05/07/09 — Right-of-way tussle ends project for Borden Mill

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Right-of-way tussle ends project for Borden Mill

By Catharin Shepard
Published in News on May 7, 2009 1:46 PM


Today the old Borden mill warehouse sits vacant on William Street after developers abandoned the project because of demands placed on the property by the North Carolina Railroad Co. And, developers say, because of the railroad company's charter that grants it expansive rights to property along its lines, the historic buildings may never be utilized.

Two years ago, it seemed as if the old Borden mill on William Street would get a new lease on life.

Developers Tom Webb and Robby Baker planned to restore the historic building and turn it into a gated community of condominiums, complete with new plumbing, heating and electrical systems and hot-ticket architectural features like refurbished wood floors and exposed wood beam supports.

Once renovations were complete, their Web site boasted, the property would be just like a new home, but charmingly reminiscent of days gone by with the large windows and restored original wood found only in historic buildings. About a dozen units out of the 65 two- or three-bedroom apartments planned for the property pre-sold at a price of $115 to $118 per square foot.

"We were running full tilt," Baker said.

But the Borden Lofts plans derailed when Webb and Baker ran into problems acquiring a clear title to the entire property. Parts of the old mill sit on the 200 foot right of way owned by the North Carolina Railroad Co., and the company, developers and city had difficulty working out a solution to the problem.

While the Borden Lofts project would have no impact on the William Street crossing, if the NCRR ever decided to add a second track to the area, or make adjustments to the existing track, it could require demolishing part of the mill. It is a future issue the NCRR hopes to avoid, company spokesperson Kat Christian said.

"Our concern about the right of way in that area is to preserve appropriate corridor space should it be needed for a railroad project, such as commuter service," she said.

The Borden Lofts project halted in June 2008, and money already placed into escrow by interested buyers was refunded as the developers and railroad representatives attempted to work out a solution. Under normal circumstances, what the developers were asking was almost impossible: That the railroad essentially give up its right of way.

"We can rarely give permanent easement for encroachment," Ms. Christian said.

But because of the significance of the project, she said, the NCRR proposed a trade.

If the parcel of land stretching along Atlantic Avenue, from North William Street to North John Street, was vacated, the railroad could hold that space in reserve instead and could release the Borden mill property.

The NCRR requested that the developers buy the property and trade it in exchange for the Borden mill right-of-way, Webb said. The company would then allow use of the land occupied by the mill for as long as it existed.

"It's one of the craziest things I've ever been requested to do as a developer," Webb said.

If the NCRR ever decided to further develop that set of tracks, he said, it could mean closing a major Goldsboro street.

"The road is in this right of way. It would require Royall Avenue to be closed. If they can force a project to close, they can force that road to be closed," Webb said.

Despite his doubts, Webb contacted the property owner to see if they would be interested in selling.

"They just laughed at me," he said.

The other alternative presented by the company was also unfeasible to the developers.

"The original solution was we need to hire a contractor to redesign the building. You don't do that to an historic building," Webb said. "Buildings are on the historic register for a reason."

Webb and Baker refused both solutions, and the Borden Lofts project was canceled - although the developers still had to absorb the costs already incurred during their preparations.

"I've spent you would not believe how many thousands of dollars on this property," Webb said.

Even though the Borden facility was constructed in the late 1800s and is listed on the National Register of Historic Places, the NCRR's charter predates even the old mill. The NCRR was founded in 1848 and is North Carolina's oldest corporation.

The company's charter gives the railroad ownership of the 200 feet of ground surrounding the more than 317 miles of railroad tracks that wind through North Carolina, and in recent years, the company has been charging fees to residential and commercial land owners encroaching on their territory.

The Borden buildings were constructed on what was already railroad property, said Downtown Goldsboro Development Corp. director Julie Thompson.

Three corners of the mill and a fourth section, constituting about 1300 square feet of the property, sit on top of the railroad's right-of-way, she said.

"They wanted us to shave those portions of the building off," Mrs. Thompson said.

Besides defacing a building listed on the National Register of Historic Places, she said, there was also the concern that it could affect the tax credit associated with it -- a not inconsiderable 40 percent from the Historic Mill Tax Credit law, Webb said.

It was a step the developers were unwilling to take.

"If you look on their (NCRR) Web site, it says their mission is economic development. I was extremely disappointed with the way they promote their mission," Webb said.

However, had the Lofts continued on schedule, the luxury apartments would have opened for sale just as the credit crunch hit the real estate market.

So the cancellation could have been a sort of blessing in disguise, Mrs. Thompson said.

"In hindsight, they probably would have been completing this project now," she said. "They would have still been faced with the realities of the economy."

The struggling economy is not lost on the developers, Baker said.

"There's been a lot changed since then," he said. "It's tough to put $15-20 million in a project right now."

While railroad companies continue to be critical to supporting the development of many cities in North Carolina and other Southern states, the issue of railroad right of way has also caused many problems for cities and towns, Mrs. Thompson said.

"It's notoriously been a problem in the past for the municipalities," she said.

While cities and railroad companies exist in tandem with each other, there are still differences between them.

"They have their priorities and we have our priorities and sometimes they don't match," Mrs. Thompson said. "They were looking out for their long-term needs."

However, the Borden mill issue is the only significant conflict between the NCRR and a business development she could remember happening in Goldsboro, Mrs. Thompson added.

Goldsboro is an outstanding community with a lot of potential, Webb said, and if things change, the developers would be willing to take another shot at the Borden Lofts. But if the project does return, it will not be quite the same. The developers would have to start at square one and reappraise the property, and with the economic downturn, the window of opportunity is probably closed, they said.

"I don't really know where it's going to go," Baker said. "There's a lot that needs to happen. You never say never."

Today the Borden mill is silent, but for the trains that still run along Royall Avenue as they have for decades, and the only sign of life for the historic building reads "For Lease."

"It's the same railroad that's been running people down the road for years, and right now they're running the state down," Webb said. "I'd like to see them run out of town on a rail."