SUMMARY OF KEY PROVISIONS OF THE PROPOSED MEMORANDUM OF UNDERSTANDING
The Memorandum of Understanding is between the Town and Ram Development Company. It is intended to convey general concepts that will be further defined in a Development Agreement. Each section is described briefly below.
Description of the Development Sites (p. 8): Lot 5 is approximately 1.7 acres with a surface parking lot of 173 spaces. Wallace Deck is approximately 1.2 acres with a 309 space parking deck. There is about .29 acres at the corner of East Rosemary Street and Henderson Street included in the Wallace Deck site.
Description of the Lot 5 Project (p.9): 400 parking spaces (not less than 375 in a garage), about 31,000 square feet of public open space; and about 124 residential units for sale and 24,000 net leasable retail space in three buildings. The Town owns the parking garage and the open space, and the developer owns the improvements.
Description of the Wallace Deck Project (p.9): about 109 residential units for sale and 6,000 square feet of retail in two buildings with private courtyards. Some open space may be provided adjacent to the corner of Henderson and East Rosemary Street.
Parking (p.10): The Lot 5 garage will have 173 replacement public spaces; and 150 leased spaces for the residential owners and retail tenants, and 35 leased spaces for the affordable housing units. Additional spaces constructed by the Developer would be available for public use, with costs and revenues from operations allocated proportionately to the Town and the Developer. The Town will lease 55 parking spaces in the Wallace Deck to Ram for use by residents and patrons of the Wallace Deck Project.
Financial Investment by the Town (p.10): The Town will invest a fixed amount of $7.9 million for the construction of the Lot 5 parking garage and other Town-owned improvements, and $500,000 to support parking for the affordable housing units. Risks of costs overruns would be borne by Ram. The Developer will pay the Town $7.9 million in prepaid lease payments.
Funding of Town Investment (p.10): This section contemplates the creation of a tri-party agreement among the Town, the Developer, and the Developer’s lender. The agreement would establish an escrow account for the Town investment. The Town’s obligations are contingent upon the specified conditions.
Conditions Precedent to Developer’s Obligations (p.10): The Developer’s obligations are contingent upon the specified conditions.
Leases (p.11): The Town will continue to own both sites. The Town will provide 99 year leases for both sites to the developer, with the option to extend for 25 years. The Developer will prepay to the Town the leases in the amount of $7.9 million for both sites ($4.75 million for Lot 5 and $3.15 million for the Wallace Deck site). After the Developer receives a 15% return on cost, the Town will receive 20% of the net profit of the project. This section also refers to the idea of a “condominium regime.” The parking garage, the buildings, and the various public open spaces will each be condominiums subject to the land leases.
Affordable Housing (p.12): The Developer will provide a minimum of 15% of the 233 total estimated residential units as affordable housing through the Orange Community Housing and Land Trust. If the Developer builds more than 233 units, 20% of the additional units will be affordable.
Environmental (p.13): The Town is responsible for any costs of environmental mediation.
Retail Leasing (p.13): The Developer will not create a traditional mall environment and will target smaller, locally-owned businesses for the retail space on Lot 5 along West Rosemary Street.
Public Space (p.13): The Lot 5 public space will be subject to the same restrictions and managed in a manner like that of the Old Post Office on Franklin Street. The portion of Lot 5 between the Franklin Street Building and the center building may have additional regulations placed on it approved by the Town and the Developer.
Town Approvals (p.13): This section describes the Town’s separate roles as landowner and as a regulator. It specifies the Town’s approval rights and the Town’s review rights.
Collateral for Developer’s Obligations and Developer’s Financing (p.14): The Town’s leases will not be subordinated to any financing obtained by the Developer. The Town has rights to approve the contractor, and to be provided with a performance bond. The President of Ram Development also is providing a personal financial guarantee of the completion of construction.
Owner’s Representative (p.14): Stainback Public/Private Real Estate is contemplated to be the Town’s representative during construction. The Developer will pay these costs.
Public Art (p.14): The Developer will contribute 1% of the total development budget for public art.
LEED Certification (p.15): The projects shall be LEED-certified, and achieve Silver certification if feasible within the project budget.
Right of First Refusal (p.15): If the Town ever decides to sell these properties, the Developer would have the first right to purchase them, if such a process ever becomes legal in North Carolina.
Scheduling Milestone Dates (p.15): Exhibit A sets forth a tentative schedule. This agreement is not binding, and represents a general understanding of concepts.