EXCLUSIVE: Columbia may buy historic warehouse to save it from wrecking ball

03/15/2013 12:00 AM

03/19/2013 6:35 PM

City government is seeking to buy and save the threatened warehouse near USC’s arena that has become a flashpoint between Columbia preservationists and business leaders and then flip portions of the property to a developer who would adapt the building for residential or mixed use, officials said.

Some members of City Council, led by Mayor Steve Benjamin, are negotiating the purchase and subdivision of the eight-acre site that includes the 320,000-square-foot former cotton warehouse that is nearly a century old and is listed on the National Register of Historic Places.

Benjamin did not respond to requests for an interview for this article. Several city officials said the negotiations over the Palmetto Compress warehouse are delicate and have “many moving parts.”

The owners of the warehouse have the city’s permission to demolish the four-story building. But preservationists think that’s unnecessary, especially since an Ohio developer pulled out of a deal that would have razed the building and created student housing on the property.

Councilwoman Tameika Isaac Devine and Councilman Cameron Runyan said Thursday that talks are under way. The issue is likely to be on City Council’s work session agenda on Tuesday.

One of the property owners, attorney John Currie, said he is not part of the negotiations but is aware they are going on. “I don’t know any details ... and I don’t know whether we are willing to participate (in a buy-out),” Currie said of the owners, who include some of Columbia’s leading citizens.

Among the unanswered questions are the price and which pot of money the city might use to buy the property.

The funding options include using hospitality taxes by issuing a new bond that would pay for several projects City Council is considering, or to have the Columbia Development Corp. buy the property, several city officials said.

Controversy might flare again if the city decides to stop the demolition.

The city granted a demolition permit Feb. 21 to level the structure, and Benjamin in September dropped his effort to have the building declared a city landmark. City landmarks cannot be demolished without an extended process.

“I don’t want to be too heavy-handed,” Devine said of possibly restarting the landmark process. “But we do need to explore this (purchase) option because I think it’s a pretty viable option.”

City law also allows someone to appeal a demolition permit within 30 days after it is granted, said Toby Ward, an attorney representing the preservationists. That deadline lapses next week. Ward said he has been approached about such an appeal. As of late Thursday, none had been filed, he said.

Fred Delk, director of Columbia Development Corp., said Thursday that no one has talked with him about purchasing the property. Municipal development corporations often buy then resell properties to help consolidate development deals.

A group of preservationists interviewed Thursday agreed that a city buy-out and resale is the best option for saving the structure. But none volunteered details as to how that should happen or who might get involved in rehabilitating the building, which was built in stages from 1917 to 1923.

Runyan said that hospitality taxes, paid by patrons who buy prepared meals or beverages in the city, are not the first choice. But, he said, “It could certainly be H-tax.”

Runyan said he would support a plan to buy the property, including the use of H-taxes, as long as the city would not become a long-term landlord.

“The conversation is to bridge it (flip the property) and recoup the investment,” he said. “I don’t want to be holding that property six, seven years from now.”

Columbia has been receiving between and $8 million and $9 million in revenue yearly from the H-tax. Organizations and institutions that get a share of the money guard their portions zealously, and competition from new applicants for a share is intense.

The city is paying $1.3 million yearly to pay down the debt-service portion of a $20 million hospitality-tax bond it issued in 2004. Columbia still owes $13.8 million on that bond issue, which expires in February 2025, according to Columbia’s finance office. A new bond would add to the debt payment.

Edwards Communities Development Co. of Cleveland, Ohio, has a contract with the Palmetto Compress owners for about $5 million, preservationists and city officials said.

The company wants to build an 800-bed student housing complex on the site, which is sandwiched between the University of South Carolina’s baseball stadium and its basketball arena.

The owners have said they have tried to market the building for 25 years and that no potential buyer has found a way to save the age-worn property that sits along one of the city’s eastern corridors.

Preservationists argue the building is a historic treasure since it’s the last original structure in Ward 1, once an African-American neighborhood.

Preservationists also look back with regret at the leveling last summer of the late George Elmore’s 5- and 10-cent store that sat along Gervais Street. First Nazareth Baptist Church demolished the building before preservationists could organize against it. Elmore, considered a civil rights pioneer, suffered personal and economic reprisals for his willingness to fight all-white primary elections.

Another fight is brewing over protecting buildings on the Bull Street property, which is to become Columbia’s biggest neighborhood in the heart of the city.

“I do think it’s a bit of a line in the sand,” developer and preservationist Richard Burts said of the struggle over Palmetto Compress.

The sides have clashed before a city commission that oversees design and development and both have filed administrative appeals and gone to court over decisions that went against them.

Building owners and the Edwards company say the structure’s condition, design and sloping floors make saving it impossibly expensive. Edwards executive Steve Simonetti has said his company agreed to a contract in part because owners reduced the price.

Preservationists say the owners haven’t sought the right developer nor included preservation advocates in discussions.

Burts said he knows of three developers who have expressed interest and have the finances to undertake such an expensive project.

None of the companies is willing to come forward publicly yet out of concern they might be sued for interfering with the contract the owners have with Edwards, Burts and preservationist attorney Ward said.

Meanwhile, the city granted a demolition permit and a company has been hired to take down the building. Current tenants, who rent portions of the building for storage, have until the end of the month to move out. Co-owner Currie said earlier this week that early stages of demolition have begun.

Devine said another owner, Columbia attorney John Lumpkin, told her he’s willing to go slowly on razing the building while the city pursues a buy-out.

Robin Waites, director of the Historic Columbia Foundation, said she is moderately optimistic that Palmetto Compress will survive.

Asked to rank her optimism on a 1-to-10 scale, Waites said, “I’m really right smack dab in the middle.”

Protracted fight

Some key dates in the tussle over plans to level the Palmetto Compress warehouse and build a student housing complex:

Dec. 13: Columbia’s Design/Development Review Commission votes overwhelmingly to reject the project, saying it does not meet design guidelines for the area.

Jan. 10: The commission, on a sixth vote, agrees to rehear the December rejection. One member switches her vote several times.

Jan. 11: Ohio developer and a Palmetto Compress owner sue to overturn the Dec. 13 vote.

Feb. 14: An Innovista business owner sues to overturn the commission’s decision to rehear its December decision.

Feb. 21: City awards a demolition permit.

March 7: Developer withdraws the request to build the complex.

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