Brooklyn Village developers warn county it will forgo affordable housing plan

Axios

3 days ago

The Peebles Corporation is warning Mecklenburg County that if it doesn't subsidize affordable housing for Brooklyn Village, the developer will proceed with its original plan to build mostly luxury apartments on the historically significant site.
Why it matters: It's looking increasingly less likely that Peebles will actually redevelop Brooklyn, once a thriving Black neighborhood in Charlotte until it was razed in the '60s and '70s.
A legal battle could ensue if the county wants to reclaim control of the site it sold to The Peebles Corporation for a discount.
Catch up quick: Mecklenburg County sold prime land near Uptown to The Peebles Corporation and its development partner at a discounted rate, expecting they would honor Brooklyn through a mixed-use development that incorporates affordable housing.
But the project has stalled for years because of negotiations and construction delays, which have been blamed on market conditions.
In February, the development team revised its proposal and said it would build 250 affordable housing units — instead of 550 mixed-income units — in part to restore confidence with county commissioners.
The latest: Peebles told the county April 18 it would miss a contractual deadline to demolish a building on the site due to the discovery of asbestos. WFAE reports that the county may use this latest delay as an out from its relationship with Peebles.
In an unprompted email to Axios on Tuesday, Peebles emphasized that it now owns the Brooklyn land. "There is no reversion provision for Mecklenburg County to take it back," the email states.
Peebles also said it scored among the top applicants for a government subsidy to build affordable housing. However, the email claims the city was "insistent" that the county contributed, and the county refused.
Peebles further blamed the county for not disclosing the asbestos. It added that the building is on Phase 2 land for Brooklyn Village, which the developers do not own and, according to the email, do not plan on acquiring within the next decade.
"The County wants BK Partners to pay for and perform an environmental clean-up of a building we do not own," the email states. "They are trying to shift the cost of extensive clean up."
The other side: A letter Mecklenburg County's outside attorney sent to Peebles Corp. in late April, reported by WFAE, reads, "In reality, this is merely a continuation of BKV's ongoing attempts to avoid performing the demolition and removal work it agreed to perform. Clearly, BKV did not proceed diligently because it has been hoping it could evade its obligations."
Mecklenburg County provided Axios with its April 30 response to Peebles but declined to comment further.
The bottom line: The latest email effectively warns the county to approve its request for more funding if it's "genuinely committed to providing more affordable housing."
"Otherwise, we will wait until market conditions improve in Charlotte and then proceed with our original plan," the email states.
What's next: Developers say they expect to meet with the county in the coming weeks to seek a resolution.
Read The Peebles Corporation's statement to Axios in full below:
1. The development team of BK Partners, composed of Conformity Corp and The Peebles Corporation, owns the Phase 1 land.
2. There is no reversion provision for Mecklenburg County to take it back.
3. BK Partners has the right to build luxury apartments, a hotel, office and retail.
4. Current market conditions make construction of any of these uses infeasible economically. This is due to the impact of a global pandemic, the tripling of interest rates and an oversupply of apartments in the market.
5. BK Partners has an obligation to build 10% of any apartments on Phase 1 as affordable.
6. To address the County's and City's need and desire for more affordable housing, BK Partners was willing to build 250 units of affordable housing in two buildings.
7. As is the case for all affordable housing in Charlotte and the nation, a government subsidy is required. We applied for it and scored at the top of the applicants.
8. The City was insistent that the County contribute to their subsidy and the County refused.
9. As to the Board of Education building:
A. It is on the site of Phase 2 which we do not own and do not plan on acquiring in the next 8-10 years.
B. At the County's request two years ago, BK Village agreed to demolish the building under the expectation that there was minimal asbestos.
C. Prior to securing a permit for demolition, an additional environmental study was performed, and extensive friable asbestos was discovered. This extended the timeframe to demolish the building significantly as all the asbestos will need to be removed by hand first. Then demolition will follow.
D. The extensive asbestos in the building increased the demolition costs fivefold and added 6 to 8 months of time to the demolition process.
E. BK Partners was unaware of the extensive environmental contamination of the building prior to this discovery.
F. Apparently, the County government knew of the contamination but did not disclose this information to us.
10. The Board of Education Building has nothing to do with the schedule of Phase 1, nor does it impact the construction of affordable housing. It is the County government who is trying to leverage the construction of affordable housing to force us to cover the cost of the environmental clean-up of the Board of Education building in exchange for them to support affordable housing on Brooklyn Village Phase 1. We are surprised and disappointed by their approach. However, this is a complicated issue which will need to be addressed at some point.
11. The County wants BK Partners to pay for and perform an environmental clean-up of a building we do not own. They are trying to shift the cost of extensive clean up to BKV Partners.
12. BK Partners does not understand the urgency of the Board of Education building demolition as our original development agreement contemplated it being demolished before we started on Phase 2, which is 6-8 years away.
13. BK Partners has asked the County to allow us to proceed with the affordable housing buildings now and separately work out the issues involving the environmental clean-up.
14. If the County is genuinely committed to providing more affordable housing, it will approve our request. Otherwise, we will wait until market conditions improve in Charlotte and then proceed with our original plan.
15. BK Partners plans to meet with the county in the coming weeks to try and reach a resolution to move forward with the affordable housing.
16. There have been several reports of how we have delayed the project. Here are the facts:
A. The Development Agreement was approved by the county Commission October 2016.
B. The County did not control all of the land in Phase 1 because the City had rights to recover a portion of the land in Phase 1.
C. The County and City did not reach an agreement on the land until 2021.
D. BK Partners acquired the land under Phase 1 for $10 million in 2023.
E. BK Partners immediately commenced demolition and site work on the property as required in the agreement with the County.