Funding Beach Nourishment: Assembling the Pieces in a New Way

1. Funding Beach Nourishment: Assembling the Pieces in a New Way NCBIWA Annual Meeting, Carolina Beach November 17, 2008

2. The Grand Canyon Times Grand Canyon Collapsing Expected to be Filled in 25 Years, Nearby Owners Fight Back AP (Phoenix AZ): Scientists warned today that continued erosion of the Grand Canyon side walls was accelerating and that the entire canyon would be filled within 25 years, marking the demise of one of the great wonders of the natural world. Local property owners adjacent to the canyon have poured millions into the famed attraction but to no avail. Nonetheless, state leaders demanded they do more, since they choose to risk buying in such a dangerous area. The fight continues. Why Are Beaches Treated this Way • Beaches are state and national assets • Financing Beach projects should not be a primarily a matter of local concern • The current system of federal and state financing is flawed Would this Happen? It Does for Beaches

3. Beaches are Huge Economic Assets Public Economic Assets • The beach is usually the No. 1 industry in every coastal town • Beaches create jobs and drive the economy • Huge Tax Base for NC Cities & Counties . . . If the beaches are maintained Private Economic Assets • Many Owners = Small Business Entrepreneurs • Beach rentals generate personal wealth & income, especially for retired folks • Property ownership provides a reliable income stream . . . If the beaches are maintained Public Benefits Private Benefits

4. The Value of Beaches The Short Story Tourism - one of NC’s largest industries • In 2007, domestic travelers spent $16.5 billion across the state, a 7.2 percent increase over 2006. • Domestic tourism expenditures directly supported 190,900 jobs for North Carolina residents. • Payroll income accounted for over $4.0 billion in wages in the state • Tourism generated over $2.5 billion in tax receipts: • $1.2 billion in federal taxes • $1.3 billion in state and local taxes: • $815 million in state tax revenue • $529 million in local tax revenue Top Activities for Overnight Visitors • Visiting relatives 32.20% • Shopping 19.30% • Visiting friends 19.10% • Rural sightseeing 14.10% • Fine dining 13.10% • Beach 12.80% • State/National Park 8.70% • Urban sightseeing 6.90% • Historic sites 6.60% • Wildlife viewing 5.10% • Museums 5.00% • Fishing 4.70% Big Bucks Beaches a top destination

5. Why Paint the House? • We all do Maintenance • Of roads & transportation • Of water & sewer systems • Of homes & vehicles • Would you or could you tell your wife: “Honey, I don’t see why we should paint the house, it’ll just fade out in ten years.” • Beaches Need to Be Maintained. Period • Yes, it is on-going obligation • No, there is no permanent, one-time solution • Forget the silver bullet, build beaches and dunes. Paint the House Restore the Beach

6. Economic Development Incentives • Factory Incentives • State Tax Credits - available for job creation, investment in business property, and investment in real property • Industrial Training - Customized training for employees at no cost to the company by the North Carolina Community College system. Typically $1,500 per person trained. • Industrial Development Fund - Provides grant funds at $5,000 per new job created up to a maximum of $500,000 for infrastructure. • Community Development Block Grant - Provides grant funds from $8,000 to $15,000 per job created up to a maximum of $1,000,000 for infrastructure • Industrial Revenue Bonds - Tax-exempt bonds up to $10 million for building, equipment, and land. Interest rates are currently around 2.5%. • Why Not Beach Restoration Incentives? • Beach & Tourism jobs are impossible to outsource • Individuals own the “factory,” distributing wealth • Thousands of jobs are created • Beach economy is not “discrete and identifiable” • Where is the ribbon cutting ceremony? Job Investment is Old School Beach Investment is a Struggle

7. Wilmington International Port • If Ports were beaches, we’d say: • Shallow water is a problem • A natural process fills the Cape Fear River with sand • The Port owner picked the wrong location • The Port owner is at fault • The Port owner should pay • If Beaches were Ports, we’d say: • Beaches are huge economic assets • Beaches drive the local, regional & state economy • Beaches protect property and save lives • We will all help pay to maintain the beach Automatic State & Federal Investment Struggle for State & Federal Investment

8. The Hawaiian Shirt Syndrome • Beaches are Frivolous Places • Drink in hand • Surfers, skateboards, kites, Putt Putt Golf • Leisure time • Shorts & the Hawaiian Shirts • Can you invest millions in a place where everyone wears ugly shirts? • Beaches are Economic Engines • Carolina Beach: Look around - see the small businesses • Almost all depend entirely on the existence of a healthy beach • This is true in your beach town too. Don’t Be Fooled Beaches Mean Money

9. Public Character Community “park” Protects Public Infrastructure Foundation of the tourism economy Drives the real estate market Expands the tax base Increases public revenue Private Character Protects Mr. T’s house Can saves Mr. T’s life Increases his property value Enhances his rental income Enhances his recreation experience Provides him “spiritual” benefits There’s Nothing Like a Beach

10. “Duality” is the Key to Funding • Successful Funding Strategies must reflect the dual nature of beaches • Failed beach Funding Plans Fracture: • Beachfront owners emphasize the “public character” of the beach to push costs landward • Off-beach owners emphasize the “private character” of the beach to push costs seaward • Financial plans must balance and reflect the public and private character of the beach. Everyone has a stake in healthy, stable shorelines.

11. Build Funding Coalitions Based on the “Duality” of Beaches Contributors should include: • State of North Carolina Public • Local Government (County & Town) Public • Beachfront property owners Private • Off-beach property owners Private

12. New Beach Funding Philosophy • Beaches are economic assets, pure and simple • Beachfront owners and beach communities are not at fault – erosion is a natural process, like rust, even where we help it along • State must invest in one of its top industries – beach tourism - with federal participation whenever possible • Beachfront vs. Off-beach Battles Must End

13. Beach Program Funding Concept • North Carolina Beach & Shoreline Commission • Bond Authority • State-wide funding base for 50% - 75% of project cost • Local Government partnerships (with feds when possible) • Beach property owners participate at a modest level • State Funding by Coastal Planning Region • Create new, more flexible local funding mechanisms (Florida MSBU model) • Rethink ad valorem and sales tax revenue distribution with dedication back to beach communities - ROI • Establish uniform, coast-wide Accommodation Tax, dedicated in part to beach projects

14. North Carolina Coastal Business Alliance • A “Coastal Business Chamber of Commerce” • Should Include: • Hotels, resorts, condominiums (the big guys) • Beach & tourism businesses: T-shirt shops, beach chair rental guys, kite stores, small groceries, eco-tourism businesses, etc, etc • Restaurants and tourism services • Property Owners: both Resident & Investment owners • NCCBA’s Job: Document the economic impact of beach-related businesses and advocate for public investment in beach restoration

15. Summary: It is time to re-think our understanding of the beach, To have the courage to look anew at the pieces of the puzzle, and Reassemble them in a new, more effective way.

16. Thank you.Peter A. Ravella Consulting, LLC512-784-3565peter@ravellaconsulting.com