A redevelopment of a county-owned block in downtown Wilmington could be on its way to becoming a reality as county officials and the developer continue to work on a potential agreement.

Referred to as Project Grace, the transformation of the property bordered by Grace, Third, Chestnut and Second streets could include a new library, Cape Fear Museum, city of Wilmington offices and apartments, according to New Hanover County Board of Commissioners agenda documents.

On Thursday, the Project Grace item was removed from the county agenda for Feb. 1. The change came at the request of the developer, Zimmer Development, so the firm can continue revisions to the memorandum of understanding, said Jessica Loeper, chief communications officer for the county, in an email Thursday afternoon.

The block currently holds the main branch of the New Hanover County Public Library, a park, a 650-space parking deck, surface parking lots and the former Register of Deeds building.

The redevelopment would be a public-private partnership between New Hanover and Zimmer Development, which had prepared an MOU, memorandum of understanding, “that identifies key parameters of the project in the way the developer can effectively proceed,” the agenda item stated.

Before it was pulled, the agenda item said that the county’s legal team “believes the memorandum should be considered as a proposed general development agreement and go before a public hearing prior to final acceptance as county legal finds the proposed agreement to be a development agreement consistent with public-private partnerships.”

A public hearing on the agreement was anticipated to take place at the New Hanover County Board of Commissioners' March 15 meeting before the Projectx Grace item was withdrawn.

"The board is asked to consider this item [on its Monday agenda] as the time to either accept or direct modifications to the proposal so that county staff can proceed with the hearing notice and prepare for the public hearing at the board’s March 15, 2021 meeting," the Feb. 1 documents stated before they were removed. 

The developer was proposing to place the public portions of the redevelopment on the Chestnut Street side. The documents spelled out key elements of the developer’s plan at the time with regards to the nearly $84 million in civic and arts facilities:

• The construction of a 35,000-square-foot museum and 38,000-square-foot library
• The library construction cost estimate, over $26 million
• The museum construction cost estimate, over $30 million 
• 75,000 square feet of city of Wilmington offices (which the city would sublease) that would cost about $27 million
• Anticipated rent payment for the museum and library is $4.5 million a year
• A termination clause includes the county reimbursing the developer its expenses up to $800,000, unless it is determined the county's rent payment exceeds $4.5 million a year or the Local Government Commission does not approve the lease agreement. 
• The parking component is not a part of the project condominium. Parking for the project will require a separate agreement as to the relative allocation of parking spaces between uses.
• A ground lease that will revert to the county in fee simple for no additional cost to the county
• A library/museum lease agreement for 20 years that includes upfit, furniture, and fixtures (not books, library materials, art/museum display items)
• The county would be responsible for taxes, maintenance, repair, replacement and insurance
• The developer would be responsible for structural and exterior elements (roof, exterior walls, foundations for the library, museum) and for the county ’s portion of the community elements (community terrace, overlook roof terrace and outdoor community gathering area/ park)

The Grace Street side could be the site for the potential private investment, for which Zimmer Development would have the right to build $23 million worth of apartments, according to the agenda item before it was removed.

“If it’s determined that no part of the civic and arts facility needs to be located on the north parcel, then the developer can request to negotiate a leasehold or purchase acquisition of the northern parcel,” the documents stated.

Workforce housing was not included in the agreement, although it was discussed during a process that has been ongoing since 2019.

According to an answer in a Frequently Asked Questions document about Project Grace, "The proposed housing on the block is planned to be market rate, however the county is in active conversations with Zimmer’s development team to include affordable housing as part of Project Grace. New Hanover County is committed to improving workforce housing through strategic initiatives, including partnerships with Habitat for Humanity and other affordable housing advocates, updating our development codes, and streamlining our permitting processes – all of which are important steps to ensure workforce housing."

The developer and the county "anticipate that the project will revitalize and reinvigorate a portion of historic downtown of the city of Wilmington and through the creation of the Civic and Arts District, generate significant ad valorem tax revenues, and result in the creation of jobs in the county that will pay at or above the median average wage in the county," the previous MOU stated.

The project timeline, a multi-year process, described the construction of the civic and arts facilities taking three years from the date when the agreement is finalized.