Thursday, September 29, 2022

Bald Head Island ferry selling to private company after public deal stalls

Raleigh-based private equity and real estate company SharpVue Capital announced it will purchase the ferry for $56 million from Bald Head Island Limited.  (Port City Daily photo/Mark Darrough)

BALD HEAD ISLAND — The years-long battle over the Bald Head Island ferry system seems to have an end in sight. 

Raleigh-based private equity and real estate company SharpVue Capital announced it will purchase the ferry for $56 million from Bald Head Island Limited. 

The ownership may be changing, but SharpVue’s CEO Lee Roberts said the service will remain the same.

“I think the day-to-day experience should be very similar and largely seamless for the passengers and for the general public,” Roberts said. “It will still be the Bald Head Island Ferry.” 

The sale will include the ferry, tram, barge and parking operations, all of which are assets of the Mitchell Family estate and controlled by Limited, also involved with Southport’s Project Indigo subdivision. The entire deal, totalling $67.7 million, will include supplemental estate assets, such as the marinas and real estate owned by the Mitchell family. 

The North Carolina Utilities Commission, which regulates the ferry and tram, must sign off on the transfer of those two assets. According to Roberts, the sale of the barge and parking lots could be finalized in the next few months.

The deal comes after a five-year effort to transfer the ferry system to a public authority. The Bald Head Island Transportation Authority was set to acquire the ferry infrastructure from Limited for $47 million, but the state’s Local Government Commission needed to approve the arrangement. It never made it on the commission’s agenda.

According to Limited’s CEO Chad Paul, it’s time to close the estate and move on.

“We’ve been working on this with the authority and the state for a long period of time, but they’re out of time,” Paul said. 

While Paul’s original intentions were to sell to a public entity rather than a private one, he said SharpVue will make a good steward for the ferry. 

“It’s privately owned and publicly regulated now. If our deal is approved, it will be privately owned and publicly regulated in the future,” Roberts said. “I don’t think the public should be concerned on that front.” 

Even though the company is private, the ferry and tram will be governed by the utilities commission.

According to Roberts, the company plans to retain all current staff and management. Everyone will keep their current ranks, titles, tenure, benefits and paid-time off days. 

It also won’t change the operations of the ferry, which in 2021 made approximately 8,200 round trips and carried 373,560 passengers.

“They’re going to take the current rates, they’re going to take the current schedule, they’re going to take the current lease for the real estate,” Paul said.

SharpVue will not immediately increase fees — at least not within 30 or 60 days, Paul confirmed, despite the private equity company’s profit motive.

A ticket for an adult round-trip costs $23 and parking is $12 a day. To raise rates, the company would need to gain approval from the utilities commission, the same way it’s been done for the last 35 years. 

However, SharpVue shared plans to simplify the ferry’s ticketing process by fall. Roberts wants to move to an online system where riders make reservations in advance and receive one unified ticket for ferry and parking.

Public vs. Private

For years, placing the ferry into a public trust with the Bald Head Island Transportation Authority was presented as the best solution, according to Paul. Now, Limited is tired of waiting for the authority’s deal to be approved.

“If you’re going to have a private transaction buyer, this is really the penultimate solution,” Paul said. 

Paul said the option of selling to a private buyer has been on the table for a while due to the impasse. Limited threatened to sell the assets on the open market in a September 2021 letter to the village’s previous mayor.

“That’s not news,” he said. “We alerted everybody a year ago that that’s the path we were headed on because that’s what was being forced our way.”

Passed in 2017, North Carolina Senate Bill 391 created the authority to purchase Limited’s ferry assets. The authority approved a purchase of the ferry for $47 million in December 2017 and moved to apply for a revenue bond. Bald Head Limited agreed to the authority’s offer. 

The bond approval by the Local Government Commission was derailed by Village of Bald Head Island officials, who wrote a letter to State Treasurer Dale Folwell in December 2017 objecting to the purchase. The village cited potential increases to ferry fees, alleged one-sided consulting documents, the authority’s apparent lack of an official credit rating, and concerns about overpaying for the system. Village council members launched their own $54-million bid for the ferry, which was not considered by Limited. 

Folwell and State Auditor Beth Wood slowed down the approval process at the Local Government Commission due to questions about the deal’s merits. Wood initially criticized the two commissioned appraisals that factored into the purchase price of $47 million. According to Susan Rabon, chair of the transportation authority, it was because Wood wanted the property to be sold at tax value. In January, Wood suggested Governor Roy Cooper replaced three appointees on the Local Government Commission to advance the ferry approval. 

The deal has seen no action at the Local Government Commission for a year and a half now. 

Folwell defended his position in the wake of SharpVue’s announcement.

“My thoughts have never changed: It’s about transparency, governance and competency and how to bring certainty especially to the majority of people who use that ferry, which are workers,” Folwell said. “I mean, let’s face it: This a toll road and, you know, toll roads normally benefit wealthy people. But in this case, there’s no other option.” 

Rabon said the authority has done everything it could do by following the statute and complying with the legislation.

“They wanted to keep it in the hands of a public body that would have the public interest at heart,” she said.

She added the appeal of the public authority was so it could keep rates reasonable for everyone. 

“It’s real important that people understand that 90% of the people that ride the ferry don’t live on the island,” Rabon said. 

SharpVue is not ruling out input and “productive conversations” with the transportation authority, village and other stakeholders, Roberts said. 

Rabon and Bald Head Island Mayor Peter Quinn, whose term started in December, both said they hoped they could collaborate with SharpVue moving forward. 

“They seem responsible, and they understand exactly the role they’re trying to fill,” Quinn said. “I’m looking optimistically at working with them and trying to figure out how the Village collaborates with them in this new endeavor there.”


Reach journalist Brenna Flanagan at brenna@localdailymedia.com.

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