SUMMARY MINUTES OF A WORK SESSION

OF THE CHAPEL HILL TOWN COUNCIL

WEDNESDAY, OCTOBER 8, 2003 AT 5:30 P.M.

Mayor Kevin Foy called the meeting to order at 5:30 p.m.

Council members present were Flicka Bateman, Pat Evans, Ed Harrison, Mark Kleinschmidt, Bill Strom, Dorothy Verkerk, Jim Ward and Edith Wiggins.

Council Member Verkerk arrived at 6:25 p.m.

Staff members present were Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller, Senior Long Range Planning Coordinator Chris Berndt, Planning Director Roger Waldon, Senior Planner Than Austin, Assistant to the Mayor Emily Dickens, and Town Clerk Joyce Smith.

Item 1 - Work Session on Downtown Issues

1a. Report from the Mayor's Downtown Taskforce.

Mayor Foy reviewed the University Retail Group's (URG) Executive Summary of recommendations listed on page two of the Manager's report.  These were:

1. Hire a qualified professional with the single purpose of orchestrating the renaissance of downtown retail for all the Citizens of Chapel Hill.  The ability of this person to be credible to bankers, property owners, merchants, customers, Town officials and University administrators is paramount.

2. Develop a "real main street" of substantive merchants selling clothes, shoes, accessories, jewelry and gifts to people of all ages.

3. Develop multiple concept areas with their own special focus and constituencies on Franklin and Rosemary streets.

4. Bring a bookstore downtown that serves as the anchor or centerpiece.

5. Property owners, as the key to a successful downtown, should be encouraged to take a more progressive and long-term approach to their real estate holdings.

Mayor Foy then listed the Downtown Task Force's recommendations, noting that they concur with those of the URG.  The Task Force's recommendations were: 

1. New Downtown Management Model, a Downtown Development Corporation headed by an executive director.

2. Increase Residential Presence Downtown.

3. Review use of the old municipal building and means to support Interfaith Council (IFC) planning.

4. University-Owned Property.

5. Support IFC Planning.

6. Transportation issues.

7. Multi-Street Downtown.

8. Encourage modern building standards.

9. Implementation. 

Mayor Foy indicated additional materials attached to the report:

Attachment 1:     Downtown Economic Development Programs in College Towns (p. 19), part 1, part 2, and part 3.

Attachment 2:     September 25, 2003 Letter from UNC Chancellor James Moeser regarding the University’s Commitment to Economic Revitalization and Downtown Redevelopment (p. 32).

Attachment 3:     Chapel Hill Downtown Commission’s Proposal for a New Economic Development Entity (p. 44).

Attachment 4:     Draft Proposal for Economic Development Consultant (p. 48).

Mayor Foy said that the letter from UNC Chancellor Moeser set forth specific ideas about the University's potential involvement.  These included a commitment of intellectual capital and a commitment of financial capital, he said.  Mayor Foy pointed out the Downtown Commission's proposal for a new economic development entity.  He noted the draft proposal for an economic development consultant, Stainback Public/Private Real Estate, LLC, to help devise the model for Parking Lots 2 and 5.  Mayor Foy remarked that the staff had done an excellent job in negotiating a potential contract that gives the Town the ability to move forward with breakpoints where it can decide whether and how to make further financial commitments. 

1b. Discussion.

Mayor Foy suggested trying to reach consensus by the Council on how to progress.  He recommended that Council members, in collaboration with the University and the private sector, form a small work group to devise and specify the model that would become the long-term downtown development entity.  Mayor Foy noted that this seemed acceptable to the University, which had repeatedly indicated a willingness to commit resources immediately.  He pointed out, however, that there was not yet a vehicle for the University to do that.  Mayor Foy recommended that the Council create an entity that could draw on the Business School's and the Institute of Government's expertise and resources. 

Mayor pro tem Evans agreed that it was very important to have all three entities support what the Council does.  She suggested calling it a steering committee rather than a work group because that would give it more direction.  Mayor pro tem Evans stated that this was the direction the Town should take.  Mayor Foy agreed with the suggestion to call it a steering committee.

Mayor Foy suggested discussing this in the context of the Task Force's report.  And, he added, the staff might benefit from hearing the Council's thoughts on the proposal for an economic development consultant.  Town Manager Cal Horton acknowledged that it would be helpful to have the Council's guidance on that. Mayor Foy suggested that the Council discuss first the Task Force recommendation for a downtown management structure that the Town, University, and private sector would all invest in.

Council Member Ward asked why not consider economic development needs beyond the downtown area.  This seems like an opportunity to coordinate what will be going on downtown with other commercial/retail economic activities, he said, adding that doing so would create synergy rather than competition.  Mayor Foy replied that the downtown area was a unique resource, in part because of its diverse ownership.  Other areas of the commercial sector with which downtown competes do not have the same difficulty in unifying efforts to address problems that the downtown has, he said.

Mayor Foy noted that University Mall, for example, had been able to change its image, but the downtown cannot respond to market forces in that way.  Mayor Foy pointed out that the Town, the University, and the public sector were significant owners downtown.  If these interests do not help guide it then they would be negligent, he said.  Council Member Ward replied that he understood but suggested that the mission statement not preclude conversations about the Estes Drive part of East Franklin Street, for example.  Some people might see that as downtown, he explained.  Mayor Foy predicted that the steering committee would come back in a relatively short period of time with specifics.

Council Member Strom commented on the scope of work statement in Attachment 3.  Its recommended market demand study was vital for whatever the steering committee recommends, he said.  Council Member Strom added that the study was also vital for the Town as it commits a significant amount of financial and other resources toward developing the downtown.  He noted that there would be many opportunities for the Council to digest information and to decide whether or not to continue before committing more resources. 

Council Member Strom endorsed the idea of creating a steering committee, stressing that the timeframe should be short.  He argued that it was essential for the steering committee to focus on downtown because the success of economic development hinges on a narrowly defined focus and scope that the Council can track and evaluate.  Council Member Strom stated that the committee should be a nimble one that can communicate with other commercial entities in Town.  It should not have a huge bureaucracy and overhead, he said, and should be out there making things happened.

Mayor Foy commented that the ideas being put forward by the Task Force and the University, and implied in the Stainback market study, indicate that the Town might be asked to make decisions about land use that are different from what exists there now.  He pointed out that demographics would need to support those things.  The Council should be aware of what it's embarking upon, said Mayor Foy, adding that the Council would be doing more than just testing the waters.

Council Member Bateman stated that she did not want this endeavor to be an extension of the Town.  The opinion of the person hired must be respected, she said, and the person should not be fired if his or her conclusions do not reflect the Council's philosophy.  Council Member Bateman commented that politicians do not have that much expertise and that it would not make economic sense to not give the person autonomy.

Mayor Foy replied that comments such as Council Member Bateman's are helpful when moving forward.  The steering committee would work with the Business School and the Institute of Government, he said.  Mayor Foy pointed out that his assistant, Emily Dickens, had looked at many communities in North Carolina to understand the structure of their downtown management groups.  He agreed that the Council needed to balance the Town's interest as a property owner and a funder of this entity with the person's ability to have autonomy, he said.  Mayor Foy added that this means s/he cannot be reporting to the Council every week.

Council Member Bateman read a statement on page 3:  "Recognizing that there may be State regulations that would hinder such development, the Task Force recommends the creation of a prototype of second floor residential development that could be used as a model for local owners and developers."  She stated that it did not make sense to recommend a model that it knows “can't pass muster."   Mayor Foy replied that someone with expertise had helped craft that statement.  There might be ways to deal with whatever the State code issues are, he said, adding that it should also be demonstrated if barriers are not legitimate.

With regard to lifting the ban on Section 8 in Chapel Hill, Council Member Wiggins remarked that there was no such ban and characterized that as an incorrect statement. Mayor Foy replied that Section 8 had been frozen so that no one could get on the list, adding that there simply was no more Section 8 housing available. Council Member Wiggins said that people could get on the list but that the County director had said that was misleading and disingenuous because there was no hope of ever getting Section 8 housing.  Council Member Wiggins noted that some of those who are on the list have Section 8 vouchers but cannot find housing. So there really is no ban on Section 8, she said, there is just not enough housing for people who qualify.  Town Manager Cal Horton agreed that this assessment was correct.

Mayor pro tem Evans remarked that all of the topics covered on pages 2, 3 and 4 were merely recommendations.  There were some inaccuracies, she said, but these were not mandates from the Council.

Mayor Foy pointed out that the steering committee would receive the Council's discussion, the Task Force's recommendations, the University's written commitments, and the Downtown Commission's input.

Council Member Ward asked Mayor Foy if he viewed the steering committee as a subset of the Task Force that he had chaired.  Mayor Foy replied that he did not see it that way but would request that the Council appoint him and the Town Manager to the steering committee.  The Task Force had also suggested that UNC appoint two representatives and that the private sector appoint two people as well, he said. 

Council Member Ward asked how far the steering committee would advance this before the Council had another discussion.  Mayor Foy replied that all three groups probably would be ready to agree to a specific recommendation by April 1, 2004.

Council Member Kleinschmidt inquired about how the downtown members would be chosen. Mayor Foy said that he assumed the Downtown Commission would identify representatives.

Council Member Kleinschmidt noted that Mayor Foy had articulated concerns about variant downtown interests when he first commissioned the Task Force.  Downtown interests varied not just between property owners and merchants but among people within those groups, he said.

Council Member Wiggins asked for clarification of who would be making those choices. Mayor Foy replied that he viewed it as three separate prongs that will support the entity.   If any one of them does not buy in then it might not work, he said.

Council Member Ward suggested that it might take more than two people to represent downtown interests.  Downtown should not be limited to two just because the Town is represented by two, he said.  Council Member Bateman agreed, and Mayor pro tem Evans suggested perhaps taking three from each group and making it a nine-member steering committee rather than six.  Nine was a workable group, she said, noting that there were nine Council members.

Council Member Ward pointed out that the steering committee would arrive at a consensus rather than a majority opinion and that the three sides did not need equal representation.  Having the Mayor and Town Manager represent the Town was fine with him, he said, adding that having more than two people represent the downtown would be okay as well.  Mayor Foy agreed that decisions would be made by consensus rather than voting.  He also agreed with Council Member Ward's comment about the three sides not having to be equal.  

Council Member Harrison established that the steering committee would be a short term one.  Mayor Foy explained that both the Town and the University needed a model by April 1^st in order to plan their budgets.  Everyone wants this to start, he said, so the committee might come back in January with a suggested direction so that they can get feedback and start implementation.  Council Member Harrison asked where the economic development consultant would fit into the plan.  Mayor Foy replied that Stainback's information would be critical to the overall investment.  Council Member Harrison verified with Mr. Horton that information from Stainback would be made public.

Council Member Strom remarked that the first step in the contract dovetails with the timetable and formulation of the steering committee.  It would come back with a smorgasbord of issues that could be studied, he said, adding that the steering committee and the partners would have had a thorough discussion about what they wanted to study.  Council Member Strom said that the Town would use the economic viability of the various areas studied as a guide to devise plans for what the buildings would actually look like. 

Council Member Strom stated that the degree to which the Council wanted public space would have a large impact on what the economic model would look like.  Once the Council has the market demand study data, it will be able to act with certainty, he said.  Council Member Strom requested that others on the committee and Council comment on the contract so that the Council can move ahead. He noted that the timetable for completing the first phase was about five months.  Council Member Strom added that approving the contract in October would mean finishing in February or March, which would dovetail nicely with the timetable for the steering committee.

Mayor Foy suggested discussing the contract.

Council Member Ward expressed support for the contract that was before them, which, he said, outlined the right people and the right process.  He recommended initiating that contract in order to get useful information in a timely fashion.

Mayor pro tem Evans expressed support for the consultant's recommendation for a market analysis, noting that one can be adapted to various and disparate areas of downtown.  She pointed out that the Council would have an opportunity to stop this at many different places.  There was no question in her mind that the committee had selected the strongest consultant and that he would do a very fine job with the partners that he's selected, she said. 

Council Member Dorothy Verkerk arrived at 6:25 p.m.

Council Member Bateman inquired about the spreadsheet on page 57.  Mr. Horton explained that it showed that the total cost to the Town, if both lots were developed and Stainback were the construction representative, would be $831,000.

With regard to Step 56/Part 4/Page 57, Council Member Bateman asked if the Council would be the owner's representative.  Mr. Horton replied that it would and that the Council would not move forward unless the project was economically feasible and the Council could recover the costs. 

Mayor Foy noted that this was based on a $40 million investment.  Mr. Horton pointed out that the Town had not done an economic development study.  The Town did not know what size development might work or what type of development the Council might choose, he said, so that number is somewhat speculative.

Council Member Strom added that the only circumstance in which that huge fee would be paid was when the contract had been signed, the project had become a reality, and the Town was certain of the outcome.

Council Member Bateman pointed out that she was one of the three Council members who had not been on the Task Force, adding that if she was going to vote on this, she wanted to be certain she understood it.   Mr. Horton explained that the staff had worked under the presumption that the Council would be judicious at each stage, would carefully consider the community's interests, and would move ahead only if the opportunities and potential benefits made sense and seemed to justify the risks involved.  He pointed out that things could always go wrong but that risk can be minimized.  Mr. Horton added that Mr. Stainback had been particularly well prepared to help identify risks and to help the Council choose among options.

Council Member Strom asked Mr. Horton to comment on opportunities for public comment. Mr. Horton explained that everyone the Town works with is always surprised at first at how important the Town's public process is and how seriously the Council takes it. An opportunity for public comment had been built into every step, he said, adding that it would be handled much like budget deliberations. Mr. Horton explained that Mr. Stainback understood that he might need to devote additional time to this even though he thought it was unusual.

Mayor Foy proposed that the Council formally state that they want to go forward on the steering committee and consultant and they want him and Mr. Horton to represent them on it.  He suggested that Council members say they want the University and the private sector to collaborate with the Town.  Mayor Foy also recommended that the Council ask for a final recommendation on or before April 1, 2004, with interim reports on a regular basis. 

COUNCIL MEMBER STROM MOVED, SECONDED BY COUNCIL MEMBER WARD, THAT THE STEERING COMMITTEE GO FORWARD WITH TOWN MANAGER CAL HORTON AND MAYOR FOY AS TOWN REPRESENTATIVES, AND THAT IT INCLUDE REPRESENTATIVES FROM UNC AND THE PRIVATE SECTOR, TO COMPLETE WORK BY APRIL 1, 2004, AND TO BRING INTERIM REPORTS BACK TO THE COUNCIL.  THE MOTION WAS ADOPTED UNANIMOUSLY (9-0).

Mayor Foy proposed that the Council also tell the Manager that it is pleased with the contract with Stainback and want him to proceed with that.  Mr. Horton said that the staff would bring something formal back for Council action at its next regular business meeting on October 27, 2003.

COUNCIL MEMBER STROM MOVED, SECONDED BY COUNCIL MEMBER WARD, THAT THE MANAGER PROCEED WITH THE CONTRACT WITH STAINBACK PUBLIC/PRIVATE REAL ESTATE, LLC, WITH FORMAL ACTION AT THE COUNCIL'S REGULAR BUSINESS MEETING ON OCTOBER 27, 2003.  THE MOTION WAS ADOPTED UNANIMOUSLY (9-0).

Mayor Foy thanked Task Force members for spending so much time on the proposal.  He particularly thanked Beverly Scarlett, Vivian Olkin and Jonathan Howes, who represented UNC, and Charles House, Chair of the Downtown Commission, as well as other Downtown Commission board members.    

The meeting adjourned at 6:35 p.m.