Huntersville Town Center is Stuck in the Middle

Business Today
June 1, 2011

By V. Tom Gardner

The Huntersville Town Center took about six years to go from the initial concept to partial completion.

Once the first building and parking garage were built last year in downtown Huntersville, hopes were high that Tommy Norman and his company, HTCP Development One, would quickly complete the next phase of the Town Center and the revitalization of Downtown Huntersville would be well under way.

It hasn’t worked out that way.

The town spent almost $19 million to buy the land and construct the building that houses Discovery Place (on the first and second floor), city offices (on the third floor) and the parking garage. Huntersville Town Manager Greg Ferguson deems the project a success.

“From the town’s perspective we have a highly successful kids museum that serves the needs of the region and has already had over 110,000 visits in less that six months. And we have a third floor with 18,000 square feet that serves a great need — we didn’t have enough office space for employees,” said Ferguson. “From our perspective the project is doing exactly what we wanted it to do. We hope the private side comes forward, we’re confident that it will at some point, but the recession has not helped with that.”

Discovery Place Kids Huntersville

Nor does it look as if the economy — despite the fact that it is improving — will rescue this project anytime soon. A glut of office space, as well as competing commercial real estate dispersed throughout the Lake Norman region means the Huntersville Town Center has plenty of competition.

Merchants nearby are not enjoying a bump in business either, despite the town’s investment.

“It’ a shame that the taxpayers of Huntersville funded this $19 million project and even with its successes to date, no ‘downtown revitalization’ has occurred at all or even helping the existing businesses that had high hopes for this project,” said Ken Lucas, a member of the Huntersville Town Commission. He resigned from the commission last month.

Though Discovery Place pays only $1 for rent per year, there is an agreement to pay $30,000 per year for use of the parking garage.

In addition, Ferguson said that HTCP was supposed to pay for one third of the cost of the parking structure over a 20-year period. However, the city hasn’t yet received any of these payments because the Town Center development still has two empty lots. One is on Gilead Road just to the immediate east of the Discovery Place building, and the other is a grassy field adjacent to Discovery Place along Old Statesville Road across from the shops in downtown Huntersville. These lots were planned to be developed by HTCP.

The city won’t receive the $100,000 per year until a building is constructed on the Old Statesville piece of land.

Norcom is the parent company of HTCP. Tommy Norman, president of HTCP, says Huntersville Town Center as a “current project.”

During a very brief conversation with Business Today, Norman said that he was still moving forward with the Town Center. “Our leases are still intact and our tenants are still intact.” Norman did not respond to phone calls and emails asking for clarification.

Adventures in real estate

According to Davis Capital Group CEO Richard Davis, the property on Old Statesville is being foreclosed on while the land on Gilead is in default, and will eventually be foreclosed on.

Davis Capital Group (DCG) lent $1.2 million to HTCP. Now with interest and penalties, Davis says DCG is owed approximately $1.9 million.

But Norman also borrowed $330,000 in equity from investors, $300,000 from subordinated lenders, and $4 million from The Scottish Bank, now North Carolina Bank and Trust.

Norman borrowed “way more money than he needed for the deal,” said Davis.

The foreclosures have been in the works for some time. According to Davis, once a note has been defaulted on, the lenders can foreclose. Then the borrower is given a “cure period” of 90 to 120 days, to come to an agreement with the lenders and fix the cause of the default. But, “He has gone beyond that (time period) and hasn’t talked to me in year,” said Davis.

Huntersville’s adventure in real estate began near the top of the market. Tom McMahon, the managing director at Sperry Van Ness Commercial Real Estate Advisors in Cornelius, said he hasn’t seen the commercial real estate market this bad for this long. “It’s part of the real estate cycle, I’ve never seen the cycle dip as much as this one as it has for this time frame,” McMahon said.

Lucas called the Huntersville Town Center a “sad tale that ends tragically on the backs of the taxpayers because the Huntersville Town Commissioners decided to get into the land development business vs. allowing the expert private sector professionals to do just that.”

McMahon said the whole situation doesn’t surprise him “with the timing of the project and the timing of the economy collapsing.”

Davis is becoming the new driving force behind the completion of the Town Center. A Huntersville native, he attended Huntersville Elementary just down Gilead Road.

Davis is trying to work with North Carolina Bank & Trust in an effort to develop the empty lots in the Town Center. But when the economy went south banks have become far more conservative in their approach to real estate investments.

Davis has been trying to work out a new agreement with North Carolina Bank & Trust to gain control of the Town Center parcels. “They’re being unreasonable,” said Davis. “I really wish the bank would get on board with the revitalization of the downtown of Huntersville. I wish they (NCBT) had an interest in helping…. I wish they would be a team player. It will take a group effort to make this thing happen.”

Merchants are hopeful

Nearby business owners are hopeful that additional buildings brought in by the completion of the Town Center may help to increase business.

Bob Murdoch, owner of Studio 101, said the Discovery Place Building hasn’t helped jewelry sales.
Cathy Wiltcher, owner of Nanny’s Attic, said that she hasn’t seen any increase in the number of her customers since Discovery Place opened. In fact, business is down, she said, due to the economy.

Meanwhile, the town is forging ahead with its expectations. Ferguson said any new building at Huntersville Town Center would have to be made in the same style as the Discovery Place Building. “We anticipate that they (the developer) would build in the form that the present building has.”

Lucas said the “bottom line is this: DPK succeeded, and the Town gets $1 a year rent plus footed the entire cost of the parking garage plus the debt service associated with this multi-million dollar project! Bad deal in my opinion.”

Davis is hopeful. “I would love to see the re-vitalization project succeed. I think it’s an awesome location,” said Davis.

Wiltcher is also hopeful. “Anything that increases foot traffic, that’s a good thing,” she said.


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