To be clear, the $500K direct payment + $7.9 million lease “kickback” ($8.4 million) I ‘blogged on earlier, in spite of what the Mayor affirmed today, is not necessarily fixed in stone.

As reported in July 15th, 2006’s Chapel Hill News article “Project Price Rising”

Council members said they’re open to paying more, though doing so would contradict the “memorandum of understanding” that Chapel Hill and Ram Development Co., the town’s private partner, signed in October.

Whom specifically?

Mayor Pro Tem Bill Strom said he’s willing to discuss increasing the town’s cash contribution to the project.

“Personally, I’m willing to go further depending on what the risks of the project are,” he said last week. “From other town projects that are being bid or built, we know in the last 15 to 16 months that construction costs increased 30 to 35 percent. That’s not speculative; we’re satisfied that’s a fact. So it shouldn’t be a surprise to anyone that some elements of the project are going to have to be revisited.”

Councilman Cam Hill said he, too, was open to restructuring the financing.

How might the financing be restructured? Use of often abused TIFs (tax incremental funding) has been suggested.

Some council members, particularly Mark Kleinschmidt, are wary of using this method.

Tax money generated by new development typically goes to pay for services demanded by the project — fire and police protection, for example.

If that money is diverted to pay off debt for a private project, taxpayers will wind up bearing the costs of increased service demands, Kleinschmidt said.

“The truth is, though, as a council member, I’m not absolute on this,” he said. “It’s not a dead letter on my desk. But I think the taxpayers need to be aware of what the truth is about this kind of financial arrangement. I would have to see evidence of significant public support for this.”

So, the financial burden might expand and then shift further onto the citizen’s shoulders.

I respect Bill’s, Mark’s and Cam’s desire to improve downtown. I’ve supported them and their initiatives over many years. I have sided with them on many issues. In this case, though, I think they’ve gotten too close to the project to see that it has “slipped of the rails”.

One example? The predictable request by the developer to rework the financing.

The good news is that all three have rejected an immediate modification of the Memorandum of Understanding for Downtown Economic Development Initiative as originally outlined here.

And, as Cam said here

But the reality is the deal we were attracted to is the deal we want,” he said Friday. “The deal we had was a good deal. I do know I’m not afraid to walk away from it. I’m not wed to building something on Lot 5 to the point of making a deal I don’t like.”

I expect that sentiment is shared by most of the Council. I think the deal, as presently constituted, doesn’t make sense for the community.

Now, what constitutes a deal they don’t like?

Be Sociable, Share!