Testimony of Thomas Z. Hayward, Jr., Terra Cotta Realty (Florida), Inc.
Before the Committee on Environment and Public Works
United States Senate
September 22, 1998

Thank you Mr. Chairman and Members of the Committee. My name is Thomas Z. Hayward, Jr. and I am the Chairman of Terra Cotta Realty Florida ("TCR"), the owner of the property known as Pumpkin Key near North Key Largo Florida. I am here today to testify on behalf of George A. Berry III, who is the founder of TCR and resides on Pumpkin Key. I am also here representing the Berry family and Robert F. Berry is here with me today.

Specifically, we want to express our strong support for legislation (S.2470) introduced by Senator Bob Graham and co-sponsored by Senator Connie Mack. Senator Graham, of course, is a member of this distinguished Committee. The legislation would correct the Coastal Barrier Resources System (CBRS) map, so as to exclude Pumpkin Key from "FL-35". The bill reflects the findings of the United States Fish and Wildlife Service that Pumpkin Key was mistakenly included in the System when Congress passed the 1990 amendments to the Coastal Barrier Resources Act. Identical legislation (ELR 3647) has been introduced in the U.S. House of Representatives by Representative Peter Deutsch, whose Congressional District includes Pumpkin Key.

Allow me to provide the Committee with some background on the time frame and physical development of Pumpkin Key. Mr. Berry personally bought Pumpkin Key in 1973 as a retirement residence for himself and his family. In 1974, he hired the Miami engineering firm of Connell, Metcalf & Eddy to start the planning, engineering and permitting of Pumpkin Key. At the time of the purchase, Pumpkin Key was zoned GU-1, one residence per acre or 25 residences for the property. By 1976 it was quite obvious that, to secure the necessary permits at the Federal, State, and County level it was going to take considerably more time and expense than Mr. Berry originally contemplated. So, at that time, he sold one half of the property to Terra Cotta Realty Florida, which is a private real estate investment company owned by the Berry family.

In 1980, we received the last of our permits and started construction of the subaqueous utility line as well as on a private residential twenty slip concrete dock. Those permits were from: (1) at the Federal level, the U.S. Corps of Engineers, Jacksonville, Florida; (2) at the State level, the Florida Department of Natural Resources and the Florida Department of Environmental Regulation; and (3) at the local government level, the Monroe County Department of Building and Zoning, the Monroe County Department of Growth Management, and the Monroe County Commission.

In 1981, again because construction costs far exceeded the original estimates, Mr. Berry sold the balance of Pumpkin Key to Terra Cotta Realty Florida. The site plan that had been approved called for sixteen lots of one acre or more and three caretaker apartments. The first caretaker moved onto Pumpkin Key in June of 1983. On March 7, 1984, Mr. Berry and his wife moved into their residence on Pumpkin Key -~ a full ten years after the original purchase of the property.

At this point, I would like to provide the Committee with a brief chronological outline documenting the development of Pumpkin Key.

1974 - 1978 Negotiations were held with the Ocean Reef Club, Inc. for the purchase of a right of way on their new development of Snapper Point to install underground power, telephone cable, and a four (4') inch private water line to serve Pumpkin Key. At that time, The Ocean Reef Club was the only source of potable water on North Key Largo (See Exhibits A & B).

1980 - 1981 The subaqueous utility crossing was constructed bringing water, electric power and telephones to Pumpkin Key from Ocean Reef Club property on Snapper Point. This comprised of two four (4") inch water mains, two (2) 13,800 volt electric lines and a one hundred (100) pair telephone cable. An additional four inch (4') line was installed to handle future wastewater disposal in the event public sewers became available in North Key Largo. During this period the twenty slip double "L" private residential concrete dock was installed (See Exhibits A & B).

1981- 1982 Construction of cart paths and distribution of utilities to each of the sixteen residential lots (See Exhibit C).

1982 - 1984 Construction of caretaker's residences, dock house, the residence and two tennis courts, beach area, and three breakwaters (See Exhibit D). The two tennis courts, constructed in 1983, are not just designed for recreational purposes; they are also designed to function as a heliport for emergency medical evacuation.

The subaqueous line provides 13,800 volt primary electric power, the voltage of which is stepped down via ten transformers spread throughout the island. The step-down transformers provide 440, 220, and 110 volt electrical service to all of the original 16 permitted lots. Water and telephone service has also been extended to each lot. The utility system and island-wide electrical grid were fully operational by 1983, well before Pumpkin Key was added to the CBRS in 1990. Also in 1978, Terra Cotta received county, state, and federal approval to construct a beach area, a 20 slip multi-residential docking facility, and breakwaters to protect the dock and beach area. The dock facility provides dock space for each of the 16 lots and building sites. Access to Pumpkin Key is provided from a private marine basin facility located at Ocean Reef Club, North Key Largo, Florida. The basin, located 1,300 feet across the water from Pumpkin Key includes docking facilities, a garage for cars and golf carts, and a guest house for Pumpkin Key. Here again, these facilities were completed and fully operational before Pumpkin Key was added to the CBRS.

In 1986 Monroe County was rezoned and although the approved plat filed and accepted in 1980 by the county was in full force and effect, the Island was rezoned O.S. (offshore island) -- one residence per 10 acres when there were already four residences on the property existing from 1983. In light of this rezoning in 1986 we immediately filed for a vested rights hearing in Monroe County. The hearing was held in 1989, in Key West, Monroe County, Florida. The hearing of ricer found as a matter of both law and fact that the site plan was grandfathered and our right to develop fifteen additional residential lots was a vested right. This finding of the hearing officer was upheld and approved by the Monroe County Commission in January 1990.

Due to the fact that the State of Florida, Department of Community Affairs, had put Monroe County under its control as an area of critical State concern and had frozen all zoning, Pumpkin Key was and still is zoned as an offshore island. So, to protect our vested rights for sixteen residential lots on Pumpkin Key, we started negotiations in 1993 with Monroe County and the Florida Department of Community Affairs. We sought a development agreement to provide us with ten (10) years to build on the remaining fifteen (15) residential lots. The results of these negotiations were that we gave up twenty five percent of the vested rights to the sixteen (16) residential lots, leaving twelve (12) with a balance of eleven (11) to be built out and placing some eight (8) acres of Pumpkin Key in a private conservation area that can never be developed. This development agreement was signed by all parties on January 13, 1995, and approved by the Monroe County Commission by unanimous vote in January 1995.

We had no more than completed our development agreement than we were advised by the FEMA representative for Monroe County that the new CBRS map and the FEMA map showed Pumpkin Key in the CBRS, which means that a homeowner cannot secure flood insurance for a residence on Pumpkin Key and without flood insurance it is just about impossible to secure mortgage money. This notification was the first knowledge we, or Monroe County, or the State of Florida Department of Community Affairs had of this inclusion. Mr. Chairman, the debate here today is not about the National Flood Insurance Program. We have to comply with the Federal and State regulations as they currently exist, which mandate insurance to qualify for lending approval.

In 1996, after being contacted by representatives of our company, the Fish and Wildlife Service undertook a comprehensive review of the Pumpkin Key situation. On January 28 of this year, the Director of the Fish and Wildlife Service wrote to Congressman Deutsch indicating that "Pumpkin Key met the requirements to be considered developed at the time of the passage of the Coastal Barrier Improvement Act in November 1990." What this means is that Pumpkin Key should not have been included in the Coastal Barrier Resources System to begin with and the Service admits that had they known then what they know now, Pumpkin Key would not have been included in the CBRS FL-35. The bill introduced by Senators Graham and Mack would correct that error.

More specifically, the Fish and Wildlife Service letter states that Pumpkin Key had a "full complement of infrastructure" prior to 1990. A full complement of infrastructure is defined under Fish and Wildlife Service guidelines to include water supply, waste water disposal, electricity, and paved roads or docks. The Fish and Wildlife Service states that their review "clearly demonstrates a high level of infrastructure development prior to 1990." They noted the presence of electricity, water, and waste disposal capacity for every building lot on the island, as well as the paved cart paths and docking facilities. The paved cart path exceeds two miles in length. Since the island is only 25.6 acres in size, there is no need for roads or automobiles on Pumpkin Key. In fact, on an island the size of Pumpkin Key, a road or more expansive street system would be environmentally intrusive. Under the guidelines applied by the FWS the extensive docking facilities provide the necessary transportation access to and from the island.

Earlier this year, on May 19, the Subcommittee on Fisheries, Wildlife and Oceans of the House Resources Committee held a hearing on Congressman Deutsch's counterpart bill_H.R. 3647. We were very pleased with the positive reception that we received from the House Committee at that time. Subsequently, along with two other non-controversial FWS-supported properties, the Pumpkin Key correction was included in the Department of Interior FY 1999 Appropriations bill (H.R. 4193) which passed the House on July 23.

Mr. Chairman, before concluding, there is one other item I would like to quickly discuss. Some have alleged that Pumpkin Key is a "mangrove island". But the fact is that Pumpkin Key is an elevated island of limestone base which is covered primarily by tropical hardwood hammock. Only a small portion of Pumpkin Key has mangrove (approximately 1.6 acres), which we preserved through a voluntary, but binding covenant on the approved site plan in 1980. Subsequently we further set aside an additional 8 acres in a private conservation area as part of our development agreement entered into between Terra Cotta Realty, Monroe County, and the Florida Department of Community Affairs in 1995.

CONCLUSION

So, prior to 1990, Terra Cotta Realty had undertaken extensive capital investment in Pumpkin Key, totaling more than $5 million in development funds. We believe that all of the above facts clearly demonstrate that Pumpkin Key was, in fact, developed prior to its mistaken inclusion in CBRS in 1990.

Under the statute, only undeveloped coastal barriers were and are to be included in the System. The facts show, and upon review the Fish and Wildlife Service agrees, that at the time that Pumpkin Key was added to the System it was already developed. Consequently, we are not asking for any kind of special exception; rather, we are asking for the law to be applied appropriately in our case. The enactment of S.2470 would be fully consistent with both the spirit and the letter of the Coastal Barrier Resources Act.

Mr. Chairman and members of the Committee, we greatly appreciate the opportunity to provide the Committee with the facts in this case. We believe that these facts reflect that Pumpkin Key's inclusion in CBRS was an error. This position is supported by the Fish and Wildlife Service which, after an exhaustive review of the facts in this matter, concluded that the addition of Pumpkin Key to the System was not correct. Director Rogers' letter to Congressman Deutsch states that the removal of Pumpkin Key from the System is a "valid technical correction that the Service and Department can support." We ask your support in enacting the legislation (S.2470) introduced by Senator Graham, which would implement that recommendation. Thank you, again, for this opportunity to testify here today.