NEW HANOVER COUNTY — The Local Government Commission was at odds Tuesday when, out of the gate, its chair, State Treasurer Dale Folwell, put forth a motion to deny financing approval for Project Grace.
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The county wants to enter a public-private partnership with Cape Fear Development for Project Grace. It involves tearing down the current library and the nearby historic Borst building to build a new 95,000-square-foot combined library and Cape Fear Museum. Upon completion, CFD will purchase half the block and invest $30 million worth of private development.
Project Grace was first discussed in 2014 but didn’t gain traction until the last five years and has been through numerous revisions — developers, commissioners and plans — to get where it is today.
The county is asking to finance the $57-million project with limited obligation bonds, using its triple-A bond rating from Moody’s and Standard and Poor’s, retained for 11 years. Folwell has said on the record the county should fund it outright rather than going through the commission.
County manager Chris Coudriet has explained the county can issue debt at less of an interest rate — 3.8% — than paying for Project Grace from its $300 million revenue stabilization fund, which would come in at 5%. The county also has a policy to retain cash on hand to keep taxes low and to implement needed county services.
The LGC must approve a county government’s debt issuance. Folwell’s motion — seconded by state auditor Beth Wood — to deny New Hanover County’s financing plan failed. Votes tied with four nays from Elaine Marshall, Ronald Penny, John Burns and Mike Philbeck, and four yays from Paul Butler, Nancy Hoffman, Folwell and Wood.
Member Vida Harvey recused herself after Folwell and Butler questioned her per conflict of interest. Within the first two minutes of the meeting, Folwell called out Harvey.
“Mrs. Harvey, regarding New Hanover County, do you have a conflict there?” he asked
“I do not,” she responded.
“May I ask: Have you had one in the past?” he followed up.
“Not in respect to Project Grace,” she said.
“But dealings with New Hanover County and Novant,” he said.
“I think everyone is aware Novant Health purchased New Hanover Regional Medical Center in February of 2021, but nothing related to Project Grace,” she said.
“We’ll come back to that in a few minutes, if you don’t mind,” Folwell added.
Harvey works for Novant, and later in the meeting Butler brought up the fact again. He stated since Brian Eckel — co-founder of Cape Fear Development overseeing Project Grace — serves on Novant-NHRMC’s Board of Trustees that Harvey shouldn’t cast a vote. Butler basically surmised the board member was her boss.
“My boss’ boss’ boss is Carl Armato [CEO and president of Novant], who reports to the board of directors,” Harvey said. “So I don’t work directly for the [Novant] board. But to the extent that I do, I am not familiar with the individual who serves on the board and who is related to the developer. Can you explain the connection to me?”
“The developer here is on the board; you are an employee at Novant. He stands to make a substantial fee. For this project, it would appear to me that you would recuse yourself as a voting member on this,” Butler said.
“If that’s the case, I’m happy to recuse myself. It’s not a personal conflict of interest, but in the effort to move this along, I will gladly recuse,” she said.
Burns stepped in to Harvey’s defense, reminding the board that it has a duty to vote. He recognized Harvey’s diplomacy to step away, but also was clear North Carolina statute mandates members vote if they aren’t directly receiving personal financial gain.
“One person from a corporation sits on the board of another corporation, for which Mrs. Harvey works — there’s no financial benefit there, unless Mrs. Harvey wishes to point one out that she would draw from personally,” he added.
Penny, the secretary of revenue at the North Carolina Department of Labor who also sits on the commission, chimed in.
“Every time I vote, I impact somebody’s taxes that will come into North Carolina,” he said. “It’s no pecuniary benefit to me. But it does impact North Carolina every time I vote. So I’m just saying, if Mrs. Harvey has a conflict on this one, I have a conflict every time. And, quite frankly, the legislature understood that when they put my office … here.”
The board consists of four ex-officio members, three governor appointees, one member appointed by the president pro tem of the Senate and one by the speaker of the house.
Butler, who has voted in-step with Folwell throughout much of the Project Grace process, questioned how Harvey couldn’t know Cape Fear Development. Harvey’s connection to the livestreamed meeting wasn’t strong and she was speaking simultaneously as Butler during the exchange. At one point, Folwell stated she was recusing herself, to which Burns interjected.
“I’d like to ask legal counsel,” he said, “as to whether we are understanding the proper standard of recusal [and] Mrs. Harvey considers that further.”
Folwell rejected that Burns “speak for” the board member. Harvey asked for clarification from counsel, who confirmed her standing at Novant and the ability to vote for the commission didn’t clash with the statute.
Still, Harvey decided to abstain, though she had a change of heart by the time Penny put a motion on the floor for a vote to approve Project Grace’s financing structure.
“Does that necessarily mean that I have to abstain from this vote?” she asked counsel. The answer was no.
Harvey was the deciding vote for Project Grace to pass muster with the LGC.
Hoffman, who was against the project, said she didn’t come to her decision easily.
“Transformational projects are often controversial, which is why I think it’s very important to get voter approval and buy-in on these kinds of projects,” she said.
Hoffman was speaking to the redevelopment of the Project Grace block in downtown Wilmington — Second, Third, Grace and Chestnut streets. The new combined library and museum and mixed-use development will be located there, with residences, potential restaurants, a hotel and retail coming in. Cape Fear Commercial is buying the south parcel of the block for no less than $3.5 million once the new library and museum is completed.
“I think the county wanting to invest in the downtown of its major city is for economic development reasons and to generate private investment based on public investment is difficult,” Hoffman added.
Cape Fear Development met with more than 10,000 people in the greater downtown area ahead of coming onboard with the project. Support has been shown by leadership from Wilmington Chamber of Commerce, Wilmington Downtown Inc. and Cape Fear Community College, among others.
However, there have been many outspoken critics, including a group from the Save Our Main Library initiative, which has more than 2,000 members on Facebook rallying to save the current structures.
Folwell has questioned the project for its location and involvement as a public-private partnership. Specifically, he has questioned why the county would sell the parcel directly to CFD instead of using an upset bid process.
“The fact is, there’s a pattern of profits,” Folwell said during the meeting, referring to the developer. “And there’s a pattern of the folks that you are entrusting Project Grace to having their hand or their finger or their pulse on every single one of these transactions that either have or have not been in front of the Local Government Commission.”
Cape Fear Development’s leasing and real-estate arm, Cape Fear Commercial, is involved with City of Wilmington’s purchase and leasing of the Thermo Fisher building and the Bank of America building the county bought earlier in the year for CFCC’s nursing program expansion.
“But the fact that that developer has been involved in other things, it doesn’t necessarily mean this is a bad thing. Somebody’s going to make a profit,” Philbeck retorted.
Folwell did not vote the last time Project Grace went to the board in September 2022 with Zimmer Development Group at the forefront; it didn’t pass last year due to failure for a motion to proceed.
The chair said numerous times he spoke via phone to then-New Hanover County Commissioner Chair Julia Boseman the morning of the vote. His recounting was that she seemed indifferent whether Project Grace was voted “up or down” and even suggested she disapproved of Zimmer, stating she wanted to go in a “different direction,” such as with CFD.
Boseman did not respond to Port City Daily’s inquiries Tuesday as to whether Folwell’s statements were true.
“These are words from her lips to my ears, that I will say to you under oath,” Folwell said at the meeting. “So if you want to know why I ask so many questions, it’s because God gave me the vision to see what needs to be seen and the humility to listen for what needs to be heard, which sometimes requires the courage to act on what needs to be done, which is protect taxpayers and citizens.”
Philbeck took issue with Folwell’s propensity to bring Boseman into the conversation, considering she lost the primaries in spring 2022, four months before the LGC vote.
“I wonder if that call from Mrs. Boseman was before or after she lost the Democratic primary and then switched parties, when she called you and said just vote up or down because she was obviously bitter at that point,” he said.
Marshall asked whether Boseman also voted in favor of Project Grace back then, which she did; however, the LGC member was more outspoken about how Harvey’s recusal played out Tuesday. Marshall especially took umbrage with other members challenging Harvey after she was upfront there was not any conflict.
“It is up to the individual themselves to declare whether or not they have a conflict of interest,” Marshall said. “I’m very uncomfortable on the principles that are at play here. She was obviously surprised at the suggestion. And she was very kind to even mention the word ‘recusal,’ which then you basically took as her word when there was doubt in her mind. I just feel like this was a matter of bullying and pressure, if you will — for someone who had no knowledge of this person, this activity per se. And I just am very, very uncomfortable what’s just happened with this board.”
Philbeck echoed Marshall’s concern, also calling the behavior coercive.
“I love and admire both of you,” he said to Folwell and Butler, “but I do think you bullied her. And I’m very, very upset at the way this has gone down if this is not approved.”
The county sent a representative, commissioner Dane Scalise, to speak on its behalf. Folwell requested to talk to New Hanover County Chair Bill Rivenbark instead.
“He’s asked me to speak, sir,” Scalise said. “I’m ready to answer the questions that you supposedly have.”
Folwell responded he preferred to speak to Rivenbark, to which fellow member Burns also expressed concern with.
“I think you’d be overstretching the authority as chair of the meeting if the proponents of the proposal here designated a spokesperson,” Burns said. “I think we should hear from that spokesperson.”
Penny agreed: “We’re getting ready to go down a road we do not want to go down and set a precedent that would be dangerous for this commission.”
Scalise kept his comments short and asked to keep emotions out of the vote.
“There’s nothing complicated about what we’re asking for,” he said. “And we have made a policy decision that pursuing Project Grace is best for our community.”
Scalise asked if the chair had questions. Folwell didn’t bring any forth and instead responded: “I had some questions for Mr. Chairman, I do not have any questions for you.”
Diana Hill, founder of Save Our Main Library, has been vocally opposed to demolishing the former Belk and Borst buildings for a new library and museum and also spoke at the meeting. She iterated the negative effects of Project Grace: losing library and museum space by combining the two, as well as impacting historic tax credits, as the Borst building is a contributing structure listed on the National Historic Registry.
Folwell called for Travis Gilbert, executive director of the Historic Wilmington Foundation, to be contacted during the meeting to answer inquiries regarding the building’s status. The concern was if the building comes down, it will hurt the historic district from receiving potential state and federal funding.
“The demolition of the Borst building will affect the integrity of the Historic Wilmington District,” Gilbert said. “It could shrink or decrease in size the historic district and thus eliminate those existing historic buildings to utilize preservation tax credits.”
“But that, per se, does not cause all other potential tax credits from being able to be realized for historic preservation?” Marshall asked, to which Gilbert confirmed.
The historic building has been brought up numerous times throughout the Project Grace timeline as developers considered the possibility of saving the 1926 Borst building, as well as the Belk building. However, Cape Fear Development has gone on the record twice now saying the cost to rehabilitate would be more than building anew. As well, the library would not be able to continue to operate if renovation was pursued, according to officials.
It will continue to serve the public during construction of a new facility. Fencing will go up around the Chestnut Street library likely this week for the process of construction to begin, according to county spokesperson Alex Riley. The opening of the facility is scheduled for 2025.
“As we advance, we’re eager to see this collective vision come to life and look forward to seeing this block transform and meet our community’s needs, with a purpose-built museum and library that is in sync with the private investment to come,” County Manager Chris Coudriet said in a release.
Additional reporting provided by Amy Passaretti Willis
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