You won’t see mailboxes at the Victorian-porched homes in the Oconee mill village of Newry.
To pick up bills and Christmas cards, residents visit the post office instead, housed beside a bygone mercantile store, to check both their P.O. boxes and the news about town.
Since Newry Mill’s operators pawned off the textile machinery that functioned as the spine of the 1895-era mill — now a hollow castle of brick rising over the community’s peaked roofs — and shuttered its doors in 1975, the post office has become the local haunt that knits Newry together, according to Mark Peters, developer and partner of M. Peters Group.
It was this sense of camaraderie and rootedness that first piqued Peters’ interest in rehabilitating the mill’s approximately 80,000-square foot frame into an apartment community. And it’s these qualities that Peters hopes to build on as the company prepares to launch its second phase of development — the first phase of rehabilitation — despite the towering challenges accompanying the project.
“Newry is an incredible little haven,” Peters said. “The people are very friendly, very interested in what we’re doing, and we don’t want to do something that creates an imbalance in that community. So we’re working very hard to create something that will be complementary to that community. We don’t want to change the community. It’s too unique.”
Redevelopment and rehabilitation is a labor of love, but M. Peters Group has years of experience with environmentally compromised and historic sites. Former projects include Greenville’s Plush Mills transformation, Easley’s Cornerstone 1909 project and a brownfield solar field and multifamily housing development in Indiana.
The project at Newry, now on the National Historic Register, may be one of the team’s most challenging, and rewarding, yet.
“It will be north of $50 million in investment and it’s going to be an amazing place when we’re finished,” he said. “It really will.”
Plans for the new development, fleshed out in architectural renderings during the project’s first phase, include 197 apartments in the legacy factory and in a four-story building and parking garage to be raised in the mill’s shadow. A green space, wildlife habitat and trail system will occupy the nine acres surrounding the mill and lead to an open-access kayak put-in to Lake Hartwell and 10-acre lagoon.
The mercantile will be given a fresh face as well, according to Jennifer Gosnell, Peters’ partner. A local cafe and health food market — similar in aesthetic and selection to Greenville’s Swamp Rabbit Cafe and Grocery — will occupy the downstairs. An event venue space is slated for the top floor of the building.
According to an Oconee Economic Alliance news release, capital investment in the project reached $60 million.
“It affords us the ability to preserve an important part of our history, because what would you do with a turn-of-the-century, wooden building that has very uneven floors and huge windows? It just has limited use in today’s manufacturing world, so the best use is either an office development or a multifamily,” Peters said.
The first phase of development has hinged on perfecting architectural blueprints, environmental testing and compliance and garnering capital and informational support from partners including Oconee County, SGA/Narmor-Wright Design, Preservation SC, Berkadia Commercial Mortgage and Peters’ civil engineering firm Britt Peters and Associates, among others.
Peters hopes to break ground on the project during the fourth quarter after acquiring a building permit and closing the project loan. Previous plans called for summer construction, but COVID-19 threw a wrench in that schedule.
Despite the project’s tax credit assistance from the state and federal level for the building’s historical value, environmentally compromised property status and location within an opportunity zone, sometimes working on preservation projects can feel like pushing water uphill, Peters said.
The greatest hurdle will be remediating the environmental contamination at the site.
Asbestos, lead paint and heavy metals — features of many historic mill sites — will need to be disposed of during the first round of environmental cleanup. The S.C. Department of Health and Environmental Control has played a significant role in coordinating resources for this aspect of the project, Peters said.
Banks won’t lend money on a brownfield site until it is cleaned up, Peters said, so jump-starting a historical rehabilitation project is not for the faint of heart — or those without access to capital.
“None of what we do is rocket science. It just is time consuming and takes a lot of capital. It’s expensive, at least for me. It’s just me and Shelby Dodson, my partner on this one. And it’s just us, us and the bank,” he said.
The project’s location in an economically distressed opportunity zone allows the investors to defer capital gains through a tax-free status.
The Palmetto State has 135 eligible opportunity zones located in all Upstate counties, including Pickens’ Arial-Easley corridor, Greenville’s Travelers Rest, Park Place and Magnolia Acres neighborhoods and Anderson’s Homeland Park community, according to the state’s website on the federal program.
“There is a lot of money out there through … the opportunity fund structure, but they’re looking for a very high return on their investment, a very high-guaranteed return, and we find it hard to utilize those funds, because they’re too expensive,” he said. “Maybe in more intense metropolitan areas like New York or Los Angeles, where rents are much higher, you can afford to pay the preferred returns that they’re looking for, but in Newry, S.C., I can tell you, it’s very difficult, so we’re placing our own money in Newry. We’re not using any outside opportunity zone money.”
Tax credits make developments on historical contaminated sites possible, but don’t give developers a leg up — just somewhat more of an equal playing field, Peters said.
“You have to be patient,” he said. “You have to like the complexity. These are not easy deals.”
This story originally appeared in the Sept. 7, 2020, print edition of the GSA Business Report.r