City Council members gave a mostly skeptical reception to the notion of giving the owners of Phoenix Square and Phoenix Crossing $500,000 to remodel their shopping centers on Fayetteville Street.
Mayor Pro Tem Cora Cole-McFadden gave her endorsement right away. Other City Council members hearing the proposal at last week’s work session were somewhat more reserved – on grounds fiscal and historic.
“This shopping center needs improvement,” said Councilman Eugene Brown. “However ... why should public funds be used to do half the work?”
Economic development director Kevin Dick presented the grant request to the City Council “just to receive your initial thoughts ... on the idea of possible city support.” The proposed $1 million renovation would strengthen the area’s business climate and “create more of a sense of place in the district,” he said.
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Phoenix Square and Phoenix Crossing face each other across Fayetteville Street, about 300 yards south of the Durham Freeway bridge. Fayetteville Street is a target area for the city’s business-assistance grants and aesthetic improvement, and is a gateway corridor from the freeway south to commercial and residential areas and to N.C. Central University.
“Right now, there is a lack of appealing gateway aesthetics as pedestrians or vehicles enter the corridor from the north,” Dick said.
Phoenix Square, on the east side, was built in 1987 and encloses 10,300 square feet that is 100 percent leased. Phoenix Crossing, on the west, was built in 2000 and encloses 34,000 square feet that is 93 percent leased, according to an economic-development memo to the City Council.
M & M Inc. of North Carolina, according to Dick, approached the city with a plan in which it would match a $500,000 neighborhood revitalization grant dollar for dollar, using the money to replace their buildings’ siding, add taller steel framing to the existing structures, add insulation, upgrade electrical systems and repair worn and potholed pavement.
“I support the project wholeheartedly, with no reservations,” Cole-McFadden said. “Fayetteville Street needs it, this is the project for Fayetteville Street, I’m sure students at NCCU will be pleased.”
Other council members questioned the wisdom of putting a large share of limited revitalization money into one project, and Councilwoman Diane Catotti said that the renovation would bring a negligible increase in the city’s property-tax revenue, since the centers are already in business and leased at near capacity.
Dick pointed out that neighborhood revitalization grants are generally intended to make up for “disinvestment” in a particular area, a point that Brown picked up on.
“There is disinvestment here, meaning the owners have not invested in their own property. They have not embellished,” Brown said. “This is also ... an unprecedented amount going not just to one area but to one owner.”
This owner and the city have a history, which Dick acknowledged.
“There has been documented and publicized information about the city’s relationship with this company in the past,” he said. “That may be part of the council’s consideration.”
According to N.C. Secretary of State records, Larry and Denise Hester of Durham are president and secretary respectively of M and M Inc. of North Carolina. Larry Hester is the registered agent for Zuri and Associates, which owns Phoenix Crossing, and Phoenix Square Associates, which owns Phoenix Square, according to Secretary of State and Durham County records.
Records also show that Hesters were involved in Southeast Durham Development Corp. which, with city support, set out in the 1990s to build a residential subdivision, Rolling Hills, on 19 acres next to the Phoenix Crossing site. With little progress made and its loans to the company delinquent, the city repossessed the unsold property in 2003 – but only after an involved legal battle with Southeast Durham Development.
“Based upon past history, with Rolling Hills, which was just an absolute, complete fiasco that cost public taxpayers thousands and thousands and thousands of dollars, I’m not too eager to get on board with this,” Brown said.
Since the city took the property back, a new developer has an apartment complex almost ready for tenants. Mayor Bill Bell, who took office in 2001, said he had “reservations” as well about investing in the Phoenix centers.
“My reservations are born in the history of what ... we had to go through to get Rolling Hills where it is now, the new Rolling Hills,” Bell said.
“And I remember very distinctly who fought very hard to prevent that from happening, in spite of the fact we tried to say this would only enhance your property,” he said, with the Hesters in the audience.
“Now to come back and ask for this kind of investment ...I know what shape Rolling Hills was in when the city took over. I know what the city went through to get Rolling Hills where it is. I know who fought hard to prevent that from happening.
“You’re really going to have to prove to me ... that we’re going to see the type of results that are projected (for the shopping centers)” Bell said.
The Hesters did not respond, but Dick did point out that they do own significant property at the Fayetteville Street gateway.
“If we are interested in enhancing,” Dick said, “this is the entity we would be working with.”