Lee Roberts’ Island Dreams

Past the sizzling parking lot and an alligator warning sign, people trickled into Deep Point Marina in Southport. 

Across the marina, a docked ferry started to hum. “If they’re firing up the Sans Souci, then they’re leaving at 12:15,” a woman standing in line pronounced, loud enough for those nearby to overhear—a courtesy that also felt like a warning. 

She tugged her rolling cooler across the crushed-shell concrete, ditching her spot in line for a different gate. The woman was clearly a pro.

At the stern of the Sans Souci, a 1970s-era ferry used primarily to tote contractors to and from Bald Head Island, the woman was sitting on her cooler. We talked—yelled, rather—about the ferry’s uncertain future while watching the engine forcefully churn the Cape Fear River’s light tea-colored waters.

A private equity firm wants to buy this boat–and all other components that make up the ferry system. Like many of her island neighbors, she wasn’t thrilled with that prospect. She would have preferred that her village government buy it instead. “But I think they blew that chance,” she said.

The ferry system, which has been owned and operated for decades by the island’s developer, Bald Head Island Ltd., is currently up for grabs. One of the leading contenders to buy it is the Raleigh-based private equity firm SharpVue Capital–a company co-founded by Lee Roberts, who was recently named UNC-Chapel Hill’s new permanent chancellor. But clinching that job means parting with another: Roberts is stepping down from the firm to lead the university, he told The Assembly on Monday.

SharpVue faces fierce competition in its quest to buy the ferry system: The island’s small municipality–where a seat in last year’s council election tied at 102 votes and was decided by plucking a name out of a foam Uncle Sam hat–is also angling to buy it.

Leaders of the village of Bald Head Island argue that the motivations of profit-driven outsiders are incompatible with the island’s long-term stability. Under village ownership, excess revenues would be reinvested into the system for much-needed improvements. In the hands of SharpVue, they say, profits instead would line investors’ pockets.

SharpVue has a different perspective: The tiny village government for years has been an obstructive force in blocking the transaction and is wasting taxpayer money in pursuit of owning a system it can’t realistically afford or manage. 

Roberts’ handling of the ferry deal is emblematic of his operating style: analytical and understated, but also patient and persistent with an unflinching eye on long-term success.

‘With or Without Me’

Two weeks before he was named interim chancellor of UNC-Chapel Hill last December, Roberts sat in the first row inside the N.C. Court of Appeals Building. 

Roberts listened intently, occasionally resting his chin on his fist. He was there to watch attorneys argue about overturning a North Carolina Utilities Commission decision that ruled the ferry system’s parking and barge operations should be regulated like the ferries and trams are, drawing an objection from SharpVue. A decision on that appeal is expected soon. 

As the attempted sale to SharpVue hangs in limbo, Bald Head Island Ltd. remains the owner and operator. Roberts personally sought out and shepherded the complicated deal forward, starting with an agreement inked in May 2022. Ever since, SharpVue has been patiently waiting to take over the multipart system. 

SharpVue wants all of it–the ferries, as well as on-island trams, mainland parking, barge and more. Fearing the firm could raise parking and barge rates to milk the system for profit, the village secured the Utilities Commission’s approval to regulate those parts of the operation, a decision Bald Head Island Ltd. appealed; only ferry and tram rate increases currently undergo strict scrutiny from the Utilities Commission. 

The case is one of five clouding the future of the ferry system.

Two key cases are preventing SharpVue’s deal from closing: The village appealed the Utilities Commission’s approval of the transfer, as well as a district judge’s spring ruling that found the 25-year-old right-of-first refusal agreement between the village and Bald Head Island Ltd. was void, in part because the village failed to buy the system in time.

The N.C. Court of Appeals heard arguments on Wednesday in the case contesting the transfer, which the Utilities Commission unanimously approved last year. Roberts didn’t attend this time around.

Since becoming interim chancellor,  Roberts said he’s kept abreast of the ferry deal’s status. “I’m available when needed, but I’m not involved day-to-day,” he said. “This is true of SharpVue’s overall business as well.”

Before he was named permanent chancellor, Roberts said last week that he didn’t expect that dynamic to change and that SharpVue could close the deal “with or without” him. But on Monday he said he’d step down from the firm. 

Roberts said the shift doesn’t change SharpVue’s commitment to the Bald Head investment. 

“Our team has been working on this investment for almost three years and knows it intimately,” Roberts said Monday. “We have already invested significant capital (and countless hours) and we remain eager to invest more as soon as we can.”

UNC System spokesperson Jane Stancill said Roberts was not asked to resign and that it was his decision. Stancill said Roberts has remained in compliance with system policies for the duration of his role. 

“Nothing in the policy prevents UNC System employees from outside work, so long as they comply with the provisions on conflict of interest and conflict of commitment,” Stancill said.

Ferry Tales

The transportation system is the foundation of Bald Head’s daily viability. While a handful of private charter boats can zip visitors back and forth, nothing rivals the operations established and maintained by Bald Head Island Ltd., the island’s private developer and longtime caretaker. Last year, the company shuffled a record 782,000 passengers on the 20-minute ride between Southport and Bald Head Island. A round-trip ticket costs $23–a rate the company hasn’t budged from since 2010.

Texas billionaire and oil tycoon George Mitchell, known as the “father of fracking,” bought and developed the island in the 1980s. In the decade before the Mitchells arrived, more than a dozen families known as the “generator society” had established a primitive lifestyle. 

Through Bald Head Island Ltd., the Mitchells curated a pristine subtropical paradise. No cars. No high-rises. Bounties of untouched, conserved maritime forest. 

The island’s charm and exclusivity begat some of the highest property values on North Carolina’s coast. In May, the median home sale was $1.2 million. Nearly all 1,288 of the island’s residential units fill up in the summer. The year-round population is just 292, per the latest state demographer’s count.

Following Mitchell’s 2013 death, Bald Head Island Ltd. started offloading its assets–restaurants, social clubs, land–to settle his vast estate. But divesting the firm’s last jewel, the transportation system, has proven to be a Herculean feat.

“It’s all a battle for control,” said Chad Paul III, Bald Head Island Ltd.’s CEO. “That’s really what it’s about.”

For village Mayor Peter Quinn, control means survival. “The village wants to control our destiny in the long run, and you have to control the thing that controls you,” he said. 

Drawn-out fights have ensnared the sale, even before SharpVue entered the picture.

SharpVue is the third prospective buyer. The deal for the first, a public authority crafted specifically for the purpose of buying and operating the system, crumbled under Local Government Commission scrutiny in 2021. A deal with the second attempted buyer, the village, never quite crystallized.

The ferry issue first came across Roberts’ desk when he was state budget director, a role he occupied between 2014 and 2016. Paul said Roberts was there when he met with members of former Gov. Pat McCrory’s administration to discuss legislation to create the Bald Head Island Transportation Authority. 

The bill that emerged from that meeting passed unanimously, and Gov. Roy Cooper signed it into law in 2017. It called for removing the ferry system from the oversight of the Utilities Commission and making it independent (which never happened because the deal fell through).

The bill did create a board that gave seats to various stakeholders: three representing Bald Head Island; three selected by the N.C. Secretary of Transportation; two appointed by the legislature; and one each for Southport, where the mainland terminal sits, the governor, and Brunswick County. (Despite it now being obsolete, the authority continues to meet quarterly for usually less than 15 minutes; Paul says it may play some role in the future.)

The authority’s directive was to purchase and operate the system–but in 2021, that was derailed amid questions about the system’s appraised value. Two separate appraisers put the value within 6 percent of each other, at $51 million and $48 million.

State Treasurer Dale Folwell and former State Auditor Beth Wood, who were both members of the Local Government Commission with the power to approve the sale, were highly suspicious of the valuation. Folwell refused to put the item on the commission’s agenda, and commission staff recommended denying the proposal. It never got a formal vote.

In retrospect, $47.5 million sounds like a deal. The authority would have bought the system using revenue bonds at a 4.75 percent interest rate. Rates are higher now, and so are real estate values. SharpVue signed a contract to purchase the ferry system for $56 million and also pledged to buy other nearby real estate assets for an additional $11.7 million. 

SharpVue seems confident in its higher valuation. It issued its own appraisal of the ferry system in December 2022, marked confidential as part of court proceedings. The firm’s proposed purchase price “represents an appropriate (if not conservative) fair market value,” SharpVue disclosed in filings.

On paper, SharpVue today owns several properties totaling 27 acres between Southport and Bald Head, but neither ferry terminal. SharpVue’s purchases include the mainland marina, some slips in the island marina, and a couple of condos and commercial parcels on the island. 

Tasked with courting a new buyer for the Bald Head Island Ltd. ferry system, Paul, the CEO, met with executives in Miami and New York and had serious discussions with about six firms. 

As the deal was publicly imploding, Roberts twice reached out to Paul to check in.

“Lee’s been around on the authority deal since day one. He understands it, he believed in it,” Paul said. Partnering with a North Carolina firm instead of a major shipping giant with tighter investment turnarounds bodes far better for islanders in the long run, Paul said. “It’s a natural fit. It fits perfectly.”

SharpVue pledged not to increase rates beyond inflation for four years and views the Bald Head deal as a safe and slow mechanism to build value for its investors. The firm plans to use a blend of debt and investor-raised capital to finance the purchase and declined to share how many individual investors have committed to the transaction. 

Mitchell’s family, exasperated from the ordeal, has said Bald Head Island Ltd. won’t invest in any capital improvements while awaiting a new owner. The gridlock has frustrated many ferry riders, who point out issues with the aging fleet.

“SharpVue’s willingness to invest any needed capital in the future—from its current investors, potential future investors, and its lenders—is far greater than the willingness of the Mitchell estate to do so,” Roberts said in testimony for one of the cases last year. “An indifferent owner is not in the best interest of utility customers.”

Doug Vaughn, the firm’s co-founder, said SharpVue sought out investors who had “a reason to invest in North Carolina” and a familiarity with Bald Head Island. “There are plenty of folks we could have gone to just to get money, but that wasn’t the point,” he said. “We didn’t take the easy way here.”

In legal filings, the firm disclosed Roberts and Vaughn would always retain at least 50 percent control of the system assets.

That is, if they can hang onto the bull long enough to ride out the legal troubles. “We’re just sort of a bystander waiting for the traffic to clear,” Vaughn said.

The firm hasn’t specified how long it intends to hold the assets but says it isn’t constrained by typical short-term turnarounds required by many private investors. 

“The ferry ride is short, but we’re in this for the long haul,” Roberts said in a statement to The Assembly last week. (He said he didn’t have time to be interviewed because he was busy with the chancellor search process.) 

In various hearings and sworn testimony related to the transfer, Roberts, 55, has conducted himself diplomatically. After all, tact is a prerequisite to survive as a bureaucrat in a sea of sharks.

As multiday Utilities Commission hearings on the transfer were closing last year, Roberts personally thanked members for their time, relating to them as someone with an above-average understanding of public service. “I realize that the commission generally deals with matters of greater statewide importance than this,” he said. 

But he also hasn’t minced words. In the same hearings, he painted the small village municipality as an obfuscating aggressor. 

“The village wants to kill the sale to SharpVue, like it did the sale to the authority, so that it can buy the transportation system itself for less than its fair market value,” Roberts said. 

‘Industry Agnostic’

SharpVue isn’t in the habit of competing with local governments. “Which I suspect would be true of almost any investment firm,” Roberts told The Assembly.

Roberts spent his early career at investment firms, including nine years at Morgan Stanley. Asked by the village for his relevant experience in infrastructure projects, Roberts reported in a filing last year that he was part of teams that financed well-known global projects, including the $1.6 billion Africa ONE fiber network, the $2.2 billion Mumbai Trans Harbour Link, and the $5 billion World Trade Center site redevelopment.

After his stint in state government under McCrory, Roberts co-founded SharpVue, a spinoff of Medical Mutual Insurance Co. of North Carolina, with Vaughn in 2016.

“The older I get, the focus I have on my partners is 100 percent about what’s inside them: their integrity, their ethics–I don’t want to have any doubts about that,” Vaughn said in an interview with The Assembly. “Lee, he’s an 11 out of 10 on the integrity scale.” 

Vaughn has said they both want to retire from SharpVue. In the meantime, Roberts’ job will be waiting for him.

“If he ends up getting corralled into Chapel Hill for a few more years, then that’s great if that’s what he wants to do,” Vaughn said in early August, before Roberts was named permanent chancellor. “We’re not 90 yet, so hopefully we’ll have plenty more years to do things together. He’s doing important work there, and I’m certainly supportive of it.”

Vaughn operates the private credit and equity investment side of SharpVue, while Roberts’ expertise is in real estate. One highlight: In 2021, the firm flipped a three-year investment in a commercial complex that houses the North Carolina Education Lottery for more than a $14 million gain.

SharpVue describes its strategy as “industry agnostic.” Its investments run the gamut: a vacation rental firm in Boone, a social media analytics company in Silicon Valley, a dental firm in Texas, a lawn service company out of Florida.

Vaughn said the common thread between those investments and its interest in Bald Head is the people behind the operations. The firm partners with established cash-flowing businesses and offers insights and improvements, but it lets the on-the-ground experts take the lead. In the deal with Bald Head Island Ltd., Paul and his transportation team of 130 would remain the operators under a lease agreement. 

“We look forward to completing the sale from one private owner to another so we can make much-needed improvements that provide stability and quality service to the people of Bald Head Island,” Roberts said.

While some islanders believe SharpVue will elevate the system, not all are convinced by the firm’s benevolence. 

“It is ludicrously naive to think that they will do the best for the island if given their own druthers,” one homeowner wrote in a 2022 survey conducted by the Bald Head Association.

Bad Blood

The Sans Souci cruised into the island-side marina, and as we offloaded, some toddler-sized buccaneers scurried by, headed to the island’s annual pirate invasion event.

A long line of squinting passengers slinked around the terminal, waiting in the sun to board the outbound ferry. Dozens of trams–mini, low-riding vehicles with train-like carts attached–idled awaiting the arrivals. 

It was a relief to be on time–making appointments that rely on the ferry is a guessing game, given frequent delays. Ferries and crew struggle to stay on schedule when it’s crowded, especially on weekends and holidays.

Quinn, the village mayor, soon pulled up driving the Lamborghini of golf carts, a black Curtis model with sliding solid doors. An architect, Quinn built and designed about 200 houses on the island during his 20-year tenure–roughly 15 percent of the housing stock. 

We scooted over to village hall, across the street from the state’s oldest standing lighthouse, Old Baldy, and dipped into an air-conditioned office. 

Soft-spoken and genteel, Quinn was elected mayor in 2021. Quinn was a “new body,” he said, to replace the previous mayor, Andy Sayre, who had served since 2009. “I was fresh… I don’t have a lot of axes to grind.”

Still, the Mitchells have been unwavering in their refusal to sell the ferry system to the village. They have said they intentionally designed the authority so their operation wouldn’t end up under the control of a small handful of people who represent just a fraction of the overall ridership. 

The family even publicly rebuked the village and its goals–and still, the council sought and obtained voter approval for a $54 million general obligation bond to purchase the ferry system in November 2021.

Quinn says he doesn’t understand why the family is so steadfastly against the village owning it. “I don’t get it,” Quinn said. “That’s what the story has always been, that the Mitchells won’t sell to the village. Whether that’s true or not, that’s the story we’ve heard and gotten in writing.”

The village is contemplating workarounds to their Mitchell problem—like potentially a maneuver to purchase the system from SharpVue instead. 

Quinn said he met Roberts for coffee in Raleigh last year and asked him to explain SharpVue’s interest in the ferry. 

Roberts told him they want to enhance the value of the ferry system and other real estate assets. “That’s perfectly rational, and I would never put him down for that,” Quinn said. “It’s just not the same as, you’re the mayor–I gotta take care of these people somehow.”

Quinn’s constituents have grown fatigued by the ferry drama. 

The island has the highest tax rate in the region–twice as high as the next among Brunswick County’s 19 municipalities. Council raised taxes by 21 percent last year and by another 9 percent this year, in part to pay for legal expenses that are approaching $3 million.

Former village council member Betsi Stephen organized a petition in the spring asking council to resolve the dispute expeditiously and collected more than 300 signatures. 

“Homeowners are furious that the village has just run this out forever and ever and ever,” she said. 

Stephen said the village’s dream of owning and operating the ferry system is unrealistic. “They’re inept. What most people say is they can’t even run a post office,” she said, though she added that the mail system has improved lately.

Councilmember Scott Thomas says he probably rides the ferry more than anyone–twice a day to and from his job as an attorney for Brunswick Electric Membership Corp. He ran his campaign last year on trying to get the village to back out of the ferry litigation. 

Thomas cast the lone vote against the latest budget because he opposed the tax increase. Rising legal costs have prompted council to delay or defer investment in various projects, like repairing the bridge, roads, and sewer lift stations, Thomas said.

“Given the choice, any reasonable resident would go, ‘Yeah, let’s wind up this litigation and start making this back to the paradise that we all know it to be,’” Thomas said.

Quinn said some level of opposition to village ownership has always been there. He doesn’t see the petition as a sign that it’s grown; he just thinks that the people who support the village’s stances are less vocal.

He wishes those objecting would see the long view for the island. “It’s worth it,” he said. “It’s a necessary utility, and it’s a monopoly. And so if you’re looking at it that way, the people who are most dependent on it should be running it.”

As the legal process lingers on, there are no clear winners so far. 

Except maybe the attorneys.

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Johanna F. Still is The Assembly‘s Wilmington editor. She previously covered economic development for Greater Wilmington Business Journal and was the assistant editor at Port City Daily. She can be reached at johanna@theassemblync.com.