Republic of the Philippines

COLEGIO DE MONTALBAN
Rodriguez, Rizal

Figure 8 Island Home Owners Association, Inc.

A Case Study Presented to the Faculty of Institute of Business Colegio de Montalban

Rodriguez, Rizal

In Partial Fulfilment of the Requirements for the Degree Bachelor of Science in Business

Administration Major In Human Resource Development Management

Submitted to:

Mr. Louie John Devera

March 2019
 Figure 8 Island Home Owners Association, Inc.

PROBLEM

Figure 8 island home owners association plan to have a beach restoration (called

re-nourishment) on the ocean side and canal dredging on the sound side. And, while the

home owners of the island wanted the restoration process to begin as soon as possible

SUB-PROBLEM

Mike Powell, president of the figure 8 home owners association, left the home

owners meeting confused. The meeting was intended to be informative and detail the

long-rang plan adopted by the home owners association to preserve the island. Instead, it

turned into a war of words between the property owners.

It was common knowledge that figure 8 island desperately needed beach

restoration, little consensus could be reached as to who would bear the cost. Mike Powell

thought the home owners’ board of directors presented a fair and equitable cost allocation

scheme. The home owners thought differently.

BACKGROUND OF THE COMPANY

Located just east of the quiet Ogden area of Wilmington, Figure Eight Island is a

destination that has inspired curiosity for decades. Privately owned by its homeowners,

and only accessible by a single bridge that crosses the Intracoastal Waterway, the island

is a rumoured haven for celebrities, wealthy CEOs and company owners, and any visitor

who just wants a private escape.

Though difficult to access, visitors who make the cut by renting or buying a

vacation home on the island will be treated to one of the quietest beach landscapes in the

area. As a result, Figure Eight Island retains its reputation as one of the most pristine –

and privileged – vacation destinations in the coastal Cape Fear area.

Figure 8 island is a 4.5 mile long barrier island located approximately 9 miles

northeast of Wilmington, North Carolina. The private, very exclusive resort island varies

in width from 550 to 1,250 feet and is bordered by the Atlantic ocean on the southeast

side and the middle sound channel on the northwest side. Chronic beach erosion has

plagued the beachfront on the southern portion of the island. A map of the barrier island

is provided in Exhibit 1.

The south ocean beach has experienced enough beach erosion to deem the

properties located there endangered. The south sound-side waters have experienced

significant shoaling, which has made the middle sound channel nearly impassable by

small boats, except at high tide, affecting the boating and the water-recreation use by

property owners, As a result, many sound-side waterfront property owners have

requested that the channel be dredged to remove the shoaling.

 Without beach re-nourishment and dredging channel maintenance, the island will

likely suffer serious damage during future storms, Additionally, the increased threat of

hurricanes to the Atlantic Coastline reinforces the immediate need for action.

Development on figure 8 island begin in 1965,As of January 1994, the property

tax listings noted 568 total properties on the island. Of this total, 271 properties were

developed and 297 properties were undeveloped (table 1.) All lots, both developed and

undeveloped, are single family residential properties. The majority of homes on the island

are vacation residences belonging to affluent and often high-profile people.

All lot owners pay equal annual amounts for required membership in the

homeowners Association. The Homeowners association does not charge dues based on

property development status, property value, or lot size. Homeowner dues are for the

purpose of covering the cost of operations, maintenance and capital improvements to the

island. No percentage of homeowner dues are reserved to cover environmental

contingencies like beach restoration or channel dredging.

The Homeowners Association has a number of subcommittees to assist the board

of directors in maintaining the welfare of the island community. The long range planning

committee contracted with environmental engineers in October of 1993 to review the

endangered shoreline and shoaling channels threatening the island and to propose a

solution.

Like most of the communities in the Cape Fear region, Figure Eight Island was

“discovered” by English settlers in the 1700s. Unlike most other regions, however, once

it was discovered, it never really grew.

 The island was first part of a royal tract of land that was given to James Moore in

1762, and the island was later passed along to Cornelius Harnett in 1775, on the eve of

the American Revolution. Harnett was a signer of the Declaration of Independence, and

he held on to the property for 20 years before selling it at auction to the Foy family as

part of the Poplar Grove Plantation. The island remained in the family for the next 160

years or so, and under their ownership, also remained just as pristine and quiet.

Interest in the island never really developed until, ironically, Hurricane Hazel.

After this massive 1954 storm destroyed 15,000 homes along the coastline, beach

property was available at a song, simply because people feared that local island homes

wouldn’t last. A pair of investor brothers, Dan and Bruce Cameron, took advantage of

this situation, and began the process of purchasing the island from its then-two owners,

(George Hutaff and the Foy family), in the hopes of eventually creating a private vacation

destination. They were successful in their efforts, and they bought the entire island in

1955 for just $100,000.

Despite their initial coup, the island remained dormant for the next 10 years or so, as

more investors signed on and began plotting the “new” community that was to be created.

A bridge was built, which cost $150,000, or 50% more than the island itself, and was

eventually replaced with a new and stronger bridge in 1980, which was actually a second-

hand structure that originally hailed from Port Royal, Virginia.

Interest in the island’s development would ebb and flow in the latter 20 th century, with

recessions, financial issues, and bankruptcies leading to a string of different owners. Lot
sales were initially high in the early 1970s, but slowed to a crawl with the downturn of

the economy just a couple years later.

Eventually, the property owners at the time - Figure Eight Development Company - went

into bankruptcy in 1974, and the island was effectively sold at auction on the courthouse

steps. It eventually landed in the hands of the Figure Eight Homeowners’ Association,

which has technically “owned” and managed the island ever since.

The island really started to draw attention in the 1980s and 1990s, when rumors flew in

the Cape Fear area of the many celebrities who flocked to the destination for a private

vacation. Famous visitors who paid a visit to the island include Dustin Hoffman, Gene

Hackman, Debra Winger, Nick Nolte, Kim Basinger, and Alec Baldwin, just to name a

few, and in the late 1990s, even then-Vice President Al Gore vacationed there with wife,

Tipper.

Today, the island remains an elusive community and a hidden jewel along the beach, with

stunning vacation homes and residences and wonderfully nothing else. Still a hotspot

with celebrities and industry movers and shakers, a vacation on Figure Eight Island is like

no other experience in the Cape Fear area.

Strength Weakness
  A lot of Stakeholders will  Stakeholders who are not agree to
contribute to the cost the meeting.
 Endangered Property
Opportunities Threats
 The beach will get better and a lot  The problem will get worse they
of beach activities will be will not allocate the cost as soon as
performed such as boating, possible.
snorkelling etc.

PLAN FEASIBILITY AND ENVIRONMENTAL ISSUES

A study of the feasibility of channel maintenance and beach restoration was

undertaken by consultants, Dr. William cleary and Dr. Paul hosier. In May of 1994, Drs.

Cleary and Hosier provided an extensive report to the Board of Directors detailing the

environmental consequences of undertaking a beach re-nourishing project.

The report outlined a three-phase process for maintaining the island Phase 1

included channel dredging from middle sound channel with relocation of the dredge sand

to the southern ocean side of the island. This sand relocation would establish the beach

width to 1990 conditions. Phase II for channel maintenance and shoreline nourishment

for the northern portion of the island. The sand source for beach replenishment in phase II

would come from the dredging of nearby Rich’s Inlet. Phase III proposed continued

channel maintenance of the middle sound channel and dune reconstruction in order to

further fight erosion.

 Phase I, Being the most urgent, was presented in great detail by Dr. Cleary and

Dr. Hosier. The environmental concerns resulting from the implementation of Phase I

included disturbing coastal wetlands, interference with turtle nesting activities, and water

quality. In order to avoid degrading wildlife and the wetlands, on dredging or filling

would take place in tidal wetlands. To avoid interference with the nesting activities of the

endangered loggerhead turtle, no beach renourishment would take place between May 1 st

and Nov 15th. Water quality changes resulting from dredging would be addressed through

bulldozing a dike. This dike would provide a channel for the water running over the

newly dredged material. Thus the channel will force “dredge” water to enter the ocean at

one location instead of entering the ocean over a wide area.

With these stipulation in place, the report concluded that no significant long term

changes in wildlife feeding, nesting, or other habitat were expected to occur as a result of

the dredging and renourishment activities of Phase I. A detailed analysis of Phase II and

III plans were to be addressed upon completion of Phase I.

PHASE I

To implement the beach restoration and channel dredging for the southern part of

the island, the island was broken into four district as indicated in Exhibit 1. District A

included all lots on the south Oceanside of the island. This needed immediate beach

renourishment to save endangered lots. District B included all lots on the north Oceanside

of the island. District C included waterfront lots on the south sound side. The sand

located in the Middle Sound Channel in front of these lots would be dredged to provide
beach sand for District D included lots on the north sound side as well as all inland lots

also located at the northern end of the island.

The details of Phase I dredging and beach maintenance follow:

Approximately 550,000 cubic yards of sand will be removed from 5,476feeet of the

Middle Sound Channel behind Figure 8 Island using a hydraulic pipeline dredge with

beach disposal. Sand removed from Middle Sound Channel will be discharged along a

9,700 foot section of the lots located in District A of the island. The sand will be

deposited to provide an equilibrated berm of 55 feet.

Removal of sand will widen the middle sound channel to 300ft for approximately 3,600ft

along the northern portion of the channel, then widening to 900ft with a 1,800foot

section nearest mason’s Inlet. The channel will be dredged to a depth varying from 9.3ft

at the northern terminus of the channel.

The cost estimates for this project were between $750,000 and $1,250,000. These

estimates assumed that 550,000 cubic yards of sand would be pumped at a cost of

between $1.20 and $2.00 per cubic yard and that the administration and the contingency

cost estimates would be between $90,000 and $150,000.

The homeowners of Figure 8 Island expect to accrue the following benefits from

the completion of Phase I.

 15 developed and undeveloped endangered lots will receive extended lifespan.

 Beach renourishment will provide additional time before major dune

reconstruction is necessary.
  The recreational potential of both the ocean beach and middle sound channel will

be enhanced.

 The possibility of overwashing and threat of erosion to the single access corridor

to the island, beach road south, will be reduced.

 The damaged associated with hurricanes and nor’ easters should be reduced.

SUMMARY AND FINDINGS

A basic allocation is proposed by the Homeowners Association. Their proposal

allocates cost using the number of lots on the island. Endangered lots are assessed ten

percent for the total estimated cost based on historical precedent with each other lot

assessed an equal share of the estimated total coast after the initial direct charge to

endangered properties. The results of these calculations are presented in Table 4.

The second allocation, proposed at the meeting, focuses on relative property

values. This proposal would allocate cost to individual property owners based on

unbiased and straightforward tax assessment of value that are proportional to property

market values. The values given in the case reflect district values, and from these district

values, an average lot value can be derived. Table 6 provides an example of this

allocation scheme for the endangered lots.

The third allocation, also proposed at the meeting, attempts to match cost with

benefit. These proposals calls for the cost to be allocated to each lot in proportion to the

estimated benefits each lot will realize over time. Weighting factors are proposed in the
case to adjust relative sales values to reflect relative benefits received from the dredging

and replenishment project.

CONCLUSION

The district A who is the most endangered properties should pay higher than the
other district property owners. They should bear the 10% allocation to the estimated cost

for the project because at the end of the day they are the one who will be benefit the most.

Based on relative value of developed versus undeveloped lots district A would

bear $6,463(developed lots) and $3,328 (undeveloped lots) in the project if they use the
estimated amount which is the $750,000 on the other hand if they use high cost estimate
they will pay $10,771 for the developed lots and $5,547 for the undeveloped lots.

RECOMMENDATION

We as a researcher of this case study, we highly recommend to the home owners

association of figure 8 island inc. to use the 10% direct allocation to the district A who is
the most affected area or what they called the most endangered properties. It is fair for all
districts because they will all be benefited by this project which is the beach re-
nourishment

For future case studies, for it is easy to process a case study with a help of a guide.
This case study can be a basis of another, especially if it's about homeowners
associations' problems or mishaps. It will help the researchers or the students by using it
as a guide in doing a case study, while the teachers or the professors can benefit from it
by using it as a lecture guide