Ouch! Obviously stung by Council member Jim Wards comment about “switch-n-baiting”, RAM Development’s VP Casey Cummings delivered a death blow to Council’s request for affordable condo fees for the affordable housing units and a commitment to energy efficiency.
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Both requests seem quite reasonable.
What use is it for the Land Trust to “sell” a condo to an affordable housing applicant just to have them priced out by condo and parking fees?
On the energy front, as former OWASA board member Terri Buckner notes over on OrangePolitics
Not a single citizen speaking at last night’s hearing or at the first public hearing on Lot 5 challenged the Council to ensure energy efficiency. There seemed to be an assumption that “LEED certified†means the development will be energy efficient. However, LEED certified is the lowest level of LEED and even at Platinum status there is no assurance that a LEED building will be energy efficient. To get around that problem, the state of North Carolina has adopted ASHRAE 90.1 for all state constructed buildings.
Chapel Hill is not willing to meet the same requirements as NC State? Dang, we usually lead the State in environmental initiative.
As far as “bait-n-switch”, RAM was challenged last year on their original rosy financial projections. Were they knowingly over promising expecting to under deliver to get the deal?
In the most stark example, Grubb’s financing model would produce a 21.77 percent return on its $10.5 million investment in condominiums on the Wallace Deck site. Ram sees only a 2.98 percent return on its $23 million investment there.
“If they’re willing to do it for that,†Harris said, “God bless ‘em.â€
Even if the company wanted to, Grubb couldn’t make a counteroffer, Stainback said, explaining that the proposals are considered “best and final offers.â€
Two council members asked Cummings whether Ram’s financial model was too good to be true.
He said no projection ever is exactly right but that his company hopes to ride the growing trend of people returning to downtown.
After the meeting, Ivy Greaner, Ram’s managing partner, said the profit margins are healthy enough to sustain the project.
But Ram also is seeking a foothold in North Carolina. The company is willing to make less money in Chapel Hill to get a centerpiece project in the Triangle.
“This is a special town,†Greaner said, in a suitor’s tone. “We love Chapel Hill.â€
Town investment up 15-fold. Value of the property discounted. Property moving from public to private hands. I understand Jim Wards sentiments.
Will, note that he said he negotiated in good faith an put forth a best and final offer (BAFO) that didn’t include these things. Why didn’t the people who blessed the BAFO speak up?
Fred, good point. Note he does acknowledge they discussed these issues – they just couldn’t come to an agreement. RAM is going to make a boatload of bucks on this deal – it’s really a steal. Nickel and diming the affordable housing folks doesn’t make sense. It’s on the town for negotiating a building design that it appears NC State wouldn’t accept.
Only 3 counsel members and the mayor were in on the negotiations. So unless there was an active back-n-forth dialogue it is quite likely that most of the counsel was not privy to lots of important information.
Further many extremely important details need to be worked out and are unknown by anyone at this point. My suspicion is that fewer yes votes will fall on the final vote in Feb…. but at least the developer was told on record what was missing.
Without knowing what the fees will be (will there be a gym, a rec room, jacuzzi? etc how will the grounds be kept etc…) it is very easy to imagine fees that would make the affordable units unaffordable.
I am not real keen on the price tag of this whole deal and I would like to see better energy efficiency requirements.
From Will’s homework on the documents, it sounds like Lot 5 would appraise in the neighborhood of $6-8M and it would be sold to the developer at $272,571 in today’s dollars (see *).
Antawn raises a great point on the fees. A realtor friend was telling me this past weekend that Duke Power charges all of its homeowners around Lake James over $250/month just to maintain the common areas (mostly grass cutting – no pool or fitness facilities).
*Using http://www.halfhill.com/inflation.html and the average inflation of the last 50 years