In a sign of the faltering economy, two developers have pulled out of land deals that city officials hoped would help pay for the NASCAR Hall of Fame.
City staff members say the broken contracts will not hurt the NASCAR hall, however, because of safeguards that ensure it has secure funding and is built on time. They also believe that when the real estate market gets better, the city will have no trouble selling the land.
“We really were ahead of the game by having the contracts earlier in the year,” said Jim Schumacher, the assistant city manager overseeing the NASCAR project. “We're confident that this land is well positioned.”
The land deals were on two parcels that will become available once a redesign of the Interstate 277 interchange at South Caldwell Street is complete next year. The city plans to sell a total of five such parcels – about 12 acres – and estimates it will pull in about $60 million from the sales. Some of the money will pay for the road construction, and $20 million is committed to the NASCAR hall.
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Three developers had signed contracts on three of the parcels. But in mid-October, Schumacher said, Charlotte developers Lincoln Harris and Tidewater Partners/Prada pulled out. Lincoln Harris was to pay $7 million for a 2.6-acre tract near South Davidson Street and Tidewater was to pay $21.2 million for 3.7 acres across from the hall of fame.
“The economic conditions are such that they are choosing not to continue with the process,” said Deputy City Manager Ron Kimble.
George Shield, owner of Tidewater Partners/Prada, said his company had planned to put hotels, a retail gallery and for-rent housing on the site. But he said a range of factors made the timing bad, including the tightening credit market and the uncertainty of uptown jobs as Wachovia merges with Wells Fargo.
“Certain products need to come on the market at certain times,” he said.
The third developer, Michigan-based Greenwood Development Company, still has an active agreement with the city, Kimble said. Greenwood has agreed to pay about $27 million for a 5.3-acre tract across from the Charlotte Convention Center. Kimble noted that that deal alone would settle the $20 million NASCAR obligation.
Schumacher and Kimble emphasized that selling the land so quickly was never key to the NASCAR construction schedule – it would have been a bonus.
As part of the original financing plan, the city had arranged to take out a $20 million loan next year that would be paid off whenever the land sells.
“This is indeed evidence that we've negotiated a very solid deal” to pay for the hall of fame, Kimble said.
City council members also said the developers' decisions did not worry them.
“It is really a question of when the property will be sold,” said Councilman Anthony Foxx. “It's not a question of whether.”
Councilman John Lassiter agreed.
“It's symptomatic of the current real estate market, not just in Charlotte, but across the country,” Lassiter said. “We still have flexibility in our financing.”