Wednesday, August 17, 2022

New Hanover County picks local partner for government center redevelopment

New Hanover County Government Center
The New Hanover County Government Center will likely be redeveloped as part of a public-private partnership. (Port City Daily photo / File)

WILMINGTON — New Hanover County staff have picked Wilmington-based GHK Cape Fear as the preferred choice to redevelop the government center as a public-private project. Next week, county commissioners will vote on whether or not to approve the selection.

In August, county commissioners approved sending a Request for Proposals (RFP) to redevelop the 15-acre government center located off the aptly-named Government Center Drive, adjacent to Ten Pin Alley and Break Time Billiards near the intersection of College Road and Market Street.

Two companies, GHK Cape Fear / FD Stonewater and Chicago-based Vermilion Campbell submitted proposals.

According to Sara Warmuth, director of the county’s property management department, both firms were very capable and very qualified, but staff ultimately felt GHK had a “better understanding of the needs of the county.”

If approved by county commissioners, the county would enter into a non-binding Memorandum of Understanding (MOU) with GHK, that would allow for a period of planning and negotiation on project details; if an acceptable agreement isn’t reached, county staff say they would move on to negotiations with Vermilion.

The government center’s current status

The New Hanover County government center is located in the former Marketplace Mall, built in 1989 and purchased by the county in several stages between 2002 and 2006 for a total cost of around $18.5 million.

Currently, the 136,000 square feet of building space and the 15-acres of land it sits on were valued at around $18.8 million by tax appraisers — but since the county owns it, the space generates no property tax revenue. The property has not had a third-party appraisal yet, which may be part of the process moving forward.

The space will, on the other hand, require considerable maintenance in the coming years, according to the county. Over the next 15-20 years, county staff expect the building to require over $20 million in repairs ($12.4 million in 2018 dollars, allowing for 5% annual inflation compounded annually), a major part of that will be replacing the building’s roof. The space is also under-utilized, according to the county, with about 30,000 square feet that doesn’t get used, though the county must heat, cool, clean, and maintain it.

At the same time, the county is looking at rebuilding or expanding its Emergency Operations Center (EOC) and 911 call center.

Defining the project

As opposed to some public-private projects, where a government body usually has a firm idea of what it needs (a parking deck, a public venue, a redeveloped residential project), County Manager Chris Coudriet said staff are open to looking at a variety of potential configurations of the property.

Warmuth said if the MOU is approved next week, staff will move into a pre-development phase, including an assessment of the county’s needs, funding proposals, a feasibility study, looking at how the property might be subdivided, and other issues.

That means, for now, a number of variables remain up in the air. That includes whether the county would retain ownership of part of the property or move to a long-term lease; it also remains to be seen what the financial breakout of the project would be — in other words, how much the county would invest versus how much the county would profit.

Coudriet noted that idea of a public-private partnership in this situation was to leverage the county’s property to avoid spending taxpayer money on improvements to the government center.

Another factor that staff hope to work out in the coming months is how GHK (or another private partner) might take advantage of the property’s inclusion in one of two Wilmington Economic Opportunity Zones (EOZ). These areas were created by a 2017 Congressional act and allow developers to defer capital gains taxes in exchange for long-term investments in predominantly low-income areas.

While it’s not clear exactly how that might play out, Coudriet said the inducement to invest might help spur interest in the government center that hadn’t previously existed (Coudriet also noted that prior to issuing a RFP, the county hadn’t been contacted with any interest in redeveloping the site).

Lastly, for bowling and billiards fans, it’s worth noting that Ten Pin Alley and Break Time are not part of the county-owned property and are not slated for redevelopment, though those businesses are part of the same former mall building (and the sound of strikes and gutterballs can occasionally be heard in county offices).

According to county spokesperson Jessica Loeper, the county is committed to considering the needs of its business neighbors as the project moves forward, and noted that GHK had already reached out to the adjacent property owners.

Next steps

If the MOU is approved, county staff expect to spend five or six months on pre-development work before having a formal proposal, which would then receive a public hearing and vote by county commissioners on whether or not to approve a development agreement.

If that agreement were to be approved, county staff expect purchasing, design, and permitting would take the rest of the calendar year, and that construction could begin in 2021, although that is only an estimate.

The county emphasized that, as part of the project design, county services would be available continuously throughout the redevelopment process.

The New Hanover County Board of Commissioners will vote on the MOU at the upcoming meeting on Tuesday, January 21 (Monday is Martin Luther King, Jr. Day and county offices will be closed). The meeting will be held at 9 a..m in Room 301 of the New Hanover County Courthouse at 24 N. 3rd St. in downtown Wilmington.

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