Real Estate and Business

June 15, 2011

Coast Guard prepares to put former base housing in Buxton on the market

BY CATHERINE KOZAK

Six years after the Coast Guard vacated Group Cape Hatteras, federal officials are preparing to put its 45-unit housing complex on the market and demolish adjacent base buildings.

Dare County had once sought to acquire the property from the federal government to use for affordable housing and county facilities, but negotiations over costs were unsuccessful. In 2010, the county declared it was no longer interested.

Built for $8.5 million in the mid-1990s near the former site of the Cape Hatteras Lighthouse, the housing complex, situated on eight oceanside acres, has 24 two-bedroom, 14 three-bedroom, and seven four-bedroom units. It had been home to about 50 personnel and their families at Group Cape Hatteras, then the Coast Guard’s Outer Banks headquarters.

Its location is prime real estate, but it has two significant drawbacks -- the site currently has no wastewater disposal capability and it is vulnerable to storm-induced beach erosion and ocean overwash.

Group Cape Hatteras relocated in 2005 to Fort Macon at Atlantic Beach as part of a Coast Guard consolidation policy, but the necessity of moving was escalated after a storm damaged the treatment plant and flattened the protective dune.

A year before the move, the Coast Guard had spent $100,000 to relocate the sewage plant away from the eroding beach.

The U.S. General Services Administration, which is handling the sale of the property for the Coast Guard, considers the assessed market value of the housing complex to be proprietary, said Gregory Andrews, GSA spokesman.

Andrews said in an e-mail that the dune line between the structures and the beach is stable. He also said that a new wastewater treatment plant will “need to be installed for operational use of the complex.”

Prospective buyers will be encouraged “to complete due diligence activities to form their own estimate of value,” he said.

Although the $12 million value often cited early on by county officials was never official, the later estimate quoted --- also never confirmed --- seemed to settle closer to $5 million.
But, based on past experiences, the county had initially expected to be able to acquire the property for public purposes for next to nothing.

In 2007, the county zoned the area where the complex is located as a Natural Historic District, a decision then-County Planner Ray Sturza said was based on a need to conserve it and make it compatible with nearby Buxton Woods. But it also would make the housing nonconforming and the property less marketable to prospective private buyers.

At the time, Sturza said that a big attraction to the county of acquiring use of the base was that the wastewater treatment facility for the housing units was located there, and there was enough land available to build a new one if necessary.

The housing complex and its property are owned by the Coast Guard. The base property is owned by the National Park Service and its buildings are owned by the Coast Guard.

“There’s no way to treat wastewater if you don’t have the base,” Sturza said.

Donna Creef, the current planning director, said it is unclear how a new owner will be able to address waste disposal at the housing site.

“They’ll have to install some kind of waste treatment facility before they can get occupancy,” she said. “In my mind, that was one of the big issues with the houses.”

The property, Andrews said, boasts “a unique setting with an unobstructed view of Cape Hatteras Lighthouse and abutting Cape Hatteras National Seashore” and is expected to be marketed and advertised locally and nationally this summer.

It will be a competitive public sale offered to the highest bidder, probably with a minimum starting price, he added, based on terms and conditions. The units have been deemed structurally sound and in fair condition.

“The government will be seeking the highest return to taxpayers,” he wrote. “Future owners will have to seek compliance with the local zoning ordinances. We have engaged Dare County’s support of the sale and expect they will eagerly work with prospective buyers to assess permissible uses to facilitate a re-use that aligns positively with the community’s visions for the area.”

The housing complex’s inoperable wastewater treatment plant, damaged in a storm years ago, is in the process of being removed from the adjacent National Park Service property, said Chris Belmont, planning and real property section chief for the Coast Guard.

Belmont said that demolition of base structures – 12 single-story cinder block buildings, a concrete storage shed, and seven small wooden utility sheds ---will be started next year at the 36-acre site. Two below-ground concrete pools will also be demolished. Two above-ground fuel storage tanks and a 100-foot metal communications tower are slated for removal.

The design work for the demolition is about 35 percent complete, he said, and the project is expected to go out for bid to contractors in the fall. The target date for completion is late 2012 or early 2013.

Since the Park Service has agreed to allow Dare County to use the property as a beach access, Belmont said, the asphalt parking lot, perimeter fencing and a wooden gazebo will remain at the site. The Coast Guard will also continue using a 30-foot metal tower located on the property.

“Once we’re done and the National Park Service is happy, what they choose to do with the county, that’s up to them,” Belmont said. “I hope the National Park Service can work out an agreement that can benefit everyone.”

Until a contract is signed, Belmont said he could not be specific on the project cost, saying only it was “millions of dollars.” The funds have been budgeted, he said.

Once the Coast Guard vacated the site without finding a new use for the buildings, it was obligated to remove the buildings and restore the site. Previous reports said that demolition costs were estimated at $5 million.

Although the beach near the housing units has been stable in the last few years, there also have not been any powerful storms in that time span to hit the coast.

In 1999, shortly after the housing units were built, the National Park Service relocated neighboring Cape Hatteras Lighthouse about a half-mile away from the shoreline, leaving the beachfront complex behind to face the might of the ocean.

Realtor Tom Hranicka, with Outer Beaches Realty, said that whatever price a buyer pays needs to reflect the reality of the stunning, but hazardous, location.

“It’s my understanding that that Buxton beach is considered one of the highest erosion rates on the island,” he said.

“My sense is you’d probably have to take that into account because that’s the same location as the old lighthouse.”