A failed plan to reclaim polluted land along the AshleyRiver and build thousands of homes and businesses there is getting a second look, with regional development powerhouse MeadWestvaco leading the team. While a building boom has resumed across the tri-county area, roughly 300 acres of once-industrial riverfront sit vacant in the Neck Area, the stretch of land between the Ashley and Cooper rivers where Charleston and North Charleston meet.
That unpleasant landscape, one of the first glimpses of Charleston for many people as they drive into the city, is seen as an opportunity to focus some of the region’s growth inward, toward the metropolitan area’s urban center. But there’s the challenge of making the properties a safe place to live and work. Once lined with fertilizer factories, a lumber treatment plant and other heavy industry, much of the land between the AshleyRiver and Interstate 26 was left polluted with lead, arsenic, creosote and other contaminants during the last century.
“Obviously the Neck is full of contaminated sites,” said Kenneth Seeger, president of community development and land management at MeadWestvaco. “This whole situation is extremely complex.”
A bold plan that started more than a decade ago aimed to clean up and redevelop that land, but the real estate meltdown intervened. A great deal of environmental cleanup work was accomplished, but additional work costing tens of millions of dollars would be needed before anyone could live on the properties.
The largest site is where a mini-city called Magnolia was planned along the AshleyRiver, with up to 4,400 new homes and 2.5 million square feet of office, retail and hotel space. It would have been the largest development in Charleston since DanielIsland, with some of the tallest buildings in the city, and there was even short-lived talk about moving part of I-26 to accommodate the plan.
“Magnolia was put on pause, or was one of the many real estate victims of the Great Recession,” said Charleston Mayor Joe Riley. “This project made huge sense when we started working a decade ago, and that’s even more so today.”
Motorists who speed by the area today on elevated Interstate 26 might notice empty spaces where industrial buildings once stood, and a bridge that cost nearly $8 million and appears to serve no purpose. The bridge was built to provide access to the Magnolia site, which also connects to upper Meeting Street.
“You would obviously start development adjacent to the bridge,” Riley said.
Slightly upriver, just over the North Charleston city line, a second development called AshleyRiverCenter had been planned by the same group of companies. It was supposed to include a public park and pier, a botanical garden, and a greenway along the Ashley, built with the city’s assistance.
That was before the crash, before the redevelopment team led by Cherokee Investment Partners, of North Carolina, defaulted on loans secured by the properties. Both development plans went quiet during the recession, and have stayed that way for years.
“MeadWestvaco, which is a most excellent and capable land developer, acquired the note when it went into foreclosure,” said Charleston Mayor Joe Riley. “What they want to do is go through all of their due diligence and make sure everything is correct.”
MeadWestvaco and its partners have proposed a plan for the AshleyRiverCenter properties, and they are evaluating the Magnolia site.
“The property in many areas still needs to be cleaned up,” said Seeger. “We have to be satisfied it can be done in a way that would allow us to be in a position to acquire title to the property.”
Charleston is ready to press forward. This month Riley started the process of extending by 10 years a special tax district created to help finance redevelopment of the Magnolia site.
Two main concerns
Seeger said an extension of Charleston’s tax increment financing district, and clarity about the scope and cost of remaining environmental work, are the keys to reviving redevelopment of the Magnolia site. “Those are the two major threshold issues we are trying to resolve before we know if the project will be viable,” he said.
Riley agrees that the tax increment financing district, or TIF, should be extended. On May 1 he sent a letter to Charleston County Council and the School Board, seeking their support for a 10-year extension. In a TIF district, the government borrows money to finance development-related infrastructure, such as the $7.8 million bridge built to serve Magnolia. Then, for a set period of time, new property tax revenues generated by the development are devoted to repaying the borrowed money.
The idea is that using property taxes created by the development, to help finance the development itself, can boost economic growth and reclaim blighted areas. Charleston, North Charleston, Mount Pleasant and other governments all use TIF districts to build parks, improve streets and spur development.
“The TIF is critical for making this thing work,” said Robert Clement of CC&T Real Estate, who worked with Cherokee and is now working with MeadWestvaco. “We don’t really have functioning roads or utilities.”
The issue with the existing Magnolia TIF district is that it was created in 2004 and expires in 2029. If the development were to be revived, there would be less time than originally anticipated to repay any TIF debt, which means less could be borrowed to spend on infrastructure.
“If there was a poster child for extending a TIF, I think Magnolia would probably be it,” said Charleston’s Chief Financial Officer, Steve Bedard. “If we don’t get the extension, I don’t think they are going to do it.”
Charleston City Council will consider the extension June 17. The county and school district have until mid-June to make their decisions. Both are currently collecting more information about the TIF, County Council Chairman Teddie Pryor and Charleston School District Board of Trustees Chair Cindy Bohn Coats said.
The other big question for MeadWestvaco is the cost of making the properties suitable for development. Some land in both redevelopment sites has been cleaned up enough for industrial use, but would require expensive additional work if homes were going to be built there, to keep residents safe from lead-contaminated soil and other problems.
“With residential, you’re looking at kids running around a yard, eating dirt, or playing at a playground,” said Ken Mallary, U.S. Environmental Protection Agency site manager for several of the properties. “What you want to do is basically keep potential residents from coming into contact with the first two feet of soil.”
“It’s very doable,” he said.
Craig Zeller, EPA site manager for one of the most polluted properties on the Magnolia site, the Koppers Superfund site, said redevelopment should make the sites safer.
“Development of the property would actually make it more protective by putting down asphalt and driveways and such,” he said.
The Magnolia property has the most serious cleanup issues. The Koppers site is an unfinished Superfund cleanup, and work hasn’t started on the neighboring Columbia Nitrogen site, a former fertilizer plant. Gerald Pouncey Jr., an Atlanta lawyer specializing in environmental and land use issues, has been working for the MeadWestvaco team and meeting with regulators. “What has been discussed with the EPA is the possibility of conducting significant cleanup of the two creosote plumes that still exist (on the Koppers site) – particularly the one in the middle of the property – and cleaning up the soil, and putting a soil cover on the site,” he said. Pouncey said the price tag for that work should be between $14 million and $15 million. “We have a formal work plan that is going to the EPA in the next few weeks,” he said. “That would allow for a clearer determination about whether that number is accurate.”
Seeger said the MeadWestvaco partnership is evaluating land uses similar to what was proposed on the Magnolia site, including housing, though likely with less density. Responsibility for the Columbia Nitrogen cleanup, estimated to cost more than $11 million, is in litigation. The EPA has ordered the cleanup to move forward, and work to remove up to 43,000 cubic yards of soil and sediment tainted with lead and arsenic should begin later this year.
On the Ashley River Center property, more recently dubbed the Baker Business Campus, the MeadWestvaco group approached North Charleston seeking a change in zoning that would allow light industrial development such as showrooms-warehouses and offices. The two EPA-listed sites on the property are now considered clean enough for light industrial development, but a majority of city officials – recalling previous plans that called for homes, shops and parks – oppose light industrial development there.
At a meeting in April, Mayor Keith Summey voted to support revised zoning, but every member of the City Council except Bob King, who was absent, voted against the change. “God’s not making any more waterfront property,” Councilman Ron Brinson said. Summey argued it would be unfair to insist retail stores or homes be built on the site because the location is unsuitable. The site wraps around a nursing home, an apartment building, and a psychiatric facility, but to get there people have to pass through an industrial area near the Lowcountry Food Bank and drive under the interstate. “I would rather see light industrial development that will create jobs for the community,” the mayor said.
Following the City Council rejection, Seeger said the team is re-evaluating what could work on the property. “We thought that what we had proposed was appropriate,” he said. The ongoing environmental issues and developers’ interest in overcoming them illustrate both the desirability of the AshleyRiver land and the extra costs and hurdles involved with developing what’s known as a “brownfield” site.
The Neck Area is not like a suburban subdivision, where developers can cut down trees and build on untainted land. MeadWestvaco is known for suburban and rural projects, including the 12,000 homes and apartments planned at the Nexton development near Summerville, and long-range plans for the 72,000-acre East Edisto properties, most of which is in Dorchester County. But MeadWestvaco also owns a specialty chemical company in North Charleston, and until 2008 operated the large paper mill that dominates the CooperRiver waterfront next to the DonHoltBridge on Interstate 526. The mill and other properties were sold to KapStone. “Certainly, as a company, we’ve had to deal with brownfields,” said Seeger.
The company teamed up with Branch Properties, and Pope & Land, to buy the notes on the Neck Area land and consider redevelopment there. “We’re optimistic that we can get through these issues,” Seeger said. “Otherwise, we wouldn’t be spending our time and money doing it.”
Reach David Slade at 937-5552