Monday, June 24, 2024

City Council vote is latest step in paving the road for Wrightsville Ave ‘Galleria’ project

This week Wilmington City Council will vote to designate a development zone for the Wrightsville Avenue ABC store property, which was recently annexed into the city. It's part of a much larger, longer, and more expensive process, designed to bring a major mixed-use development to fruition.

This week Wilmington City Council will vote to designate a development zone for the Wrightsville Avenue ABC store property, which as recently annexed into the city. It's part of a much larger and longer process, designed to bring a major mixed-use development to fruition. (Port City Daily photo | Benjamin Schachtman)
This week Wilmington City Council will vote to designate a development zone for the Wrightsville Avenue ABC store property, which was recently annexed into the city. It’s part of a much larger and longer process, designed to bring a major mixed-use development to fruition. (Port City Daily photo | Benjamin Schachtman)

WILMINGTON — This week City Council will vote to create the initial zoning for the property containing the Wrightsville Avenue ABC store. It’s the latest step paving the way for the “Galleria” mixed-use development — the process will cost residents hundreds of thousands of dollars but Wilmington hopes it will reap future benefits in property tax.

Named for the Galleria shopping center which used to occupy the site, the development has not yet been formally proposed by landowner and developer State Street Companies. Nevertheless, preparing the property for the potential project has required numerous interlocal agreement, two acts of state legislation, and – depending on who you ask – anywhere from hundreds of thousands to millions of dollars.

This week’s city council vote

On Tuesday, City Council will vote to create a zoning for the property, which State Street Companies purchased from the ABC Board last year, because it’s just recently become part of the city; it was transferred from Wrightsville Beach to Wilmington by an act of the North Carolina General Assembly at the end of June. City Manager Sterling Cheatham has recommended the area be zoned Urban-Mixed Use, to allow it to be developed as part of the Galleria project.

Both the reasoning for and the process of the ABC store transfer is complicated – and you can read a full account of it here – but it essentially stemmed from a 2017 request from Jeff Kentner, president of Charlotte-based State Street Companies. With the coordinated actions of the General Assembly, New Hanover County ABC Board and Board of Commissioners, Wilmington and Wrightsville Beach the ABC store will be demolished and rebuilt about a quarter of a mile down the road on the former site of a mobile home park, out of the way of the planned development’s footprint.

The cost to move the store will be about $3 million, which will come from taxes paid by liquor store customers. The ABC Board has denied that the expenditure – several times more than the worth of the current store – is in any way a “benefit” to Kentner or State Street Companies, although the move was initiated by the developer’s request.

In any case, the ABC store relocation is only the latest move by local government to facilitate the State Street Companies project.

History of the “Wrightsville Galleria” project

The 12-acre Galleria property was annexed into Wrightsville Beach in 1985; the following year the Galleria shopping center was constructed. The center floundered after anchor tenant Harris Teeter left and the mall was demolished in 2012. The following year, State Street Companies bought the land.

State Street Companies proposed a mixed-use development on the site, as well as the neighboring property on Airlie road — where the Airlie at Wrightsville Sound project is already underway. However, Wrightsville’s zoning ordinances would not allow mixed-use development; the town would only allow commercial use, like the Galleria, and would not consider apartments or townhomes.

So, State Street Companies petitioned the City of Wilmington to transfer the land, de-annexing the property from Wrightsville and annexing it into Wilmington. This included most of the Galleria site — but not the ABC store, which would stay in Wrightsville Beach; that would get dealt with several years later (this week’s council vote being part of that).

As for transferring the rest of the Galleria site, Wrightsville got to maintain its zoning ordinances, but the property transfer would deprive the town of considerable property tax base, money that would now go to Wilmington.

In the interest of bringing long-term tax revenue into Wilmington, the city agreed to compensate Wrightsville Beach.

Economic incentives

Page 91 of Wilmington's proposed budget for fiscal year 2018-2019, listing current economic incentives. (Port City Daily photo | Courtesy City of Wilmington)
Page 91 of Wilmington’s proposed budget for fiscal year 2018-2019, listing current economic incentives. (Port City Daily photo | Courtesy City of Wilmington)

As part of an interlocal agreement, made in June of 2014, Wilmington agreed to pay Wrightsville Beach $778,896 over 29 years. Although the agreement is not framed as an incentive and the money is not a direct payment to the developer, it is included in the city’s annual budget as an economic incentive, alongside more traditional incentive payments to companies like Live Oak Bank and PPD.

The first four annual payments were made in $7,224 installments every July 15 from 2015 to this year. Starting next year, Wilmington is scheduled to start paying $30,000 annually, through 2043 — the increase is designed to match the expected increase in property value as State Street Companies begins development.

Relocating the ABC store

Because of the way the various shareholders in the Galleria project decided to proceed, the current ABC property was transferred to Wilmington before a new store was built. That means that revenue from that store now goes to Wilmington, not Wrightsville Beach.

So, as part of a second inter-local agreement between Wilmington and Wrightsville Beach, this one signed in August of 2017, Wilmington again agreed to compensate Wrightsville Beach for lost revenue. Under the agreement, the city will pay back to Wrightsville Beach the revenue from the ABC store until the new store – located on Wrightsville Beach property – is completed.

This is money that the city would not otherwise have received, so it’s not considered a cost. However, should the city be late with its payments, it’s contractually obligated to pay a 4-percent late fee; based on the 2017-2018 fiscal year revenue from the Wrightsville store, that 4 percent of $650,000, or about $26,000.

What’s next?

According to the ABC Board, an architect has been hired and a request for qualifications – a formal announcement that the Board is looking for a construction firm – was put out last year. The Board has about five years to complete the new store.

According to the 2017 agreement between Wilmington and Wrightsville Beach, if the store isn’t constructed by June 30, 2023, the city and town are required to jointly ask the General Assembly to reverse the property swap, which would likely impact State Street Companies’ development considerably.

As for Galleria project itself, while the neighboring project on Airlie Road has broken ground, the city’s planning department has yet to receive any formal proposal from State Street Companies for the site.

According to draft versions of a TIA for the planned - but not yet officially proposed - Galleria project, the development would include a hotel, two restaurants, a movie theater or entertainment venue, office space, and over 200 residential units. (Port City Daily photo | Benjamin Schachtman)
According to draft versions of a TIA for the planned – but not yet officially proposed – Galleria project, the development would include a hotel, two restaurants, a movie theater or entertainment venue, office space, and over 200 residential units. (Port City Daily photo | Benjamin Schachtman)

However, according to draft versions of a Traffic Impact Analysis (TIA) emailed to the city, the Galleria project includes a hotel, a movie theater or entertainment venue, two restaurants, office, retail, and residential. The draft suggests the hotel will have around 90 rooms, and the residential part of the project will include around 225 units (the TIA doesn’t indicate whether these will be townhomes, apartments, or a combination of the two).

Wilmington and Wrightsville Beach: Galleria land-transfer 2014 by Ben Schachtman on Scribd


Send comments and tips to Benjamin Schachtman at ben@localvoicemedia.com, @pcdben on Twitter, and (910) 538-2001.

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