Plans for the redevelopment of the Water Street Parking Deck are beginning to move forward after a public hearing on the purchase and development agreement for the project was held during last week’s Wilmington City Council meeting.
Terms of the deal include selling air rights and leasing land to Water Street Ventures, a limited liability company created by East West Partners, the firm selected by city council in 2015 to develop the site. It will be turned into a mixed-use space, with 170 residential units (both condominiums and apartments) in two 13-story towers, 409 parking spaces and 25,633 square feet of retail, restaurant and bar space.
Appraisers hired to assess values for the sale priced the air at $0.294 cents per cubic foot, making the total cost of air (anything over 14 feet) over the property $2,150,000. However, the developers would only have to pay for the air they fill with their project – which will be capped at the city maximum of 132 feet – making their cost just over $1 million for 3,453,532 cubic feet. The land will be leased at the price of $1.50 per square foot, or a total of $48,552 a year, during the 50-year lease, which has the option to be extended for 49 years after that.
According to the agreement, the Water Street Ventures’ preliminary contributions to the cost of the public-private development totals $55.8 million, or about 74 percent of the total cost. The city’s input will be $19.7 million, or 26 percent, and according to the documents is not to exceed $20.7 million. By state statute, the city cannot pay more than 50 percent of the project.
“We’re well under that,” said Deputy City Manager Tony Caudle.
The city will pay for the demolition of the parking deck as well the relocation of the on-site utilities, access to public areas and enhancements to neighboring Grace and Chestnut Streets. In addition to the costs of air and land, Water Street Ventures will pay for a public plaza on the third level of the development, an extension of the existing Bijou Park and a bridge that will connect the two residential towers. Both parties will share construction costs.
Negotiations on the purchase and development agreement, a document that totals over 150 pages, began in February 2015. The memorandum of understanding adopted at that time was extended three times to allow for lawyers and officials on both sides to work out the details.
“We’ve had to delay bringing this proposal forward in hopes of getting something together that everyone could support,” Caudle said.
The city has been trying for years to redevelop the two-story utilitarian parking structure located between Grace and Chestnut Streets, a prime downtown location. Officials hope the project will remove an eyesore and revitalize an under-utilized portion of the downtown riverfront, particularly on Water Street.
Preliminary plans show the majority of the retail space located on the ground level along the streets. Unlike the current deck, which is open with all the parking spots exposed, the parking areas of the new development will be hidden on the interior of the structure, with the river-facing residential units wrapping around them.
“It activates a commercial street front that currently has very little activity other than parking,” Caudle said.
“This is an important economic development initiative for downtown Wilmington,” said Ed Wolverton, president and CEO of Wilmington Downtown, Inc. “I think that everyone will agree that this a special site and that it can be so much more than what it is today.”
Mayor Bill Saffo and five of the six council members agreed, voting in favor of approving the agreement. The lone dissenter was Councilman Paul Lawler, who conceded that the proposed development would be better than the current structure, but voiced concerns about costs and using taxpayer money.
“I must admit the [proposed] Water Street deck has its merits. It eliminates the existing parking deck, which is an eyesore for Wilmington – we can all agree on that,” Lawler said. “But unfortunately this public-private partnership fails to offer enough for the public.”
Lawler noted that the city will have to raise the ad valorem tax rate by a penny to help cover costs in addition to using revenue garnered from property taxes, the sale of the air rights, the leasing of the land and money made from paid public parking.
“Still, with all of this, there will likely be a shortfall that taxpayers must cover,” Lawler said. “Ultimately, this is a question of options. What is the best use of the city’s money? What do we pay for? There are plenty of needs in Wilmington, and there are better uses for this money than investing in this project.”
Lawler also voted down the motion to wave the second reading of the item, meaning it will be heard again at the council’s next meeting on July 19.
If the deal is closed on then, developers have 120 days to put together final plans, a schedule and budget to present to the city.