WILMINGTON — As the city looks to offload properties no longer needed since the purchase of the 12.5-acre Thermo Fisher campus, council members questioned staff’s approach bidding parcels at an agenda review Monday.
READ MORE: City officially takes ownership of downtown Thermo Fisher campus
ALSO: Is $68M a fair price for city purchase of Thermo Fisher building? LGC hears city’s pitch
One council member said their instructions were being ignored entirely, while others disagreed with the guidelines staff put forth for the sealed bid process.
One thing apparent from the meeting: As the city is starting to sell off nine properties, the gained taxes won’t cover what’s being lost — taxes paid by Thermo Fisher to the county. The potential taxes from the surplus property sales will equal less than one-third what the North Front Street building was bringing in.
The goal for the city in purchasing the downtown 12-story building was to consolidate city departments currently spread around town in more than a dozen different buildings — police, fire and maintenance operations will not relocate. Once staff moves into the new office building — timeline has yet to be determined — the other properties will be sold.
Deputy city manager Chad McEwen told the Local Government Commission in June the nine parcels city council voted to surplus in February could bring in nearly $20 million of potential revenue.
City economic development director Aubrey Parsley has grouped the properties into six categories, all to be sold at market rate.
- 305, 315 and 319 Chestnut St. (69,874 square feet)
- 115 N. Third St. and 210 Chestnut St. (39,92 square feet)
- 414 Chestnut St. Ste #2 (N/A)
- 302 Willard St. (9,800 square feet)
- 1702 Burnett Blvd. (239,189 square feet)
- 1502 Wellington Ave. (20,790 square feet)
Add in the two vacant tracts that flank the Thermo Fisher building — a combined appraised value of $21.7 million — and the city could be adding nearly $83,700 back into collected property taxes by next fiscal year, based on New Hanover County’s 2023 tax values for the 11 properties. The $71.7 million tax assessed value — around $283,215 in taxes — for the Thermo Fisher campus will come off the tax roll, now that it’s city owned. Therefore the new taxes coming in will not cover those lost by the Thermo Fisher building. City-owned buildings do not pay property taxes.
City spokesperson Jerod Patterson said the Thermo Fisher campus will remain on the tax roll until Jan. 1, 2024 and will not have an impact on tax payments until fiscal year 2025. The surplus properties will roll onto the tax rolls at the same time, after being sold.
“The values of those properties will grow significantly once they are developed to their highest and best use,” Patterson said.
Surplus properties will all be sold “as-is,” according to Parsley.
The goal for the city is to use profits earned from the multiple property sales to pay down the debt owed on the $68 million N. Front Street campus purchased last month.
Parsley told council that staff recommends using an upset bid process — as opposed to sealed bid or public auction — to control the timeline and information disseminated. He also suggested using the appraised values of the buildings as a starting point for bidding, which was met with opposition from council members — many of whom are involved in real estate.
Council member Margaret Haynes was the first to indicate it could lead to an undervalued offer and suggested not including the appraised value in the bid.
Parsley said it might make sense for high-demand properties, such as 1021 N. Front and 115 N. Third streets.
“I would think the opposite,” Haynes said. “If it’s in high demand, why put a low ball price on it? Come on.”
Council member Charlie Rivenbark agreed and also reminded staff these properties would be sold to the private market, as opposed to another municipality, meaning there are less restrictions for a potential future buyer.
“Most of these are trophy properties sitting on the 50-yard line,” he said. “We want to sell them, but we ain’t gonna give them away.”
For example, 1110 Castle St. was sold April 4 in a sealed bid process. Without any indication of asking price, one bidder offered $10,000 and the approved purchase was for $867,500. Council wants to leave the sealed bids open-ended to let bidders determine what they think the value is.
Once the window for bidding closes, the city can either accept the highest offer or reject them all. Parsley also said the city is able to take the second-highest offer if the first one were to back out before closing.
Rivenbark didn’t like that either.
“Sealed bid works, but we don’t need to say if this doesn’t work, let’s go to the next highest,” he said.
While the surplus properties are fairly straightforward sales, the vacant parcels surrounding Thermo Fisher come with specific covenants, a point Saffo wanted to make abundantly clear to the public.
“The city has a say in respect to the architectural control on what the project will look like,” he said. “I want to make sure that’s definitely clear. I do not want someone to say, ‘I didn’t know.’”
City manager Tony Caudle said the limitations are tied to the property for anyone undergoing due diligence. He also said staff will release a prospectus, similar to when searching for a developer of River Place, to include all the restrictions associated and what the city would prefer to see built.
“We want the highest and best use,” Caudle said. “But it would have disclosures on it.”
If someone’s spending the money to buy the property, appraised by at least one firm at more than $10 million, Rivenbark said he doesn’t anticipate the buyer just “throwing something up willy nilly.”
Parsley suggested the sealed bid packet for 1021 N. Front St., adjacent to Thermo Fisher, could be ready for council vote as early as September. It caught council member Neil Anderson off guard.
“I feel like we had a meeting in here two weeks ago and we gave you some pretty explicit instructions,” he said to Parsley. “Are you going to have all that done by September?”
Anderson was referring to council’s interest in using that parcel for potential handicapped parking for Live Oak Bank Pavilion, handling issues with ingress and egress to the venue and moving the lay-down yard.
“If you all missed that, I’m going to have to print it in bold or something,” he said. “I don’t know how that wasn’t heard.”
Caudle clarified city staff had a meeting Monday to discuss those very items. The team will be gathering on the parcel to look at potential ADA parking, as well as increasing access from the concert venue on Nutt Street.
“What I meant to say, councilman,” Parsley said, “given the information on that property we have today, that action could be ready as early as September, but it does not need to be.”
Anderson then turned to deputy city manager Thom Moton.
“You have notes on this; can you convey them to the city manager and everybody on staff?” he said. “And get everybody on the same page?”
Anderson was clear he wants to sell it but also stood firm more work was to be done: “But this is not first, unless you all are magicians.”
Parsley agreed to delay the sealed bid for 1021 N. Front St.
The first two properties to be released for sale would be 115 N. Third and 210 Chestnut streets — purchased by the city in April 2022 for $11.2 million — across the street from Thalian Hall. Located in the central business district, Parsley estimated bringing the sealed bid package to council for a vote Sept. 5. It would remain open for 45 to 60 days.
The next three properties — 414 Chestnut St., 302 Willard St., and 1502 Wellington Ave. — would be brought before a council vote Oct. 3, before opening for sale.
The remaining properties are still to be decided on a future date.
Parsley anticipates each property could take at least six months to sell, from the time each property is advertised for a sealed bid until closing.
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