Plans for major developments on Chapel Hill’s East Rosemary Street were put on hold from public meetings during the summer break. But as local government returned, Chapel Hill’s Town Council recently discussed the next step of the project and heard public comment.
The East Rosemary Downtown Deck and Redevelopment Project consists of the town consolidating and expanding its parking options, while allowing space for new business. Proposed by Grubb Properties, the project missed having its Economic Development Agreement [or EDA] approved by the council in June, a deadline which would have given Grubb federal tax incentives.
With those opportunity zone dates extended and town officials continuing discussions with developers through the summer, however, the project is still alive. The town council held a public hearing on the project and the latest draft of the EDA.
From the community’s comments and the clarifying questions asked by some council members, some details of the project are still unclear. In order for the project to work, Chapel Hill will do a land swap with Grubb Properties, giving them the land where the Wallace Parking Deck currently sits. In return, the town would receive the parking deck on 125 East Rosemary Street, where a new six-story deck could eventually be built to expand all parking.
With a new draft EDA revealed for the Wednesday meeting, both the public and some council members shared worries about the town’s commitment. Some expressed concern about if the land swap is confirmed and construction begins on the project, but then Grubb Properties fails to build its proposed office buildings.
Council member Michael Parker said the wording of the EDA made it sound like the town would be obligated to go through with the project even if Grubb chooses to forgo its construction hopes at 137 East Rosemary Street. He also said problems could arise if the final price of construction, or the guaranteed maximum price, is higher than developers currently estimate.
“If the GMP is significantly more than we budgeted,” said Parker, “then we have to be able to get out of this deal. We can’t just be forced to move forward with it regardless of what the price comes in [to be].”
Town staff presenting at the meeting responded by saying a delay on confirming the land exchange is planned, since it will be beneficial for both parties. Now, that action will not happen until 2021, likely right before construction on the proposed expanded parking deck would be set to begin.
Other concerns were raised by council member Hongbin Gu. She questioned whether the expanded parking deck could earn enough in revenue to be worth the nearly $33 million Chapel Hill will ultimately pay or borrow to build it.
Town staff estimated it would take five years for the deck to become profitable for the town, as they will use any revenue to pay toward the debt it will incur. Staff also said interest rates on the debt are projected to be unusually low due to the coronavirus pandemic, which would help the town pay off their balances quicker.
Additional data from Chapel Hill indicates an expanded parking deck would serve nearly 4,000 cars each day and assist UNC, which hopes to use some of the parking for employees of a new visitors center.
Bob Jessup, who is an attorney on local government finance that has served as outside counsel to Chapel Hill on the project, shared several comments outlining how the development project could benefit the town. Aside from Grubb’s proposed office building and the potential for hundreds of jobs, he also said the expanded parking deck element alone could unlock future economic opportunities.
“If [Grubb Properties’ office] building is not built,” Jessup said, “the town will have consolidated and expanded its downtown parking, it will have served additional UNC activity, it would have opened up [the 137 East Rosemary Street] parcel for development and made it easier for others to redevelop their parcels in town.”
No action was taken at the Wednesday meeting due to it being a public hearing item. The town council will vote on a final draft of an economic development agreement for the project on September 30.
Photo via Perkins + Will.
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