City of Wilmington officials will consider a resolution Tuesday night that directs the city manager and city attorney to begin negotiations with the only local company to submit a Water Street parking deck redevelopment proposal.

But that doesn’t mean East West Partners, a Chapel Hill firm the city staff identified as another good option, is out of the running.

The city’s staff review committee found the proposals of Cape Fear Development Partners LLC and East West Partners worthy of moving forward and had planned to recommend both to City Council, but city manager Sterling Cheatham’s office said the resolution needed to be more specific, according to a memo dated Feb. 13.

“The City Manager’s Office respects and honors the staff committee’s position, but believes that a recommendation should be made to Council on the order in which these two firms should be considerered,” the memo, sent to Mayor Bill Saffo and the City Council, says. “As a result, after a thorough examination of the proposals against the criteria, we recommend that the City move forward with Cape Fear as the primary firm with which to negotiate, followed closely by East West.”

The proposed resolution, posted to the City’s website Monday, states, “Should the City not be able to reach mutual agreement on the terms of a Memorandum of Understanding with Cape Fear Development Partners LLC,” the city manager and attorney would be authorized to negotiate with East West.

The memo adds, “The deciding factors that ultimately pushed the City Manager’s Office to recommend Cape Fear … were the strength of their design in preserving open space at the foot of Chestnut Street, their attempts to comply from the beginning with the Council adopted development program, and our knowledge of the credentials of team members.”   

Cape Fear Development Partners LLC, the development arm of Cape Fear Commercial, wants to create 1 Chestnut Plaza, a project that would include a 128-foot building with 174 residential units, mostly one- to three-bedroom apartments with the possibility of some condos, and 19,000 square feet of retail space, according to the revised proposal the company submitted in January.

“We have expanded Chestnut Plaza by 53 percent creating a 1/3 acre public amenity on Water Street. We are also extending Chestnut Street to connect with Water Street and draw the public to the water,” the company’s revision states.

The East West revised proposal includes 554 parking spaces and a 172-foot-tall building with more than 31,000 square feet of retail space. The plan's 190 residential units would include 58 condominium homes, the revision says.

"We have also revised our budget estimates to include the entire cost of the parking garage in our financing. This will result in some interest and loan expenses for the City at the time of purchasing the deck, but we have arranged financing in a similar public/private partnership in the past and are happy to accomodate that request here," says the revision, signed by East West Partners president Roger Perry.

Cape Fear Development Partners' revision proposes three options in regard to the parking portion of the project: Rebuild the 300-space Water Street deck at an estimated public cost of about $11.3 million, including street/streetscape improvements, Nutt Street connector improvements, etc.; build a 615-space Water Street Deck along with additional development as described in Cape Fear Development Partners' original proposal at an estimated public cost of nearly $23 million; or build a 509-space deck with 300 spaces for public use and the original proposal's additional development, at a project cost of nearly $17 million. The second and third options, the developers said, add property tax revenue and create more parking revenue for the city over 10 years.

"Although it has never been proposed by the City of Wilmington/DFI, we are open to alternate scenarios including purchasing parking spaces within the deck in a condo ownership format. Furthermore, we are open to financing the public infrastructure and being reimbursed by the city," the 1 Chestnut Plaza revision states. DFI refers to the University of North Carolina School of Government’s Development Finance Initiative, which the city paid to come up with the best uses for the Water Street deck property.

Council members said they believe they face a tough decision Tuesday, and that the resolution could change depending on what the council wants to do.

“I will make up my mind tomorrow night after I’ve heard everything,” councilman Kevin O’Grady said Monday. “We’re in a wonderful position. We have two very qualified developers. I consider both of them excellent proposals.”

Both projects would rejuvenate the area, add public space, give the city a modern parking garage to serve downtown and add to property values, he said.

“Each of them is talking about a $35- to $40-million private investment in that area. It’s a win-win for all taxpayers of Wilmington,” O’Grady said.

Councilman Neil Anderson said he believes the team of people involved in the development, including the builder, architect, engineer and property manager, is critical because of its unique aspects – an urban infill project in an historic area next to the Cape Fear River.

“I think both are good teams or else we wouldn’t be where we are; it would be a slam dunk,” Anderson said Monday.

He said no matter which company the council chooses to begin negotiations with, coming up with a memorandum of understanding for the project will likely take several months.

"It was the consensus of the staff review group that if the City cannot successfully negotiate a Memorandum of Understanding with either of these firms, that Council should reopen the solicitation process,” the memo to the council states.

The City Council meets at 6:30 p.m. Tuesday at City Hall.