Mecklenburg Mills Money Pit Morass
The Charlotte City Council this week threw another $1.25 million into the decaying Johnston and Mecklenburg mills in the north Davidson NoDa neighborhood, adding to the nearly $7 million of taxpayer loot that has already been sucked into the mills money pit as part of the city’s quest to salvage a piece of history and provide a stock of so-called affordable workforce housing.
In doing so, councilmembers who approved the deal promised this would be the last of throwing good money after bad. Really. Honestly. They mean it this time.
But with the past as precursor, the infamous Mills might not be done with taxpayers yet.
Before delving into the council’s latest round of largess, a bit of history is in order regarding the stone-crazy burn rate of spending on the project dating back to 1990. That’s when the city doled out a $1 million loan for a developer to purchase and rehabilitate the Mills, followed by additional loans totaling nearly $5 million.
The revitalization, alas, never bore fruit and in 2004 the city spent another $800,000 to acquire the first mortgage on the property to protect its initial investment and maintain the Mills’ collective 150 affordable housing units. In 2006 the city foreclosed on the properties and took possession of the Mills. Less than five months later, the residents of Mecklenburg Mill had to be evacuated because the building was riddled with structural and safety hazards.
The properties sat vacant and deteriorating, until 2007 when the city had an opportunity to sell the albatross property for about $4 million; but common sense and city government being oil and water, it was not to be. The council, instead, pursued an agreement that would have fetched a purchase price of $475,000 and included a promise that at least 75 units of the Mills would be dedicated to affordable housing. The deal fell through and the city, once again, was left holding the bag.
So to recap: the city spent about $7 million of your money on the Mills property, passed on an opportunity to sell it for $4 million, and has been left with a pair of crime-plagued and deteriorating shells of decay.
Enter The Community Builders Inc., a Boston-based development company that specializes in affordable housing revitalization, which bought the Mills property for $1.24 million with plans to create 48 units of affordable housing in Mecklenburg Mill, along with about 60 market-rate housing units in the adjacent Johnston Mill and some new commercial space. Developers will invest about $2.5 million into the nearly $15 million revitalization project, with the balance coming from tax credits, grants and fundraising.
The Mills plan, shockingly, hit a snag when the developers determined that renovation of the dilapidated property would cost about $5 million more than anticipated. Community Builders, naturally, asked the city to split that tab. When the council balked earlier this month, Community Builders returned with an ask of $1.25 million.
The city council being the city council and all too willing to spend yet more of other people’s money, agreed and sealed the deal this week with a 9-2 vote. Councilmembers Lawana Mayfield, a Democrat, and Andy Dulin, a Republican, voted in opposition. Democrats David Howard, John Autry, Patsy Kinsey, Claire Fallon, Beth Pickering, Michael Barnes, Patrick Cannon and James Mitchell, along with Republican Warren Cooksey, voted to support the spending.
The money will flow from a well of about $4 million in federal funds that can only be used on projects related to affordable housing, namely Community Development Block Grants (CDBG), which the city has left in reserve from last year.
That raised a red flag for Cooksey, who proposed that the city proceed with the Mills deal in tandem with returning the balance of CDBG funds, about $2.75 million, to the federal government.
“We have this money sitting on a shelf that we can only use for limited purposes,” Cooksey said, “and there have been no proposals brought forward for how to use it.”
His motion sunk like a rock.
“There are several uses to which the money could be put,” opined Mayor Anthony Foxx, with promises to share some of those potential uses at an affordable housing workshop the council has scheduled this week. One idea Foxx floated early would be to use the CDBG funds to help create a rental subsidy program.
Foxx said he supported the Mills deal as a way to both address the city’s need for affordable housing and also to save a slice of its history.
The need for the later, Foxx said, hit home when he saw the old Virginia Paper Company building being razed uptown to make room for the new taxpayer-subsidized baseball stadium. Foxx said he was struck by “how much of our history we’ve allowed to just be decimated.”
“For a city that’s progressive in so many ways,” Foxx lamented, “we’re not progressive in that way.”
Foxx and several councilmembers also noted that the revitalized Mills would be located next to a light-rail transit station, at uptown’s 36th Street near North Davidson Street, for the future $1 billion-plus Blue Line Extension.
“I think it will be a transformative investment,” Foxx said of the Mills. “What today may be an eyesore, could tomorrow be a point of pride for our transit system as people go by and they say, ‘hey, what is that over there?’ Well, that’s something we preserved.”
Fallon echoed that sentiment, noting that NoDa was becoming a historical anchor for Charlotte, what she called the Queen City’s own “Greenwich Village.”
“Charlotte has no history. It tears it down if it gets to be 50 years old,” Fallon said. “We have to retain some part of our culture.”
But at exorbitant cost in the case of the Mills, where the 48 units of workforce housing promised by the developer roll in at a staggering per-unit cost of nearly $310,000. That price was too high for Dulin, who said he doubted the developer could make the project work sans even more subsidy.
“I’m not going to support throwing another $1.25 million after the $6 million we’ve already lost on this building,” Dulin said. “I’m not going to throw more good money after bad.”
By pitching in another $1.25 million, Mayfield said, the city was essentially “buying back the initial investment that was made” by the developers.
“At the end of the day, for 48 units, I have a clear concern about us continuing to put funding into this project,” Mayfield said.
Despite the hefty price tag, Cooksey said he decided to support the deal in large part because of the NoDa community’s willingness to embrace affordable housing in its own backyard. Indeed, NoDa neighbors filled the council’s meeting chamber this week to show their support for the Mills project.
“This money is going to be spent for subsidized housing,” Cooksey said of the CDBG funding used to facilitate the city’s $1.25 million gift to developers. “If you oppose spending this money for subsidized housing in their backyard, I can only presume you want it spent in your backyard. I’m going to take the folks who are asking for it now, rather than the folks who are asking for it later.”
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