Dear Islanders,
Village officials are hearing comments and questions regarding the potential acquisition of the Island’s transportation system by either the Village or the BHI Transportation Authority (BHITA). Both the NC Local Government Commission and the Village have expressed concerns that the acquisition process consider public participation, debt payers’ approval, transparency, and governance.
Proper governance of our transportation system is necessary for its and the Island’s long-term success. For many reasons previously stated, including responsiveness, opportunity for public input, and accountability to the users, the Village Council has expressed its conclusion that Village ownership of our transportation system would be superior to that of an outside agency over which the stakeholders of Bald Head Island have no control and with members who rarely or ever ride the ferry.
We’ve listened closely to residents’ ideas and concerns. Based on their feedback, here is an outline of five key issues surrounding pricing, borrowing costs, taxation impact, capital and operating expenditures, and quality of service.
1) In analyzing the purchase price, consideration should be made not only to the dollar amount but also to the assets that should be included. In this transaction; real estate assets integral to the operation, particularly on the island, are not included. Parking, passenger management, baggage handling, and more are constrained by a lack of useable land. The Village has extensive experience with land planning on the island and is in a far better position to comprehensively integrate transportation land-use needs into the island’s overall infrastructure. But the Village’s objective is not cost-savings for its own sake: any savings will be used to finance long-term capital and operational improvements, which will result in a more efficient, user-focused ferry system.
2) As has been stated many times, the Village’s General Obligation Bonds coupled with our superior bond rating will allow for substantial interest savings over the 30-year term of the bond. Additionally, the initial bond amount would be reduced due to the Village’s lower issuance and reserve costs, further reducing our debt exposure and enabling plans to fund deferred capital expenditures. The Village will be able to apply capital far sooner than the BHITA can, making an immediate investment in system improvements. Further savings will accrue through personnel redundancy, facilities overhead, short and long-term planning, single-source purchasing, and the ability to swiftly address emergency issues.
3) There is much talk of property tax increases allowed — but NOT required — in General Obligation Bond financing. Neither the BHITA nor the Village project any shortfall in the debt obligation (even though the Village would incur lower borrowing costs than the BHITA). Rather than hypothesizing very unlikely tax increases, reasoned analysis shows that the GO Bonds provide the island with more flexible and economical financial options that BHITA’s proposed financing does not allow. The BHITA, for example, will have only two options: increase fees and/or slash operating costs (i.e., services). This is impractical because, at current operating costs, service is already unsatisfactory.
4) We’ve also heard concerns about the amount of debt carried by the Village. Our conservative projections for the next 30 years indicate that this will not be a problem. The Village’s tax-base will continue to grow, and unlike the BHITA, we have a solid track record of debt repayment. We are still a young incorporated municipality that has successfully undertaken numerous long-term capital projects, all of which demonstrate a high degree of financial management expertise. These include acquisition of our public water and sewer systems, construction of the Public Safety Building, construction of the Terminal Groin, land acquisitions, improvements to the Postal Building, and more.
5) As has been previously stated the Village needs to own the system, but not micromanage it. The Village will see that the system is professionally managed by experienced personnel, just as our Public Safety operations and other municipal services are. Another stark difference between BHITA and Village ownership is that, unlike BHITA, Council members have a personal vested interest in ensuring operational challenges and emergencies are immediately and properly handled. Members of the Village Council live here and share with all island stakeholders a common desire that the transportation system operates at the highest possible level.
The Village will continue to keep you updated on this matter.
Thank you for carefully considering THE FACTS on this important issue,
Mayor Andy Sayre