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Real Estate - Commercial

County, Buyer Address Questions On Pending CFCC Building Purchase

By Johanna F. Still, posted Oct 10, 2022
The New Hanover County Board of Commissioners have agreed to take over a contract to purchase the former Bank of America building at 319 N. Third St. for Cape Fear Community College. (File photo)
The pending purchase of Cape Fear Community College’s planned expanded nursing and allied health facility downtown was maneuvered discreetly, in a manner to ensure the price would remain fair, those involved in the deal say. 

Brian Eckel, co-founder of Cape Fear Commercial, said that as he negotiated the contract through his special purpose entity, Cisco Acquisitions, he always intended to transfer it to New Hanover County. 

Cisco Acquisitions aimed to push the due diligence and closing window as lengthy as the seller, River Bend #1 LLC, would tolerate – with the understanding that transferring the contract could take some time. The five-story building at 319 N. Third St. went under contract on Aug. 5 for a purchase price of nearly $11.9 million.

The county could use general fund dollars to finance the transaction prior to debt issuance, via the sale of limited obligation bonds, according to a county spokesperson. New Hanover County also plans to finance building renovations and equipment upgrades to prepare the facility to host labs and classrooms at a cost of $14.8 million. 

“I had no intentions of purchasing the building,” Eckel said.

Eckel, who said he is breaking his personal 25-year stance of not discussing deals until they are done in order to address this transaction, said the reason for the planned contract transfer to the county was to lock in a low but fair price. In commercial real estate, sellers can sometimes raise the asking price once they get a sniff of who the buyer is, Eckel said. 

In this case, Eckel said he was also nervous another buyer would offer a higher price for the landmark downtown building, formerly home to Bank of America, which was listed at $12 million. 

For nearly a year prior, Eckel said he had partaken in a series of meetings with heads of several local institutions – Novant Health, Cape Fear Community College, University of North Carolina Wilmington, New Hanover County Schools, New Hanover County, Wilmington Chamber of Commerce, Liberty Healthcare & Rehabilitation Services, state Sen. Michael Lee, county commissioners, Cape Fear Collective and more – to address shortfalls in the health care system, namely the growing nursing shortage. 

The CFCC building purchase marks the first public move that arose out of conversations prompted by that informal coalition, initially convened by Eckel, who serves on both the local and parent Novant Health hospital boards. With $2 million in seed funding recently pledged by Novant Health for the coalition, the group aims to accelerate its progress in the next few months to achieve a grander plan – one that extends far beyond this singular facility, stakeholders say.

Through those meetings, the coalition had repeatedly identified the need for a facility, Eckel said, but the stakeholders did not anticipate the acquisition of this particular building. 

After several conversations with CFCC President Jim Morton, Eckel put the former Bank of America building under contract. “As the circle grew,” he said of the coalition’s participants, “the more I decided to make a move.”

“I implored Jim not to talk about the building,” Eckel said, citing the need to preserve the integrity of the purchase offer price. As soon as he had it under contract, Eckel said he approached Morton and said, “We need to get with the county and get a game plan.”

Morton said the downtown location is ideal for the nursing and allied health program expansions. CFCC’s existing nursing programs are situated in Union Station, just a few blocks away. 

“Quickly we realized, ‘Oh, boy, we need space,’” Morton said of the need to expand the program. “The building is contiguous to our campus … it’s very walkable … it’d be a really perfect fit.” 

Building a new structure downtown could be cost-prohibitive and take too much time, Morton said. Though an expansion at the CFCC North campus near Castle Hayne was considered, ultimately, separating the nursing programs was less than ideal. “Having students close to the resources that are needed is a huge benefit to students to help them be more successful,” he said.

CFCC’s associate degree in nursing program has consistently ranked first in the state in various analyses, and with the new facility, the college aims to triple its graduate class. 

The college does not intend to cut short any of the building's six existing leases, Morton said. The last lease expires in 2027, Morton said, and in the meantime, the plan is to renovate the structure in phases so as not to interrupt tenants' business. 

“It just was good timing and a good opportunity,” he said. 

Board asks for purchase

On Sept. 12, the CFCC Board of Trustees sent a letter to the county commissioners, requesting them to purchase the 1.9-acre property, which consists of the 55,000-square-foot building and related parking lots. The county has funded the purchase of nearly every building CFCC operates in, according to a county spokesperson, and is responsible for the college’s capital outlay and bond financing. 

Three days prior to that letter, trustee Jimmy Hopkins said Morton informed him of the planned building purchase. “I knew nothing about it until it was a done deal,” Hopkins said. As chair of the CFCC facilities and equipment committee, Hopkins said he was disappointed he wasn’t told beforehand. “If it's going to have classrooms [and] be a part of Cape Fear Community College, I would think [the] facilities [committee] would definitely have a voice,” he said. 

Hopkins said he voiced his displeasure with Morton about what he perceived as a lack of transparency around the deal. Despite his qualm, Hopkins said he does support the expansion of the college’s nursing program. “I don't think there's any doubt that they need more space and obviously, the general public needs more nurses,” he said. 

By Sept. 26, Hopkins received a letter from Chairwoman Julia Olson-Boseman, according to WECT and WHQR, informing him of his removal from the CFCC board for incurring three or more absences. Through legal counsel, Hopkins has since challenged and aims to reverse the action, which he attests was taken improperly. Hopkins said he can validate each of his excused absences.

Given the timing, Hopkins said he believes his voiced displeasure about the building sale played into his removal as a trustee. “That’s the only thing I can deduce from it,” he said. 

Though Morton declined to go into detail given Hopkins’ legal challenge, he said, “One has nothing to do with the other.” Morton added he was not involved in Hopkins’ removal from the board. 

While Morton said he informed the chair and vice-chair of the trustees on the building sale, he didn’t view it as a facilities matter because the county is spearheading the purchase and improvements. “We tried to keep things as close to the vest at that point,” he said. 

Folwell steps in

Hopkins’ removal attracted the ire of N.C. State Treasurer Dale Folwell, who oversees large municipal transactions as chair of the Local Government Commission and sits on the State Board of Community Colleges. Folwell is calling for the decision to be reversed, according to WECT and WHQR. 

Last month, Folwell and the LGC denied New Hanover County’s financing application for Project Grace, a proposed public-private partnership just one block from the former Bank of America building. 

New Hanover County CFO Eric Credle said the county’s proposed purchase of the building for CFCC “is not dependent on the LGC’s approval.”

After purchasing the building, the later debt issuance would require LGC approval, according to Credle, in a future bond package that will likely include other small projects. “We believe this is a widely accepted initiative,” he said. 

Folwell’s early discomfort with the planned CFCC building purchase is at least his fourth public criticism of New Hanover County’s recent dealings. The treasurer sharply opposed the county’s sale of New Hanover Regional Medical Center to Novant Health; chastized Project Grace’s structure; and the LGC prompted the county to rearrange a plan to privately finance its redeveloped government complex it initially intended to enter into with another firm of Eckel's.

In general, Folwell has accused the county of being unnecessarily covert and complex in arranging these deals. “It’s curious and somewhat disappointing that all the transactions that come out of New Hanover County have to be so damn complicated and secretive,” he said. 

County manager Chris Coudriet said the item to purchase the building for CFCC was added to the board’s agenda once the transaction was brought to the commissioners’ attention. “Every transaction the county enters into is open, transparent and in the public square,” Coudriet said. “That is something the county has been keenly aware of and has ensured.”

Via community and press updates, public hearings and meetings and more, Coudriet said the county’s frequent public engagement can be easily validated. “The county’s conversations are in the public space, and the fact pattern demonstrates that directly,” he said.

Appraisal, next steps

With Eckel’s contract soon transferring, New Hanover County has until Nov. 3 to finalize its due diligence, which includes obtaining an appraisal for the building’s value. Eckel arranged the contract so that the buyer can terminate it up until that point “for any reason or no reason,” he said. “The county leadership has the ability to make a course correction at any time,” he said.

Though exact mechanisms are still being worked out, Eckel will receive back his $50,000 in earnest money, which the county will potentially put toward a trust in the interim. Cape Fear Commercial broker Hank Miller (also chair of the UNCW Board of Trustees) will continue to serve as a broker on the deal in representing the county as the buyer. The building purchase was actually Miller’s initial idea, Eckel said. 

Cape Fear Commercial is also assisting the county in its due diligence to aid in the process of closing smoothly. Title work, an environmental study and the appraisal are due to be wrapped up by Oct. 21, according to Eckel. 

Though Folwell has questioned the county’s decision to enter into the contract prior to obtaining an appraisal report, Eckel said doing so would have been unusual. 

“In the thousands of deals I’ve been a part of, never, ever, nor have I ever heard of, in 25 years, anybody appraising a building before they have it under contract,” he said. “Ever.”

Before approving the contract transfer, Commissioner Rob Zapple commended Eckel for his involvement in getting the deal together and for personally securing the $2 million pledge from Novant Health for the new coalition. “I just want to say thank you on [the] part that I know that you played behind the scenes," he said. "You’re not the kind of person that comes out front.”

Stay tuned for more on the health-related coalition Tuesday on WilmingtonBiz.com.
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