WILMINGTON — The City of Wilmington’s Chestnut Street parcels have officially been sold, and though the developer’s commitment to transform them into a grocery store may have decreased its market value, the city is emphasizing the value it will bring to downtown.
READ MORE: Local developer proposes downtown grocery store for 3 city surplus properties
Thursday was the deadline for upset bids on 305, 315 and 319 Chestnut Street, surplus properties once used as city offices before they were consolidated at the Skyline Center. The $1.7 million gleaned from the sale will be put toward offsetting the debt service on that $68-million building the city purchased in July 2023.
Port City Daily has received inquiries asking if the bid for the properties is a fair price, so the outlet decided to take a closer look.
The bid was submitted by Cape Fear Holdings, managed by Vin Wells, partner at Cape Fear Development. Port City Daily reached out to co-founders Brian Eckel and Vin Wells from Cape Fear Development to gain more insight into their plans for the property, but did not get a response by press.
The city purchased the properties from BB&T in 1997 and 1999; their combined price was almost $5 million, though this included the buildings, which were demolished earlier this month.
According to county tax records, the value of all three parcels was $8 million, though the value of the land has increased at the rate of inflation, while the buildings, which have aged to the point of being functionally obsolete, have not.
The city razed the structures under the expectation it would make the property more desirable to buyers. In May of this year, when the city first broached demolishing the structures at 305, 315 and 319 Chestnut St., spokesperson Dyaln Lee said: “Removing the structure could make the property more desirable to prospective buyers.”
Until Cape Fear Holdings’ bid was announced earlier this month, the city had received no offers since the properties were declared surplus in July 2023.
The three parcels’ land value, per county tax records, is $1.75 million — $50,000 more than the bid. Local commercial property appraiser Hector Ingram — not associated with the project — said appraisers rarely use this number when putting together valuations. This is not because the county’s evaluation isn’t accurate, he said, but because official revaluations are conducted every four years (the county property records list the values as of 2024, though the next official revaluation won’t begin until next year.)
Ingram did not appraise the Chestnut Street properties or offer judgement on the bid because of appraisal board rules. However, he did say the city made the right move in demolishing the structures.
“They’d get less for [the property with buildings] probably than they would for the raw land because, you know, the raw land can now be developed to its highest and best use,” Ingram said.
A mixed-use commercial property on the ground floor, coupled with hi-rise apartments, would most likely yield the highest profit. But Cape Fear Holdings proposed a restrictive covenant committing the property to a grocery store for at least 10 years. All other bidders had to abide by that use restriction.
Ingram said bidders can be deterred by restrictive covenants, which can also diminish a property’s value.
“The downtown commercial market’s tricky,” Ingram said. “Office users and retail users don’t want to be downtown because parking is difficult, space is expensive. There’s not a lot of traffic. Most of the high-end retailers and office users want to be out towards Mayfaire.”
In the case of the Chestnut properties, the grocery store commitment could have prevented a bidding competition, potentially lowering the amount the city may have received for the properties — thus, how much profit they could put toward debt service on the Skyline Center.
The $1.7 million will go toward easing the taxpayer’s burden on paying off Skyline. However, the sale doesn’t demonstrate the taxpayer funds used on the upkeep of the buildings over the last two decades, nor the demolition costs of $600,000 the city incurred this year.
Port City Daily asked the city what it had spent on maintenance of the properties since they were purchased; spokesperson Lauren Edwards said it would be “hard to provide.” According to property records, more than $800,000 were paid toward renovations at 305 Chestnut St. at least since 2013, to cover “HVAC, water heater, and flooring,” the city confirmed to PCD in May.
Edwards said the city was facing $4.2 million in repairs on the buildings over the next three years if they were kept.
As far as the properties’ value, Edwards called the bid “unique” in that it addresses “a long-sought need in downtown Wilmington.”
“Tax valuations do not necessarily reflect specific uses such as this, nor do they necessarily reflect cost liabilities on existing structures,” she said.
Mayor Bill Saffo, who spoke to Port City Daily Friday, said he thought the sale was a good deal.
“It kind of hit a lot of different things — the grocery store, selling the property, reducing debt service, location that we think would be central to the Northside and to everybody in the radius of this grocery store, and something that we think is going to look really good on Third Street,” Saffo said.
The sale was unanimously approved by council at its Dec. 3 meeting, where members assuaged concerns the grocery store would affect the success of the Northside Food Co-op in the works seven or so blocks away.
“You’re going to appease two different demographics,” council member Kevin Spears said. “And so you’re going to get a higher-end grocery store for people who live downtown and in this area, and then you get a lesser version over for the food co-p. But here’s an opportunity for all people that are involved again to step it up.”
A specific retailer for the Third Street store hasn’t been named, but Cape Fear Development has installed two Publix stores in the Wilmington area. CFD is also the group behind the county’s public-private partnership of nearby Project Grace and first floated the idea of a downtown grocery store as potentially part of its ground-floor redevelopment.
Saffo explained bringing a grocery store downtown was the last piece of the city’s 2020 Vision Plan and a goal of the city for a long time. Downtown Wilmington is considered a food desert; in urban areas, this means 33% of the population lives more than one mile from a grocery store.
Port City Daily asked Edwards if someone from the city approached Cape Fear Holdings or Cape Fear Development about bidding on the Chestnut properties or bringing a grocery store downtown; Edwards said no, the idea originated with the bidder.
Council member Charlie Rivenbark is listed as senior vice president at Cape Fear Development’s sister company, Cape Fear Commercial. He sent an email to city staff on Oct. 16 asking if they had received any bids on surplus properties. Rivenbark told PCD he did not have any conversations with the development group preempting their bid of 305 Chestnut St.
So far, the city has sold four surplus properties, with two more closing in January. That will put $5.22 million toward Skyline Center’s debt service.
Saffo expressed, with all the housing and business located downtown, the grocery store would be successful, even beyond the 10-year requirement. He also noted the grocery store could in turn help sell the city’s other surplus properties because a grocery store is now going to be nearby.
Ingram said the upset bid process is the most fair way to sell public property.
“In my opinion, that protects the public because everyone sees everyone else’s bids and everyone knows what the bids are and if they want to pay more for it, they will,” Ingram said.
The remaining surplus properties are as follows:
- 115 N. Third St.
- 210 Chestnut St.
- 414 Chestnut St. Ste. 4
- 514 Bellamy Alley
- 820 N. Second St.
- 825 N. Front St.
- 901 N. Front St.
- 909 N. Front St.
- 910 N. Fifth Ave.
- 911 Hanover St.
- 914 Dock St.
- 915 Eighth St.
- 1001 N. Front St.
- 1020 N. Front St.
- 1021 N. Front St.
- 1405 Dawson St.
- 1702 Burnett Blvd.
- 3743 River Road
Reach journalist Brenna Flanagan at brenna@localdailymedia.com.
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