ED & Planning Committee
Meeting Summary for June 15, 2009
Page 1
COMMITTEE AGENDA TOPICS
I.
Subject:
Action:
Carolina Theatre
Make a recommendation to City Council on request by the developer for a
three-year extension of the option.
II.
Subject:
Action:
First Ward Park & Parking Deck
Make a recommendation to City Council on a Development Agreement and
Infrastructure Reimbursement Agreement for the First Ward Park and Parking
Deck project.
III.
Subject:
Action:
Arts & Science Council (ASC) Endowment Campaign
Review determination by ASC of how they intend to manage the Cultural
Facilities Endowment over the next 24 months.
IV.
Subject:
Next Meeting Date
The next meeting date is scheduled for June 17th.
COMMITTEE INFORMATION
Present:
Absent:
Time:
Council members John Lassiter, Anthony Foxx, Nancy Carter and Patsy Kinsey
James Mitchell
11:30am – 12:55pm.
ATTACHMENTS
1.
2.
3.
PowerPoint presentation: Carolina Theatre Update.
PowerPoint presentation: First Ward Park & Parking.
a. Memorandum from Jeff Brown assisting Levine Properties.
Handout: Arts & Science Facilities Endowment Plan for the next 24 months.
DISCUSSION HIGHLIGHTS
John Lassiter, Chair:
We have three items on our agenda today. The first item is a discussion of the First
Ward Park and Parking Deck. We are going to give this matter back to Council by the
22nd. There are a number of things that have happened since we last met including,
you may have seen an e-mail that came out in the early morning. We may ask Jeff
Brown or Daniel Levine to speak to that so that we get the flavor that is coming before
us. We have copies and we will walk through pieces of that. Let me start with Tom to
give us an update as to where we are and frame the issue of what we are going to
deal with today.
Flynn:
I want to ask the Committee’s indulgence, we are still working with the PowerPoint.
Lassiter:
So do you want to take these items out of order, would that be helpful to you?
Flynn:
Yes, that would be my preference.
Lassiter:
Showing great flexibility as the Committee Chair. Let’s go ahead and talk about the
Carolina Theatre, I don’t think this will take quite as long. If you will recall, there has
been some discussion about the option that is about to expire. There is some interest
on the part of the partners of either acquiring or extending the option. You have some
information in your packet about that. So let’s go ahead and take that item first and
come back to First Ward Park. I believe that Peter Zeiler will lead that discussion.
ED & Planning Committee
Meeting Summary for June 15, 2009
Page 2
I. Subject:
Carolina Theatre
Zeiler:
Good morning, I want to make sure that everyone is fully briefed and understanding
what the original development agreement with the Carolina Theatre is. The original
agreement is for the sale and development of the land and Theatre to CMP Carolina
Theatre LLC for $1 million dollars. The City commits the proceeds from that sale to
the renovation of the Theatre portion only and the public space. CMP will build the
condo tower and the commercial space above and around the Theatre. The City and
County will formally issue a Synthetic TIF for the arts programming up to cap of $4.5
million dollars to support the activities inside the renovated Theatre. The sale is
completed to close when the CMP Carolina Theatre reaches a number of specific
benchmarks such as regulatory approvals, full financing and agreements on the
easements with Bank of America, including technical issues. The City and Carolina
Theatre has extended the agreement on three different occasions by Council vote
which has lead to six different extensions of the timeframe. CMP has made over
$250,000 dollars in non-refundable option payments, the current option which expires
on July 17th. CMP intends to complete the Theatre per the existing development
agreement to keep and renovate the Theatre. CMP has materially met all closing
requirements except securing full financing. They have submitted plans for permits
they have come to agreement on how they are going to build the automobile elevator
and come to agreements with Bank of America on all of the easements. They have
presold eight of the twenty residential condos and they have presold all five floors of
the commercial space. However, I think we all know the economy has issues and
challenges; it’s pretty remarkable that they have been able to hold on to their first
financing and are in the process of trying to secure the mezzanine financing. They
have reached operating agreements with the Carolina Theatre Preservation Society, so
from a finance perspective, they are 98% there in most peoples’ eyes. CMP came to
us and asked if they could close on the property without securing full funding for the
development because they have met the majority of the material requirements and
the fact that their investors are looking for some security for the money invested with
option payments as well as architectural efforts. They wanted to have some sort of
asset at the end that would make sense with the continuing investment. The problem
with going to an immediate closing is that complications with the fair market value
clause would be created if the agreement is not fulfilled; they would essentially have
gotten the property at below fair market value. The City would need to recover the
property and subject it to an upset bid. The City staff and the developer worked
through multiple scenarios to address the fair market value issue and get to the
developer’s needs. They have come to the conclusion that if you would like to see this
project continuing to moving forward, that there are a two feasible solutions. The first
solution is to have CMP make a fair market value offer subject to an upset bid process.
This requires an extension of the existing option for two to three months to run the
upset bid process. Basically you would say make us an offer based on what you think
this property is worth out in the fair market. If there is no upset bid you close on the
parcel concurrent to the original terms of the agreement; at a future date, if they are
unable to complete the project per the agreement, they would pay us the difference
on the land, which would be the difference between the option payments paid and
what the fair market value bid was. The challenge on that is if CMP is not the winning
bidder, and it is bid and won by someone else, the Theatre would most likely be
demolished and the project as we know it goes away. The other challenge that CMP
brings out is that they have spent a year and a half to two years solving what are
some difficult challenges for the site for future re-development. There is some real
concern that someone will come in, bid on the property, take the property, take the
Theatre down and then run into a whole lot of problems and not be able to solve those
easement issues on their own. The other option would be to simply extent the option
as it is now for a period of two to three years at a no cost option that would basically
keep the existing agreement with CMP Carolina Theatre moving on the same project
ED & Planning Committee
Meeting Summary for June 15, 2009
Page 3
Carter:
Zeiler:
Donnelly:
Carter:
Donnelly:
Kinsey:
Donnelly:
Lassiter:
Carter:
Lassiter:
Zeiler:
Lassiter:
Donnelly:
Lassiter:
Carter:
Donnelly:
that they are now. Working to secure that last point for mezzanine financing, the City
would retain title and property maintenance responsibility for option duration as it has
now. However CMP has clearly an idea, and I think it is a sound idea, of making some
interim site improvements, which is creating movable pods that can be used for
merchandising and art displays that would create a usable space instead of just being
an asphalt lot with an iron fence. So essentially there are three ways to go forward;
Council can do nothing, let the option expire and direct staff to begin working on a
new solution, we could ask for an extra two to three months to begin the upset bid
process to extend the existing option so that we can go through this upset bid process
and see if CMP would be the winning bidder on that. The third option is to simply
extend the existing option for a period of two to three years at a no cost option.
I am very interested in using that space in certain ways but at the same time it
concerns me that in the same tab we commit to title and property maintenance. If the
exhibits are not under our control how do we maintain and protect them?
That is a good question and it will take some time to work out, how that would work
out. I can see discussion options with them regarding shared maintenance and
whether to take out liability insurance. Jim Donnelly with CMP is here.
The idea would be that the City would do very little; what the City does today to
maintain the property is very little. I think that corner has been an eyesore for far too
long; those pods were just part of what that block could become. That could be much
more attractive with paths and a circular space with flower beds. The idea would be
that we would take on that expense; we would in fact make that corner look nice. We
talked about doing it in a way that has some commercial value and also some value to
the community. We have always told Peter and everyone at the City that we think that
we have a pretty good track record in terms of projects that we have done here in
downtown whether it’s the old Federal Building or Grace Church. Having an eye
towards what would be nice, not just for our good but for all.
What about the liability?
The liability, we would certainly have insurance that would cover that. If there are
going to be people walking on that property, I would certainly want that insurance
anyway. Whether or not we had our own insurance or a separate policy but we would
certainly be able to take on that. The Theatre will still be closed; no one would be
able to go in the structure that has been deemed to be unsafe. That little block in
front is probably more unsafe now than it would be. Now it’s just a fence that we
have seen people hop over as well as other kinds of stupid things.
I don’t think it’s any secret how dedicated I am to keeping the Carolina Theatre; I
think that since we are about 98% along in this, I am very comfortable in extending
the option for two to three years. Hoping that we get not only your development
going but the Carolina Theatre restored.
In normal times we would not be asking for an extension. It certainly has not been for
lack of effort or personal financial sacrifice on our part, we want to see the project
finished in the way it has been envisioned. I appreciate that confidence.
Additional comments?
If you want to make that motion I will second it; at no extra cost to the City, that
includes the coverage and the maintenance.
Let me make sure that I understand what that motion is. If we have a two to three
years, is that to be negotiated or is that to be time certain?
I think on the staff side we are confident making it three.
Do you want the motion at three or do you want the motion for two?
I prefer three.
Is everyone comfortable with three years? O.K. make a motion for three years.
That would take it into a third Council from now, so do you want to do it for two years
with the option to extend it for another year per approval?
I prefer three years simply because, assuming once again that the world progresses
and does well. We have invested tremendous costs in this already so the last thing we
want to do is take three years. But at the same time as we continue to spend more
ED & Planning Committee
Meeting Summary for June 15, 2009
Page 4
Carter:
Lassiter:
Kimble:
Mumford:
Lassiter:
Carter:
Lassiter:
Carter:
Kimble:
Lassiter:
money all the three years does is give our investment team comfort that we are not
throwing good money after bad. Given the economic conditions going in a direction
that was unexpected, I would feel more comfortable with three.
I appreciate that, I am concerned about skipping an interim Council and their ability to
decide on this.
If you want to take it at two and a half years, until November 2011, that would get
you through the current Council. Make it until December 1, 2011, that would still be
the current Council and be responsible for it that would be about two and a half years.
Second question; your motion said the City would not take the property maintenance.
I think what staff has said that they would like to work out that arrangement. We
have a maintenance responsible report today? We just secured it, if something
happens there and we have to stop and take care of it I think what I heard was to let
us work through how to do that? Come back with some kind of a maintenance
agreement that would take into account use on the property and an operating
agreement that states who is responsible it. So let’s make a motion for that purpose.
Just a comment, I talked to both Jim Donnelly and Ruffin Pearce about this and I know
you had a conversation about the programming ought to be in line with Center City
Partners and find ways to link up to what they are trying to do. I think we talked about
some event use and other kinds of things that will fit very well on that site. Make
these things tie in with their overall effort to their productivity in Center City.
We have comments to Center City Partners about this property.
December 1st is a Thursday. I don’t remember exactly when the Council will end.
The following Monday, it’s a ceremonial meeting.
Yes, but it needs to be an action meeting.
I just picked a random date.
Back it up to that number.
That works because that means that Council would have to take action on it.
Yes, Council would have to decide by that date and that current Council would have at
least two or three business meetings during the month of November if they had to
work through something. December 1, 2011.
Motion:
Make a recommendation to City Council to: Approve the seventh amendment to the
Purchase and Sale Agreement for the Carolina Theatre with CMP Carolina Theatre, LLC
(CMP), to extend the closing date until October 15, 2009 and pending resolution of
easement issues then again until December 1, 2011 at no cost to CMP and direct staff
to negotiate a property maintenance agreement between CMP and the City.
Lassiter:
Motion made by Kinsey and seconded by Carter. All in favor say aye, it’s unanimous.
Vote:
Lassiter
Mitchell
Carter:
Foxx:
Kinsey:
Yes
Absent for vote
Yes
Absent for vote
Yes
II. Subject:
First Ward Park & Parking Deck
Lassiter:
Back then to First Ward Park, we now have PowerPoint information in front of us. Tom,
are you going to start the discussion?
I want to first update the Committee members on the status of where we are. We
have the developer agreement in its final draft. We have some outstanding issues and
complications with the County developer land swap which is going to force the County
Commission to push back their consideration of this. We also have some issues on the
liquidated damages on the workforce housing as well as the language around the
parking deck maintenance. So, we now have what we call tax tinkering for the park,
this is what we talked to Council about last Monday. We are going to share with you a
Flynn:
ED & Planning Committee
Meeting Summary for June 15, 2009
Page 5
Lassiter:
Kimble:
Lassiter:
Kimble:
Flynn:
Carter:
Flynn:
recommendation on that but we have yet to see the language on that as well. Finally,
we have not been able to come to an agreement with the properties around the park
on the cost for the Brevard Street. We would like to push back Council consideration
of this to the meeting in July, so we are not here asking for a recommendation today.
You have a meeting scheduled for July 15th, and that is when we will be asking for a
recommendation.
July 15th is that a Zoning meeting?
That is a Wednesday.
Committee meeting for July 15th?
You can still take it to the July Council meeting.
Once again to familiarize everyone with the park layout, UNC-Charlotte is down in the
right hand corner. My understanding from Dennis Rash is that they are about ready to
break ground this week. You will see the park design has been developed with 8th
Street staying open through the park. The part of the Tax Increment Grant provides
for 1335 total public parking spaces, 25% of those would be hourly and 75% would be
monthly parking spaces. They can be rented out on a monthly basis but only on within
those timeframes, 5:00 to 6:00pm weekdays, that dedication would be made for thirty
years. The grant payment schedule, the developer has until the sixth year after taking
the Certificate of Occupancy on the first deck. We are all looking forward to that being
the underground deck. After six years they would have to make their first request for
payment. The grant goes for 10 years from that time forward or until it reaches the
maximum grant.
I am concerned about your phraseology.
Are you looking for this to be the
underground parking deck?
Yes. The developer is 95% certain but they wanted some flexibility to do the above
ground deck first and that is with the lots at the bottom of the picture. In case they
can’t find the financing in these times to do the underground deck. That is certainly
their intention; that is certainly where they have spent the bulk of their engineering
and design work; we have spent that with them, but they wanted that flexibility. That
is the grant payment schedule; once again at 45% of Incremental Taxes the maximum
grant that we have agreed to is $29.75 million dollars that is City/County. When we
scanned this work back in June of last year, we had an estimate a very rough estimate
of $26.1 million dollars. What has been added to that number is the soft costs of
building the deck, the specs were not included in that cost. The engineering, the
design work and the technical aspects were not in that number. We now have a
complete design for the underground deck so we have a much better understanding of
what those costs are and a much better understanding of where the rock is on that
site as well. All of that leads us to a maximum grant amount of $29.75 million dollars.
The underground deck cost could be reduced by up to 85 spaces on one level if
underground deck costs exceed estimate, in other words, if they got in there and
found a whole lot more rock than they thought and got to a point in their budget to
keep going. But those spaces, the 85 spaces, would have to be added to the above
ground deck. That has to be started by December 2011 and the model, the model that
the developer has been using, would indicate that the developer would have to have
about $700 million dollars of new incremental investment on the ground by 2023 in
order to meet the maximum grant amount. Looking at North Park the part north of 8th
Street would need a Tax Increment Grant for that. The policy framework had the
County constructing that, they are now not able to fund that portion of the park. This
is what we talked about here at the last meeting the Committee said to see what we
could do, we have come back to Council and Council has approved us moving forward.
This is the area between the two buildings here at 8th Street where all those trees are.
It’s about 8/10 of an acre it clearly is going to be open space that UNC-Charlotte is
going to be building there. It really connects across to UNC-Charlotte to the rest of the
park as well as connecting the Levine Properties future office building. We think it is a
very important part of the overall project. This is the issue we brought up to you, we
have worked with the developer and the County and the developer is willing to build
ED & Planning Committee
Meeting Summary for June 15, 2009
Page 6
Carter:
Flynn:
Carter:
Flynn:
Carter:
Lassiter:
Flynn:
the park and be reimbursed for it through a Tax Increment Grant. The grant would be
for five years, it would be the first five years of the project. The City contribution
would be taxed at $2.3 million dollars, so if the City paid out $2.3 million dollars by
year four on this that would be the end of our responsibility. This is still 45% of
Incremental Taxes. If needed to pay off just the land cost, if we have to pay off all the
land cost and it’s still below the City tax there would be another payment added to the
very end of the parking deck. So the sixteenth year there would be one more
payment if we have not paid off all of the land costs.
Could you tell us what that amount might be within the final payment cap? I want to
keep a running total of how much more we are investing.
It would not exceed the $2.3 million dollars. The City payment would not exceed the
$2.3 million dollars even in the sixteenth year.
So, we have that running commitment for the TIF projects? I have not seen a
statement recently.
We have run that number and this project leaves 30% percent of the Tax Increment
available, that is with the new North Park stake, which doesn’t affect that at all, what
is more effective on that is the reduction in the property tax assumption that is used in
the model from 2% to 1-1/2%. Finance did that to remain consistent with all of the
other models that they were using. So that is where you will see that it has dropped
from 40% left to 30% left.
Could we distribute that statement to Council?
We just got that in our final budget. It was revised in our budget documents.
We ran it to show the North Park TIG as well; you are right it was not in your budget
we have updated since then. So that is the issue and we have recommended that the
City take it on and make a contribution toward the park north of 8th Street. 8th and
Brevard Street reimbursement this is a project where the City committed to raise
Brevard Street, we have since moved to try to work out a reimbursement agreement
with the developer. We have offered to pay the developer $5 million dollars plus
$170,000 dollars for already completed design work that was paid for by the
developer. This $5 million dollars included a 10% contingency. We estimated that the
cost would be about $4.8 million dollars or $5 million dollars with the contingency the
developer has not accepted that $5 million dollars. In a letter we received the
developer explained their thoughts on that. I think there are two things to consider
around this project. In all of your tax reimbursements agreements, if you look at IKEA
and City Park, the City has never paid all of the cost, it has always been that
understanding with the private sector developer is going to benefit from this additional
City infrastructure that we are putting in. For example, the IKEA road cost was about
$7 million dollars, your maximum grant was $5.2 million dollars. So there is
recognition that there is a private benefit here. Secondly there is about $150,000
dollars in that $5 million dollars that is the amount that the developer would have to
pay to meet the UMUD requirements, which includes the sidewalks, planting strip,
trees, all that is provided by the City. Having said all that, the City would then move
forward, if we cannot reach an agreement, and build the 8th and Brevard Street
ourselves. We could not do that until 2011 because this is funded from November
2010 in bonds, so we could not do anything until those bonds pass. So we would be
looking at a 2011 start, by the way the street would be under construction when UNCCharlotte opens its building in May of 2011. I think everybody agrees that we want to
try and figure this out; we just have not been able to do that at this point. At one
point at 8th Street we were trying to make this more special street with bollards and
street furniture and street pavers. We were unable to get within the $5 million dollar
budget, we think that’s probably a $300,000 dollar add on to this. We would have a
sidewalk, street trees and planting strip, it will be a very nice street; it will not have
those extra amenities that we wanted at one point. We would replace the water and
sewer and storm water, there is a Storm Water improvement project that was already
in place set to go that would also be done at this time. It would place all the utilities
underground as well install $500,000 dollars in street light, pedestrian lights and
ED & Planning Committee
Meeting Summary for June 15, 2009
Page 7
Foxx:
Flynn:
Foxx:
Flynn:
Kimbler:
Foxx:
Kimbler:
Foxx:
Flynn:
Lassiter:
Carter:
Flynn:
Carter:
Flynn:
Carter:
Flynn:
Lassiter:
Brown:
traffic signals. The CIP includes $5.5 million dollars and then the $170,000 dollars
would come from Storm Water.
I am surprised that we are talking about putting a traffic signal there. Can someone
speak to me about why we are doing that?
A traffic signal at the corner of?
8th and Brevard Streets.
Is Jim Kimbler here from CDOT?
Did you say 8th and Brevard?
Yes.
We are not completing putting a signal there; we are looking at 9th and Brevard.
Thank you.
The other provisions of the agreement are around workforce housing; there are fifty
rental units they would say as workforce housing for twenty years. 35% of those units
must be two bedrooms. You will see up there the AMI breakdown of those. We are
still negotiating penalties around what happens if the developer does not meet them.
We have previously shared with you the MWSBE Goals; this is a City County project so
the numbers that we have agreed to with the developer are SBE 6%, County MBE 8%
and County WBE 5%. We would like to come back to you on July 15th for the ED &
Planning Committee recommendations and then to Council on July 27th and the County
Commission in August. The County Commission would not be able to do anything on
the development agreement until the land swap transfer has been completed
sometime in August.
If you have questions for Tom or the staff members; we also have Jeff Brown and
Daniel Levine here to talk about additional issues that we are trying to work through.
Regarding your comment about the bollards; looking at the cost and personnel to
move the street barriers every time there is a function at this park and apparently this
park will be very much used for blocking traffic, the market, electricity involved, etc.
I am not sure if there is comparable cost and if there is comparable cost for both
methods it seems to me that the bollards would be preferable. They’re more
structured they are always on site, they do not necessarily involve personnel; they are
more sturdy and can protect the area better. I am concerned about it, I know it’s a
small issue in this financial issue, but it’s interesting.
Is there any study or
comparison between the two methods and what it would cost?
It would be bollards that would be manually put in and out, so you would still have a
labor cost. They are not the type that automatically rises up and down; some of them
have to be screwed into the ground.
But they are still available as bollards?
Yes.
They will not be the simple traffic barriers?
Bollards, they will still have labor costs. Our attempt to do this is to see if we could get
it in the scope. Right now we don’t think we can get it with the money that is
currently available.
Let me recognize Bobbie Shields; our counterparts have been working with this
aggressively on the County side and are trying to stay on the same path and running
into a little bit of a wrinkle. I understand with the School System and the economic
events they are trying to work around. Let me call on either Jeff Brown or Daniel
Levine; you have a copy of the e-mail that came to late this morning. Jeff Brown can
walk us through this and give us an idea of where the issues are and the alternatives
that we as a Committee can think through and offer recommendation to Council.
Daniel Levine is here as well to answer specific questions that you may have. First I
want to thank you for the patience of the Committee and the staff as well as the
County. We have been working for almost two years on this project and we are close.
The economic times and challenges have resulted in some changes to the framework.
As I have said in the material before, these changes have actually resulted in taking
on some additional burdens for Levine Properties. Levine Properties is committed to
making this project work and working with the University in creating what we believe
ED & Planning Committee
Meeting Summary for June 15, 2009
Page 8
is powerful stuff in the long term for the community. We have worked with City Staff,
County Staff and UNC-Charlotte to adjust the project framework initially approved in
July of 2008 in order to respond to the changing economic and budget conditions. In
this regard, Levine Properties has agreed to take on the following responsibilities not
initially contemplated in the approved project framework in an effort to keep the
project on track. Initially the City would provide for the infrastructure work in Brevard
and 8th Street as you recall in July of last year. Levine Properties will take over the
City’s commitment to complete street and utility infrastructure work principally to
Brevard Street and 8th Street, subject to a delayed reimbursement by the City. This is
a street and not a Greenfield Street like some of the other examples that have been
used. It’s old and creates a great deal of uncertainty and risk when you are dealing
with the public Right-of-Way that is beyond what we think would be a modest
contingency risk. The request of the City staff when Levine Properties take over the
construction work that it would be done on a turnkey basis. Set a budget number, the
private sector would work hard with staff in coming up with a final sector based
number and if the budget was exceeded because of challenges that would be within
the developers risk. Not being comfortable with the number that was set a month ago
in the CIP, we felt like that number was too low. We are trying to get that number in
a place where Levine could take on full measure of the risk associated with it. We are
not far off, but we do have a difference in the neighborhood of $250,000 dollars. The
private sector numbers have been shown to go up; this project will not start taking
place within 10 to 12 months. The result in that could be; as we are all aware
petroleum prices are going up, the concern is that petroleum prices would be radically
up and result of that is that these numbers that we think are low right now will impact
the project even more. The Levine’s are willing to take over the responsibility and the
coordination benefits that come from taking over. There is additional time and energy
as well as additional more equity in financing to get this piece of the puzzle done.
They are willing to do that, they just don’t want to be in place with those numbers that
they feel like are going to be too low to begin with. Below I have summarized the key
aspects of the project for your consideration. As you are aware the project fulfills the
vision of the 2010 Center City Plan to provide an urban park in First Ward, addresses
the need for public parking in uptown, supports UNC-Charlotte’s urban campus,
provides a possible venue for a Center City farmer’s market and provides a catalyst for
over 2,000 new jobs and economic development at a time when jobs are desperately
needed. As currently proposed, the project accomplishes these goals by leveraging
tax revenues from private sector development using a 45% tax increment grant model
thereby creating new jobs as well as increased general fund revenues.
We have worked cooperatively with the City staff, County staff and UNC-Charlotte to
adjust the project framework initially approved in July of 2008 in order to respond to
the changing economic and budget conditions. In this regard, Levine Properties has
agreed to take on the following responsibilities not initially contemplated in the
approved project frame work in an effort to keep the project on tract:
1. Levine Properties will take over the City’s commitment to complete street and
utility infrastructure work principally to Brevard Street and 8th Street, subject to a
delayed reimbursement by the City;
2. Levine Properties will take over the County’s commitment to build the First Ward
Park improvements subject to reimbursement by means of the Tax Increment Grants
from the new development and;
3.
Levine Properties has agreed to take the risk that the costs of the park
improvements and park land will not be reimbursed to Levine Properties if the desired
level of development and resulting tax revenues are not achieved.
The accommodations by Levine Properties create increased equity needs and
contingency risk, but Levine Properties is committed to seeing this project to fruition.
We are very close there are some adjustments to the framework with Levine
Properties taking on a great deal more risk and having to come up with more equity at
the same time we are very conscience of the budget constraints. When you look at the
ED & Planning Committee
Meeting Summary for June 15, 2009
Page 9
Foxx:
Brown:
Foxx:
Flynn:
Foxx:
Kimbler:
Foxx:
Brown:
Flynn:
Foxx:
Brown:
numbers that are generated in the first year those numbers provide for substantial
City revenue. The difference of $250,000 dollars we think can be made up with
looking at the modeling. If you look at the numbers that I show in 2011 the
cumulative to the City is a little less than $200,000 thousand and that is in that one
year alone. In the following years, we expect that number to go up a little bit. We will
be more than happy to take on the risk of doing this work and if it goes wrong we will
take that risk. But we cannot start out of the box feeling like the numbers that have
been created are lower than what they should pay, with the revenue provided in the
55% percent.
I am going back to the question that I asked before. Under the scope of work for 8th
and Brevard Streets, the $200,000 dollar difference that we are talking about here
goes back to the scope on 8th Street. You are not satisfied that the number that has
been quoted to get those improvements done is adequate, is that correct?
In view of the whole project.
And I have a question about scope, because the idea is to make an improvement on
8th and Brevard and we are rolling into the number of street lights on 7th and 9th
Streets. I am trying to understanding some of the costs here possibly being part of
looking at the project beyond just 8th Street. I would expect to see all of the money
being used on 8th. Can someone help me understand why we planned it beyond that?
In raising 8th Street we also have to raise Brevard to come up to it, so the project
would really have to start at 9th and 7th Streets. Using Urban Street Guidelines, we
applied the guidelines in that entire project from 7th to 9th Street. Right now there are
no poles; there are no poles on 7th and 9th Streets, it is part of the Urban Guidelines to
put those there so that is where you get the light poles. The other thing that this
project does is provide for Brevard Street to have two-way traffic at some point in the
future. So that is the other reason for wanting to do the work on 7th and 9th Street as
well.
How long into the future for Brevard Street to go both ways?
We are currently doing a special design for Brevard Street North to 12th Street it is
obviously not in the CIP at this point. And will be a fairly expensive project due to the
interface with I-277. Short answer is that it probably is 10 to 15 years away.
I really think that the scope needs to be reexamined to make sure that it is as
compacted as we can make it, because we are talking about $200,000 dollars in a
project that we estimated to be at $5.5 million dollars. It would seem to me that we
can make some minor adjustments to the scope to get to the number that we need for
this project.
We appreciate that point, we are working hard on this stud; we will continue to work
on that. This a project that will allow us to get this business street in here sooner that
we think; a private sector contractor and Levine will look at these numbers and we
think the number between that and the City staff is lower than that. We are willing to
take the work and risk missing the budget but we just can’t go out there with having
seen numbers lower than that.
I think you are asking, what are the other scope reductions that could generate
another $200,000 dollars in cost estimates and what are the consequences?
Right, without compromising the goal, I don’t want Brevard to be compromised by
scope changes. But if there is something that is optional about that line item in
particular I would want us to look at it. The other question I have is, I know that there
are some prices coming in that are markedly lower than they were expected. Have the
staff and private sector folks that you have talked to; are they satisfied that they have
kicked the tires enough to be confident about what you are saying?
We do appreciate the work that the staff and Jim Kimbler have put into this. Back in
the fall we worked to estimate what this scope would cost. We hired Cole Jenest &
Stone, who now has the scope. I think we agreed to take this to the market place five
different times to reach the price line. My concern is that oil can go on from $100
dollars a barrel to $40 dollars a barrel; these prices include very aggressive prices
based on a weak market place. If oil goes up by $70 dollars a barrel and this work
ED & Planning Committee
Meeting Summary for June 15, 2009
Page 10
Lassiter;
Carter:
Lassiter:
Foxx:
Lassiter:
Rash:
does not begin until next May at the earliest, so you really take a risk. I think there
are going to be more price increases over the next 12 to 14 months that there are
going to be price decreases. We are willing to do it but we are not willing to take it
knowing that it’s below what the current pricing in the market is.
Let me try and explain staff had a number that was based upon estimates that has
been relatively fixed. Staff analysis to date estimates the cost at $4.8 million dollars;
but that is not a fully engineered design. That is a best guess based upon the data we
have in construction estimates. Levine Properties has gone an additional step further
and had hard estimates developed which from their estimates shows the cost to be
$5.2 million dollars. So there is a variation within that based on upon depth of analysis
and Levine Properties has extended something in the neighborhood of $200,000
dollars to figure that out; which is an absorbed cost that we normally assume with a
construction project. If we were going to build it we would go through the same kind
of design and engineering estimating cost as part of that construction. The second
point is the City created this because of our desire to bring 8th Street through the
project. We have long since gone over that issue, but now that we are there is our
desire to have a through street that has created a number of these costs relative to
building that street, designed the street and related issues as you move to make this
the new Brevard. My sense we have to take all this in to account as we try and close
this gap. My prospective is that we do not want to lose this deal for $200,000 dollars
we go positive cash flow very quickly once the project starts. The cash goes positive
for the County a little bit behind us but they are going to get an improved park that
they cannot otherwise afford in their current debt capacity. To me we need to find a
way to close this gap and be a little more flexible on our part on how we reimburse all
these costs and get ourselves in a position to make this deal happen in lock step with
UNC-Charlotte to get their building out of the ground. The way we get there is with
some flexibility on our part staff has a position as policymakers, we have the ability to
say o.k. we want to find a way to close that either by providing some additional
reimbursements to create a narrower negotiation point between what we are trying to
do on the City side and what Levine Properties are trying to do on their side all within
the confines of the Tax Increment Policy we are using to create the partnership.
I really appreciate what you are saying Mr. Lassiter, because I think this project is one
of those higher balloons for the City that creates our landscape. There may be some
other funding sources we are creating a park and urban street. We are creating a
green space in the center of the City, urban street bike and pedestrian-friendly
environment and market for the community, these are environment improvements.
What about looking at Environmental Grants? These are stability funds that are being
offered in the stimulus package. That might get us somewhere that we may not have
as many options.
It’s possible.
I think there is an opportunity to narrow the scope of work that is done within this CIP
and to move some of these other things that are outside of 8th Street itself on to
another part of this on to our CIP ledger. Is there a way to do that so that you create
yourself some room to manage some of these costs that we are talking about? You
still get the work done its just done on a different part of the ledger.
Dennis Rash with UNC-Charlotte has raised his hand, since he is a player.
First off everything that has been said about the work that staff on both City and
County have done. There are more moving parts on this than any other project that I
have seen and it’s remarkable that we are down so close. That having been said there
are three observations that I would be remiss if I didn’t point out from the University
prospective. I really do want to underscore the obvious; this is not doing a developer
driven project. What you are asked to do with Economic Development is fund three
very important public projects. A public university wants to bring it’s presence to
Center City and has been encouraged overtime that this would be a vehicle that we
could find. No more money is available. It brings a public parking deck that will be
encapsulated by a public park. The parking deck is not as big as we would have liked
ED & Planning Committee
Meeting Summary for June 15, 2009
Page 11
Lassiter:
Brown:
Lassiter:
Brown:
Lassiter:
Carter:
Lassiter:
it to be but it is a wonderful model for us as a city, saying how we should go forward
in dealing with the infrastructure issues. I hope this Council won’t lose sight of the
opportunity to front load the economic stimulus. The logical implications of staff doing
the infrastructure work don’t begin until 2011. What is germane about the way, and I
thought very creative on the part of the City and County staff to look at rolling this
into the reimbursement. It takes advantage of the developers’ assistance on that
side; it also creates jobs in an area that is targeted to be the highest area for minority
and small businesses effort and that is on the infrastructure. But that is very
complicated area, so we may not get much participation or as much as one would like.
Overall the front loading of the economic stimulus jobs created is important with the
reimbursement agreement being handled by the private sector. I implore you when
looking at scope lets don’t value engineer out the importance of the pedestrian impact
on this. It’s no secret that the University is no great fan of the idea of a park that is
cut through with an operating street, but we understand the importance of
connectivity and perhaps with the public market there is a staging opportunity that
this could take advantage of. But the limit in the amount of automobile traffic is
terrific opportunity for a pedestrian scale and we can’t afford to lose that. So as we
are looking to narrow that gap with creative contingencies to be able to include that
piece of the scope.
Since we have a suggestion from staff to defer this to our July meeting; let me get a
thought from Levine Properties relative to what you like and don’t like or prefer
relative to the decision process.
I think the agreement with the County has to defer to August. If we defer into July
that gives us time to work out and refine the scope and the dollars a little more.
I want to say amen to that.
With the positive sentiment that seems to be around this room.
I think we want to get this thing done. Let me just suggest that as we reflect on the
staff side of about how to make this thing come together, that we look into Mr. Foxx’s
suggestion of scope and are there costs that are assigned to this project that perhaps
should be assigned somewhere else. Let me suggest that we look at the full load of
the costs in the sense that there has been design and engineering work that has been
paid by Levine Properties to come up with a scope with a sharper pencil than ours
engineering and design work to date and is potentially a reimbursable cost. Ms. Carter
has suggested that there may be a source of funding that would be available based
upon environmental elements within this project that may be available to us based
upon our grant making. Then there may be some other things that present
themselves. We have a City estimate of “X” and a Levine estimate of $4.8 million
dollars. Beyond that to construct some sort of claw back if there is in fact the costs do
come closer the number we have a way to recover a portion of that. So if they we are
right and their numbers are not correct, the way for the City to recover some of that
reimbursement costs. I would encourage us to look within those alternatives and any
other that come up in the next 30 day that give us some way to make this thing work
or an alternative menu to the Committee that says o.k. we believe facts if you want to
fund this here are your choices that you can in fact use and some assessments from
staff and particularly from our lawyers perspective. I don’t think we want to risk
anything that puts us past the outside dates. We can fairly make our decisions next
month and give that to Council for their decision at the end of July. We tracked the
County process and they are running on exactly the same schedule so that everything
is fully in place in August and this project can go forward with Council and County
Commission approval. Are there any additional comments or suggestions? Alright,
let’s do that I will make a motion for our next meeting.
I do want to say that I respect the staff’s perception and value of the structures; I do
appreciate all the efforts and work that you have put into this project.
Everyone recognizes the complexity of this deal and as we get further in, it becomes
even more difficult to bring all the pieces together. Going to the Music Factory the
other night and seeing the benefits of all the hard work, it was worth it. I think we are
ED & Planning Committee
Meeting Summary for June 15, 2009
Page 12
going to have a similar kind of sense of place when this is all said and done. When it is
built out and the University is in live time on that property and the green space is
active and open and active it is really going to change an entire piece of this
community; right now it is relatively desolate. It’s an area that Mr. Foxx goes through
each day that is just sitting there and it will be vibrant and a wonderful addition.
III. Subject:
Arts & Science Council (ASC) Endowment Campaign
Lassiter:
Last on our agenda today is an update on the Arts& Science Council Endowment
Campaign; Kristin Bradberry is here with us to give a report. We have representatives
from a number of the affiliates and partners in this project, we appreciate John and
Patrick and Bill are all here. They are getting excited about the progress on their
facilities and we are getting increasing closer to being able to walk in there. As part of
the Chamber Inter City Visit this week, we will have a chance to tour several of them
and get a really good view of what is going on. Let me call on Kristin to give us an
update.
I want to talk specifically about the next twenty-four months and how we are
progressing. The Campaign for Cultural Facilities has an $83 million dollar endowment
campaign. The campaign deadline was extended to March of 2010, a $21 million
dollar balance in pledges is needed. In the next twelve months our focus will be on
successful completion of the Endowment campaign. We are conducting facility tours
and our major gift approaches $25,000 dollars and we do need another seven figure
gift to make this happen. We have a new president that was announced last week; he
is acutely aware of the earnestly of being successful on this project. The Cultural
Organization leadership and ASC leadership teams have met several times to
brainstorm on other options for managing costs and all agree that the best path is the
Contingency Fund. The Contingency Fund will be utilized for fiscal year 2010 with
distributions beginning in July of 2009. The Contingency Fund has been invested in
cash equivalents for the past several years and is not subject to market volatility. In
our second twelve months the new State law offers additional options that will be
reviewed by the Finance Committee in early 2010 regarding FY 2011. To give you a
quick project update we expect the Harvey B. Gantt Center for African-American Arts
& Culture to open in October of 2009. Followed in 2010 by the Bechtler Museum of
Modern Art, Knight Theater, Discovery Place, McBride – Bonnefoux Center for Dance
and the Mint Museum. We have scheduled tours for the Chamber Inter City Visit on
June 17, 2009 and potential donor tours for June 18th and 25th. We are going to take
a break in July in preparation for opening the Gantt Center in October. I know the
Cultural leaders are working on a ribbon cutting ceremony.
I just want to applaud you and Lee Keesler and all of the folks at the ASC for keeping
the steering wheel going on this effort in raising money. I know it has been a tough
environment in the last few months and you all have been working hard so kudos to
you for all your hard work. I asked the question when you all presented to us in 2006
I basically said that I have a concern about the impact of this campaign, the
endowment and the focus on the capital side on the performance side of the equation
for our arts organization. Can you give us a picture of what kinds of things they are
dealing with on the artistic side? To me that is what gets people in the door and keeps
the organization vibrant. I am not going to diminish the value of having a nice building
but we want to make sure the programming is commensurate with the level of the of
the facility. Can someone speak to that?
I will try to respond to the Councilman. Having the Huett Collection provides an
extraordinary opportunity for us. We have also engaged a wonderful artist and
curator Dr. Michael Harris, on staff. He has actually scheduled the first two or three
years of exhibitions for the Harvey B. Gantt Center, beyond that we are planning to
offer the very best in local and regional and national exhibitions. I was up in Chicago
about three weeks ago and then met with the president of Art Institute of Chicago.
We are in the process of establishing a partnership where we will be able to bring
Bradberry:
Foxx:
Kline:
ED & Planning Committee
Meeting Summary for June 15, 2009
Page 13
Lassiter:
Adjourned:
exhibitions out of the Art Institute a permanent collection. This is a unique situation in
that they have been collecting African art work for more than 100 years. We believe
that the programming is going to be very strong to generate the kind of interest and
rapport that will allow us to be successful in serving the public. We are looking for
other opportunities to collaborate with our other partners. We feel very excited about
building upon these collections and taking full advantage of this extraordinary building
that you have made available to us.
We also have exhibitions that will include Bank of America’s Corporate Collection from
all over the country that will have some of the finest. These items were displayed on
the Andy Warhol show this past year. Other collections will include various studios
from around the country. It will be an international attraction. We have been in
partnership with ImaginOn for the past several months that will provide a wonderful
family gallery with hands on activities for children and students. The hands on
activities will provide an introduction to the fine arts. I think our programming will be
very strong and not without challenges in fund raising as every non-profit is going
through at this time.
I do want to note that Discovery Place does not get much attention because they are
renovating the facility. What they are doing inside is equally remarkable in terms of
changing the way that facility is going to operate in this community. I am not sure if
the Council Members received a copy of the Apollo Magazine which is a leading
international art collectors’ magazine that featured Andre Bechtler and the Bechtler Art
Museum, which is tells you the kind of game we are getting into. So we are going
from a very regional art destination to an international art destination. That is again
something that is hard to imagine from where we sit today, but you will have folks
that will travel to this community simply for the opportunity to go to these art
collections and programs. We talked lovingly about the Hyatt Museum in Atlanta;
people will begin to reflect on our museum name in exactly the same way. They will
know what it is and where it is and that is a very different world than we are in now.
Thank each of you for being here and we look forward to walking with you on a hard
hat tour of the facilities. Our next meeting is July 15th we know why there will be an
agenda. We will also have a few things to wrap up through summer; we are only
meeting between now and mid August. Thank you all, we are adjourned.
12:55pm
7/23/2009
Carolina Theatre Update
Carolina Theatre Update
ED & Planning Committee
g
May 13, 2009
ED & Planning Committee
June 15, 2009
Development Agreement • City sale of theater and land to CMP Carolina Theatre LLC for $1M
LLC for $1M
• City commits sales proceeds to renovation of theater by CMP
• CMP builds condo tower and commercial space
• 90% City/County Synthetic TIF for arts programming up to $4.5M
$4 5M
• Sale closes when CMP reaches specific benchmarks such as regulatory approvals, full financing and agreements with Bank of America
1
7/23/2009
Agreement Status
• Have extended deadline for closing six times • CMP has made $250,000 in non‐recoverable option p y
payments
• Current option expires July 17
• CMP intends to complete project per existing development agreement (keep and renovate theater)
• CMP has materially met all closing requirements except securing full financing
–
–
–
–
–
70% + of financing secured, searching for mezzanine debt 70%
+ of financing secured searching for mezzanine debt
8 of 20 residential units presold
All 5 floors of commercial space presold
Regulatory and easement requirements substantially complete
Operating agreement reached with Preservation Society
Developer Request
• CMP Carolina Theatre LLC approached City to close on property without full funding for development
• Closing creates Fair Market Value clause complications if agreement not fulfilled • City would need to recover property and subject it to upset bid • City staff and developer worked through multiple scenarios to address FMV and developer’s needs
• Two solutions are feasible 2
7/23/2009
City Option: Upset Bid • Have CMP make a fair market value offer subject to an upset bid process
–R
Requires extension of existing option for 2‐3 months to run i
i
f i i
i f 23
h
upset bid process
– If CMP is winning bidder, they would also retain the right to develop per agreement (keep theater)
– If CMP not winning bidder, theater likely demolished
– CMP concerned someone may submit a high bid without y
g
understanding the site’s challenges City Option: Extend Option
• Extend existing option at no cost for two ‐ three years
• Existing agreement remains intact
• City retains title and property maintenance responsibility for option duration
• Require CMP to make open space improvements to site in interim
3
7/23/2009
Interim Site
Next Steps
• ED & Planning Committee recommendation to City g
y
nd
Council on June 22
4
7/23/2009
First Ward Park & Parking Economic Development & Planning Committee
June 15, 2009
Status
• Development Agreement
– Final Draft being prepared
Final Draft being prepared
– Outstanding issues
• County/developer land transfer
• Workforce housing liquidated damages
• Parking deck maintenance language and enforcement
• Park TIG (Tax Increment Grant)Agreement
– Draft being prepared
• Brevard/8th Street Reimbursement Agreement – No agreement on reimbursement amount
1
7/23/2009
Overview
•
•
•
•
Parking Deck Tax Increment Grant (TIG)
North Park Tax Increment Grant (TIG)
8th & Brevard Reimbursement
Other Provisions
– MWSBE
– Workforce Housing
• Schedule
Conceptual Park and 8th Street Design
2
7/23/2009
Parking Deck TIG
• Public Parking Spaces (1335 total)
– 25% hourly
– 75% monthly (5:00am to 6:00pm weekday only)
75% monthly (5:00am to 6:00pm weekday only)
– Dedicated for 30 years
• Grant Payment Schedule
– Developer has six years from Certificate of Occupancy on first deck to request first payment
first deck to request first payment
– Stop at grant amount for first deck until second deck built; or, ten annual payments are made; or Maximum Grant amount paid
Parking Deck TIG (cont.)
• Maximum Grant Amount
– $29.75M
– Increase from $26.1M estimate due to:
• Includes soft cost of deck construction
• More complete design of underground deck
• Deduct for costs associated with office building above deck
– 11% return on equity to developer
• Underground deck could be reduced by up to 85 spaces (one level) if underground deck costs exceed estimate
– 85 spaces added to above ground deck
85 spaces added to above ground deck
• Deck must be started by December 2011
• Developer may build above ground deck first
• Model indicates $700M of investment required by 2022 to pay Max Grant Amount
3
7/23/2009
North Park TIG • Policy Framework: County funds design and construction costs of entire park (includes park t ti
t f ti
k (i l d
k
north of 8th Street) ($7M)
– County unable to fund park and land north of 8th
Street due to fiscal constraints ($4.6M)
Conceptual Park and 8th Street Design
4
7/23/2009
Park North of 8th Street
• .8 acres
• Covers underground parking deck
• Connects UNC‐Charlotte building and plaza to park south of 8th Street and cultural facilities beyond (i.e. ImaginOn)
– Important to UNC‐Charlotte vision for Center City Campus
• Abuts Levine Properties future office building
North Park TIG
• ED & Planning Committee asked staff to explore solutions at their May 13th meeting
• June 8
J
8th: Council ok’d
C
il k’d further staff exploration
f th t ff
l ti
• City/County TIG for first five years to reimburse developer for land and construction of park north of 8th Street
– City contribution capped at $2.3M
– 45% of incremental taxes
45% f i
t lt
– If needed to pay off land cost, sixth year payment occurs at end of Parking Deck TIG (16th year)
5
7/23/2009
8th & Brevard Reimbursement
• Developer/City Reimbursement Agreement
– Staff offered $5M plus $170,000 for already completed design work paid for by developer ($5M includes 10% contingency)
– City staff estimated cost: $4.8M
Ci
ff i
d
$4 8M
– Developer has not accepted City staff offer; wants to include cost of interest carry and 15% contingency ($200,000 additional)
– Previous City Tax Increment Reimbursement Agreements (Ex: IKEA, City Park) have not included carry cost or paid full cost of infrastructure
– $150,000 of the $5M is for UMUD required infrastructure (sidewalk, planting strip, trees) that the developer normally pays
• Consequences
– City builds 8th & Brevard beginning in 2011
– Street under construction when UNC‐Charlotte opens in May 2011
– Coordination of two or three different contractors working in same area
8th & Brevard Reimbursement (cont.)
• Scope of Work
– 8th Street through park conforms to Urban Street Design Guidelines
th and Brevard – Sidewalks, planting strips, street trees, pedestrian lighting on 8
,p
g
p,
,p
g
g
Streets
– 8th Street does not include: Street pavers, street furniture, bollards, etc.
– Replaces all water, sewer and storm water (Storm water contribution covers 9th Street, storm water improvement already planned)
– Places overhead utilities underground throughout project
– City installs traffic signals,7th & 9th Streets and street lights ($500,000)
• Source of Funds
– CIP includes $5.5M
$
– Storm Water: $170,000
– Reimbursement Payment due no earlier than July 2011
6
7/23/2009
Other Provisions
• Workforce Housing
– 50 rental units; 20 years; 35% must be two bedroom
• 30% @ 80% of Area Median Income
30% @ 80% of Area Median Income
• 20% @ 100% of Area Median Income
• 50% @ 120% of Area Median Income
– Could be built within one mile radius of project
– Penalties still being negotiated
• MWSBE Goal
– Applies to parking decks and park (also apply to road if Reimbursement Agreement approved)
– Goals:
• SBE: 6%
• MBE: 8% (County)
• WBE: 5% (County)
Schedule
• ED & Planning Committee Recommendation: J l 15
July 15
• Council Consideration: July 27
• County Commission: August – County issue involving land transfer must first be resolved
• Projected Construction Start: January 2010
7