WILMINGTON — Representatives of the City of Wilmington could soon make more property sales behind closed doors per a bill advancing in the North Carolina General Assembly, potentially increasing the city’s ability to dispense with its surplus property.
READ MORE: Downtown grocery store official, appraiser and mayor talk merits of the deal
Senate Bill 203, sponsored by Sen. Michael Lee (R-New Hanover) and Sen. Bill Rabon (R-Brunswick), is a local bill, meaning it only applies to one locale, in this case Wilmington; these bills are proposed by the legislators in the subject area and scrutiny of them by the larger assembly is rare.
Now in the House after passing the Senate on March 13, the bill would authorize the city to sell real property through private negotiation without the need to comply with article 12 of chapter 160A.
The article limits private dealings to the following circumstances:
- When the property is valued at less than $30,000
- When the property is significant for its architectural, archaeological, artistic, cultural or historical associations
- When the property is conveyed through a preservation agreement or conservation agreement to a nonprofit or trust
The bill would allow private negotiations under any circumstances, whereas deals outside the exceptions must go through public means under current law — a sealed or upset bid process or public auction. Council would still be able to use these methods if it so chooses; the bill merely adds private negotiation as another option.
In interviews with Port City Daily on Thursday, Mayor Bill Saffo and council member Salette Andrews described the current law as antiquated and pointed out other North Carolina cities have been moving to an updated process.; a similar bill to S.B. 203 has passed in Raleigh, Cary and High Point. Cary city manager confirmed to PCD the law has helped them dispense of their property.
“People want — they need — to be able to move quickly,” Andrews said. “When they find a property that suits them, and to have to go through the upset bid process, public auctions, sealed bids, it’s just not the way that modern, especially commercial real estate, is transacted.”
Andrews suggested the bidding process can be a bit bureaucratic; upset bids require a public notice and then a 10-day waiting period for accepting other bids, which starts over with each new offer.
Saffo said he has seen the upset bid process go awry in other communities as people entered into the process not particularly interested in purchasing the property but rather with the goal to ruin a deal.
“That’s why there is a reluctance on behalf of a lot of people that may want to come forward to do that,” Saffo said. “They understand that it’s going to be upset, and [they are] going to put all this time, money, energy and effort into this process, and somebody could just come in and say: ‘I’m just going to upset it for 10%’ and may not even have to wherewithal to do it.”
Though the original bidder can make a higher estimate, it can lead to a bidding war. Ultimately, it’s the goal to maximize returns to the taxpayer, but if bidders don’t have the financial means to buy the property, it could lead to the deal falling through.
Andrews and Saffo pointed to these aspects deterring buyers from the city’s 18 surplus properties, spread across downtown Wilmington. The city’s properties are being sold due to the city’s consolidation of its offices into the Skyline Center; it purchased the 12-story building and surrounding properties for $68 million in July 2023. Council has committed the revenue from surplus properties to pay down debt on the Skyline Center, which totaled $17.3 million in October 2024. The faster it can pay the debt means the less interest incurred, thus reducing impact on the taxpayer.
Also, putting the vacant properties back on the private market will help the taxpayer, Saffo said. In essence, they are added back to the city’s tax base.
Thus, in the leaders’ view, the benefit of potentially attracting more buyers through private negotiations outweighs the transparency concerns of the law change on an upset bid process.
“This isn’t a matter of we’re hiding or we’re selling something in the dark of night,” Andrews said. “It’s very public information that these properties are for sale, and there’s just very few buyers that are in the position to be purchasing these properties.”
The law change will still require some public notice and a public council vote. Notice of council’s vote must be published at least 10 days prior to a planned vote on the transaction. The notice must include:
- Describe the property involved, the nature of the interest to be conveyed, and all the material terms of the proposed transaction
- Provide the time and place of the city council meeting where the proposed transaction will be considered
- Announce the city council’s intention to authorize the transaction
The sale must be finalized by a resolution voted on by council in open session and the resolution must demonstrate the sale furthers the city’s policies or plans for the area.
“There’s seven members of the city council, and seven of us sometimes may have different pages as to what we might want to sell a piece of property for, but ultimately that the final decision comes down to us,” Saffo said, adding council is not allowed to intervene in a bidding process — the highest price wins, no matter what the plans are for the property.
Saffo said the city has, and probably will always, face more scrutiny for its ties to real estate; he, along with Charlie Rivenbark and Luke Waddell, have real estate licenses.
The mayor pointed out they are outnumbered by council members who have other occupations and council has turned down “many deals” they didn’t think were right for the community.
“I can assure the public that we want the highest and best price for the property,” Saffo said. “We also are looking for ways to enhance our community by things and goals and objectives at the city through its planning process … and at the same time be able to work with viable developers that we know can do the deal.”
He added private negotiations could also foster more deals, such as the bid that took place late last year to bring a downtown grocery store to 305, 315 and 319 Chestnut St. S.B. 203 stipulates the city could solicit bids or written proposals for private deliberation, which could include site or development plans.
A municipality could make the sale contingent upon a rezoning of the property and place restrictions on the property, as done in the grocery store deal. However, the grocery idea had to be stimulated from the developer who submitted an upset bid, as required by the current law.
The three Chestnut properties were sold — in a public upset bid process — on the condition the property be used for a grocery store for at least 10 years. This stipulation was put forth willingly by the developer Cape Fear Holdings, managed by Cape Fear Development partner Vin Wells. Council member Rivenbark is the senior vice president at the company’s real estate arm, Cape Fear Commercial; Rivenbark told PCD he did not have any conversations with the development group preempting their bid of 305 Chestnut St.
Though the grocery store restriction potentially prevented a bidding competition that could drive the price up, the city hailed the $1.7-million transaction as a public good. Downtown Wilmington has long been considered a food desert, where 33% of an urban area’s population is more than one mile from a grocery store.
“If I’m negotiating with a developer that I know is gonna bring us a good grocery store, are we willing to take a little bit less to bring that grocery store downtown?” Saffo rhetorically asked, following up the council would consider it.
The mayor added there are other foreseeable needs downtown the surplus properties could possibly be steered toward — hotel space, retail, affordable housing.
“There’s a litany of different things that downtown is going to need in the future and how that is developed is going to be critically important,” Saffo said.
Reach journalist Brenna Flanagan at brenna@localdailymedia.com.
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