Monday, March 27, 2023

Oleander apartment complex out of step with city’s vision, a relief for health store neighbors

Construction has begun for Hawthorne at Oleander, an apartment complex that includes more than 200 units at the location of a former movie theatre. (Port City Daily photo/Preston Lennon)

WILMINGTON—Watching construction crews frame apartment buildings through the window, Anthony Garguilo, co-manager of Tidal Creek Co-op, says he feels lucky. For years the future of the neighboring lot had been a mystery. Demolition crews removed an old Cinema 6 movie theater from the site in October 2019 that had gone unused since its closure in 2005.

The property changed hands a few times in recent years, eventually settling with the Hawthorne brand, which operates at least 10 other complexes in the Wilmington area. Evolve Companies, represented by State Senator-elect Michael Lee in his role as a private development attorney, procured a zoning approval for the tract while it was in the possession of a previous owner, and is now managing construction of the project. 

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On nine acres, Hawthorne at Oleander will include 233 apartment units spread across three buildings, a pool facility and 389 parking spaces. 

“They completed this green space area so we could get our farmers’ market back,” Garguilo said, pointing to an enclosed lawn in the parking lot. The neighboring developers vowed to let Tidal Creek continue making use of the space, even though it’s on Hawthorne’s side of the property line, he said. 

“The alternatives were horrible: Walmart, family store, U-haul, a mega church,” he said. “It’s been near miraculous how it’s all played out for us.”

While Garguilo awaits the new complex with open arms, some officials with the City of Wilmington are less rosy on the project. Hawthorne at Oleander was one of the final developments to take advantage of a since-removed zoning loophole that allowed for unlimited density in exchange for a developer’s promise to include retail or commercial space. Of 301,284 square feet in the site’s buildings, 5,600 square feet — less than 2% of the property– is dedicated to commercial use.

Tidal Creek Co-op
Tidal Creek Co-op sits next to a valuable property on Oleander, most recently sold for $3.5 million, that will be the site of a Hawthorne apartment complex. (Port City Daily photo/Cory Mannion)

“There were a number of projects that were completed while that hole was being patched by us,” said Wilmington City Council member Kevin O’Grady. “Unfortunately, that particular project was already approved, so it didn’t apply to them.”

Before Hawthorne developers took possession of the land, its previous years were spent bouncing between LLCs and even serving as a UNCW off-site parking lot. In a few month’s time, it will be added to the fleet of apartment complexes in the Hawthorne portfolio that dot major roads in New Hanover County. 

Once a movie theatre

Developers behind Hawthorne at Oleander first went to work on parking areas and green space used by neighboring Tidal Creek Co-op in constructing the project. (Port City Daily photo/Preston Lennon)

Carmike Cinemas sold the property in 2005 to an entity legally created by UNCW for these sorts of transactions. The university hosted an off-campus parking lot and shuttle service at the location, and paid $2.5 million for the parcel.

“At the time, this was a more efficient and more timely option than building additional parking lots or decks on campus,” a university spokesperson wrote in an email. “Later, after additional parking was constructed on campus (while construction costs were more affordable), the Oleander property was no longer needed and was sold.”

UNCW sold the lot in 2016, transferring the land to an LLC, Oleander Investments, for $2.05 million. Jason Swain, the younger of the father-and-son duo for Swain & Associates, who partly engineered the sale of The Forum shopping center and is currently developing CenterPoint, is the registered agent for Oleander Investments. He said the old cinema property “fit our investment strategy,” which he called, “building value through ground-up development or opportunistic redevelopment.”

“We also felt like this site would give us the chance to do something for the community as well — turn an eyesore into a quality development,” Swain continued in an email. “We were always hopeful that the redevelopment of this site would be a catalyst for new, first-class projects along this part of Oleander Drive.”

The former Carmike Cinema on Oleander Drive has been dilapidated for years; a new proposal would redevelop it into a mixed-use project. (Port City Daily photo / Benjamin Schachtman)
The former Carmike Cinema on Oleander Drive was abandoned for years before developers began a dense apartment project. (Port City Daily photo/Benjamin Schachtman)

In early 2019, months before Swain would sell the land, Lee’s law firm and Evolve Companies went to work on a site plan, presenting a community called “Oleander Commons” to the planning commission in March, then to the city council in April. The parcel was rezoned and a Commercial District Mixed Use approval was granted, allowing for the creation of a high-density apartment community. 

Oleander Investments then sold the parcel to Hawthorne for $3.5 million in September 2019, according to tax records. After waiting three years, Swain and his company profited $1.5 million on the sale, while the previous owner, UNCW, had lost half a million after holding the land for more than a decade. 

Meanwhile, a bordering tract that is now included in the Hawthorne development was also switching hands. Neil Realty Co. bought 5429 Oleander Drive for $810,000 in 1992 then sold the parcel to Hawthorne for $1.6 million in 2019. 

“We are excited that the project is going to be one our entire community can be proud of,” Swain wrote in an email.

Lee said as an attorney, he could not speak to his client’s work on the project, and forwarded inquiries to a representative at Evolve Companies, who did not return requests for interviews. Representatives of Hawthorne also did not respond to requests for interviews. 

One of the last of its kind

Hawthorne at Oleander is part of the final generation of Wilmington developments that was able to push plans through government channels that included hyper-dense development in exchange for an inclusion of retail or commercial space: a land use provision called “Commercial District Mixed Use” that was altered from the city code in October. 

Previously, as long as developers vowed to include an unspecified amount of commercial space in their projects, those structures could include levels of density that would not otherwise be approved. 

Read More: Developers latch onto 18-year-old loophole, city aims to close it

The highlighted portion shows the area of Hawthorne at Oleander dedicated to commercial, retail and office space. (Port City Daily/Johanna Still)

“The intent of commercial district mixed use development (CDMU) is to promote more sustainable development patterns that locate residential options in close proximity to retail and work options,” a City of Wilmington spokesperson wrote in an email. “This proximity reduces reliance on vehicular transportation, which is an important strategy to reduce traffic congestion in areas that experience sustained population growth.”

The spokesperson said some developments approved under this provision “did not fully reflect the policy’s intent.” Council adapted the policy in October to require 20% of a project be commercial space in most cases for a CDMU. 

“The policy revisions also require more open space, which helps to preserve the city’s tree canopy, and also incentivize the inclusion of workforce housing, which provides more affordable housing options,” the spokesperson said. “The Hawthorne development predates these policy changes and reflects a lower percentage of commercial and open space than future mixed use developments.”

City councilman O’Grady said projects passed under the provision often included immense parking lots and clear-cutting, and that city staff worked to amend the rule after realizing it was being employed to allow dense projects with miniscule amounts of commercial space. 

Tidal Creek’s Garguilo said the years of waiting to see what would end up at the old cinema property has been an ongoing drama. 

“It was something we worried about forever,” he said. ‘We thought we were kind of in the clear because UNCW was going to use the theatre, but when we heard they were selling it, I didn’t sleep for, like, two years.” 

Now armed with the identity of his future neighbor, he is thankful this is how it turned out. 

“I would imagine they have spent quite a bit more money than they could have spent, accommodating us fully,” he said. “And honestly, I can’t think of any complaints anyone could have in this situation.”

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