Thursday, August 18, 2022

Galleria developer won’t build project Wilmington wants without millions in Wrightsville Avenue improvements

Wilmington has already dedicated over $750,000 in taxpayer dollars, and millions in ABC store taxes, to move the project along. But what the developer is asking for now will likely dwarf that expenditure.

A dramatic overhaul of nearly a mile of road along Wrightsville Avenue will likely cost millions; developer Jeff Kentner has essentially told the City of Wilmington these improvements are a 'pre-requisite' for the long-awaited Galleria project. (Port City Daily photo / City of Wilmington)
A dramatic overhaul of nearly a mile of road along Wrightsville Avenue will likely cost millions; developer Jeff Kentner has essentially told the City of Wilmington these improvements are a ‘pre-requisite’ for the long-awaited Galleria project. (Port City Daily photo / City of Wilmington)

WILMINGTON — The developer of the long-planned Galleria project submitted a Traffic Impact Analysis to the city at the end of the year. But instead of simply laying out the project’s potential impact on area traffic, the analysis opens with a clear message: the city of Wilmington is not going to get the project it has spent several years, and hundreds of thousands of taxpayer dollars, working towards.

Not without spending several million more, that is.

The Traffic Impact Analysis (TIA) submitted by developer Jeff Kentner and State Street Companies includes a preface, which cites Wilmington’s Comprehensive Plan and the city’s 2010 “complete streets” policy.

“The Comprehensive Plan characterizes “mixed-use” development as pedestrian-friendly communities that provide a wide range of daily-life services within a short walking distance as a way to reduce motor vehicle trips. A complete street, or multimodal transportation network, which includes sidewalks, bike lanes and transit facilities, is a prerequisite to mixed-use development as non-vehicular modes of transportation are an essential component of mixed-use communities,” the TIA states.

The TIA concludes with a message that states that Wilmington must deliver these improvements to Wrightsville Avenue, between Military Cutoff Road and Eastwood Road, before State Street will move forward.

“In this case, the developer has taken the appropriate steps to (i) assemble the acreage required to facilitate the recommended land use and (ii) effectuate the zoning changes required to develop a notable mixed-use project. In order for the mixed-use project to be developed, multimodal transportation improvements to Wrightsville Avenue are required,” the TIA states.

According to city emails, Wilmington has been in preliminary discussions with State Street for some time about the Wrightsville streetscape project, but nothing formal has emerged. Unlike the neighboring mixed-use projects on Military Cutoff, CenterPoint and The Avenue, the Galleria project has no conditions on its land use.

After annexation from Wrightsville Beach, the new Wilmington land was initially zoned urban mixed-use, meaning no rezoning or conditional use permits are required for State Street to build, and so there haven’t been any requirements to perform any road improvements.

In November, Kentner said in an interview with the Wilmington Business Journal that time was “running out” on the Galleria site – which has sat largely untouched for five years — without some kind of agreement with the city to build the road improvements.

Kentner suggested — some would say threatened – that State Street could easily scale back plans for the site from including apartments, restaurants, a hotel, and retail, to a basic apartment complex; this could potentially generate less tax revenue for the city of Wilmington and, in short, would not be the project that city has gone to such notable lengths to bring to fruition.

Wilmington’s efforts to get Galleria built

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 voted this year 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)

The City of Wilmington has been involved with the Galleria project since early on, and has taken several major steps to facilitate the development since Kentner and State Street Companies purchased the land in 2013.

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

Initially located on one of Wrightsville Beach’s mainland parcels, Kentner proposed a large-scale mixed-use development that conflicted with the beach town’s zoning; Wilmington arranged an annexation deal.

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 following year, State Street workers cut down a number of Oak trees on the property without a permit, and Wilmington’s code enforcement office fined Kentner and State Street $13,000. Shortly afterward, Mayor Bill Saffo proposed a closed-door settlement that would waive the fine — a deal that, at least in part, stemmed from the city’s desire to see the project move forward without a hitch.

This past summer, Wilmington oversaw the removal of the final roadblock, or at least, what appeared to be the final roadblock. Admitting it was an “unusual request,” Wilmington spearheaded a complicated and costly effort to move the Wrightsville Avenue ABC store about a quarter-mile east down the road, to make room for the Galleria Project. The $3 million project involved the cooperation of Wrightsville Beach, Wilmington, the ABC Board, and the General Assembly, which had to approve the de-annexation and re-annexation of the properties to make sure the new store would also sit on Wrightsville Beach land.

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 Kentner’s request.

How much of the cost will taxpayers cover?

State Street Companies' TIA requests about a mile of road improvements, including a roundabout, new signals, sidewalks and bike paths. (Port City Daily photo / City of Wilmington)
State Street Companies’ TIA requests about a mile of road improvements, including a roundabout, new signals, sidewalks and bike paths. (Port City Daily photo / City of Wilmington)

It’s not clear how much the Wrightsville Avenue streetscape project would cost, or who would pay for it; but it’s safe to say the cost of the project would far exceed the taxpayer money spent on it so far.

The project has been discussed over the years, and city planners have exchanged emails with artists’ renderings of the project – similar to those include in State Streets’ TIA – but none of the plans have been formal engineering studies and, importantly, none have included price tags.

Over the summer, State Senator Michael Lee – who also formerly served as attorney for State Street – said he had heard “wild variations on how much it would cost” to overhaul the street.

“Some of [the estimates] are not a lot, relatively speaking, some are a whole lot,” Lee said.

The section of road in question was not included in Wilmington’s “Wrightsville Avenue 2030” land use and transportation plan, nor in the 2014 transportation bond which is currently funding improvements elsewhere on Wrightsville Avenue; presumably, because the area was bordered by Wrightsville Beach property, improvements between Military Cutoff and Eastwood were a low priority.

There’s also no current North Carolina Department of Transportation funding associated with the project (which is not unusual, since it is still in the conceptual stages).

For comparison, the North Third Street “complete street” project cost over $10 million. The 12-block project between Martin Luther King Boulevard and Market Street stretches just shy of a mile, about the same length as the Wrightsville Avenue improvement project requested in State Street Companies’ TIA.

The majority of the funding for the North Third complete street came from Wilmington taxpayers — $5 million came from the city’s 2006 transportation bond, an additional $1.9 from the city’s general fund. NCDOT provided about ten percent funding, around $1 million. It’s worth noting that, because the project also included upgrading sewer infrastructure, CFPUA contributed $2.5 million; that likely would not be the case for the Wrightsville Avenue improvements.

What’s next?

Major infrastructure and roadway projects in the Wilmington area usually fall under the Wilmington Urban Metropolitan Planning Organization (WMPO), which coordinates various funding streams, including from NCDOT and Wilmington.

WMPO Executive Director Mike Kozlosky acknowledged the receipt of State Street’s TIA, in early December, but said the organization hadn’t reviewed it yet — because WMPO had not received the review fee.

“We have received a traffic impact analysis and are awaiting the review fee to begin our review,” Kozlosky said.

Kozlosky was also presented with several follow questions, including if WMPO or Wilmington had any sense of what the improvements suggested in the State Street TIA could cost, or if, and how, WMPO, NCDOT, Wilmington, and State Street might share the financial burden of the complete street project.

“We have not started a review of the TIA. Since we have not reviewed the TIA, we have not developed a cost estimate to include some of these improvements. We continue to work with the developer and will want to develop a cost estimate for all of the improvements once we have reviewed the TIA to have a better understanding of the costs,” Kozlosky said.


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

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