Monday, July 22, 2024

City’s Castle Street developer barely hangs on to old bus yard project

The property is located on Castle Street, and is a former WAVE Transit facility. (Port City Daily/Courtesy Wilmington)
The property is located on Castle Street, and is a former WAVE Transit facility. (Port City Daily/Courtesy Wilmington)

WILMINGTON ––  The city’s development partner of an old bus yard on Castle Street narrowly escaped being removed from the project in favor of a new team Tuesday. 

Council ultimately continued the item but was close to issuing a revamped request for proposals for its 1.5-acre property to see if the city could attract any new options upon staff’s recommendation.

RELATED: City staff unimpressed by developer’s revamped plans for old bus yard on Castle St.

The developer, Clark Hipp, and city council discussed the threatened new RFP at length Tuesday, revealing several breakdowns of communication amid a complicated and drawn-out development process. 

The transfer of public property outside of a public auction setting, whereby assets are sold at market value, is governed by case law, state statutes, and the state constitution, the city’s attorney John Joye explained at the meeting. When partnering with a potential “buyer,” whether it be a nonprofit or for-profit entity, the city can give away the asset for free, so long as the use of the land is dedicated to a public purpose (technically, the value of the asset becomes a subsidy to offset the cost of providing the public purpose).

“The bottom line is, when the city gives property for a public purpose, we’re allowed to just give it for that public purpose,” Joye said. 

Snags with the complexities of turning over the 1110 Castle St. property have held up the development of the site. Hipp was initially brought in as an architect a decade ago and later re-engaged by the same nonprofit, Wilmington Southside Community Development, Inc. The city had initially intended to gift the land to this group in 2007, but the nonprofit never turned over plans. 

In 2019, the city sought proposals to redevelop the property, which has two dilapidating bow-roof structures built in the ‘40s. Hipp’s was the only proposal submitted.

His project has changed over time, prompted by the city’s evolving interpretation of eligible uses and deals appropriate for the site in concert with the relevant laws governing the land transfer. 

Initially, Hipp intended to transform the structures for commercial use while dedicating between 18 to 20 units to workforce housing. Once the city informed him his planned commercial portion wouldn’t meet the definition of a “public purpose” under state law, Hipp had to rework the plans by finding a new partner to develop that portion and by dropping the number of affordable units to ensure the project was still financially viable; the commercial portion was how he had originally planned on making the project worth his time, as the affordable units would be developed and sold at cost. 

Staff recommended dissolving the standing RFP and issuing a new one on the basis of closed session directives given by city council. After a back and forth with the developer, council gave a “quote, ‘final offer’” in a previous closed session, according to city attorney Merideth Everhart, for 18 units averaging 70% area median income (AMI). 

In communications with staff, Hipp and his team informed the city he couldn’t come down off of his latest offer of 15 units at 80% AMI (though this week he indicated those metrics were negotiable, so long as he had approval from his investment team backing the $5.3 million residential portion of the property). 

He had presented a new partner for the commercial portion of the site, Genesis Block, which told the city in writing it intends to redevelop the buildings into a food incubator hub and entrepreneurship center as part of a $5.7 million project.

At a Monday agenda review meeting, Hipp was about 20 minutes into a lengthy speech, detailing the hiccups his team ran into since first responding to the 2019 RFP, before he stopped himself: “I’m tired, are y’all tired? I’m tired of talkin’. We’ve been doing this a long time.”

The points he raised largely revealed hangups caused by the city’s slow response to action, sometimes taking months to get back to his team, sometimes delivering legal opinions that materially altered the structure of the deal. 

Outside market forces are also at play: In 2019, each two-bedroom unit could be developed for about $170,000, Hipp said; that cost has since grown to $219,000. “These are the mechanics of the realities of building housing,” Hipp said Tuesday. “That is one of the reasons it is so difficult to provide affordable housing. If it weren’t difficult, everybody would be doing it.”

Hipp asked the city to work with him on the proponents of the deal he is unable to budge on –– perhaps the city could reduce the number of affordable units requested, raise its minimum AMI ask, or chip in funds to help see the project along. 

“Just giving us a piece of dirt is not the only thing that the city can do,” he said. 

Mayor Bill Saffo wanted a number Hipp was after so he could assess whether the $8.5 million the city budgeted to affordable housing this year could be attributed elsewhere, more efficiently. “Not only are we going to be giving you the land, but you’re also going to be asking us for additional monies to put into the deal to make it happen –– and we still don’t have a commitment on the commercial section there,” he said. 

Councilwoman Margaret Haynes favored a new RFP, and said if Hipp’s proposal was truly the best offer, then it would be chosen again in a second round. 

“You all can point all of the fingers you want to at the city about the history of this particular project. We want it done. We would like for it to have been done yesterday. But there comes a point to me where you have to quit pointing fingers and if people that have been trying very hard to work with you and negotiate and compromise, and compromise, and compromise, and at some point, there’s a line in the sand and everybody moves on,” she said.

Both Councilmembers Charlie Rivenbark and Kevin Spears preferred to delay a decision (Spears even joked about getting struck by lightning for agreeing with Rivenbark, a rarity). Rivenbark aired frustration and disappointment for the city’s culpability in holding up the project.

“It looks bad if we put out a RFP, and people respond to it, and then we start changing it as we go,” he said of the past years’ activity. “This one is particularly frustrating because we keep moving the finish line.”

Council will revisit the proposal in January 2022.

Below, view Hipp’s rendering of the project:

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