Hazardous Consequences: A Report, a Rushed Decision, a Regrettable Day for Chapel Hill

Wednesday, April 4th, 2007

The Chapel Hill News’ ‘blog OrangeChat first alerted me to the Town’s completion of the Lot #5 negotiations with RAM Development (more to come in the N&O).

The Town’s April 3rd news release celebrates what I believe will eventually be seen to be a rushed decision foisting a counter-productive, fiscally irresponsible obligation to construct expensive rental properties for out-of-town landlords on our citizen’s dime:

04/03/07 — The $75 million residential and retail complex to be constructed on Town-owned Parking Lot 5 in downtown Chapel Hill moves a step closer to reality. Town Manager Roger L. Stancil today concluded final negotiations and executed the development agreement with Ram Development Co.

April 3rd, 2007, a regrettable day in our Town’s history.

Why? According to our Town’s legal counsel, the only way now to back out of this troubled deal is to default. Default means difficult to defend lawsuits against our Town. Default means probable expensive judgments against our community. Default, after today, puts all our residents firmly on the hook for millions of dollars of expenditures.

The Council last month authorized the Manager to finalize negotiations and execute the agreement. The project will now follow the Town’s normal regulatory process for a Special Use Permit, including review by the Town’s advisory boards and commissions and a public hearing before the Council.

While they did authorize the Town Manager to proceed with negotiations, the Council also directed Roger Stancil to achieve certain goals – like a firm commitment to improve energy efficiency as per ASHRAE 90.1 20% efficiency standards and an increase on-site affordable housing parking.

Without the final modified agreement (not available this evening), it is not clear our Town Manager achieved these goals. Further, for the partial success reported – 5 additional on-site parking – the trade-offs required by RAM to get those spaces remains unknown.

Final negotiations centered on energy efficiency construction. Recognizing the importance of reducing the energy demand of buildings and dependence on energy from fossil fuels, the Council directed that the agreement require the design and construction of the project to meet a minimum 20 percent improvement in energy efficiency (as measured against standards established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers – ASHRAE).

Again, the language of the announcement leaves it somewhat unclear, at least to me, if the commitment to the ASHRAE 90.1 %20 energy efficiency standard is measurably firm.

[UPDATE] From today’s N&O

As part of the final contract, Ram agreed to achieve an energy efficiency level 20 percent better than standards established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers.

It appears the LEEDs trade-off discussed here was the key to ASHRAE acceptance. Of course, without the final contract before us it’s difficult to ascertain how compliance with ASHRAE or LEEDs will be measured.

The project will incorporate sustainable, “green” features that will result in at least 26 points under Leadership in Environment and Energy Design (LEED) standards, the equivalent minimum number of points for basic certification under the LEED system. The Council has established a Town-wide goal to reduce carbon dioxide emissions by 60 percent by 2050 through the Carbon Reduction Program.

Councilmember Sally Greene suggested trading the potentially expensive formal LEEDs review for simple compliance with the LEEDs basic certification goals. Councilmember Jim Ward countered that RAM Development’s assertion of compliance was insufficient – that the review process was a necessary element to achieving those goals. I lean more towards Sally on this with the proviso that a specific, standards-based methodology for measuring compliance outside of the LEEDs process be agreed upon prior to a final commitment (would’ve been nice to also pursue some of the AIA’s 2030 sustainability goals). Again, sans the modified agreement, it’s unclear whether any process for measuring LEEDs compliance is in place.

To the Town’s credit, the environmental reports I asked for in my Mar. 27 petition were provided as part of the announcement.

The completed environmental assessment report will be on the Town’s website.  The assessment detected no underground gasoline tanks, only limited sections of petroleum-impacted soil that will require remediation.

Timed too late for our talented citizens with expertise in geology and environmental remediation to influence Stancil’s decision, this coincident release demonstrates, once again, the ascendancy of clever political gamesmanship over good public policy.

This bit of Town PR vastly downplays the caveats and disclaimers the authors used:

The report’s findings are based on conditions that existed on the dates of ECS’s site visits and should not be relied upon to precisely represent conditions at any other time. ECS did not assess areas other than those discussed in the report.

The conclusions included in this report are based on: ECS’s observation of existing site conditions; our interpretation of site history and site usage information; and the results of a limited program of subsurface assessment, sample screening, and chemical testing. The concentration of contaminants ECS measured may not be representative of conditions between locations sampled. Be aware that conditions may change at any sampled or unsampled location as a function of time in response to natural conditions, chemical reactions, and/or other events.

Conclusions about site conditions under no circumstances comprise a warranty that conditions in all areas within the site and beneath structures are of the same quality as those sampled. Recognize, too, that contamination might exist in forms not indicated by the assessment ECS conducted.

April 2nd’s letter from ECS Carolinas, LLP concerning the “Phase II ESA and Limited Soil Delineation Report”, p. 2

Based on approximate measurements of the property boundary and sample locations, ECS estimates that approximately 8,600 cubic yards (~13,000 tons assuming 1.5 tons per cubic yard) of petroleum-impacted soil may be present at the site. This is a preliminary estimate only; the actual quantity of potentially impacted soils may vary based on conditions observed during soil excavation. [CW: EMPHASIS by ECS]

April 2nd’s letter from ECS Carolinas, LLP concerning the “Phase II ESA and Limited Soil Delineation Report”, p. 6

The concerns of the report’s authors are clear. What is left unsupported is the Town’s cost estimate.

The estimated cost of the clean-up will be $232,000. The Town will assume the costs for remediation, and the developer will fund the excavation.

So, RAM Development will pick up the tab for excavating 13,000 tons/8600 cubic yards of hazardous material and the Town will pay, I assume, to haul it safely off-site and dispose of it in an acceptable manner. Given the author’s caveats and the lack of discussion of hazardous material intrusions into the underlying bedrock, I’d like to see the analysis behind the $232,000 cost estimate.

Is it as solid as RAM Development’s Spring 2006 claim of a total $500,000 in public outlays? I hope not since a 15-fold increase in the environmental costs, similar to the 10 month increase from $500,000 to $7,425,000 for those 161 buried parking spaces, would be in the neighborhood of $3.5 million!

One notable improvement in our Town’s communications is a savvy ability to propagandize, making a gold-filled silk purse out of the hazardous waste sows ear by now trumpeting development on “brownfields”.

“Developing a project in downtown reflects Chapel Hill’s commitment to build on brownfields rather than greenfields in order to preserve our environment,” said Manager Roger L. Stancil. “Brownfields are properties where redevelopment or reuse can be complicated by the presence or potential presence of pollutants or contaminants from past use. Developing on greenfields is to build on undeveloped properties on the urban fringe, often farmland. Chapel Hill intends to keep the greenfields green.”

A month ago we weren’t supposed to worry about hazardous waste on Lot #5. Today it’s an asset.

There’s a lot of fertile “brown” in the “fields” lay bare by this announcement. Once again, the liabilities are down-played, the potential fiscal “surprises” ignored, the value of the project over-stated while the obligations continue to be heaped upon our citizens.

April 3rd, 2007, a regrettable day in Chapel Hill’s history.

Raleigh’s Carlton Place: A Downtown Affordable Housing Commitment Worth Emulating

Wednesday, March 21st, 2007

I’ve followed the ins-and-outs of Raleigh’s Carlton Place before the Wallace Deck/Lot #5 developments took flight.

64 of the 80 units – ranging in size from 800 to 1200 sq./ft. – are priced so those making %60 of Wake County’s median income can afford one.

Market rates aren’t too shabby either (market/affordable): 1 BR/1 BA $700/$550 or less, 1 BR/1 BA (with Den) $750/$570, 2 BR/2 BA $875/$600, 3 BR/2 BA $1,100/$670.

Located at the intersection of E. Davie Street and S. Bloodworth Street, less than two blocks from Moore Square, City Market, and the Exploris and Moore Square Museums Magnet middle schools. Its central location provides residents with easy access to all of downtown’s employment, shopping, professional services, public transit, and cultural and recreational opportunities.

Amenities found at Carlton Place include on-site management and maintenance; a variety of one-, two- and three-bedroom floor plans ranging from about 800 to 1200 square feet; a fitness room, business center and laundry room; walk-in closets; washer and dryer hook-ups; cable television and Internet connections; a picnic area and tot lot; and private, off-street parking.

In addition to the on-site amenities, the project was built to include green design elements that help make it an environmentally friendly and cost-effective place to live. Among the green features of the project are: Energy Star appliances; high efficiency heat pumps; low-VOC carpet and paint; carpet padding made from recycled materials; pervious concrete; and native, drought-resistant plants for landscaping.

Off street parking? Are they nuts?

By contrast, the Lot 5 development offers compact affordable units: “21 one-bedroom units be provided in the project, with a square footage averaging 643 square feet.” Qualification starts at %80 of the regional salary (little less than $50K), with the purchase price set accordingly (to what someone earning $50K/year could “afford”). Condo fees capped at %1.5 of that sales price of the affordable units plus utilities.

Of course, folks will “own” their apartment on Lot #5 while those at Carlton Place will only rent. Chapel Hill’s condo owners, then, will experience a modest growth in equity and see a return on their investment (minus the %1.5 yearly fees) while those in Raleigh don’t.

Ownership is supposed to also reduce unit churn – a favored attribute over apartments – an attribute that appears to be unique to Lot #5 as our local affordable housing advocate Robert Dowling noted when commenting on “Mr. Meadowmont” Roger Perry’s new East 54 (University Inn) project:

Meadowmont developer Roger Perry is planning a major project that challenges the town’s inclusionary affordable housing model.

In exchange for the town’s approving high density — half a million square feet on 11 acres — Perry is offering to double the town’s requirement: 30 percent affordable housing, or 60 out of 200 condos.

Robert Dowling, executive director of the nonprofit Orange Community Housing and Land Trust, praised the idea. But he urged the Town Council to reject it. Dowling said the flood of condos would be harder to manage because condos are smaller starter homes that few people would live in for very long.

Lower-cost condos criticized The News & Observer February 17, 2007

Perry’s East 54 units “one- and two-bedroom units would range in size from 700 to 1,000 square feet and would be priced somewhere in the low $100,000s”.

Bigger, cheaper but will churn faster than those condos on Lot #5? Doesn’t compute.

Back to Raleigh, the taxpayers’ outlay was at least 5-fold less than our taxpayers, $1.5M to our $7.5M.

A $1.5 million loan from the city and county helped the non-profit housing company, DHIC, develop a $10 million project. Apartments are available to families earning 60 percent of the median income. In Raleigh, that’s $43,000 for a family of four.

WRAL, Feb. 26th, 2007

Larger, cheaper units with on-site parking, no condo fees, many amenities without creating a slew of publicly financed million dollar condos? That computes.

What about that housing cost disparity?

“It’s so important for downtown to give opportunities for multiple classes to help build a life in downtown,” said Kris Larson, deputy director of the Downtown Raleigh Alliance.

It allows people who work in the service industry downtown to live downtown.

“If only people who can live here have to buy a $350,000 condo, what kind of community is that, it’s not very diverse or vibrant,” said Natalie Connell, of DHIC.

WRAL, Feb. 26th, 2007

Vibrancy. That also computes.

What kind of mix of residents will live in our publicly underwritten Lot #5? Well-to-do students, young professionals, retirees that can drop between $300,000 and $1 million plus on housing?

Raleigh designed in diversity and environmental sanity from the start with their Carlton Place project, as the ‘blog Raleighing reports (Carlton Place Opens With Fanfare):

Eight of the units are set aside for, and affordable to, persons with disabilities. Additionally, 4 units are fully accessible to people with mobility impairments, including curbless showers. One resident benefiting from this is Raleigh native and reigning Ms. Wheelchair North Carolina, Ms. Kelly Woodall.

Carlton Place also received a grant from the Home Depot Foundation to incorporate “Green” elements in the design of the development. Carlton Place features Energy Star appliances, low VOC paint and carpet, pervious concrete, low flow plumbing, and solar reflective roof membranes.

According to Gregg Warren, Executive Director of DHIC, the first residents are employees of The City of Raleigh, Wake County Public Schools, Blue Cross Blue Shield, Capital Area Transit, retail businesses, state government, and Wake Med. Many are now able to walk to work. DHIC is also the developer of Murphy School Apartments and the Prairie Building in downtown Raleigh.

End of the day? If increasing Downtown’s population, diversity and vibrancy in a sustainable, environmentally sound fashion is your goal, Raleigh’s Carlton Place suggests some solutions.

They Count: 2007 Point in Time Orange County Homeless Census

Monday, March 12th, 2007

Cross-posted from Terri Buckner’s (TerriB’s) ‘blog LocalEcology

Orange County Homelessness Fact Sheet
February 2007

Total Number of Homeless People Counted in January 2007: 224

  • Homeless people staying in temporary shelter: 199
  • Homeless people without shelter (i.e. on the streets): 25
  • Homeless families: 23
  • Homeless people in families (including children): 60
  • Homeless children: 35
  • Homeless individuals (not in families): 164
  • Homeless people with a history of domestic violence: 23
  • Chronically homeless people: 71

These figures do not include numbers of people who are “doubled up,” that is without a legal residence of their own and temporarily staying with another person. Furthermore, the data does not account for people who are at-risk of homelessness for any reason including unemployment, foreclosure, eviction, chronic or sudden illness and domestic violence. According to the 2000 U.S. Census, 40.5% of renters in Orange County pay 35% or more of household income toward rent which qualifies as at-risk of homelessness.

In Orange County:

  • A minimum wage earner (earning $5.15 per hour) must work 117 hours per week, 52 weeks per year, to afford the fair market rent (FMR) for a two-bedroom unit, which is $785 per month. An SSI recipient (receiving $603 monthly) can afford monthly rent of no more than $181, while the fair market rent for a one-bedroom is $603 (Out of Reach Report, 2006).
  • In order to afford FMR for a two-bedroom unit ($785), without paying more than 30% of income on housing, a household must earn $2,617 monthly or $31,400 annually. Assuming a 40-hour work week, 52 weeks per year, this level of income translates into a Housing Wage of $15.10 (Out of Reach Report, 2006).
  • In 2006, the Inter-Faith Council served 85,055 hot meals; provided 7,726 bags of groceries to 7,187 members of the community; granted 3,500 requests for food, cash, and help with utilities and other service needs representing more than 2,100 households; and offered 813 homeless individuals a place to sleep through its Community House and HomeStart program.
  • Neighbor House, Inc. distributed at least 17, 680 dinners to members of Northern Orange County through its Food for All Program in 2006. They are currently serving an average of 85 meals per night, four nights per week.
  • In 2005, the Community Initiative to End Homelessness received approximately $275,000 to provide permanent housing to homeless and disabled individuals or families. The funding is shared among OPC Area Program, the Chrysalis Foundation for Mental Health, Inter-Faith Council for Social Service and UNC Horizon’s. The CIEH applied for additional homeless assistance funding in 2006, but award letters have not been received as of 2/13/07.

I’m trying to find how the $275,000 in Community Initiative to End Homelessness funds were actually dispersed.

Council member Sally Greene has also been doing work (and blogging about it) with the ORANGE COUNTY PARTNERSHIP TO END HOMELESSNESS

Thanks Teri for shining a light into the shadows, please keep the posts coming.

Downtown Development: Feb. 12th Council Debate

Wednesday, February 14th, 2007

[UPDATE:] The video below streams from my site – here’s the Google Video that streams faster.

Here’s the complete “debate” Council held on the Lot #5. Note how quickly the expedited SUP application was approved.


Downtown Development Initiative: Where’s the beef?

Friday, December 1st, 2006

[UPDATE]

How could the negotiations team done a better job informing the public throughout the process?

Here’s two examples from Greensboro’s District 5 Council member Sandy Carmany covering their coliseum issues, this one from a year ago and this one from November.

Sure, she wasn’t hampered by reporting on material potentially shielded under NC’s open meetings laws, but, then again, not every decision or thought process going into RAM’s “new” deal was by necessity shielded.

The only Council member directly involved in the negotiations, Sally Greene, has done the best informing the public of her thinking process on Lot 5 though nothing I read prepared me for such a right turn.

Original post:

Council had an excellent opportunity over the last week to answer the critics of the new Downtown Development Initiative Lot #5 deal.

Over the Summer, the public’s investment in the deal ballooned 15-fold, from $500K to north of $7.2M (with additional revenue hits, etc.). The Wallace Deck portion excised. Public space diminished. Boutique shops up, affordable commercial space missing. $385-$415 per square foot property, slated, as one critic pointed out, probably for affluent student housing.

What, over the Summer, caused the deal to change so radically for what I, other downtown business folks, two Kenan-Flager business school professors and many other concerned citizens consider the worse?

Council could’ve released more information – to provide a solid foundation for the public’s understanding of “the deal”. I’ve followed this deal quite closely. I agreed to “bite my tongue”. to not criticize the problematic elements of the original deal, to wait on the “new deal” which would correct the more egregious of the public’s concerns.

I’ve spent hours trying to pull together all the whispers, hints, etc. that incidentally wafted the public’s direction over the course of the Summer. But what I have is not enough.

The Council has the responsibility and obligation to fully disclose the details, to the fullest extent
allowed by law, of this deal.

Mr. Manager, Mayor and Town Council,

Thank you for being more timely this week and publishing the RAM development agenda item before close of business. Unfortunately, the agenda item is fairly light on the background of the “new deal”.

Would you please publish the remaining reports, discussions notes, comments, etc. that went into forming the “new deal” over the Summer?

I know that there’s some legal issues involved in releasing all of the notes – legal issues that will become moot after you sign the deal – so I’m not asking for ALL the information now (though I will be exercising a citizen’s FOIA prerogative ASAP).

I’m asking that you release everything you can prior to the meeting, including information not protected under the confidentially agreement but also not,to date, publicly disseminated.

For instance, would you please provide details of your consultations with the Local Government Commission (LGC) on financing?

This would include notes, reports, detailed analysis, etc. Please be thorough in your disclosures.

I’m interested in the LGC’s take on leveraging the secured debt, effect on our town’s debt ratings, thoughts on the quoted interest rate, etc. Essentially, I imagine, the same kind of financial analysis that a private business uses in evaluating the risk-rewards of taking on debt.

Finally, the main conduit for publishing this data has been the DDI website which hasn’t been updated since Spring. I’ve asked the Council to update the information on the RAM deal in a timely fashion. Several folks told me to “hold my horses”, that I needed to wait until the “final” deal was set.

Well, the final deal is set and the public still doesn’t have those details. I was hoping that this issue would be addressed over the last 9 days but it hasn’t.

The public has one weekend to review these critical additional details.

Please, if you can’t update the website, then submit them to the citizenry directly. If emailing or providing paper copies is easier, that’s fine.

I’ll make sure they get into the public domain over the weekend.

Thank you for your prompt attention,

Will Raymond

Chapel Hill Downtown Development Initiative: The Debate

Tuesday, November 28th, 2006

Posted these individual citizen comments from the Nov. 20th Public Hearing on the Downtown Development


Scott Kovens

Robert Dowling

Gene Pease

Roger Perry

Lex Alexander

David Godschalk

David Hartzell

Joyce Brown

Janet Kagan

Alan Rimer

Barnes Burke

Laurie Paolicelli

Scott Radway

Anita Badrock

Tom Jensen

Josh Gurlitz

Liz Parham

Philip Duchastel

Bill Camp

Raymond

Bernadette Keefe

Downtown Development Initiative: Culbreth and the Domino Effect

Monday, November 27th, 2006

Chris Culbreth, a second term member of the Town’s Community Design Commission (CDC), stayed late Monday, Nov. 20th, to comment to Council on the proposed revisions for the Process for Revision of the Comprehensive Plan

Interestingly enough, he spent more of his limited time counseling Council on the Downtown Development Initiative (DDI) juggernaut than the process revisions – including this digression on how developers are already factoring in Council’s temperament:

[Lot #5] is going to be a key building because the people who see that are going to come and build things following – and some of those people were here tonight – all the guys who bring us their plans of what their going to develop were sitting in the audience tonight to see what Lot 5 went over – so they can figure out “what we can get approved next”…

He then held up another RAM Development proposal, 425 Hillsborough St., of which I’ve been somewhat critical of for a few reasons, as an example of a kind of urban density at odds with our Town’s stated goals of walkability, livability and sustainability before turning back to the Lot #5 precedent:

…this building, Lot 5, and how it’s going to be built, and how it looks, will be a precedent for these others that will be developed. And I don’t want it to turn out to be like Rosemary Village, for example, it was built and it’s all students and sold in less than a year. No professional is going to want to live there. And the way it was built – it doesn;t even communicate to the neighborhood [Northside] behind it..that’s a transitional neighborhood…we want those neighborhoods to come into Town…

The other developments that come into place, they’re going to use that [Lot #5 density and design] as an example and our concern is the massing of these buildings and how it’s going to function…

[Movie]

As Chris pointed out, the CDC reviews development projects and provides feedback to developers prior to Council. Chris has long familiarity with many of the projects coming before this Council – projects the Council has generally been satisfied with, at least as far as general design goals.

Council should weigh this members counsel in light of that experience.

The Community Design Commission is charged with the following:

To initiate, promote and assist in the implementation of programs of general community beautification in Chapel Hill and its environs;

To seek to coordinate the activities of individuals, agencies, organizations and groups, public and private, whose plans, activities and programs bear upon the appearance of Chapel Hill and its environs;

To provide leadership and guidance in matters of design and appearance to individuals, organizations and groups, public and private;

To make studies of the visual assets and liabilities of the community, including surveys and inventories of an appropriate nature, and to suggest standards and policies of design for the entire community, or any individual project to be undertaken therein;

To prepare both general and specific plans for the improved appearance of the Town of Chapel Hill and its environs…

Downtown Initiative: $500,000 here, $7.3 Million there, pretty soon we’re talking real money…

Monday, November 20th, 2006

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.

UNC’s Board of Trustee Roger Perry: You’re Insulted?

Wednesday, September 27th, 2006

UNC trustee and local developer Roger Perry said his sense was that UW-Madison officials essentially tell the community that the university’s mission requires it to do a certain project, and then everyone goes to work on preventing negative impacts, without trying to stop the project in general.

He said he’d like to get to that point in Chapel Hill, and that it can be somewhat “insulting” when someone not connected to UNC says they really aren’t convinced the university needs to do what it says it needs to do.

HeraldSun 09/27/06

Perry is insulted when someone outside of UNC questions the whys-and-wherefores of campus development?

What the hell? Near quoting from the authoritarianism playbook, Perry says he likes a community that doesn’t question the diktat of the university – a community that just “deals” with the university’s negative impacts.

Perry appears to long for the day when citizens “shut up” and STOP SAYING they aren’t really convinced about what the university needs to do. My guess? It isn’t the citizen taxpayer questioning the “needs” as much as the citizen taxpayer that questions the “hows” that really inflames his ire.

The obvious sub-text is Carolina North.

The fine residents of our community, the hard-working taxpaying citizens of our State, deserve more than the University’s current flimsy assertions of positive financial, economic and social impacts. From a straight business perspective, for the investment demanded of our community and State, the return is hardly clear.

While I believe the University needs to expand, I have been quite clear that the justifications UNC, to-date, have offered up for Carolina North are, at best, fundamentally weak, at worse, downright disingenuous.

Roger Perry and the rest of UNC’s Board of Trustees absolutely must address the glaring absence of any reasonable, documented, calculable return on investment before I, a single North Carolina citizen taxpayer, will be convinced of the soundness of their plans.

Of course, this is the board Carolina North’s designated quarterback Jack Evans claims can’t handle reading a 15 page list of development principles for Carolina North.

What a trip for the Carolina North boys. Perry’s “shut up” is a fine bookend to Moeser’s reaction to “freelance dissent”.

Hillsborough425: Google Earth Fly-By, Alpha Quality

Friday, September 22nd, 2006

Alpha quality?

This is my first release of a “fly-by” created with Google’s mapping tool Google Earth [v4.0291.beta], drawing tool SketchUp and published concept plans to model new development in our community. In this case, modeling RAM Development’s 322 luxury condos visual impact.

The large McMansion-like teardown, unfortunately, is displacing Hillsborough Street’s affordable 111 unit Town House apartments. Town House has been a low cost haven for students for years.

Hillsborough425 aka “The Residences at the Grove” (again, what grove?) will be the largest development of its kind to bless (?) Chapel Hill. Given that and RAM Developments close relationship with Council in the ongoing $100M deconstruction of downtown, the Mayor’s brush-off of greater transparency is troubling.


How did I do it?

Tools:

Input:

Output:

Using Google Earth:

  • 1) “Flew” to the general location of Hillsborough425.
  • 2) Added Hillsborough425: Current Town House Apt. layout [JPG] as an overlay, changed its opacity to %50, then stretched and rotated it until the roads and features matched up.
  • 3) Set the overlay to be drawing priority #1.
  • 4) Added Hillsborough425: Sept. 2006 Concept Plan [GIF] also as an overlay and adjusted it in a similar manner using both the underlying GoogleEarth features and the current layout overlay.
  • 5) Toggled off the Town House Apt. overlay leaving just the concept plan.
  • 6) Saved the result safely to disk.

Using Google Sketchup:

  • 1) Imported the current view from GoogleEarth (the Hillsborough425 concept plan overlaid on the current topography)
  • 2) Toggled Google->Terrain OFF
  • 3) Outlined the buildings using the flattened concept plan imported from Google Earth and tracing with the LINE tool.
  • 4) Using the Hillsborough425: Concept plan descriptions and other documents as references for each buildings height, used the PUSH/PULL tool to extrude a volume roughly the same height.
  • 5) Toggled Google->Terrain ON
  • 6) Using the SELECTION tool to select an element in one building, right clicked and selected all connected components. Once selected, used the MOVE tool to place the building roughly at grade.
  • 7) Exported the finished product to GoogleEarth.

Once exported to GoogleEarth, I finished by exporting my alpha-quality project as a KML suitable for GoogleEarth v4.0291.beta.

If I get some time this weekend (ha!), I’ll add in the existing two and four story apartments for scale.

Here’s the Sketchup files ( [1] and [2]) of the Hillsborough425 buildings, please feel free to build upon my initial effort.

My only request is you publish the results for the wider community.

Hillsborough425: Daily Tar Heel Says “Scrap the Plan”

Wednesday, September 20th, 2006

That’s the Daily Tar Heel’s Editorial Board.

The concept plan to tear down the 111-unit Town House Apartment complex and build 322 new nonrental luxury units called the Residences at Grove Park should be scrapped before any more money is wasted investigating the issue.

They share some common concerns: traffic and affordable housing.

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