ATTACHMENT 1
Mayor’s Downtown Taskforce Report
Supplementary Information
June 23, 2003
The following is supplementary material provided by the Mayor’s office and reviewed by the Taskforce during formation of the group’s recommendations.
Recommendation #1: Formation of a downtown development corporation
An economic development corporation needs to be established to identify and package the business development and real estate development opportunities in the downtown area, develop and implement business recruitment and retention programs, and provide the financial tools and incentives necessary for their success.
The taskforce discussed whether the best approach to creating this organization was through the reconstitution of the Downtown Commission or the creation of a separate Downtown Development Corporation. While no decision was made either way, the taskforce recommends a separate Downtown Development Corporation headed by an executive director. This could be a re-organized version of the Downtown Commission or a brand new organization.
Economic Development in Chapel Hill
The Orange County Economic Development Office (EDO) provides some services to Chapel Hill. Its purpose is to ensure the desired quality of life in Orange County by encouraging economic development through investment in human resources, the expansion of existing business, and the creation of diversified and environmentally safe businesses. The aim of this investment is to provide jobs for community residents and to increase the non-residential tax base, thus enhancing the quality of life and contributing to the financial well-being of Orange County residents and their local governments. Chapel Hill contributes $6000 annually to the Orange County Office of Economic Development. Carrboro contributes the same amount but has its own economic and community development officer. The EDO has two full-time staff, an executive director and an administrative assistant. The Economic Development Director supervises the Orange County Economic Development Department and spearheads a wide range of development initiatives, including small business assistance, tourism, arts promotion, employment education and training, and economic research and data collection.
Research and Review of Other Downtown Development Models
At the request of the taskforce, the Mayor’s office engaged in meetings with local economic development entities to gather the following information:
Many North Carolina towns have dedicated resources for economic development of their downtowns. In our effort to determine what to recommend for the Town of Chapel Hill, the Mayor’s Office researched several of these other community models. Information was gathered from discussions and meetings with James Harris, Carrboro Economic and Community Development Director; Bill Kalkhof, CEO, Downtown Durham, Inc., Howard Clement, Durham City Councilmember; Randy Hemann, Director of Downtown Salisbury, Inc. (DSI);Susi Hamilton, Executive Director of Wilmington’s Downtown Area Revitalization Effort, Inc. (DARE); and Diane Reed, Orange County Economic Development Director. A chart outlining the results of this research can be found in Attachment 2.
The staff gleaned from this information that there are basically four types of downtown management models prevalent in North Carolina.
Some overlap exists and in some instances one organization serves more than one function for the downtown. Examples of this are discussed below.
1. Chapel Hill/Carrboro Downtown Commission Corporation (DTC)
a. Mission: It is the mission of this organization to maintain, develop, and encourage the vitality and growth of the downtown business district of Chapel Hill as an economic, cultural, recreational, entertainment, and historic center.
b. Activities include walk-in welcome center, a recycling program, chartering of city buses, promotional events, supplemental sidewalk cleaning and special event planning (outdoor concerts and July 4th celebration). The welcome center aspect diminished with the presence of the visitor’s bureau at 501 Franklin Street.
c. The downtown commission has an executive director and a thirteen-member board composed of business owners in the downtown service tax district.
d. This organization is funded by a Downtown Service District tax, which was requested by the local business community to spread the cost of operation evenly and fairly throughout the downtown area. The tax is currently 6.2 cents on the $100 valuation of business property in the district. The University and residential properties are exempt from the tax. The tax provides approximately $70K annually and makes up about half of the budget. Chartering of city buses, a cardboard recycling program, various fund-raisers, and donations supplements the remainder of the budget. Many projects and special events are co-sponsored by businesses to defray costs.
Following publication of the Kauffman Study, the DTC began a marketing and visioning project which included the introduction of a new logo and tag line and a multimedia marketing campaign. The formation of the Services to Property Owners Committee is a direct response to Kaufmann’s recommendation that property owners become more involved with the state of downtown.
2. Carrboro Downtown Development Commission (DDC)
a. Mission/Purpose: The health and well-being of downtown Carrboro.
b. Any regulation regarding downtown Carrboro is sent to the DDC. The Commission may make studies and recommend to the Board of Alderman plans, goals and objectives relating to the growth, development and redevelopment of downtown Carrboro. Recommend site specific plans for various lots in the downtown area and recommend plans for the improvement of access to and circulation within the downtown area by motorists (including parking) public transportation users, bicyclists and pedestrians.
c. The Commission is composed of eight members appointed by the Board of Alderman. The appointees are residents, business people and professionals.
d. Any commission expenses are covered by general funds.
The town of Carrboro employs a full-time Economic and Community Development Director. Some of his key duties relevant to downtown are:
· Counsels owners and potential owners on business development and provides financing through the revolving loan fund.
· Facilitates the permitting and plan review process for persons seeking to expand or start new businesses
· Develops and maintains economic development strategies
· Assesses business climate and determines what actions are needed to retain businesses in the town.
· Works and develops economic strategies with the Orange County Economic Development Commission.
3. Downtown Durham, Inc. (DDI)
In Durham, DDI is recognized as the organization with the most knowledge about the downtown market and about what properties are available for lease or purchase in downtown.
a. Some of the organization’s tasks are:
i. Offer one-stop-shopping and have information about available properties, working with local government, and financial incentives available in downtown.
ii. Maintain the most up-to-date computerized listing of available space for lease/purchase in downtown
iii. Knowledgeable about issues relating to downtown real estate, safety, parking, and plans for future development
b. The organization has a President/CEO and a thirty-five-member board which includes ten ex-officio members that are representatives from the city council, county commissioners, chamber of commerce, local universities and interest groups. The other twenty-five members are private sector businesspersons. Board members are required to make a financial commitment to the Downtown Durham, Inc. Monetary donations range from $25-10,000.
c. There is a core budget of $320K. The county provides $45K, city provides $135K and the remainder is raised privately. The CEO raises another $40-80K per year for project specific needs like bike patrols, signage and providing funds to purchase a street cleaner machine for city-use downtown. In addition, one penny on the tax rate is dedicated to the downtown revitalization fund.
DDI. works closely with Durham’s Economic Development Office, which was created around the same time as Downtown Durham, Inc. DDI does not plan special events in Downtown Durham. Some years ago the city assigned a parks and recreation staff person to the Economic Development Office for those purposes. DDI does assist in sponsorship for these special events.
4. Wilmington Downtown Area Revitalization Effort, Inc. (DARE)
DARE, Inc. is a non-profit corporation established to revitalize the Central Business District (CBD) of Wilmington. It is the outgrowth of a Task Force appointed by the Mayor of Wilmington in 1976. DARE receives both public and private financial support for its administrative programs.
a. Mission: DARE's goal is to ensure that the physical and economic change in Downtown Wilmington develops in a positive way by serving as a liaison between the public, business and government sectors, and by promoting and developing downtown as a good place to shop, work, live and enjoy. DARE works to identify problems and opportunities downtown and advocates change.
b. DARE is staffed by an executive director and administrative assistant and is governed by a 36-member board that represents various downtown constituencies, as well as city and county governments. The board is composed of ten (10) directors who are members by virtue of their association with an organization or institution, fifteen (15) at large directors selected from the community at large and surrounding neighborhoods, four (4) directors from local government and seven (7) directors who are members by virtue of their profession (financial community, hotel and restaurant business real estate business, architect, attorney). The board has four standing committees (operations, economic development, planning and urban design, Central Business District services). The vice presidents, who chair the committees, plus DARE's president and treasurer, constitute the executive committee.
c. DARE's $136K budget is funded by City of Wilmington ($52K), County ($19K) and private contributions ($65K).
5. Salisbury - Downtown Salisbury, Inc. (DSI)
DSI was formed in 1980 and incorporated as a 501(c)3 non-profit in 1983.
a. Mission: "Downtown Salisbury, Inc. will enhance and manage the development of the central business district in a manner which will make the district the economic, governmental, social and cultural center of Rowan County. We will address the needs of impacting neighborhoods and businesses within and adjacent to the Municipal Services District. We will accomplish the above by promoting activity in economic restructuring, design, promotions, and building partnerships."
b. DSI offers a variety of services to all businesses and property owners located within the municipal service district boundaries.
i. Special Events and Retail Promotions are coordinated with the businesses in the district.
ii. Grand Opening assistance is available, including the free use of our Grand Opening sign and development of press releases, ribbon cutting events, etc.
iii. DSI promotes the downtown through Shopping Guides with a map and listing of all downtown businesses as well as through advertisements in local and statewide publications.
iv. Financial Assistance is available through Facade Grants and Tax Credits for Historic Rehabilitation.
v. Pro forma analysis and other detailed property development services.
c. The Board of Directors has eighteen (18) members. The group is composed of one member from the City Council, one County Commissioner, one City Staff member (Urban Planner), an attorney and fourteen (14) at-large seats.
d. The organization has a budget of $326,000 ($123K from "Appropriated fund balance", $60K, City appropriation and $95K, Municipal Service District Tax). The Appropriated Fund Balance is a cash balance that the DSI maintains with the proceeds from its sale of downtown buildings that either were gifted to the DSI or sold to the DSI at below-market-value.
Downtown Salisbury is often heralded as one of the most successful mid-sized Downtowns in the state. Over $60 million has been invested in the downtown since 1980. Another $15+ million has either just been completed or is underway. The Downtown has maintained a first floor occupancy rate between 95% and 97% for the last 5 years. The downtown has 100 market rate apartments in various locations. Those apartments have over a 99% occupancy rate.
Downtown Business Development Incentives
The organizations mentioned above offer a myriad of programs and incentives for developing and maintaining businesses in downtown. These are summarized below.
|
Incentive |
Where Used |
Source |
|
Revolving Loan Fund |
Carrboro Salisbury |
|
|
|
Wilmington |
DARE's Loan Program has $240,000 available for up to $10,000 in a single use building and up to $20,000 in a mixed use building. Proposals have been solicited from banks for the administration and loan collection. The program will put the $240,000 in a savings account, CD, etc. which will provide a small amount of interest for DARE's operating expenses for the loan program and provide collateral for the bank to lend the money at a very low interest rate. |
|
Municipal Service District Grants |
Salisbury |
In place since mid-80’s. Funded by the city, none last year. Typically allocates $22-25K matching grants up to 50%. Award grants up to $5K through Committee. Over $5K goes to City Council. |
|
North Carolina & Federal Historic Renovation Income Tax Credits |
Salisbury |
Federal and state |
|
Prime Rate Loan Program |
Durham |
Nine financial institutions |
|
DDI-City of Durham Downtown Low Interest Loan Program |
Durham |
Applicants qualifying for the Prime Rate Loan Program may request the City to purchase up to one half of the loan ($500K limit) form the bank at 2% below prime. The Prime Loan Rate Program and this program are designed to work together. The result is a loan made at 1% below prime to qualified applicants. |
|
Façade Improvement and Mural Grant Program |
Durham |
Commercial and residential property eligible for grant funds up to $40000 for façade improvements or murals. |
|
Durham Historic Property Tax Deferral |
Durham |
Properties designated as “Durham Historical Landmarks” may receive up to a 50% property tax deferral based on the assessed value of the property. |
|
City of Durham Economic Development Investment Fund |
Durham |
A commercial renovation or new construction project downtown is eligible for up to 3% of the new or expansion capital investment. If the project creates at least ten full-time livable wage jobs ($9.15 in 2001/adjusted annually), it is eligible for an additional 3% incentive. Minimum new investment is $500K. |
|
Impact Fees |
Durham |
The City carved out a “Downtown District” and assigned lower impact fees to downtown than other areas. |
|
Commercial Rehabilitation Loans
(D.A.R.E.) |
Wilmington |
This program provides low-interest fixed loans at ¾ the prime rate amortized for a term of up to twenty (20) years with a balloon payment in five (5) years to ten (10) years. The maximum loan amount of $10,000.00. The funds can be used for general building renovations. This loan program and the mixed use program are Administered by DARE, Inc Program: Maximum Loan:
$10,000.00 or 20% of purchase and renovation cost (whichever is lower) |
|
Mixed use Rehabilitation Loans
(D.A.R.E.) |
Wilmington |
To encourage the development of residential used in upper floors of building, DARE offers loans of up to $20,000.00 at fixed interest rates of ¾ prime amortized over 20-30 years. Each loan has a five, seven, or ten year call. The lower interest rates and longer terms will reduce the owner's monthly debt service and will enable an owner to offer the units for monthly rents affordable to more people. The development of residential uses in the Downtown Redevelopment Area will provide for utilization of upper floors of buildings and contribute to the redevelopment of offices and retail shops on the ground floors. Maximum Loan: $20,000.00 or 20%
of purchase and renovation costs (whichever is lower) |
Pros and Cons of Creating a Separate Development Organization
Reasons to Combine Functions:
1. If there is not one organization at the outset, it will become more difficult to merge them in the future.
2. The Downtown Commission has asserted that they are capable of taking on the additional responsibilities of economic development.
3. Continuation of services-it will take at least six months to get a new office up and running.
Reasons to Separate Functions:
1. It is important that the downtown economic development effort receive the focused attention of the person who is hired to lead this effort. If the person were hired as the new director of the Downtown Commission instead of the director of a new Downtown Development Corporation, too much of his/her time probably would be spent supervising the staff person in charge of the promotional, events planning, and merchant relations functions currently carried out by the Downtown Commission.
2. The economic development organization needs to be structured much differently than the Downtown Commission, which would lead to a significantly reduced voice for the current Downtown Commission members. Specifically, the economic development organization needs to have a small, nimble board with a much different composition than the current Downtown Commission. Indeed, out of a possible board of 11-16 members, it is possible that only one downtown landowner and one downtown merchant would be represented.
3. The mission of the downtown economic development effort will include, in part, the goal of changing the retail mix downtown. As a result part of the goal is to see some of the downtown’s current tenants replaced with other tenants. This will cause, inevitably, some tension between current merchants and the new downtown development organization. For the first few years of this effort, it would be best if this tension were not built into the organization and merchants had an organization of their own to lobby for their interests.
4. There may come a time in the future that it will make sense to merge the Downtown Commission and the Downtown Development Corporation, but it would be best to let the Downtown Development Corporation grow into its role before this happens. The Downtown Winston-Salem Partnership (DWSP) is the result of a merger between a downtown development corporation and a merchants association, but that merger did not happen for several years after the establishment of the development corporation. And, in any event, most of the DWSP’s economic development efforts are carried out by a Winston-Salem city employee within the city’s Development Office.
If a separate downtown development corporation were created, the following structure is recommended:
Name: Downtown Chapel Hill, Inc. (DCHI)
Form: 501(c)3 non-profit corporation
Functions:
Financing: Pubic-private
Ø Majority public
o Possible Sources
§ Town of Chapel Hill
· Redirect some of Downtown District Tax
· Redirect some of money going to Orange County for Visitors Bureau and EDC
· Increase the Downtown District Tax
o University of North Carolina
§ Donate office space
§ Help secure private sources
Ø Minority private
o Donations solicited by the executive directors for parties with an interest in maintaining and redeveloping downtown.
Budget: Approximately $150,000 a year. This budget will provide for a full-time Executive Director and a full-time Administrative Assistant in addition to rent, office supplies and travel allowance.
Board of Directors:
Ø The Board of Directors will have 11 members, the majority of which will be appointed by the Town Council.
Ø Community members representing the following areas of expertise:
o Law (law degree and experience practicing real estate law required)
o Commercial real estate (experience as commercial real estate broker required)
o Financial accounting (accounting degree, CPA certification and experience in financial accounting required)
o Marketing (MBA and marketing experience required)
o Commercial development (at least 5 years experience as a commercial developer)
o Environmentalists
Ø Community members representing the following organizations:
o The Downtown Commission/Chamber of Commerce
o Visitor’s Bureau
o Downtown Congregations
o IFC
o Neighborhood groups, i.e. Northside and Westside
Ø A County Commissioner
Ø The Board of Directors will elect a president, vice president, treasurer, and secretary, who will serve as the officers of the corporation. The officers will comprise the Board’s Executive Committee.
Recommendation #2: Increase residential presence downtown
If there were more opportunities for people to live downtown, this would have a direct effect on transportation and sales. To create these opportunities the Town should review with interested developers building code provisions that allow development of airspace above retail locations, including re-evaluation of existing provisions for TC-1 and 2.
Recommendation #3: Use of Town-Owned Property
The existing Chapel Hill Court site in the Old Post Office is an important part of downtown. Court operations cannot be run without the Chapel Hill facility. Though rumors persist that the County will site a criminal justice center on Homestead Road, it is necessary to consider the client base served by the downtown court facility. Most of the citizens who use the facility are student defendants with traffic and alcohol violations. The court facility as it exists is acceptable, but the Town and County should enter into discussions about modernization and expansion of the facility. Some additions would be a research library with LEXIS and WestLaw access and at least one conference room for mediations and attorney/client conferences. The taskforce encourages the Town to participate on the County’s Justice Facilities Use Committee.
Recommendation #5: Support IFC Planning
The taskforce recognizes that panhandling is an issue separate from the mission of the Interfaith Council (IFC). Those served by the IFC can benefit from Town support of mental health and affordable housing initiatives. Therefore the taskforce encourages the Town to request that the County provide additional funding for Community Resource Court (see Attachment 3) since federal and state funding for mental health will diminish over the next few years and that the County lift the moratorium on Section 8 Housing in Chapel Hill. The taskforce would also like the Town to encourage development of more transitional housing in Chapel Hill.
Recommendation #6: Transportation
The staff provided information regarding parking in other college towns. There was very little difference in the parking fees for lots and on-street parking. Some of the towns did offer free downtown parking after 5 p.m. one or two days a week. However, Chapel Hill provides free parking after 6 p.m. on-street and in the other parking lots. This does not apply to the Wallace Deck.
However, the Committee determined that the Town could work to improve parking logistics. These include:
Recommendation #9: Implementation
The taskforce understands that this will not be an overnight process. Input from other downtown constituencies and the general public is crucial. The taskforce recommends that the Town Council schedule a Work Session in September to discuss this report and draft a response. In the interim, we suggest the Council solicit written responses to this report from the general public which can be reviewed during the summer break and considered along with this report during the Work Session.