Bald Head Association (BHA) is seeking BHI property owners’ opinions. Please answer just two questions, in addition to any comments you would like to include, by Tuesday, August 23, by clicking on the survey link below the following information.
On February 16, 2022, the Village of Bald Head Island filed a lawsuit against Bald Head Island Limited with the North Carolina Utilities Commission (NCUC) asking the NCUC to exercise regulatory authority over the parking lot and the barge and, therefore, regulate the fares that could be charged to park at the ferry landing or to use the barge.
Since the BHI Ferry System began, the fares for the ferry and tram have been regulated by the NCUC. The fares for the parking lot and the barge have not been regulated by the NCUC.
The Village wants to change that so the NCUC will hereafter exercise jurisdiction over the parking lot and barge so the NCUC will then regulate the rates.
This matter is set for hearing before the NCUC on October 10, 2022.
We have kept you up to date on all the relevant filings with the NCUC regarding this matter.
We, the BHA, have intervened in this proceeding in order to be able to speak on behalf of the BHA, if we conclude it becomes appropriate for us to do so.
It would assist us to know your views on this matter.
We have identified some possible advantages for regulation of the parking and barge and some possible disadvantages. As the facts are complicated and reasonable people can differ on what is the better result, people can differ on the advantages and disadvantages.
By listing possible advantages and disadvantages, we do not mean to suggest our views on what we think or suggest. We only want to list some obvious points and get you thinking about this so we can elicit your thoughts and views.
Do not ascribe any significance to the fact that our explanation of the the possible disadvantages is longer than the possible advantages. Some explanations just take more words. Nothing more should be inferred.
Possible Advantages and Disadvantages of
Public Regulation of the Parking and the Barge
Possible Advantages:
1. There would be some level of assurance that the rates that are charged by the owner of the parking lot and/or barge will be reasonable and limited to cost recovery and a reasonable profit.
2. The process for increasing rates would be open, public, transparent and predictable.
3. The home and lot owners would have the ability to participate in the rate-changing process.
4. The NCUC rate-setting process is quite complex. There is a possibility that if regulated, the permitted returns and asset valuations would be such that the existing fees could actually be lowered from what they are today.
Possible Disadvantages:
1. Since the beginning of the ferry and tram for BHI, the parking lot and the barge have been owned and operated by a private business, BHI Limited. The rates have been reasonable. SharpVue, also a private business, indicated it would carry on service substantially as it has been and only increase rates consistent with inflation. All appears to be set up for an orderly and reasonable ownership transfer from BHI Limited to SharpVue.
Public regulation of the parking lot and the barge could change things significantly.
For example, the NCUC might disallow the dedicated premium parking lot and
require so-called first-come, first-served parking. In addition, the return criteria and
asset valuations could possibly be set at a level so low that we could possibly lose
SharpVue as the buyer.
2. If the Village were ultimately to buy the Ferry Transportation System, as it wants to do, we, the real property owners on Bald Head Island, will have personal liability for increased real estate taxes to pay any losses suffered by or needed by the Village in operating the Transportation System.
In addition, if the Village buys the Ferry Transportation System with the General
Obligation Bonds as it intends to do, you will only be able to sell your lot and/or your home during the 30-year life of the bond to a buyer who is also willing to assume that risk.
If SharpVue buys it, the real property owners have no risk of increased real property
taxes based on the Ferry Transportation System and no personal liability for any losses incurred by the Ferry Transportation System.
3. If the system becomes regulated at a level that SharpVue is willing to accept, the cost of administrative compliance for a regulated company is high. There is much legal, administrative detail and compliance cost just to meet the regulatory demands. That cost will ultimately be passed on to the consumer in either increased fares or lesser service.
4. Regulated returns might be set at a low level and provide a disincentive for SharpVue to spend additional capital to upgrade the ferry system.
These are just a few of the possible advantages and disadvantages of regulation of the parking lot and the barge.
SURVEY LINK
At this time, we would like you to answer just two questions, in addition to any comments you would like to include, by Tuesday, August 23. All responses are anonymous. Click HERE for the survey.
Thank you very much.
The BHA Board of Directors
Alan Briggs, President
John Kinney, Vice President
Robert Drumheller, Secretary/Treasurer
Jennifer Lucas
Tiffany Williams
Joe Brawner
