Most of the details of proposed Downtown Raleigh Entertainment District, a.k.a. Downtown South, had leaked before real estate developer John Kane and soccer team owner Steve Malik took the stage Tuesday, so they used their time before the media to emphasize the need for public support to make their plans a reality.
The idea — an open-air, multi-use stadium surrounded by retail, commercial and residential space on more than 100 acres immediately south of downtown Raleigh — doesn’t advance past the planning stages without public investment, the pair said.
“Now is the time,” Malik said Tuesday. “It is not coincidental that we are coming forward with these plans. We need interlocal funding to create a stimulus for this area to justify the rest of this investment.”
Kane was more direct, flatly stating that Downtown South does not happen at all without interlocal funds.
“We’ve got to have [interlocal] funds to build the stadium,” Kane said. “And the stadium is the stimulus for this whole project to work.”
Scope of Downtown South project proposal
Downtown South would include:
- a downtown entertainment and sports center (the 20,000-seat stadium to be home to Malik’s North Carolina FC and NC Courage)
- 1.6 million square feet of office space
- 125,000 square feet of retail space
- 1,200 hotel rooms and
- 1,750 residential units
“This is a big project, it’s going to be over a period of time,” Kane said.
Billie Redmond, founder of Trademark Properties, joined Kane and Malik on the dais and took the lead in outlining their predictions for how the project pays off. She cited an impact study that showed the Downtown Raleigh Entertainment District would generate $3.8 billion in economic activity for Wake County, create 5,900 jobs in Wake County and add $20 million annually to city and county property tax coffers.
“This development is certain to spark other developers and investors to follow our lead, providing opportunities to revitalize and repurpose even more underused property in this area,” Redmond said.
Summary: Annual Cost Benefit of Downtown South proposal
“The Downtown Raleigh Entertainment District would be a catalyst for growth, bridging the space between the new district into our traditional downtown and compounding the economic benefits of our project for the City of Raleigh.”
Asked about the identity of the parcels as “Downtown South,” Redmond said, “We’re going to move downtown dramatically.”
Kane and Malik have contracts for approximately 130 acres, located in and around Penmarc Drive in south Raleigh. The bulk of the acreage is inside the notch formed north of Interstate 40 and east of South Saunders Street, extending west to South Wilmington Street.
Economic Impact for Wake County of Downtown South proposal
They’ll see tax benefits from their planned investment because the property falls within a federally designated Opportunity Zone.
“Opportunity Zones allow for capital gains from anything to be invested in census-tract, underprivileged economic areas,” Malik explained. “In Raleigh, there’s one from Red Hat Amphitheater south past I-440. In those areas, you can take an unrealized capital gain and invest it and avoid paying tax on the gain for as long as 10 years. You also get a step-up in tax basis. There’s very favorable tax treatment for investment in the Opportunity Zones.”
“Southeast Raleigh hasn’t really hasn’t been given the love that a lot of the rest of the city has been given over the years. That part of the city needs an economic driver, and I think this can be the economic driver for jobs, affordable and workforce housing, and future economic development to fill in the area between the [current] edge of downtown and our project.”
In a sneak peek the night before they unveiled their plans to the public, Downtown South secured letters of support from more than 100 business leaders, Malik said before asking the public to contact their representatives on the Raleigh City Council and Wake County Board of Commissioners.
Downtown South Plaza (rendering by Gensler) for proposed new sports/entertainment complex in Raleigh.
“All of them need to hear from you,” Kane said.
The project launched a website — visitDowntownSouth.com — to collect names and contact information for supporters and to put them in touch with political representatives.
“In order for this to work, it needs a stimulus, and that stimulus is the stadium,” Kane said.
The group is asking city and county leaders for a chunk of what Malik called the “tourism tax,” Wake County’s Room Occupancy and Prepared Food and Beverage Tax, at a rate of $13 million annually over 30 years beginning in fiscal year 2022 for debt service and annual maintenance of the estimated $180 million privately-funded stadium.
“When you think about the request, it’s a very small amount of a very, very big project,” Richmond said.
Yet the need is urgent.
“We intentionally timed these announcements,” Malik said. “We need people engaged now.”
Last week, the interagency review group headed by the managers for Raleigh and Wake County issued funding recommendations that included PNC Arena, the convention center, a Cary indoor sports facility and several smaller projects, but no funding was specifically earmarked for Kane and Malik’s project. Instead, Downtown South would have to vie against other competitors for a total of $42.1 million tapped for “medium projects.” The final decision on interlocal funding rests with the Raleigh City Council and Wake County Commissioners, who could vote on final appropriations in August or September.
The stadium would be the first phase of development, and Kane says he’d want to begin infrastructure work as soon as the middle of 2020. The group expects other investors to come on board as the potential become reality.
“We think we will be the stimulus for money coming in to our project, and land prices will go up around that property as others see opportunity,” Kane said.
