City Council amends First Ward deal with Levine Properties

Levine Properties, in a public-private development plan, expects to break ground next month on a project that will ultimately include a public park, 264 apartments, a new street, and 1,400 parking spaces along the planned light rail extension in the First Ward. Illustration courtesy Levine Properties

CHARLOTTE – After additional monetary penalties were added if Levine Properties does not live up to its part of the bargain, the City Council on Monday OK’d changes to a public-private development agreement for a long-delayed revitalization effort in Uptown’s First Ward.

The developer expects to start moving dirt within a month.

With the council’s unanimous approval, the tweaked agreement – a complex, three-way deal between the city, county and Levine that dates back to 2009 – is now scheduled to go to the Mecklenburg Board of County Commissioners on Aug. 5 for a vote.

“We are ready to go” after the county vote, said Brian Nicholson, director of construction and development for Levine. The project has been delayed, Nicholson and city officials said, because both public underground and private overhead utilities had to be moved out of the way for construction to begin. The Charlotte-Mecklenburg Utilities Department problems have been dealt with, Nicholson said, and work on the Duke Energy, Time Warner Cable and AT&T wires is underway.

“Once the overhead utilities are relocated by Duke, Time Warner and AT&T, which will take about four weeks, there will be a massive amount of earth moving,” Nicholson said. “We are ready for prime time.”

The project, which Democratic at large Councilman David Howard on Monday said has “transformational potential,” could make over 23 acres of First Ward owned or under the control of Daniel Levine after he and his family began buying up chunks of an eight-block area in 1981.

The $84 million first phase of the project calls for the development of a 3.2-acre county park; an apartment building with 214 market-rate units and 50 workforce apartments; two public parking decks with a total of 1,335 spaces; and $5 million in street and utility improvements. Levine and city officials say the total buildout value of the entire First Ward project eventually could be as high as $700 million.

The city and county have pledged nearly $30 million in tax-increment grant financing for the project, including $23.7 million for the public parking decks.

The city-county funding for the parking decks is the subject of the agreement modification, which stirred some concern among several City Council members when it was first brought to the council in late June.

The modification would allow Levine to qualify for up to $16.7 million of the city-county economic development grant if the developer completes by July 1, 2016, the construction of a parking deck with 935 spaces.

Levine would be eligible for the other $7 million of the grant only if he provides 400 more structured public parking spaces by Dec. 31, 2019.

Both Levine and officials with Charlotte’s Neighborhood & Business Services department said that waiting until 2019 to release all $23.7 million was complicating Levine’s attempts to get private financing for the project.

And, Levine and city officials said, the project’s start has been delayed by having to move public and private utilities out of the way of construction.

The part of the new arrangement that in June caused concern for Councilwoman Vi Lyles, an at large Democrat, was a clause that said Levine could provide those extra 400 spaces in an existing surface lot if he could not build the second deck by the 2019 deadline.

But Lyles changed her mind after Patrick Mumford, key business executive for Neighborhood & Business Services, explained Monday that the development agreement change had one implied and two stated clauses protecting the city against a possible default by Levine.

First, Mumford said, the developer would not qualify for the $7 million chunk of the grant until those 400 spaces were in a garage.

Second, new language inserted after the June City Council meeting could strip out $2.6 million of the total public grant if Levine failed to meet deadlines after 2019 to put those 400 spaces in a deck.

If the second deck were not completed by the end of 2022, Levine would lose an additional $350,000; another $550,000 would be taken out on Dec. 31, 2024; $750,000 more would be subtracted two years after that; and another $950,000 at the end of 2028.

“I think we’ve worked out a great ‘double protection,'” Lyles said Monday.

But, Mumford told the council, there is a third incentive for Levine to not dedicate land to surface parking: In order to receive anywhere near the entire $30 million tax-increment grant money, Levine needs to create upwards of $700 million in economic improvements in the eight-block area. Without the improvements, the property’s tax value would not be high enough to generate the revenues that the grant money comes from, Mumford said. A parking lot with no other improvements on it, Mumford said, does not help Levine achieve that goal.

Levine was out of the country this week and could not be reached for comment, and Nicholson said he was not involved in negotiations with the city and county, and could not comment on them.