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Wednesday, February 8, 2023

NC trend: Wilmington debates how to revitalize a key downtown block

A transformational redevelopment in Wilmington has some asking, “At what cost?”

For years, many Wilmington leaders have wanted to put a new shine on a 3-acre downtown block that includes an aging public library and parking deck and a historic former car dealership building. New Hanover County Commission Vice Chair Deb Hays, says what has become Project Grace has the potential to create a transformational learning and cultural hub to showcase the city’s rich history. 

“This is a complete revitalization of an entire downtown block, currently a blighted block, and an investment in the future of all our citizens,” she says of the property, which is owned by New Hanover County. The site is two blocks from the Cape Fear River and bordered by Chestnut, Grace, Second and Third streets.

While the effort has significant community support, some bumps in the road have emerged. One issue is the county’s decision to develop Project Grace as a public-private venture instead of a more traditional public project.

In 2018, “request for qualifications” were sent to about 1,000 entities including developers, architects, lawyers, engineers and investors. The goal was to attract lots of enthusiasm for a multiuse development anchored by a new library and relocated Cape Fear Museum of History and Science. 

“One of New Hanover County’s strategic goals is to leverage public infrastructure to encourage private investment. We began contemplating how to better serve our residents and visitors with purpose-built facilities,” County Manager Chris Coudriet says.

But the mass mailings culminated in only one full “request for proposal” that would create a public-private partnership for the project. It came from a business owned by one of Wilmington’s wealthiest families. Zimmer Development has completed more than $3 billion of projects in 140 cities. Another unnamed group showed interest but didn’t submit a proposal, Coudriet says.

Zimmer went to work, spending hundreds of hours collaborating with residents and local officials amid the COVID pandemic. Project Grace now calls for an $80 million public library and museum to replace the existing site, with the city paying Zimmer a lease of $4 million annually for 20 years.

Additionally, the developer plans 100 apartment units, a 150-room hotel and 10,000 square feet of retail space. The existing 620-space parking deck would be improved in the proposal.

All seemed to be moving ahead until August, when the N.C. Local Government Commission reviewed the county’s application for the plan. It included a clause that State Treasurer Dale Folwell deemed objectionable: If the commission didn’t approve the project, New Hanover would have to buy Zimmer’s development plans for $2.5 million. 

“When a governing body passes a resolution that hand cuffs another governing body, that raises a red flag with anyone,” Folwell says.The commission is a division of the treasurer’s office.

 Zimmer’s work on the project entailed a great expense and a lot of effort, making the agreement necessary, the company’s development director, Adam Tucker, told the LGC in August. 

When commission members asked why Wilmington city officials didn’t undertake the project by using conventional financing, Assistant County Manager Lisa Wurzbacher cited the potential for more than $20 million in property, sales and room taxes over the next 20 years because of the private ownership.

While North Carolina municipalities can arrange lower-interest financing than private developers, she said, the difference in overall costs wasn’t significant compared with the benefits from partnering with Zimmer.

The Wilmington officials presenting Project Grace to the LGC didn’t officially ask for approval, so the issue was pending as of mid-September.

Folwell remains leery, citing the $2.5 million clause and dependence on private funding. “New Hanover County is one of the most economically prosperous counties in the United States,” he says. “They can borrow money for cheaper than most. It makes me think, why do you need a partner?”

Meanwhile, other opposition to the project has arisen from the Historic Wilmington Foundation and the Save Our Main Library group. Plans call for replacing the 1926 Borst building, first used as a Chrysler dealership, and the library, which was a Belk Beery department store. That could lead to an exclusion of preservation tax credits, which include a 20% federal credit for income-producing properties, the foundation says. 

Diana Hill, who leads the library group, favors redevelopment rather than new construction. She cites the recent $44 million renovation of Durham’s downtown library. Her group attracted nearly 500 supporters.

But Coudriet says Project Grace ensures public benefits and can add housing for middle-income workers in a highly sought-after market.

The county has experience in public-private partnerships as it is redeveloping its government center with Arlington, Virginia-based Stonewater. The project, which the LGC approved in early 2021, is expected to open late this year. 

The new library will include two outdoor reading terraces, programs for children and adults, and shared multipurpose space. The museum will feature a planetarium and a theater, outdoor space and room for traveling exhibits. 

“Our library and museum staff have dedicated a lot of time and research with the project’s design team to ensure this public facility meets their service and operational needs and provides the right design for future growth and opportunities,” says Comissioner Hays. “Our team has thoughtfully considered the best use of the space to ensure that it accomplishes the county’s goals to best serve the community.”

County commissioners hope the LGC will greenlight the project, enabling construction to start next year and the doors to open in mid-2024. Officials with Zimmer Development declined requests for comment for this story.

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