We Bought Some Land (5-2-23)

Last week the Town of Carolina Beach purchased a 3 acre property adjacent to our 7 acre municipal complex (which contains Town Hall, Police Department, Operations Department headquarters, the Federal Point History Center and the Rec Center.)

The price – $2 million, paid in 10 installments of $279,600 (I hate paying interest!)

Why Buy It?

In a word… insurance. Insurance against the possibility that we’ll need land, but we won’t have any. I can’t explain it any better than this quote from Mayor Lynn Barbee:

“It’s an insurance policy for the future. First we have seen MOTSU significantly tighten up on the use of their land for public facilities. So placement of water towers on their land is not guaranteed. Also, we have seen other coastal towns (Wrightsville) have saltwater intrusion into their aquifer. We depend on our aquifer for all of our water.

We are not on CFPUAs long range plans for water in the southern part of the county. So if we see salt water intrude into our aquifer, we will need to put in a reverse osmosis plant to filter our water. The town did not own a piece of land large enough for such a plant.

Lastly we don’t foresee property opening up adjacent to town hall in a lifetime. In the short term we have uses for storage and parking. The first thing you realize when you get in council is ‘why did my predecessors not plan for this and buy something when it was cheaper?’ Well speaking for this council we are taking care of our future. It was a tough pill to swallow right now, but the responsible thing to do.”

Can We Afford It?

Yes. When we were discussing the purchase it was unanimously agreed upon that we wouldn’t close on the property unless we received a grant to pay off the Freeman Park loan. (We did.)

To recap, we paid $7 million for Freeman Park with $3.75 million down and $3.25 million financed. (The downpayment came from entrance fees saved up over a few years.) This winter we were awarded a $4 million grant to not only pay off the loan, but also improve the park. So that frees up $399,750 in our budget. (If we could afford 399K, we can afford 279K.)

Let’s look at it another way

We have a $29 million budget – $2 million is 7% of that.

Let’s use the household analogy that I love so much. Imagine you’re a family with a $100,000 annual budget and the empty lot next door comes up for sale at $7,000. Could you afford it? Yes, but you might have to finance it. Would you buy it? I would… I would buy it in case I needed it for something I haven’t even thought of yet. I would buy it to ensure that I’m in control of what happens next door. I would buy it because it’s a safe investment.

The same logic applies.

Why Didn’t Anyone Know About It?

Real estate transactions are discussed in closed sessions (no public allowed, no minutes provided) because of the sensitive nature of negotiations. If word gets out, these things can go up in smoke. I didn’t even tell Mrs. Hoffer about it.

That being said, it wasn’t that secret. On multiple occasions we specified that we were going into closed session to discuss Real Estate Parcel ID# R08814-001-007-000. Anyone could have looked it up, but for the same reasons that closed sessions are closed, we weren’t going to advertise it.

In Conclusion

It definitely made me nervous… $2 million is a lot of money. (Think of the bike paths and trees you could buy with that!) But I believe it’s ultimately the right thing to do.

I don’t want to look back 10 years from now wishing we had done this. And if it isn’t needed, we can sell it. I’m not trying to be a real estate investor with the public money, but surely it’s value won’t disappear. Land is not usually a depreciating asset.