State Treasurer Dale Folwell freely shares his objections to Project Grace, but this week he also addressed both his opposition to the county's financing plan as well as the developer behind the redevelopment project's latest version.
The county has an agreement with Wilmington-based Cape Fear Development, the development arm of Cape Fear Commercial, on the latest iteration of Project Grace, the name given to the proposed transformation of the county-owned downtown block bordered by Chestnut, Grace, Second and North Third streets into a new mixed-use destination.
County officials want to issue debt for the $57 million construction of the public portion of Project Grace – a 95,000-square-foot museum and library – but Folwell, a Republican who is running for governor, has stymied that effort by not putting the matter on the Sept. 12 agenda of the Local Government Commission (LGC).
The LGC would have to sign off on the county’s financing plan as it currently stands, and according to a letter released Monday from the New Hanover County Board of Commissioners urging Folwell to change his mind and include the item on the upcoming LGC agenda, the county is expected to seek the help of one of the other members of the nine-member LGC.
The letter said they intend to ask that the state commission members “make a motion at the September meeting and vote to place this item on the LGC's agenda for September 12th.”
With no intention of putting the item on the calendar as of Monday, Folwell said he believes the county should fund the project itself, from its own coffers, without borrowing any money.
In noting another of his objections in a phone conversation, Folwell told the Business Journal, "There's one person that makes money every time New Hanover County or the city of Wilmington do anything on every transaction."
That person, he said, is Brian Eckel, co-founder of Cape Fear Commercial and partner in Cape Fear Development. The treasurer cited Eckel's companies' involvement in other city and county projects and sales. Eckel and his firm were behind the redevelopment of the New Hanover County Government Center, but it was CFC broker in charge Paul Loukas and global commercial real estate firm Cushman & Wakefield who represented the seller in the $68 million sale of the former PPD headquarters building to the city of Wilmington in July.
In another example cited by the treasurer, Loukas and Hank Miller of CFC, not Eckel, represented New Hanover County in its nearly $11.4 million purchase of the former Bank of America building at 319 N. Third St. in April.
Asked why he objects to Eckel's and CFD's involvement in Project Grace, Folwell said, “Because I don’t think the average taxpayer knows that there’s one person who is profiting from every single move that’s made, and I’ve always talked about this in terms of transparency, competency and good government.”
Eckel responded to Folwell’s statements Tuesday in an email to the Business Journal.
“The fact is that New Hanover County is growing rapidly, in large part thanks to the decisions of local government and local business leaders. For almost a year, the CFD team have been working with local leaders to bring Project Grace to life and help develop a new museum, library and cultural center in downtown Wilmington,” Eckel wrote. “It should also be noted that this project has received unanimous bipartisan support from all elected officials locally as well as members of our state delegation who all understand the value Project Grace will bring to our community.”
In his response, Eckel referenced a specific aspect of CFD’s Project Grace efforts so far.
“I am proud of the work that has been done and the significant cost savings of more than $4.5M that has been provided to the project and we will never apologize for hard work and trying to be the best we can,” he wrote. “We are excited and we will continue to work hard to make Project Grace a reality and continue to bring positive things to this community.”
In an email Tuesday afternoon, New Hanover County Manager Chris Coudriet noted that over the past five years, New Hanover County has awarded or completed 19 capital projects of which only two involved Cape Fear Development – the Government Center and Project Grace.
"We stand by all of those projects and are proud of all of those partnerships. The county is always transparent in our capital plans and purchasing policy and practices. In every engagement and agreement, the county has followed the letter of the law, ensuring it was open to any qualified firm," Coudriet said.
Cape Fear Commercial served as the buyer's agent for the former Bank of America building purchase based on the contract assigned to New Hanover County, he said.
"The county took assignment of the contract on behalf of Cape Fear Community College for the expansion of their nursing and allied health program," Coudriet said. "The share of fees paid to Cape Fear Commercial for this transaction were taken from the proceeds of the sale of the building."
It’s not unusual for developers to be involved in more than one major project in a city, but Project Grace faced scrutiny from Folwell even before Cape Fear Development's involvement.
Folwell and LGC members objected to a previous Project Grace proposal between New Hanover County and Wilmington-based Zimmer Development Co., one of the development firms behind one of the city’s largest mixed-use developments, Mayfaire.
That plan died last September when the LGC failed to approve an $80 million lease agreement the county wanted to enter into with Zimmer as part of a deal through which Zimmer would build the new library and museum. Back then, Folwell said the county should finance the project itself because it could borrow money at a lower rate.
Early on, Zimmer Development was the only company that appeared to want to participate in the redevelopment, according to county officials.
In 2017, New Hanover County got an exemption to a state law concerning public bid requirements, with the exemption applying solely to the 3-acre Project Grace site. But the county still issued a request for qualifications and proposals for the project “to see the interest in the marketplace,” Coudriet told the LGC board in September 2022.
The county manager also said in a following Business Journal article last year that the exemption allowed conditions that otherwise would not have been possible. “With the deal as it’s structured, we can guarantee the housing investment, we can guarantee the private investment, we can guarantee the outcomes that we have promised to our community,” Coudriet said at the time.
Zimmer Development was the sole company to submit a proposal. After the Zimmer deal folded under the LGC’s lack of approval, Cape Fear Development began studying the project. CFD spent several months looking at the feasibility of Project Grace and hosting dozens of outreach meetings and presentations, CFD officials have said.
In an article in December 2022, Eckel said, "The timing works well for us as we just held the building dedication for the county Government Center and are finalizing punch list items now as the county prepares to move into their new facility. New Hanover County has been incredible to work with during previous projects, so we were honored to be asked to evaluate Project Grace."
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