Front Street Capital’s latest expansion bid of its local speculative building network involves a potential 420,000-square-foot industrial building in southwest Winston-Salem.
The Winston-Salem City Council has set a public hearing for 6 p.m. Oct. 20 to address a voluntary annexation petition from Front Street — Wallburg LLC.
Meanwhile, council approved unanimously Monday the request of developers of The Grounds for securing up to $80 million in public finance authority lease revenue bonds.
The prospective $35 million speculative building would be built on an undeveloped 30.46-acre tract at 4015 Wallburg Road, located at the intersection of Wallburg Road, Hayes Drive and Union Cross Road.
“We are nearing absorption of all of our land holdings around Park at 74, and this land acquisition was to provide future opportunities for industrial growth,” said Coleman Team, president and managing partner of the Winston-Salem private-equity group.
“Industrial development in this area is in alignment with Forsyth County’s future area plans and projected land use.”
Team said the voluntary annexation request “aligns with long-term economic development strategy for the area — both in attracting sizable corporate users with municipal services, and expanding the tax base benefit for both the city from those users and projects.”
By being annexed into Winston-Salem, the building and property gains access to municipal fire and utility services.
“These are meaningful advantages, especially for prospective large corporate users, who often prioritize municipal-level services when selecting sites for major investment,” Team said.
“Securing annexation will allow us to make more specific plans for development as we consider options around target users, project scale and scope, etc.”
Other Front Street projects in the area include Union Cross Industrial Center and The Park at 74 on Wallburg Road.
The Front Street industrial campuses represent a combined $368 million in capital investment, as well as more than 950 jobs and more than $2.5 million annually in local property taxes, according to data from Greater Winston-Salem Inc.
In April, Council unanimously approved an economic-development loan to Front Street to help with construction of a $32 million speculative building in Union Cross Industrial Center.
Front Street wants to borrow up to $3.5 million — typically a five-year, no-interest loan — toward construction of the 300,000-square-foot building.
Front Street indicated in the notice the speculative building is expected to have “additional investment on future tenant improvements.”
The loan typically is repaid in full upon either a tenant occupying the building or the selling or refinancing of the building.
“Without such available product in our local inventory, our city and county will lose on many potential projects that bring net new tax base, jobs and overall economic diversification,” company officials wrote to the city.
“Given current market activity and the intense competition for every project, we as a city cannot afford to miss out on these economic drivers due to a lack of available modern facilities or shovel-ready sites.”
The Grounds
Front Street is among the developers for Wake Forest University’s The Grounds, an ambitious $515 million, 100-acre mixed-use development around the university’s athletic complex.
The $215 million project also involves the city and developer Carter of Atlanta.
The bonds would go toward financing the construction of a 130,500-square-foot Wake Forest University administrative office building project on campus and a parking area.
“The financing of the costs of the project in the city is solely for the purpose of satisfying the authority requirements and the federal tax requirements,” according to a legal notice for the bonds.
Council approval “does not constitute an endorsement of the bonds or the projects, does not obligate the city for the payment of the principal or premium or interest of the bonds, does not obligate the city for the performance of any pledge, mortgage, obligation or agreement of any kind which may be undertaken by the issuer, and does not constitute bonds or any of the agreements or obligations of issuer as an indebtedness of the city.”
What council’s approval does do is give the developers access to a lower interest rate, according to Tony Plath, a retired finance professor at UNC Charlotte.
Council has taken similar action with projects involving Salem College and ASPIRE, formerly known as the Housing Authority of Winston-Salem.
rcraver@wsjournal.com
336-727-7376
@rcraverWSJ
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