DATE: Friday, September 19, 1997            TAG: 9709190992

SECTION: LOCAL                   PAGE: B1   EDITION: NORTH CAROLINA 

SOURCE: BY LANE DeGREGORY, STAFF WRITER 

DATELINE: SOUTHERN SHORES                   LENGTH:   81 lines

SOUTHERN SHORES' TOWN MANAGER RESIGNS; SHE HEADED BLUE SKY

Less than a week before town council members received a preliminary audit report about the management of Southern Shores' $2 million Blue Sky program, town manager Cay Cross submitted her resignation.

Cross, who has held the $51,363-a-year post for nine years, will step down Oct. 15.

``She did not give us a reason for her resignation,'' Town Councilwoman Diane Henderson said Thursday. Henderson has been acting as the town's administrator since Cross took a leave of absence for medical reasons earlier this month.

``We met with our auditor Tuesday. And there is no evidence of fraud or misappropriation of funds,'' Henderson said. ``We won't have the final figures of how much money Blue Sky has - or how much more it needs - until the final audit is completed, probably by early November.''

Debbie Burgess, whose Kill Devil Hills financial firm conducted the audit, was unavailable for comment Thursday.

In 1994, Cross started the Blue Sky program to help builders erect storm-resistant homes and buildings. Although federal and state money paid for most of the project, Cross managed Blue Sky's finances and administration through her Southern Shores town hall office. She received $1,000 a month from Blue Sky funds in addition to her town salary.

Blue Sky's budget is about $2.8 million. An estimated $800,000 of that came from in-kind contributions of materials and labor by local corporations and land Southern Shores donated for workers to build a storm-resistant house on.

``We're trying to reconcile the in-kind contributions with the overall budget right now,'' Henderson said.

Although Henderson serves on the town's five-member managing board, she said there is no conflict in her also acting as the municipality's administrator and chief financial officer.

In February, Cross told the town council that Blue Sky needed about a quarter-million dollars to pay its bills. The council appropriated $261,000 from its fund balance to bail out Blue Sky. So Southern Shores taxpayers had to pay that price.

Southern Shores has 1,804 permanent residents.

``All of Blue Sky's expenses were legitimate - but just went beyond the project's budget,'' Henderson said, explaining the shortfall. ``Cost overruns were the primary problem.''

Money the town kicked in probably can't be recovered, she said.

But she hopes the Blue Sky program can continue despite the storms surrounding it.

Henderson and Southern Shores Mayor Kern Pitts have applied for state and federal grants totaling $479,274 to continue the building program. Philip Letsinger, who oversees grants through the North Carolina Division of Emergency Management, said a decision probably would be made by early October. He would not predict whether the funds to continue Blue Sky will be forthcoming.

``The state has found that the overall concept of Blue Sky is very good,'' Letsinger said Thursday from his Raleigh office. ``It has produced some results to this point. And there's still a lot that needs to be done to educate the public and public officials about how to make coastal construction more hazard-resistant.

``We're looking at the existing program. And we'll monitor that in determining whether to award another grant,'' Letsinger said.

Even if Blue Sky gets the additional money, it can't be used to pay the town back.

``It will be used for new work on securing more instrumentation for the hazard-resistant house, more retro-fitting and other details,'' Henderson said. ``There's been a lot of valuable research and learning that's gone on so far. And that needs to continue.''

Town Councilman Gerald Beshens agreed. ``It's a valid project that got off to a good start. But things got off track,'' Beshens said Thursday. ``We let it get out of control. But I think Blue Sky is going to be revamped and will continue.

``I don't, however, think Southern Shores will be advancing any more money into it.''

Henderson said the town council is putting together a newsletter explaining to citizens what is going on with Blue Sky. It is expected to be mailed out before the Oct. 7 council meeting.

Potentially, Blue Sky will benefit builders and property owners across the Atlantic and Gulf coasts by showing them better ways to build homes that will withstand hurricanes, gale-force winds and storms.

Asked if it was worth $261,000 to a town as small as Southern Shores, Henderson said: ``We'll be able to figure that out in about 10 years.''

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