Citizen Will

An update on the muni-networking task force prepared by UNC’s Shannon Howle Schelin, PhD, one of our stronger advocates for 21st century infrastructure.

On November 13, 2006, an exploratory meeting was held at the Town of Chapel Hill to discuss the Town’s interest in pursuing a wireless strategy. The goal of the meeting was to determine a strategy for investigating the broad issues related to a wireless initiative in the Town, as well as to seek the in-kind support and expert guidance of the University of North Carolina (UNC), the UNC School of Government (UNC SOG), and the NC League of Municipalities (NCLM). External participants participating in the meeting included John Streck, UNC, Shannon Schelin, UNC SOG, and Lee Mandell, NCLM. Internal staff members participating in the meeting included Roger Stancil, Flo Miller, Bob Avery and Arek Kempinski.

The preliminary minutes and associated outcomes of the meeting are offered for your review and comment.
The external participants were briefed on the interest of Town Council and citizen advocates in pursuing a wireless strategy for Chapel Hill. The majority of the conversation centered on the “why” question—as in “why is Chapel Hill interested in undertaking such an effort?” The drivers for the wireless strategy were articulated as follows:

• 1. Addressing the digital divide;
• 2. Increasing citizen access (in-home service)
• 3. Increasing mobility (ubiquitous access in public areas—i.e. downtown);
• 4. Improving governmental operations (public safety and public service); and,
• 5. Economic development.

Based on the conversation, the following suggestions and commitments were made by UNC, UNC SOG, and NCLM

• 1. The interest of the Town Council and citizen advocates does not specifically presume a “wireless” solution, but rather, a “connectivity” solution of which wireless is one component.
• 2. The “why” question is multi-faceted and each component needs to be studied individually in order to create a comprehensive connectivity plan.
• • a. For example, licensed radio frequency (4.9 GHz, etc) is a robust, 802.16 alternative that is specifically designed for public safety and public service but is unavailable for citizen use. However, the lack of interference that is provided by the licensed spectrum creates significant advantages in data speed, accuracy, reliability, and security—all of which are vital to the development of any mobile government applications.
  • b. Another example is the extension of a wireless network into low-wealth communities without the provision of equipment used to access the network will not have the desired impact upon the community.
• 3. The external participants, UNC, UNC SOG, and NCLM, agreed to work as a team, with the involvement of the Town staff, to examine the components and drivers of the “connectivity” request that has been generated by Town Council and citizen advocates. The outcome of this work will be a comprehensive listing of the drivers and requisite solution alternatives for each issue.
• 4. The request to identify additional drivers associated with the connectivity request was made at the close of the meeting and will be gathered by Town staff through conversations with Council Members.
• 5. The team will convene to begin its work after the Thanksgiving break.
• 6. In addition, upon completion of the plan, the team will advise the Town Council and staff on the technological, financial, and legal issues surrounding the various solutions that will compose the Connectivity Plan.

Additional feedback or comments on this meeting or the steps outlined for proceeding are appreciated.

Originally tonight’s Council agenda seemed to indicate a discussion on forming a broader task force was on the docket. Now the item is “informational”.

A shame, as I was planning to make a few comments about the lack of citizen advocates within the current discussion and trumpet the continuing successes of other locales, like St. Cloud Florida’s comprehensive effort or Minnesota’s St. Louis Park educational outreach.

A quick reminder of this evening’s public forum [Mon., Nov. 20th] on the failing Downtown Initiative.

Tonight’s agenda starts with this gem

The 2000 Comprehensive Plan’s goal for downtown is to “enhance the downtown’s role as the center of the community, with a pedestrian orientation and a human scale.”

I consider the 104′ multi-building development on lot #5 to be a stake through downtown’s heart. I’m not alone. Many residents find the scale of this development anything but “human”.

Former Council member David R. Godschalk, the Stephen Baxter Professor Emeritus in UNC’s City and Regional Planning department, waved the redflag in 2005 claiming

The developer has put too much building on these two small parcels. The nine-story building on lot 5 is out of scale with the existing downtown streetscape and soars above the 90-foot height allowed in the town center 2 district of the Chapel Hill zoning ordinance.

Scale aside, why else is the Downtown Initiative failing?

• Redevelopment of the blighted Wallace Deck and adjacent lot – off the table
  • “As a result of these material economic changes, the Town Negotiating Committee and the Developer have reevaluated the proposed Lot 5 and Wallace Deck projects.
  • Reevaluated? The Wallace Deck improvements, the real honey for this bee, are GONE.
• Lease amount dropping from $7.9 million TO $1 (ONE) DOLLAR per year
• Taxpayer contribution increasing 14.6 times, %1360 – from $500,000 to $7.3 million
• Moving from a manageable $500K out of “on-hand” funds to $7.3 million
  • supposedly borrowed at %5
  • sum added to our Town’s current debt
  • impacts our debt ratio, bond rating and forward ability to borrow
  • “the Town would incur an estimated annual debt service cost of $725,000 in the first year, decreasing annually by about $18,000”
• RAM’s original equity investment of $23 million has dropped to $12.5 million – nearly %50 drop in equity investment, though, on the plus-side, it’s upfront money.
• Borrowed monies using COPs financing mechanism – a secured debt normally reserved for essential building
  • COPS (“certificates of participation” [PDF]) are usually used to finance essential buildings and projects (sewer, water, schools, etc.)
  • My research to-date indicates the dominant private-public partnership using or proposing COPs in NC are prisons, coliseums. convention centers, etc.
  • Town income directly affected – “Revenues to pay the debt service on the proposed borrowing would be property taxes, sales taxes, and parking revenues above those we are currently receiving.”
• Shrinking PUBLIC SPACE – from 31,000′ in the original proposal, to 27,215′ (no published usage patterns – Are we accepting RAM’s restrictive idea of “public”?).
• Missed opportunity for internal space for public use – arts facilities, museum, etc.
• Commitment to provide affordable commercial space for local economic development is missing.
• No commercial space for an integrative tenant, like a grocery store, that reduces off-site travel by the condo-residents and draws folks in from surrounding neighborhoods.
• After 50 years, the developer gets a “sweetheart” deal to acquire the land and air rights for $2 million (imagine the value of that property 50 years hence).
• Developer is supposed to find 10-15 additional on-street parking spaces (the incredible difficulty of doing the Downtown Parking Task force, of which I’m a member, just discussed).
• “Owners” of affordable housing units HAVE TO LEASE OFFSITE PARKING, 21 spaces rented at below market rates.

The deal with RAM Development was never very good, at least for the Town. RAM’s payment of $7.9 million ($4,750,000 to lease Lot 5, a one time lease payment of $3,150,000 for the air rights over the Wallace Deck and the Rosemary/Henderson street lot) was a steal of a deal.

$7.9 million for 99 years of use of citizen-owned, prime downtown real-estate? Incredible.

$99 for 99 years? Impossible!

Several folks pointed out that RAM’s original projected rate of return, less than %3, was financially infeasible and would have to be “re-traded”. Last year I publicly stated that RAM had over-promised and would under-deliver – that dramatic renegotiation upwards, more inline with Grubb’s competing bid, was an inevitable result.

For instance, I work on the corner across Church St. and remember well the Devil’s own time the construction crew had digging my building’s basement. I never bought into the idea the Town would only pony up $500,000 to build underground parking structures in the granite ladened Lot #5 – and I sure as heck found it difficult to believe that RAM, our Council members or any other longtime residents would buy this malarkey.

When I brought this and similar issues up with our leadership, both then and since, I was told “not to worry” and “the deal is the deal”.

Why should the citizens of Chapel Hill pay the piper? Remember how “thrilled” RAM was to get a piece of Chapel Hill’s action?

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.”

Even if the company wanted to, Grubb couldn’t make a counteroffer, Stainback said, explaining that the proposals are considered “best and final offers.”

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.”

N&O

Guess the Chapel Thrill has worn off for RAM. We’re special, just not $7.3 million special.

The Town and Ram claim costs have unforeseeably skyrocketed in the last year

In the time that has elapsed since the Developer formulated the development plan for Lot 5 and the Wallace Deck sites and the Town negotiated the October 24, 2005 MOU with the Developer, construction costs have increased by as much as 30 percent and interest rates have increased significantly.

yet we’re supposed to accept that the other rosy projections, like a %5 borrowing rate and an above average return on parking fees, retail and property taxes will pan out?

Since the original deal was inked, the national average cost of building materials hasn’t exceeded %11, with a recent flattening (due to lower energy, aggregate and raw material costs) of an annualized increase between %5 and %7.

Worse, last October, after closing the deal (N&O), Keith Cummings, president of Ram,

…personally guaranteed with his own money that the project will be completed as planned, according to the document signed Monday. Any increased costs — because of issues such as the rising price of construction materials — are to be borne by Ram.

Personally guaranteed.

Come on, I feel like the Town’s citizens are being taken to the cleaners on this deal.

Until I see the specifics of the %30 increase, I must assume it was part of the “shell game” of under-bidding to win the contract.

If this turns out to be the case, what must we expect of RAM’s projections (“guarantees”) concerning their luxury, mega-condo development – the largest in Town’s history – at 425 Hillsborough Street?

And once we’re hip deep into this development, what restricts RAM from coming back to the well? Quite frankly, while I’d hate to “throw away” any taxpayer investment, it certainly would be easier to back out of a $500K losing proposition than a $7.3 million boondoggle. The modest protections of paying on delivery don’t seem sufficient.

The return of the public’s investment better be phenomenal to justify this private-public partnership. With this project’s current fiscal track record, financial prudence, above all, should steer our leader’s decision, especially when we go against our Town’s tradition of letting the voters decide to take on such massive financial obligations.

Speaking of prudence, beyond the $7.3 million demanded by RAM, the Council is supposed to approve a major chunk of debt tonight for the Homestead Park Aquatic Center. As today’s HeraldSun reports

The next key step comes tonight, when the Town Council will consider approving a contract with the Resolute Building Co. to build the Homestead Park Aquatic Center. The contract on the table is for $5,238,000, although the town manager would be authorized to approve up to $530,000 in change orders if necessary, as the work proceeded.
…
In the town’s 2006-07 budget, the council authorized borrowing another $750,000 for the Homestead project. That’s in addition to the bond funds the town and Orange County both are allocating for it.

Orange County is putting about $4.3 million into the project in bond funds approved by voters across the county, and Chapel Hill is contributing about $1.2 million in bond funds.

That’s nearly $2 million of debt we’re taking on – with a possible upward tick already projected. Strange that the citizenry had a voice in taking on that $2 million obligation, but we’re left out of directly approving an amount 4 times as large.

I’m going this evening with my concerns, fully expecting Council to answer each issue fully before moving forward. Hopefully the missing issues of public access, accommodations and facilities will be covered.

Here’s the “new deal” being proposed this evening.

• Town leases building pad to Developer under Ground Lease for a term of 99 years (the “Ground Lease”). Rent under the Ground Lease will be $1 per year plus the various benefits the Town will realize from the development of the Lot 5 Project, including but not limited to public space to be developed by the Developer at its cost but owned and operated by the Town, public art corresponding to 1% of the total cost of the project, affordable housing that will be required to be subsidized by the Developer, LEEDs certification of the project, the additional cost of placing the Condominium Parking underground, the enhanced tax base, and the general economic developments that will be generated for the entire downtown area.
• The Developer shall have the right, which shall be assigned to the condominium association upon turn-over, to terminate the ground lease and acquire fee simple title to the land and/or air rights on the date that is 50 years after the commencement of the ground lease. The termination fee shall be $2 million.
• The Developer will construct approximately 137 for sale condominium units (15% of which shall be affordable for a total of 21 affordable units) and approximately 28,540 square feet of retail.
• The Developer will construct, pursuant to plans and specifications approved by the Town, the public plaza/public space aggregating approximately 27,215 square feet. All of such public space will be owned and operated by the Town.
• The improvements on Lot 5 will be LEEDs certified.
• Developer will construct an underground parking garage below the condominium/retail building containing approximately 161 parking spaces (the “Town Parking”) that will be available to the general public including retail patrons (i.e. no monthly rentals). The remaining parking spaces aggregating approximately 169 will be allocated to the owners of the condominium units (the “Condominium Parking”).
• Developer and the Town will seek to secure appropriate permission for an additional ten (10) to fifteen (15) on-street parking spaces that will be allocated to the Town.
• The Town Parking would be located on the first level of the underground parking garage and the Condominium Parking would be located on the level below the Town Parking.
• Upon completion of the parking garage, the Developer will convey to the Town, fee simple unencumbered title to the Town Parking at a purchase price equal to $7,245,000, which represents Developer’s current estimate of the cost to design, permit, finance, plan, supervise, and construct the Town Parking (“Town Parking Costs”). Developer agrees to provide documentation as may reasonably be required by the Town and the Local Government Commission to assist with the financing of the purchase of the Town Parking. The Town may, at its option, elect to audit the Town Parking Costs and in the event said costs are less than $7,245,000, the Developer shall refund the excess amount within 30 days of demand thereof. In the event the audit indicates that a refund is due, the Developer shall also reimburse the Town for the cost of the audit not to exceed $20,000
• Parking for the affordable housing units will be provided by the Town at the Wallace Deck or other Town-owned property. A below market rental rate would be charged for such parking.

[UPDATE] As of November 20 2006 4:45 pm, we’ve had two questions and two comments by “site admin”.

Questions:

Hi, I haven’t seen anything lately that lays out the architectural vision of Carolina North. Could you point me towards any current plans? Thank you.
November 20 2006 9:46 am by Robert Peterson

Is UNC still planning to realign Estes Drive as part of Carolina North development? Shouldn’t changes so potentially disruptive be discussed with the community that depends on that road as a major arterial connection?
November 20 2006 9:28 am by Ruby Sinreich

The comments referred to the “Attendee Comments Received at the Ecological Assessment Listening Group Meeting With Biohabitats Inc., Nov. 6, 2006” and “two maps created by Biohabitats of Raleigh. The maps were marked up in the Ecology Listening Session on November 6.”

Good notes that haven’t been previously published on UNC’s Carolina North site or on the UNC-LAC mailing list (at least the one I’m a member of).

Not exactly answers to either of the questions or to my earlier third question on forum rules but a response all the same.

[ORIGINAL]

Did you know that UNC has created an online discussion forum?

Hey, I wouldn’t have known but for this email:

Hello all,

I’m writing to let you know that the public discussion forum for Carolina North is now accessible online at http://research.unc.edu/cn/view_comments.php. If you would like to post a comment, click the “leave a comment” link at the bottom of the page, and you’ll be asked to register your name and e-mail address. Once registered, you’ll receive a confirmation e-mail, after which you can post comments.

Thanks,
Colie Hoffman
Office of Information and Communications
962-6137

which didn’t appear on the normal UNC Carolina North LAC (Leadership Advisory group) email list – a list, by the way, which you can get on ONLY by contacting UNC here (no “self-subscribing”).

UNC’s Carolina North group has done a fairly decent job on their, admittedly biased, main website, including posting timely videos and minutes of the Carolina North Leadership Advisory Committee (UNC-LAC) meetings.

Creating a discussion forum is a bold step for the development folks in Moeser’s administration, so points for trying, but 8am to 5pm EST moderation kind of misses the mark.

Please be aware that we only add new comments to the discussion forum during regular business hours (Monday through Friday, 8:00 a.m. to 5:00 p.m. EST).

Given that, I still wanted to heap credit on UNC for this apparent e-democracy effort but the lousy advertising and the the lack of forum rules (possibly undercutting open debate) really make that difficult.

Disappointing. Mustn’t let Moeser’s “freelance dissenters” engage in free form discussion ;-)!

Hey, I registered,

Your registration was submitted successfully. You will receive an email from “HTTPD Daemon” containing a URL that will allow you to view and participate in the Carolina North public discussion forum.

and added this question, “What rules of moderation will you be applying to this forum?”

Wonder how long after 8am, Monday, Nov. 20th, 2006 I’ll find out…