AGENDA #2a
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Draft Report on Financial Feasibility Analysis on Building Program for Town Parking Lots 2 and 5 and Related Sites
DATE: September 13, 2004
This memorandum provides the Town Council a draft report on the financial feasibility analysis by John Stainback, managing partner with Stainback Public-Private Real Estate. Mr. Stainback’s cost estimate and financial feasibility analysis on a building program for Town Parking Lots 2 and 5, the Wallace parking deck and the RBC-Centura Bank property is attached (see Attachment 1). The analysis also recommends a process for proceeding with the development of the sites.
Tonight, the Council receives Mr. Stainback’s draft financial feasibility analysis report; the Council Committee on Lots 2 and 5 discussed the report with Mr. Stainback at a meeting earlier today.
The public will have an opportunity to comment on the draft at a public forum the Council has scheduled for 7 p.m. on Monday, September 27, 2004. The Council Committee recommends that the Council consider whether to proceed with the next stage of the work, request for proposals from developers, at the October 11, 2004 meeting.
The Council Committee is scheduled to meet prior to the September 27th forum and the October 11th Council meeting.
The Downtown Chapel Hill Small Area Plan, adopted by the Council in 2000, identifies as development “opportunity areas” two Town-owned downtown parcels: Town Parking Lot 2, at East Rosemary and South Columbia Streets, and Town Parking Lot 5, on West Franklin and Church Streets.
In February and March 2002, the Town held Design Workshops to provide the public the opportunity to sketch their ideas for key downtown sites, including Lots 2 and 5. At a Council Work Session on June 10, 2002, the Town Council reviewed concepts for Parking Lots 2 and 5, as described in the Summary Report on the workshop.
On June 10, 2002, the Council formed the Council Committee on Lots 2 and 5 to review in greater detail options for proceeding with a project to develop the two parking lots.
On February 24, 2003, the Council adopted Principles and Priorities recommended by the Council Committee on Lots 2 and 5 and adopted a resolution directing the Town Manager to seek proposals for an economic development consultant to work with the Council and Staff on a process to potentially develop the sites. On October 27, 2003, the Council, after a consultant search process, authorized the Manager to contract with Stainback Public/Private Real Estate.
On March 22, 2004, the Council held a public forum on the findings of a market study by Economic Research Associates which forecast demand for apartments and retail space. The market study results were used as a basis for establishing a range of uses and amount of development specified in the building program adopted by the Council on April 14, 2004. On April 14, the Council authorized proceeding with the development of conceptual master plans for both sites.
On May 24, the Council held a public hearing on draft conceptual master plans developed by HKS, Inc., showing the potential arrangement and scale of buildings on Lots 2 and 5. Additional concepts also were developed for the Wallace parking deck and the adjacent parcel and the RBC-Centura Bank property at Columbia and Rosemary Streets, as recommended by the Council Committee on Lots 2 and 5.
On June 14, 2004, the Council adopted a resolution outlining recommended development options to use as a conceptual guide by Mr. Stainback and the Council in determining the financial feasibility of the building program. On June 14, the Council authorized proceeding with the financial feasibility analysis phase.
On August 25, 2004, the Council Committee on Lots 2 and 5 received an initial report on financial feasibility by Mr. Stainback and discussed potential scenarios for developing the sites in terms of the order in which sites might be developed, the development schedule, and the impacts on parking.
DISCUSSION
Attached is the financial feasibility analysis by Stainback Public-Private Real Estate. Among the data included in the analysis are cost estimates by McDonald-York, Inc., a Raleigh general contracting firm, and appraisals of Parking Lots 2 and 5 by Analytical Consultants, a commercial real estate appraisal firm in Chapel Hill; these firms worked as subcontractors for Mr. Stainback.
Mr. Stainback was asked to incorporate into the draft financial feasibility analysis report the following development scenario on which the Council Committee reached consensus at its August 25th meeting:
· Find 173 off-site parking spaces to account for the temporary loss of parking with the development of Parking Lot 5.
· Explore funding sources for construction of a transit transfer center at Lot 2, estimated to cost $2.7 million.
· Start construction on the Wallace parking deck and Parking Lot 5, estimated to take 15 to 18 months.
· Upon completion of the construction at Parking Lot 5, RBC-Centura Bank would move out of its building at Rosemary and Columbia Streets to a new building at Lot 5.
· Begin construction on a parking deck at the RBC-Centura site.
· Begin construction at Lot 2, including the below-grade transit transfer station.
The Committee also requested Mr. Stainback conduct a financial analysis on a subset of options, including scenarios where development occurs only at Parking Lot 5 and the Wallace deck, and where Lot 2 is developed with a below-grade parking garage instead of a transit center.
In addition, Committee members requested that the staff provide information on the amount and location of public parking that would be needed off-site while Lot 5 is developed, and explore potential grant funds that the Town could pursue to finance the transit center construction. A proposed process for gathering this information is summarized below.
Provision of Temporary Parking During Development of Lot 5
We will prepare a report on parking-related issues and potential solutions for the October 11, 2004 Council Committee on Lots 2 and 5 and Town Council meetings. The report will examine the following:
· The demand for downtown parking during the day and at night at parking facilities owned by the Town;
· The number of spaces leased at Town-owned lots and the parking deck;
· The number of spaces provided on-street and where; and,
· The potential number of new on-street spaces that could be added to downtown streets.
The report will outline options for providing additional temporary public parking spaces in response to the parking lost during the construction of Lot 5. These spaces would be needed during the construction of Lot 2 should that site be developed after Lot 5. In addition, the report will examine the impact of these options on parking revenue to the Town.
Potential Grant Funds for Transit Transfer Center
We have begun exploring the potential for funding of the transit transfer center by the Federal Transit Administration and will report whatever we have learned by October 11.
NEXT STEPS
The Council has scheduled a public forum for 7 p.m. Monday, September 27, 2004, to receive comment on the attached financial feasibility analysis by Stainback Public-Private Real Estate. The project schedule contemplates the Council considering whether to proceed with the developer solicitation phase at a meeting following the forum.
ATTACHMENTS
1. Draft Cost Estimate and Financial Feasibility Analysis Report by Stainback Public-Private Real Estate [Note: To be distributed to the Council on Friday, September 10, 2004]