Signs of ill will

You know those times when everything seems poised for success, then some hours later, relationships have frayed, the evening is in shambles, and everyone goes to bed angry? Town council had one of those nights last night.

When the meeting opened, everyone seemed in fine fettle. In talking about the proposed downtown business incubator, council members tossed around words such as “amazing,” “inspiring,” “transformative.” Later, during the discussion of amending the commercial property section of the Glen Lennox Neighborhood Conservation District, council members crowed about the process that was similarly amazing, inspiring and transformative.

Things bogged down a bit during the 2040 Long Range Transportation Plan update, and the mood soured noticeably during a discussion about Duke Energy’s decision to resume spraying herbicide to “manage non-compatible vegetation.”

But the turning point came at 10:30 p.m., when council has the option of calling it a night. Much as members hate to do that when people have waited three and a half hours to speak, most were willing to postpone the remaining items on the agenda – a couple of budget items, the towing ordinance change and a mysterious petition put forth by Penny Rich, who did not show up for the meeting – because they would need considerable discussion.

But town attorney Ralph Karpinos had to file a response in the lawsuit brought against the town over the cell phone ban’s impact on tow truck operators. He volunteered to file and response and amend it later, after the town took action at its next meeting Monday, but the mayor pushed for a resolution. The discussion went on and on and brought in tangentially related topics, as those sorts of discussions do as they begin to deteriorate: Can we limit the signage to downtown lots only? Put one sign per five spaces not per three? Make lot owners pay for the signs, instead of towing businesses footing the bill? Standardize a time limit before towing? Give towing companies time to comply?

As the tempers flared and each comment generated multiple responses, even the generally even-keel Karpinos had an edge in his voice. Understandable, given that unlike private lawyers who bill by the hour, he is on straight salary. Because of his looming deadline to file a response, he wouldn’t even be able to come in late the next day.

Around 11:30, Gene Pease pleaded for council to pass the ordinance due to the lateness of the hour and set up a task force to handle the details. Lee Storrow made a motion; Jim Ward amended it; Storrow objected; Mark Kleinschmidt overruled; Donna Bell wanted wording about compliance. Matt Czajkowski suggested the three changes be voted on separately, which Kleinschmidt sort of allowed, in a lawyerly sleight of hand, but called for the vote in reverse order: Bell’s change first, Ward’s second and Storrow’s original motion last.

All three passed, but no one seemed happy.
– Nancy Oates

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  1. Chris Jones

     /  June 1, 2012

    While I’ll be the first to admit that it’s a whole lot of fun to make fun of the neverending saga of Cell Phone Ban vs. Tow Company Regulations, I certainly want to highlight the beginning of Nancy’s post.

    Roger’s team, in having the initiative to identify and pursue this economic opportunity, bringing several different entities to the table in a model of governmental and private partnership, and the Town Council for being willing to “go out on a limb” in approving this initiative, both deserve a lot of credit. We’ve been discussing economic development in downtown, and the city at large, for years. The 2020 process brought it to the forefront as a continuously referenced theme. Town and the Council acted on this theme, grabbing a good opportunity to generate new jobs in downtown.

    This initiative is tangible proof that different entities (Town, County, UNC, the Downtown Partnership, the Chamber, and, most importantly, the business sector) can come together to make great things happen. In my humble opinion, its even more notable that this “Economic Development Initiative” wasn’t a real estate transaction — it wasn’t about development, or zoning, or SUPs. This project is truly an endeavor to enable more job creation with a successful local company (critically, retaining its presence in Chapel Hill) and provide a resource for new and emerging companies to find a foothold in downtown Chapel Hill through the incubator space.

    BIG Kudos to the Town and Council!

  2. George C

     /  June 1, 2012

    Couldn’t have said it any better than Chris did – so I won’t. But I will add that I hope the whole Town can get behind this initiative and provide the necessary support to help it become a great success and a great example of approaching solutions to our problems with a firm conviction that those solutions will have a high likelihood of success rather than with fear that they will fail.

  3. Based on my own experience, I started lobbying for in 2003/2004 a Chapel Hill commitment to both encourage entrepreneurship by promoting/sponsoring affordable incubator space and for an economic strategy to help business make that crucial transition from startup to the level of commercial maturity evinced by 3Birds.

    I also made it a central plank of each of my campaign runs and took some heat, just as I did in promoting the need for a staff economic officer to help create and guide economic strategy, for pushing so hard.

    When, after 2 years of rapid expansion, outgrew our Chapel Hill home (literally a house) we couldn’t find affordable commercial space, required technology infrastructure or even the slightest assistance from the Town to support our transition from startup to the next phase of our development. We became a Durham success story because there wasn’t a focus on retaining businesses like ours.

    That is why I thought last Monday’s proposal indicated a very promising shift in economic strategy. Especially, as Chris notes, because the Town was stepping beyond the old paradigm of land development equaling economic development.

    So, an encouraging outline of a new direction, but certainly unfinished as a firm proposal. This new deal involves several major moving parts, a substantial community investment, aggressive and unvalidated growth projections, taxpayers taking the majority of risk without taking the time to do due diligence or explore the ramifications of directly subsidizing a particular business.

    That bothers me. In a year where it appears Council is going to ask taxpayers to pay more, the rush to push this through without further community review makes little sense. The Downtown Partnership said there was time to get it right. 3Birds has said they don’t want to leave Town and will work to get it right. Why the rush?

    The Council aren’t venture capitalists and should exercise more prudence in committing our residents dollars to supporting this economic initiative.

    It’s interesting to see Chris and George’s comments on a new type of Downtown initiative given recent history. The Council has invested in private/public deals before.

    Next week they’re going to sign-off on LOBs for 140West (note, no comment on the impact of reduced parking revenues from 3Birds in that agenda item).

    Much of the rhetoric in support of the deal sounded a lot like the rhetoric around subsidizing The Frank with low cost, favorable payback loans (note, The Frank initiative got zip airplay last Monday). Does The Frank experience offer no lessons for public/private initiatives?

    Where are we now? Council has handed off the creation and execution of this tripartite deal to Town Manager Stancil. They didn’t ask for final approval or commit to a final public review to help iron out any problems.

    As the Town moves forward on this new kind of subsidized business strategy, the Council needs to keep a close eye on how effective the public investment is in achieving the touted goals.

  4. Terri Buckner

     /  June 1, 2012

    I agree with Chris and George. This is a great initiative and I applaud the manager and the council members for making it happen.

  5. Chris Jones

     /  June 1, 2012

    Will –
    I appreciate your concerns, and they are not without merit, but let me blunty explain why I believe that the manner in which it was approved is substantially more positive than that which you allude to above and in your letter to council.

    First (and foremost), the opportunity is here now. We don’t know if the opportunity will be here in 30 (or 60, or 90, or 365) days or not. Is there risk? Absolutely. But, as anyone will acknowledge, it’s impossible to mitigate all risk. So, knowing that there is risk, the decision has to become do we or do we not trust the people empowered by the resolution (name, Roger Stancil) to properly evaluate and mitigate as much risk as possible.

    As I mentioned to Council, for me, the answer is a resounding YES, I do trust Roger. Specifically, I trust Roger to engage a cadre of professionals with experience in the different sectors necessary to make this happen. I trust him to vet ideas with those that have tried and succeeded, and more importantly, tried and failed. I trust him to solicit the advice, input, guidance and feedback of those of us in the private sector, the University community, and the municipalities that can add value to the development and implementation of the incubator.

    The alternative to investing in that trust is really quite simple: Council could have pursued a watered-down “we like the idea, let’s refer it to staff.” Then, we can committee it, plan it, discuss it, hearing it, revise it, envision it, work group it, community listetning session it, and generally bludgeon it to death ad nauseum. When (if) it mercifully emerges, a) does the opportunity, or a comparable one, still exist and b) have you layered with so many rules, regs, reports, and general bureaucratic nonsense that it is a marginally-functional, wholly-inefficient nightmare?

    Now, I know, the second of the two options is most certainly more the “Chapel Hill” way of doing business. I think a great voice on that would be UNC’s new Athletic Director, Bubba Cunningham, in discussing the oft-repeated “Carolina Way” (quoting a recent CBS article here:

    “”The Carolina Way is the phrase you hear a lot but it goes both ways,” says athletic director Bubba Cunningham. “One, it’s a very positive thing because we do things very, very well. But, other people use it as an excuse of not changing…….I think there is a balance between fresh ideas and the tradition of the place and that’s what I’m trying to do right now, balance the core principles that are not going to change with where can we make some changes and, hopefully, improvements.””

    Apply that to the decision made by Council on Wednesday: Certainly, advocating for and enabling a local, independent firm to create new local jobs fits Chapel Hill’s value system. Helping to foster an environment where entrepreneurs can create a vibrant, energetic, enthusiastic workplace fits within the culture of our community. Did the TC agree to pursue it in a manner that may not fit the Chapel Hill norm? OK, yeah, they did. Does that inherently make it wrong? Particularly when many of us (yourself included) has long complained that TC just doesn’t get it?

    I don’t intend on swaying your opinion . . . while I don’t know you, i have read your writings, and responses on blogs like this for several years, and know that you’re tough to move. Instead, here’s what I ask of you:
    Quit asking Why? Quit questioning the decision. Start with a simple question to yourself: WHY NOT? Once you get that answer, you’ll know what you believe the obstacles in front of us are. Then, take your experience as a successful entrepreneur, and invest it back in your community as a partner helping to avoid, mitigate, and break down those obstacles in front of us. Then we all win.

    As I so ineloquently put it on Wednesday night . . . come out on the limb with us, Will. The fruit’s out here.

  6. Chris, I thought I was pretty clear but let me say it again – I don’t have a problem with the WHY? I understand it well from my own experience.

    I understand that a payoff can require commensurate risk (I’ve done well by taking significant risk). The difference here is it is public monies put partially to a private purpose. As such, I believe more prudence was called for than what a private capital placement firm might do.

    The Council didn’t ask questions or request background information that private capital firms I’ve worked with would: a peek at 3Birds business plan and fiscal track record, more detail on a key element to success – UNC’s collaboration, an informal prospectus, etc.(the kind of things I asked about in my letter – a few which Roger responded to last Monday).

    Certainly the Council could’ve had a bit more discussion (it’s an interesting contrast between the Council’s treatment of the Chapel Hill Museum proposal – which was sent back over and over to nail down the smallest of details for an investment 25 times less than Monday’s – and this proposal).

    I also volunteered my services in assisting the Partnership in making both elements of the proposal successful prior to Monday’s meeting and will be doing what I can to help going forward.

    This isn’t the same as saying NO.

  7. One last comment on the proposal, something I really thought Council would ask: Where’s the alternatives analysis?

    Much of the laudatory jubilation for the proposal centered on the incubator. Meg told me that 3Birds did an excellent job converting the Avalon into tech friendly workspace. Creating an incubator in this “shovel ready” space makes a lot of sense and maybe is the superior solution but that doesn’t mean that a range of other alternatives be excluded without comment (it seems it was a “do this or lose everything” proposition).

    Marc Pons make a great point about 3Birds activating his end of West Franklin, providing an additional 80 potential customers and off-setting the commercial problems of The Courtyard and Greenbridge.

    Could empty commercial space at Greenbridge or Courtyard locations be rehabilitated – made “shovel ready” – for less than the $70K/year over 3.5 years the 3Birds plan has? What’s the longer term impact of renting those locations – a multiplier effect expanding operations into other empty spaces in the same developments as companies grow? Is that of more economic value than leasing the old 3Birds space?

    These alternatives still allow the Town to award 3Birds their parking spaces while creating an opportunity to more effectively use taxpayer dollars without entering an existing lease.

    Again, very reasonable alternatives which could’ve been mentioned. Maybe these alternatives were evaluated but all I have to go on is the written record.

  8. Chris Jones

     /  June 1, 2012

    Appreciate the feedback, but I’m just not going to debate this ad nauseum (i.e. the Chapel Hill bludgeoning effect). I will provide you one informed response, and leave you with one final thought.

    First, “Could empty commercial space at Greenbridge or Courtyard locations be rehabilitated – made “shovel ready” – for less than the $70K/year over 3.5 years the 3Birds plan has?”
    No. Not even close to less. And not any time soon.

    And, again, a question that I think all of us would be better for pondering, “Why Not?”

  9. Joe

     /  June 2, 2012

    An incubator is “cheap office space”. Will Raymond moved his business to Durham for “cheap office space”. “Cheap office space” very, very, very rarely has any impact on whether an office-based business succeeds or not.

    I don’t understand why people start talking like a Forbes magazine when it comes to common sense business ideas.

    An incubator’s nice, but a room with power and an internet connection is really only going to help small businesses so much. Most businesses that require “cheap office space” could (and do) also use home offices if push came to shove. There’s little to no excess demand for very cheap office space, hence the recent closing of Carrboro Coworking (which was opened by another person preaching that cheap office space was needed to stoke the fires of “innovation”). Besides, there’s plenty of cheap office space in town, already.

    If Chapel Hill wants to get serious about economic development, then they need to build a small business loan program similar to Carrboro’s, but a bit more robust. It would need more money, and better oversight.

    Chapel Hill needs to put some of that tax money into the SBTDC, or somehow work closer with the SBTDC to give real help to real businesses.

    Instead of getting in on the cheap office space business, perhaps Chapel Hill could put into place some legal provisions to help *all* commercial tenants defend themselves against the notoriously oppressive landlords all through the town.

    Oh well. 3 Birds Marketing gets some free parking and it only costs the town & county $100K. That’s pretty cheap for a bad idea.

  10. Terri Buckner

     /  June 2, 2012

    Will says this is a deal where “public monies put partially to a private purpose.” As I understand the deal, 3 Birds gets free parking IF they meet their staffing goals, and in exchange for the parking perk (which is for daytime hours only when the demand for the parking isn’t there) they will provide in-kind service to the incubator. That’s a trade, not public monies put to private purpose.

    If I understand Will opposition, it does not seem to be against funding of the incubator–just the parking for 3 Birds, on the basis that other businesses like the ones he has been involved with haven’t received like opportunities. But it’s the recognition that past practices by the town–letting solid businesses leave without any attempt to acknowledge their value and keep them here–have failed to create a solid commercial business foundation that this new program is trying to change.

    Sometimes Will has valid points once you filter down to the real issue. In this case, he’s just completely off base. It’s contradictory to say he supports the incubator but opposes the “deal” 3 Birds is getting. This “deal” is a win-win-win for everyone involved. The challenge to the town and its partners now is to define the conditions of use for the incubator. Is the incubator a risk? Maybe, but as Will and everyone else seems to acknowledge, without risk there is no change. And the need for change in the way the town works with local businesses seems to be a premise everyone, including Will, accepts.

  11. Terri, I’ve tried to be clear but you’re analysis of my positions and reasons for concern are completely incorrect. Not sure the value to the discussion of making personal slights or why you ascribe motivations I don’t have but I’ll chalk that up to the confusion on so many points. If you want to understand my position, I’ll be happy to have a face to face discussion sometime soon.

  12. Terri Buckner

     /  June 2, 2012

    Will, I’ve read what you wrote here and on Twitter and I listened to you at the council meeting. In each venue, I heard you objecting to spending public money to help a private business. The only business in the discussion is 3 Birds. So if that isn’t what you meant, then maybe you just haven’t communicated as clearly as you think you have? Either way, I think this is an excellent project and doubt that anything you can say will change my mind so further discussion probably isn’t worth the time or effort for either of us.

  13. WJW

     /  June 4, 2012

    Ms. Buckner:

    If you think that 3 Birds is an excellent project, that’s fine. You can take your money and invest in it.

    But why should the govt be able to take my tax money to invest in this company? Invariably govt “investments” end up tainted by cronyism and outright bribery.

    If a company isn’t good enough to get private investment, then I don’t understand why it should get taxpayer money.

    City government shouldn’t play favorites, but have a hospitable atmosphere to business in general. Easier permitting, increasing parking, etc.

  14. Terri Buckner

     /  June 5, 2012

    Mr./Ms. WJW,

    Neither the town or the county government is investing in 3 Birds. That’s my point. The government is making a trade with 3 Birds. Out of this trade, 3 Birds gets some parking spaces to use during weekday, daytime hours and the Town gets 1) physical space to create the business incubator AND 2) it keeps a growing business in Chapel Hill instead of losing it to Durham. In addition 3 Birds will also be paying a portion of the rent on the incubator facility AND they will be providing their expertise to the businesses in the incubator.

    There is no favoritism in this deal. It’s just good solid horsetrading.

  15. WJW

     /  June 6, 2012

    I stand corrected.

  16. Terri and I have different ideas of what constitutes an investment.

    The Town is taking over 3Bird’s existing lease for their existing office to create the incubator space. That cost is $80K per year until Dec. 31st, 2015.

    3Birds will contribute $20K per year towards that cost as $10K/yr in cash and $10K/yr in-kind (several suggestions were enumerated but how the value would be assessed is left unsaid).

    Orange County will use $40K/yr of the 1/4ct sales tax. Lots of hands out for that money but no discussion on why this particular project scored well above others.

    Chapel Hill the remaining $30K/yr possibly coming from the Downtown tax district fund. Of course, Downtown has a lot of needs, the sum total which well exceed the current and anticipated district tax fund balance. No discussion on the trade-offs here.

    Chapel Hill will be the sub-leaser and bear the risk in terms of the incubator’s ability to further sub-lease space to make the deal more sustainable. We do know that a similar effort in Carrboro had difficulty making a go of it.

    The parking spaces aren’t free. There was the cost of developing the expanded parking lots Downtown, of which a substantial chunk of the existing parking fund was used. Replenishing that fund, dealing with the expanded cost of maintaining and operating the new lots and paying back the LOBs for 140West depends on a fairly good return from all the lots.

    At best, the Town would’ve realized $103,530 in parking fees for the 29 spaces over the initial 42 months of the deal. Realistically, the yield is below that but certainly far from zero. It appears that 3Birds has an option to extend that “free parking” deal at the end of the initial period.

    There is a cost to this investment.

    Like the priority-based budgeting the Town is supposed to be using, there should have been an analysis of the opportunity value, cost and alternative uses for the same investment dollars.

    Now, to Terri it seems like discussing that investment is equivalent to saying no to the deal (no matter how clear I’ve tried to be).

    That is not the case but maybe that attitude towards discussing even the simplest of details explains, to some small extent, the reticence of Council to delve into the details or even ask for what most any business would before entering such a deal – 3Birds fiscal track-record and a peek at the business plan which will yield the fore-casted aggressive growth in jobs. No one wants to be seen standing in the way of the deal of the year (I know from my experience with The Frank).

    Continuing to minimize the community’s investment does a disservice to 3Birds, to our residents and to our new economic development strategy.

    If you want to see what Council was presented, here’s the link:

  17. Terri Buckner

     /  June 7, 2012

    The manager’s office did do an analysis of the revenue situation on the parking spaces and determined that the bulk of the demand for those spaces was in the evening hours (restaurant and bar traffic). 3 Birds staff lose access to the spaces at 6 pm when the town starts charging downtown patrons.

    Will wants to micromanage this deal instead of trusting the manager and everyone associated with the negotiation to have done their homework. For the town to change course on their economic future, we need space for new businesses to start up and grow. And now we have it.

    Using the co-working business that failed in Carrboro as a reason to continue the practice of micro-managing every single detail of every opportunity is bogus. Carrboro contributed nothing but a loan to the co-working business although they did require the business owner to take a small business class from UNC. This deal provides programming for the start up businesses from UNC, marketing assistance from 3 Birds, and the management expertise of all those involved in the Downtown Partnership. There is no reasonable comparison between the co-working business and this deal.

  18. WJW

     /  June 7, 2012

    Ms. Buckner:

    You wrote “Neither the town or the county government is investing in 3 Birds. That’s my point. The government is making a trade with 3 Birds.”

    Mr. CW points out further, very PERTINENT facts to the deal. I don’t see how anyone could see this as an even up “trade”. Facts I don’t see you refuting in your follow-up reply.

    The governments are on the hook via the subleases for very REAL cash. 3 Birds now has to pay substantially less in lease cost for several years.

    By you saying that this is no “investment” is at best you obfuscating, and at worst simply not telling the truth. Disappointing.

  19. Terri Buckner

     /  June 7, 2012

    Mr/Ms WJW,

    3 Birds will be paying on their old lease as well as on their new lease. Saying they are paying substantially less in lease cost for several years is just flat wrong.

    Will has kept his criticisms to how the town is spending their money. While 3 Birds pays a portion of the rent for their old lease (in addition to the full rent for their new lease), the town and the county are picking up the remainder of the rent for the incubator space. It’s a very small investment for the town and another very small investment for the county. I never said otherwise.

    This is a discussion. No one individual is going to be “right”. It’s a matter of interpretation and strategy and making sure the facts are out on the table.

  20. Terri Buckner

     /  June 7, 2012

    One more thing. Will’s arguments fluctuate between opposing the deal that 3 Birds is getting and the creation of the incubator. So just to be clear:

    1. I do not think 3 Birds is getting any extraordinary benefit at the town’s expense. The parking spaces don’t seem to be any major investment in financial incentive IMHO.

    2. I think the incubator is a great idea and the funding deal that creates it is a minor financial risk to the town and the county–a risk I support them taking. I do not think there is a reasonable comparison between this deal and the Carrboro co-working business.

  21. Terri, as I said before, you have misinterpreted what I’ve written and continue to state objections which I do not hold,

    When you say “Will’s arguments fluctuate between opposing the deal that 3 Birds is getting and the creation of the incubator.” you are incorrect.

    As far as making comparison between Carrboro Co-Working and the new incubator, while I do agree that UNC’s direct participation is a key differentiator, as Joe notes, there is a basic similarity in the facilities offered.

    I’ll let the owner of that effort speak for himself on what he thinks the comparison is (from his offer to help in a recent email to Council): “I’ve dealt with this as a coworking/incubator space owner. I’d love to help.”

    I’ve tried my best to explain my reasonable concerns, to highlight my long standing support and championing of Downtown economic development and to clarify the misconceptions you continue to find within what I’ve written Terri. Again, I would be happy to discuss this face to face but as far as posting more on this thread – I’m done.