The Village of Bald Head Island submitted a formal complaint to the N.C. Utilities Commission Wednesday, asking it to regulate Bald Head Island Limited's currently unregulated parking and barge operations.
The commission currently governs rate increases for Bald Head Island Limited’s ferry and tram services.
Each of the company’s four services functions as a monopoly, given the village’s remote location, almost exclusively accessible by water.
The utilities commission receives between 20-30 formal complaints annually, according to spokesperson Sam Watson. Many complaints end up settling before a formal hearing takes place, he said.
BHI Limited has 10 days to respond to the complaint; the village then has 10 days to respond to that response, per commission rules. If no resolution is met, the item may be scheduled for a hearing, after which the utilities commission would issue a formal order. The entire process could take six months, according to the village.
Since December 2020, the village and BHI Limited – owned by the Mitchell Family Corporation, the island’s original developer – have been embroiled in a feud regarding the transportation system’s future. Bald Head Island Limited is seeking to dissolve its assets, and was poised to sell its transportation system to the Bald Head Island Transportation Authority (BHITA), a state-created entity authorized by legislation in 2017. Under the legislation, each transportation system service would no longer fall under the utilities commission's purview, if purchased by BHITA.
As BHITA was on the precipice of obtaining state approval to take out $52 million in revenue bonds to purchase the system, the village government intervened, alerting the N.C. Local Government Commission to its many objections. In turn, prominent LGC members, including the state auditor and treasurer, have agreed with the village’s concerns about the initial deal’s transparency and questioned the system’s valuation. The village later submitted its own bond application to finance the deal at a lower interest rate, and secured approval from roughly 170 voters in a November 2021 referendum to take out general obligation bonds to buy the assets.
Stuck at an impasse, the BHITA asked its creators for guidance following the referendum. No one responded, according to BHITA Chair Susan Rabon. Charged by legislation with purchasing the ferry system, BHITA hasn’t had much on its docket in the interim. The authority hasn’t taken any relevant action since sending the letter, according to Rabon.
In January, the village warned Bald Head Island Limited it intended to ask the utilities commission to regulate the parking and barge system.
Bald Head Island Limited has indicated it has little interest in selling to the village, with BHITA as its preferred buyer. But with the LGC making no moves on BHITA’s pending application (which it’s now had for over a year now), BHI Limited has indicated its interest in seeking a private buyer and its willingness to sell the system in pieces.
“The gravity of this situation for residents of and visitors to the Island cannot be overstated,” the village’s Feb. 16 complaint to the utilities commission states.
Visitors and residents have no practical means to access the mainland ferry terminal at Deep Point Marina other than using BHI Limited’s parking facilities, and no feasible manner of transporting bulk goods to the island other than its barge, the village argues in its complaint. The village does not permit vehicles except for public safety and contractor services; visitors use golf carts to traverse the island.
“These are de facto monopoly services currently operated by [Bald Head Island Limited], both of which are indispensable to the regulated utility operations,” the complaint states.
If these services are sold in parts to maximize profits, the complaint states visitors and businesses are at risk of being “held hostage by one or more monopoly service providers.”
Daily parking on the mainland is $12, with premium annual rates as high as $1,350.
The latest quarrels are taking place as the ferry system is as busy as it’s ever been, taking 360,000 trips annually, according to BHI Limited’s Dec. 22 application to the utilities commission, seeking to increase fees for excess baggage. During peak periods, the village's full-time population of nearly 300 residents balloons to over 7,000, according to the village's complaint.
Over the Fourth of July weekend, ferry staff handled 1.2 million pounds of luggage, according to the application. Increased ridership is partially to blame for lagging on-time performance, which has dropped from 80% in July 2013 to 47% in July 2021, according to the application.
On Monday, the commission will review Limited's baggage rate increase application, which seeks to limit the number of allowable oversized luggage containers from six to three, specifies their permitted size and weight, and increases the excess baggage fee from $5 to $23.
Major island stakeholders – including the village government – submitted letters of support to the commission regarding the change. The commission's public staff recommends approving the request.
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