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Friday, May 17, 2024

Decision on the BHI ferry sale could head to court after village files appeal

After Hurricane Florence, Bald Head Island's mayor initiated a decision that spurred controversy among several island residents. (Port City Daily photo/Mark Darrough)
Bald Head Island. (Port City Daily photo/Mark Darrough)

BALD HEAD ISLAND — The North Carolina Utilities Commission has made its ruling on the transfer of the Bald Head Island ferry system to SharpVue Capital, as well as whether to regulate the entire system. But a resolution still has not been reached.

READ MORE: Lawsuit shows Bald Head Island refused offer to buy ferry last fall

The Village of Bald Head Island has filed an appeal against the NCUC’s ruling allowing SharpVue to obtain the ferry assets, which include the ferry, barge, parking and tram operations. The village is not disputing the transfer of the system as a whole, but rather several “deficiencies” in the NCUC’s order. 

In August, the NCUC decided to allow the system transfer from Bald Head Island Limited, longtime stewards of the ferry, to SharpVue. This is the second appeal in the process of settling the ferry issue; Bald Head Island Limited filed an appeal to the NCUC’s extension of its regulatory authority to the parking and barge, as it has done with the other two assets for decades. 

A ruling has not been made on the appeal.

In a newsletter, Bald Head Island Mayor Peter Quinn announced the objection, which will be heard by the North Carolina Court of Appeals. He said he expected the appeal process to take between six months to a year.

“The Council did not take this decision lightly but with the understanding that the decision at issue could, if the transfer is consummated, establish baseline requirements governing the future operation of the system, with financial and practical consequences that far outweigh the litigation expense,” Quinn wrote in the newsletter.

One of the village’s qualms isthat the commission is allowing SharpVue to raise rates based on inflation for the parking and barge operations. According to the ruling, the commission maintains the current rates are reasonable.. It also notes SharpVue has committed not to raise the rates for six years unless it is needed to do so based on inflation.

Ferry and tram rate increases are not allowed for one year post-transfer, and then an application will need to be made to NCUC. The village states the ferry system is already making revenue in excess, thus negating the need for rate increases.

However, the commission said SharpVue will have “significant incentive” to maintain reasonable rates and provide high-quality services to keep up ridership numbers and “because its investment in the Island will extend beyond the transportation services.” 

The village also objects to net income stipulations put in place by the commission. The village claims the order would allow SharpVue to distribute all net income to its investors and managers, rather than reinvesting back into the system.

In an effort to hold the public harmless, NCUC had also mandated no costs associated with the transfer of the ferry and tram be passed on to ratepayers. 

However, SharpVue will be able to recover an acquisition premium, or the amount paid over the value of the asset, for the parking and barge operations, though not the ferry and tram. The village claims this will leave riders “on the hook” for paying those excess costs.

Finally, the village is concerned about the commission’s allowance of SharpVue to own the utility in a separate, unregulated entity and enter into lease agreements with the utility for use of the property. The village maintains this could be used to skirt the commission’s intention of regulating the parking and barge, and also warned the move could result in ratepayers burdening the cost of assets that are already paid for.

According to the ruling, however, any leases SharpVue chooses to enter into should be submitted to the commission for advance approval. The commission also mandates SharpVue will provide a minimum of 1,955 paved and 347 unpaved parking spaces available at surface lots or parking decks at the Deep Point Terminal in order to maintain the space for customer use.

A date has not yet been scheduled for the Court of Appeals hearing.

Catch up on Port City Daily’s coverage about the Bald Head Island ferry sale: 


Reach journalist Brenna Flanagan at brenna@localdailymedia.com.

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