Growing Pains Have Two Businesses Grappling for Same Waterfront Property

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By Stefanie Jackson – Cape Charles is having growing pains, as made evident at two public hearings March 14, both concerning development by the town harbor.

Jon Dempster, owner of the Shanty restaurant and the Hungry Crab LLC, offered the town $262,000 for a portion of Lot 10 at the harbor, an area less than half an acre, to expand his business and reduce wait times during the summer tourist season from two hours to one hour.

But some citizens were concerned that the Cape Charles town council is giving away prime harborfront property for cheap, even though $262,000 was determined as the fair market value of the property, according to an independent review by W.R. McCain and Associates, of Salisbury, Md.

Bruce Evans called the property “tremendously undervalued.”

Wayne Creed said citizens are also worried Cape Charles would be “giving up control on the waterfront” by selling the harbor property to the Hungry Crab. He suggested the council extend the Shanty’s lease or take other action to ensure the business’ success without selling harbor property.

Dempster currently has a lease agreement with the town, effective from 2012 through 2021, for the property occupied by the Shanty. He pays $500 a month plus 1 percent of gross revenues. The amount of gross revenues paid started at .5 percent but increased in 2015.

Dempster assured the town council that he isn’t planning to “flip” the property or “block any access or take anything away from the town,” but to “continue to invest in it and continue to improve it.”

He chose to locate his restaurant at the Cape Charles harbor because the town’s harbor plan called for the development. Dempster has invested $750,000 in the business and has spent $100,000 this winter renovating the kitchen and restrooms in preparation for further expansion.

“We have three-quarters of a million dollars invested on someone else’s land. That, from a business owner’s perspective, can be an uneasy place to sit,” Dempster said.

“You don’t just snap your fingers and come up with” money, he continued. “You need to go to the bank, and the bank wants equity.”

“We feel much more comfortable having the security of owning the land,” Dempster said.

But the Shanty owner’s issue is twofold. Not only must he convince town council members to sell him the land, he must convince them not to accept a competing offer.

Southern Shore Holdings LLC made an unsolicited offer for the .4-acre harbor property – $300,000 cash, nearly $40,000 more than the fair market value and “without the lengthy financing contingency,” the company stated in an email.

The company also offered the town first right of refusal and the lessor of the property second right of refusal “to prevent the future sale that may not be in the taxpayers’ best interest.”

The Shanty would be allowed to continue operating under its current lease, but if the restaurant “falls out of favor and moves on,” the parcel would be repurposed for a “new highest and best use.”

Southern Shore Holdings recommended the town council practice “fiscal responsibility” rather than “subsidizing a private enterprise.”

Another public hearing concerned the town vacating the Sustainable Technology Industrial Park (STIP) public right-of-way, near the Cape Charles Yacht Center to the north and the Cape Charles Natural Area Pre- serve to the west.

The STIP park, which opened in 1996, was the first of its kind in the U.S. It offered financial incentives to green businesses that used renewable energy and resources, but few pursued those incentives and the industrial park remains largely empty today.

Eyre Baldwin, of Southport Investors LLC, owns the yacht center, which is undergoing a multi-year expansion that will include the acquisition of a 600-ton boat lift. Last year, he purchased the 1.5-acre parcel that includes the right-of-way on Bayshore Road from Northampton County. The parcel originally belonged to the town of Cape Charles.

He wants the road for transporting boats on lifts from the yacht center to a repair facility on another nearby parcel he owns.

“If VDOT (the Virginia Department of Transportation) or the county kept the road, and I wanted to move a boat that was over-width … then I’ve got to get a special use permit every single time … even if it’s only for two or three minutes,” Baldwin said.

“There’s no conspiracy, there’s no drama. It’s safety, and it’s cost-factor.”

He added he has no intention of closing the road to the public and plans to extend a local trail around the harbor for public access. Baldwin also allows public access to two natural area preserve walkways on additional property he owns.

Baldwin is ready to settle the matter of the right-of-way so telephone and power lines can be buried to allow boat lifts safe passage, and he can close two other business deals, he said.

Spencer Murray, chairman of the Northampton board of supervisors, called Cape Charles’ vacation of the public right-of-way a “simple thing,” noting the property transfer was al- ready done.

Both the county and the town abandoning the right-of-way means the street will be removed from the secondary road system and “VDOT has no further obligation to go in there and do anything.”

“I don’t think VDOT’s ever thrown a pebble of gravel on it in the last number of years,” Murray remarked.

Northampton supervisors will vote on the matter April 9.

At press time March 21, the Cape Charles council was preparing to render its decisions on both matters presented at the March 14 public hearings.