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Environmental contamination threatens to take the air out of realtors’ ACC dream

by Jordan Green

Some of Greensboro’s real estate interests combined with the city’s civic insecurity in powerful fashion on May 8 when Coliseum Director Matt Brown and two business leaders lobbied the city council to buy a piece of contaminated property to serve as the future home of the ACC Hall of Champions.

Adding still more agendas and players, the state of North Carolina has dangled $2 million in front of the city for the project, and the property – a mothballed Canada Dry bottling plant – is partly owned by the wife of News & Record Editor John Robinson. In addition to Susan Robinson, the other owners are her brothers, Royall Spence III and W. Hardy Spence.

Following a petroleum discharge in March 1999 the Spences removed half a dozen underground storage containers. Because the petroleum was released near two water wells the property has been deemed a high-risk environmental site. It remains unclear how much environmental remediation has been completed following a 2002 order by the state Department of Environment and Natural Resources to clean up the site.

The Guilford County Department of Health has also played a regulatory role.

“It’s currently an active case under investigation and monitoring of the Environmental Health Division of the Guilford County Health Department,” said Pam Spence, an environmental health educator at the department, who is not related to the owners. “There is groundwater contamination from the underground storage tanks. There’s possible soil contamination, but that is under investigation.

She added that the source of the 1999 petroleum discharge “was traced to six underground storage tanks. There were two wells within a thousand-foot radius of this contaminated site. Therefore it was considered a high-risk site. There were six underground storage tanks removed, plus 103 cubic yards of contaminated soil removed.”

A report commissioned by the owners and later shared with the city indicates that the underground storage tanks, which were installed from the 1930s to the 1980s, held not only waste oil, but gasoline and varsol, a mineral spirits product made by ExxonMobil.

Confronted with the Health Department’s determination that the site is contaminated, the Spences’ real estate broker denied there are any outstanding environmental problems at the Canada Dry property, which lies on High Point Road across Patterson Street from the Greensboro Coliseum Complex.

“Everything’s been addressed, with the exception of some minor items of dotting the I’s and crossing the T’s,” Carl Essa told YES! Weekly in a cell phone conversation from his car on May 10. “There is no major issue. [Documents] haven’t been submitted yet, but they are going to be. Basically there’s several items that need to be addressed as far as the filing of all the cleanup that has already taken place. The environmental issues have been addressed.”

The property was originally operated as a Coca-Cola bottling plant. The Spences bought the local franchise from Canada Dry in 1952 and operated a bottling plant on West Market Street. In the late 1980s the family purchased the High Point Road property and operated a bottling plant there until it closed.

The Department of Environment and Natural Resources took note of the petroleum discharge in a 2002 letter to Royall Spence III.

“Your prompt attention to the items described herein is required,” regional supervisor Cindy H. Rintoul wrote. “Failure to comply with the state’s rules in the manner and time specified may result in the assessment of civil penalties and/or the use of other enforcement mechanisms available to the state. Each day that a violation continues may be considered a separate violation.”

The state’s “high-risk” determination imposed the requirement that the Spences submit a Comprehensive Site Assessment Report. This they did, and the report prepared by EnviroLinc, a High Point consulting company, disclosed that an “unknown” amount of gasoline and diesel had been discharged from a line running from a 10,000-gallon underground storage tank.

The EnviroLinc report notes that two separate surface streams run at a distance of about 1,000 feet from the discharge point, and groundwater lies between 13.4 and 18.7 feet below the surface.

The consulting company took soil samples, which detected benzene, ethylbenzene, tuluene and xylenes concentrate. “Due to the levels of contamination,” the report states, “a Corrective Action Plan will need to be prepared.”

One of the wells was still being used to draw water for bathrooms only, while the other well remained unused. Pam Spence, the environmental health educator with Guilford County, confirmed that health officials view the possibility that the wells could act as a conduit for residual contaminants as a concern.

“The responsible party is in the process of determining the costs to close all on-site private wells,” the 2002 EnviroLinc report states. “Once the wells are properly closed we will notify the department.”

The report provides several options for remediating the site, including soil vapor extraction, involving “the use of blower or series of blowers to apply a vacuum to the subsurface soils”; air sparging, or “injecting air beneath the water table in areas of contamination”; groundwater extraction; and vacuum-enhanced groundwater pumping and treatment.”

By early 2006, the city of Greensboro was actively considering purchasing the property.

A memo written by City Manager Mitchell Johnson and dated April 7, 2006 indicates that his predecessor, Ed Kitchen, had broached the idea, but that the city’s interest in the property dated back to 1990.

A year ago, the Spences were asking $3.2 million for the property. Johnson pursued negotiations, while noting in his memo that several environmental liabilities remained, including “many barrels containing petroleum and other unknowns,” a hydraulic lift that needed to be dismantled and cleaned up, and the presence of asbestos and lead in the building. Most significantly, he noted that “the remaining contamination had not been remediated and the owners have not completed the comprehensive action plan because they are continuing to use the well for non-potable purpose (bathrooms).”

Armed with an appraisal of $3.09 million, Johnson recommended to the council that the city offer the Spences $3.05 million, with the caveat that the owners close the remaining well, remove all barrels and debris, and remove the hydraulic lift and all piping. The city manager’s memo indicates that the offer took into consideration an estimated $200,000 as the cost of environmental remediation and a $350,000 adjustment “assuming the demolition of the building was the highest and best use” for the property.

The Spences responded with a counter-offer of $3.19 million, including the commitment to address all environmental issues. Correspondence indicates that both parties considered the cost of environmental remediation a giant question mark.

“Their offer to remediate the environmental items outlined in your proposal, which was made at your meeting with Susan Robinson and Royall Spence III, places them in the position of assuming substantial financial risk,” Essa wrote Johnson on March 30, 2006. “Because of this risk and the scope of work they have agreed to undertake, they do not feel that any reduction in the previously-agreed-upon price of $3.2 million is warranted.”

He added that his clients would reduce their price by $10,000 to help defray the city’s legal expenses.

“On April 4, 2006 I reviewed this offer with city council,” Johnson recounted in his memo. “I indicated that while I believe that the property was an important acquisition for the long-term control of the coliseum site, I could not recommend with any surety that the cost of the remaining remediation would be $200,000.”

The Spences are now asking $3.7 million for the property, Carl Essa told YES! Weekly.

City Manager Mitchell Johnson said in an interview on May 11 that he had not heard directly that the asking price had been raised by $500,000.

“If $3.7 million is right, I would have trouble recommending it,” he said. “I told the council we had sources of revenue for the $3.2 million, which I think is a fairly rich price.”

Johnson added that the Spences would have to clean up the site before the city considered buying it.

“The bottom line is council is not interested unless the environmental issues are cleared up,” he said, “and even then I’m not sure.”

Johnson said the proposed purchase of the Canada Dry property ended up back on the city council’s agenda at the request of the Coliseum Director Matt Brown and the Greensboro Convention & Visitors Bureau.

During the May 8 briefing Johnson mentioned that the Bryan Foundation made a commitment of $200,0000 “to assist in the cleanup and remediation of any issues remaining in the building, that is lead paint and asbestos, if the city purchases the site.” A local philanthropic organization, the Bryan Foundation is headed by former Mayor Jim Melvin, who was a major force behind bringing First Horizon Park to downtown Greensboro.

Brown and his business allies have framed the revitalization of High Point Road as an obvious next step for the city following its recent downtown renaissance.

“As elected officials you have a once-in-a-lifetime opportunity to not just talk about the need for economic development in our city but to actually be a part of making it happen by jumpstarting the realization of the most important mile in our city, the gateway to our community, High Point Road from Interstate 40/85 to Coliseum Boulevard,” he said.

He reminded council members that $2 million in state funds has been earmarked to pay for the ACC Hall of Champions, saying, “How fortunate we are as Greensboro taxpayers to have had the state of North Carolina believe in what this property can become.”

Ron Mack, chairman of the board for the Greensboro Convention & Visitors Bureau – a potential tenant should the city purchase the property – also spoke in favor of acquiring the Canada Dry site. Mack is the executive vice president of sales and leasing for Koury Corp., a Greensboro real estate powerhouse that developed the Four Seasons Town Centre, a bookend of the stretch of High Point Road he and others would like to redevelop.

“I have seen this corridor go from being one of the most desirable business environments to one of the least desirable business environments,” Mack told the council. “The High Point Road corridor has deteriorated significantly. From the standpoint of national retailers, there is very little demand. We have a lot of small start-up businesses whose credit is not very good, whose financial background is not what will allow them to invest significant amounts of money.”

Another supporter, Russ Parmele, is the local general manager of Security National Properties, a California company that owns a 13-building business park on West Meadowview Drive about a mile from the coliseum, along with Greensboro’s Stonebrook and Wingate buildings, and Winston-Salem’s Republic Square.

Parmele said commercial occupancy has dropped from 92 to 60 percent at the Meadowview business park. He confirmed in an interview that he serves with Mack on a “citizens committee” to provide input on the city’s High Point Road-Lee Street Corridor Plan.

The city council voted to authorize the manager to pursue negotiations with the Spences for the property, but members are currently divided on the merits of the project, with strong feelings being expressed on both sides. Yvonne Johnson, Mike Barber, Sandy Carmany, Goldie Wells and Florence Gatten expressed support for the land deal. Mayor Keith Holliday and Tom Phillips came out against it. Sandra Groat and Dianne Bellamy-Small indicated in their comments that they remain on the fence.

Johnson said, “I am in fully in support of us making this investment. It would begin to give us the name of ‘Tournament City.’ I think it will definitely bring business and motels that will be tax-paying entitites.”

Barber added: “As far as the ACC Hall of Champs goes, there is no greater glimmering, shimmering opportunity. It should be on every entry sign in Greensboro. This is one-time money that Mitchell has pointed out.”

Carmany, whose district encompasses the coliseum area, said, “I see this as the jump-start piece to get this area moving again.”

Wells: “I fully support it.”

Gatten: “I do support this project and I believe it’s the catalytic event that will revitalize High Point Road.”

Phillips expressed scorn for the idea.

“Carl Essa sat in my office and said, ‘We’ve got people ready to buy this property,'” he recounted. “I said, ‘Fine, sell it to them.’ If we’re talking about redeveloping that, let’s have a hotel come in and pay taxes. I certainly would rather have the private sector owning and redeveloping it than the city.”

The mayor slammed the proposal.

“I’ve got major issues with this,” he said. “This is a bad deal…. The building’s in bad shape. I’ve been out there several times. If we bought it the first thing I’d do is demolish it…. There’s no way it’s worth over two million bucks.”

He noted that the city could not legally use the state’s $2 million grant to buy the Canada Dry property and then open the ACC Hall of Champions elsewhere.

“I’m not going to get myself in a pickle right now over what’s going on in Raleigh,” he said. “People are going to jail right now.”

Groat equivocated, first saying there was some merit in speculative land purchases.

“I’m in the building business and real estate,” she said. “Sometimes you have to buy the building and bite the bullet.”

Then she complained, “I feel like I’m getting this whole sports idea pushed down my throat.”

Bellamy-Small urged caution.

“I’m very concerned about cost,” she said. “People say, ‘This is a slam dunk,’ and then we find out there’s no air in the ball.”

To comment on this story, e-mail Jordan Green at jordan@yesweekly.com.

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