A $10 million land purchase by South Carolina’s railway division marks the end of Noisette Company’s fading plans to reimagine the former Navy Base as “the urban heart of the New American City” in North Charleston.

Palmetto Railways, a division of the S.C. Department of Commerce, bought the remaining Noisette Co. properties Tuesday, having acquired the rest through foreclosure in 2010.

The sale is the final nail in the coffin of Noisette Co. and the public-private venture Mayor Keith Summey and developer John Knott unveiled with great fanfare in 2001, aimed at turning the former base into a bustling residential and commercial center.

“I think the Noisette Company as we know it is defunct now that this property has sold,” Summey said, “but quite honestly, it has been hanging on by a hair for several years anyway.”

A dozen years ago, Noisette vowed to redevelop the north end of the base with city support, as part of a larger “New American City” plan that also would revitalize nearby neighborhoods such as Park Circle and what is now the city-funded Oak Terrace Preserve development.

The Navy Yard at Noisette was to be the 350-acre “urban heart” of the revitalized city.

There were unexpected hurdles in getting the project rolling, however, and then the housing market collapsed. The Great Recession began, and Noisette lost the majority of the base property to foreclosure in 2010.

The Commerce Department secretively snapped up the 233 acres Noisette lost that year, to further the state’s plan to run freight trains through the north end of the base to serve a new container port that’s under construction at the south end. The foreclosure combined with the rail plan proved a fatal blow to plans for turning the base’s north area into a master-planned community with an environmentally friendly mix of homes, offices and shops, but a diminished Noisette Co. survived for more several years.

“I don’t think the rail plan would have been there had the economy not gone down and if development had happened faster, but it didn’t,” said Summey.

Tuesday’s $10 million multiple-property purchase by Palmetto Railways involved the last roughly 50 acres owned by Noisette, including a number of occupied buildings where the state said leases will be honored, ranging from government offices and private businesses to the Palmetto Scholars Academy public charter school.

Noisette Co. issued an unsigned statement Tuesday in which the company declared its demise a victory.

“It is with great pride that The Noisette Company announces a formal end to their involvement in the Noisette Project,” the statement said.

“The face of ownership of Navy Yard property has been transforming for years, as was always intended, sparking additional private investment into the area,” Noisette Co. continued. “The plan for the Navy Yard continues to adapt and grow, and the future remains bright.”

The statement noted that while Noisette Company’s real estate interests were limited to the base, it was closely involved with the Noisette Plan that aimed to revitalize other neighborhoods — and nationally recognized redevelopment has been taking place around Park Circle.

The state’s purchase includes the former Navy hospital on the base, numbers 7, 10 and 11 Storehouse Row, a multiple-building property known as the CMCI parcel at Noisette Boulevard and Turnbull Avenue, two houses on St. Johns Avenue known as Quarters 762 and 763, and properties surrounding the Powerhouse between Kerhart Street and North Hobson Avenue.

State Secretary of Commerce Bobby Hitt said the land deal “gives the Department of Commerce and Palmetto Railways the unique opportunity to make good things happen in North Charleston and to take a comprehensive, public-oriented approach to development.”

Palmetto Railways, formerly known as S.C. Public Railways, intends to work with the city and existing business owners and residents on the base property to create a new master plan.

“We are optimistic that Palmetto Railways and the Dept. of Commerce are well-positioned to attract new investment to North Charleston and have a sincere interest to further improve the Navy Base,” Summey said in a statement released by Palmetto Railways.

Former adversaries

Less than a year ago, the city and the Commerce Department were suing each other over the base properties and the state’s plan for rail access. The city had long opposed rail access to the new port from the north end of the base.

That dispute was settled in December, in a deal that gave North Charleston millions in cash and more land around the city’s Riverfront Park, while the state got a clear path for its freight rail plan and acquired some city-controlled properties on the base, including the iconic Powerhouse.

The latest land deal consolidates the state’s holdings on the base, creating a large swath of properties owned by Palmetto Railways that extend from Virginia Avenue at the far north end to the planned rail yard property that ends at Viaduct Road.

“The Department of Commerce and Palmetto Railways have a public-oriented interest in ensuring that the former Navy Base is a vibrant and sustainable community that is attractive to companies that wish to locate near the port,” said Hitt. “With the cooperation of Mayor Summey and others, Palmetto Railways will be a driving force in turning the former Navy Base into an economic engine not only for the city of North Charleston, but also for the greater Charleston region and the state as a whole.”

Legal issues

The Commerce Department’s focus on attracting industry has already led to conflicts with some property owners on the base, however. A plan to develop a large tract at the north end of the base as a new site for Continental Tire is subject to a lawsuit filed by opponents that include the owners of an apartment building adjacent to the site.

Noisette Co. was among the parties suing over the zoning change, but was dropped from that suit as a result of the state’s property purchase.

North Charleston City Councilman Bob King said he is skeptical of the state’s latest land deal.

“What do they need all that land for? They have got all the land they need over there,” he said.

King said it appears as if the state is trying to bail out those who invested in the doomed Noisette venture.

But the state’s purchase does fill in some large doughnut holes in the middle of Palmetto Railways’ properties on the base, and had the additional benefit of resolving a dispute over ownership of certain rail lines on the base, as well as a lawsuit involving a more than $1.2 million claim against the state.

After the Commerce Department acquired the bulk of the Noisette land in 2010, the Noisette Business District Association sent the state a bill for assessments that are levied when properties are sold in the Noisette development area. The state had been fighting that bill.

As part of the state’s purchase of all remaining Noisette property on the base, Palmetto Railways was assigned the developer’s rights related to restrictions, covenants and easements.

Reach David Slade at 937-5552 or Twitter @DSladeNews.