Price tag on the gift

Head and heart – they can coexist. We desperately want them to in Town Council members.

At a council work session last week, DHIC, a housing nonprofit in Raleigh, proposed building 140 apartments – 60 reserved for senior citizens and 80 for low-income families – on 10 acres of what is now part of Chapel Hill Cemetery between Legion Road and U.S. 15-501. DHIC president Gregg Warren made the proposal with two conditions. First, he would need the town to do an expedited approval, because he would use state and federal money to finance the project. The state money would be available only through 2014, he said, and federal money, well, let’s just say with the way things are going, the sooner the better.

The plan would have to be approved by the N.C. Housing Finance Agency to win the money. Warren said he would need a purchase agreement by January and rezoning and special use permit approval by May, then the state would make a decision in the summer about whether to hand over any money.

Warren’s second condition was simpler: The town would have to sell him the 10 acres for $100, total.

The project has much to recommend it. In an atmosphere where developers have focused only on their own profit margins, hearing from a developer who would leverage public money to yield housing for members of our workforce, or retired from our workforce, sounds great. But before taxpayers sign over our assets, we need to know how generous a gift we are giving. And no one on council knew the value of that 10-acre parcel.

Furthermore, no one knew how much the site preparation would cost – the slope of the land and the soil type may pose obstacles to construction – and whether the developer would want the town to pay for it. We may still be paying for the site cleanup of 140 West. Town staff have not yet made public the total bill.

And, of course, the town needs to know the demand for cemetery space and the alternatives if that space is no longer available.

Sure, making public the value of the gift we are giving to this developer to provide us with something we’ve been asking for takes the romance out of it. But the fiscally prudent course would be to know how much it costs.
– Nancy Oates

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25 Comments

  1. Joe

     /  October 7, 2013

    There’s a lot more to ask, as well…

    – How much will DHIC be making off of this development?
    – What makes the “low income” and “senior citizen” housing “low income” and “senior citizen”?
    – How does this property remain “low income” and “senior citizen” housing?
    – What happens if (when) the state decides not to give them the money? What happens to what is now, their land?

  2. Milton Hayek

     /  October 7, 2013

    Great article Nancy. Non-profit is nothing more than a tax status and doesn’t prevent – this should really piss you off Don – DHIC from pocketing the economic benefit from the externalities of their proposal.

  3. many

     /  October 7, 2013

    I have to agree with Milton on this one. This sort of thing has been tried before and results in an economic dead zone.

    Back in the 60’s & 70’s these developments were called “projects” or the “ghetto”. In the extreme think Cabrini Green, Starret City and Caliope, locally think Few Gardens.

    I acknowledge things have changed since then, but isolating and concentrating the externalities Milton speaks of from the rest of society has never worked and ultimately becomes prison for the innocent.

  4. Nancy

     /  October 7, 2013

    Chapel Hill historically has small pockets of public housing, and that model works really well. I would love to see smaller parcels of infill development as affordable housing. Would the federal and state money cover small projects? And to Joe’s point, why not a long-term lease, like we did with the for-profit 140 West?

  5. Many, DHIC has done OK by Raleigh.

    I used their Raleigh Downtown Carlton Place as an example when calling for a private/public partnership to build affordable workforce housing on Lot #5 ( http://citizenwill.org/2007/03/21/raleighs-carlton-place-a-downtown-affordable-housing-commitment-worth-emulating/ ).

    Carlton Place was aimed at serving those folks who worked on behalf of their community – teachers, Raleigh public works, police and fire personnel among others.

    Interestingly enough, that effort – to have Chapel Hill to put deeds to words – was shot down by Council members like Sally Greene who preferred building heavily taxpayer subsidized luxury condos over serving those in our community who work on our behalf.

  6. many

     /  October 8, 2013

    Will, it is well documented that “mixed use” development driven by the inclusion of various social services and commitment from other parties (public-private partnerships) to date are far more successful that “projects” or section 8 vouchers.

    https://cdr.lib.unc.edu/indexablecontent?id=uuid:cafedf52-cd94-4e60-8084-d7f24e923b91&ds=DATA_FILE

    However there will always be the consideration of location on decisions. If I recall correctly, it was the location that was shot down, not the idea.

  7. Scott

     /  October 8, 2013

    Like Will, I was one of those that thought the town could do better with Lot 5 than what has been accomplished. However, I would lay the difficulties with that project in three places, none of which is Sally Greene. (1) Our previous town manager, (2) his hand picked economic development consultant, and (3) the politics vs. reality of parking needs in downtown. The Council did not heed the warnings of UNC business school professors and their examinations of the economics nor the very thoughtful and meaningful comments from former Council Member and nationally prominent planner, David Godshalk. Nevertheless, we have in place a development that adds substantially to the economic health of Chapel Hill and that will be considered one of the important steps in re-energizing downtown Chapel Hill.

    But all that is not relevant to the current question raised by Nancy. The council, with a strong push by Council Members Pease and Czajkowski has initiated the process of evaluating “surplus” town property and what would be the best uses if some/all of the land is released from Town ownership. Those who attended the Council Work Sessions last Monday or Tuesday would know that DHIC presented a “preliminary” proposal for the 10± acres between the cemetery proper and the Sheraton Hotel. DHIC presented an overview of their activity, their financial and operational structure, how tax credits work in the real (not fantasy) world, how the state makes decisions (cost) and raised questions that would need to be answered before any concrete proposal could be offered and any town agreement to sell would be possible. Joe asks good questions, answer to which are readily available by contacting DHIC, which by the way is the organization established by the Raleigh City Council -maybe 30+ years ago – to find ways to provide affordable rental housing. Their track record is one of the best in the US. So can the land in question be developed? Any responsible seller (read town) would first determine the environmental constraints, utility availability – or the improvements needed and the cost of such improvements, zoning entitlements (none) and market needs and land value. These are precisely the items the town council, manager, and economic development director agreed to examine at owner (town) expense. This is something needed if the town is to sell this property for any use and also the information needed for all properties if any of the general information provided to the council about the “surplus” sites is to have any meaning.

    Professionally and personally I can not imagine the site in question being used for retail or office or mixed-use in any way with no direct access to US 15-501 ever likely and only access from Legion Road. I certainly can imagine a development of 15 or so dwelling units per acre that leaves over 50% of the site in open space. So the real question in my mind is – rather than retain this property that currently provides no economic or use benefit, what are the costs and returns (economic and social) of utilizing this land for “affordable” housing or perhaps more upscale market rate housing. I certainly would prefer affordable rental housing by DHIC, a reputable developer and provider, to a market rate rental or ownership property.

    So, lets keep track of what the town finds out about the site potential and its possible value/return for market rate housing and also for the DHIC proposed use. I trust that everyone who commented here and Nancy who wrote the blog entry are interested in the provision of affordable housing and can make another more refined judgement once the information is available to answer the questions.

  8. Fred Black

     /  October 8, 2013

    Scott, didn’t the IFC look at that property?

  9. Scott, I agree that the previous (and current) Town Managers played a role, along with the “rah rah at any cost” crowd but you are wrong about Sally Greene.

    Sally was dead center in the negotiations, promotion and outcomes of West 140 and a key reason why the Town decided not to partner up with developers – like DHIC – in building affordable housing Downtown.

    She wasn’t the only Councillor who favored luxury condos over a commitment to build something affordable on a prime piece of citizen-owned Downtown to serve our working folks.

    West 140 became a prestige project for a solid block of Council members – with Sally leading the charge to cap our Town’s missed opportunity to build diversity at the center of the community with a $480,000 vanity fountain (the silver turd) which she personally fought for.

    Want to see how well those negotiations went?

    Take a listen here: http://citizenwill.org/2007/02/12/downtown-development-intiative-listen-and-learn-how-negotiations-went-awry/

    It’s time to take of the rose-tinted specs Scott and admit that we’re poised to make the same kind of mistakes with Obey’s Creek, CentralWest and Ephesus Church.

    Listen to those negotiations and tell me that when the Town jettisons zoning in favor of the form-based free for all we’re going to get a better outcome.

    As far as the claim ” we have in place a development that adds substantially to the economic health of Chapel Hill and that will be considered one of the important steps in re-energizing downtown Chapel Hill”, I’d like to see your evidence.

    What I see is under-performing underground parking lot which is not generating enough income to payback the substantial loan the Council took out on behalf of the taxpayers.

    What I see is an environmental cleanup that is headed towards 5 times the originally projected cost.

    What I see – as of the last report I read – is a 1/3rd of the luxury condos selling to folks who will occasionally use them, 1/3rd going to landlord/speculators – sure isn’t the fully vested “eyes on the street” we were promised or the continuous economic driver that the Chamber, Council and others touted.

    And if you equate turning Rosemary St. into a homogeneous concrete canyon and replacing Downtown’s distinctive character with Anywhere USA with re-energization, well, we’re using fundamentally different yardsticks.

    The reality was (and is) that there were thousands of non-student Downtown residents before West 140. The vacancy rates were not unlike today – that is if you don’t account for the various empties at West 140, Rosemary Village and Greenbridge. What was West 140 fixing?

    Given that workforce housing would have paid property taxes and cost the Town so much less – possibly nothing more than the contribution of the property – and the folks living there would have been much more likely to be a persistent economic force Downtown – where do you see the great community return?

  10. Scott

     /  October 9, 2013

    Will – a long informative reply and a lot to consider.

  11. Scott, we’ve agreed on a lot of the basics and even some of the specifics over the last 14 years, we need to hash this out over coffee instead of on CHW.

  12. Here’s a quick exercise for anyone who is making the case that living Downtown reduces car use.

    I believe the residents parking area is gated. If so, why not ask the Town to calculate how many times a day/week/month residents of West 140 enter and exit the parking garage.

    Would give us some data to work with…

  13. Fred Black

     /  October 9, 2013

    Will that data on 140 West Franklin residents’ car use might not tell us anything that is very useful. Where they go when the exit and how long they are away might be useful data, but you might want to know how often they leave their residences and not use an auto. Last week, I saw a couple who lives there walking to a restaurant. When they lived on the other side of town they would have driven.

    I think we also know that after you build it, support services will follow when it is a viable financial investment. This is still a work in progress. Thus, people will still drive to get some of the basics like groceries.

  14. Terri Buckner

     /  October 9, 2013

    Fred,

    I understand the build it and they will come theory, but I think the town needs to have some kind of quantifiable expectation for how much they need to build and what kind of services before they make many more decisions. When I lived in Northside, I didn’t have a car. I walked to the grocery, I walked to campus, and I walked to the bookstore as well as to Belk. Why did all those services move out? Residency in Northside hasn’t declined–it’s increased.

    When I lived in downtown Norfolk as it was redeveloping, it only took 1-2 residential bldgs before the services moved back in. That’s not happening in Chapel Hill and we should all be concerned. Downtown isn’t going to become a dynamic urban neighborhood based on restaurants alone. Where’s the plan? Theories are great, but they need to be tested before they go too far.

  15. Gregg Gerdau

     /  October 22, 2013

    On August 16, I asked Brenda Jones, Parking Superintendent for the Town, this question: “tell me what the 140 West Franklin St parking deck utilization has been since it opened. Of the 160 (is that right?) public spaces, what has been the high or peak utilization, low utilization and average utilization? If you could break this down between week days, Saturdays, and evenings, that would be great.”

    On August 28th, she replied with “The system we are using at 140 West is new for our operation therefore we are still learning and working through its’ intricacies. I have requested assistance from our vendor support staff to attempt to generate the type of report you have requested and I will update you as soon as I have any information.”

    She never replied further and we are left to assume the Town has NO IDEA what the utilization of those spaces is. Or, does not want to know because:
    Town investment was at least $7,245,000. OR $45,281 PER SPACE; which rent for $1.00 per hour: which means EACH SPACE must be rented 24 HOURS A DAY 6 DAYS A WEEK for OVER 6 YEARS before the Town sees a return on the investment.

  16. Thank you Gregg, always nice to see a citizen dig into the actual numbers.

    The end cost was a bit lower – but not that much – especially given the COPs financing doesn’t come free. We (the taxpaying public, that is) also ended up ceding a dozen plus public spaces to the “affordable housing” units thus making them worth more if they are ever flipped on the open market (something RAM wanted to do if they didn’t sell quickly).

    In any case, the most expensive parking – by a mile – the Town has – and, by what I can tell, possibly the worst performing. A shame as that was Council’s promised prime revenue stream for paying back all the costs of West 140 (so they didn’t have to dip into taxpayers’ pockets for the difference).

    Last note: Generally, underground lots are consumers last choice for parking – with only underground lots in highly urban settings (think Downtown San Francisco/Manhattan) – approaching surface lot usage patterns.

    In spite of that, Sally Greene and Mark Kleinschmidt both claimed that the parking would be utilized at a much higher rate than equivalent parking elsewhere because of the prime location.

  17. Nancy

     /  October 22, 2013

    This is exactly why I’d like to see more people with a strong business background on council.

  18. many

     /  October 22, 2013

    Parking also needs to be measured in the context of the other tax revenue it generates. If all parking was measured on just the parking fees alone, it would never make sense. OTOH being the most expensive lot does not bode well for it being cost effective.

  19. I disagree, respectfully, with Nancy’s suggestion it takes a business person to tease out the reality here.

    The Town commissioned a Downtown Parking Task Force (I happen to serve on it) that studied different modes of parking and reported back to Council that underground was not a favored mode.

    It didn’t take a business degree to understand the role consumer preference plays when it came to choosing between alternatives.

    As far as being especially business savvy, when the majority of Council (led by Strom, Foy, Greene and Kleinschmidt) fudged the parking revenue numbers to create a “no cost” narrative for West 140, it was the Chamber that was their strongest ally.

    When they realized that even the most optimistic parking revenue projections for West 140 wouldn’t cover the cost of borrowing $6.2M (or the ballooning environmental cleanup cost – headed over $500K, 5 times greater than originally estimated – or the $2M spent on consultancies to get the deal off the ground or the millions of dollars of staff time or the cost of required infrastructure improvements or the major cost of acquiring replacement parking or the decreased tax revenues from local businesses suffering due to construction or … ) they decided to cast a wider net – redirect off-site parking revenues – stealing from Peter to pay Paul – to cover the difference.

    Anyone would understand that there’s a finite supply of tax dollars and monies redirected from one pot aren’t magically resupplied from another.

    Again, I don’t think it takes any great biz acumen to realize that when the projected costs increase, when all the supplementary costs added in and when you stray far from typical fiscal realities, that you’re in trouble.

    I imagine most every family who deals with a weekly or monthly budget would realize that you can’t dig yourself out of a fiscal hole. Yet this is what we’re seeing Council (with a few very notable exceptions) doing now.

    Pretty much every fiscal misstep Chapel Hill’s Council has taken over the last decade is understandable with just a bit of reading, a bit of thinking, a little bit of 3rd grade math and an ounce of concern.

    So, while I understand the call for someone with business experience – especially someone who routinely practices due diligence – I want to give lie to the idea that the problems we’re dealing with required some special training or insight.

    The reality is they don’t.

  20. Bonnie Hauser

     /  October 23, 2013

    Will – sadly the ability to think through options and consequences, including numbers, is missing from the debate. These are not special or unique skills; In the business world, they are front and center – and go way past ideology or good intentions.

    So Nancy’s call for business skills on the council – or in political decision-making in general is well placed. The economics are complicated, and the public interest looks different than development interests. Its important ot understand both in order to find the win-win.

    This shows up in Nancy’s new post on the contradictions in the affordable housing discussion.

  21. Bonnie, as a tech entrepreneur and someone who works with logic for a living, I understand how “light” some of the analysis is used to make key decisions.
    Not sure, though, any profession confers particular insights into what’s going on Downtown. Look at how many biz folks cheered on West 140 and other economically impovererished proposals. I understand the exec director of the Chamber isn’t a biz person but he routinely cheers on the most economically short-sighted and ill-conceived proposals with, apparently, the tacit approval of the biz folks he represents.

  22. Fred Black

     /  October 23, 2013

    Will, if you are going to repeatly criticize someone, you ought to at least get their title correct. Some might call this common courtesy.

  23. DOM

     /  October 23, 2013

    CitizenWill

    “As someone who works with logic for a living…”
    Truly astounding.

  24. ( isTroll(DOM) ? “Yes” : “No” );

  25. DOM

     /  October 25, 2013

    “( isTroll(DOM) ? “Yes” : “No” )”

    Is that supposed to be a compliment? Forgive my ignorance, I did not major in logic.

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