’m giving my full support to Peter Quinn, Scott Gardner, and Emily Hill. I believe that these three individuals are best suited to serve the citizens during the upcoming transitionary period of the ferry system along with the transition and maturation of our island as we begin contemplating a fully built-out island infrastructure. Many thanks for your patience in reading this far, and we’ll see you ‘round the island :) Cheers, Claude Claude E. Pope, Jr. Maritime Market Bald Head Island, NC Manage Your Subscription
This message was sent from cpope@maritimemarketbhi.com Claude and Melissa Pope Maritime Market 8 Maritime Way Bald Head Island, NC 28461 -------------------------------