Tuesday, June 25, 2024

‘We are all in’: Local developer commits to Project Grace, adaptive reuse still off the table

New Hanover County Public Library on Chestnut Street will still be torn down to make way for Project Grace with new developer on deck. (Port City Daily/Shea Carver)

NEW HANOVER COUNTY — The county’s path forward to redevelop one block of downtown Wilmington and combine its library and museum into one building has new energy.

Cape Fear Development publicly committed to join a public-private partnership (P3) with New Hanover County at the commissioners’ agenda review meeting Thursday. After a four-month period assessing the county’s current design plans and speaking with local stakeholders, CEO Brian Eckel said developers could shave off $4 million from the $64-million-dollar project scope, originally devised by Zimmer Development.

READ MORE: Another developer enters the game in pursuit of NHC’s Project Grace

“We can manage the project at a reduced fee of three-and-a half percent,” he said. “We would have 80% of savings on that not-to-exceed number.” 

The project would comprise new construction at Grace, Chestnut, Second and Third streets, intended to combine the main branch of the New Hanover County Public Library and Cape Fear Museum, currently located on Market Street. 

Additional development would surround it. Potential uses could include housing, a hotel, retail and restaurants. Eckel made it clear he would like to see the ground floor contain a grocery store — something downtown Wilmington residents have been pining for many years now. 

Cape Fear Development has built a Publix in Wendell Falls and Publix Commons in Carolina Beach. It’s also behind current projects like Autumn Hall and The Proximity — both mixed-use projects.

The development team evaluated Project Grace by meeting with numerous engineers and conducting cost analyses, line item by line item. Eckel and Mike Brown, both from CFD, as well as Monteith Construction’s Brian Thomas, all spoke Thursday. Also present was Chris Boney from LS3P, who designed the plans the county purchased from Zimmer for $2.5 million last fall. 

Altogether, they came to the conclusion that sticking with the original idea to demolish 201 Chestnut St., built in 1950, and constructing anew is more cost beneficial to taxpayers.

ALSO: Catch up on previous Project Grace coverage

“We took a deep dive into the project,” Eckel said. “We looked at the delivery, at the costs, to understand more efficient ways to see through the project.”

CEO Brian Eckel speaks to commissioners Thursday, committing publicly to Project Grace. (Port City Daily/Shea Carver)

The financing

Cape Fear Development entered the Project Grace conversation last fall after the Local Government Commission, which approves issuance of debt and assists in fiscal management of governments, didn’t vote to pass the monetary structure between the county and its original partner, Zimmer Development Company. 

The former model included the county entering a lease agreement with Zimmer and paying more than $80 million over 20 years. In addition, Zimmer would have purchased 1.2 acres of the Chestnut Street-facing block for $2.6 million for mixed-use development.

Dale Folwell, the chair of the LGC and North Carolina treasurer, stated publicly New Hanover County, with its triple-A credit rating, could do better and save the taxpayers money. Traditional financing at 3% was a better deal than nearly 12% to a developer, he stated.

When the LGC did not approve the plan, the county purchased Zimmer’s designs to avoid starting from scratch.

Cape Fear Development went through the blueprints to see where money could be saved for the county and is entering the agreement as a fee-for-development structure. County manager Chris Coudriet detailed that Zimmer was not willing to go that route.

“Their model depended on 20 years of income,” he said, which was “offset by the fact that there was guaranteed tax income from the private investment.”

The latest iteration would have the county financing $60 million through limited bond obligations. It would not require a vote for citizen approval.

“You will not borrow today what you would have 12 months ago,” Coudriet explained to commissioners. He estimated rates have risen from 1% to 3% in the last 18 months.

The bonds would impact next year’s budget. 

“But there is also incoming tax revenue from the private investments that this team will make on the south side of the block,” Coudriet said.

CFD has increased its purchase price for the private portion at a minimum of $3.5 million. 

“So a $900,000 savings to the taxpayers,” Eckel said, when compared to Zimmer’s $2.6 million proposal. 

Eckel explained CFD would start out with two appraisals, and if the numbers come back within 5% of each other, the developers cover the higher costs — “end of story, that’s part of the price for $3.5 million, not the median,” Eckel said.

Should the assessments return at more than 5% apart, CFD would bring in a third appraiser to review the numbers. “And he picks a number,” Eckel said.

“We want to make sure that we’re being completely transparent to the taxpayer,” he added.

After CFD’s presentation, commissioner Rob Zapple inquired about the $4 million savings on the overall scope, which includes contingency due to inflation in the building market currently.

“What are we losing?” Zapple asked.

The consensus from the CFD team was “not much,” only small details in design, such as the edged glass on the third floor museum area. The team identified 27 design modifications, from structural approach to mechanical systems, floor coverings, ceilings to outlets.

Nothing differs in programming space or the aesthetic of the design.

“We don’t believe the taxpayer or the visitors of the museum will ever see any of those changes or feel any of those changes,” Eckel said. “There’s small little things here and there that all add up.”

Remediation or razing

Cape Fear Development said it challenged Monteith and LS3P partners, as well as engineers who looked at the project, to see if pursuing an adaptive reuse was feasible.

It has been one of the hangups from a vocal group of locals from Save Our Main Library, a movement of roughly 2,000 area residents that have been fighting to keep the current library building rather than razing it. Among their concerns have also been loss of space.

“We met with leadership from Save Our Library, which was a very respectful and actually informative and educational conversation,” Brown said. 

Diana Hill started the group and spoke for nearly 15 minutes at the LGC hearing last fall. She raised problems with Zimmer’s and NHC’s agreement, primarily with demolition of a viable library, the cost to taxpayers and destruction of historic property. 

“At her recommendation, we toured the Durham library project in downtown Durham,” Brown said. “Very impressive.”

The Durham library preserved its former building that became too small to serve its growing population and needs. It closed in 2017 and reopened in 2021 after undergoing the major renovations.

Brown said remediating the Chestnut Street library would mean “taking the skin off the building and reducing it back to basically a concrete podium and steel decking.” Contractors then would create a new structure around and atop the foundation.

“The depth and expanse of renovating it at that level,” Brown said, “we ran the numbers and it exceeded the cost of starting with a new building.”

He did not reveal how much exactly. Yet, like Durham’s closure, the adaptive reuse process would require Chestnut Street’s library to relocate during construction or close altogether. 

“That would be for 18 months,” Brown said, “and necessitate finding some alternative space — which, frankly, it doesn’t exist in downtown Wilmington at the moment.”

Current plans would allow the library to continue serving the public, as the new structures are built.

As well, an extensive remediation could bring “inherent financial risk” to the county as construction gets underway, Brian Thomas of Monteith noted. Foundation issues could arise in this approach, among other concerns according to engineers CFD consulted with.

“We challenged every single element of Zimmer’s plans you purchased,” Eckel said. “We actually believed that we were going to come up with a solution that was more cost effective just for an adaptive reuse.” 

The team did soil testing and looked at borings. The new building would be built on piles. Thomas said they went through the plans piece-by-piece in attempt reduce some of the footprint.

“But just looking at the cost, apples to apples on remediation versus building,” Brown said, “the new building, it was the right approach.”

Thomas assured through every step of construction, there will be three to seven bids put out for contractors. 

“It’s an open-book process that we go through, and so that’s the version to get the best bang for the taxpayer dollars,” he said. 

Community feedback

Along with gathering input from Save the Main Library, CFD reached out to businesses, groups and locals to determine if Project Grace still has support. The developers met with 70 or more organizations of all makeups.  

They hosted Rotary Club presentations, met with the Chamber of Commerce, Cape Fear Community College leadership, faith-based leaders, Genesis Block, Wilmington Business Development, and Historic Wilmington Foundation, among others.

They also contacted employers, representing roughly 10,000 people in the local workforce, Brown said.

“We just wanted to get a good feel for what the citizens thought because, ultimately, if the county is going to make a large investment on that city block, it needs to have the support of the citizens and needs to be aligned with their best interests.”

Their research revealed most were in favor of having an arts and cultural center in the area. It was only in the design and construction approach many had varying degrees of suggestions.

“Our downtown looks vastly different today than 10 years ago,” Brown said. “I think that will continue.”

He pointed to new apartments on the north end, along with Live Oak Bank Pavilion and the Wilson Center adding to downtown’s vibrancy in recent years.

Eckel said he also discussed the plans with other local developers for feedback.

“One of the first things we did when we started the process, I called the Zimmers,” Eckel said. “‘Hey, we’re thinking about … trying to move it forward, this block has to be resolved and can’t remain as is.’ Everyone said, ‘You may want to have your head examined, but go for it.’”

By improving the area, the team surmises more investment will follow in downtown. Brown said a city’s cultural arts center boosts the economy, as well as entrepreneurship and quality of life for its citizens.

Zapple asked if developers would communicate with commissioners in consideration of businesses sought for the private portion.  

“So you don’t put in something you might find inappropriate, not that I think you would,” he said. 

“I believe we already have an inappropriate list of what I can’t do here,” Eckel stated jokingly. 

The plans include at least 5% of workforce housing if the developers include a multi-family component. CFD is speaking with companies that have brand recognition — “household names,” Eckel said — for retail and restaurants, but was remiss to mention any during this phase.

Schedule and timeline

“I think we started this process when the building was still considered new,” Thomas quipped to commissioners. 

Project Grace has been five years in the making, first pitched in 2018. Through that time, it has experienced changes in its library and museum directors, board members, architects and developers. 

“We’re heading in the right direction,” Thomas said. “We’re coming to you with the confident message that this is the right time to do it, this is the right team to do it with. The passion, the fire is here.” 

CFD has submitted a development agreement to the county. Port City Daily requested it but did not receive by press.

Negotiations will take place with county officials in coming weeks, with a goal to have a more formalized contract by May 1. The team then would take two months to tighten up numbers, a placeholder being $60 million.

“Hopefully, it will be lower and something won’t be higher,” Eckel said.

The commissioners will visit CFD offices to review revisions before negotiations on a contract agreement begin.

Though a public hearing isn’t necessarily required by state statute for the developers in this type of agreement, Coudriet said the county would encourage one.

CFD proposed a return to commissioners on July 17 to review final numbers after a third party has assessed and created a report on its findings.

Should all work out, Project Grace’s new financing model could go to the LGC by mid-September, with construction slated for the beginning of October. CFD put a deadline of completing construction in 24 months once all is finalized, and hopes for a delivery date in 2025.

“This is a realistic schedule, but we also know that things change,” Eckel said.

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Shea Carver
Shea Carver
Shea Carver is the editor in chief at Port City Daily. A UNCW alumna, Shea worked in the print media business in Wilmington for 22 years before joining the PCD team in October 2020. She specializes in arts coverage — music, film, literature, theatre — the dining scene, and can often be tapped on where to go, what to do and who to see in Wilmington. When she isn’t hanging with her pup, Shadow Wolf, tending the garden or spinning vinyl, she’s attending concerts and live theater.

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