AGENDA # 8

 

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:            Response to Petition of Interfaith Council

 

DATE:             March 6, 2000

 

 

This memorandum is written in response to the petition submitted by Interfaith Council (IFC) to the Town Council at the Council’s January 10 meeting inquiring about the availability to the IFC of the present shelter building at 100 West Rosemary Street and adjoining lot and the Police building at 828 Airport Road.  A copy of the petition is Attachment 1.

 

BACKGROUND

 

The Town leases its building at 100 West Rosemary Street to the Interfaith Council for use as a shelter and community kitchen.  The lease, which has been renewed and extended by the Council since 1989, has a two year term. The lot next to the shelter’s lot is a Town-owned parking lot with monthly rentals that produces about $3,000 -5,000 net revenue.

 

On March 15, 1999, the IFC requested the Town Council to enter into a 25-year lease for 100 West Rosemary Street, currently the IFC shelter, and the lot located directly adjacent to it on West Rosemary Street; and, to request the Department of Transportation (DOT) to agree to remove Pittsboro Street Extension from the approved Transportation Plan.  At the Council’s request, the Mayor subsequently made such a request to the Secretary, but DOT declined to approve such a change. (These letters are attached as attachments 3 and 4).  The Council has not yet acted on the question of a long-term lease.

 

On June 28, the Task Force on Alternative Locations for IFC Facilities was established to include members representing the IFC Board, volunteers, clients, the Towns of Chapel Hill and Carrboro, Orange County, the University, the Downtown Commission, the Chamber of Commerce, the Department of Social Services, Orange/Person /Chatham Mental Health and the local clergy.  Mayor pro tem Lee Pavao and IFC Board Chair Rita Gray were named co-chairs. A report on the group’s activity dated October 20, 1999 is Attachment 2.

 

In 1996, the voters approved the sale of Public Safety bonds to fund, among other things, renovations at the William D. Blake Police headquarters Building.  Work is ongoing now on the analysis of what repairs must be done.

 

To prepare for considering the IFC’s request, the Council authorized appraisals of the market values of both the shelter and the Police building.  The appraised value of the Police building is $2,100,000.  The appraised value of the shelter is $1,050,000. A copy of each appraisal is available at the Town Clerk’s office.

 

Some Council members may remember a higher figure suggested as the value of the shelter.  Last spring, a staff member talked with a local appraiser, who gave us his best opinion pro bono.  Based on downtown rent per square foot, he estimated, in an informal and cursory fashion, that the value of the shelter building was in a range or $1.7 to $2.1 million.  However, our present formal appraisal report was written after careful studies of the value of this building using three different methods: the cost approach, the market comparison approach and the income approach.  The values developed by these three approaches ranged from $1,019,000 to $1,102,000, and our appraiser reconciled them, giving most weight to the income approach, to his opinion of market value of $1,050,000.

 

DISCUSSION

 

The IFC petition has raised the question of the futures of two Town facilities: the shelter and the Police building.  We have identified several options for those buildings and describe them below. We also list advantages and disadvantages of each, as seen from the perspective of the Town of Chapel Hill. We also discuss estimated costs of each option.

 

This report does not consider what might be the optimum location of the IFC shelter and offices. 

 

Option 1: No change

 

The IFC would continue to operate a shelter at 100 West Rosemary Street and have its offices and programming space elsewhere; and,the Police Department would remain in its building at 828 Airport Road.  IFC would continue on a 2-year lease arrangement.

 

Advantages

  1. Only additional costs would be to make repairs to the Police building.
  2. No need to plan for Police Department relocation, temporary or permanent
  3. Maintains flexibility for Town to change uses of its facilities as needs change.

 

Disadvantages

  1. The shelter building continues not to generate real estate tax revenue for the Town.
  2. The shelter building is not available for use for Town offices and programs.

 

Town’s Preliminary Cost Projection: $500,000 – 600,000

 

 

 

Option 2: Expand IFC Facilities at the Shelter Site

 

The IFC would add a building to the site, either an office/programming building or a shelter building.  In the latter case, the current shelter building would be renovated to house IFC offices and programming space.  While it would be easier and less expensive to do this if the Pittsboro Street Extension were removed from the adopted Thoroughfare Plan, we believe there is room for this expansion outside the projected road corridor.  The Town would negotiate a longer-term lease with IFC.  The Police building would be repaired, renovated and expanded as a long-term home for the Police Department.

 

Advantages

  1. No need to plan for temporary Police Department relocation during repair and/or renovation of the building at 828 Airport Road.

 

Disadvantages

  1. The shelter building continues not to generate real estate tax revenue for the Town.
  2. The shelter building is not available for use for Town offices and programs.
  3. The Town loses an off-street parking lot with about 17 spaces that generates about $3,000 – 5,000 net revenue.

 

Town’s Preliminary Cost Projection:  $4,500,000

 

Option 3: Town makes the Police building available to IFC.

 

The Town would sell its property at 100 West Rosemary Street.  The Town would acquire land and build a new building for the Police Department.  The Town would then make the Police Department building available on some basis to the IFC.  IFC would then renovate the building and possibly expand it for use as a shelter, offices and programming space.

 

Advantages

  1. Town would have the proceeds of the sale of the shelter building, approximately $1,050,000, to use in any manner.
  2. Real estate on a prime intersection would be on the tax rolls.
  3. Town has the opportunity to design a facility for a modern law enforcement department.

 

Disadvantages

  1. The Town would need to find and acquire a new site, and it is very unlikely that a centrally located site could be found.
  2. Because it might take three to four years until we could relinquish the Police building for use by IFC, the Town would need to spend several hundred thousand dollars to make the repairs needed now to stop the further deterioration of the Police building.

 

Preliminary Cost Projection:  $5,270,000 -  5,510,000

 

Costs

 

We do not have any exact cost figures now.  The appraisals are opinions of experienced and qualified appraisers, but they are not guaranteed sales prices.  The cost estimates for repairing and renovating the Police building are rough at best; we are working on developing more reliable figures now.  The cost estimates for land for a new police site are gross estimates, based on what we are learning in our search for a municipal operations site.  We are assuming that, no matter what happens with the shelter, that the Council will want to make the repairs necessary now curtail continued damage to the Police building. Nevertheless, we believe that these planning level figures can be useful, especially in a comparative manner.

 

Option 1:  No Change

 

$500,000 -600,000                 Immediate repairs to Police building

 

Option 2:  Expand IFC Facilities on Shelter Site

 

$3,000,000                              Renovation of Police building, excluding temporary

relocation costs

  1,500,000                                Addition of 10,000 sq. ft. for Police building

$4,500,000

 

Option 3: Town makes Police building available to IFC

 

 $   500,000 –   600,000            Immediate repairs to Police building

      420,000 –   560,000            6 – 8 acres, @ $50,000 – 70,000/ac.

   5,400,000 - 5,400,000            New building, 30,000 sq. ft. @ $180

 $6,320,000 - 6,560,000            Subtotal

- 1,050,000 – 1,050,000            Revenue from sale of shelter building

$5,270,000 -  5,510,000            Net Cost Projection

 

These preliminary cost estimates are summarized below:

 

Option 1: No Change                                     $   500,000 –    600,000

Option 2:  IFC Expansion on Site                  $4,500,000 – 4,500,000

Option 3: IFC at Police building             $5,270,000 – 5,510,000

 

CONCLUSIONS

 

After considering the issues summarized above, we believe that Option #2, expanding IFC facilities on the present site, would be the most fiscally conservative direction for the Town. 

 

If we assume that the same work would be done on the Police building, regardless of the future of the shelter building, then the cost for Option #1 and Option #2 would be the same.  However, the No Change option brings no improvements to either the police or to IFC.

 

We believe that significant questions are raised by Option #3, making the Police building available to IFC, which suggest more risk, financial and other, than with the other options. Questions include whether the Town would be able to find a suitable site for a new Police building, whether the Town could acquire a site without the use of eminent domain, how much such a site might cost, and how much a new building would cost.  Because very few citizens actually visit the Police headquarters to receive police services, and because we anticipate that police substations will continue to be used, it is desirable, but not essential to have a Police headquarters building located in the center of town. Nevertheless, we believe that there are very few six to eight acre tracts available anywhere within the Town limits, and that the price of all land is escalating.  Finally, we are familiar with the difficulties of local jurisdictions in acquiring land for public purposes without the use of eminent domain.

 

Option #2, expanding IFC facilities at its present site, would avoid much of the risk described above. The immediate financial cost to the Town would be no more than the cost of the No Change option, although potential tax revenue would be lost by keeping one corner of a valuable intersection in public use and ownership.  We believe that the IFC’s architect could deal with the constraints of the Pittsboro Street Extension’s location. 

 

The loss of the Town’s future flexibility is real, but it could be limited by offering a lease with a 15-year lease term, instead of the 25-year term that has been requested.  We believe that IFC would need to rely on HUD for financing, in addition to contributions from the community.  We understand that HUD’s grant and loan programs could be expected to require that the building remain as a source of low-cost housing for at least 15 years.

 

RECOMMENDATION

 

That the Council advise the IFC that the William D. Blake Police headquarters is not available for use by the IFC, and that the Council is willing to discuss the lease of the present shelter building and the land adjacent to it for a term of up to 15 years.

 

With the Council’s guidance, we can prepare a different resolution for action at the next meeting.

 

ATTACHMENTS

 

1.      Petition from Interfairth  Council dated November  9, 1999.

2.      Interim Task Force on Activity.

3.      Letter from NCDOT Secretary Tolson dated May 10, 1999.

4.      Letter from Mayor Waldorf to NCDOT Secretary Tolson, dated April 21, 1999.

.

 

A RESOLUTION REPLYING TO THE INTERFAITH COUNCIL THAT THE POLICE HEADQUARTERS BUILDING IS NOT AVAILABLE TO THE IFC, AND THAT THE LEASE OF THE PRESENT SHELTER BUILDING MAY BE CONSIDERED BY THE COUNCIL (2000-03-06/R-3)

 

WHEREAS, the Interfaith Council has asked the Town Council whether the William D. Blake Police headquarters building and the present shelter building at 100 West Rosemary Street and the lot adjacent to it would be available for use by the IFC, and

 

WHEREAS, the Council of the Town of Chapel Hill has provided its facility at 100 West Rosemary Street for use by the IFC on a no-rent basis, and

 

WHEREAS, the Council supports in many ways the valuable work of the Interfaith Council and intends to continue to do so, and

 

WHEREAS, the Council believes that the William D. Blake Police headquarters building is essential to the future of the Police Department,

 

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council is willing to talk with the IFC about its future lease of both the present shelter building and the Town-owned lot adjacent to it for a term of up to 15 years, and

 

BE IT FURTHER RESOLVED that the Council finds that the William D. Blake Police headquarters is not available for use by the IFC.

 

This is the 6th day of March, 2000.