WILMINGTON—One year after an “unusual request” from a developer, the New Hanover County ABC will spend nearly $3 million to build a new store as part of land-swap deal to make room for a mixed-use project on the former Galleria site on Wrightsville Avenue.
An ‘unusual request’
The request came from Jeff Kentner of Charlotte-based State Street Companies, in the hopes of connecting several plots of land into one mixed-use development including residential, hotel, business, and restaurant spaces.
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The problem for State Street’s development, known as The Airlie and Wrightsville Sound, was that the ABC store on Wrightsville Avenue interrupted the ideal footprint of the project; further complicating the issue is the fact the ABC store sits on a satellite parcel of Wrightsville Beach land.
State Street’s solution, relocating the ABC store, was far from simple and required numerous moving pieces, including both Wilmington and Wrightsville Beach, as well as the county and state.
The first step was finding a new location. State Street suggested the former Melrose mobile home park, which was rezoned by Wilmington City Council in November of 2016. Established in the late 1960s, the park was part of property annexed into Wilmington in 1999. The mobile homes were grandfathered into their new Wilmington residential zone – which doesn’t permit mobile homes – but their “non-conforming status” was noted by staff in the rezoning request.
The next step was to move the ABC store, currently located at 6730 Wrightsville Ave, about a quarter of a mile down the road to 7000 Wrightsville Avenue.
Because the ABC store is the only one dispensing profits directly to Wrightsville Beach, the city of Wilmington would be required to make up for the shortfall of the average income from the store – which in the 2017-2018 fiscal year was about $650,000.
The two properties would have to be swapped between the two municipalities, as well, so that the new store would remain in Wrightsville Beach. The current ABC store property would be de-annexed from Wrightsville Beach and into Wilmington, and the future site de-annexed from Wilmington and into Wrightsville Beach – acts that require the approval of the North Carolina general assembly.
The final step was to convince the ABC store to agree to pay for the construction of a new store, a cost of about $2,900,000. Although State Street Properties agreed to credit ABC the value of the current building and land – about $740,000 – in the land swap, it did not offer to pay for the new building.
Eventually, State Street Companies won over the ABC. By the time the measure came before Wilmington City Council, according to Sterling Cheatham, State Street’s complicated request was considered “an unusual measure, but one that has been endorsed by the New Hanover County ABC Commission.”
ABC Board was initially resistant
According to New Hanover County ABC Board Member Bruce Shell, the ABC initially rejected an offer to buy the store outright. Even with the property swap offer that followed, there was still some hesitation.
“Initially there was some resistance from the board on it,” Shell said. “We had a store, the store was fine and we didn’t feel we needed a new one.”
Apparently, the county and City of Wilmington prevailed upon the board to reconsider.
“It was a project the city and the council looked on favorably, in terms of the economic development of the area,” Shell said.
The ABC Board decided that, if a new store should be built it should address what it saw as increasing demands on the Wrightsville Avenue location, although rebuilding a similar store would have “been a whole lot less,” Shell said. According to CEO Marnina Queen, difficulty in keeping the location stocked, due to the “small size of not only the store and the warehouse,” was the main issue.
Shell said the financial burden of the relocation, which fell on ABC, was still an issue. Even with the credit from the existing store, the projected 2018-2019 ABC budget still calls for $2.2 million to build the new store.
“It would give us an improved location, but it’s still going to cost a significant amount of money,” Shell said.
That money would have to come from ABC’s general fund, which comes directly from store sale profits.
“Where’s the money gonna come from? It’s gonna come from our fund balance – the New Hanover County ABC fund balance. Where does the fund balance usually go? Well, it’s there to support the operation of the stores with working capital, but beyond that, it’s used to build stores or in some cases give an additional profit distribution to the local governments,” Shell said.
In other words, money for building the new store – which the ABC Board was not ultimately opposed to – would come from liquor store customers, and spending it would cut into funding usually dispersed to municipalities.
According to Shell, Wilmington and New New Hanover County agreed to take the hit to facilitate the development.
“And so the city and county understood, that their future profits were somewhat limited if we spent that money on a new store,” Shell said.
At the end of September 2017, the ABC Board sold its current property – where it continues to operate – to State Street Companies, presumably under the assumption that Wrightsville Beach, New Hanover County, and the General Assembly would all approve their portions of the plan, including funding for a new store.
Who benefits?
Although the relocation plan originated from State Street Companies’ request, and not the ABC Board, Shell and Queen denied that the move was done to benefit the developer.
Asked if the ABC Board was concerned that the commission might be perceived as spending customer’s money to simply move the ABC store out of a developer’s way, Shell said that benefit to a developer was not considered, only board members’ “fiduciary responsibility” to the county ABC system.
On July 9, the New Hanover County Board of Commissioners approved the $2.9 million capital project ordinance for the new store as part of its consent agenda.
Chairman Woody White said the county wasn’t formally involved in the plan, but that — in his opinion — “the overall impact of the project to the local economy and the beautification of (the Wrightsville Avenue) corridor outweighs the short-term reallocation of ABC fund balance.”
The North Carolina General Assembly voted unanimously in both houses to approve the annexation-deannexation bill on June 26. Governor Roy Cooper ratified the bill the following day.
Editor’s note: City Documents refer to the distance between the old and new ABC store locations as a half-mile, which is the distance from the current ABC store to the rear of the new location parcel. However, the city’s 2016 rezoning vote identified that the rear of the property would be residential, with mixed-use commercial – presumably including the new ABC store – at the front of the property facing Wrightsville Avenue. Thus, the distance is about 1,300 feet, or a quarter-mile.
Send comments and tips to Benjamin Schachtman at ben@localvoicemedia.com, @pcdben on Twitter, and (910) 538-2001.
