Palmetto Compress

Warehouse purchase plan gets Columbia group’s OK

cleblanc@thestate.comApril 27, 2013 

FILE PHOTO< OLD CUTLINE: A developer wants to put private student housing in the iconic Palmetto Compress Warehouse, on the corner of Blossom and Pulaski Streets.

FILE PHOTOGRAPH — The State Buy Photo

  • What the committee agreed to do Here are the primary provisions of the $7 million financing agreement for Columbia’s purchase of the Palmetto Compress warehouse that on Friday won approval from the development corporation’s executive committee:

    •  $5.65 million for the building and 4.7 acres

    •  $339,000 upfront costs for preparing the property for sale

    •  $15,300 monthly maintenance expenses

    •  4 years to sell the property, or the city would take ownership

    •  Creation of a development committee that will include city workers and make quarterly, written progress reports to City Council

    •  City Council has sole authority to give final approval to any resale.

    SOURCE: Development loan agreement approved this week by City Council and the executive committee of the Columbia Development Corp.

— Columbia City Council on Friday got the endorsement it sought on the Palmetto Compress property – though it was razor thin.

The executive committee of the Columbia Development Corp. voted 6-5 to accept the terms under which the corporation will buy the historic, four-story warehouse on behalf of the city, market it and find a private developer willing to invest millions in its revitalization.

The corporation’s director, Fred Delk, said it likely will be three to five months before interested developers will be able to submit offers on the 320,000-square-foot former cotton warehouse kept erect by its sloping floors.

About a dozen developers have made inquiries into saving the nearly century-old building near the University of South Carolina, along one of Columbia’s primary western gateways, Delk said, declining to name any. Two out-of-state companies have come to town this week to talk about the project, he said.

Rosie Craig, a Columbia business owner, developer and preservation advocate, also told The State newspaper Friday that she is has been putting together a group to buy the warehouse. She said her chief financial backer has told her, “Let’s just buy the damn thing.”

The outcome of the vote, apparently, was in doubt.

To underscore the value they are putting on the building’s purchase – and the controversial financing package behind it – top leaders in city government attended Friday’s development corporation committee meeting.

City manager Teresa Wilson, assistant city manager Missy Gentry and Mayor Steve Benjamin were at the group’s headquarters in the Vista as the executive committee met.

“This is a big deal, guys,” Benjamin told the committee. “This city is on a sharp trajectory forward. We’re seeing a revitalized urban core ... unlike people have seen in 50, 60 years. This can be done, and it can be done well.”

Wilson added, “Whether or not y’all decide to do this, ... we believe that we’re better off with your collective wisdom at the table.”

Delk reminded the committee of the corporation’s track record of taking on disputed projects that critics said were unlikely to succeed.

“The history of controversies is very, very long, and we’ve managed to overcome them,” he said, citing, among others, the fight to bring a Publix grocery store into the deteriorating former Confederate printing plant in the Vista nearly 10 years ago. Delk told the committee that tussle resulted in the then-city manager dismissing every member of the committee.

The Palmetto Compress deal calls for the corporation, which is an arm of Columbia’s economic development efforts, to dip into a $7 million economic development fund approved this week by City Council despite heated opposition. With that money, the corporation would pay $5.65 million for the building and 4.7 acres. The city also would pay about $339,000 to upgrade the warehouse. That would include making roof repairs, shoring up a retaining wall, replacing rotten wood and paying for security and property taxes, among other expenses. Monthly maintenance costs for utilities, insurance, landscaping, pest control and other routine expenses will amount to $15,300, according to the city’s figures.

The trio of city leaders at Friday’s meeting might have known the vote would be close.

The 1-vote margin came after a closed-door meeting that excluded Benjamin and Wilson and after two committee members recused themselves over potential financial conflicts of interest. Two other members suggested they might be conflicted, but the committee voted that they could participate.

The close vote and various committee members’ ties to the building showed continuing strains over the purchase, which has been debated for months and has pitted the mayor against preservationists when he withdrew his push to declare the warehouse a protected city landmark; then preservationists against the only potential buyer, which sought to build a student housing complex; then the preservationist community against the city’s business establishment; and lately igniting retirees, who fear the real estate deal risks drawing down the fund that covers their medical expenses 30 years into the future.

City retirees blistered council this week over the plan to backstop the purchase using a long-term health care reserve account for city workers and retirees. The account contains nearly $43 million, said Jeff Palen, the city’s chief financial officer.

A divided council moved ahead with the financing plan, arguing city resources will form a bridge to allow time to get an investor involved. Some have argued the building could attract $70 million in private investment and become a residential and retail hub that would produce property taxes and fuel further growth in the area.

The current owners have said the design and condition of the brick warehouse have combined to make it too expensive for anyone to save. Those owners, a group of some of Columbia’s most prominent residents, said they tried for 25 years to find a buyer but none said they could develop the property without demolishing the building.

A contract with an Ohio-based developer to construct a seven-building student housing complex fell apart in recent months when the company dropped the deal. Edwards Communities Development Co., continues to be interested in the property, Benjamin has said.

Preservationists are equally adamant that the right developer can save and reuse the last remaining structure in what was once Columbia’s cotton district and home to a large African-American neighborhood.


What the committee agreed to do

Here are the primary provisions of the $7 million financing agreement for Columbia’s purchase of the Palmetto Compress warehouse that on Friday won approval from the development corporation’s executive committee:

$5.65 million for the building and 4.7 acres

$339,000 upfront costs for preparing the property for sale

$15,300 monthly maintenance expenses

4 years to sell the property, or the city would take ownership

Creation of a development committee that will include city workers and make quarterly, written progress reports to City Council

City Council has sole authority to give final approval to any resale.

SOURCE: Development loan agreement approved this week by City Council and the executive committee of the Columbia Development Corp.

Reach LeBlanc at (803) 771-8664.

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