Project Grace rejected: County regroups over lack of LGC support on Library Museum redevelopment plans

The LGC denied the contract between the county and developer for the room financing structure of the Grace project. (Port City Daily/Courtesy of New Hanover County)

NEW HANOVER COUNTY — An inner-city development project in development for five years has raised concerns from the state funding agency over its “unique” approach; However, the structured project Grace will not move forward.

The funding agreement between the county and Wilmington developer Zimmer Development Company continued to raise concerns with the Local Government Commission at its meeting Thursday. The LGC should provide final approval for funding for Project Grace. It failed to pass the support of the board of nine.

CONTINUE READING: Find out about all reports on the PCD project Grace

Member Vida Harvey petitioned for approval and silence filled the air.

“The motion fails for want of a second,” said State Treasurer Dale Folwell, chairman of the LGC. Essentially, the county’s project was rejected on technical grounds because a full vote never took place.

The public-private partnership for the redevelopment of a 3-acre county-owned downtown block has been put to a vote at the request of the commissioners. Folwell removed it, along with two other items, from the meeting’s approval agenda, which was normally voted on as a whole without discussion, based on board input. He said it needed further discussion.

LGC had concerns about the financial structure of the lease, the burden on taxpayers and the private part of the development that could be negotiated without an angry bidding process.

Project Grace was the final point of action after a 3.5 hour meeting. Only one person spoke out, Wilmington resident Diana Hill – who spoke out against the project as part of Save Our Main Library.

Hill expressed concern over the demolition of a viable library, the cost to taxpayers, and the destruction of historic property. She had 4 minutes to speak, but her time grew to almost 15 minutes.

District management and staff were present by phone and made a final attempt to present their case.

“Agreed, we’ll continue with Zimmer; If you vote against, we’ll move on to someone else,” commission chairwoman Julia Olson-Boseman said confidently. “We as the Commission want to be able to push this project forward.”

Olson-Boseman and County Manager Chris Coudriet refuted Hill’s opposition.

“As the Chairman said, the Commission believes enough and understands the value proposition that it wishes to own the final plans to proceed with the redevelopment of this property,” Coudriet said.

Before an application was made, Folwell warned his fellow board members that he would not support the project.

“I will vote against, but I promised the Chair that I would put it on the agenda,” he said, followed by a message to county officials: “I am sure we will continue to engage in dialogue.”

The county secured a deal with Zimmer in 2021 after spending two years searching for qualification requests, reviewing all submissions, and eventually soliciting proposals from interested companies. It’s been a turbulent journey since then, with three MOU releases, community support and opposition, and questions about the financial endeavor.

The framework was set that Zimmer — the only one to submit a proposal in response to the county’s RFP — would lead the construction of a new building combining the county’s library and the Cape Fear Museum, and a 3-acre would buy land on the block at fair market value and invest $30 million.

The complexity of the MoU between New Hanover and Zimmer, as well as the controversial funding agreement, has led Folwell and the LGC to question the validity and necessity of the projects in recent months.

The biggest head scratcher, according to Folwell, was the 8% profit margin Zimmer would receive on a 20-year lease with the county, compared to the county’s ability to borrow money at 3.25%.

In addition, county officials said the overall goal is to have control over what is built in the private development to increase community benefits and increase the county’s tax base.

“[Without it] we cannot guarantee a community investment within 36 months; that there will be a housing component, not to mention that 5% will be workers housing,” Coudriet said. “We cannot guarantee that a hotel will generate a room occupancy tax for the benefit of the City of Wilmington. We cannot guarantee any investment.”

Folwell also said that the LOI’s provision, which allowed the county to purchase Zimmer’s plans for $2.5 million if the LGC did not approve the funding, “put handcuffs” on the government agency. He urged the district to amend the letter of intent to reflect LGC’s connection to that condition in a letter sent last week, to which the district agreed.

The treasurer also urged the county to consider a disgruntled bidding process for the private development side of the project, citing the property as valuable enough to receive more for its value than a private negotiation.

The county disagreed and stuck to its private negotiation plans with Zimmer.

“I was constantly concerned for a county as prosperous as New Hanover that the transactions seemed so complicated, and all of my efforts along the line have been to increase transparency and improve governance on the transaction,” Folwell said.

As the county stated during the meeting and has said in the past, it will continue to pursue a new library and museum facility; it just needs to turn around now.

After the meeting, the county issued a press release noting that it will purchase Zimmer’s complete design and construction documentation for the library and museum facility for $2.5 million.

“The county will then consider next steps, including the cost of issuing debt to build the facility and the timeframe for moving forward,” the release said. “As additional information is known, the community will continue to be updated.”

A more detailed report of the LGC meeting and discussion, as well as the county’s response, will be released this weekend.

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