Long-vacant Coast Guard housing has a new owner

Long-vacant housing units at former Coast Guard Group Cape Hatteras in Buxton have been sold to a Virginia Beach family-owned partnership that plans to fix them and rent them.

After a nearly two-month Government Services Administration online auction, a $2,625,000 bid was accepted on Dec. 20 from Lee Pontes of Virginia Beach, manager of the acquisition group Sylakama, LLC., according to Kristine Carson, point of contact at GSA’s Real Property Utilization and Disposal Office.

“This is like a dream. It’s very exciting for us,” company spokesman Jim Pereira said in a telephone interview. “We really intend to do this right.”

The buyers plan to offer seasonal and year-round rentals, he said.

Situated by the ocean on 7.96 acres, the 45-unit complex consists of 23 separate buildings: 24 two-bedroom, 14 three-bedroom and seven four-bedroom units, most with carports, screened porches, and decks.

Carson said in an e-mail that more than 100 potential purchasers, some from as far as Texas and California, contacted GSA about the property, marketed as “Cottages at the Cape.” She said the sale is expected to close within 60 days.

“We are excited about the buyer’s plans for the property,” she wrote, “and the positive impact its sale and redevelopment will bring to the community.”

Opening bids started at $2.5 million. There were a total of two bids made, including the winning offer.

Despite the desirable oceanside location, the sale was complicated by zoning issues, moisture damage to the units, and the lack of wastewater treatment at the site. Built in the 1990s for about $8.5 million, the units have been empty since 2005, when the Coast Guard base was relocated to Fort Macon.

Shortly before the Coast Guard left, the housing complex had been subject to storm-driven ocean overwash from the nearby beach, which had lost its dune. The wastewater treatment facility was damaged, and it was relocated away from the beach in a $100,000 move. Despite that, the system was dysfunctional and was later dismantled and removed.

The duneline has been restored, but the beach remains vulnerable to high erosion.

Significant flooding at the site after Hurricane Irene in August was caused by heavy rain, and the area’s high water table made drainage slow.
Pereira said that the owners are confident that a wastewater treatment system can be designed within required specifications, and that the county will be amenable to helping them find a solution to the zoning issue.

The GSA bid, he said, did not include any conditions based on the ability to meet zoning or permit requirements.

Dare County Manager Bobby Outten said that when the natural historic district zoning — which restricts multifamily and group housing — was put in place, the housing complex was still owned by the Coast Guard. Since the federal government is exempted from county zoning regulations, the complex was considered a legal non-conforming use.

Under the ordinance, Outten said, the grandfathered use expired because the property was vacant for so long. In order to now use the property, the new private owners must either seek an amendment to the ordinance, or request that the site be rezoned.

Outten said that the county Board of Commissioners has not discussed the current issue, but he does not think reasonable proposals would be discouraged.

“I would guess the board would want to allow some use of those buildings,” he said.

Not only would the county benefit by having the neglected site fixed up, he said, it would also mean more revenue for the county.

“It puts that on the tax rolls,” he said, “and that is good.”

Pereira said that the owners are working on a package to present to the Dare County Planning Board, tentatively on Jan. 9. But he said it is too soon to know any specifics of the proposal. One of the first things the owners want to do is to weatherize the property to protect it from further moisture damage.

“All I can say is, on behalf of the group, we look forward to working with Dare County on coming up with a plan for renovation and reuse of the property,” he said. “It’s not a small project. We would like to move forward as quickly as possible.”

Pereira estimated it could take six to nine months to permit and construct the wastewater treatment system. Depending on when zoning can be ironed out, the housing could be opened as soon as September.

The buyers are a “small family entity” that has up to now been involved in land acquisitions, Pereira said. As Virginia Beach residents, he said, they know and love the Outer Banks.

Pereira declined to say who earned the $25,000 finders fee, other than to say it was a broker licensed in North Carolina and Virginia.

Ultimately, he said, the family wants the property to house a combination of year-round and vacationing families who can enjoy a sense of community in a unique natural setting “right under the shadow of the Cape Hatteras Lighthouse.”

Not only will the building renovations be more hurricane resistant, he said, the complex will have beach-compatible landscaping that requires little or no mowing.

“We as much as possible want to make it fit in with the national seashore,” Pereira said. “There will be a lot less grass there.”