Gateway poised to change hands
Local buyer could clean up muddy ownership picture

By Ken Little

A local buyer will take over a controlling interest in the proposed riverfront Gateway development, project manager John Evans Jr. said this week.

Evans did not name the purchaser. Documents relating to the transfer of the 10-acre parcel near the Cape Fear Memorial Bridge have been signed, and other details are being finalized, he said.

Evans and lawyers for the estate of Danny Alvis had been reviewing offers from other potential suitors from outside the area. Court documents filed in connection with a lawsuit over ownership of the land indicate an unsettled financial picture surrounding Gateway, which is envisioned as a multi-million dollar mix of condominiums, shops and a restaurant.

Alvis’ estate and Evans are plaintiffs in a lawsuit against local businessman Peter Koke, who created River 2 Sea LLC with the idea of developing the riverfront site. Koke, who maintains he is still owner of the property, favored selling the land to an out-of-state buyer and settling the civil action, but negotiations broke down last week after Evans and lawyers for the estate of Alvis rejected his proposal.

It appears likely the ownership dispute will be settled in court. A trial is set for the week of May 12 in New Hanover County Superior Court. Evans said the lawsuit, and a separate civil action involving more than 80 investors who gave Alvis money for the failed City View project, will not affect the ownership transfer. Alvis died last year in the crash of his private airplane.

“There are a number of parties who have a say in how we go forward, so every one of them is pulling together to make this a successful project. We’ll all benefit,” Evans said.

Koke said in late April that at least four potential suitors, including the local interest, were in the running to purchase the property. He expressed misgivings about the terms of the agreement with the local purchaser.

The muddled ownership picture surrounding the Gateway site prompted a lawsuit in 2006 by Evans and Alvis against Koke.

The plaintiffs maintain Koke transferred his interest in River 2 Sea in 2005 after accepting an initial payment of $1.88 million. Koke said Evans and Alvis did not make stipulated follow-up payments to complete the purchase of the land and the company that oversees it, River 2 Sea.

Before negotiations apparently broke down last week, Koke said “a very big, very strong financially heeled developer” was poised to buy the property. Koke said there was widespread interest in the land.

Scaled-down version
Koke believes the dispute over who owns it could delay or derail the project. Meanwhile, Evans presented a scaled-down development plan last week to city planners.

Misgivings by the Wilmington City Council about Gateway’s scope and its impact on the surrounding area prompted the less imposing version, which will be reviewed Wednesday, May 7, by the Wilmington Planning Commission. If commission members approve the plan, City Council could grant a rezoning of the property in June. Rezoning from industrial to mixed-use status is necessary for Gateway to get off the ground.

It remains unclear if new ownership would mean alteration of the revised Gateway plan, which includes a 12-story building containing 300 condominium units and a deck with 887 parking spaces. Also envisioned for the site are a restaurant, retail shops, office space and 4.3 acres of landscaped open space. A hotel originally proposed for the site has been scrapped.

Evans said that discussions are ongoing about addressing traffic concerns in the area of the development. Even if the property changes hands, Evans said he anticipates remaining involved in Gateway.

“There will be a lengthy transfer period. I expect to play a role,” he said.

Under the revised development plan, a riverwalk would run the length of the property along the Cape Fear River. There would be 40 wet-slips for boats and a slip for a river taxi. The total square footage of the building has been reduced to 953,000 square feet from 1.1 million square feet.

Koke said he began acquiring the parcels where Gateway would be located about 12 years ago with the intent of putting up four- or five-story buildings. Koke said that when Alvis and Evans entered the picture as co-developers and proposed a high-rise condominium complex, he stepped aside after an agreement to purchase River 2 Sea was signed in 2005.

In the courts
A legal battle soon ensued. Lawyers for Evans and the estate of Alvis maintain River 2 Sea owns the property free and clear after signing an agreement in August 2005 that included an initial payment of $1.88 million to Koke in exchange for his stake in the enterprise.

Koke said in court papers that Evans and Alvis did not live up to their end of the bargain in fully compensating him another $4.12 million for the right to assume ownership of River 2 Sea. Evans and Alvis’ estate, which is mired in a lawsuit by the City View investors, refute Koke’s claim. They maintain by signing an agreement and accepting the first payment, Koke “conclusively” transferred his interest in River 2 Sea.

In February, Evans and Alvis’ estate asked the court to modify a preliminary injunction preventing sale of the land to allow a transfer “free and clear of the liens of creditors.”

A ruling on the motion is pending. Documents filed in connection to it provide insights into the status of financing for Gateway.

In court documents, Evans acknowledges that loans totaling $1.88 million from SunTrust Bank and two other individuals that were used as a first installment to Koke for his interest in River 2 Sea are in arrears. The SunTrust Bank loan was made to River 2 Sea.

A sale of the riverfront property “or other means of satisfying the SunTrust Bank debt in full during or about May may be required to prevent foreclosure on the property by SunTrust Bank,” plaintiff lawyers wrote in the February motion to modify the preliminary injunction order. Such a foreclosure would “substantially decrease the value of the property and prejudice the rights of all parties to this action,” the document continues.

Evans said an agreement exists with SunTrust Bank that the loan will not be foreclosed on. SunTrust officials declined to comment.

“They’re working with us. Things are very close to a likely resolution,” Evans said.

Koke said he believes Evans acted ethically throughout the land acquisition process, but was suspicious of Alvis, who was aggressively marketing City View to investors at the time.

“I think he was a pretty optimistic fellow. My advice to him was not to monopolize every project. If he would have taken his resources and developed one project it probably would have been developed today,” Koke said.

Muddy waters
Another complicating factor in the future of River 2 Sea is the company’s ties to Alvis’ Muddy Waters Properties LLC. Alvis’ estate and Muddy Waters Properties are named in the lawsuits filed by investors in the City View development, which was to have included high-rise condominiums near Battleship Park on the New Hanover County side of the Cape Fear River. Cash that was intended for City View may be tied up in the Gateway project, some investors believe.

City View stalled after Alvis’ death, although county planning officials have said there is active outside interest in the property. Many City View investors were of the belief that Alvis’ Muddy Waters Properties already owned the land where the development was to be built. Before Alvis died, he sued property owner Walter W. Winner for breach of contract, alleging Winner backed out of an $8.7 million agreement for the property after negotiating a higher price from another buyer. That case was settled out of court in February. Terms were not disclosed.