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.

Hazardous Consequences: No Official Word, Yet, On Lot #5’s Hazardous Waste Issue

Thursday, March 29th, 2007

[UPDATE] As of April 3rd, the Town has provided part of what I asked for in the following petition, the environmental report [PDF]. In the Town’s announcement of a conclusion to negotiations, the figure of $232,000 for a remediation was thrown out. This figure, of which I haven’t found a full justification, would supposedly include removal of 13,000 tons of material to either a hazardous waste landfill or some other remediation facility.

More to come.

[ORIGINAL POST]

A quick follow up on my previous post Lot #5 Development: “…up through the ground come a bubbling crude…”.

I’ve sent Chapel Hill’s Town Council a petition (Mar. 29th) asking for a postponement of any further approvals for Special Use Permits, extending or adding new consultancies, preparing the lot for construction, etc. until the financial liabilities attendant to environmental remediation are fully and timely disclosed.

Further, to avoid the recent mess involving the Rogers Road community, siting a trash transfer station on Eubanks and the Orange County Board of Commissioner’s apparent lack of any discernible specific, detailed and publicly revealed process for making their analysis and decision, that the methodology, data and assumptions are published by Council fully seven (7) business days prior to any approval.

A call from the Daily Tar Heel spurred me to take this action. I was hoping the environmental report, which, from my experience, should’ve taken a short time to prepare, would be published for public review by now. According to the DTH’s reporter, it hasn’t.

My concern is that the “clock” would be “run out” on the hazardous waste remediation issue – that Council would move ahead amassing further public (taxpayer) obligations without adequate background.

To help encourage a full, timely, open and responsible discussion of the hazardous waste issue, I’ve submitted the following petition:

Mayor and Town Council,

I’m petitioning Council to postpone ANY further approvals for the Lot #5 Downtown Development Initiative:

1) until the environmental assay of Lot #5 is 100% completed. This would include any recommended
follow up tests, such as monitoring wells, further core sampling, ground-radar location of
tanks or other structures, etc.

2) until the results of the environmental assay have been independently reviewed.

3) until the results, the independent review, the methodology, data, assumptions, geologic maps
and any other factors used to derive the results have been published 7 days prior to the
approval meeting.

4) until an initial estimate and plan for the environmental remediation, if necessary, has been
developed.

5) until the estimate, the methodology, data and assumptions going into that cost estimate have
been published 7 business days prior to the approval meeting.

6) until a financial impact statement, including additional costs, borrowings and wider effects
on the Town’s financial well-being has been developed.

7) until the estimated financial impact and methodology, data and assumptions going into that
evaluation have been published 7 business days prior to the approval meeting.

It also appears that the underlying geology of Lot #5 might be rockier than expected. If this is so,
Council should also postpone further approvals pending an evaluation of increased costs to the
developer and taxpayers of Chapel Hill.

Considering that an expensive environmental remediation might significantly and adversely impact our
Town’s finances, and, in combination with Lot #5’s current taxpayer obligations, possibly necessitate
either a substantial tax increase or reduction in services or both, the fiscally prudent course of
action is to wait until the facts are reported and the conclusions reviewed by the wider public.

Finally, I would like to highlight the importance of giving the public at least 7 business days of
notice. Our citizens are already concerned about the trajectory this project has so far taken.
Some of the greatest concern has come from financial, urban planning, environmental, energy and
commercial real-estate experts.

Let’s give our talented citizenry the opportunity for a careful, measured evaluation of the
Town’s reports and extend the courtesy of providing a reasonable amount of time to draft a
response.

Rushing the project forward without disclosing further anticipated financial obligations does
our citizenry a disservice.

Thank you,

Will Raymond

I’ll post the response as it comes in.

Lot #5 Development: “…up through the ground come a bubbling crude…”

Tuesday, March 20th, 2007

Well, not quite “black gold” or “Texas tea” but it appears that more “refined trouble” is brewing under Lot #5 (MAP).

Chapel Hill’s taxpayers will have to wait for next week’s official lab confirmation but, as of today (Mar. 20th, 2007), initial field tests of some of the nearly 30 core samples show “interesting” signs of contamination.

Hazardous waste remediation involving the fractured geology below the lot could prove to be quite expensive – launching the total taxpayer commitment to just south of the $12.5 million of equity that RAM Development, the Town’s private partner, is contractually obliged to contribute.

Of course, RAM will easily recover their equity and make millions on the deal. The fine folks of Chapel Hill will get an expensive hole in the ground.


Folks started calling on the Council to pull their heads out of the sand and do this environmental assay over a year ago, well before entering final negotiations with RAM Development. Council members Jim Ward and Laurin Easthom, before voting against the Lot #5 proposal, strongly argued that the “known unknown” of contamination deserved evaluation before signing the deal.

Unfortunately, caution, that night, was overridden by the zeal for the deal.

Another expensive “known unknown” lurking in the wings has been the cost of digging two stories below Lot #5’s current grade. I work across Church St. and recall the difficulty the developers of my building had with “the ROCK”. “The ROCK” underneath Chapel Hill’s Downtown has been the bane of many a stalwart developer. UNC has spent millions over the last few years tussling with “the ROCK”.

An incidental consequence of the technician’s drilling cores during this current environmental assay is a better understanding of the parking lot’s underlying geology. The optimism the Town showed – expecting to escape the vicissitudes of other Downtown developers – needs to be tempered by the measured reality of the last few days. It appears, again pending a final report, that “the ROCK” on the Franklin St. side of the lot is roughly 10′ below current grade tapering to 20′ on the Rosemary side.

If you live near Downtown, I suggest an early run to the store for ear plugs before blasting begins 😉

The HeraldSun Turns A Corner: Trouble on the horizon at lot 5

Monday, March 19th, 2007

The HeraldSun’s editorial stance on Chapel Hill’s Lot #5 project has always been somewhat “peppy”.

Tom Jensen’s Chapel Hill Herald (CHH) columns have been singularly reflective of the papers ebullient attitude towards this troubled development. In spite of the narrowing scope – halving the size of the project – and escalating taxpayer commitments – keeping the cost the same, increasing the public outlay 15-fold, ignoring the potentially expensive hazardous waste remediation, discounting further cost increases – the message continued to be move forward at a reckless rate and let the details be damned.

Tom,a recent graduate of UNC, political insider, Sierra staffer and Chapel Hill Planning Board member looks forward to the day he can live Downtown:

On a personal note, one of the reasons I love this project is that I would like to live in it myself.

I don’t own a car and I commute by TTA to work in Raleigh every day. Lot 5 is about two minutes away from where I pick up the bus. It would be great to be able to walk right out of my house, catch the bus, and then come home at night and meet my daily needs within walking distance of my condo.

Right now there’s nowhere that meets both the niceness and affordability criteria I would need to see to live on Franklin or Rosemary Street.

Affordability, Tom, considering the $385-$415 per square foot price of the condos, is reserved for those qualifying for the affordable housing component. It might be tough to qualify if Councilmember Strom makes good on his statement that the bulk of these roughly 600 square foot affordable units will be used for families.

Today’s HeraldSun editorial takes a different, more cautionary tack.

Let’s hope they don’t find anything. Let’s hope the environmental assessment, being undertaken this weekend, on downtown parking lot 5 shows no problems at all.

Because if it doesn’t, there are very serious consequences.

Yes, it would be nice to think there is no hazardous material to remove, but with at least one known gas station sited on that lot, it isn’t likely. Serious? The price tag could run into the millions.

And from what I observed this weekend, digging a deep parking deck just got a lot more expensive.

The editorial continues with this interesting assertion:

It is the linchpin for the town’s attempt to reinvigorate downtown, to bring more people to live by the community’s historic core, to create a market for downtown businesses and to make sure the area remains the vital, throbbing heart of Chapel Hill.

As I’ve mentioned before, this project lacks a “communal” center – something like a grocery store – to both serve the residents of the complex and to draw in the thousands of walking distance residents noted in recent cautionary testimony before Council. The commercial component seems oriented towards boutique shopping – Sunglass Huts and Jumba Juice – over sustaining, locally-owned concerns.

Because that goal is so important, the town has been willing to accept a far-less beneficial deal to develop lot 5. What once was an arrangement last year with the private developer that would have cost the town under $1 million, now may cost more than $7 million — and that price could be going up.

We have noted in the past in this space that on balance, the increased financial liability for the town still was worth it. The ultimate benefit — to downtown and the entire community — would offset the increased cost.

It is nice to see a bit of concern about the value returned being somewhat in the ballpark of the value given – even if the editorials numbers are off by a factor of 2 on the low-end. The original investment was $500,000 with a more restrictive land deal – increasing to today’s $7.3 million with a real-estate giveaway. And, of course, the $7.3M figure doesn’t incorporate the true value of the property – commercial real-estate folks have quoted $5-$13 million conservatively, the probable high costs of environmental remediation, the slew of new expensive consultants to manage our Town’s end of the deal and another round of predictable increases (like having to deal with a huge rock under the lot).

But if the consultants conducting the assessment this weekend find evidence of possible environmental contamination at the site — and previous consultants had, in fact, found that kind of evidence — the town, as the owner of the property, would have to pay for any cleanup needed.

There’s no telling, at this point, how much that could cost, but the price tag could be significant, in the millions. If it is, that could jeopardize the entire project. If it is, that probably should jeopardize the entire project.

The town cannot afford — either literally or figuratively — to put excessive sums down the deep hole being bored this weekend at lot 5. Let’s hope it doesn’t come to that, but if it does, the town should be ready to cut its losses and head in a different direction.

Absolutely correct. On the cusp of expanding the Lot #5 moneypit I hope the majority of our Council reassess our citizen’s liability – drops the current deal – totes up the “lessons well-learned” and starts again.

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