The Bald Head Island Transportation Authority is stuck. Created by the legislature in 2017, the authority has spent years exploring the purchase of the island’s transportation assets, owned by Bald Head Island Limited.
Embroiled in snags, the authority is formally asking those who signed off on its creation for guidance amid the impasse. In a special meeting Monday morning, the authority approved sending a letter 7-3, with the three trustees representing the Village of Bald Head Island dissenting.
Authorized by Senate Bill 391, the authority is tasked by law with acquiring Bald Head Island Limited’s transportation assets, which include the ferry, barge, on-island tram and mainland parking system.
The unique public entity has no clear path forward. The Local Government Commission has not taken action on the authority’s revenue bond application since it was first submitted in January. There’s also a competing offer to purchase the system, submitted by the Village of Bald Head Island, bolstered by a voter-approved general obligation bond referendum that could offer a comparatively lower overall debt service with a lower interest rate.
State Auditor Beth Wood (who serves on the LGC) has said she is unwilling to consider the purchase price the authority has arrived at through two commissioned appraisals, $50.9 million and $48 million. Wood has said the appraisals aren’t worth the paper they’re written on.
The authority sent the letter to parties tasked with appointing its 11 members: the governor (one appointee), Speaker of the House (one), President Pro Tempore of the Senate (one), Secretary of the Department of Transportation (three), Brunswick County Board of Commissioners (one), Southport Board of Alderman (one), Village of Bald Head Island (three).
Trustees debated omitting information referencing the village’s competing proposal, with the majority relenting, figuring the copied parties are already well aware of the two bond applications. The village purports to save $13 million over the 30-year life of its proposed bonds, supported by 173 affirmative ballots earlier this month and rejected by 122.
Despite public criticisms of the authority’s deal by LGC members and a denial recommendation from staff, the authority maintains it has met the statutory criteria for bond approval, according to the letter. “[W]e believe the consequences of inaction are likely to have a significant and lasting adverse impact on all the users of the system,” the letter states.
Bald Head Island Limited has informed authority members it is actively pursuing a sale on the private market, with the possibility of divvying up the assets to maximize its returns. Discussions among six entities are ongoing, according to the letter. Although village officials have said they see this as a negotiating ploy, the authority considers it a real outcome of a failure to move.
“We believe a sale to a for-profit owner or owners would be the worst of all outcomes,” the authority’s letter states.
Since the authority’s second appraisal – ordered to assuage concerns raised by the first – the village paid a consultant to review it, finding it was not conducted appropriately. In all, Bald Head Island Limited officials have said the company has spent more than $1 million to finance the deal through cash infusions to the authority.
State Treasurer Dale Folwell promised the LGC board he would carve out time to consider both Bald Head bond applications at its December meeting, which prompted Wood to put in writing her vocal objections to considering the deals. In a Nov. 15 letter to Folwell, Wood insisted he remove the items from the agenda as the commission had yet to receive the evidence required by state statute to support the asset valuation.
Folwell said he is seeking input from fellow commission members on Wood’s request. Separately, the governor chose not to re-appoint three commission members, a shakeup that could impact the LGC’s ability to take action on the complex deal. “We have basically lost half the institutional knowledge about Bald Head Island and every other deal that we’re working on right now,” Folwell said.