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Landowner Challenges Conservation Terms

MOREHEAD CITY — The owner of more than 12 wooded acres on Crab Point Bay that was set aside for conservation in 2003 has filed a civil case in Carteret County Superior Court seeking to remove deed restrictions on the property to allow the land to be sold and developed.

The 12.6-acre tract was donated for conservation in 2003 to satisfy wetland mitigation requirements related to the development of the Blair Farms residential subdivision. Photo: Mark Hibbs

Beverly Pham of Morehead City seeks a court declaration that would remove the “uncertainty” of the status of a conservation deed restriction on the undeveloped 12.6-acre property adjacent to the Blair Farms neighborhood. Pham’s husband Andy Nguyen purchased the property for $44,742 on Jan. 25, 2016, via an upset bid in a county tax foreclosure auction held 10 days earlier and transferred his interests to her.

Nguyen’s bid upset the auction’s high bid of $42,611.50, which Morehead City and the county had placed in a move to conserve the property and use part of it for a park with public water access.

Pham, in her complaint, contends that because the foreclosure for nonpayment of county property taxes complied with certain state requirements, “it was effective in extinguishing the conservation restriction.” Her complaint also cites as precedent a 1985 case that found, “The effect of a judgment foreclosing a tax lien on real property is to extinguish all rights, title and interests in the real property subject to foreclosure …”

Pham’s attorney, Taylor Avioli of the firm Narron Wenzel P.A. of Raleigh told Coastal Review Online that Pham would not agree to selling the land to a conservation group with the deed restrictions left in place.

According to real estate listings, the property has been for sale since March 2017 with an asking price of $575,000. The parcel has a tax value of $68,020, according to county records.

Conservation Interests

The property, which was donated for conservation to satisfy wetland mitigation requirements related to the development of the Blair Farms residential subdivision, was previously held by a nonprofit corporation that did not exempt the land or pay property taxes on it.

The nonprofit, Coastal Hunting Land Group Inc. of 300 N. 35th St. Morehead City, was incorporated Oct. 16, 2003. Morehead City accountant Leonard W. Jones, who died in 2009, was the registered agent on the incorporation filing and the corporation is listed as “current-active,” according to documents on file with the North Carolina Secretary of State’s office.

The property is adjacent to the Blair Farms neighborhood in Morehead City. Image: Carteret County GIS

Pham’s complaint names as defendants Blair Pointe LLC, the Coastal Hunting Land Conservation Group Inc. and Carteret County, which “are joined out of an abundance of caution as the only parties with a possible interest in the status of the conservation restriction.”

David Horton, formerly of Morehead City and now living in Raleigh, was an owner of Blair Pointe LLC, the now-defunct company formed in 1996 to develop Blair Farms. Blair Pointe LLC conveyed the wooded property to Coastal Hunting Land Group in December 2003 with the intent that it be used for conservation purposes as defined by federal tax codes.

Horton said he’d like to see the deed restrictions remain.

“I hate the thought of it being developed,” Horton said last week.

Horton, whose partners in the development company were John Gainey, Larry Land and Dean Wagaman, all of Morehead City, said removing the deed restrictions should require action by the state legislature because people had taken tax benefits from the property’s conservation status. He said Blair Pointe LLC, which was dissolved in December 2010, had donated the property and received in return favorable tax treatment.

Horton said that Jones, his accountant before his death, had organized the nonprofit hunting club to which the land was donated, but Jones died before the property received tax-exempt status.

“Nobody really knew much about it except Leonard,” Horton explained. “There shouldn’t have been taxes because of its conservation status, but it never got set up as zero.”

A total of more than $13,856 in county property taxes had gone unpaid between 2006 and 2014, according to court documents.

Horton said he was made aware of the case when Morehead City attorney Doug Goins, who had been the registered agent for Blair Pointe LLC, contacted him about the property owner’s desire to void the restrictions. Horton said he understood the property was under contract, contingent upon the deed restriction being removed.

Goins is not a party to the Pham case, but he told Coastal Review Online Monday that Blair Pointe LLC officials had acted properly in claiming any tax benefits that arose from donating the land for conservation.

“If the restriction is removed without any complicity by the developers, which is the case, I don’t see how it can be held against them after the fact,” Goins said. “The situation is not their fault.”

“If the restriction is removed without any complicity by the developers, which is the case, I don’t see how it can be held against them after the fact.”

– Doug Goins, attorney

Goins said the state may have an interest in the case, adding that state officials were aware of the situation.

He noted that Coastal Hunting Land Group Inc. had “disappeared” and “there’s no one that anybody’s been able to find who claims to be a director or officer regarding the thing.”

Goins said he was unsure whether Pham’s contention that the foreclosure extinguishes previous conservation restrictions would indeed accomplish that.

Horton said the deed restriction should continue to be honored because people who had purchased homes and lots in Blair Farms did so with the understanding the land was not to be developed. “The people bought property with that in mind,” he said.

Horton added that the property is not “swampland,” as he said some have characterized it.

“It’s good land, elevated, on a peninsula. It’s uplands with marsh around the edges, not swampland. We had it delineated and we knew exactly what it was,” he said.

Plans for a Park

About 10 years ago, the Morehead City Council held what was apparently the first of several closed-session meetings to discuss, among other things, purchasing the property from the hunting club, “for public interests,” according to the subsequently released minutes from those meetings.

Horton was at the time a member of the city council.

At first, it appeared the city was in position to acquire the land by donation, so that the area could “‘remain natural’ for future generations,” according to minutes from a closed meeting on Sept. 8, 2009. Later, the homeowners association for Blair Farms also became interested in purchasing the land, which had an assessed value of $20,000 at the time.

Mayor Jerry Jones said at the time he would be more comfortable with the city acquiring the property rather than the Blair Farms Homeowners Association. Jones said the HOA could “always sell the property later,” according to the Dec. 14, 2010, meeting minutes. “The property would be more protected if the City acquired it.” Then-councilman Demus Thompson agreed, noting that the city would be more apt to leave the land as “undeveloped, undisturbed open space,” according to the minutes.

City attorney Derek Taylor told the council at the time that he would advise the HOA’s attorney that the city would pursue buying the land and that he had notified the county to proceed with its foreclosure.

The city held another closed-session discussion about the property the following month. According to the minutes from that January 2011 meeting, the council discussed options for the property should the city acquire it. The board also discussed ways to keep the property from being developed.

Randy Martin, the city manager at the time, advised the council “to be careful in how restrictions would bind the property for future use.” Martin further advised that when the property was originally brought to his attention, it was identified as an opportunity for Morehead City to have a recreational area in that part of the city for “water access or bird watching, etc.”

The council and city attorney discussed working toward a compromise with the Blair Farms HOA, rather than competing for the property. It appeared the HOA lacked the proper nonprofit status to hold a conservation deed, according to the minutes. Horton, as city councilman, supported the HOA in its desire to acquire the property and was not in favor of “going against” the HOA.

Then, during another closed-session meeting July 12, 2011, Taylor advised the council that the HOA would cooperate with the city on a deal to purchase the land, but that the property would never qualify for title insurance without a condemnation process. Taylor said at the time he had advised county officials to go ahead with the condemnation proceedings and have the property go through the tax foreclosure and auction, which ultimately happened in 2016.

Taylor responded last week that if any members of the nonprofit hunting club that received the donated land were ever identified, he no longer recalled their names.

Tom Outlaw is treasurer of the Blair Farms Homeowners Association and also chairman of the city planning board. He said the homeowners association has no formal opposition to development of the property but there is concern among residents.

“Nobody wants something different over there and they could put whatever, condos or whatever, over there. But I don’t think they can do a lot to make money on it,” Outlaw said.

About the Author

Mark Hibbs

Mark Hibbs is editor of Coastal Review Online. A native of coastal North Carolina, Mark joined Coastal Review Online in 2015, after more than 20 years with the Carteret County News-Times, where he served as a staff writer and photographer, business editor and assistant to the editor. Mark has won numerous awards for his reporting, including numerous N.C. Press Association awards, the American Shore and Beach Preservation Association's Friend of the Coast Media Award and the U.S. Small Business Administration’s 2009 Small Business Journalist of the Year Award for the Southeast Region. Mark is a graduate of the University of North Carolina at Wilmington.