The Dive: Public-Private Pitfall

Just as construction timelines were about to formalize, Wilmington’s Gateway Project deal has fallen apart.

The city’s memorandum of understanding with the developer, East West Partners, expired Wednesday. And despite spending four years and six figures preparing for the massive project, the firm won’t seek to renew it. 

When the city council declined to apply for millions in grant funding to subsidize the inclusion of workforce housing in the mixed-use proposal last month, members didn’t appear to realize that doing so would effectively kill the deal.

The vote to apply for the grant failed 4-2. In a statement Thursday morning, the city billed the decision to not pursue a development agreement as mutual.

For The Assembly, Johanna Still reports on what went wrong, and what lessons it has for future lofty public-private partnerships.

Public-Private Pitfall

A failed request to include affordable housing in an ambitious mixed-use development downtown highlights the complications of big ideas in cooler economic times.

---

‘Traveling Mercies’

On Tuesday afternoon, New Hanover County finally got state approval for Project Grace, a plan to redevelop the downtown Wilmington library block that’s been in the works for nearly a decade. The nine-member Local Government Commission, part of N.C. State Treasurer Dale Folwell’s office, approved the county’s plan to take on $57 million in debt to fund the project with a 5-4 vote.

The county’s plan to pair a new library and museum with private development has been a tough row to hoe. Folwell–who during the meeting said that “there’s been nothing graceful about this thing called Project Grace”–has been a relentless critic. 

Folwell was still ever the polite host, and when the vote was done thanked county representatives for making the 300-mile trip to Boone, where the commission meeting was held. “You’ve made a long effort to get up here and I wish you traveling mercies on the way home,” Folwell told them.

“Traveling mercies,” if you’ve never been offered them, are a prayer for safe and smooth travels, rooted in the Southern Baptist tradition. Folwell’s folksy send-off was a contrast to his tone earlier in the meeting, by turns combative and conspiratorial. 

Folwell called on county Chair Bill Rivenbark to answer questions and bristled when, instead, Commissioner Dane Scalise stood to address them as a representative of the county.

“I asked for the chairman,” Folwell said flatly. “I didn’t ask for you.”

John Burns, a commission member, warned Folwell that he risked “overstretching the authority as chair of the meeting.” 

Folwell moved on, recounting a story he’s told before but with more details each time. He said during a phone call last year, former county Chair Julia Olson-Boseman had told him she wanted to ditch the original choice of developer, Zimmer, for a new company.

He’d told me the story in August, and in the commission meeting last month, but this time gave one more turn of the screw: That Olson-Boseman explicitly said she wanted to use the same developer the county had partnered with for the government center project, Brian Eckel of Cape Fear Development.

In 2020, Folwell successfully pushed the county to retool the government center project after learning its “lease to own” financing deal with Eckel would cost taxpayers $20 million more than a more direct debt-financing plan. He was clearly piqued when the county prepared to go to the commission the following year with a similar lease-to-own plan for Project Grace. But when the county again reworked its plan, again saving taxpayers tens of millions of dollars, Folwell remained critical and voted against it Tuesday.

We’ve written a lot about Folwell, who is also running for governor, but we’ve had a lot of occasions to do so. The government transactions he’s expressed concerns about have been big news here: the government center redevelopment, the sale of the Bank of America building to Cape Fear Community College, Wilmington’s purchase of the former Thermo Fisher building, and Project Grace–all eight-figure deals, and all involving, directly or tangentially, Cape Fear Development. 

For good measure, Folwell has also noted that Eckel served on the advisory board that steered the sale of the then-county-owned New Hanover Regional Medical Center to Novant Health and now serves on the regional Novant board. Folwell was critical of that sale at nearly every juncture of the process.  

Tuesday, he said he is “never going to stop asking questions.” It’s an attitude that’s made him popular with journalists and transparency advocates, and helped garner him a 2022 Sunshine award from the North Carolina Open Government Coalition. 

But Folwell’s questions about Cape Fear Development and Eckel specifically haven’t coalesced into actual accusations. “Something’s rotten in Denmark,” Folwell told me earlier this year. 

But what? Eckel has certainly been involved in a lot of government transactions and they’ve all been open to public bids, voted on by bipartisan councils and commissioners.

There is, no doubt, a coziness between real estate power players and elected officials in the Wilmington area. There is even a fair degree of overlap. But that, as several state commission members alluded to, seems like an issue for voters, not the treasurer, to address. 

–Ben Schachtman

Catch up on an audio conversation on last week’s edition of The Dive here, or contact us with story ideas and feedback at wilmington@theassemblync.com.

---

Not a subscriber yet? Good journalism is expensive – and we need your support to do more of it. For just $5 a month or $50 a year, you’ll unlock full access to our archives and help us grow in 2023.

Already a subscriber? Consider giving the gift of The Assembly to a friend.

---

Around the Region

Cash to Walk: While the state claims Cape Fear Community College has broken no rules, payroll documents and former employees’ testimony show the school is using state money to pay terminated employees rather than local funds. WHQR reports on why the practice could run afoul of state regulations. 

Double Dip: Former employees of a Christian recovery center told Port City Daily that the local nonprofit was charging residents rent even though it was receiving state money to house them. The employees also raised concerns about verbal abuse and withholding wages.

Roll Credits: The city’s oldest movie theater is set to close, the StarNews writes. Once AMC Classic Wilmington 16 plays its last film later this month, the city will have two remaining theaters, at Mayfaire and The Pointe.

---

Around the State

---

---