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August 23, 2005 VIA email and FIRST CLASS MAIL Mayor Robert W. Muller 124 W. Old Cove Road Nags Head, NC 27959 Re: My Client: Acadia Homes, LLC Lots 289 and 290 George T. Stronach Subdivision Nags Head, NC

Dear Mayor Muller: Reference is made to our telephone conversation on Wednesday, August 17th regarding my client, Acadia Homes, LLC, a single member limited liability company owned by Jim Stewart. I believe that you met with Jim Stewart on that same date following our telephone conversation. The purpose of this letter is to inform you and the County Commissioners of the irreparable damage that your decision to accept no applications for the construction of single family homes on lots zoned C2 that front on the west side of Highway 12 has or will do to my client. In order for you to properly understand the nature of the harm, I need to provide you with the facts that led to my client’s current precarious position. Approximately three months ago, my client purchased Lots 291 and 292 of the George T. Stronach Subdivision. These lots are 50 x 200 feet each and are located approximately 400 feet North of Curlew Street on the west side of Highway 12. My client purchased these lots for over $400,000.00 apiece with the intent to construct single family homes on each lot as allowed for C2 zoned property. At the time of closing, my client obtained construction loans from the Bank of Currituck. Following closing, my client applied for sewer permits and after review, properly filled the lots and obtained septic permits from the Dare County Health Department. My client also had to submit a storm water plan to Kim Allen at the Nags Head Building Department and when doing so, my client included a storm water plan for Lots 289 and 290 of the Stronach Subdivision in anticipation of purchasing those two lots. On June 22, 2005, building permits were issued by the Town of Nags Head to my client for Lots 291 and 292.

Mayor Robert W. Muller August 23, 2005 Page Two

In addition to submitting storm water plans for Lots 289 ad 290, my client and/or its contractor, David Alexander, negotiated and made the town building inspector aware that my client intended to purchase lots 289 and 290 in the George T. Stronach Subdivision. More specifically, Mr. Alexander signed financial responsibility—ownership forms for soil erosion and sedimentation control on June 17th for Lots 289 and 290, which forms were apparently submitted to the town on June 28, 2005. Based on the approval of the building permits for Lots 291 and 292 and on assurances that applications for lots 289 and 290 would be handled in a like manner, my client on June 28, 2005 purchased Lots 289 and 290 for $440,000.00 apiece. In order to purchase these lots and construct homes on them, my client obtained loans of $624,000.00 (Lot 290) and $628,000.00 (Lot 289) from Cooperative Bank. In addition, to make up the shortfall between the loans and the cost of the lots and cost to construct the houses, my client took out an additional personal loan with Cooperative Bank in the amount of $190,000. On June 28, 2005, the day of closing, my client’s contractor, David Alexander, filed documents with the Nags Head Building Department so that my client could begin spending money on filling Lots 289 and 290 in order to get residential building permits. As you are aware, applying for a residential building permit is not something that the Town of Nags Head has set up so that you can obtain it in a day. Before you can even make application for a building permit, you have to get a septic permit. Before you can get a septic permit, you have to pay to have fill put on your lot and before you can fill your lot, you have to file a financial responsibility document with Mr. Kim Allen at the Building Department and provide storm water and SESC plans. On June 28, 2005 David Alexander filed these documents with Mr. Allen at the Building Department for Lots 289 and 290. They were approved for residential projects as is the normal manner, and at no time was my client informed that it would not be allowed to apply for building permits. In order to make application for a building permit, the Town requires an applicant to provide it with a lot survey, plot plans, house plans, engineering plans, engineer septic system plans, and numerous other expensive and time consuming documents. After June 28th and having obtained building permits for Lots 290 and 291, and after submitting all appropriate documents, my client commenced with the spending of thousands of dollars on surveys, engineering, drafting, overhead, administrative expenses and fees in the process of making application for building permits for Lots 289 and 290. On July 11, 2005 David Alexander applied to the Dare County Health Department for a site review for a residential septic system for both lots. As soon as it was allowed to fill the lots, my client proceeded to spend over $16,000.00 filling Lots 289 and 290 as required. Once they were filled, my client requested the Health Department to verify that the lots were filled enough in order to allow it to pay for appropriate septic permits which it was told takes from ten days to two weeks.

Mayor Robert W. Muller August 23, 2005 Page Three

Finally, in early August, my client had secured all of the requirements including septic tank permits for Lots 289 and 290. On August 10, 2005, David Alexander, on behalf of Acadia Homes, LLC, went to the Nags Head town offices to apply for building permits for Lots 289 and 290. At that time, he was informed that the Building Department was not accepting any residential building permit applications for lots zoned C2 located on the west side of Highway 12. As we now have learned, on August 2, 2005, the Town commissioners voted to order the Building Department not to accept residential building permit applications on lots zoned C2 located on the west side of Highway 12 in Nags Head. This order came as a result of a motion made during the “Commissioner’s Comments” portion of the Board of Commissioners meeting for which there was absolutely no prior notice or warning given to the general public in violation of NCGS 160A-364. In effect, you have amended your ordinance without a public hearing and it would appear from a video tape that the manner in which this was accomplished was done on purpose so that the public would not be able to adjust their plans before the order was put into effect. My client now finds itself having to pay interest on its construction loans to Cooperative Bank in an amount close to $5,000.00 per month. It has spent well over $20,000.00 in design, survey, permit and fill costs and is unable to do anything with its lots. If it is unable to proceed with construction, my client will shortly, no doubt, default on its two construction loans and thereafter my client’s credit will be ruined. The process of obtaining a building permit is a lengthy process that does not happen over night. Contractors must spend thousands of dollars to purchase the lot, obtain septic permits, have designs and surveys in place, just to get the building permit. The action taken by the Town Council on August 2 nd in placing a moratorium on building applications is, quite frankly, arbitrary and capricious and as previously stated, in violation of Section 160A-364 of the North Carolina General Statutes. As evidenced by the Planning Commission’s voting unanimously in favor of denying the Council’s proposed ordinance, the Council’s plan is ill-conceived and was passed without a true understanding of the damages that could be caused to individuals and companies such as my client. Its lots are now virtually worthless and you should ask yourselves, what type of commercial development could be placed on a lot 50x200? I urge you on behalf of my client to withdraw your proposed ordinance at the September 7th public hearing. In the alternative, if you feel that a moratorium is in the best interest of your constituents, then I urge you to allow those individuals and companies such as my client whose applications were in the “pipeline” to be approved for building permits in order that they not incur the damages as outlined above that are certain to result from your actions.

Mayor Robert W. Muller August 23, 2005 Page Four

I welcome any response or comments on behalf of my client. Very truly yours,

Thomas P. Nash, IV


Mayor Pro Tem Brant Murray Commissioner Anna Sadler Commissioner Wayne Gray Commissioner Bob Oakes Timothy Wilson, Nags head Planning & Development Director Ronnie Balance, Nags Head Chief Building Inspector Ike McRee, Atty.

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