McCrory wanted to reshape the north end of downtown Raleigh. Will Cooper restart the program?

Months into Gov. Roy Cooper’s administration, former Gov. Pat McCrory’s ambitious plan to revamp aging state government properties is on hold – with one exception.

McCrory rolled out “Project Phoenix” in 2014, proposing partnerships with private developers to overhaul downtown Raleigh’s state government complex with ground-floor retail space and residential development. He also put several state-owned properties up for sale, including the former Rex Hospital on Wade Avenue and historic houses on Blount Street.

The Republican governor said he hoped to “develop a plan that will hopefully last over a century.” But only one construction project began before he left office: the $42 million renovation of the 12-story Albemarle Building on North Salisbury Street.

The N.C. Department of Insurance is moving its headquarters into the reopened building, which is now a modern office building bearing little resemblance to its former self.

“This used to be the worst building in state government,” said Mark Edwards, a deputy secretary at the N.C. Department of Administration.

The Albemarle now looks similar to private-sector office spaces elsewhere in downtown, with sunlight in nearly every work area, video conferencing systems and hearing rooms set up to serve the public on the lower two floors. Key pass security systems have replaced a guard checking badges at each entrance.

“We think that this is going to be a better way for people to work together,” Edwards said of the building.

But one key part of the building remains vacant for now: a prominent space near the entrance designed to house retail or restaurant space.

John LaPenta, who oversaw Project Phoenix under McCrory, said administration officials were working to attract a tenant when Cooper took over. “It was either a Panera (Bread) or somebody like that,” he said. “It was pretty far along the line.”

Edwards says the Department of Administration is still interested in putting a coffee or food vendor in the space, but it has to work with the Division of Services for the Blind to make the arrangements.

Under state law, that organization gets first dibs on operating vending facilities in state office buildings, and it already runs several nearby cafeterias for state employees. The law says the requirement is “in order to promote the employment and the self-sufficiency of blind persons in North Carolina.”

LaPenta said the McCrory administration had an agreement with the agency, which was “actively talking to several tenants and retailers.”

The state has no plans to add retail in other downtown Raleigh government office buildings. While McCrory hadn’t secured funding to renovate more buildings like the Albemarle, he had reached two deals to sell vacant and underused properties on prime downtown real estate.

Those properties are no longer listed as available, and pending sales have been on hold since Cooper took over in January. The governor recently said that the “Project Phoenix” concept and property sales “remain under review.”

“I think we certainly want to work with private businesses to improve downtown Raleigh, but we don’t want to sacrifice unnecessarily state property that could be used for state purposes in the future,” Cooper told reporters in April. “So we’re trying to figure out what the right balance is.”

Cooper’s Department of Administration “has completed visits to the sites under consideration for sale by the previous administration, reviewed previous analyses and started its own,” spokeswoman Alexandra Mendoza said.

Two of the buyers that the McCrory administration lined up still hope to acquire the state properties.

Milan DiGiulio, an orthopedic surgeon with an office in Cary, offered $1.75 million for the 0.36-acre site of a long-vacant former steam plant on North Dawson Street near the Days Inn Hotel. He hopes to turn the site into a medical office complex housing urgent-care and primary-care offices.

The Council of State, made up of top state elected officials, had been scheduled to vote in December on that sale, as well as the $4.85 million sale of a 1.8-acre site on West Peace Street across from Seaboard Station. The deals have been on hold since.

DiGiulio said he hasn’t been in talks with state officials since December, but hopes to make progress on the sale in the coming weeks. “We’re working with the community to try to see if everyone is on board with the sale,” he said Friday.

A group of developers seeking the Peace Street site also remain hopeful that they’ll be able to buy the property. They did not have a specific plan but had expected to build a mix of retail, office space, restaurants or residences.

Two larger properties had been put on the market by McCrory but didn’t yet have buyers: the 16-acre former Rex Hospital site at St. Mary’s Street and Wade Avenue – which houses the Employment Security Commission – and 26 acres at Blue Ridge and Reedy Creek roads.

Raleigh leaders have been supportive of the property sales. Raleigh City Councilwoman Mary-Ann Baldwin said the city is “very anxious to see movement” on the Blue Ridge Road and Wade Avenue properties.

“Both of those sites are really important to the future of Raleigh,” she said. “If we can get some of these properties developed and back on the tax base, it would mean revenue growth. We have our fingers crossed it would be sooner than later.”

In downtown, McCrory was also considering development of the large parking lot between the N.C. Museum of History and the governor’s mansion, as well as the possibility of demolishing the aging Administration Building on Jones Street – across from the science museum’s newer wing – and allowing private development there, LaPenta said.

“We really did do our due diligence, and it took us years to get these properties on the market,” he said. “I hope (the Cooper administration) proceeds and takes these underused properties back on the market.”

LaPenta said the McCrory administration wasn’t able to make more progress because extensive studies of the properties had to be conducted before they went on the market.

“It took a while to sell the project, let people understand what was going on,” he said.

Mark Binker of the N.C. Insider contributed

This story was originally published April 29, 2017 at 10:00 AM with the headline "McCrory wanted to reshape the north end of downtown Raleigh. Will Cooper restart the program?."