Over Eggs, 3 Sparked Creative Land Deal

By Richard Rubin, The Charlotte Observer, N.C., The Charlotte Observer, N.C.

Dec. 25–Over eggs,

3 sparked

creative

land deal Richard Rubin

The booster, the broker and the big-time deal-maker huddled in a booth at Showmars a few months ago, studying a map of uptown Charlotte and hatching the idea behind the decade’s most ambitious public-private real estate deal.

Showmars may seem an unlikely spot to orchestrate a major land swap, but Michael Smith (the booster) picked the West Third Street location intentionally. The comfort-food mainstay sits diagonally across from a parking lot familiar to uptown workers and football tailgaters.

Smith, the new president of Charlotte Center City Partners, wanted to turn the parking lot into an urban park. He feared Mecklenburg County was about to build the park in the wrong place, too far from Charlotte’s Tryon Street axis.

He summoned Jim Dulin (the broker), who represents MassMutual, the insurance firm that owns most of the block. Also at the table: Jim Palermo (the deal-maker), a retired bank executive who helped shape uptown’s recent boom.

By the time they finished their eggs, Smith, Dulin and Palermo devised the basics of a six-way deal that would create the park Smith wanted. And a minor-league baseball stadium. And a residential neighborhood in barren Second Ward. And a new school headquarters.

Land swaps between governments and businesses are nothing novel. But what makes this idea unique and difficult is the size of the game board and the number of politicians who will have to agree on it.

At the time, Dulin said, “It just sounded to me like a real pipe dream.”

But after that breakfast, he took the idea back to MassMutual, just to see if it might work.

MassMutual’s early role

Dulin, chairman of Spectrum Properties, has plenty of experience in Charlotte real estate, and this wasn’t the first time he had entertained offers for the MassMutual land.In 2003, consultants hired by Mecklenburg County warned against the county’s proposed location for an urban park. Mecklenburg owns an 8-acre site at Third and Graham streets, but the consultants said a park there would be an island for 25 years because it did not touch Trade or Tryon Streets.

The easiest way to attach the park to Tryon was through MassMutual’s land. But Dulin said MassMutual wouldn’t trade its Tryon Street anchor for the county’s less-central spot.

The county began more detailed planning for its park. Meanwhile, the Charlotte Knights struggled to get an uptown stadium.

When Smith took over Center City Partners in April 2005, he worried that the urban park was going in the wrong place and consuming the best site for a baseball stadium. County commissioners were refusing to put any money toward a stadium. And they weren’t likely to allow a privately funded stadium on their site unless the county also got a park, said commissioners Chairman Parks Helms.

Smith started exploring possibilities, a path that led him to Dulin, Palermo and Showmars. Smith always carries a map of uptown Charlotte — a handy tool for someone in his job — and the three men pored over it.

Dulin wouldn’t trade MassMutual’s land for the county’s park site, and that brought up the key question: Was there any other government-owned land he would take instead?

Palermo and Dulin both serve on the Center City Partners board, and they began talking with Smith about the organization’s goals for the year, Smith said. Among them: finally sparking development in Second Ward, the sterile zone of government buildings in uptown’s southeastern corner.

The city and county had endorsed a revitalization plan in 2002, but almost nothing had happened since. What if, they thought, MassMutual took city-owned Marshall Park and the Charlotte-Mecklenburg Schools headquarters?

“There’s a piece of land we would swap for,” Dulin recalls thinking. “Not like we’re dying to, but to make room for baseball, and to get the park in a better place, we’d work with you.”

Suddenly, the longstanding problems of Third Ward and Second Ward were linked.

Dulin ran the basic idea past MassMutual twice before the company agreed. Smith started shopping it around to top government officials, keeping it secret as long as possible.

3 hurdles to consensus

But getting from Showmars to a press release wasn’t easy, and Smith had to grapple with at least three major issues:

— Connecting the park to Tryon Street.

Helms called Smith on Halloween and told him the park needed to include the half-block of Tryon between Latta Arcade and Third Street, according to Helms’ notes. But MassMutual wouldn’t give up its land.

“We almost gave up at that point,” Smith said.

But they kept working, and agreed on a 25-foot wide promenade to tie the park to Tryon.

— Building the stadium.

Until now, the Knights had not committed to pay the full cost of an uptown stadium, estimated at $34 million. But, said majority owner Don Beaver, they hadn’t been this close to reality before. He now plans to raise all the money privately.

Smith and Helms say the Knights have an anonymous investor who is helping. But when asked by the Observer, Beaver denied that there were any new investors in either the team or the stadium.

— Compensating the school system.

Charlotte-Mecklenburg Schools owns the Education Center and half the Second Ward block that MassMutual would get.

But what could the school system get for its property, worth perhaps $12 million?

That puzzled Smith for a while, but the recent task-force report on the district provided a clue. The report calls for a decentralized administration, which would require a smaller headquarters.

That new building would be paid for with the property taxes from the neighborhood MassMutual would build on the old Education Center site.

Making others aware

In the days before last Tuesday’s county commissioners meeting, Smith started expanding the number of people who knew about the idea.

“You’ve got five entities involved, which makes it more difficult,” said Mayor Pat McCrory.

The night before the county meeting, Smith and County General Manager Bobbie Shields met with commissioner Valerie Woodard. Her district includes Third Ward, and she’s been a major supporter of leaving the park where it is.

The two avoided saying the word “baseball,” she said.

“They were showing me how you can get it all, you can have the park, you can have this, you can have that,” she said. “I had to put the word ‘baseball’ on the table.”

But by Tuesday night, commissioners were applauding the general idea, and they kicked it to the county manager for more study.

Up next: The hard work of real-estate appraisals, negotiations, contract writing and political debate.

— Staff Writer Carrie Levine contributed to this report.

— Richard Rubin: (704) 358-5832

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