Downtown Economic Development Initiative

Overview

The Chapel Hill Town Council began the Downtown Economic Development Project in 2003 as part of its effort to invigorate downtown and energize the streets with people and activity.

After numerous planning meetings and continuing community participation, a development agreement was under way in February 2007. The project has now entered the usual planning review process required by the Town, beginning with development applications and reviews by boards and commissions. The Council may consider a Special Use Permit application for the project in September 2007, and, if approved, a Building Permit may be issued by early 2008.

The $75 million development is sited for the Town-owned Parking Lot 5 facing West Franklin and West Rosemary streets. It will combine condominium housing, retail businesses, and public and private parking in downtown Chapel Hill.

The development agreement calls for 137 condominiums of which 21 will qualify as affordable housing units (with reduced condo fees), an underground parking garage with about 330 spaces, about 27,000 square feet of open public space, and public art.

Recognizing the importance of reducing the energy demand of buildings and dependence on energy from fossil fuels, the Council directed that the project achieve 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).

As part of the financial arrangement, the Town will pay the developer a maximum of $7.245 million using tax-exempt borrowing for public parking spaces ($45,000 per parking space) after construction. The Town will retain ownership of the site and will lease the property for 99 years at $1 per year to the developer. The developer will have the right to acquire building “air rights” in 50 years at cost of $2.

An early proposal of this initiative included a second building complex proposal for East Rosemary Street. The Town negotiating committee decided to delay consideration of this proposal due to rising costs in the construction industry. The current iteration, which focuses on the Lot 5 site, aims to shield taxpayers from significant financial risk.

While design proposals for the downtown development project have changed over time, the Council’s adopted set of principles and priorities for guiding the development have remained firm. The project is intended to stimulate the town center, reduce dependence on the automobile and increase the tax base. More specifically, it must provide for at least 15 percent affordable housing, include a public plaza and gathering space, and reflect green and sustainable building principles. Also required are high-quality design and materials, underground public parking and public art.

The Council has worked with the expectation that the development proposal should meet the community’s high standards while retaining economic viability. The project is expected to generate new property and sales taxes and other revenues.

The proposed downtown project has benefited from continuing peer review by architect Marvin Malecha, dean of the College of Design at NC State University, who began reviewing design concepts in October 2005.