Real Estate - Commercial

What's Next For County's P3 Projects

By Cece Nunn, posted Sep 2, 2022
A new New Hanover County Government Complex is underway off South College Road (Photo by Cece Nunn)
Developers working on the transformation of county-owned property off South College Road expect to start the private development portion of the project next year.
In the meantime, a main feature of the public portion – a new New Hanover County Government Center – is expected to be complete by December, officials said.
The government facility that’s being replaced was originally a shopping center built in 1989, which the county bought and began renovating in 2002.
The new building “is focused on serving our customers efficiently. It was designed to provide a ‘one-stop’ for anyone visiting the complex to come in and be quickly served in the lobby, with no more wandering around the building trying to locate the correct department,” said Sara Warmuth, the county’s chief facilities officer.
She said the final certificate of occupancy is expected to be issued Dec. 1 with move-in scheduled to begin Dec. 5.
“By constructing a multi-story complex for the government center, we will reduce the area needed for county operations from 15.01 acres to 6.91 acres,” Warmuth said in an email. “Additionally, the new site will eliminate more than 30,000 feet of impervious surface area to create green space that features a park with trees and other natural vegetation, helping create better stormwater runoff and overall quality-of-life improvements.”
The building improves upon the county’s emergency operations center, she said.
“Within the two-story portion of the building is our purpose-built EOC and 911 Center, along with a new area we call the Hub, which will be a place for daily gathering, meetings and sharing of ideas that will be converted to additional operational space during emergency events,” Warmuth said. “By using tilt up concrete construction, the new government center will have a higher storm resiliency, helping ensure the county can maintain operations without concern of the facility becoming compromised.”
Despite challenges in the overall commercial construction industry, the process for the new government center “has gone extremely well,” Warmuth said. 
“Cape Fear Commercial/FD Stonewater, Thomas Construction and LS3P Architects have stayed ahead of potential supply chain delays” she said. “The team has been flexible and often shifted priorities depending upon what was the critical path. Unfortunately, electrical components continue to present the longest delay, but progress continues to be made.”

Private development update
The private portion of the redevelopment is expected to include residential and commercial space. 
Assistant County Manager Lisa Wurtzbacher said in an email that through the development agreement established for the public-private partnership, the private portion of the property will have mixed-use development with at least 5% of the residential units dedicated to workforce housing. Construction on the private portion is expected to start after the land is sold to the developer, which will occur after the completion of the new government center facility. 
But that won’t be the end of the county’s involvement in the private portion.
Wurtzbacher said in an email, “Per the development agreement, the developer will present final plans for these improvements to the county and receive input from the County Commissioners prior to beginning construction.” 
Brian Eckel, of Cape Fear Commercial/FD Stonewater, said the developers hope to demolish the existing building during the first quarter of 2023, followed by installing the entry drive and public green space. 
“We will start construction on the private portion of the Government Center, which will be known as ‘Proximity – Government Center,’ in 2023,’” Eckel said. “Everything is on track as planned.”

Project Grace Update
The New Hanover County Government Center redevelopment project isn’t the only partnership on the county’s plate.
Project Grace, which would transform a downtown Wilmington block owned by New Hanover County into both public and private uses, is somewhat in limbo as officials await a decision by the N.C. Local Government Commission.
The 3-acre block bordered by Grace, Third, Chestnut and Second streets would include the existing parking deck, a new museum, new main branch of the New Hanover County public library, residential units and commercial space, including potentially a hotel. 
Under the terms the county has been working on, Zimmer Development Co. would finance and reconstruct the block, then lease the museum-library and parking deck back to the county for a 20-year term.
But the Local Government Commission has to approve the lease. According to a previous Greater Wilmington Business Journal article, the difference between the county’s 20-year lease payments to Zimmer (a total of $80 million) compared to a traditional design-build scenario ($66.8 million) is about $13.2 million. Those costs would be offset by the creation of $11.6 million generated by taxes from the private uses, according to a presentation by the county to the LGC in August.
During the meeting, some LGC officials, including State Treasurer Dale Folwell, questioned why the county was seeking a private financing arrangement.
The LGC did not make a decision on the lease at its August meeting. 
On Aug. 26, a spokesperson for the treasurer said in an email, “As of today, what items will appear on the LGC agenda for the September meeting has not been finalized.”
Around the same time in August, Wurtzbacher said in an email, “At this time, New Hanover County has not been informed if a vote on Project Grace will be included on the Sept. 22 LGC meeting agenda, but we believe we have responded to all of the questions from the LGC and their staff at this time. The county is continuing to work through the final design and construction documents process, to ensure the project can move forward quickly once a decision is made.”
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