KANNAPOLIS, N.C. — After three months of negotiations, the Kannapolis City Council has agreed to pay $7.5 million for billionaire David H. Murdock’s downtown properties.
“It has been a long process but well worth the wait,” said Darrell Hinnant, mayor of Kannapolis. “We all know how much time it takes to buy one house. We have in essence bought many houses and it took time to complete the purchase.”
The sale price of Murdock’s 46 acres of downtown property is about $2 million higher than the initial estimate of $5.55 million presented in March.
“Just like buying a personal home we submitted an initial purchase offer,” Hinnant said of the price difference, “which allowed us time to officially analyze the assets we are buying, which properties to purchase, determine what renovations may be needed, how best to plan for the revitalized uses of the property, and negotiate the best price we could for the properties.”
During the inspection and evaluation phases of the negotiations, it was determined that the downtown properties the city decided to buy were worth more than previously estimated. The properties have a total tax value of approximately $25 million, instead of the $23 million first reported.
The city will pay for the purchase with bonds. Officials expect to pay off the bonds with a 3-cent property tax increase which is part of the 2015-2016 fiscal budget
The 3-cent tax increase will be discussed during a special called meeting at 6 p.m. Monday, June 29 at the Kannapolis Train Station, 201 S. Main St., Kannapolis. The meeting is to vote on the 2015/2016 fiscal budget.
The current tax rate is 60 cents per $100 valuation and if approved would go to 63 cents. This means the average home valued at $150,000 would pay an additional $45 or $945 annually in property taxes. The increase stems from the purchase of downtown Kannapolis.
But officials are already looking to sell the properties to the right investors when they can.
“The city does not want to be in the property management business any longer than we need to. The goal is to develop a good strategic plan and find private sector investors to sell or partner with,” said Mike Legg, Kannapolis city manager.
The closing period for the sale will end in September and at that time the city will take ownership of all the properties. The legal process began in March when the city signed the initial offer to purchase the properties in a ceremony held at the Kannapolis Train Station.
The purchase includes properties located on Oak Avenue, West Avenue, S. Main Street and West First Street, including the former Cannon Village, the Gem Theatre, the current Kannapolis City Hall offices, Wells Fargo Bank, the current Kannapolis Police Department and the former Plant 4 site.
While contract negotiations have been underway, Development Finance Initiative (DFI), the organization guiding the revitalization of Kannapolis, has been working on a market analysis study of downtown. The analysis will give officials an idea how much square footage should be devoted to different markets, such as retail, residential and office space.
The market analysis will also help officials when they work toward a “demonstration project” in August. The project will not actually be started in August, but officials will use the information they collect to pick out a project they should start with and begin taking steps in August. A demonstration project is one that officials can use as a “proof of concept” to show developers why they should invest in downtown Kannapolis.
LOOKING AT DURHAM
Michael Lemanski, director of DFI, said at a previous meeting they used a similar approach when he and others worked at revitalizing downtown Durham.
The demonstration project for that community was the Baldwin Building. The building had been vacant for more than 20 years, was boarded up and had no working plumbing or electrical. But the building had been a high-end department store that many in the community remembered and had a personal connection to. Lemanski leveraged that interest to garner publicity for the project.
The Baldwin Building was transformed into high-end apartments, with a rooftop patio that overlooks the Durham Bulls Athletic Park, where people can sit on the roof, drink a beer and enjoy the fireworks from the stadium.
It was developed despite Durham going through the process of tearing up its streets to improve infrastructure, including sidewalks and street lights. The Baldwin Building had parking in the rear, allowing the project to move forward with the residential spaces being built and the bottom floor left for retail space when the infrastructure was complete. Now, a high-end restaurant sits in that first floor, Lemanski said.
The project was the catalyst for development and since then there has been $275 million in public sector money with 10 projects since 1990, which has led to more than $940 million in private sector investment and more than 50 projects since 2000, according to Lemanski.
Lemanski will face similar challenges in Kannapolis, since DFI would have to find a project that can survive the infrastructure improvements that will be needed in downtown. The water and sewer lines are more than 50 years old and the streets in downtown will be torn up, as well as the sidewalks, to make those improvements.
READY TO LAUNCH
While DFI works on coming up with a revitalization plan, the city council has taken other steps toward preparing for the downtown revitalization.
At this Monday’s Kannapolis City Council meeting the council approved a business improvement district. Also known as a municipal service district, the district will allow the city council to pursue special obligation bonds that can be used to pay for revitalization efforts.
The municipal service district would allow officials to pursue bonds to help on needed improvements of the downtown properties and surrounding area, such as water/sewer lines which are more than 50 years old.
The special obligation bonds could be used for improvement to water mains, electric power distribution lines, street lighting, streets and sidewalks, construction of public buildings, restrooms, docks, visitor centers and tourism facilities, sponsoring festivals and markets in the downtown area to promote business investment, construction of bike paths and other uses. Those bonds can only be spent on improvements within the district.
Contact reporter Michael Knox at 704-789-9133.