One town’s quest to de-densify led lawmaker to file de-annexation bill for builder

Riptide Builders purchased Sea Trail in August 2020 and has plans to revitalize and finish longstanding plans in the golf-course community, abandoned after the Great Recession. A portion of the development (shown in purple up top) is slated to be de-annexed from the Town of Sunset Beach, should a local bill pass the General Assembly. (Courtesy/Town of Sunset Beach)
Riptide Builders purchased Sea Trail in August 2020 and has plans to revitalize and finish longstanding plans in the golf-course community, abandoned after the Great Recession. A 30-acre portion of the development (shown in purple up top) is slated to be de-annexed from the Town of Sunset Beach, should a local bill pass the General Assembly. (Courtesy/Town of Sunset Beach)

SUNSET BEACH — Just a few miles east of the state border, the Town of Sunset Beach has spent the last few months poring over its land-use policies, trying to codify a means to curb and control growth. 

The town finds itself entangled in a web of attorneys, developers, lobbyists, and a state legislator, all while attempting to do right by its residents’ wishes, allegedly infringing on property rights in the process. 

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Sparked in part due to Riptide Builders’ purchase of hundreds of undeveloped and once-abandoned parcels within Sea Trail, the town’s de-densification code rewrite has inflamed its relationships with key development interests. 

After purportedly refusing to meet with developers to discuss the code changes, the town hired a lobbying firm for $54,000 to confront a de-annexation bill, following a potentially illegally called closed session.

“Heck, they could have met with us months ago for free,” said Robert Hill, Riptide’s co-owner. 

However, the town’s attorney said officials have met and discussed the code changes with Riptide representatives on multiple occasions. It is not clear when these conversations occurred; the attorney did not provide a timeline or approximate date of the meetings when asked; development interests say the town only substantively responded to requests to discuss the code changes after the town hired the lobbyists.

Riptide isn’t alone in its distaste of the town’s conduct. Landon Weaver, land manager for Bill Clark Homes, said the town’s anti-development pushback isn’t limited to just multi-family projects — even single-family proposals are met with delays and roadblocks.

“We’ve built houses all over eastern North Carolina for 40 years, and we’ve never before encountered this much obstruction and antagonism from local officials anywhere,” Weaver said. “It’s frustrating and surprising, to say the least.”

An anti-development image

Last fall, the Town of Sunset Beach realized its code served as a welcome mat for potentially thousands of multi-family units on undeveloped land, requiring no major approvals or oversight by staff or council.

The town’s renewed focus on maintaining status quo was brought on in part by the August sale of 221 acres within Sea Trail, an ‘80s-era golf-course community. After the 2008 financial crisis, its owner filed for bankruptcy, later selling to a Chinese investor. When word of Riptide’s recent acquisition spread, town officials and community members got nervous: When, or perhaps more importantly, what are they going to build?

For some municipalities, the prospect of hundreds of new rooftops would be greeted with green lights all the way home; an expanded tax base means more property and sales taxes, increasing the possibility of landing commercial investors — where the real tax revenue comes from.

In Sunset Beach, the idea was met with resistance. Residents had already made their voices clear in the town’s land use plan, finalized in 2017. Home to mostly senior residents, the community’s consensus was to support single-family housing and strongly discourage high density and multi-family developments (condos, duplexes, townhomes, etc.). The plan outlined ways of achieving this (including steps the town is just now taking, four years later).

As a guiding document, the plan has no effective weight because its recommendations weren’t codified.

Town attorney Grady Richardson, responding to interview inquiries directed to town administration, said the land use plan has been utilized continuously since its adoption. “There have been a number of changes that were implemented as recommended in the plan,” he wrote in an email. “Similar to the recommendations in all land use plans, it takes substantial time to implement even a small portion of the directives contained within such a vitally important document.”

Anticipating incoming development, town officials reworked the code with the end goal of restricting and controlling growth, beginning in September 2020 — one month after the Sea Trail sale. The town has taken three major steps so far this year:

1. In March, council removed public hearings and notices for plans as a requirement for planning board meetings.

2. Also adopted in the March meeting, council now requires special use permits for all multi-family projects, previously permitted by right in the multi-family residential (MR-3) zoning district, which encompasses most undeveloped land in town.

3. Next month, council could vote to adopt setback and lot size changes in the MR-3 district, increasing the minimum lot size from 7,500 to 10,000 square feet.

These defensive moves were encouraged by residents and fiercely opposed by the development community, so much so that a group of several interests bent the ear of a state legislator, who filed a de-annexation bill on behalf of Riptide, a Sunset Beach-based firm.

“I really don’t want to be the referee on this but I’ve been pulled into it,” said Rep. Frank Iler (R-Brunswick). 

Iler filed House Bill 385 in mid-March. If passed as is, the bill would turn an undeveloped 30-acre Sea Trail tract within Sunset Beach town limits into unincorporated county land. 

For now, the bill is acting as somewhat of a placeholder. A collection of parties with ownership of a combined 800 acres in town limits are interested in de-annexation, according to Iler.

“That bill can either be expanded, that bill can go away, or a variety of things can happen,” Iler said.

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Island of its own

House Bill 385 is the second such de-annexation legislation Iler has personally sponsored over his 12 years in the N.C. General Assembly. The first also involved Sunset Beach, and passed in 2017, de-annexing 6 acres of Sunset Creek Commons on the outskirts of town. The senior living community’s owner claimed the town sent an inspection bill for $80,000 — double the town’s estimates.

If a property owner wishes to be removed from municipal limits, there’s no available avenue in N.C. — other than the General Assembly. De-annexation bills are rarely filed without the consent of both property owners and municipalities, Iler said. “Across the state, it’s been more voluntary and agreed to by the towns,” he said.

Then-mayor Robert Forester called the 2017 de-annexation bill an “abuse of legislative discretion.” (Forrester resigned after four months on the job, and in a nearly nine-minute exit speech, called out a “notoriously dysfunctional council” and said leadership had secret cabals, prejudices, and personal agendas.)

A hotbed of political turmoil, Sunset Beach has been led by five different mayors in less than a three-and-a-half-year period: Three mayors in a row resigned; the fourth finished out a vacancy. In 2019, voters elected Shannon Phillips, whose nickname “Hotdog” appeared on the ballot (he used to run a hotdog business). Over the past five years, Phillips has been the town’s longest-serving mayor.

There’s a perception, Iler said, that Sunset Beach and its residents oppose development — or any change, for that matter. It took the town more than 20 years to give in to N.C. Department of Transportation plans to replace the island’s only access point — a single-lane pontoon swing bridge that opened hourly and on-demand to commercial boat traffic — with a 65-foot high rise. Stalled by local opposition and lawsuits, the $31 million bridge, which opened in 2010, cost five times more than original estimates. “It was 20, 25 years past due,” Iler said.

“It’s a nice community. It’s beautiful,” he said. “But it’s a little different as far as the politics and the continuity as far as leadership and the administration. There seems to be a lot of personnel turnover, a lot of leadership turnover as opposed to a lot of the nearby towns that have a lot more continuity.”

Compared to neighboring beach towns in Oak Island and Ocean Isle Beach, Sunset Beach has struggled to attract commercial investment in recent years. It’s a thorn for many local residents, who want businesses but don’t want the growth it requires.

“Sunset Beach has been more dismissive; disregarding investment for whatever reason,” said Tyler Newman, CEO of Business Alliance for a Sound Economy (BASE), a business advocacy firm.

When local governments encounter business-related topics, Newman frequently arranges meetings between officials and relevant parties to discuss a proposal’s impact.

“In all of the other jurisdictions that we work in, that would be an easy meeting to try to get together,” Newman said. “In Sunset Beach’s case, they reached out to lobbyists to fight the de-annexation bill before they actually called the landowners back that have been asking to sit down since January.”

Multi-family developments in MR-3, the town's most prolific zoning district (shown in pink), now require special use permits. Before, they were permitted by right. (Port City Daily photo/Courtesy Town of Sunset Beach)
Multi-family developments in MR-3, the town’s most prolific zoning district (shown in pink), now require special use permits. Before, they were permitted by right. (Port City Daily photo/Courtesy Town of Sunset Beach)

Involving Raleigh

Sunset Beach hired lobbyists to meet with developers on its behalf and rehab its anti-development image.

In a March proposal for lobbying services, the law firm Manning Fulton suggested it would “rebrand” the town at the General Assembly “to ensure that the default position isn’t to file local bills to resolve issues that can be resolved on the ground in Sunset Beach.” 

Explaining the town’s decision to hire the firm, Richardson, the town attorney, said many local governments hire lobbyists to represent their interests.

“The Town’s reasons for hiring a lobbying firm are protected by the attorney-client privilege in light of the threats of litigation and/or anticipated litigation,” Richardson wrote in an email. “Given the amount of misinformation and simply incorrect information that has been communicated and likely continues to be communicated about the Town’s zoning and legislative efforts, the Town’s decision to have a local presence in Raleigh to serve and protect the citizens of the Town and the Town’s interests is a prudent one. I would be remiss if I did not also point out the fact that the Town hired a lobbying firm only after the developers retained a lobbyist and sought to have a de-annexation bill filed in the General Assembly aimed directly at the Town.”

At the beginning of the council’s Apr. 4 meeting, Mayor Phillips motioned to go into closed session. He did not cite any statute to justify doing so. Gen. Stat. 143-318.11 (c) mandates every motion to close a meeting must cite the permissible purpose. Amanda Martin, counsel to the N.C. Press Association, said the language in this subsection is “clear and unequivocal.”

After about an hour and a half, council re-emerged. Richardson said the Manning Fulton lobbying proposal was discussed and council wished to move forward with the proposal. The terms and cost of the contract were not publicly disclosed (a public records request shows the firm will be paid $54,000 for work through the end of the year).

“The discussion about hiring a lobbyist is an open-session discussion,” Martin said. “The discussion about whether they need a lobbyist and the discussion about who that lobbyist might be and the discussion about the details of a lobbyist should all be held in open session. Period.”

Presented with apparent N.C. Open Meetings Law violations, Richardson pointed to the town’s printed agenda and YouTube slide, which cited attorney-client privilege as the reason for the closed session. “The Town completely followed the law pertaining to closed sessions as well as open sessions,” Richardson wrote in an email.

Filings with the N.C. Secretary of State show three Manning Fulton lobbyists are now registered to carry out the town’s bidding. On Apr. 13, one of the lobbyists saw a developer’s representative by happenstance in Iler’s legislative office.

“They’re just waiting for someone to call back,” Iler said of the developers. “In fact, the two of them were at my office one after the other yesterday. So they know each other. It’s not hard for them to get in touch.”

After speaking with the lobbyist, Iler is optimistic the firm can help smooth over Sunset Beach’s intentions and reputation. “That’s what they do: They communicate. So it could be a positive,” he said. “I’m hopeful that it will all work out with communication.”

Scooped

In a pivotal September meeting last year, then-planning director Todd Rademacher opened the density topic by telling council it can’t legally stop development.

“In North Carolina, there’s no inherent way to just stop growth outright. It’s not a tool in our toolbox that we have,” he said. “So once we can really get past that notion and that idea that we can’t stop it, we can really look at how we can guide it.”

Rademacher presented maps of town, showing hundreds of mainland acres zoned MR-3, which permitted multi-family housing by-right. “You’re basically giving them a use by-right right now to put in massive loads of people,” he said.

Concerned about over-development, councilman Charles Nern asked Rademacher “to look into seeing how quickly we can act on the MR-3 that are left to make that single-family housing.” Pushing back on characterizations that the town’s code changes were rushed through, Richardson, the town attorney, said the adopted changes took place over an eight-month timeframe and “were not hastily considered by the Town, nor were they part of any sort of surprise effort by the Town.”

Though the minimum lot size in MR-3 is 7,500 square feet, lot sizes in Sea Trail and elsewhere are much larger (an April staff report found a majority of MR-3 lots are between 9,300 and 18,200 square feet). “Nobody’s really doing them that small, but they will try to shoehorn one in if the dollars make sense,” Rademacher said at the September meeting.

Through some tweaks in the zoning map and ordinance, Rademacher said the town could be more effective at guiding inevitable growth, spurred by retiring baby boomers. Designed as a dense community, Rademacher recommended the town leave Sea Trail alone. “Those areas I would leave and let develop more or less as they are,” he said.

By the next month, he resigned. Now he works for Riptide.

As Riptide’s community planner, Rademacher has publicly advocated on behalf of Sea Trail and against town proposals in planning and council meetings. Last month, he told council multi-family is not a special use and should not be subjected to the arduous quasi-judicial process. The move “exposes the town to considerable litigation,” he said.

Richardson said town staff (specifically, his successor, new planning director Chad Staradumsky) have met and spoken with Rademacher in his role with Riptide on numerous occasions.

“As Mr. Rademacher surely knows, there is no requirement, legal or otherwise, that any local government such as the Town of Sunset Beach convene a special meeting to engage development interests in the Town’s review and consideration of a proposed text amendment to the Town’s own zoning ordinances,” Richardson wrote in an email. 

Since work on the code changes began in September, Richardson said the town has balanced all interests. “The Town has worked to implement changes which are supported by the public while still being accommodating to and supportive of development interests,” he said. “The Town supports development in its community.”

‘We have major, major issues’

Newman, the BASE business advocate, said the lot size changes aren’t based in reason. “It’s arbitrary all the way around. But it’s more arbitrary because the discussions being framed about how ‘bad’ density is and how Sunset Beach needs to be less dense, but you have a huge part of the town made up of lots out at the beach that can be 4,500 square feet,” he said. “So you have people with small, tree-less beach lots talking about how everybody else needs to live on a larger, wooded lot. It’s counterintuitive at best.”

Between the adopted changes and discussed changes (rezoning the golf courses, imposing height restrictions, etc.), Newman said the main concern is in how the town conducts itself. 

For example, the town recently switched a proposal halfway through its approval process: The planning board reviewed and approved a text amendment to remove the requirement for public notices to be printed in the newspaper ahead of planning board meetings. They believed the process to be costly and redundant, as a notice is also required ahead of council meetings. By the time the item reached council, it switched from only removing public notices to also include removing public hearings at the planning board level — “so they didn’t actually have a planning board public hearing about doing away with planning board public hearings,” Newman said. 

Removing the public hearing at the planning board level “only relates to the adoption of a ‘plan,’” according to Richardson. “Therefore, such change in the public hearing requirement bears no relevance to any of the actions or amendments that have been considered in recent months,” he said. Sunset Beach goes above and beyond legal requirements in supporting public comments, Richardson said. 

The intention of requiring SUPs for multi-family projects is to make sure the development fits with the community, not to prevent development, councilmembers said in March. At the meeting, Richardson said he didn’t see what the big uproar was about in introducing a controlled, legal atmosphere to the approval process —- a process commonly used in surrounding communities. 

“The larger issues are transparency and fairness,” Newman said. “Unfortunately, the town is constantly changing rules while being unwilling to sit down with the impacted parties to talk about how to move forward without existing landowners having their property rights diminished. We have major, major issues with how this has played out.”

Richardson said the town’s new planning director met with Newman to understand the development community’s concerns. 

Saving Sea Trail

Before the rule changes took place, the town recently approved multiple projects, including Sunset Ridge, a 10-lot, 10-acre duplex project from Bill Clark Homes, and Eastwood Bluffs, a 20-building, 11-acre townhome project from Riptide. The projects elicited backlash from neighbors, who worried stormwater problems would worsen, property values would drop, and threatened to put their homes on the market. 

The town’s new rules would only apply to projects that didn’t get submissions turned in before the change. While the town made efforts to honor projects that predate the rule change, creating legal nonconformities can sometimes create hiccups on the lending side. 

Hill, Riptide’s co-owner, said the burdensome and expensive new requirements “would force us to scrap several phases of our planned build-out, wipe out dozens of families’ home plans and start over.” 

Council’s actions send “a loud and alarming message that Sunset Beach discourages business success,” Hill said. 

After months of trying to get a meeting and just a few returned emails, Hill doesn’t understand why the town wouldn’t try to find a compromise with landowners. “I’ve never seen anything like it,” he said. 

The town left Riptide with no other option but to seek de-annexation, he said. A veteran and Sunset Beach resident, Hill said he wants to give residents the reinvigorated community it deserves. Pools, club houses, walking trails, green spaces, and locally owned restaurants and businesses are in the works at Sea Trail, he said. Amenities residents currently rely on are at risk of continued deterioration if Riptide doesn’t get to finish the job. 

“Sunset Beach is a wonderful place to live, visit and vacation, and we want to keep it that way,” Hill said. “The fact is that Sea Trail, planned for more than 40 years, has been left dormant for far too long, which has hurt Sunset Beach and Brunswick County.”


Send tips and comments to Johanna Ferebee Still at johanna@localdailymedia.com

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