Citing 'pattern of profits,' state treasurer keeps heat on New Hanover over Project Grace

When it comes to Project Grace and other Wilmington-area projects, State Treasurer Dale Folwell says his job is to protect and defend the interest of the taxpayers.

Recently, the New Hanover County Commissioners announced Folwell had refused to add the financing for Project Grace to the agenda for the Local Government Commission’s next meeting, scheduled for Sept. 12.

The New Hanover County Board of Commissioners responded by sending a letter to Folwell asking him to reconsider and add the application to the agenda. But Folwell maintains he's just doing his job, and when it comes to government projects, he considers four factors: transparency, competency, good government, and conflicts of interest.

“I will never back down from those four things,” he said. “A lot of questions that I ask are questions that other board members have, as well as the members of the public.”

History of Project Grace

With the goal of bringing more traffic and life into downtown Wilmington, the New Hanover County Commissioners recently approved a development agreement for a joint facility that will include Cape Fear Museum with state-of-the-art upgrades and a public library.

The price tag is estimated at $55.94 million with Cape Fear Development, a Wilmington-based firm, serving as the developer. The county already owns the land, a three-acre city block, bounded by N. Third, Chestnut, N. Second and Grace streets.

The county intends to finance construction of the new facility through limited obligation bonds. This is a change from the county’s previous plan to construct the project with a different developer and finance it through a public-private partnership. The county said they made the changes after the Local Government Commission failed to approve the project at its meeting in September 2022. During that meeting, the motion to approve died for lack of a second.

State treasurer's objections to Project Grace

In its letter, the New Hanover County Commissioners wrote LGC staff told them Folwell would not add the item to the Sept. 12 agenda because he “did not like or approve of the site” and he did not “believe debt is necessary” for the project.

But Folwell said some of those claims are false.

“I never said anything about the site,” Folwell said. “Them saying that is inaccurate.”

In an email to the StarNews, New Hanover County Manager Chris Coudriet maintained the statements made in the New Hanover County Commissioners' letter were confirmed by Folwell's staff.

"The information I reported to the board during their public meeting on August 21, and they subsequently included in their letter to the Treasurer, was based on direct conversations between New Hanover County Staff and the Treasurer's office, who spoke on his behalf," Coudriet said. "I confirmed three times to ensure I understood the specific reasons for Project Grace not being placed on the LGC's September agenda, and each time, those reasons were affirmed by the Treasurer's staff."

Folwell did say if the board was so frustrated by the tough questions why didn’t the county use some of the $300 million in its Revenue Stabilization Fund.

But Coudriet explained the fund is designated for "economic crises and tax stabilization."

"The Board of Commissioners has unanimously agreed to limit the use of this fund to interest proceeds for community needs, thereby preserving the principal to ensure long-term financial stability and flexibility for the county," Coudriet said. "We believe that issuing debt is the more financially prudent route, because with the county’s AAA bond rating and strong financial position, we will be able to borrow at a low interest rate."

Folwell also claimed he did not say Project Grace would never be added to the LGC’s agenda and added the inaccuracies were "another example" of what he had been dealing with when it comes to "projects in this area."

“I won’t be bought, and I can’t be bullied away from asking tough questions,” he said. “It’s just another transaction from that community that’s so overcomplicated.”

Coudriet said the county welcomes questions from the State Treasurer and the Local Government Commission and has been "responsive in providing any and all information that has been requested."

"In many instances, we are taking steps to answer questions proactively based on statements made by the Treasurer to the media, to ensure all concerns, questions, and perceived issues can be addressed directly," Coudriet said.

What other local projects has Folwell questioned?

A few years back, Folwell questioned the sale of the Bald Head Island Ferry to the Bald Head Island Transportation Authority, also refusing to add that item to the Local Government Commission’s agenda for consideration. More recently, he voiced concerns about the city of Wilmington’s purchase of the former PPD building.

Folwell defended his position on those projects, reiterating once again his four considerations: transparency, competency, good government, and conflicts of interest. He noted it came down to a "pattern of profits," and in the case of Wilmington and New Hanover County, he believes those profits are going to Cape Fear Development. Folwell questioned why the development company was being allowed to buy the old library site in downtown Wilmington without going through the upset bid process, a process he claims benefits the taxpayers by ensuring the municipality gets top dollar for public property.

Coudriet addressed those claims.

"The county has consistently been transparent about its capital plans and purchasing policies, ensuring all processes are open to any qualified firm," he said. "Over the past five years, New Hanover County has awarded or completed 19 capital projects, only two of which involved Cape Fear Development. We stand by these projects and are proud of all our partnerships."

Coudriet also spoke to the county's decision to forego the upset bid process because it does not "allow public agency sellers to impose conditions on the purchase of a parcel."

"In line with this, we've proceeded under a statute specific to our county block that does not require an upset bid process, but instead allows conditions be placed within the public-private partnership agreement to ensure a fair market price of the property, guaranteed private development within a set timeline, and that the proposed uses are approved by the Board of Commissioners to ensure it fits with the county’s overall vision for the block," he said.

In the case of the Cape Fear Development's purchase of the old library property, Coudriet said there is a minimum $3.5 million price for the property that the developer will pay, and that amount could increase based on two appraisals that have to be obtained.

"In addition, we have guaranteed that there will be a $31 million minimum investment by the developer within a set timeframe that guarantees this investment," he said.

According to the agreement, private construction must begin within 24 months of the land sale to Cape Fear Development.

"So, we have been able to ensure a higher than fair-market purchase price as well as guaranteed, timely and compatible private investment, the latter of which would not be possible through an upset bid process," Coudriet said.

But Folwell said claims about a desire to control the development of the surrounding property are "so ridiculous" given that the county just constructed its new administration building "next to a strip club," referring to Cheetah Premier Gentleman's Club, a business that existed prior to the county's decision to build the new administration building.

Folwell said when it comes to Project Grace, he will continue to ask the tough questions.

“There are hundreds of cities, counties and water and sewer districts that need our assistance,” he said. “The fact that we’re having to spend so much time in a community that has everything going for it is disturbing.”

As of now, Project Grace has not been added to the Local Government Commission’s agenda for consideration on Sept. 12.

“We are continuing to evaluate the application in a very serious manner,” Folwell said.

This article originally appeared on Wilmington StarNews: New Hanover wants NC treasurer Dale Folwell to consider Project Grace