Wilmington and New Hanover County leaders are working to iron out the details of a land transfer that’s set to become the site of a grocery store run by the Northside Food Cooperative.

In 2022, Wilmington leaders authorized the transfer of a 2.5-acre lot at 905 N. 10th St. on the city’s Northside to New Hanover County for the future grocery store. The long-awaited store will help fill gaps in the Northside community, which has been a food desert for the last 35 years.

The land transfer's deed included a reverter clause, which stated the land would revert to city ownership if not used for a grocery store. That clause faced scrutiny from members of the New Hanover County Board of Commissioners late last month as the board considered a memorandum of understanding (MOU) with the Northside Food Cooperative. 

County leaders are partnering with the cooperative to help fund the grocery store’s construction and equipment along with subsidizing its operations for the first five years.

“This MOU solidifies our relationship and outlines who’s responsible for what as we work together now to design and construct this grocery store,” New Hanover County’s Chief Facilities Officer, Sara Warmuth, told the board at its March 25 meeting.

According to the MOU terms, New Hanover County will provide up to $2.45 million in project funding and will serve as a fiscal agent for a $6.8 million investment from the New Hanover Community Endowment, which was announced in February. The county will own the grocery store and the surrounding lot and lease the store to the cooperative for $1 each year, Warmuth said.

The county also plans to help subsidize potential cash flow deficits in the store’s first five years of operation, up to $1.55 million, said Eric Credle, the county’s chief finance officer. The cooperative will be in charge of hiring people to run the store and maintaining store equipment and inventory.

“We believe this operational support is necessary to put the store in the best possible position for long-term success, starting up a new business in an industry usually results in early losses,” Credle said. “We believe that will be the case also with this grocery store, which is in an industry that operates on thin margins.”

“After several years, it is anticipated that the store will gain traction and will optimize its operations in a way to approach break-even,” he added.

During a discussion of the MOU, members of the board of commissioners voiced concerns about the reverter clause. Board Vice Chair LeAnn Pierce said while she hopes the grocery store will succeed, she doesn’t want to risk millions of dollars in investments from the county if something happens to grocery store operations.

“I think we should have a more clear agreement,” Pierce said. “We don’t want to give the (grocery store) building back to the city, we want it to be the county’s building.”

Commissioner Dane Scalise called the current deed structure a “very serious issue.”

“I think that we need to make sure that our partners at the city are on the same page with us about what will happen to this building, should we move forward with this significant investment from the county and the endowment,” Scalise said. “We have got to get this worked out before we approve this MOU.”

Ultimately, the board voted 4-1 to approve the MOU between the county and the cooperative contingent on county and city management teams working out the details of the deed. Pierce cast the one dissenting vote.

A resolution authorizing city staff to amend the land transfer is set to go before the Wilmington City Council at its meeting on Tuesday. The resolution included in the council’s agenda documents would remove the reverter clause from the deed.

But at the council’s agenda briefing on Monday, New Hanover County Manager Chris Coudriet said he was open to other options to help resolve the issue.

“The ask that I’ve been directed to make is would the city council consider eliminating the reversion clause,” Coudriet told the council Monday. “But I understand if that’s problematic. There are any other number of options that perhaps the council may identify that I’m more than happy to take back to the county commission and get their consensus and/or approval.”

Council member Kevin Spears said he’s wary of changing the terms of the deal.

“I don’t like this at all, Mr. Coudriet, it just makes the hair on the back of my neck stand up because it seems like something is awry,” he said. “If you all wanted to produce a grocery store on the Northside then that’s what would happen, and we wouldn’t talk about the possibility of a grocery store not being delivered and then the city of Wilmington not getting our land back.”

Other council members discussed the possibility of requiring the county to give the value of the land if sold, back to the city or to invest it in a cause shared by both local governments.

“I think we all want to see this happen. We just want to make certain … in the event that the grocery store goes away that some compensation or some value is applied toward something that either comes back to the general fund or is applied toward something that we jointly support together,” Wilmington Mayor Bill Saffo said.

City Attorney Meredith Everhart said Monday she would work with the county leaders to determine a potential “legal mechanism” for amending the terms of the land transfer. Coudriet said he intended to present feedback from the council to the Board of Commissioners at its regular meeting on Monday afternoon.