Winston-Salem’s East End takes off, magnifying gentrification concerns

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.”