03/10/2011 Backup DocumentsWESTERN CAROLINA UNIVERSITY
Pow PROGRAM FOR THE STUDY OF
DEVELOPED SHORELINES
North Carolina law (G.S 113A- 115.1) prohibits the use of groins — steel, rock or wood walls
built perpendicular to the beach in order to trap shifting sand - and other permanent erosion
control structures along ocean shorelines. This ban is based on: 1) extensive studies and
technical data documenting the detrimental impacts of erosion control structures and 2) 150
years of documentation of the negative impacts of shoreline stabilization on the barrier
islands in New Jersey.
The negative impact of groins and jetties on downdrift shorelines is well understood. When
they work as intended, sand moving along the beach in the so- called downdrift direction is
trapped on the updrift side, causing a sand deficit and increasing erosion rates on the
downdrift side. This well- documented and unquestioned impact is widely cited in the
engineering and geologic literature.
The United States Army Corps of Engineers' Coastal Engineering Manual describes groins
as: "...probably the most misused and improperly designed of all coastal structures... Over
the course of some time interval, accretion causes a positive increase in beach width updrift
of the groin. Conservation of sand mass therefore produces erosion and a decrease in beach
width on the downdrift side of the groin" (USACE, 2002).
In his textbook (used by most coastal engineering programs to introduce beach processes)
Paul Komar, professor emeritus in the College of Oceanographic and Atmospheric Sciences
at Oregon State University, states, "Groins and jetties have the same effect in damming the
longshore sediment transport, the shoreline builds out on the updrift side and erodes in the
downdrift direction" (Komar, 1998).
There is no debate: A structure placed at the terminus of a barrier island, near an inlet, will
interrupt the natural sand bypass system, deprive the ebb and flood tide deltas of sand and
cause negative impacts to adjacent Islands.
In a complex coastal system, the precise location, onset and scale of these impacts are very
difficult to pinpoint. As with all erosion control structures, it may take years for groin impacts
to become apparent. This is why promises to monitor such projects ring hollow, and why
disputes over groin impacts often end up in court where judges, rather than scientific experts,
end up making critical coastal management decisions.
Using groins in conjunction with beach nourishment projects is of dubious value as well.
When big storms occur, groins direct strong currents that carry large amounts of sand
seaward, in an offshore direction parallel to the groins. After Hurricane Hugo, for example,
sidescan sonar studies showed gullies excavated on the continental shelf adjacent to each of
the groins on Pawleys Island in South Carolina. Because much sand loss is offshore during
storms, groins will have little impact on holding sand in place (and may even accelerate loss).
294 Belk, Western Carolina University, Cullowhee, NC 28723 • 828- 227 -7519 • http: / /psds.wcu.edu
There is nothing experimental about groins, terminal or otherwise, and the insinuation that a
terminal groin will be removed or altered if it doesn't work is nothing more than lip service.
Experience on many other American shorelines indicates that removal of a structure, once
put in place, is a rare event - no matter what promises were made beforehand.
The localized and temporary updrift benefits afforded by groins and jetties rarely, if ever,
justify the downdrift damage caused by increased erosion — regardless of whether it is to
developed or undeveloped shorelines, inlets and islands.
We urge you to maintain the State of North Carolina's high standards for coastal
management by preventing any change to the current ban on coastal hard structures. Doing
so is the surest way to protect the state's beaches for future generations.
Thank you for your time and consideration
Sincerely,
1. Rob Young, PhD, P.G., Professor of Geosciences, Western Carolina University
2. Orrin Pilkey, PhD, James B. Duke Professor Emeritus of Geology, Duke University
3. Duncan Heron, PhD, Professor Emeritus of Geology, Duke University
4. Stan Riggs, PhD, Professor Emeritus of Geology, East Carolina University
5. David Mallinson, PhD, Assistant Professor of Marine Geology, East Carolina University
6. David Bush, PhD, P.G., Professor of Modern Sedimentology, University of West Georgia
7. Len Pietrafesa, PhD, Director of External Affairs for the College of Physical and
Mathematical Sciences, North Carolina State University
8. Art Trembanis, PhD, Assistant Professor, Department of Geology, University of Delaware
9. Michael Fenster, PhD, Director of Environmental Studies, Randolph -Macon College
10. James F. Fox, PhD, Director of Operations, National Environmental Modeling and
Analysis Center, UNC Asheville
11. Charles Fletcher, PhD, Professor and Chair, Department of Geology, University of Hawaii
12. Paul T Gayes, PhD, Director, Center for Marine and Wetlands Studies,
Coastal Carolina University
13. Andrew Coburn, MEM, Research /Graduate Faculty & Associate Director,
WCU Program for the Study of Developed Shorelines
14. David Levinson, Physical Scientist, Climate Monitoring
15. Dorothea Ames, P.G., Assistant Scientist, East Carolina University
16. Laura J. Moore, PhD, Assistant Professor, Department of Geology, Oberlin College
17. Nicholas Coch, PhD, Professor of Earth & Earth Science, Queens College, CUNY
18. H. Allen Curran, PhD, Kenan Professor of Geology, Smith College
19. Jon C Boothroyd, PhD, Professor of Quaternary Geology, University of Rhode Island
20. Joe Kelley, PhD, Chair, Dept of Earth Sciences, University of Maine
21. Hal Wanless, PhD, Chair, Department of Geology, University of Miami
22. Andrew Cooper, PhD, Professor of Coastal Studies, University of Ulster
23. Donald Barber, PhD, Director of Environmental Studies, Bryn Mawr College
24. Michael Katuna, PhD, Professor of Geology, College of Charleston
25. Stephen B. Benton, MS, Coastal Geologist, NC Division of Coastal Management Coastal
Hazards Coordinator — Retired
26. Owen Mason, PhD, Institute of Arctic and Alpine Research, University of Colorado,
Boulder and Geoarch Alaska, Anchorage, AK
27. Tracy Rice, PhD, Adjunct Professor, Albright College
28. Joseph F. Donoghue, PhD, Associate Professor, Dept. Geological Sciences,
Florida State University
29. Maurice Schwartz, PhD, Geology Professor Emeritus & former Dean, Western
Washington University Graduate School, Editor of The Encyclopedia of Coastal Science
30. Paul Pinet, Professor of Geology and Environmental Studies, Department of Geology,
Colgate University
31. Daniel F. Belknap, PhD, Professor of Earth Sciences and Marine Geology,
University of Maine
32. Jeffrey P. Donnelly, PhD, Associate Scientist, Coastal Systems Group & Geology and
Geophysics Department, Woods Hole Oceanographic Institution
33. William J. Neal, Ph.D., Emeritus Professor of Geology, Grand Valley State University
34. Julian Orford, Head, School of Geography, Archaeology and Palaeoecology (GAP)
Queen's University, Belfast, Ireland
35. John F. Wehmiller, PhD, Professor of Geological Sciences, University of Delaware
36. Andrew D Short, PhD, Professor, School of Geosciences,
University of Sydney, Australia
37. Denise J. Reed, PhD, Professor, Department of Earth and Environmental Science,
University of New Orleans
38. Stewart Farrell, PhD, Director, Coastal Research Center, Richard Stockton College
39. Harry H. Roberts, PhD, Boyd Professor Emeritus, Coastal Studies Institute and
Department of Oceanography and Coastal Sciences, Louisiana State University
40. Norbert P. Psuty, PhD, Director & Professor Emeritus, Department of Marine and Coastal
Sciences, Department of Geography and Department of Geological Sciences, Rutgers -
The State University of New Jersey
41. Miles Hayes, PhD, Research Planning, Inc & Recipient of Shepard Medal in Marine
Geology
42. H. Jesse Walker, PhD, Boyd Professor Emeritus, Louisiana State University
43. Helena Granja, PhD, Professor, Earth Sciences Department, University of Minho,
Portugal
294 Belk, Western Carolina University, Cullowhee, NC 28723 • 828 - 227 -7519 • http: / /psds.wcu.edu
�A
A Fiscal Analysis of
Shifting Inlets and Terminal Groins
in North Carolina
Andrew S. Coburn, Associate Director
Program for the Study of Developed Shorelines
Western Carolina University
294 Belk
Cullowhee, NC 28723
psds.wcu.edu
828 - 227 -7519
eslern
a '9 Ana
r i 4' E c `: "+T'S'
Executive Summary
North Carolina contains some of the most unique and biologically rich coastal ecosystems in the
United States, providing immeasurable aesthetic, habitat, recreational and economic benefits.
In order to successfully - and equitably - balance long -term environmental and sustainability
needs with short-term economic development concerns, state and local coastal management
policies, rules and laws must be both technically and fiscally- sound.
Nowhere is this more evident than at North Carolina's tidal inlets where these dynamic natural
features, once used to lure economic development, are now considered the primary threat to
the very development they were used to attract.
In response to the risk shifting inlets pose to static economic development, NC coastal
communities and property owners typically rely on three mechanisms to protect vulnerable
coastal property: 1) Beach restoration 2) Inlet channel realignment and 3) Sandbags.
Beach restoration involves the import and emplacement of sand on an eroding beach in order to
artificially stabilize inlet and ocean shorelines. Inlet channel realignment modifies the position
and orientation of an inlet's main ebb channel in an effort to reduce impacts and erosion rates
along adjacent shorelines. Sandbags are a temporary measure intended to provide short-term
protection to imminently threatened structures until a more "permanent" solution can be
implemented.
A fourth approach, now being actively promoted by some in North Carolina, is the use of
terminal groins: shore - perpendicular erosion control structures made of rock or steel placed at
the ends of islands near dynamic coastal inlets.
Session Law 2009 -479 in 2009 instructed the NC Coastal Resources Commission (CRC) to study
the feasibility and advisability of terminal groins as erosion control devices. The study,
completed in April 2010 at a cost of $280,000, included an assessment of the potential economic
impacts of shifting inlets to the state, local governments and the private sector from erosion due
to shifting inlets, but failed to provide compelling evidence regarding the economic or fiscal
benefits of terminal groins.
As a follow -up to that study, the Program for the Study of Developed Shorelines (PSDS) at
Western Carolina University examined the economic role of coastal property at ten North
Carolina tidal inlets (Bogue, New River, New Topsail, Rich, Mason, Carolina Beach, Cape Fear,
Lockwood Folly, Shallotte and Tubbs) to evaluate the potential fiscal costs of property loss as
well as fiscal benefits of terminal groins in ten coastal municipalities (Emerald Isle, North Topsail
Beach, Topsail Beach, Wrightsville Beach, Carolina Beach, Bald Head Island, Caswell Beach, Oak
Island, Holden Beach and Ocean Isle Beach), five coastal counties (Carteret, Onslow, Pender,
New Hanover and Brunswick) and one private island (Figure 8 Island).
Based on this study, PSDS has determined that:
1) Assessed value does not reflect the potential fiscal impacts of shifting inlets to the state or
local governments from erosion due to shifting inlets,
2) The fiscal benefits of protecting property at -risk to shifting inlets are small compared to the
costs of protection,
3) The use of terminal groins would provide limited fiscal and economic benefits to state
taxpayers and local communities and
4) Long -term costs of a terminal groin exceed potential long -term benefits at every developed
NC inlet.
This analysis indicates that, even ignoring environmental concerns, terminal groins are not a
fiscally -sound strategy for dealing with coastal property at -risk to shifting inlets and, due to
their limited fiscal benefits, the expenditure of state funds for groin construction /maintenance
is bad public policy.
1) Assessed value does not accurately reflect the fiscal contribution investment property at-
risk to shifting inlets makes to North Carolina's coastal municipal and county economies
According to the CRC terminal groin study, the purpose of the economic assessment
component of the study was to assess economic value within areas around developed inlets
called 30 -year risk areas (30 YRAs) that contain a level of risk approximately equal to the risk
indicated by setbacks in adjacent oceanfront areas, as well as the economic value of properties
in 30 YRAs having temporary sandbag protection (Table 1).
Table 1: North Carolina 30 -Year Risk Areas
1.
Emerald Isle /Bogue Inlet
8.
Bald Head Island /Cape Fear Inlet
2.
North Topsail Beach /New River Inlet
9.
Caswell Beach /Cape Fear Inlet
3.
Topsail Beach /New Topsail Inlet
10.
Oak Island /Lockwood Folly Inlet
4.
Figure 8 Island /Rich Inlet
11.
Holden Beach /Lockwood Folly Inlet
5.
Figure 8 Island /Mason Inlet
12.
Holden Beach /Shallotte Inlet
6.
Wrightsville Beach /Mason Inlet
13.
Ocean Isle Beach /Shallotte Inlet
7.
Carolina Beach /Carolina Beach Inlet
14.
Ocean Isle Beach/Tubbs Inlet
A number of components of economic value within these 30 YRAs were considered including
residential property, commercial property, government property, road infrastructure, waterline
infrastructure, sewer infrastructure, property tax base and revenues and recreation and
environmental value. The greatest potential economic impact of shifting inlets, according to the
CRC study, is to residential property, which the study quantifies in terms of assessed value.
But an economic assessment that focuses almost exclusively on assessed coastal property value
- the dollar value of an asset assigned by a public tax assessor for the purposes of taxation - is
misleading because changes in value do not accurately reflect actual fiscal impacts coastal
counties, municipalities and the state may experience as a result of shifting inlets.
Taxation or, more specifically, ad valorem tax revenue based on assessed value and generated
by residential property, does, however, reflect the potential fiscal impacts various levels of
government may experience due to shifting inlets along the North Carolina coast.
Ad valorem taxes comprise an average of about 57% of all revenue collected by North Carolina
coastal county and municipal governments (Table 2). From the perspective of a public entity
such as a coastal municipality or county, the potential loss of ad valorem (and to a similar
extent occupancy and sales) tax revenue generated by at -risk residential coastal property
represents an accurate and meaningful way to quantify the tangible costs of shifting inlets.
Table 2: NC Coastal Municipal and County Ad Valorem Tax Revenue
Jurisdiction
Budget Year
General Fund
(GF) Revenue
Ad Valorem
Tax Revenue
Ad Valorem Tax Revenue
as a % of GF Revenue
Bald Head Island
FY 2010/11
$8,246,160
$6,815,618
83%
Carolina Beach
FY 2009/10
$8,203,250
$4,125,000
50%
Caswell Beach
FY 2010/11
$1,011,618
$547,000
54%
Emerald Isle
FY 2010/11
$7,016,691
$3,437,423
49%
Holden Beach
FY 2009/10
$2,417,773
$1,507,023
62%
Kill Devil Hills
FY 2009/10
$12,035,612
$5,278,985
44%
Kitty Hawk
FY 2009/10
$5,721,795
$2,476,750
43%
Kure Beach
FY 2010/11
$2,891,452
$1,538,914
53%
Nags Head
FY 2009/10
$11,292,993
$4,490,743
40%
North Topsail Beach
FY 2010/11
$3,339,166
$1,903,186
57%
Oak Island
FY 2010/11
$11,341,185
$6,472,902
57%
Ocean Isle Beach
FY 2010/11
$4,156,762
$2,349,000
57%
Sunset Beach
FY 2009/10
$4,748,773
$2,213,468
47%
Surf City
FY 2010/11
$5,887,153
$3,120,586
53%
Topsail Beach
FY 2010/11
$2,092,670
$1,314,690
63%
Wrightsville Beach
FY 2008/09
$7,722,822
$2,644,346
34%
Brunswick County
FY 2010/11
$136,232,066
$100,331,000
74%
Carteret County
FY 2010/11
$74,918,385
$43,290,000
58%
Currituck County
FY 2010/11
$44,028,000
$24,936,000
57%
Dare County
FY 2010/11
$99,244,631
$49,309,278
50%
New Hanover County
FY 2010/11
$253,919,849
$158,778,525
63%
Onslow County
FY 2010/11
$163,799,539
$70,261,500
43%
Pender County
FY 2009/10
$49,261,230
$30,238,766
61%
Municipal and County Combined Total
1 $919,529,575
$527,380,703
57%
Ad valorem tax rates for coastal municipalities and counties adjacent to a developed coastal
inlet in North Carolina are $.1559/$100 and $.4455/$100 respectively (Table 3). The loss of a
residential coastal property assessed at $1 million therefore, would result in an annual loss of
56.014 in ad valorem tax revenue [$1,000,000/100 * (.1559 +.4455)1- or iust 0.6% of the
roperty's $1 million assessed value.
Table 3: NC Coastal Municipal and County Ad Valorem Tax Rates
Municipality
FY 2010 -11 Tax Rate
Total Ad Valorem
Tax Revenue Collected
County
FY 2010 -11 Tax Rate
Bald Head Island
0.2700
$6,815,618
Brunswick County
0.3050
Carolina Beach
0.1750
$4,125,000
Carteret County
0.2300
Caswell Beach
0.1300
$547,000
New Hanover County
0.4525
Emerald Isle
0.0800
$3,437,423
Onslow County
0.5900
Holden Beach
0.0690
N/A
Pender County
0.6500
North Topsail Beach
0.2355
$1,507,023
AVERAGE
0.4455
Oak Island
0.1400
$1,903,186
Ocean Isle Beach
0.0900
Topsail Beach
0.3100
Wrightsville Beach
0.0800
AVERAGE
0.1559
According to the CRC study, 1,983 residential properties with an assessed value of about $1.4
billion are within the state's fourteen 30 YRAs. While losing all at -risk properties is unlikely, the
potential fiscal impact to North Carolina's coastal municipalities and counties would be
$7,127,087 - the combined local and county ad valorem tax revenue these properties currently
generate but would not in the future (Table 4). Over 30 years, using a discount rate of 3% and
price appreciation rate of 5 %, the loss of 1,983 at -risk coastal properties would result in a loss
of ad valorem tax revenue totaling about $292 million - or about 25% of assessed value.
Table 4: Properties "At -Risk" to Shifting Inlets
Municipality
Year
Total Ad Valorem
Tax Revenue Collected
"At -Risk'
Properties
Ad Valorem Tax Revenue
Generated by At -Risk Properties
Bald Head Island
FY 2010/2011
$6,815,618
323
$1,017,647
Carolina Beach
FY 2009/2010
$4,125,000
39
$60,776
Caswell Beach
FY 2010/2011
$547,000
100
$135,483
Emerald Isle
FY 2010/2011
$3,437,423
96
$71,560
Figure 8 Island
N/A
N/A
114
N/A
Holden Beach
FY 2009/2010
$1,507,023
343
$207,756
North Topsail Beach
FY 2010/2011
$1,903,186
376
$157,356
Oak Island
FY 2010/2011
$6,472,902
102
$181,335
Ocean Isle Beach
FY 2009/2010
$2,349,000
124
$54,931
Topsail Beach
FY 2010/2011
$1,314,690
184
$103,165
Wrightsville Beach
FY 2008/2009
$2,644,346
182
$83,863
$31,116,188
1983
$2,073,872
County
Brunswick County
FY 2010/2011
$100,331,000
992
$2,705,286
Carteret County
FY 2010/2011
$43,290,000
96
$205,735
New Hanover County
FY 2010/2011
$158,778,525
335
$1,531651
Onslow County
FY 2010/2011
$70,261,500
376
$394,224
Pender County
FY 2009/2010
$30,238,766
184
$216,313
$402,899,791
1983
$5,053,209
Total Ad Valorem Tax Revenue generated by properties in 30 YRA
$7,127,087
4
The use of assessed value grossly overstates the value of coastal property at risk to, and the
potential fiscal impacts of, shifting inlets, thereby resulting in the misperception that much
more is at risk than actually is.
Using ad valorem tax revenue rather than assessed value provides a pragmatic approach for
evaluating the true value of "at- risk" properties as well as estimating the potential fiscal impact
state, county and municipal economies could experience as a result of shifting inlets.
An issue that should be considered when evaluating the value of coastal property at risk to
shifting inlets, but not discussed in the CRC report or this white paper, is the contribution public
policies and actions such as state and federally- subsidized insurance and shore protection
projects make to assessed values and, ultimately, ad valorem tax revenue.
2) The fiscal benefits of protecting investment property at -risk to shifting inlets are small
compared to the costs of protection
While ad valorem, sales and occupancy tax revenue is critical for maintaining the economic
viability of coastal North Carolina, an analysis of 30 YRAs at ten NC tidal inlets shows that the
contribution residential properties at -risk to shifting inlets make to North Carolina's coastal
municipal and county economies is insignificant.
Table 5 shows the contribution residential property at risk to shifting inlets makes at the
municipal and county level. While coastal counties have more than twice the amount of ad
valorem tax revenue at risk than coastal municipalities ($5,053,216 vs. $2,073,872), the relative
importance of ad valorem tax revenue generated by at -risk property is greater for
municipalities than counties. For example, the total loss of all at -risk residential properties in
the Caswell Beach /Cape Fear 30 YRA would eliminate $135,483 - nearly 25% of the municipal ad
valorem tax revenue collected by Caswell Beach. Brunswick County's loss of $317,865 in county
ad valorem tax revenue - 2.3 times more than Caswell Beach — represents only 0.32% of its ad
valorem tax revenue.
Table 5: Assessed Value of, and Ad Valorem Tax Revenue Generated by, At -Risk Coastal Properties by 30 YRA
Community
County
Inlet
Assessed Value
of At -Risk
Property
2010 Municipal Ad
Valorem Tax
Revenue Generated
by At -Risk Properties
2010 County Ad
Valorem Tax
Revenue Generated
by At -Risk Properties
Bald Head Island
Brunswick
Cape Fear
$310,732,000
$1,017,647
$947,733
Carolina Beach
New Hanover
Carolina Beach
$34,729,000
$60,776
$161,664
Caswell Beach
Brunswick
Cape Fear
$104,218,000
$135,483
$317,865
Emerald Isle
Carteret
Bogue
$89,450,000
$71,560
$205,735
Figure 8
New Hanover
Rich
$163,186,000
N/A
$759,631
Figure 8
New Hanover
Mason
$46,408,941
N/A
$216,034
Holden Beach
Brunswick
Lockwood Folly
$27,240,000
$18,796
$83,082
Holden Beach
Brunswick
Shallotte
$273,855,000
$188,960
$835,258
North Topsail Beach
Onslow
New River
$66,817,693
$157,356
$394,224
Oak Island
Brunswick
Lockwood Folly
$109,900,000
$181,335
$335,195
Ocean Isle Beach
Brunswick
Shallotte
$25,069,000
$22,562
$76,460
Ocean Isle Beach
Brunswick
Tubbs
$35,966,000
$32,369
$109,696
Topsail Beach
Pender
New Topsail
$33,279,000
$103,165
$216,314
Wrightsville Beach
New Hanover
Mason
$84,710,027
$83,863
$394,325
$1,405,560,661
$2,073,872
$5,053,216
Of the ten municipalities with a 30 YRA, only three have more than 10% of their ad valorem tax
base in a 30 YRA: Caswell Beach: 24.8 %, Bald Head Island: 14.9% and Holden Beach: 12.5 %. The
remaining municipalities have an average of 3.2% of their ad valorem tax base in a 30 YRA. No
coastal county has more than 1% of its ad valorem tax base in a 30 YRA (Table 6).
Table 6: The Contribution of At -Risk Coastal Properties to Ad Valorem Tax Revenue by 30 Year Risk Area
Community
Inlet
County
2010 Municipal
Ad Valorem Tax
Revenue
Generated by
At -Risk Properties
% of Municipal
Ad Valorem
Tax Revenue
At -Risk
2010 County
Ad Valorem Tax
Revenue
Generated by
At -Risk Properties
% of County
Ad Valorem
Tax Revenue
At -Risk
Bald Head Island
Cape Fear
Brunswick
$1,017,647
14.9%
$947,733
0.96%
Carolina Beach
Carolina Beach
New Hanover
$60,776
1.5%
$161,664
0.10%
Caswell Beach
Cape Fear
Brunswick
$135,483
24.8%
$317,865
0.32%
Emerald Isle
Bogue
Carteret
$71,560
2.1%
$205,735
0.46%
Figure 8
Rich
New Hanover
N/A
N/A
$759,631
0.48%
Figure 8
Mason
New Hanover
N/A
N/A
$216,034
0.14%
Holden Beach
Lockwood Folly
Brunswick
$18,796
1.2%
$83,082
0.08%
Holden Beach
Shallotte
Brunswick
$188,960
12.5%
$835,258
0.85%
North Topsail Beach
New River
Onslow
$157,356
8.3%
$394,224
0.54%
Oak Island
Lockwood Folly
Brunswick
$181,335
2.8%
$335,195
0.34%
Ocean Isle Beach
Shallotte
Brunswick
$22,562
1.0%
$76,460
0.08%
Ocean Isle Beach
Tubbs
Brunswick
$32,369
1.3%
$109,696
0.11%
Topsail Beach
New Topsail
Pender
$103,165
7.8%
$216,314
0.70%
Wrightsville Beach
Mason
New Hanover
$83,863
1 3.2%
$394,325
0.25%
$2,073,872
1
$5,053,216
In order to provide an assessment of the current or imminently at -risk property due to potential
erosion from shifting inlets, the CRC study identified properties having temporary sandbag
protection. These properties are considered at imminent risk, rather than at risk over a 30 -year
period. Properties located immediately adjacent to erosion control sandbag locations, or
between two nearby sandbag locations, were considered to be Imminent Risk Properties (IRPs).
Sandbag locations on ocean facing or inlet- facing beaches within the 30 YRAs were considered
to be inlet IRPs.
Of the state's 1,983 properties within a 30 YRA, 204 (10.3 %) are classified as an inlet IRP (Table
7). These properties have an assessed value of $89.6 million and generate $445,767/year in
municipal ($102,244) and county ($343,523) ad valorem tax revenue (Table 8).
Table 7: Imminent Risk Properties Within 30 -Year Risk Areas
Community
Inlet
County
At -Risk
Properties
Imminent Risk
Properties (IRP)
IRPs as a % of
At -Risk Properties
Bald Head Island
Cape Fear
Brunswick
323
22
6.8%
Carolina Beach
Carolina Beach
New Hanover
39
0
0.0%
Caswell Beach
Cape Fear
Brunswick
100
0
0.0%
Emerald Isle
Bogue
Carteret
96
13
13.6%
Figure 8 Island
Rich
New Hanover
89
16
18.0%
Figure 8 Island
Mason
New Hanover
25
0
0.0%
Holden Beach
Lockwood Folly
Brunswick
150
32
21.3%
Holden Beach
Shallotte
Brunswick
193
0
0.0%
North Topsail Beach
New River
Onslow
376
37
9.8%
Oak Island
Lockwood Folly
Brunswick
102
0
0.0%
Ocean Isle Beach
Shallotte
Brunswick
85
24
28.2%
Ocean Isle Beach
Tubbs
Brunswick
39
3
7.7%
Topsail Beach
New Topsail
Pender
184
57
31.0%
Wrightsville Beach
Mason
New Hanover
182
0
0.0%
TOTAL
1983
1 204
10.3%
Table 8: Summary of Imminent Risk Properties (IRP)
# Imminent Risk Properties (IRP)
204
% of all Properties in 30 YRA that are IRP
10.3%
Assessed Value of IRPs
$89,610,211
2010 Municipal Tax Revenue generated by IRPs
$102,244
2010 County Tax Revenue generated by IRPs
$343,523
Total 2010 Tax Revenue generated by IRPs
$445,767
As table 9 shows, the loss of all imminent risk properties, a more plausible scenario than the
loss of all at -risk properties, would result in an insignificant loss of municipal and county ad
valorem tax revenue in every 30 YRA:
Bald Head Island has $35,920 in municipal ad valorem tax revenue at imminent risk in the
Bald Head Island /Cape Fear 30 YRA — the most of any NC coastal municipality. This amount,
however, represents only 0.55% of the town's total ad valorem tax revenue.
New Hanover County has $120,881 in county ad valorem tax revenue considered in
imminent risk in the Figure 8 /Rich 30 YRA — the most of any NC coastal county. This amount
represents only 0.08% of the ad valorem tax revenue collected by the county in 2010.
Topsail Beach is the only municipality with more than 1% of its ad valorem revenue
classified as being in imminent risk. Pender County is the only county with even 0.1% of its
ad valorem tax revenue in imminent risk.
Table 9: Contribution of IRPs to Ad Valorem Tax Revenue by 30 Year Risk Area
Community
Inlet
County
2010 Municipal
Ad Valorem Tax
Revenue
Generated by IRPs
% of Municipal
Ad Valorem
Tax Revenue in
Imminent Risk
2010 County
Ad Valorem Tax
Revenue
Generated by
IRPs
% of County
Ad Valorem
Tax Revenue
in Imminent
Risk
Bald Head Island
Cape Fear
Brunswick
$35,920
0.55%
$33,452
0.03%
Carolina Beach
Carolina Beach
New Hanover
$0
0.00%
$0
0.00%
Caswell Beach
Cape Fear
Brunswick
$0
0.00%
$0
0.00%
Emerald Isle
Bogue
Carteret
$11,500
0.34%
$33,062
0.07%
Figure 8
Rich
New Hanover
$0
0.00%
$120,881
0.08%
Figure 8
Mason
New Hanover
$0
0.00%
$0
0.00%
Holden Beach
Lockwood Folly
Brunswick
$12,024
0.79%
$53,152
0.05%
Holden Beach
Shallotte
Brunswick
$0
0.00%
$0
0.00%
North Topsail Beach
New River
Onslow
$6,863
0.35%
$17,193
0.02%
Oak Island
Lockwood Folly
Brunswick
$0
0.00%
$0
0.00%
Ocean Isle Beach
Shallotte
Brunswick
$2,312
0.10%
$7,835
0.01%
Ocean Isle Beach
Tubbs
Brunswick
$5,760
0.24%
$19,520
0.02%
Topsail Beach
New Topsail
Pender
$27,865
2.11%
$58,428
0.19%
Wrightsville Beach
Mason
New Hanover
1 $0
0.00%
1 $0
$102,244
1 $343,523
3) The use of terminal groins would provide limited fiscal and economic benefits
to state taxpayers and local coastal communities
Because the CRC study leaves the efficacy of constructing terminal groins at developed North
Carolina inlets unresolved, it is difficult to accurately quantify the long -term fiscal benefits
terminal groins may or may not produce over a period of 30 years.
It is possible, however, to make two assumptions about terminal groins based on the study:
1. All IRPs in North Carolina will be lost over the next 30 years without terminal groins and
2. If they work intended, terminal groins may protect IRPs for the next 30 years.
Because the effectiveness of terminal groins beyond IRPs is highly uncertain, IRPs represent at-
risk coastal properties most likely to benefit from terminal groins and the continued generation
of municipal and county ad valorem tax revenue by IRPs within 30 YRAs is the primary fiscal
benefit of constructing a terminal groin in a 30 YRA.
In the Ocean Isle Beach /Shallotte Inlet 30 YRA, for example, the primary annual benefit of
constructing a terminal groin is $10,147 - the combined municipal and county ad valorem tax
revenue currently generated by 24 IRPs in this 30 YRA. Over 30 years, using a discount rate of
3% and price appreciation rate of 5 %, the primary fiscal benefit of constructing a terminal groin
in Ocean Isle Beach at Shallotte Inlet is $415,633 (Table 10).
Table 10 shows that the estimated annual primary fiscal benefit of constructing a terminal groin
in each of the state's 30 YRAs is $445,767. Over 30 years, using a discount rate of 3% and price
appreciation rate of 5 %, the primary fiscal benefit of constructing terminal groins in all 30 YRAs
(even though six have no IRPs) is $18,259,148. Note that this table includes only municipal and
county ad valorem tax revenue due to the small number of impacted properties (204) and
limited contribution of other revenue sources.
Table 30: Primary Fiscal Benefit of a Terminal Groin by 30 Year Risk Area
Community
Inlet
County
2010 Municipal
Ad Valorem Tax
Revenue
Generated by
IRPs
2010 County
Ad Valorem Tax
Revenue
Generated by
IRPs
2010 Combined
Ad Valorem Tax
Revenue
Generated by
IRPs
NPV of Ad
Valorem Tax
Revenue
Generated by
IRPs Over 30
Years
Bald Head Island
Cape Fear
Brunswick
$35,920
$33,452
$69,372
$2,841,560
Carolina Beach
Carolina Beach
New Hanover
$0
$0
$0
$0
Caswell Beach
Cape Fear
Brunswick
$0
$0
$0
$0
Emerald Isle
Bogue
Carteret
$11,500
$33,062
$44,562
$1,825,313
Figure 8
Rich
New Hanover
$0
$120,881
$120,881
$4,951,430
Figure 8
Mason
New Hanover
$0
$0
$0
$0
Holden Beach
Lockwood Folly
Brunswick
$12,024
$53,152
$65,176
$2,669,687
Holden Beach
Shallotte
Brunswick
$0
$0
$0
$0
North Topsail Beach
New River
Onslow
$6,863
$17,193
$24,056
$985,362
Oak Island
Lockwood Folly
Brunswick
$0
$0
$0
$0
Ocean Isle Beach
Shallotte
Brunswick
$2,312
$7,835
$10,147
$415,633
Ocean Isle Beach
Tubbs
Brunswick
$5,760
$19,520
$25,280
$1,035,499
Topsail Beach
New Topsail
Pender
1 $27,865
1 $58,428
1 $86,293
1 $3,534,664
Wrightsville Beach
Mason
I New Hanover
I $0
I $0
1 $0
1 0
$102,244
1 $343,523
1 $445,767
1 $18,259,148
4) Long -term costs of a terminal groin exceed potential long -term benefits
at every developed NC inlet
The CRC study estimates the initial cost of constructing a 1,500 -foot terminal groin, similar in
size to the structure currently at Fort Macon, to be $10,850,000 with total annual maintenance
costs of about $2,250,000. Using a 3% discount rate and price appreciation rate of 5 %, the
estimated total cost of constructing and maintaining one terminal groin in North Carolina over
30 years is approximately $54,950,993.
This amount is more than ten times greater than the potential long -term fiscal benefit of
constructing a groin at Figure 8 /Rich Inlet ($4,951,430) and about three times greater than the
combined long -term benefit of constructing terminal groins at all fourteen 30 YRAs
($18,259,148).
Given the CRC study and an evaluation of other terminal structures, a scenario in which
terminal groins protect only IRPs over a 30 -year period is rational. However, due to uncertainty
in the efficacy of terminal groins, PSDS also assessed a "best- case" scenario in which the
benefits of terminal groins extend to every at -risk property within every 30 YRA for 30 years.
In this scenario, long -term costs are projected to exceed potential long -term benefits
(measured by the continued generation of ad valorem tax revenue) in every 30 YRA except Bald
Head Island /Cape Fear (Table 11). It should be noted that the potential fiscal benefits of
constructing and maintaining a terminal groin at Bald Head Island over a period of 30 years are
split almost equally between Bald Head Island ($41,684,034) and Brunswick County
($38,820,273).
Table 11: Estimated "Best- Case" Fiscal Benefit of a Terminal Groin by 30 Year Risk Area
Community
Inlet
County
2010 Municipal
Ad Valorem Tax
Revenue
Generated by all
At -Risk Properties
2010 County
Ad Valorem Tax
Revenue
Generated by all
At -Risk Properties
2010 Total
Ad Valorem Tax
Revenue
Generated by
all At -Risk
Properties
NPV of Ad
Valorem Tax
Revenue
Generated by all
At -Risk Properties
over 30 Years
Bald Head Island
Cape Fear
Brunswick
$1,017,647
$947,733
$1,965,380
$80,504,307
Carolina Beach
Carolina Beach
New Hanover
$60,776
$161,664
$222,440
$9,111,408
Caswell Beach
Cape Fear
Brunswick
$135,483
$317,865
$453,348
$18,569,674
Emerald Isle
Bogue
Carteret
$71,560
$205,735
$277,295
$11,358,334
Figure 8
Rich
New Hanover
N/A
$759,631
$759,631
$31,115,391
Figure 8
Mason
New Hanover
N/A
$216,034
$216,034
$8,849,010
Holden Beach
Lockwood Folly
Brunswick
$18,796
$83,082
$101,878
$4,173,044
Holden Beach
Shallotte
Brunswick
$188,960
$835,258
$1,024,218
$41,953,190
North Topsail Beach
New River
Onslow
$157,356
$394,224
$551,580
$22,593,374
Oak Island
Lockwood Folly
Brunswick
$181,335
$335,195
$516,530
$21,157,684
Ocean Isle Beach
Shallotte
Brunswick
$22,562
$76,460
$99,022
$4,056,059
Ocean Isle Beach
Tubbs
Brunswick
$32,369
1 $109,696
$142,065
$5,819,152
Topsail Beach
New Topsail
Pender
$103,165
1 $216,314
$319,479
$13,086,241
Wrightsville Beach
Mason
New Hanover
$83,863
1 $394,325
$478,188
$19,587,150
Discussion
Assessed property values do not reflect the potential costs of shifting inlets to coastal
municipalities, counties or the state. Ad valorem tax revenue generated by at -risk coastal
property represents a more realistic and accurate way to quantify the potential fiscal impacts a
North Carolina coastal county or municipality might expect as a result of shifting inlets.
The assessed value of 1,983 properties at -risk to shifting inlets in North Carolina is
approximately $1.4 billion. Losing every at -risk property, however, would translate into an
annual loss of $7,127,087 in county and municipal ad valorem tax revenue - a figure that is
0.5% of assessed value. Over 30 years, using a discount rate of 3% and price appreciation rate
of 5 %, the NPV of this statewide loss is $292 million.
While $7,127,087 in annual lost ad valorem tax revenue seems significant, it represents less
than 5% of municipal ad valorem tax revenue and 0.37% of county ad valorem tax revenue
collected by NC coastal communities and counties containing a developed in 2010.
Of the state's 1,983 at -risk properties, 204 are classified as Imminent Risk Properties (IRPs).
These properties represent 0.45% of coastal municipal ad valorem tax revenue and 0.04% of
coastal county ad valorem tax revenue collected in 2010.
IRPs also represent the primary beneficiaries of terminal groins, and the continued generation
of ad valorem tax revenue by IRPs resulting from the emplacement of terminal groins can be
used to quantify the potential fiscal benefits of terminal groins.
Using IRPs as a proxy to estimate the impacts of terminal groins, annual municipal benefits
range from $0 in seven locations (Carolina Beach /Carolina Beach Inlet, Caswell Beach /Cape Fear
Inlet, Figure 8 /Rich Inlet, Figure 8 /Mason Inlet, Holden Beach /Shallotte Inlet, Oak
Island /Lockwood Folly Inlet and Wrightsville Beach /Mason Inlet) to $35,920 in Bald Head Island.
10
Annual County benefits using IPRs as a proxy range from $0 in six locations (Carolina
Beach /Carolina Beach Inlet, Caswell Beach /Cape Fear Inlet, Figure 8 /Mason Inlet, Holden
Beach /Shallotte Inlet, Oak Island /Lockwood Folly Inlet and Wrightsville Beach /Mason Inlet) to
$120,881 in Figure Eight Island.
The NPV of ad valorem tax revenue generated by IRPs and assumed to be protected by a
terminal groins over 30 years, using a discount rate of 3% and price appreciation rate of 5 %,
ranges from $0 in six locations (Carolina Beach /Carolina Beach Inlet, Caswell Beach /Cape Fear
Inlet, Figure 8 /Mason Inlet, Holden Beach /Shallotte Inlet, Oak Island /Lockwood Folly Inlet and
Wrightsville Beach /Mason Inlet) to $4,951,430 at Figure Eight Island /Rich Inlet.
The annual fiscal benefit of constructing and maintaining a terminal groin at every developed
NC inlet, in terms of protecting municipal and county ad valorem tax revenue generated by
IRPs, is $445,767. The NPV of this ad valorem tax revenue over 30 years, using a discount rate
of 3% and price appreciation rate of 5 %, is $18,259,148.
When the protective benefits of terminal groins are extended to all 1,983 at -risk properties, the
NPV potential fiscal benefits (over the next 30 years) range from about $4 million at Ocean Isle
Beach /Shallotte Inlet to about $80.5 million at Bald Head Island /Cape Fear.
The cost of constructing and maintaining one terminal groin in North Carolina over 30 years,
using a discount rate of 3% and price appreciation rate of 5 %, is estimated by the NC CRC to be
$54,900,993. When put in proper context, the cost of constructing and maintaining a terminal
groin exceeds potential fiscal benefits at every North Carolina inlet.
Summary of Findings
• Assessed property value is not an accurate metric for quantifying the fiscal impacts of
chronic erosion and coastal storm impacts and should not be used to justify the expenditure
of public funds for erosion control measures.
• A fiscal analysis of tax revenue impacts to NC coastal municipalities, counties and the state
is a sound methodology by which to evaluate the potential impacts of shifting inlets as well
as potential costs and benefits of constructing and maintaining terminal groins.
• The average annual fiscal impact, in terms of property tax revenue, of losing a $1 million
coastal property in NC is $6,014.
• The combined impact of losing a coastal property at -risk to shifting inlets in NC is about
0.6% of the property's assessed value.
• 1,983 residential coastal properties are considered at -risk to shifting inlets in NC.
• Properties at -risk to shifting inlets represent about 9% of all municipal and county ad
valorem tax revenue collected coast -wide in 2010.
• Of the ten NC municipalities adjacent to a shifting inlet only Caswell Beach, Bald Head Island
and Holden Beach have more than 10% of their ad valorem tax base at risk to shifting inlets.
The remaining coastal municipalities have an average of 3.2% of their ad valorem tax base
at -risk to shifting inlets.
11
• Of the 1,983 coastal properties at risk to shifting inlets, 204 (10.3 %) are classified as being in
imminent risk.
• Properties in imminent risk to shifting inlets represent about 0.08% of all municipal and
county ad valorem tax revenue collected coast -wide in 2010.
• The CRC study estimates the cost of constructing and maintaining one terminal groin in
North Carolina over 30 years to be approximately $54,950,993.
• Using IRPs as a proxy for estimating the impacts of terminal groins, annual fiscal benefits of
constructing a terminal groin at every developed NC inlet is $445,767. Over 30 years, the
primary fiscal benefit of constructing a terminal groin at every developed inlet is
$18,259,148.
• Terminal groins are not a fiscally -sound strategy for dealing with coastal property at -risk to
shifting inlets
• The limited fiscal benefits produced by terminal groins do not justify the expenditure of
state funds.
12