State Treasurer Dale Folwell lobbed question after question – many about real estate – to the cadre of New Hanover County officials at this week's Local Government Commission meeting in Raleigh.
The inquiries from the treasurer, who is a gubernatorial candidate, centered at Tuesday's meeting around the county’s purchase of the former Bank of America building in downtown Wilmington. He also expressed concerns about the city of Wilmington's financing plan to buy the former PPD headquarters building on North Front Street for $70 million.
In the end, although Folwell voted against them, the state's Local Government Commission granted both New Hanover's and Wilmington's requested financing approvals.
Folwell has questioned New Hanover County's decisions before in his role as chair of the LGC and as state treasurer, including other redevelopment plans and the county's sale of New Hanover Regional Medical Center to Novant Health.
In the case of the county's recent purchase, the county paid nearly $11.4 million for the property at 319 N. Third St., minus 14 parking spaces that were in dispute, to seller River Bend #1 LLC. Refurbishing the five-story, 55,000-square-foot building for use by Cape Fear Community College to expand its nursing and allied health programs would cost at least another $14 million, according to a previous Greater Wilmington Business Journal story.
During Tuesday's meeting, Folwell and another member of the LGC, Paul Butler, questioned the timing of the county’s request (after the sale had gone through) to approve $25 million in limited obligation bonds, nearly half of which would be used to reimburse the county itself for the purchase of the Third Street building.
“It is not uncommon for us to use our cash liquidity to purchase large assets on the front end with an expectation when we go through the process to go to the bond market and reimburse ourselves. We've done this before,” County Manager Chris Coudriet told the treasurer and the rest of the LGC. “If there's a policy change that we need to explore, we're certainly fully committed to that, but we had the ability to close on the property to go ahead and give certainty to the community college and community that there would be a chance to expand the nursing school.
“We did not want to bring down permanently our fund balance, and so the expectation of our board was that we would come and ask to be reimbursed, but we did have the ability to pay for it in cash at the time. We do want to return our fund balance to its very solid position.”
The county came prepared for Folwell’s questioning. The group that attended the meeting included Coudriet, Board of Commissioners Chairman Bill Rivenbark, Commissioner Dane Scalise, CFO Eric Credle and Intergovernmental Affairs Manager Tim Buckland, along with the county’s bond counsel, Rebecca Joyner.
Of the county’s request, Joyner added, “It is a common practice not just by New Hanover but by the large majority of our local government clients, and it really relates to the timing of capital project expenditures. You wouldn't want them to have to go back to the bond market every time there's an opportunity to purchase something. So sometimes folks purchase something with an anticipation of reimbursing so that they can collectively put projects together and finance them all at once.”
Among the other questions Folwell had was, “Who represented New Hanover County on the purchase of the building that you're asking us to finance after the fact?”
“Cape Fear Commercial is the buyer's agent, our agent,” Credle said of the Wilmington-based commercial real estate firm.
Folwell then asked, “Was it anybody in particular or just Cape Fear Commercial? Was there a broker of record?”
“Paul Loukas was the main one we dealt with. He was the primary contact,” Credle said.
Folwell also asked about the commission fees involved. Credle said about 2%, or $227,500, went to Cape Fear Commercial, while 3% went to the seller’s agent, Cameron Management, another Wilmington-based commercial real estate firm.
Elaborating on his reasons for questioning the county, as well as the city of Wilmington's planned purchase of the former PPD headquarters campus to consolidate offices, Folwell said on Wednesday that transparency is vital.
"I think that when you're making these multi-million dollar purchases ... it's important to be as transparent as possible," he said.
Folwell added Wednesday, "We have 85 counties and hundreds of cities in North Carolina who would love to trade places with Wilmington and New Hanover County in terms of their economic tailwind and vitality. And, you know, whether it's the government center, or they want to enter into a [public-private] partnership when we show them how to save $21 million of interest or any other thing that you want to talk about, it just seems like everything is so complicated. And the fact is, is that Wilmington has an opportunity going forward to figure out that ... all transactions have to have the highest levels of transparency, competency, governance and absent conflicts of interest. That's what's going to really determine the future of Wilmington for the next 50 years."
After the LGC meeting Tuesday, Wilmington City Councilman Luke Waddell blasted Folwell's questioning in an emailed press release.
"The Local Government Commission has a specific role in facilitating the financial needs of local governments and stepping in when a local government faces insurmountable challenges. These responsibilities are clearly outlined in State Statute," Waddell stated in the email. "Unfortunately, Treasure [sic] Folwell has twisted and politicized the Commission’s narrow role, targeting Wilmington and New Hanover County directly. They have demanded unwavering obedience and submission, possibly because we dared to assert our right to self-governance. Treasure Folwell’s actions have needlessly (and I believe purposely) complicated our task at hand. However, the majority of the Local Government Commission, which he chairs, recognized the merits of our proposal and the inherent benefit for the future of Wilmington. I am grateful to them for their professionalism and dedication to the service of North Carolina."
Asked about its reaction to Folwell's questioning, Brian Eckel of Cape Fear Commercial emailed the statement: "For over 20 years we’ve built our company on hard work with the utmost integrity and total transparency. Our results, reputation, and repeat clients are a testament to these values. Our team of solution-based professionals will continue to remain focused on creating a lasting impact and a better community."
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