Proposed changes impact Project Grace’s financial plan

The potential redevelopment of a New Hanover County-owned block in downtown Wilmington could now include a $2.5 million contingency plan for the developer in case state officials waive a part of the emerging agreement.

The Grace Project could transform the 3-acre block bordered by Grace, Third, Chestnut and Second streets into a mixed-use project, requiring the demolition of the existing main branch of the New Hanover County Public Library.

Expecting the project to be part of a public-private partnership with Wilmington-based Zimmer Development, county officials in March last year approved a memorandum of understanding with the company. In addition to other changes to the memorandum of understanding regarding funding, size and location of project components, the New Hanover County Board of Commissioners is set to consider a provision requiring the county to purchase the Zimmer’s plans “at a cost not to exceed $2.5 million in the event the necessary Local Government Commission approvals are not received.”

The plans include LS3P’s drawings of a new main public library branch and a new Cape Fear museum. The Grace project could also include apartments (5% of which are expected to be workforce housing), a hotel and commercial space used by retail or office tenants.

Local Government Commission (LGC) approvals, involving lease agreements for which the county would be responsible, are not guaranteed.

“The county is committed to this project and sees the benefits of this project and hopefully Zimmer will continue to be our partner…but in the event that the LGC does not approve it, we wanted to have the opportunity to purchase these plans,” said Jennifer Rigby, chief strategy officer for New Hanover County. “Our library team and our museum team have done a tremendous job, working with LS3P on the design of the building and we really have a spectacular design, so we would definitely want to buy them.”

She said Zimmer Development “bear the cost of this design process and therefore they were interested in receiving reimbursement for this if the LGC did not approve it”.

The LGC stepped in on leasing versus self-financing when New Hanover County was planning a public-private partnership with Cape Fear FD Stonewater to transform the county government complex.

“In consultation with the Local Government Commission, the county worked with the developer [Cape Fear FD Stonewater LLC] to update our agreement and change the agreement from a lease to a debt for the county,” said Lisa Wurtzbacher, who at the time was county chief financial officer and is now deputy county chief executive. “Interest rates for county borrowings have continued to decline, so the county will issue its own debt and fund the construction of the new government center building, and in doing so, will provide cost savings to the county and our taxpayers.”

Dale Folwell, state treasurer and chairman of the LGC, said Thursday the overhaul saved the county millions of dollars.

Of the lease details in the Grace Project plan, Folwell said, “The complexity of this deal requires an enormous amount of analysis.”

As part of changes to the memorandum of understanding to be considered at Monday’s meeting of commissioners, the projected base rent for the Cape Fear Museum and Library to be paid to Zimmer has been reduced from $4.5 million to one. just over $4 million per year over a 20-year period. . After this period, the county would own the facilities.

The reduction comes from cutting $7.5 million from the developer’s budget for the design and fabrication of the Cape Fear Museum’s exhibits, which will instead be funded by the county “and ensure direct collaboration between exhibit designers and museum staff,” according to a county statement. Release.

Other proposed changes are:

  • An increase in private investment on the block by the developer, from approximately $23 million to just over $30 million – which will further increase city and county tax revenue.
  • Approximately 4,000 additional square feet for the library and museum building (for a total of 84,905 square feet), based on design needs and space utilization, at no additional cost to the county.
  • The addition of a replacement stair tower as part of the existing parking lot to create safer and easier access from the parking lot to the county building at no additional cost to the county.

County officials remain hopeful that construction will begin this year. If the county ends up buying Zimmer’s plans, Rigby said, “then I think we’d need to go out there and really get a development team together or a construction team to move the project forward…either that , or if there was a way to make a deal with Zimmer on a different structure.”