County approves two changes, denies a third for Project Grace

The multi-million dollar project would completely redevelop a city block in Wilmington.
Published: Sep. 19, 2022 at 5:26 PM EDT
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WILMINGTON, N.C. (WECT) - The public-private partnership between New Hanover County and Zimmer Development Company for Project Grace doesn’t sit well with State Treasurer Dale Folwell, and he’s asked County Commissioners to consider a few changes. The multi-million dollar project would completely redevelop a city block in Wilmington.

On Monday morning, Commissioners agreed to two of the three changes:

  • “Removal of the reference to the LGC where it notes that if the LGC does not approve the lease agreement or if either party terminates the agreement, then the county will purchase the design plans for a not to exceed amount of $2.5M. The proposed staff change strikes the language of LGC approval, which will leave the agreement to read that if either party terminates the agreement, the county will purchase the plans for a not to exceed amount of $2.5M.
  • Adding in that if any change orders arise during construction, they will be reviewed by both parties to determine any offsetting cost decreases; and should the change order become material enough to increase the annual lease payment, the county will request approval from the LGC for such changes.”

The one change that Folwell asked for that the county didn’t approve comes down to the public-private partnership or P3.

“It’s my belief that there is a need from time to time for a P3 relationship, but it’s generally from a position of weakness, not from a position of strength,” Folwell said.

Part of the resistance to these partnerships for Folwell is whether or not the county is taking on debt unnecessarily.

“There may be a way if they really sharpen their pencil that they could actually just purchase this library/museum and not talk take on any debt at all,” he said.

This isn’t the first time he’s questioned the method.

“I’ve just been very concerned, especially the last two or three years. With New Hanover County, it seems like every transaction turns into some big investment banking deal, a private public partnership, we’re talking about one of the most financially solid counties in the United States. Partners are great, but most of the time people need partners because they’re weak, not because they’re strong,” he said.

Regardless of Folwell’s thoughts on the plan, these partnerships are permitted by state law and the county stands by the decision.

“Staff is not recommending that this change be included in the amendment to the MOU because the county believes using its authority under Session Law 2017-86, House Bill 397 to enter into a private sale for fair market value is the most appropriate method under the public-private partnership agreement. Under the current agreement, the county can determine what will be on the site and the timeframe it will be developed, and will ensure fair market value is received for the property through independent appraisals,” according to a statement from the county.

In terms of saving money, Commissioner Rob Zapple says he believes this is a good deal for taxpayers due to the current economy.

“I’m somewhat surprised that the development company, ZDC is being able to stick to their original cost estimates that they have, they have not come back and raised those cost estimates on us like that, even though we know materials labor has gone up here. They have locked themselves into a cost of being able to build the plans that we have looked at it and approved. So what I would say is that the taxpayers getting a heck of a deal,” Zapple said.

When asked about the redevelopment of the Government Center where the county ultimately took a different approach Zapple says both projects are unique and approached differently.

“It made sense that the county could go out and borrow the money at, I believe, want to say like 1.3%, or that is not the case today, where we’re in the exact opposite situation where we have rising interest rates,” he said.

Another reason the County stands by the decision to go with this model is that they say the public-private partnership allows control over what goes in Downtown.

That’s been a point raised by others in the region too when getting into these public-private partnerships like the City of Wilmington’s River Place. Since the government can’t say what goes where once a property is sold through a public process, these partnerships help them retain some say in the overall project.

While many have concerns that if these sales were put out to bid developers would be able to build whatever they want on the land, that’s not exactly the case. Zoning restrictions already dictate what can go where in Wilmington and the county and Folwell said he doesn’t think these issues should be that big of a concern.

“Do you think somebody is going to bid on one of the most valuable pieces of remaining property in Wilmington, North Carolina, and put carwashes number? It’s just ridiculous to even assume that,” he said.