After delaying action for a month, the state’s Local Government Commission (LGC) is expected to openly review plans by the Bald Head Island Transportation Authority to sell $56.14-million in bonds to take over the marina docks, ferries, barges and trams serving Bald Head Island. If approved by the state’s financial watchdog, the sale could close in early March, an official said.

The Authority, created by a 2017 state law, has been negotiating with developer Bald Head Island Limited to buy the system, which is privately owned but partially regulated by the state Utilities Commission. Owners want to divest the system to help settle the estate of patriarch George Mitchell, whose 10 heirs are parsing holdings he created in 1983. Most of the island is undeveloped; developed areas include exclusive clubs with a golf course, marina, pools, croquet greenswards and high-end dining. The average sales price for homes last year was more than $1-million.

The ferry system is the only practical way to reach the island, known for its beaches, maritime forests and lack of cars and trucks, except those used by village staff and contractors. Electric golf carts and bicycles are the preferred means of travel around the five-mile-long island. The permanent population is about 235, but workers coming to and from the island sometimes number four times that amount.

The nonprofit Authority, composed of local and state government officials, business leaders and attorneys, was set to take its plans before the LGC earlier this month. Some of the Bald Head Island contingent objected and the village government asked for a delay. Concerns included plans to raise rates for passengers by $4 a ticket and on barge shipments (for construction materials and food, among other cargo) from $55 to $60 per six linear feet.

Islanders are also concerned about potential increase for parking on the mainland at Deep Point Marina.

State Treasurer Dale Folwell recently suggested that the Mitchell family donate the system to the Authority.

Folwell added that the state should coordinate with the island and public officials to address the overall transportation needs for the area, citing nearby state-owned and operated Southport/Fort Fisher Ferry, which is a few hundred yards away.

“I’m most concerned about the forgotten citizen who may end up getting the short end of this deal through higher fares,” he said in a prepared statement. “Oftentimes the number of people working on the island is four times the number of residents. Nearly all of them have to leave the island every day and night,” Folwell said. “The best way to keep that from happening is for the Mitchell family to continue their philanthropic legacy in the area by donating the system for the benefit of all.”

Chad Paul, CEO of BHI Limited, said the family was not in a position to give away the assets to a state or municipal entity.

The Authority met again Monday and Chairman Susan Rabon said the plan is to move forward with LGC approval and a bond sale by early March. The Authority released a letter, timeline and 66-page detailed analysis of the rationale, vetting, financial planning and assumptions for converting the ferry system into a state-authorized entity, somewhat like the state Ports Authority or an airport authority.

Rabon said she believed the due diligence exercised by the Authority was extraordinary and forward-looking.

“We’re being very conservative,” she said.

She added that every step of the three-year process has involved village officials and island residents. The Authority, she said, does not have a full-time staff – only a part-time secretary and part-time bookkeeper. With no functional staff to interact with the public and the COVID-19 crisis, it is not practical for the Authority to host events like public informational meetings or forums, said Rabon.

“We will be getting out some (additional) information in a FAQ,” Rabon said.

Potential opportunities

The Authority has suggested, in part that it could create:

– Operational efficiency gains in general and administrative and

support functions by consolidating four separate organic

operations into one vertically integrated interoperable system.

– Purchase vessel fuel forward-based on demand rather than at spot

fuel rates as required by the North Carolina Utilities Commission

(fuel is largest variable cost in system).

– Flexibility to align and coordinate ferry schedules with passenger

demand and seasonality (currently any changes to ferry schedules

require a Rate Case).

– Advancing electronic ticketing systems.

– Align ticket tariff classes with travel type demand.

– Integrate ferry, tram and parking ticket classes/reservations.

– Integrate baggage processing with electronic ticketing system.

– Integrate island tram and ferry reservation ticketing systems.

Background

The system transported more than 359,175 passengers to and from the mainland of

Southport to Bald Head Island in 2019.

It made 8,127 round trips to-from Bald Head Island using four ferries in

2019.

It has a full-time staff of 65, increasing to 85 during summer season.

Looking forward

Rabon acknowledged there are unknowns, including how a reservation system might work and not impede workers just trying to get home after a long shift. Securing financing and setting up the formal structure will make it easier to address these concerns, she said.

“I’m just following the law,” stated Rabon. “I didn’t, nor did the Authority, create this statute. The alternative is that it (the ferry system) goes into private hands.” That, she said, could lead to higher prices. The Authority has no need to make a profit but would plow revenues back into the system.