A community wanting to transform its downtown could focus on singular projects, but UNC DFI analysis often reveals that a greater scale of redevelopment can enhance feasibility and achieve more impact. If an entire city block is vacant, the redevelopment of one building will not make a huge difference. Large-scale efforts will sometimes help mitigate the costs of development and allow for a shared vision and coordinated investment among public and private sectors—all factors that can enhance the likelihood of a successful and sustainable revitalization effort.

The Challenge

Kannapolis, North Carolina, exemplifies the scaled-up approach. In 2015, the City of Kannapolis acquired its entire historic downtown core for $8.75 million. The purchase included numerous historic buildings and large swaths of vacant land where mill structures once stood.

Much of Kannapolis’s downtown had been built and run for employees of Cannon Mills, the city’s namesake and once the largest textile factory in the world. In 2003, the mill closed and the 4,300 jobs that were lost marked the biggest permanent layoff in North Carolina history. The downtown, as well as the mill, had been acquired from Cannon Mills in 1982 by billionaire and Dole Food mogul David Murdock, who sold the mill in 1987 but held onto the downtown and surrounding acreage. Having a single owner of the area helped to facilitate the sizeable transaction between the City of Kannapolis and Murdock.

In 2015, more than half of the downtown was vacant and many of its historic structures were in states of disrepair. Few vestiges of Kannapolis’s formerly bustling downtown, where three movie theaters once played the newest films in sync with mill workers’ shifts, remained. Although the tax assessed value of downtown totaled $24.5 million, it represented less than 1% of the city’s total tax base.

With the downtown under local government ownership and a 10-year partnership with UNC DFI in place, city leadership regained control over the fate of arguably its most unique asset.

The Project

Since 2015, Kannapolis—with the help of DFI—has made major investments in its downtown, radically transforming its infrastructure, providing more greenspace, and refocusing on pedestrian-centered designs. The downtown’s primary street, for example, is being transformed into an urban, linear park. Its innovative design will tie into surrounding commercial and community spaces, providing outdoor seating and recreational opportunities.

The construction of a new baseball stadium with expected opening in Spring 2020 complements the city’s vision. Known as the Sports and Entertainment Venue, or “SEV” for short, the new stadium will host 70 baseball games annually, seating roughly 5,400 people, while also providing a venue for outdoor concerts and events.

These strategic and innovative investments signal the City’s commitment to revitalizing its downtown, and though not yet complete as of Summer 2019, they have already begun to usher in new private investment.

Through DFI’s help in master planning, Kannapolis is beginning to transfer its downtown land holdings to private parties for redevelopment. A mix of residential, office, retail, and hospitality uses are planned, which—once implemented through a series of solicitations and Public Private Partnerships (P3s)—will breathe new life into this once-vibrant downtown.

As each property is turned over to private partners, UNC DFI conducts detailed predevelopment analyses to better inform the appropriate development program as well as the appropriate level of public investment. And as a long-term partner, DFI will remain by the City’s side throughout its downtown’s redevelopment. By continuing to provide updated financial, market, and site analyses, UNC DFI protects the City’s potential financial liability, limits public investment, and upholds the public interest.

Ultimately, as Kannapolis works to reposition itself, DFI provides resources that expand the capacities of City staff and elected officials and inform better decision-making.

The Outcome

In 2016, the City and DFI released the downtown’s first solicitation for private development. Known as the Demonstration Project, this mixed-use development opportunity served to showcase the market’s appetite and development potential of downtown Kannapolis. With UNC DFI’s help, the City successfully negotiated and executed a development agreement with an experienced partner and the project broken ground March 2019. Known as VIDA, the development will add 286 apartments, 19,000 square feet of commercial space, and 417 structured parking spaces to downtown.

Since the success of the demonstration project, UNC DFI has released additional solicitations for townhouses to be constructed at the former mill site and the adaptive reuse of several historic downtown buildings. The City and DFI will continue to release solicitations to realize the City’s goals of seeing more than $400M of investment in downtown Kannapolis.

 

Wilmington, North Carolina: Water Street Parking Deck

The City of Wilmington, North Carolina, hired the Development Finance Initiative (DFI) in 2013 to conduct a pre-development process for the Water Street Parking Deck (parking deck). The parking deck is an aging public parking facility prominently located in the city’s historic downtown on the Cape Fear riverfront.

Wilmington is one of North Carolina’s largest and fastest growing cities and a popular tourist destination. Its downtown area is an economic and social hub for the region. With a nearly 300-block historic district, the area includes cobblestone streets with ancient trees and lovingly restored historic homes, restaurants, shops, music and art venues, hotels, a river walk, a college campus, and a convention center.

The Challenge

The two-story Water Street Parking Deck was constructed in the 1960s and sits on 1.2 acres along Water Street overlooking the Cape Fear River. Though it is nearing functional obsolescence, the parking deck serves as primary public parking for tourists and locals alike. Surrounded by vibrant retail and entertainment businesses, the parking deck is an eyesore.

City officials long believed that a parking structure alone was not the highest and best use for the high-profile location. They envisioned a future for the site that would spur additional private investment while respecting the historic fabric of the surrounding built environment.

What city officials hoped would be a straightforward redevelopment project was much more complicated. In the last two decades, the city released two different Requests for Proposals that received no responses from the private sector. Numerous factors made consideration of development particularly challenging. The property was constrained by the physical limitations of a site surrounded by existing structures and the necessity to provide generous space for public parking. There was public discord over the use and density of the site as well as a lack of a shared vision among political leadership.

Meantime, owners of other valuable downtown properties had put redevelopment on hold until the parking deck could be refurbished.

Frustrated by the lack of interest in what they saw as a desirable development opportunity, city officials turned to the School of Government—a long-trusted and respected resource to local municipalities. In 2013, the city hired the School’s Development Finance Initiative (DFI) to help.

Roger Johnson, the City of Wilmington’s special assistant to the city manager for economic development, has been a central participant in the search for a viable solution to the Water Street Parking Deck. “Our decision to hire DFI for this project,” he said, “was greatly influenced by its association with the School of Government and the broad expertise they bring to the table.”

The Project

The city asked UNC DFI to define an economically feasible redevelopment project for the parking deck that would be attractive to the private sector while also serving varied (and sometimes competing) public interests.

DFI led a 12-month pre-development process that guided the city to key decision points about the program, the public investment, the structure of the public-private partnership, and selection of a private sector partner. This iterative process included a market analysis, site analysis, public stakeholder engagement, and financial feasibility modeling.

The market analysis provided an assessment of supply and demand dynamics aimed at understanding what types of specific uses (residential, retail, office, hotel, and parking) the downtown market could support. For the site analysis, UNC DFI directed an architecture firm in their work to determine the configuration and massing of the potential redevelopment uses identified through the market analysis.

DFI also worked with Allen Davis, urban designer in the city’s Planning, Development, and Transportation Department, to make sure the parking deck project would integrate seamlessly into its surroundings. This included urban design elements as related to adjacent building and public space, as well as emphasizing the important connection an elevated walkway provides between the redevelopment site and several existing businesses on Front Street.

Public engagement occurred throughout the pre-development process and took on several forms – one-on-one meetings, an online survey, public forums, and small group stakeholder meetings. Finally, UNC DFI performed a financial feasibility analysis of the proposed redevelopment program, informed by the site and market analyses, as well public interests collected through stakeholder engagement and endorsed by city officials.

The Outcome

DFI’s pre-development process resulted in an economically sound program and partnership structure for the parking deck, which DFI then used to actively recruit qualified private developers to the project. The city received proposals from eight development teams from across the Southeast, and with UNC DFI’s guidance, selected a skilled development partner with a successful track record in mixed-use projects in urban cores.

The Impact

Roger Johnson noted an additional unanticipated benefit to the process. “DFI brought in eight developers who had not before considered Wilmington for development, but who, because of UNC DFI’s intervention, were willing to consider building something transformative in our community,” he said. “And now, in addition to the parking deck project, I am still in contact with another five of the developers who are considering other large scale projects around the city.”

Johnson describes the parking deck and the possibility of additional business as having the potential to “transform our urban core in a powerful manner and result in large scale capital projects that will improve our community overall.”

population at project start: 110,000 people

County: New Hanover County

Tier Designation: 1

Project Type: DFI

Solicitation Archive

Description:  The City of Wilmington, North Carolina, hired the Development Finance Initiative (DFI) in 2013 to conduct a pre-development process for the Water Street Parking Deck (parking deck). The parking deck is an aging public parking facility prominently located in the city’s historic downtown on the Cape Fear riverfront.

Tags: adaptive reuse, masterplan, downtown, in-fill