"The wheels turn slowly, but at least they're turning": Battleship Point developer on west bank's future
In the spring of 2021, developers Kirk Pugh and Jim Lea sat down with WHQR to discuss a proposed $500 million project. Now, two and half years later, Pugh returned to address more recent concerns and to share his optimism about what’s changed and his frustration about what hasn’t.
When Kirk Pugh and his development partner, Wilmington-based attorney Jim Lea, proposed Battleship Point, it kicked off a flurry of interest in the western bank of the Cape Fear River.
Their development company, KFJ Development, was proposing a massive $500 million project, with three 240-foot towers — which would not only make it the tallest building in the region but also plant a serious development footprint in an area which, as Pugh and others have noted, is conspicuously undeveloped compared to other riverfront cities.
The proposal also inspired a coalition of critics, including conservationists who wanted to protect the undeveloped land and environmentalists concerned about the flooding impact; the Historic Wilmington Foundation, which wanted to protect cultural resources on that bank; and the NAACP, which voiced concerns about disturbing a segment of the Gullah Geechee trail and the creating inequities in a disaster response scenario.
The county was hesitant to rezone the property — which is currently designated as industrial — but the proposal sparked debate about what the county wanted to see on the west bank. That’s an area including the riverfront of Eagles Island, the stretch of land south of the Isabel Holmes Bridge, and a spit of land between the Cape Fear and Northeast Cape Fear rivers called Point Peter, the proposed location for Battleship Point.
As far back as 2014, the county had envisioned development that mirrored the Wilmington side, with a fairly dense mix of uses for a modern urban riverfront. Right now, much of the area between Point Peter and the Isabel Holmes Bridge is zoned heavy industrial, with a few exceptions. That means things like warehouses and manufacturing plants.
There is also a parcel, located at the foot of the Isabel Holmes Bridge, zoned Riverfront Mixed Use (RFMU) planned development. The site includes a ‘performance height bonus’ that allows upward of 240-foot development if enough private land is made available for public use (i.e. a park area). That zoning helped KFJ dial in the height they wanted for their project, Pugh and Lea told WHQR in 2021.
On Eagles Island, aside from the U.S.S. North Carolina, the area is largely zoned regional business, which would allow, for example, box stores and car dealerships, but also hotels. There's the potential for RFMU zoning, which would allow up to 75-foot development. (You can find all the zoning types and descriptions here).
Reevaluating west bank development
Last month commissioners heard a detailed presentation from staff about the development possibilities on the west bank. Ultimately, commissioners gave county staff the green light to pull the riverfront region out of the overall land use plan and fast-track an analysis of what might be the “highest and best use” of the land.
Pugh said he was optimistic that the county is again discussing the area.
“We're optimistic that the county commissioners and planning department are now having more conversations about what to do with the west bank. But, you know, frankly, we're a little bit frustrated with the pace at which they're able to have those conversations,” Pugh said.
He did acknowledge that state requirements and the commissioners’ meeting schedule mean nothing can happen overnight.
“So the wheels turn slowly, but at least they're turning,” he said.
During the meeting, commissioners seemed to have mixed feelings about the possibility of dense development across the river.
Commissioners Dane Scalise and LeAnn Pierce approved of county staff looking more deeply into development there, but noted that respecting property owners’ rights was important. Pierce did note that the industrial uses currently allowed weren’t particularly attractive to her.
Commissioner Rob Zapple voiced concern about the RFMU site near the Isabel Holmes bridge, saying he fears it would be used as a springboard to allow high-density projects all along the coast. He also referenced a short-lived measure in the General Assembly that would have allowed the Lumbee tribe to operate casinos in New Hanover County; the measure died as Republican factions hammered out a compromise budget bill, but Zapple warned he felt it could return, bringing casinos to the west bank with it.
Commissioner Jonathan Barfield had the most pointed comments, accusing developers — strongly implying KFJ without specifically naming them — of “bullying” the county.
“You had a developer, who I think is in the room today, who is in my opinion continued trying to bully the process,” Barfield said. “First going to the Town of Leland to get them to annex the property to force our hand to do something, and now going to the City of Wilmington to try and force our hand again to do something, what I would call prematurely.”
Barfield said he would not be comfortable making any determinations right now. He asked Wilmington city council to stay away from a potential annexation decision and suggested that CFPUA shouldn’t run water and sewer to any project on the west bank until the county has done its analysis.
Pugh said Barfield’s comments weren't quite accurate. He said that around a year and half ago, they spoke to Mayor Bill Saffo, but refuted the suggestion that they were trying to avoid county oversight.
“That was really outreach to the mayor to discuss what his vision for the west bank was so that we could have sort of a collaborative effort between us as developers and the city of Wilmington as to what would they like to see and, and working with the county at the same time to develop a plan that everybody would be pleased with. So there was a misconception, I guess, that we tried to skirt the planning department and the New Hanover County Board of Commissioners by going to the town of Leland,” Pugh said.
He also said that Leland approached KFJ — not the other way around — but that the plan presented by the town wouldn’t work out. Leland, in any case, has since had its ability to annex indefinitely curtailed by the General Assembly, rendering that a moot point at least for the time being.
The City of Wilmington confirmed there was no current conversation about annexing land on Point Peter for the Battleship Point project. However, the Wilmington Hotel and Spa project, a neighboring development on Eagles Island, has expressed interest in Wilmington annexation, according to reporting from Port City Daily.
KFJ’s initial proposal was both ambitious and controversial for its scope and scale — prompting both hyperbolic claims that it would blot out the sunset as viewed from the Wilmington riverfront, and more practical concerns about traffic, flooding, and the draw on county services.
Pugh said KFJ had listened to those concerns.
“We heard what some of our critics have said about the size and scope and mass of the project that we designed. And quite honestly, with the price of land, you have to have a certain amount of density in order to make the project as a whole pencil,” Pugh said. “So we went back to the drawing board, and we made some drastic revisions to our plan for the purposes of just seeing if the project would pencil at a significantly smaller scale.”
Pugh said ultimately he hopes the project can end up somewhere between this revised plan and the original presentation — depending on how the county ends up reenvisioning the zoning regulations for the area.
But county staff have acknowledged that the engineering requirements of the area will increase costs — which means denser projects are likely to be proposed so developers can recoup their investment.
Pugh said the actual logistics aren’t that challenging compared to projects in other areas their engineers have worked on, but there are definitely costs associated with it, like putting piling down to the bedrock.
One of the main concerns about building on the west bank is flooding. On the one hand, projects near the river could be vulnerable to rising water levels and increasingly strong floods during storms and King Tides. On the other hand, building these projects could impact the water table and the flow of the river.
Pugh noted that the plan still includes the same accommodations for flooding as it did in 2021, including a “sacrificial first floor” and then three stories of parking decks.
“[That] puts the first habitable space at about 50 feet above mean high water which, if we ever have a storm surge or a flooding event that gets up to 50 feet, we’ve got a lot worse problems,” Pugh said.
Pugh said while he was skeptical of some of the more extreme sea-level rise predictions that have been invoked in criticism of his project, the engineering team had nonetheless given them due consideration.
There’s also the issue of what impact a sizable project like Battleship Point would have on the flow of the water around it. Basically, would it contribute to flooding nearby properties?
Pugh said that while he’s been told anecdotally that’s unlikely, given the footprint of the project and the size of the river. But he says the real frustration is that the county can’t study the potential impact with a hydrology study until he’s able to officially propose technical details.
“It is the chicken and the egg. The county was told [by engineering experts] ‘we can't do a hydrology study unless we know what we're studying,’” Pugh said.
He said he and his business partner are small business owners, and can’t afford a half million to a million dollars for fully engineered plans and surveys. Even if they could, their proposal could then be rejected “for a completely different reason,” Pugh said.
Other concerns: Traffic, historic preservation, and providing services
Pugh said he’d heard “another sort of fallacy” about Battleship Point, including at the recent Board of Commissioners meeting, that the project would have limited access to and from Highway 421. Pugh noted that there is a plan that’s already been approved by the NCDOT and Wilmington Urban Area Metropolitan Planning Organization (WMPO), the two organizations responsible for coordinating local transportation projects.
Another concern — raised by Commissioner Zapple — was that given the size of the development, the county would be on the hook to provide significant services (like fire, EMS, and law enforcement, for example).
Pugh said, given the tax value to the county of the proposed project, it should be worth it to the county.
“Not even factoring the employment opportunity for people that would be affiliated with this project, you know, the framers and the concrete guys and the asphalt folks, but the overall employment is significant to maintain a project like ours. And the contribution to the county tax base is immense,” Pugh said.
"Our original design called for over 800 residential units, and I'm going from memory, but I think the estimate was that it would contribute about $10 million a year to the New Hanover County tax base for a piece of property now that's earning the county practically nothing. And so my argument would be that if you take $10 million a year, you can pay for a guy in a fire truck to come over," Pugh said.
As for concerns about the historic preservation of the site, Pugh said he never quite understood the objections of the Wilmington Historic Foundation. Pugh reiterated what he’d said in 2021 — that the project would preserve any historically significant artifacts they found, including those related to the Civil War and the Gullah Geechee corridor (the latter had been a primary concern of the NAACP in its criticism of the project).
“We’re well aware of the Gullah Geechee corridor. We're also aware that there's a potential for there to be some Civil War memorabilia on the island. And again, one of the requirements of having a CAMA major permit is that there be an archeological survey done to determine whether or not there are any items of historical significance,” Pugh said. “I mean, there was a rumor that there was a sniper at one time during the Civil War that sat in a hollowed-out tree, so there might be a musket ball lying around somewhere, and we would be required to determine whether that was the case or not. And if it were, we'd need to preserve that site, archaeologically, and historically.”
While some of the western bank of the Cape Fear River is part of the downtown Wilmington National Register historic district, there isn’t a specific height limit established by Wilmington’s Historic Preservation Commission, according to the city. (The RFMU zoning does have a 75-foot height limit on parcels that are directly across from the Wilmington Historic District, although that would be enforced by the county through a project approval process, not the city.)
The wider area would also be subject to a review by the North Carolina State Historic Preservation Office, according to the county, which could potentially include height considerations.
The future of Battleship Point
Pugh said he and Lea wanted Battleship Point to be a “legacy” project.
“Jim has been in Wilmington for 40 some odd years I've been here, over 20 […] neither of us are spring chickens and we thought, how cool would it be for us to spearhead a project it would be a lasting legacy to not just New Hanover County, but the City of Wilmington and all of southeastern North Carolina,” Pugh said, adding that he imagines sitting on the Wilmington riverfront, looking across the Cape Fear River at Battleship Point with his son, and being able to say, “we did that.”
But for that to be a reality, a few things still have to happen.
One, is that Pugh and Lea need to bring in hundreds of millions of dollars — a tall order for two self-described small business owners. That has led to concerns about who would really be making decisions as the project went forward.
“So I think there's been some conversation that I've heard third hand that maybe the Board of Commissioners is afraid that we're gonna get this thing entitled and turn around and flip it and then be gone,” Pugh said.
“We're not so arrogant to think that we have the CV to be able to do this thing ourselves, right? We have always planned from the very beginning that we would need to have a master developer partner, somebody like a John Kane from, from Charlotte, somebody that is familiar with building coastal waterfront from maybe South Florida — Tampa, Miami, Fort Lauderdale, where this is sort of routine for for the developers in those areas — and bring them in as the lead.”
But Pugh said KJF intends to stay involved with the project, adding that a “secondary vision” for the project was that his team of real estate agents would be the on-site representatives, which would “provide a living for people long after I’m done selling real estate,” according to Pugh.
Aside from KFJ’s own finances, there are the financial conditions in the market, in general.
“I think the timing was good when we presented the project initially. Everybody that reads the newspaper or watches the news knows that we're in something of a perfect storm in the real estate world with not historically high, but very high, very high interest rates. Also very low supply. And many of the buyers that existed in the real estate world, particularly first-time homebuyers, are no longer qualified to be in the real estate market at all,” he said.
Pugh said he hopes the current timeline for the project would help them open their doors as the real estate market is exiting a recessionary period, ready for a fresh wave of demand.
While the project may end up scaling back, Pugh still imagines it as being a high-end development. Workforce housing isn’t in the cards; it's not sustainable, given the cost of building on the west bank, Pugh said. KFJ still hopes to build an upscale grocery store (Wegman’s, once floated as a possibility, has apparently passed on Wilmington in general, Pugh said), locally owned shops and restaurants, and a ferry or water taxi to the downtown Wilmington waterfront. (For what it’s worth, Pugh said he and his partners have never envisioned a casino on the west bank).
Ideally, Battleship Point wouldn’t be alone on the west side of the Cape Fear River, Pugh said.
“Well, you know, if you're dreaming, right, I was out at Navy Pier [on Chicago’s waterfront] for New Year's a couple of years ago and admiring the Ferris wheel. We've had some private conversations about, how cool would it be to have a top golf facility over there? How cool would it be to have sort of a combination of mixed use residential, local business, and park settings and recreational things to do?” Pugh said. “I think the possibilities are endless.”
But the possibilities will depend in large part on the county. While Pugh said he’s confident the project could clear the dozen-plus regulatory hurdles, it will still have to fit with the county’s vision for the area. And that vision hasn’t been determined yet.
Pugh said he had no real sense of what the county’s timeline will be to figure that out, but that he was appreciative that the county is fast-tracking consideration of the west bank ahead of the overall county land use plan, which could take several years.
“We’re just hopeful that process will continue and hopefully at a little faster pace,” he said.
(Disclosure notice: Commissioner Rob Zapple is a member of the WHQR Board of Directors, which has no role in editorial decisions.)