CLOSED SESSION OF THE CHAPEL HILL TOWN COUNCIL

WEDNESDAY, AUGUST 4, 1999 AT 5:10 P.M.

Mayor Rosemary Waldorf called the Closed Session to order at 5:10 p.m.

Council Members present were Flicka Bateman, Joyce Brown, Joe Capowski, Pat Evans, Kevin Foy, Julie McClintock, Lee Pavão, and Edith Wiggins.

Staff members present were Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller, Town Attorney Ralph Karpinos, and Town Clerk Joyce Smith.

Mayor Waldorf invited visitors to leave.

Mayor Waldorf indicated that Anne Stoddard, representing Capital Associates, wanted to address the Council. Ms. Stoddard and Attorney Robert Marcus were invited to join the Council.

Ms. Stoddard indicated she was available to answer questions or provide information as necessary.

Council Member McClintock asked them to remain nearby so that questions could be asked if necessary. Ms. Stoddard and Mr. Marcus left the room.

Mayor Waldorf indicated Capital Associates had offered three options for the Council's consideration. She noted that Ms. Stoddard had made it clear that any one of those three options would be agreeable to Capital Associates but that they could not be combined.

Mayor pro tem Capowski asked Mr. Karpinos the meaning of paragraph 3 under proposal "A". He asked if it meant that the entire Meadowmont project was being reduced, or just the office park was being reduced which could be made up through some other component of the Meadowmont development. Mr. Karpinos answered it was a reduction of 22,500 square feet of the office project.

Council Member McClintock said that meant they were proposing reducing the office park square footage, but could add it somewhere else. Mr. Karpinos said that was the way he had interpreted it.

Mr. Horton said there would be a small amount of office area in the Hilltop project, and that Roger Perry, the developer, had indicated he would not want to be penalized by making the reduction here then having it held against him elsewhere. Mr. Horton said the issue about the ratio came from Roger Perry, not from Anne Stoddard.

Council Member Evans said she wanted clarification from Ms. Stoddard that the interpretation of paragraph 3 under proposal “A” was correct. Mr. Karpinos said a minor change would have to be made to the Master Plan to reflect the change in the office park.

Council Member Brown asked if this change in the Master Plan was only for the square footage in the office space or in the square footage for the entire project? Mr. Horton said it would reduce the total allowable office space for all office development within the project.

Council Member Evans asked if Mr. Perry would have to request a modification to the Special Use Permit. Mr. Horton said if the Master Land Use Plan was modified, it would have to be requested by Roger Perry.

Mayor pro tem Capowski asked if proposal “A” as written would allow Mr. Perry to delete 22,500 square feet from the south side of Raleigh Road, but allow him to build it on the north side? Mr. Karpinos said it does not specifically address where it would be added, but says that that particular project would be reduced by 22,500 square feet.

Mayor pro tem Capowski asked if there was a limit on the total number of square footage for office space. Mr. Horton said yes, for the entire project, not just this office site.

Council Member McClintock said the Council needed to agree on their position and the best strategy for presenting that position.

Council Member Evans said she had called the Orange County Economic Development Commission to discover the vacancy rate for office space in Chapel Hill, and at present the vacancy rate is 1.3%. She said that she remembers when the retail vacancy rate was 3% for Orange County. Council Member Evans said that 3% represented space that was typically not attractive space, so the 1.3% now vacant may be undesirable space. Council Member Evans said this means there is a large demand for all types of office space, and this office park would be upscale space that would free up more moderate space for others.

Council Member McClintock said she did not believe that was a paramount priority.

Mayor Waldorf asked how many Council Members were interested in the absolute reduction of 22,500 square feet in the Meadowmont development.

Council Members Bateman, Brown, Capowski, Foy, and McClintock raised their hands.

Mayor Waldorf asked Mr. Karpinos how this could be done. Mr. Karpinos said on page 3, the first page of Resolution A, the final WHEREAS clause could be amended to read, “WHEREAS, upon the acceptance of the terms of this Resolution by the Developer and the other terms referenced in the Memorandum of August 4, 1999, from the Town Manager and Town Attorney, and upon the Developer of Meadowmont applying for and receiving approval of a minor change to the Master Plan to reduce the total approved office space by 22,500 square feet, the Town Council authorizes and directs that its appeal of the pending litigation shall be withdrawn.”

Council Member Brown asked for clarification of item 3 on the second page of Resolution A under “Stipulations Required for Settlement of Litigation.” Mr. Karpinos said that number refers to the requirement of a 60/40 ratio from office to commercial, and that this reduction does not affect the requirements for this ratio.

Council Member McClintock said that looking at Mayor pro tem Capowski's proposal, she concluded that proposal “A” reduces the parking by 86 spaces, but the overall ratio is higher.

Mayor pro tem Capowski said that the number of parking spaces proposed did not appear to be pedestrian/bicyclist/transit friendly. He said Capital Associates is asking for 2-1/2 times more parking than in eleven previous projects they have built.

Council Member Evans asked if these buildings are contracted to be built for certain types of business? Mayor pro tem Capowski said no. Council Member Evans noted that certain businesses require more parking than others.

Mayor Waldorf asked if any of the Council wanted to pursue the parking analysis prepared by Mayor pro tem Capowski, or did the Council want to accept either proposal A, B or C as is. She said all the Council could do was speculate about what Capital Associates might do.

Mayor pro tem Capowski said the Master Land Use Plan did not specify the amount of parking required. He said that Capital Associates’ argument is that these plans must conform to the Master Land Use Plan. Mayor pro tem Capowski asked since parking was not specified under the Plan, wouldn't an office building of 951 space or one with 643 spaces be equally consistent with the Master Land Use Plan? Mr. Horton responded that he did not believe that was correct, and offered to have Roger Waldon, Planning Director, come in and comment on that.

Council Member McClintock said she is convinced that there is more parking being proposed than is actually needed, and in the spirit of trying to improve the project, she would like to ask for additional reductions in the amount of parking so that some of the impacts could be mitigated.

Council Member Bateman said that those points had been made to the applicants on several different occasions.

Mayor pro tem Capowski noted that other projects by Capital Associates existed without extensive parking.

Council Member Foy said that if the size of the building was cut by 15%, then the number of parking spaces should be cut by 15%. He said he wanted to explore the possibility of reducing the spaces by some additional number.

Council Member Brown asked about the contribution to affordable housing, noted she thought the amount was larger. Mayor Waldorf responded that the total was $50,000, with $25,000 coming from Mr. Perry, $12,500 from the office park, and $12,500 from the hotel.

Mayor pro tem Capowski said the affordable housing contribution was extremely low, considering the potential revenue from this project is projected to be $5 million annually.

Mr. Horton said he believed the language regarding the ratio needed to be strengthened under number 3 on page 4. He said that language should be considered to add that the overall project size be reduced from 225,000 square feet to 202,500 square feet and the reduction would not be used to reduce the allowable amount of commercial space.

Mr. Waldon entered the closed session.

Mr. Horton asked the Mayor to get agreement from the Council as to what will be asked of Ms. Stoddard and Mr. Marcus when they return.

Council Member McClintock said the Council should ask for an additional 51 space reduction in parking, reducing the total number of parking spaces to 814.

Council Member Bateman reiterated that Ms. Stoddard had indicated previously that they could get by with a reduction in spaces.

Mr. Horton suggested putting this on the table in a firm manner and see what the reaction is.

Council Member Wiggins asked if these spaces were in the deck or surface parking. Council Member Foy said surface parking. Council Member Wiggins said that may leave more space for landcaping and plantings.

Mayor Waldorf asked if there was a majority of the Council who desired the additional reduction in parking. There was general consensus.

Ms. Stoddard and Mr. Marcus were asked to join the Council.

Mayor Waldorf stated that proposal A was the focus of interest, but had a couple of language suggestions that the Council felt would create greater clarity. She asked Mr. Karpinos to state the revisions under discussion.

Mr. Karpinos said on page 3 of the memorandum, which is the first page of resolution A, under the last WHEREAS clause, the question came up if the reduction in office square footage could be made up elsewhere in the Meadowmont development. He said to make sure that was not what was intended, that clause would be amended to read: “WHEREAS, upon acceptance of the terms of this Resolution by the Developer and the other terms referenced in the Memorandum of August 4, 1999, from the Town Manager and Town Attorney, and upon the Developer of Meadowmont applying for and receiving approval of a minor change to the Master Plan to reduce the total approved office space by 22,500 square feet, the Town Council authorizes and directs that its appeal of the pending litigation shall be withdrawn.”

Ms. Stoddard stated her conversations with Mr. Perry indicated he did not want to be put at risk. Mr. Karpinos said that Mr. Perry would have to apply for a minor change to the Master Land Use Plan.

Mr. Karpinos said that on page 4, the second page of Resolution A, under number 3, the last sentence should read: “The overall project size will be reduced from 225,000 square feet to 202,500 square feet (10% or 22,500 square feet), with the specific reductions in one or both of the buildings to be resolved with the Manager during the ZCP phase. This reduction in office space square
footage will not impact the office/commercial ratios required for the overall Meadowmont development and the reduction will not be used for the purpose of reducing the allowable development of commercial space.”

Ms. Stoddard said that was not their intent.

Mayor Waldorf referred to the July 30 letter from Mr. Marcus. Ms. Stoddard said this was just a technical change. Mr. Horton said he did not characterize this as just a technical change. Ms. Stoddard said they felt it offered greater flexibility in reducing the square footage from one building to another, since one building is four stories. Ms. Stoddard said they would like to reduce either one building or the other, not take some square footage from both buildings.

Council Member Evans said the Council might gain less impervious surface if they allow that flexibility.

Mayor Waldorf said the Council was comfortable with proposal "A" except for point number one, which was that the total parking spaces be reduced by 86 to a total 865. She noted that earlier discussions had indicated that would be possible. Ms. Stoddard said she would not be willing to negotiate this point, that she was not willing to reduce the number of parking spaces from 865 to 814, or to any other lesser number.

Council Member Bateman said that during earlier discussions, this seemed to be negotiable. Ms. Stoddard said those earlier discussions were no longer valid, and they were no longer comfortable with reducing the spaces any further.

Council Member Foy said that from the Council's point of view, the building required 951 spaces, but the building is being proposed to be 15% smaller, so it would seem that a reduction of 15%, or 51 spaces, would be acceptable. Ms. Stoddard said the tradeoff is that with a smaller building, the economics get tighter, so that the fixed costs are spread over a smaller area. She said that she must meet the market demand, and she is in a different position with a smaller building.

Mayor pro tem Capowski asked if she was saying she could not market this office space with 814 parking spaces. Ms. Stoddard said the risk was unacceptable.

Mayor pro tem Capowski stated he had taken information from Capital Associates’ web site and calculated the parking spaces available for each of those sites. He said they are asking for over four times more parking area for this project than for those he had researched. Ms. Stoddard distributed a chart which showed how office space is used. She indicated that the projects Mayor pro tem Capowski had researched had been built prior to 1994 when the market was different. She said they had recently sold many of those buildings because of the lack of parking, which was affecting their ability to lease the office space. Ms. Stoddard said some of the buildings in Mayor pro tem Capowski's chart were in downtown Raleigh where adequate nearby parking already existed. She reiterated she was not willing to reduce the number of parking spaces.

Mayor pro tem Capowski said that there is virtually no vacancy in office space in Orange County. Ms. Stoddard said that is basically correct at this time, but there is no guarantee that that trend will continue.

Mayor pro tem Capowski said that Ms. Stoddard's information indicated that this project will be pedestrian, bicycle and transit friendly, but he does not believe the parking ratios back up that statement. Ms. Stoddard disagreed. She said she had been consistent with her statements that they were willing to accommodate the Town's goals in offering different methods of transportation, but they still wanted to accommodate those who wanted to drive their car.

At the Mayor’s request, Mr. Karpinos reiterated the language changes to Resolution A:

Mr. Karpinos said that on page 4, the second page of Resolution A, number 3 should read: “The overall project size will be reduced from 225,000 square feet to 202,500 square feet (10% or 22,500 square feet), with the specific reductions in one or both of the buildings to be resolved with the Manager during the ZCP phase. This reduction in office space square footage will not impact the office/commercial ratios required for the overall Meadowmont development and the reduction will not be used for the purpose of reducing the allowable development of commercial space.”

Mr. Karpinos said that on page 3, the first page of Resolution A, the last WHEREAS should read: “WHEREAS, upon acceptance of the terms of this Resolution by the Developer and the other terms referenced in the Memorandum of August 4, 1999, from the Town Manager and Town Attorney, and upon the Developer of Meadowmont applying for and receiving approval of a minor change to the Master Plan to reduce the total approved office space by 22,500 square feet, the Town Council authorizes and directs that its appeal of the pending litigation shall be withdrawn.”

Mr. Marcus noted they would have to confer with Mr. Perry about that language amendment.

Ms. Stoddard and Mr. Marcus left the room.

Mayor Waldorf asked if the Council wanted to discuss where the reduction in square footage would take place, for instance in the first building, the second building, in the first building built, or any other scenario. Council Member McClintock said there was a good opportunity to have a reduction in imperious surface.

Mr. Horton said he did not believe it mattered where or how the square footage was reduced.

Mr. Karpinos noted that the language change suggested by the applicant in their July 30^th letter could be incorporated into the resolution.

Council Member Foy asked if the developer decided he wanted to add the 22,500 back at a later date, could he do that. Mr. Horton said it would require a modification to the Special Use Permit.

Mayor Waldorf asked if there was a majority of the Council who wanted to make this amendment to number 3. There was no objection.

Council Member McClintock said she was disappointed that the Council's request for a reduction in parking was dismissed out of hand. She said statistics show that people will not use alternate transit unless parking is limited.

Council Member Foy said the Council could pass the resolution with 814 parking spaces, but he did not want to do that.

Council Member Evans said the Council must think about the next step, and if they want to continue the lawsuit and delay the development. She said she believed Ms. Stoddard had indicated that this was her bottom line.

Council Member Brown asked if the Council wanted to settle the issue of the parking spaces tonight. Mayor Waldorf said she preferred that it be settled tonight and the Council move into open session and adopt the resolution.

Council Member McClintock said another avenue would be to not act tonight. She said the Council had made a reasonable offer.

Council Member Foy said he believed the Council would have to give a clear indication of what they would accept. He said that every parking space that was not available would decrease traffic on NC 54. Council Member Foy said that less parking would force less single occupancy vehicles traveling to the development. He said he did not believe reducing the parking would damage the development.

Council Member Brown asked what the process would be. Council Member Foy said to move the resolution and adopt it.

Mayor Waldorf said the choice was to adopt the resolution with a reduction in parking spaces, or to inform Ms. Stoddard of the Council's wishes and discuss it further.

Council Member McClintock said she believed the Council would have to be prepared to vote.

Council Member Wiggins said there was some advantage to the compromise, in that the project would not be delayed and they would not have to go back to court. She said she was prepared to vote for a total of 850 parking spaces.

Mr. Horton said the Council could say that they were willing to accept the language amendment suggested in Capital Associate’s July 30 letter and the Council’s suggested language amendments, with 850 parking spaces, and that the Council was willing to issue the permit tonight.

Mayor pro tem Capowski said the changes that have been proposed are actually very small.

Council Member Bateman said she did not believe the Town would win on appeal if Ms. Stoddard refused the Council's offer.

Council Member McClintock said that a permit in hand now is worth more than a permit won a year from now. Council Member Bateman replied that she did not believe Capital Associates would negotiate further.

Mayor pro tem Capowski said he believed that if the Council really wanted to reduce the parking, they should vote to reduce the parking to 814. Council Member Bateman said she would vote for 850.

Council Member Foy stated he would move resolution A with the attorney's changes as amended, and with the stipulation that the parking spaces be reduced to 850, for a total of 101 reduction.

Council Member Evans said she would vote for it if it was acceptable to the applicant, but would not if the applicant opposed it.

The Mayor suggested a straw vote before moving into open session. The straw vote was 8-1, with Mayor pro tem Capowski voting Nay.

Mayor Waldorf reiterated that they would tell the applicant that they would support resolution A with the language proposed by the Attorney, and the substitution proposed by the applicant, and with the parking reduced to 850, with a vote of 8-1.

Council Member Foy said the Council needed to be clear that they strongly endorsed this proposal.

Mayor pro tem Capowski said he believed the Council seemed to be in a hurry to get this over with, and to support a proposal with such small concessions says that the Council must feel differently about what they want for Chapel Hill that they did six months ago. He said the concessions are small and he did not want his name associated with a development that he was unhappy with.

Ms. Stoddard and Mr. Marcus entered the room.

Mayor Waldorf stated that a significant number of the Council had agreed to support Resolution A with the attorney's suggested changes, with the applicant's suggested change, and that the parking spaces be reduced to 850. Ms. Stoddard stated they had put a lot of thought into the proposals, that conceptually they all had the same goal, but she was not willing to reduce the number of parking spaces.

Council Member McClintock stated that the Council was prepared to adopt the resolution tonight with those changes. Ms. Stoddard reiterated that she would not accept a reduction to the 865 parking spaces.

Ms. Stoddard and Mr. Marcus left the room.

Council Member Evans noted that since the applicant would not accept the reduction in parking spaces, she would not support the resolution.

Council Member Foy said he believed that once Ms. Stoddard took the proposal back to her investors, that they would compromise so that the project could go forward.

COUNCIL MEMBER BROWN MOVED, SECONDED BY COUNCIL MEMBER PAVÃO, TO ADJOURN THE CLOSED SESSION AND MOVE INTO OPEN SESSION. THE MOTION WAS ADOPTED UNANIMOUSLY.

The Closed Session was opened and the meeting was adjourned at 7:00 p.m.

The minutes of August 4, 1999 were adopted on the 11^th day of October, 1999.

__________________________________________

Joyce A. Smith, CMC

Town Clerk