New Hanover will get $2 million less for public land in new government center deal, here's why
On Tuesday, New Hanover County commissioners will vote to approve a new deal to redevelop the government center. The new arrangement will save millions in financing, but involves selling public land to a developer for $2 million less than originally planned.
The redevelopment of New Hanover County’s government center is a public-private partnership with local developer Cape Fear FD Stonewater. The deal has two parts: Stonewater will build a new, tax-payer funded government center, and it will buy public land for the private construction of commercial, retail, and residential units.
In the initial deal, approved by commissioners last June, Stonewater would have built the new complex and the county would essentially enter a 20-year ‘rent-to-own’ agreement.
However, the Local Government Commission (LGC), part of the North Carolina Department of the Treasurer, discouraged this agreement, telling the county it could hypothetically save up to $20 million over 20 years by self-financing the project. [You can find a spreadsheet, comparing the two financing methods, provided by the LGC, at the end of this article.]
So county staff renegotiated the deal --- the new proposal looks largely the same, except for the sale price of public land to Stonewater, which has dropped by about $2 million.
During last week’s county agenda meeting, Commissioner Rob Zapple asked Chief Financial Officer Lisa Wurtzbacher about the decrease.
“The amount that we're getting was negotiated down substantially from about $4.8 - $4.9 million down to $2.8 million dollars. But the thinking behind that...”
“The rationale behind that --- is in the original agreement, they were paying double what the appraised value is.”
Stonewater confirmed it offered to pay whichever was higher, either the appraised rate or their initial purchase price offer. With the new arrangement, Stonewater said it mutually agreed with the county to pay a lower rate.
County manager Chris Coudriet noted that the county is still getting market value for its land, and offered this explanation for the lower sale price:
“So part of it is recognizing that the developer still needs to make some degree of money on the deal. And what they were going to make in the lease agreement is no longer an option.”
Coudriet said in the original deal the county would have paid Stonewater around 4.5 to 5% interest, more than double the rate the county will now get by self-financing. To compensate Stonewater for the profit it is losing out on by essentially acting as a lender, the county agreed to the lower rate for the public land sale.
The project, which is expected to contain 5% affordable housing units, could break ground as early as next month.
To view the proposed development agreement, click here.
To view the county's news release on the project, click here.
Public can submit comments on this project (send to email@example.com) until 8 a.m. on January 19th.
The public hearing will be held on Monday, January 19th at 4 p.m. You can view the meeting on NHCTV.com and on NHCTV's cable stations: Spectrum channel 13 and Charter channel 5.
LGC appraisal of funding options for Government Center redevelopment by Ben Schachtman on Scribd