The Yaupon Pier

First, let me set the record straight on one thing;

I was one of the first proponents of someone

SAVING the Yaupon Pier !!!!

But, I was TOTALLY AGAINST the Town BUYING the Yaupon Pier after I learned that the town outbid 2 private entities in October of 2007 for the purchase of the pier. That bid simultaneously increased the MLS listing price for the pier to an amount no private individual could justify offering.

If the Town of Oak Island had stayed out of it, the Yaupon Pier would have been long ago owned by private individuals who stated their purpose was to operate it as a pier, tackle shop and restaurant, and we would not have a situation in which the Town is in direct competition with private business.

Regardless of my opinion on the transactions with the Yaupon Pier, the Town of Oak Island did buy the pier with grants of $800,000.00 and a loan from BB&T for $900,000.00, of which $200,000.00 was for repairs to the pier. Whether one was in favor of or against the purchase, the fact remains that the Town of Oak Island now owns the property, and the provisions of the grants require that that ownership remain for at least 25 years.

After the Public Hearing for comments on the Town's financing of the Yaupon Pier purchase, I requested a copy of the application and the proposed financing agreement by BB&T.

Paragraph 6.02 of the agreement stated, in part, "The Town shall be solely responsible for the Facilities' operation and shall not contract with any other person or entity for the Facilities' operation"

Since, by the date of the application, the Town had entered into a Lease Agreement with Tommy Thomes' newly formed company, "Oak Island Pier, LLC", I emailed Town Manager Jerry Walters and questioned the conflict of Paragraph 6.02 of the Financing Agreement.

Mr. Walters responded with the statement that the Town had addressed that issue in March, but without including any resolution or agreement with BB&T to resolve the conflict.

I then emailed the Loan Officers and Attorney with BB&T to clarify my interpretation of Paragraph 6.02.

They confirmed that if the Town entered into the Financing Agreement as it was written, they would be in violation of Paragraph 6.02 for any of the property that BB&T held as collateral, since the Financing Agreement's interest rate was based on the provisions of Federal Tax Code that regulate interest rates and provisions of Not For Profit financings.

The representatives of BB&T confirmed that if the Town wanted to lease the property, with BB&T holding as collateral the entire property, the Financing Agreement would have to be amended as a For Profit financing arrangement, at a much higher interest rate.

BECAUSE OF MY COMMUNICATIONS WITH BB&T, negotiations of the collateral to be held were amended so that BB&T held only the On-Shore property as collateral, leaving the ability of the Town to apply the Grant Funds received to the structures.

IT IS MY CONTENTION THAT IF I HAD NOT NOTICED THE PROVISIONS OF PARAGRAPH 6.02 OF THE FINANCING AGREEMENT, THEN TOWN MANAGER JERRY WALTERS AND THE TOWN'S ATTORNEY WOULD HAVE ALLOWED THE TOWN OF OAK ISLAND TO ENTER INTO AN AGREEMENT THAT VIOLATED FEDERAL TAX CODE.