Redevelopment is already underway in the East End, a historically disenfranchised area adjacent to the Innovation Quarter, but city leaders are locked in a dispute over a proposed partnership with a local community-development corporation.
People who commute into downtown Winston-Salem from the east know that the Fifth Street exit provides a convenient bypass around the traffic congestion at the Business 40-Highway 52 interchange. The route takes commuters across Martin Luther King Jr. Drive and into the heart of the East End area before crossing 52 and dropping them into the Innovation Quarter.
Under the East End Master Plan, approved by city council last November, East Fifth Street would be transformed into a “town center” with new commercial investment to complement higher-density housing. The plan envisions East Fifth Street as a revitalized corridor that extends the economic vibrancy of downtown and the Innovation Quarter eastward into an area historically burdened with redlining, racially concentrated poverty and lack of private investment. But as growth continues in the Innovation Quarter, both proponents and skeptics of the East End Master Plan worry that demand for high-end housing will trigger a landgrab that displaces longtime residents.
The East End Master Plan itself is currently in a state of limbo, subject to a political battle over whether to turn over $3 million in economic-development bond funds to a local community-development corporation for the purpose of purchasing commercial properties for redevelopment.
Meanwhile, signs of regeneration in the newly-named district — bounded by Highway 52, Martin Luther King Jr. Drive and Business 40 — are abundant. A local church now controls four blocks of lower-income housing potentially at its disposal for revitalization. A Kernersville couple is in the process of acquiring a property at a prominent location of MLK Drive that has been the focus of longstanding redevelopment efforts by the city. The Chronicle, a weekly newspaper serving the African-American community, now occupies a former bank branch building owned by developer Drew Gerstmyer. Other Suns, a combined retail store, barbershop and event space that is operated by longtime educator and community leader Hazel Mack, recently added a coffee shop with morning business hours from Thursday through Saturday.
Political street fight
While organic growth unfolds in the district, a plan to allocate $3 million in economic development funds to the SG Atkins Community Development Corporation is on hold as a result of objections raised by the East Ward representative on city council. The dispute has pitted Councilwoman Annette Scippio against state Rep. Derwin Montgomery, her predecessor on council.
Scippio told fellow council members during the Aug. 13 meeting of the General Government Committee that other areas of her ward suffering from neglect need the assistance more than the East End, and that constituents have asked her: “Who’s looking out for us?”
“All I’m asking is that $3 million is released for use in all of that East Winston area that has not been targeted or got anything in the last 50 years, and it’s on a first-come-first-serve basis,” Scippio told fellow council members. “It doesn’t preclude it not going into the East End area, but if a developer wants to come and do something in Dreamland Park or Happy Hill, it refreshes all of those neighborhoods.”
Under the proposed agreement, up to $50,000 a year from the bond funds could be spent on maintenance of the properties, and additional city funds could be spent to cover taxes on the property. Once any of the properties are re-sold to a developer, the CDC would receive a 15 percent commission, Assistant City Manager Evan Raleigh told council members in May. After Councilman Jeff MacIntosh raised questions about the propriety of the arrangement, Raleigh clarified in an Aug. 12 memo that as opposed to a commission, the agreement would provide “a development fee payable out of the sales proceeds rather than upfront.”
Scippio said she was troubled by the idea of city funds being used to assist the CDC with maintenance and taxes.
“I felt that we should not be doing that — that if we’re going to give money to someone to buy property, they should be willing to take care of the maintenance and the taxes,” Scippio said during an Aug. 12 committee meeting. “If not, we could buy the property, and we wouldn’t have to pay the taxes.”
As a measure of how much he cares about the initiative, Montgomery told his former colleagues that this was the first time he had come to speak on an issue since he retired from council last year.
“The challenge is — there are plenty of people having conversations, but they all keep saying the same issue — which is, you gotta put the parcels together,” he said on Aug. 13. “The thing was to have an organization like SG Atkins do the hard work that most developers don’t want to do, which is assemblage.”
Carol Davis, executive director of the SG Atkins CDC, acknowledged to council members during a committee meeting in May that efforts to acquire commercial properties for redevelopment have run into challenges.
Over the past year, Davis said the CDC has made offers on the vacant Burger King property at the corner of East Fifth Street and MLK Drive, a used-tire shop across the street, the East Winston Shopping Center, the State Employees Credit Union, the OBGYN office and a daycare center, all of which have been turned down.
“Recently, our board members have met with a gentleman who has over 30 years of land acquisition experience in very difficult markets,” Davis told council members. “He has submitted his qualification and wants to work with us. I think he could get the job done. He describes himself, unfortunately, as a ‘shark.’ And it might take that. But yeah, we’ve tried since the plan was endorsed in November 2018 to make some progress ourselves. And we have come to the realization that we need a professional shark.”
Under a separate agreement under consideration by council, the city would allocate $60,000 per year to hire a real-estate development project manager.
Regardless of whether the city and SG Atkins CDC consummate the economic-development agreement, one significant redevelopment project appears to be on track regardless. Raleigh told Triad City Beat that the city accepted an offer on the old Smith Dry Cleaners property on the 300 block of MLK Drive from Charmon and Michael Baker, a couple who lives in Kernersville. Raleigh said the Bakers are currently performing due diligence, and he anticipates closing on the sale in the next three weeks.
Raleigh said the Bakers are proposing a mixed-use building with about 33,000 square feet that would have retail on the ground floor and upwards of 28 residential units on the second and third floors.
The property has been the focus of city redevelopment efforts for at least 15 years. In 2005, city council approved a $150,000 loan to help cover the cost of environmental remediation. In 2008, 750 tons of soil were treated and shipped to a landfill in Michigan for disposal, and the following year the state Department of Environment and Natural Resources pronounced the site ready to build. But the two owners, including Michael Suggs — president of Goler CDC — never developed the property or made a payment on the loan. In 2014, the city took possession of the property through foreclosure.
Then-Assistant City Manager Derwick Paige said the loan had been worthwhile even though the borrowers defaulted.
“Somebody had to step in make the funds available for the cleanup,” he said. “If the project had gone forward, we would have been able to recoup our funds immediately, and we would have been made whole a lot earlier. The city will through providing a development opportunity and job creation be able to recoup its investment. At some point it will be developed. I think the city’s funds were well used.”
Gentrification — curbed or fueled?
Looming over the dealmaking and policy decisions at play in the East End is a widely-shared concern about gentrification, and worry that redevelopment could lead to the displacement of longtime residents.
Empowering the SG Atkins CDC to guide redevelopment is the city’s best hedge against gentrification, Rep. Montgomery told TCB.
“The real benefit of the CDC being in control is to make sure the citizens’ voices are heard,” said Montgomery, who is a co-owner with Councilman James Taylor of The Chronicle and senior pastor at First Calvary Baptist Church in the neighborhood. “Because of the existing zoning, [developers] don’t need to come to council if they can finance their own property redevelopment. If we let the market decide, the neighborhood may not be protected.”
Davis acknowledged in her remarks to council members in May that the CDC’s potential stewardship of the $3 million economic development bond would only indirectly affect housing. (The economic development bonds can only be spent on commercial properties, although Raleigh said a developer would be allowed to build a mixed-used project that included housing along with retail or office space.)
“The housing is difficult because that’s not likely to change hands too much in terms of the apartment complexes — multi-family complexes that are in this target areas,” Davis said.
Those include Southgate Apartments, a 14-acre complex owned in large part by Greensboro developer George Carr, and the Ivy Arms Apartments owned by the Phi Omega sorority.
A collection of brick, barracks-style apartments covering five blocks at between Second and Fifth streets near the Highway 52 underpass has drawn increasing notice as observers have noted that some of the buildings have become vacant and boarded up. Hayes Wauford, the broker in charge for Wilson-Covington Construction’s property management division, told TCB that the apartments between Third and Fifth streets — roughly two-thirds of the original holdings — are under a ground lease with First West End LLC. The company leasing the properties is managed by Joe Crocker, director of local impact in Forsyth County at the Kate B. Reynolds Charitable Trust and a member of United Metropolitan Missionary Baptist Church, which is next to the apartments. Lyvonne Bovell-Harris, the project manager for First West End LLC serves on the board of SG Atkins CDC.
Wauford said his company has no plans to redevelop the 85 units that they will retain. He said all but six units are occupied. Market-rate rent for the apartments is $450 per month, although some are subsidized.
“First West End LLC that has been formed by United Metropolitan church has taken control of a couple hundred units that they’re not gonna relinquish control over,” Davis told council members in May.
Crocker declined to comment on whether his group plans to redevelop the apartments, but went on to explain that they’ve opted to board up some of the units because “we don’t want to put people in there if we’re going to be redeveloping them.”
Raleigh, the assistant city manager, told TCB that the church is in talks with Liberty Atlantic, a Charlotte-based company that “designs, builds, finances, operates and maintains multi-unit residential and mixed-use properties across the Southeast,” according to its website.
Jaron Norman, a principal at Liberty Atlantic, said the company is in early stages of talks with United Metropolitan and the two parties are still working out a formal agreement. He added, “We hope to have clear direction by the end of the year.” Like Crocker, Norman declined to comment on any potential redevelopment of the properties.
“In terms of the area being gentrified, the main strategy [to prevent that] is to make sure that the property owners and project developers are people from the community,” Davis told TCB.
Councilman James Taylor, who represents the Southeast Ward — where the SG Atkins CDC operates the Enterprise Center business incubator — articulated a similar philosophy during a committee meeting on Aug. 12.
“It means something to me, and it means something to other people in the community where those who have an African-American presence are there in the communities helping to spark and maintain economic development, as opposed to the concept of gentrification,” he said.
Montgomery said any discussion about gentrification in the East End needs to consider all of the elements of the master plan. He and others have said there’s $1.7 million in 2018 housing bond funds available for the East End, and Montgomery noted that guidelines recently approved by city council require any housing developer who receives financial assistance from the city to set aside 20 percent of the units for affordable housing, although the specific personal income target is subject to negotiation. He also noted that the master plan estimates that the area could triple in density, so it’s possible to add higher-income housing without displacing current residents.
In addition to funds for commercial redevelopment and housing, Montgomery said there’s about $2 million available for infrastructure on East Fifth Street, including street resurfacing. In terms of commerce, Montgomery said the master plan commits that existing businesses in the East End will receive first right of refusal for newly developed commercial space.
Montgomery noted that the East End occupies a critical transition space between downtown and the rest of the East Ward.
“We knew that neighborhood was close to the Innovation Quarter,” he said. “People who come over would see economic development opportunity and not the totality of the needs of the community. That area of the East Ward is right up against the Innovation Quarter. If we don’t stand now, we’ll see a higher level of gentrification throughout the East Ward.”