AGENDA #2
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Public Forum: Financial Feasibility Analysis Report for Development of Town Parking Lots 2 and 5 and Related Sites
DATE: September 27, 2004
The Town Council called tonight’s Public Forum to receive public comment on the attached Draft Cost Estimate and Financial Analysis Report on a building program for developing retail, housing, parking and public space at Parking Lots 2 and 5 and the Wallace Deck (please see Attachment 1). The report is intended to help the Council decide whether to continue with the next phase of the process – request for proposals from developers and developer selection.
Adoption of the attached resolution would invite comment on the attached Draft Cost Estimate and Financial Analysis Report from the Chapel Hill Downtown Economic Development Corporation and the Downtown Commission by October 27, 2004, and schedule follow-up discussion by the Council on October 27, 2004.
Tonight the Council will hold a public forum to receive public comment on the Draft Cost Estimate and Financial Analysis Report prepared by consultant John Stainback of Stainback Public-Private Real Estate. The Council Committee on Lots 2 and 5 discussed the report with Mr. Stainback at a meeting earlier today.
The Council is scheduled to consider whether to proceed with the next stage of the work, request for proposals from developers, at its October 11, 2004 meeting. We are recommending that the Council reschedule action on this item until the October 27, 2004, meeting in order to allow additional time for public comment.
Key steps in the project to date are summarized below.
· The Downtown Chapel Hill Small Area Plan, adopted by the Council in 2000, identifies development “opportunity areas,” including Town Parking Lot #2, at East Rosemary and South Columbia Streets, and Town Parking Lot #5, on West Franklin and Church Streets.
· In early 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; the workshop ideas are summarized in the Summary Report presented to the Council on June 10, 2002.
· 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 (ERA) which forecast demand for apartments and retail space.
· On April 14, 2004, the Council adopted a building program for Lots 2 and 5 and authorized proceeding with the development of conceptual master plans for both sites. The ERA study was used to establish the range of uses and amount of development in the building program.
· On May 24, 2004, 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 as well as the Wallace parking deck and the adjacent parcel and the RBC-Centura Bank property at Columbia and Rosemary Streets. The Council Committee on Lots 2 and 5 recommended adding the Wallace Deck and RBC site to the project scope.
· 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.
· On September 13, 2004, the Council Committee and Council reviewed Mr. Stainback’s revised draft financial feasibility report. A public forum on the report was held at the Council meeting at 7 p.m. that day.
DISCUSSION
The estimated cost of the total development is $66.3 million, of which $7.9 million would be the Town’s responsibility, according to Mr. Stainback’s draft report submitted to the Council on September 13, 2004. The public investment includes construction of a parking garage at the RBC site at Rosemary and Columbia Streets, and construction of underground parking spaces at Lot #5. Mr. Stainback’s proposal outlines a strategy for financing the public improvements, including using annual ground lease income and property taxes from the development to pay for revenue bonds and self-financing bonds (authority to use self-financing bonds in North Carolina is on the November 2004 ballot).
Revisions to September 13 Draft Report
On September 13 the Council Committee asked Mr. Stainback to make revisions in response to comments made that day. The requested revisions are discussed below.
· The financial model presented on September 13 assumed 100 percent market rate rental housing. Council Committee members requested that the financial feasibility analysis include for-sale condominiums in the mix, as discussed in previous meetings. The Committee requested that Mr. Stainback include in the September 27 draft scenarios in which all of the housing units are for-sale condominiums, including the affordable housing. Staff also suggested that the analysis could include an additional scenario for a mix of owner-occupied and rental units.
· In addition, Mr. Stainback is to change the assumed debt repayment schedule from 30 years to a maximum of a 20 to 25 year term, which also will affect the calculations.
· The report also is to include additional analysis on the impacts of potential cost increases on the project.
· The proposed schedule is to add the Town’s normal development review process.
Attached is his revised Draft Report for discussion and public comment. We received this report on Wednesday, September 22 for inclusion in the Council’s packet and have not yet reviewed the information.
Staff Reports
We will prepare a report on parking-related issues and potential solutions; we also have begun exploring the potential for funding of the transit transfer center by the Federal Transit Administration. We propose presenting these reports to the Town Council on October 27, 2004.
NEXT STEPS
The Council Committee on Lots 2 and 5 has recommended that the Council consider whether to proceed with the developer solicitation phase on October 11, 2004. We propose postponing Council consideration of whether to proceed to the October 27, 2004 meeting. This schedule would provide another opportunity for public comment and allow the Council, citizens, and staff additional time to explore and test the assumptions in the Draft Cost Estimate and Financial Analysis Report. We suggest the Council consider inviting comments from the Chapel Hill Downtown Economic Development Corporation and the Downtown Commission for the October 27, 2004, Council meeting.
The Council Committee is also exploring scheduling outreach meetings with various groups, including downtown neighborhoods, business interests, the Downtown Economic Development Commission, the Downtown Commission, the Chamber of Commerce, and the University of North Carolina. These meetings would be held before the Council makes final design and program decisions related to approving the issuance of a request for proposals to developers.
RECOMMENDATION
We recommend that the Council adopt the attached resolution inviting comment on the attached Draft Cost Estimate and Financial Analysis Report from the Chapel Hill Downtown Economic Development Corporation and the Downtown Commission by October 27, 2004, and scheduling follow-up discussion by the Council on October 27, 2004.
ATTACHMENTS
A RESOLUTION INVITING COMMENT ON THE FINANCIAL FEASIBILITY REPORT ON DEVELOPING LOTS 2 AND 5 AND RELATED SITES (2004-09-27/R-1)
WHEREAS, on June 14, 2004, the Council adopted a resolution outlining recommended development options to use as a conceptual guide by consultant John Stainback and the Council in determining the financial feasibility of the building program for Town Parking Lots 2 and 5 and the Wallace Parking Deck; and
WHEREAS, on June 14, 2004, the Council authorized proceeding with the financial feasibility analysis phase; and
WHEREAS, on August 25, 2004, the Council Committee on Lots 2 and 5 received the consultant’s initial report on financial feasibility and discussed potential scenarios for developing the sites; and
WHEREAS, on September 13, 2004, the Council Committee and Council reviewed Mr. Stainback’s revised draft financial feasibility report; and
WHEREAS, on September 13, 2004 and September 27, 2004 the Council held public forums on the Financial Feasibility Report; and
WHEREAS, additional time for public comment would provide the Council, citizens, and staff additional time to explore and test the assumptions in the Draft Cost Estimate and Financial Analysis Report;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council invites comment from the Chapel Hill Downtown Economic Development Corporation and the Downtown Commission on the Draft Cost Estimate and Financial Analysis Report by October 27, 2004.
BE IT FURTHER RESOLVED, that the Council schedules consideration of whether to proceed with the developer solicitation and selection phase for October 27, 2004.
This the 27th day of September, 2004.