North Carolina Football Club owner Steve Malik and Raleigh developer John Kane revealed their vision Tuesday for a massive sports stadium project south of downtown, drawing up plans for a 20,000-seat stadium surrounded by nearly $2 billion worth of private development.
The project — which Malik and Kane are dubbing Downtown South — would radically change the southern entrance to downtown Raleigh, creating a new cluster of high rises right off Interstate 40 in an area that is currently dominated by empty fields and small businesses.
Malik and Kane held a press conference Tuesday to talk about and try to drum up public support for the project, which they said will need public money to kick start.
In addition to the stadium — which would be placed on 55 acres off South Saunders Street — Kane and Malik hope to build:
▪ 1.6 million square feet of office
▪ 1,200 hotel rooms
▪ 1,750 apartments
▪ And 125,000 square feet of retail and restaurant space.
Previously, Malik has described the proposed development as another “North Hills,” referencing the successful office, retail and residential area Kane Realty has built north of downtown. In fact, that amount of office space would be greater than what North Hills currently has, Kane added.
Renderings of the project — which were done by architectural firm Gensler — show several high-rise towers lined along South Saunders Street and around the stadium.
The stadium would become the permanent home for the men’s pro soccer team NCFC as well as the women’s pro soccer team N.C. Courage. Malik has owned those two teams since 2015 and has put the city’s name in contention for a future Major League Soccer franchise.
However, with competition from cities like Charlotte, Sacramento and St. Louis, Malik has stressed that an MLS team is not a requirement for this stadium, adding that it could also be used for concerts, festivals and other sporting events.
Asking for public money
To pull off the project, the group is asking for $13 million a year for 20 to 25 years from local governments to pay for debt service and the maintenance of the $180 million stadium.
That money would come from the Wake County room occupancy and prepared food and beverage taxes. The tax generated around $55 million in the 2018 fiscal year. Money generated by the tax can only be used on tourism-related projects that are likely to bring more visitors to the county.
It is unclear, however, if the stadium will be able to get any of that local money, let alone $13 million per year. As The News & Observer reported last week, the soccer stadium was not included on an initial recommendation list for money, while other existing entities, like PNC Arena and the convention center, were included.
To get the money, the group will need to convince a majority of the Wake County Commissioners and Raleigh City Council to vote for the project. A vote could come as soon as August, so the stadium’s fate should be known relatively soon.
“The time is now,” Malik said of garnering support for the stadium.
“We have not closed on the land,” he added. “We need interlocal funds to justify this investment.”
Kane underlined Malik’s point saying: “This land would not be getting this (level) of investment without this stadium. It has sat there for a long time and has been available. We have looked at it many times before.”
That was a departure from what Malik had told the N&O previously. In March, he said if his group doesn’t receive local money, it would decide to develop the property in a different way.
To make their plea for public money more convincing, the group shared an economic analysis of the project’s potential impact, highlighting a report done by the local consulting firm Economic Leadership LLC.
The report predicted that over the next 15 years the stadium and surrounding development would create:
▪ $2.7 billion in economic activity for Wake County
▪ 5,900 new jobs
▪ $20 million in property tax revenue
▪ And $3.7 million tourism related tax revenue annually.
On a website created for the project, Malik and Kane urged residents to reach out to their county commissioner or city councilor to pressure them to vote for the project.
If it does receive money, construction on the stadium could start as soon as 2020, with the stadium and the first phase of the larger development being completed by 2023. Kane said he would like his firm to lead the development around the stadium, though a time line to build all of it could stretch out a generation.
Once again comparing it to North Hills, Kane noted that construction there didn’t really kick off until 2000 and continues today.
Malik and Kane have long sought to put a stadium in downtown Raleigh, previously identifying state-owned land on the corner of Salisbury and Peace streets.
That changed earlier this year, when the group began to make moves to acquire property around Penmarc Drive off South Saunders Street.
In a one-on-one interview in March, Malik admitted that dealing with the state to get the land would have taken too long and there was a lingering question of where so many displaced workers would end up.
On top of that, the new property south of downtown is in an opportunity zone, a new feature in the country’s tax code that allows developers to earn savings on capital gains by investing in economically disadvantaged area.
Those potential tax savings would open up a whole new realm of possibilities, Malik said, noting that feature didn’t even exist when the club first announced its intention to build a stadium. The zone designation could make it easier for Kane Realty to find financing for the development around the stadium. However, the group will need to move fast to reap those benefits.
Because of the way the opportunity zone legislation is structured, Malik said, the group will need to get financing going within the next six months to make it worthwhile for investors. Tax benefits from opportunity zones are done on a 10-year time line, with the most generous benefits given to those who invest for a full 10 years.
Southeast Raleigh change
Southeast Raleigh was already on pace to see fast-paced change in the coming years without the stadium — but if this project were to get off the ground, coupled with the development of Dix Park, investment in the area will hit a new gear.
The dramatic evolution of southeast Raleigh in recent years, has been fueled by a surging downtown Raleigh that is quickly expanding into the area’s neighborhoods and commercial areas. That growth has made gentrification one of the city’s top concerns, as newcomers have caused rents to increase.
Malik noted himself that property values around the stadium will likely soar in the coming years, a fact that would, on one hand, enrich the city but also make property taxes more expensive for longtime land owners in the area.
Kane and Malik said that they hope to use two separate parcels — on the other side of South Saunders Street — to alleviate concerns that the change will be bad for the area.
On one of the parcels, the group said it hopes to build community soccer fields and on the other it hopes to work with the city to build affordable housing.
“That is a big topic, both for our county and our city, and something that we need to work with them on how to best approach,” Kane said, without getting into specifics.
Later, in an interview, he said that he hoped they could build workforce housing without tapping into the city’s affordable housing fund.
“There are other ways” to fund it, he said, “whether it is through the interlocal fund, or through (tax increment financing), or if we get help from the state legislature.”