Two parcels equaling 12.2 acres annexed to the town of Wrightsville Beach in 1985 were handed back to the City of Wilmington in a two-step process June 17.
The Wrightsville Beach Board of Aldermen voted unanimously to rescind an offer to decline support of legislation to de-annexation enacted following a June 2013 public hearing. The decision to de-annex followed a public hearing held June 17, in a continuation of a June 12 board meeting.
Minutes after the board voted unanimously to accept the terms of the voluntary de-annexation, Wrightsville Beach Town Manager Tim Owens was messaging the outcome to Wilmington officials in time to add the item to the city council’s agenda. Its meeting was already in progress.
The financial terms of the 29-year interlocal agreement include four consecutive annual payments of $7,224 each from Wilmington to Wrightsville Beach. On the fifth year, the payments escalate, then cap, to $30,000 annually.
The request to de-annex was posed by State Street Galleria LLC, owners of the two properties — 5.11 acres and 7.54 acres — it purchased in July 2013 for $3.76 million each
Since that time, seven contiguous properties abutting the Galleria, some with frontage on Airlie Road, all within Wilmington city limits, have doubled the developer’s real estate holdings. In August 2013, Estelle L. and Bobby W. Harrelson sold 301 Airlie Road, with .776 acres for $400,000; 309 Airlie Road, with .563 acres for $400,000; 333 Airlie Road with 1.95 acres for $400,000 and 6724 Wrightsville Avenue with .4 acres for $400,000 to State Street Galleria LLC, dba SSG-1 LLC. The same day, Estell Harrelson’s daughter and son-in-law Rhonda and Glen Ottaway sold 315 Airlie Road, with 3.94 acres for $1.1 million. Later that month on Aug. 29, 2013, James S. and Helen Lofton sold 405 Airlie Road, with 1.95 acres for $500,000. On Jan. 9, 2014 Yvonne Fraser of Laurelton, N.Y. sold 201 Airlie Road with 1.54 acres for $320,000.
Wrightsville Beach Alderman Hank Miller represented IRT, the former owner of the Galleria. Prior to the opening of the public hearing, Miller disclosed he had introduced the owner of adjacent properties to the new owners, State Street Galleria LLC, but at no time represented State Street in any transactions.
Prior to the public hearing, town attorney John Wessell said the General Assembly had the power to de-annex the property even if the town was opposed to it citing the taking of the international airport in Charlotte as well as of the Asheville water system. Both are currently in litigation.
Sue Bulluck, representing the Pearsall Group, owners of the Holiday Inn Resort and chairwoman of the Wrightsville Beach Chamber of Commerce, is also a co-property owner.
“As a victim of unintended consequences we’re in the position we’re in. We don’t have the resources to support the kind of development being proposed,” Bulluck said. “After looking at the political side and the development side, I understand exactly why State Street wants to be in the city of Wilmington.”
By putting all of the parcels together, Bulluck said during the meeting the developers will likely develop a high-density mixed use project valued at an estimated $22 million.
“The $800,000 is probably low,” Bulluck said. “I would like to revisit the interlocal agreement and attempt to leverage more cash out of it — water, sewer and beach nourishment — maybe come up with something after the first five years when we see what’s going to be there. We have a bird in hand and have very little leverage; we have a super majority in rule and they can do whatever they want to.”
Bullock said following the meeting that with the additional acreage purchased by State Street the project could total as high as $60 million.
Former Wrightsville Beach Mayor Bob O’Quinn spoke in favor of the voluntary de-annexation.
“I say this in the kindest way: the Galleria is not architecturally, geographically or spiritually associated with Wrightsville Beach. It was part of the great whiskey store chase,” O’Quinn said.
He said it would be in the best interests of Wrightsville Beach to accept the $800,000 on the table.
Mitch Baker, resident of West Salisbury Street, said the de-annexation is a no brainer at this stage.
Resident Jim Smith noted a $22 million deal was the equivalent of a $300,000 building permit to support infrastructure.
“I think we got what we deserve,” Smith said. “Our ordinances just don’t work for people to develop property. We’ve got to be ready or the property at the corner of Canal and Eastwood will be next.”
Zeke Partin of Lees Cut and Elise Running of Pelican Drive both pointed to the need for increased public services if the development were to go forward under the jurisdiction of the town of Wrightsville Beach and supported the voluntary de-annexation as did former alderwoman Susan Collins and planning board member David Culp.
Closing the public hearing, Blair led the board to conclusion.
“The $22 million number was concocted,” Blair said. “We can hash this 100 different ways … it’s all hypothetical. The City of Wilmington is not pressing us on this; we’re all in unchartered territory.”
Blair said accepting the financial arrangement was in the best interest of the beach.
Alderwoman Elizabeth King suggested the agreement be reviewed in the interest of escalating land values. Alderwoman Lisa Weeks reluctantly agreed to the voluntary de-annexation.
The board voted unanimously to accept the proposal.
Cole Dittmer and Pat Bradford contributed to this story.