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Sunday, May 26, 2024

Another roadblock: LGC chair tells county ‘no’ to September vote on Project Grace financing

State Treasurer Dale Folwell suggested the county consider constructing Project Grace within two floors of the Thermo Fisher building; LS3P architects said it would be ‘impractical.’ (Courtesy Cape Fear Commercial)

NEW HANOVER COUNTY — It’s been seven years of back and forth to get Project Grace off the ground. Monday, county commissioners were informed of another setback to get its financing approved.

READ MORE: $4.6M savings: Commissioners to consider amending agreement for Project Grace

The Local Government Commission — state entity overseeing municipalities finances — said the item would not be heard at its Sept. 12 meeting, as requested by the county, despite its application submitted in a timely fashion and deemed complete. The county submitted Aug. 8, which included a $12,500 fee. 

Based on county manager Chris Coudriet’s summary of events, State Treasurer Dale Folwell — the chair of the LGC — would not calendar a vote because he did not approve of the location chosen for Project Grace. Coudriet said Folwell also told the county it should pay cash for the $57 million project, as opposed to issuing debt.

Folwell informed PCD he suggested using cash instead of debt to avoid needing the LGC’s approval.

“If they didn’t like people asking questions, they didn’t need LGC’s approval,” he said. “That’s what we’re there to do. Ask questions. The fact is, they don’t like the questions. Sometimes they don’t even like their own answers.”

Folwell declined Project Grace’s first iteration of financing last year. It never made it to a vote; one member made a motion to approve and it failed for a lack of a second.

Project Grace 2.0 was brought back to life in March with new developer Cape Fear Development at the helm, saving roughly $4.6 million from the previous iteration, according to the county.

The project is designed as a 95,000-square-foot joint library and museum in downtown Wilmington on a county-owned block bordered by Grace, Third, Chestnut and Second streets.

Folwell suggested in June during an LGC meeting — and again to county staff Friday, according to Courdiet — that the county use the first two floors of the city’s newly purchased Thermo Fisher building for the new museum and library instead of tearing down the current library to build anew. Coudriet said both he and city manager Tony Caudle agree the North Front Street campus, where Thermo Fisher is located, is not the right place for the project.

On a call with Port City Daily Monday afternoon, Folwell said it was a “fabrication” that he didn’t like the current site.

“What I’ve said was for the benefit of the taxpayers, since there are two extra floors on the PPD building: Have you thought about doing a joint venture?” he said. “It’s a gorgeous place to have it and provides free parking.”

Chris Boney, vice president with LS3P, the architecture firm that designed Project Grace, said adapting Project Grace to the Thermo Fisher building would be “extremely impractical.”

“There are technical problems that would be nearly impossible to overcome,” he told PCD, namely ceiling height and floor structure.

Boney said modern museums, and most libraries, have higher-than-average ceilings to accommodate exhibits and installations. Project Grace is designed for 18-foot ceilings. While the first floor of the Thermo Fisher building has 19-foot ceilings, the upper floors have 13-foot ceilings.

The city has designated the first floor of Thermo Fisher for public-facing services, meeting rooms, city council, and additional amenities. So Project Grace would have to fill upper floors, which Boney said would not suffice.

“The floor structure at Project Grace is enhanced to handle the greater-than-average requirements for museum and library support,” he said. “Changing the use of an office building to meet this need would require additional investigation and almost certainly significant expense.”

Commissioner Dane Scalise said during Monday’s meeting Folwell was “trending into territory” that does not align, under state statute, with his role as treasurer by suggesting a different location.

Within statute 159-53, the LGC “may inquire into and give consideration to any other matters which it may believe to have a bearing on whether the issue should be approved.”

Commissioner Rob Zapple agreed with Scalise at Monday’s meeting. 

“I just find it amazing that it’s outside of his purview on these two items that he will not come off of, despite the efforts of our staff, yourself [Coudriet], to explain to him ad nauseam, why this project should move forward,” he said. “And the viability of it.”

Scalise also noted it’s typical for businesses to issue debt for large capital projects rather than spend cash liquidity.

The New Hanover County commissioners have issued a policy to only use cash reserves for emergencies and crises. It also has a $300 million revenue stabilization fund from the hospital sale in 2021, but must require a super majority vote for the commissioners to utilize.

Coudriet noted during the meeting that, for example, during Hurricane Florence, the county doled out nearly $32 million in cash, draining the county’s fund balance to lower than 18%, the minimum amount required to be on-hand in the unassigned fund balance by county policy. The county had to wait nearly three years for the federal government to reimburse the money.

The board also retains its funds to offset the need to raise taxes when possible but sustain its services.

“You can issue debt at a rate lower than the interest earnings you’re enjoying currently off the revenue stabilization and other fund balances,” Coudriet told commissioners Monday, adding the county’s triple A bond rating would allow it to issue debt around 4% interest.

According to the application submitted by the county to the LGC, the county plans to finance $52.6 million, with nearly $4 million coming from a premium on the bond issuance. The 20-year contract will accumulate $25.7 million in interest, totaling $78.3 million paid out by the county for the build.

The LGC was created in 1931 as the authority to oversee financial decisions within city and county governments in the state to ensure none go bankrupt.

“And I would dare to say that we’re probably as far away from getting in trouble as any city in the United States,” commissioner chair Bill Rivenbark said at the meeting. “This is a personal vendetta for this gentlemen and we will do the best we can.”

Commissioner Jonathan Barfield asked about legal mechanisms that could require the LGC to vote on the matter.

“If he’s the roadblock,” Barfield said about Folwell, “I think we would have good standing in this case to take this to the next level.”

County attorney Jordan Smith said he was unaware of any local government ever suing the LGC but noted the option was not off the table. He suggested instead they appeal to the other eight board members of the LGC to add it to the agenda. 

“I’ve never said I wouldn’t put it on the agenda,” Folwell clarified to PCD. “We’re building a mosaic so citizens can see exactly how all this has unfolded.”

The county has sent a letter to Folwell and the LGC to reconsider calendaring the vote, or for the board members to put forth a motion to add the item to its Sept. 12 meeting agenda for a vote.

Port City Daily sent an email to all eight LGC members asking about their intention; no one responded by press.

Barfield said he thought Folwell’s reaction to the county’s attempts to finance Project Grace were in “retaliation for the county selling the hospital.”

“History is already being written on whether that is a good deal for that community or not,” Folwell told PCD, in regard to the hospital sale to Novant. “Every time they use the word ‘retribution,’ it’s an effort to steer people into looking in a different direction. The only direction I’m interested in is transparency, competency, and good governance.”

Attorney General Josh Stein had the final sign off on approving the hospital’s sale to Novant. Folwell’s office had no authority to intervene, though the treasurer made his opposition to the transaction known.

Last year, Folwell also released an audit on the state’s hospitals per pandemic revenue, and called them “cartels” for not offering more charity care to patients based on the amount profited.

Barfield sent an individual letter of support Aug. 17 for a vote on Project Grace’s financing in September, calling the plan shovel-ready and aligning with the county’s financial outlook. He also said construction limitations at Thermo Fisher would “impede” the vision for a first-class library and museum, maximizing visitor attendance and increasing access.

Letters of support were also submitted to the LGC from Cape Fear Sens. Bill Rabon and Michael Lee, both noting the positive economic impacts the facility could bring to the area.

The Friends of the New Hanover County Library, Library Advisory Board, Library Foundation of New Hanover County, Inc., and the Cape Fear Museum advisory and associate boards also submitted letters of support.

During Monday’s public hearing for the financing of the project, eight residents spoke, with two in opposition.

Save our Main Library founder Diana Hill made another attempt at dissuading the commissioners from moving ahead. She has been vocally resistant to the project since its inception, noting the historic nature of the two buildings being demolished — the library and 1926 Borst building — as well as the “constraining” space the new facility will offer.

The current library is 101,000 square feet, but county spokesperson Josh Smith said only about 32,400 is actively used. The Cape Fear Museum is 38,425 square feet; the combined facility will be 95,000.

“Precise square footage comparisons of the current and proposed facilities are not an accurate, apples-to-apples comparison when looking at what exists now and what is proposed because the new space is purpose-designed based on the needs of both entities versus how their spaces are now,” Smith said.

He also noted each of the current facilities have limitations based on height and floor weight capacity.

Hill’s neighbor, attorney Ed Ablard, agreed and also pointed out to commissioners the law library will shrink and be behind a computer paywall. He said it will make it much more difficult for lawyers in the area to do their jobs.

NHC Library Director Dana Conners told PCD she met with Ablard Aug. 4 about his concerns and explained Project Grace will have space for legal resources on the second floor, but not as a separate room. Outdated print resources will also be removed when transitioning to the new location, she said.

The library will continue to have internet access to legal resource databases, including a subscription to Westlaw Next — free for patrons to access from the facility’s on-site law library computers. Also available are free Gale Legal Forms, a comprehensive attorney state directory and a dictionary of legal definitions explained in layman’s terms, according to Connors.

Supporters pointed to the economic value Project Grace will bring downtown — including Wilmington Chamber of Commerce’s president Natalie English, Wilmington Downtown Inc. vice president Christina Haley, along with realtors and business people. They boasted the need to update an aging block, pointed to the cultural and educational assets it will bring the community, and the role it will take in attracting more tourism to the region.

After the construction of New Hanover County’s combined library and museum on one-half of the county-owned block, developer Cape Fear Commercial plans to purchase a 1.2-acre parcel for at least $3.5 million. The company will then invest no less than $30 million into the block privately, which could include residential units, retail, a hotel, and more.

Cape Fear Commercial partner Brian Eckel told media earlier this month the details of the private investment have not yet been sorted out and he plans to rely on the market to dictate the greatest need.

Folwell previously was displeased with the county’s desire to sell the parcel directly, as opposed to using an upset bid process. In the LGC application, county attorney Smith explains the reasoning for a private sale, first noting it is lawful to do so under the Downtown Development statute.

Authorized by the general assembly in 2017, the law allows the county to convey property pursuant to another general statute, 160D-1312, authorizing a private sale. It also allows the county to place restrictions on the property.

“The County believes it is critical to control the type of development, the minimum investment amount, and the timing of the development,” attorney Smith wrote. 

Folwell told PCD that, in private meetings with the county, staff has informed him they can put controls on deeds, regardless of the upset bid process.

“They’re constantly trying to twist words to fit their narrative,” Folwell told PCD. “When I suggest ways to do this to the benefit of the city and county taxpayers, they just roll their eyes, like I’m talking a foreign language or something.”

Spokesperson Smith confirmed to PCD, NHC’s outside bond counsel was present at a July meeting with Folwell and other county staff and mentioned “general business-type restrictions may be possible,” but controlling timing and the amount of private investment would not.

He also said the bond counsel was speaking in general terms and had not undergone the same research attorney Smith had.

“It was the county’s legal opinion at that time, and still remains the county’s opinion, that deed restrictions in a sale of public property are not permissible under the general property disposition statutes,” spokesperson Smith said.

Folwell is still reviewing the application and plans to request additional documents from the county, but he wouldn’t tell PCD exactly what more he wanted.

“There’s nothing graceful about Project Grace,” Folwell told PCD. “We will not be bullied from asking the right questions for protecting the taxpayers.”

The county also will not be invited to make a formal presentation to the LGC outlining the deal’s parameters, which has happened in the past, according to Coudriet.

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