FAQ — The Federal Project

Date: 09/01/2020

Regarding: Frequently Asked Questions (“FAQ”) — The Federal Project

The North Topsail Beach Board of Aldermen has collected questions from the emails submitted regarding the Federal Project. The Board and staff are working to answer as many questions as possible in a timely fashion. If you do not see your question specifically addressed, it is most likely that staff is gathering information on the topic and hopes to include the information on the next FAQ. But if you want to double check with staff or submit clarifying questions on new information, please email the town clerk at townclerk@ntbnc.org.

Given the volume of inquiries, please be patient as we work through the materials and present information.

1. Tax Revenue with NTB similar to the Pender County/Surf City arrangement. Make that happen.

In North Carolina, there is no general authorization for local occupancy taxes. Accordingly, the only jurisdictions that can levy such taxes are those that have received explicit authorization from the General Assembly by a local act. In Pender County, the General Assembly explicitly directed the County’s return of funds to respective municipalities, stating “Pender County shall, on a quarterly basis, remit to Surf City the net proceeds of the occupancy tax derived from accommodations in Surf City and shall remit to Topsail Beach the net proceeds of the occupancy tax derived from accommodations in Topsail Beach.”

From a historical perspective, the Onslow County local act was approved in 1985, five years before the incorporation of the Town of North Topsail Beach. In contrast to Pender County, Onslow’s local act allows it to levy 3%. By a separate act, North Topsail Beach may levy 3%, which it does.

To institute a similar arrangement as Pender County and its municipalities, the approval and support of the Onslow County Board of Commissioners is required. Because such an arrangement would reduce $1 million per year of occupancy tax revenue to the County, gaining the Commissioners’ support is unlikely, which is a primary reason NTB is investigating the adoption of paid parking, which is estimated to raise the same amount of revenue.

2. “jointly and severally liable for the financial obligations of Surf City”………..will Surf City have the same obligation toward NTB???

Yes, Surf City would likewise be liable if North Topsail Beach could not meet the financial terms of its obligation. In 2016, Surf City and North Topsail Beach signed a ‘Shoreline Projection Project Partnership Agreement (PPA) Interlocal Agreement’ to this effect. It is important to remember that the financial obligation of Surf City is larger, meaning North Topsail Beach’s commitment in a default scenario is larger than the North Topsail Beach project itself.

3. brief description of the expected work would help.

The best link for this is on the Corps website under ‘Civil Work Review Board Presentation. Here you will see a brief description of the project. Again, keep in mind that the project was approved in 2010 but NOT funded for construction until November of 2019. Thus, we are now in the first steps of actual construction, but we are using the 2010 approved plan to do so.

The entire study that was done for the project including all the appendices is maintained on the Army Corps of Engineers website.

4. I would like to know what the “State” contribution is expected to be. If the annual cost is 3m to the city after the State contribution the Alderman must determine how that would be paid.

Please keep in mind this is one federal project with both a federal partner and a non-federal partner. The Army Corps of Engineers recognizes only North Topsail Beach and Surf City as non-federal partners. While the State has agreed to contribute to the cost, they are not part of the PPA.

But to this citizen’s comment, this is really a two-part question. The answer to first part of the question on ‘State contribution’ is as follows: By a pre-determined formula, the State of North Carolina will contribute 50% of the ‘non-partner’ share to the project during the initial construction phase. While North Topsail Beach would hope that the State of North Carolina would also contribute this same amount during each of the re-nourishment cycles, which are planned at six-year intervals, no formal commitment has been made. In practice, the State does this through yearly appropriations bills when the State share will be needed. A good example of this is ratified House Bill 1087 in the 2019 session of the legislature. In this bill is the State’s share for the 50-year Carolina Beach Federal Project. The initial construction of that project was many years ago, so the 2019 appropriation is the expected state share for the next re-nourishment dredging cycle at Carolina Beach.

As to the answer to the second part — how will the town pay the $3 million annual cost — the Board has spent many hours researching and discussing our various options. At this point, we still do not have a solution to put forward, and thus, a big reason we are asking for public opinion. Current revenues will not be sufficient to pay the $3 million per year.

5. If NTB leaves the project, will this have an impact on the ability of Surf City to continue?

There would be an impact, but to what extent, we do not know for sure. The project as currently proposed has Corps authorization. Without participation by North Topsail Beach, the Corps would have to do a modification evaluation, i.e. re-calibrate the project scope and costs. We have been told informally that this process would take about 9 months, so basically the Surf City start date would be moved back based on the time to do the modification evaluation by the Corps.

The two towns have had different approaches to beach re-nourishment. While North Topsail has spent millions of dollars on re-nourishment, such as 2014 Project, we appreciate that Surf City has a different approach.

6. Is there a chance the State would pay more if the municipalities are unable to pay?

It is doubtful that the State would increase its formula (see the answer to #4). Given the expected $4 billion State shortfall in revenue this year, it is hard to imagine a scenario where the State contributes more that the formula share.

7. Why did I receive a letter from the Town asking for an easement?

The Town distributed letters to oceanfront property owners in the project area to ask for permission to put sand on the beach in front of their homes for the next 50 years, which is the length of the project. This letter is an easement request, and it has nothing to do with ‘costs’ of any kind. In North Carolina, beaches are in the public trust, which means anyone can walk up and down, sit on, or otherwise enjoy. In other states, this is not always true, so the Corps, as a federal agency, recognizes our beaches as private property; thus, to dot all of their “i’s,” they require the 50-year easement to start the project.

8. How much money has been spent to place and maintain the sandbags at the north end? How much has been spent in the last 10 years for beach nourishment north of the town hall?

The short answer to your question is that the north end has received approximately $8.1 million dollars since 2012 while the south end has received approximately $18.6 million dollars.

9. “Project located in same area NTB spent $15 million dollars in 2014, on which $14 million in debt remains.” Additionally, did the $15 million project only impact the southern most 4 miles and was it planned or was it in response to hurricane damage?

The 2014 Phase 5 Project, funded through a loan from the USDA, was planned before recent named storms but was instrumental in minimizing damage to homes and infrastructure during Hurricane Florence in 2018 and Hurricane Dorian in 2019. The Federal Project would impact the same area as this 2014 project.

More information to follow.

10. but it seemed that the expected useful life of the initial project was estimated at less than ten years (“its potential useful life, currently estimated at not longer than ten years for the initial project”). If we have to re-nourish the beach every six years, do we keep doing this forever?

The short answer is ‘yes,’ depending on erosion rate. The idea that beach nourishment is a ‘one and done’ expense for a given beach segment is a misconception. Our goal as a Town is to create a ‘Storm Damage Reduction Project Master Plan.’ The plan would account for re-nourishment cycles of 6 years given the average shoreline erosion rate of 2 ft per year in Town. The daunting task of the plan is financial. Given current construction costs of approximately $5 million dollars per mile of beach and that re-nourishment cycles will probably need to be done every 6 years, beach costs will become a major use of our future tax and other funding streams.

One of the positive outcomes of a Federal Project is that it guarantees federal funding for a portion of the total costs for 50 years. Yes, the initial construction of the dune and berm system may last 10 or less years, but future re-nourishment cycles are partially covered by federal funds (50%) for the 50-year life of the project. Without the project, 100% of the cost would be borne by the Town. In this scenario, not only would the federal government not be obligated to contribute, but the State would also have no obligation for its 50% non-partner share like in a federal project.

One negative side is North Topsail Beach would be responsible for its share of the costs, which are unknown but have been rising substantially as set out in the Town’s recently-published presentation.

11. Did this federal project originally include Topsail Beach as well as Surf City?

Yes, it did. Topsail Beach opted out of the project and recently completed their own private restoration and re-nourishment project, at a much-reduced cost over the amount projected for their portion of the federal project.

12. Does the project require the town to provide public parking?

Yes, the use of federal dollars requires that the Town ensure public access, and designate parking spaces at each beach crossover. In most of the project area, this will require use of the town owned right-of-way on side streets

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