City Council tells William Peace University to explain growth plans to neighbors

dbracken@newsobserver.comApril 16, 2013 

SEABOARD-NE-041513-TEL

William Peace University has expressed interest in buying Seaboard Station, a development that is alarming some of the retail center's tenants. The center's owners filed for bankruptcy last year after being unable to renegotiate the terms of the debt on the property.

TRAVIS LONG — tlong@newsobserver.com Buy Photo

— Neighbors’ concerns over the possibility that William Peace University could acquire the Seaboard Station retail center led the City Council on Tuesday to delay approving the school’s plan to issue as much as $16 million in tax exempt bonds.

Although university officials insist the two issues are unrelated, council members delayed a vote for 30 days and told William Peace to meet with neighborhood groups to explain its future growth plans.

“I know that you said these are separate, but in the public’s mind they are not,” council member Mary-Ann Baldwin said. “… I have to tell you in good faith I can’t vote on this bond until some of these community issues are resolved.”

The delay came after several residents raised concerns about William Peace’s interest in Seaboard, which has been in bankruptcy for more than a year, and whether the bond issue would give the university more financial flexibility to make such a purchase.

“We need a better understanding of Peace’s plans,” said Kim Gazella, co-chair of the Mordecai Citizens Advisory Council.

Debra Townsley, William Peace’s president, also spoke at Tuesday’s public hearing. She said the university considers the restaurants and shops in Seaboard an asset that benefits William Peace’s employees and students.

“It is not our intention to purchase Seaboard, evict the tenants and/or bulldoze the retail space, as the rumors claim,” she said. “… Should we ever acquire Seaboard, we would certainly work with the community in a positive way to enhance the value of Seaboard and the community beyond.”

Townsley said the university would be interested in possibly redeveloping the land behind the retail center. That parcel, which is currently used as a parking lot, is zoned for residential use as it was once slated to become apartments.

Seaboard tenants became aware of William Peace’s interest in the property last month after attending a bankruptcy hearing. During the hearing, a university lawyer made a statement to the court that William Peace was willing to make an offer for all or some of the Seaboard property.

Townsley, responding to questions about why the university hasn’t been more forthcoming about its intentions, said Tuesday that Seaboard’s owner, Gregory & Parker, and its representatives at Capital Associates have asked that the university not have direct contact with the merchants or divulge details of any discussions about the property.

Bret Muller, an associate partner with Capital Associates who represents Gregory & Parker, said the university hasn’t signed anything that would limit its ability to talk to tenants. He said William Peace has yet to sign the nondisclosure agreement that the firm requires of any interested buyer seeking to examine Seaboard’s financials.

Gregory & Parker, which filed for Chapter 11 bankruptcy in February 2012, has been trying to work out a repayment plan with its lenders that would allow the company to retain Seaboard. The center is income producing, with its 92,000 square feet of space more than 90 percent leased.

But several other properties that Gregory & Parker invested in have not worked out, and the Seaboard property was put up as collateral for the loans. Regions Bank is the company’s largest creditor with a claim of more than $19 million.

Gregory & Parker’s lenders have thus far rejected two repayment plans. Earlier this month, the bankruptcy judge dismissed a motion by the creditors that sought to dismiss the case or convert it to Chapter 7, which would allow Seaboard to be sold.

William Peace is seeking to issue new bonds through Public Finance Authority, a Wisconsin bond issuer that partners with private borrowers and local governments. Such bonds require approval from the largest governmental entity that is over the issuer, but Raleigh has no financial obligation to the bonds.

The university plans to use $9 million of the new bonds to refinance bonds it took out in 2004. The remainder of the money would be used to repay a $6.5 million loan the university took out from its endowment. University officials say the bonds issued in 2004 can only be used for improvements on the William Peace campus, and that donors dictate how the money from the endowment can be spent.

Bracken: 919-829-4548

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