ED & Planning Committee
Meeting Summary for April 18, 2007
Page 1
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COMMITTEE AGENDA TOPICS
I.
Subject: Scaleybark Development
Action: Review options for moving forward on Scaleybark Redevelopment and make a
recommendation to City Council.
II.
Subject: Review of Business Investment Grant Program
Action: Review proposed changes to Business Investment Grant Program.
COMMITTEE INFORMATION
Present:
Councilmembers John Lassiter, Andy Dulin, Don Lochman, Nancy Carter and
James Mitchell
1:30 p.m. – 3:00 p.m.
Time:
ATTACHMENTS
1.
2.
Scaleybark Station Transit Oriented Development
Letter – Pappas Properties, LLC
DISCUSSION HIGHLIGHTS
I.
Subject: Scaleybark Redevelopment
Tom Flynn, Economic Development Director: Council charged the Committee with looking
at options and bringing back a recommendation to the full Council on options on how to
proceed with the Scaleybark Redevelopment.
Questions/Answers/Comments
Lochman:
Flynn:
Flynn:
Tom, wouldn’t it be appropriate to explain what happened to the last proposal? I
am aware of the New Market Tax Credits, but it was alluded that there were other
things. Were there other things or was it just the New Market Tax Credits?
It really came down to the timing of the New Market Tax Credits. You may
remember there was a lot of discussion about that before this Committee and
after Council gave us direction to go forward with a MOU and other parts of the
Banc of America team came around and looked at that it became clear to us that
there was going to be about $3 million at risk for a pretty substantial period of
time before the City would have any certainty around the New Market Tax
Credits. That just created too much risk.
(Used PowerPoint to give an overview of the options going forward)
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Lochman:
Flynn:
Lochman:
Flynn:
Lochman:
Flynn:
Lochman:
Flynn:
Lochman:
Flynn:
Lochman:
Flynn:
Lochman:
Flynn:
Lochman:
Flynn:
Lochman:
Flynn:
Lassiter:
Lochman:
Lassiter:
When you say the City recovers at least full value of property, what is that
number?
It would be $5.4 million. The City’s eight acres was bought with a combination
of $2 million of Housing Trust Fund money and then $3.4 million of Smart
Growth money.
I may be over simplifying this, but under Pros under Option I, we save some
investment money on behalf of the City, right?
Save some investment money?
The City would have more money than would likely be the case on Option II by
not receiving it.
The City would probably recover the full value of their property under Option I,
the $5.4 million.
How about infrastructure and other things?
No, we wouldn’t.
I only bring it up from perspective, a significant Pro I assume would be monies
that the City would not end up spending, so I think that ought to be put on here.
There would be no City investment required in this case.
As a Pro we could say, City would realize savings of whatever.
(Continued presentation)
I am sorry, I am not getting this. First of all when you say South Corridor
Project, you are talking about the ½ cent sales tax funded?
Yes, the South Corridor Light Rail Line. This is the Full Funding Grant
Agreement.
Under the auspices of the ½ cent sales tax, what did they budget to put in this
location to serve the operational current fee?
The original budget included a 315 space surface park and ride lot. When the
overruns were encountered and a new budget was developed and is now part of
the Full Funded Grant Agreement, two assumptions were made. One, through
the sale and redevelopment of this property, CATS would no longer have to pay
$1.1 million for that surface parking lot. That was deducted out of the budget. In
addition, that budget assumes that $3 million of revenue is realized by CATS for
the South Corridor Rail Line from the sale of this property. In effect, you have a
$4.1 million negative impact on the South Corridor Project.
But it would not be a negative impact on the City as a whole. You are picking up
$5.4 million full market appraisal for the other land. I think some of this is being
misnomer. It is not a Con in the big picture for the City, it is only a Con with
respect to the one funding portion thereof.
I think you are correct, we should have added a Pro that there is no City
investment required. We clearly need to point out that this has negative
consequences on the South Corridor Light Rail Project, and negative
consequences on proceeding Full Funding Grant Agreement that the FTA is now
reviewing.
Maybe we don’t need to get preoccupied with what is Pro and Con. We just need
to make sure we understand the math.
That is fine as long as subsequent to this meeting other people are on the same
Pro and Con without, from my view, having them be accurate.
Maybe the way to better decide what and should not be included, let’s make sure
ED & Planning Committee
Meeting Summary for April 18, 2007
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Flynn:
that the math is clear and clearly that there is positive cash flow to the City in the
sense that you would forego additional expense for redevelopment of the project
under an advantage or Pro. I think on the Cons column, and my understanding is
the way this is written, is that if you simply sold the City land and CATS retained
their land, CATS still has a $3 million debt that has to be repaid and they still
would have a $1.1 million expenditure that would have to be spent. That $3
million will have to come from somewhere and the $1.1 million would have to
come from somewhere because in the decision to put this property within that
assemblage it was assumptions in the financial model that they were to recover
their $3 million and in that would also have a project that would result in the
construction of the parking spaces. We can describe it appropriately, this is to my
knowledge being used to somehow press a particular point of view and trying to
describe the financial impacts and maybe the thing to do is as this process moves
forward, provide a balance sheet that shows the financial details and not try to
classify them in a word document.
Any other questions on Option I?
Flynn:
Carter:
Flynn:
(Continued presentation with Option II)
How does this impact the schedule for the South Corridor?
It would not impact the schedule. We would have to go out with City transit
dollars and build a temporary lot and we have sufficient time to do that. It
wouldn’t be the finished lot. It would be a temporary lot and we already have a
scoped out what that temporary lot would be that could be there for about 12
months or so.
Flynn:
Lassiter:
(Continued presentation)
You’ve got $2 million invested by the Housing Trust Fund. What are the
conditions on the use of that money?
It would have to be for affordable housing. If it was not going to be affordable
housing built on that site that money would have to be realized and repaid.
If there is affordable housing in a proposal do those funds get laid into whatever
the affordable housing component is and the funds have to be replaced, or is that
just simply adjusted the cost basis the City has on the property?
We adjust the cost basis the City has on the property. That is how we worked it
in the previous work as we approached this project.
If we did a proposal that did not have affordable housing there would be a $2
million refunding of that contribution?
That is correct.
When you say affordable housing, what percent of AMI are you talking about? Is
it 60 or does a portion therefore have to be affordable?
Council’s policy is 60% AMI with a certain percent at 30% of AMI.
That percentage for a Transit Corridor would be 5% of the 25%.
Would the average cost per unit of affordable housing be competitive with what
we technically see across the board in affordable housing?
In the past, we have looked at previous proposals and I think our cost per unit
ended up around $40,000 per unit. If you look at the average for the Trust Fund
the average per unit of investment is about $21,000. We have invested $40,000
to $50,000 per unit, being the high end of the Trust Fund in the past.
Flynn:
Lassiter:
Flynn:
Lassiter:
Flynn:
Lochman:
Flynn:
Watkins:
Lochman:
Watkins:
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Lochman:
I only raise the point because affordable housing clearly is desirable, but this isn’t
my definition of affordable housing … so if the costs are not within reasonable
proximity that would be something in my mind that needs to be considered.
Flynn:
Lochman:
(Continued presentation with Option III)
The FTA funding issue is the certainty you are talking about the $33 million that
was assumed?
Right, and the $1.1 million that we took back out of the budget. It is in that Full
Funding Grant Agreement that is proceeding to be reviewed and approved up in
Washington, D.C. They are looking at the same and would like to get some
certainty around that.
When you say Full Funding Grant Agreement, how much is that? Is that the
incremental amounts?
It is the Full Funding Grant Agreement and provides for the Federal
government’s contribution of approximately $199 million towards the $462
million Light Rail Project.
So it is retrospective as well as prospective?
We have received some of that $199 million. There remains $70 million that is
available this year for appropriation under the continual resolution.
… So their concern would be this $3 million is at risk …
That is correct. The $3 million and approximately $1.1 million.
I want to emphasize that was approximately $1.1 million. That was an original
estimate, but it really hasn’t been updated for about a year or so.
Flynn:
Lochman:
Tober:
Lochman:
Tober:
Lochman:
Tober:
Flynn:
Flynn:
Lochman:
Flynn:
Lochman:
Lassiter:
Lochman:
Flynn:
Lochman:
Flynn:
Lochman:
Kimble:
Lochman:
(Continued presentation)
I missed what you said. We would not see the parking deck?
They are not committing to a parking deck. There would be a permanent 315
parking spaces provided, which may or may not be in a deck in five years.
In theory, we are getting a temporary park and ride and then other things that we
think are helpful.
They will replace the permanent lot. They would build the temporary lot by
November 1. They would guarantee a permanent lot and it could be structure
parking, based upon development plans. It is roughly a $1.1 million cost based
upon our previous estimates. You will get that to replace the temporary lot at a
minimum.
In the last proposal, we evaluated Banc of America that they would see a 7.5%
return on their investment. Talking about a gap analysis. Are you back to that
again with this proposal, trying to figure out what that would be?
They have not run numbers on this proposal for us to analyze yet in terms of
what their gap is.
We will see that before, as a Committee, we make any decisions?
You would be able to see that before you approved the final development
agreement as a Committee and as a Council.
I make the point because obviously, when you start talking a million here, and a
million here, you have to figure out why am I doing that.
On the affordable housing, 24 units would be at 30% AMI and the other 56 units
would be at 60% AMI.
The average costs?
ED & Planning Committee
Meeting Summary for April 18, 2007
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Watkins:
I don’t have the average cost per unit, but it will cost the City about $25,000 per
unit.
Flynn:
Carter:
(Continued presentation)
Does this development include the Library that was proposed in the other
proposal?
They would work with the Library, but there is no commitment to include the
Library. Mr. Pappas would you like to address that?
I think you have answered the question. I think we would go back and evaluate
the plan and see how that may or may not fit into the plan. We would certainly
work with them.
Flynn:
Pappas:
Flynn:
Lochman:
Kimble:
Lochman:
Kimble:
Lassiter:
Lochman:
Lassiter:
Flynn:
Carter:
Flynn:
Carter:
Flynn:
Lochman:
Flynn:
Lochman:
Flynn:
(Continued presentation with the Proposal Balance Sheet)
With regards to land lease, would there not be a negative number in terms of use
of money. If we get a 2% return and you could X elsewhere, should that not be
put in there as a cost?
Yes.
My concern is and I don’t want to over exaggerate it, but I am seeing too many
instances where things are not enumerated here and they need to be enumerated
if someone or the rest of the Council wants to take a serious look at this.
I would also add, Mr. Lochman, there is a time value difference. We purchase
the land, that money is gone. The first $3 million only comes in now and the
other $3.1 million, so there is a time value there that is a cost to the City and we
will reflect that. Point well taken.
There are several things missing. This is taking land that is currently in public
hands and it all becomes taxable upon the transfer of the property. We can’t get
everything on here so I think we are trying to get the big buckets.
Don’t misunderstand me. I understand that this is happening very quickly.
The goal is to get the big bucket so you can see the big piece of the money
moving and we can appropriately discount or appreciate varying categories based
upon an injection of time value.
(Continued presentation)
So you are saying that this is not a permanent site for our parking perhaps? Is
that what I’m hearing? That we are not guaranteed a site for parking for CATS
after five years.
You are guaranteed that there will be 315 spaces at the Scaleybark Station. It
may move around within those 8 to 9 acres and we have told them it has to be
much closer to the Light Rail line and they are well aware of that.
Will the spaces cost us something in the future?
No.
I may have missed this, but what is the determining factory in whether the tiered
structure will be built or not?
The parking deck – if there is sufficient market to support a densification of the
site to require a parking deck.
I personally don’t understand that at all. I don’t understand what you just said.
They are going to have to find value to build residential and commercial
structures on that that can carry the costs of a $6 million parking deck. In other
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Meeting Summary for April 18, 2007
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Lochman:
Lassiter:
Lochman:
Lassiter:
Lochman:
Lassiter:
Kimble:
Lochman:
Kimble:
words, it would be market driven.
I don’t understand.
That was a condition under their prior proposal, that they would only put
structure parking if the redevelopment plan of the entire parcel would justify the
cost of the structure. Banc of America’s plan included a structured parking as
part of the proposal out of the box. Theirs did not. It would only be included if
in fact their development plan would justify that additional expense.
The development plan with a request for rarest form of infrastructure and
support, land and etc., the deal. The deal I presume was based on the delivery of
this, this and this.
No, if you read the proposal. The proposal is a phased proposal and you have at
the outset and part of it set back on this chronology here and its got timelines on
it. At the outset they will pay CATS by this October $3 million. Deliver a park
and ride lot, temporary provided conditions occur by November 1, 2007. Then a
series of things occur and based upon the timing of those various things that will
dictate their development plan. The development plan is really structured in two
phases and they can accelerate those based upon market ability. Their ability to
provide retail at a faster rate than planned, to provide additional residential units
or office at a faster rate, but initially what will be there is a lot and the beginning
construction phase of affordable housing component that may be part of a
broader residential component, but it could be by itself while the rest of the
development is being done and then our injection of additional infrastructure
grants are then spaced out based upon a loose expectation of that statement. I
think that is why they’ve got the ability to kind of ride the market out and why
some of the repayments don’t occur until later because they won’t know enough
until they reach the build out stage, that may justify structure parking.
Our investment would also be phased.
Our investment is sunken in mostly and then we’ve got three additional
components, two $1 million infrastructure grants and a $1 million loan that is
repaid at a discounted rate. Those dates are all set here, $1 million within 24
months of October 1, 2007, $1 million loan within 24 months of October 1, 2007
and an additional $1 million grant at the closing of City property for
infrastructure.
Correct, the second $1 million is timed with the take down of the second piece
of property.
It is important to understand that there is a disproportion of the percentage of
City investment being taken place in Phase I and then having that become
basically more onerous by having Phase II not come. In other words, the
developer saying I need protection against the market driven requirement for
Phase II. Our response, I assume is, well then our up front monies will also be
apportioned in similar vain. Otherwise, you end up putting money into something
that ultimately will prove to be move expensive to occur because you are not
getting the second phase. I keep thinking I don’t understand this because that
sounds so overwhelmingly clear to me.
The only disproportionate portion is the fact that there is a $1 million loan made
in Phase I that is at 2% interest and repaid with a balloon payment after 20 years.
I think you raise a good point that needs to be addressed as Tom goes back to
work on the MOU with Pappas Properties to determine how that looks if Phase II
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Lassiter:
Lochman:
Votaw:
Carter:
Votaw:
Carter:
Flynn:
Carter:
Mitchell:
Watkins:
doesn’t happen.
Let me put this in context. This is their proposal. This is not an agreed upon deal
and what we are asking appropriately, is questions about the nature of their
proposal, initial reaction staff has to some of those terms and terms that perhaps
we think ought to be addressed should we choose this direction. This ought to be
addressed as staff works through that deal. The issues of timing, issues of when
cash should be paid, issues of return of cash or clawback should things not occur.
All are important points we can raise so that if in fact this is the direction we
instruct staff to go and the direction we are to send to Council, we have raised
those kinds of points and they become part of a deal, if in fact that is what we are
doing.
It would seem to me that the gap would be more complex than normal if you
pursue it within the scope of this phased development. I am a little surprised
because I thought the tiered parking was a key consideration in the rationale for
pursuing this in the first place. I guess I’m wrong about that.
With regards to the 315 spaces, we said in the original RFP that they could be
provided either in surface or in structure. We really wanted the developer to tell
us, based on the density, what they felt was appropriate. In this case, what they
are saying is, it could be either or and if the density and the market catches up
where they meet that certain point, the surface parking is cheaper in the long run
and that is not really the highest and best use. If that land is needed for housing,
commercial or whatever, that then justifies building in that corridor. It is
either/or situation based on the market.
This is a binding agreement, correct, that goes on into fatuity as the land …
No, we would look for a long-term agreement with the developer that gives
CATS and the City the right to occupy and maintain those 315 spaces. I think
when Tom referenced the 5 years, moving around as the development plan comes
to fruition, but ultimately you need the long-term agreement and we have to show
that to the FTA as well.
I had some concerns about the value of the land increasing as we go into the
long-term process or second phase and the acquisition is obviously keyed at the
land being valued at the same amount as valued currently. Is that correct?
That is correct.
Then I started thinking about the value of the parking deck and the inflationary
cost potentially, so perhaps offsets to some degree. There is an element of
fairness here.
I am glad to see that affordable housing is still an option in the project and it has
increased. I can remember years ago when serving on the Housing Committee
we had a policy of 50 units. I think what they shared with us is that all of the
affordable housing units would be in one building. Didn’t we create a policy
about concentrating so many levels of income? I can’t remember the exact
policy, but was it based on how many units could concentrate at a certain level of
income. I want to make sure how does this 80 units – does it create a conflict in
one of our policies?
You have adopted a policy specifically for transit station areas that basically talks
about no more than 25 of the total number of multifamily units in the area should
be affordable housing. Associated with that between 5% and 25% of affordable
housing units should be for 30 AMI and below. There are some parameters and I
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Meeting Summary for April 18, 2007
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Mitchell:
Watkins:
Carter:
Flynn:
Carter:
Flynn:
Carter:
Flynn:
Lassiter:
Lochman:
Flynn:
Lochman:
Flynn:
Lochman:
Kimble:
Lassiter:
think they have brought a general proposal and as Tom said earlier, we still have
some discussions to go about how things finally shake out going forward. The
thing I think you are alluding to, particularly at transit station areas, we do want
the affordable housing units to spread across the complex. We just have to sit
down and talk about the proposed plan for doing so.
My concern is I would hate if they approach the Housing Trust Fund to get
funding and somehow our policy would prevent them from scoring as high.
My understanding now, the $2 million just representing the site, that is all they
are asking for at this time. There are no additional dollars being requested for
affordable housing.
How many units are you proposing? I haven’t found that number.
They have not really given us that number yet.
Potentially the 80 units could be all of the housing units.
No, because the 80 units would definitely occur in Phase II. Part of that is due to
having to line up for the State Housing Tax Credits that are going to be necessary
to make this project work.
So we have no sense of proportion?
We will have a sense of proportion if you select Option III and Council selects
III. By the time we come back to you with an MOU, you will have that sense.
There is not a request in this proposal to alter the rules set by Council relative to
25% of the units in the complex being affordable in which case you would have
at least 320 units that would make it comply with Council policy.
I am not sure I understand. What I think I just heard you say was affordable
housing is in Phase II.
That is their current thinking, yes.
We discussed earlier that Phase II may or may not happen depending on the
market. It is possible that in addition to not having a parking deck, you also
would not have affordable housing if the market does not digest the ancillary
activities?
At that point, you would have a property that the City could then take. At the end
of five years, if they don’t take down the option and do Phase II, the City would
have that property back.
That is why it is so critical that the expenses are phased in accordance with the
phases, otherwise, you just by definition took off more expensive affordable
housing.
Exactly.
The most salient point, if the developer does not proceed into Phase II, then there
is recourse back to the City … that we would not have closed the transaction. We
would have accomplished the core goals that Council has required us to do, get
parking spaces on site permanently, get CATS back its $3 million investment to
fund the Full Funding Agreement and that, in fact, could result if nothing else
occurred, that we simply cover the rest of the City’s investment for some future
redevelopment. I think it is important as the timing of City future infrastructure
that it is linked to future private investment that ties to elevation of intensity and
use of the property. I think that is everyone’s desire in my conversations
yesterday is that part of the reason they have it phased is they are not convinced
that out of the box you can fully develop everything that was laid out in a prior
proposal.
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Lochman:
Lassiter:
Flynn:
Lassiter:
Lochman:
Flynn:
Lassiter:
Lochman:
Lassiter:
Lochman:
Lassiter:
Lochman:
Lassiter:
Dulin:
Flynn:
Lochman:
I think it is important to take your introductory comments on that statement about
the … parts of what we set out to achieve and if you do that then you got to make
darn sure you … your expenses associated when getting that elemental amount
recognized as you could have no Library, no affordable housing and no parking
deck. My concern at this point is that may not be … to break down some of the
subsidies we are talking about in a way that is appropriately associated with that
objective which you just talked about.
I think that is what we have to ask staff to do as they go back through and
hammer through the proposal.
I think the real issue there is that $1 million loan. That is the thing that sort of
straddles Phase I and Phase II.
Bear in mind, that $1 million loan, if that is all that occurred is a wash against the
cost of the permanent parking. You in essence have secured that with
improvement. That is not exactly the same, but you have recovered our costs
against that construction.
I would also suggest in terms of getting back my original irritation, in terms of
subsequent presentations on this, I would have Option III, with only Phase I,
Option III with combination Phase I and II. I just saw April 23rd and you’ve got
a lot of work to do.
We are asking you to make a recommendation to the Council as to which
direction to pursue on this. We know this is a tight timeframe, but we are, in
terms of providing that parking lot out there by November, we need to know
which direction Council wants us to go.
This is not to approve an MOU, this is to recommend whether or not we want to
recommend to Council next Monday to proceed with one of these options.
That is impossible.
It’s not impossible.
It may not be impossible, but it is inappropriate. Based on the questions we just
asked it is extraordinary inappropriate. You are asking me to vote when I haven’t
got answers to what I think are extremely germane questions. I’m not doing that
by the way, but you all can do what you want.
I understand. I want to make sure we’ve had a chance to answer any questions
and if it is financing questions, we will see if we can answer them today.
There is a … of unanswered questions, probably 7, 8 or 9 of them.
What I have heard were some questions that had to be spelled out in a
development agreement. What we are being asked to do is select an option and
the option that would result in a consideration of proposal would be to direct staff
to engage into a negotiation based on questions you heard and the questions they
have to see whether in fact you can reach a deal. That deal would come back to
this Committee for consideration. We are not asking you to say tell staff to go do
this and then we simply approve it. In fact, it would come back here for review
of that proposal, staff changes, debate to provide for revisions, or any one of the
other options that are on here or any other options not before us.
Today is Wednesday, and we get our information on Wednesday. I don’t know if
they can get that packet to us by Friday.
We would put this information together, take a lot of the input we have just been
given, revise this PowerPoint presentation and have it to Council on Friday.
The information that we are asking for is fundamental to which option you think
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Carter:
Lochman:
Lassiter:
is worth pursuing. It is not a matter of saying Option I and then develop the
information for Option I, then you may or may not subsequently have the
information for Option II and III. You have to know what we just described to
talk about in Phase I and II as part of Option III before you can come to some
reasonable conclusion about whether Option III makes sense or not. What is the
gap going to be? How do you decide whether these requests for public
investment are adequate or appropriate when you don’t even know what the
return on investment in theory is to the development? Are we being taken for a
ride? How do you know that if you don’t know the … Obviously, I am in the
minority here and I am personally not participating in that vote and I will make
that very clear to the public. This is worse than the Arena as far as ramming data
down people’s throat in inappropriate timeframe and I’m not participating.
I think what we are being asked to do Mr. Lochman is a series of debates about
this issue in a very constricted timeframe. The timeline is considerable boxed by
CATS. We have goals that I think are addressed. We have physically
responsible partners, we have professionals here that will analyze for us and get
us the information along the way. What I think we need to do is say this is a
preferred option from the Council Committee. As we look at our options, these
are the things that we value most and would suggest this is what we do further
investigation on and bring it back to the Committee. I understand the frustration
of the process. I understand the timeline is very constricted, but I think to move
us forward, we need to make a recommendation.
It is not the process to me. It is the fact that there is elements or data not
available that should be available for any reasonable business decision. I am
trying to be careful with my words here because I don’t want to start loosely
throwing out words here. You would not do this with your money. I can
guarantee that. You would want to know a lot more I’s being dotted and a lot
more T’s being crossed. To say it is one option or the other is critical.
Let me try to get us to where we are. I think there is some confusion about what
we are being asked to do. We are not being asked to approve anything. There is
no deal on the table. What has occurred, we had an approved deal with Bank of
America and they discovered their financing was not going to be available in
time to meet the timetable that this Committee and Council had approved. It got
referred back to this Committee to reopen the discussions. One of the bidders in
the prior process said I’d be interested in taking another stab at it. All we are
being asked to do today is take in essence one of three steps. Step three says we
can re-look at a revised proposal of Scaleybark Partners, we can instruct our staff
to do the due diligence on that to see whether can answer the questions you have
raised to the satisfaction of this Committee and the City Council and all of those
would be answered prior to having to take a vote. This is simply to move the
process forward to enter into negotiations to see whether the deal can be
constructed. No-one is being asked to make a decision on any unknown data or
any unknown evaluation, we are simply being asked to tell staff within the
framework, this is a scaled down, less public investment deal than what we had
prior approved with Banc of America and significantly less than what was being
proposed initially by Scaleybark Partners. If that cannot be done, both Options I
and II remain available to Council. If a week or 4 weeks transpire and either
staff comes back and says we can’t find a deal that works, we can’t get questions
ED & Planning Committee
Meeting Summary for April 18, 2007
Page 11
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Kimble:
Lochman:
Lassiter:
Carter:
Lassiter:
Carter:
Lassiter:
answered, we don’t feel comfortable with, this Committee says with what comes
back I’m not satisfied, it doesn’t go back to Council, or Council says they don’t
want to do it because there are several stop gaps along the way. We then can
pick back up Options I and II and they simply have consequences. In both those
cases, it will require CATS and/or the City to step forward and assure we can
build parking spaces in time for the November 1, 2007 opening of the Rail. That
is why I think we are working against an end of May date because that is about
the drop dead that if we had to go solve the problem ourselves, we would do that.
It very well may be that this can’t get resolved in 45 days and we may be at
Options I and II or some other option between. I’m not discounting your
questions Don, because they are very legitimate questions that we need to get
answered, but no one is being asked to approve a deal. All we are being asked to
do is instruct staff with the authority of Council to proceed to see if, in fact, there
is a deal that we could agree upon as a Council to renegotiate the Scaleybark
Partners proposal. Is that accurate?
Yes, it is.
I have no problem saying to staff go and research all the questions we came up
with and come back. What I have a real problem with is any option that we
choose it is predisposing the effort in that direct. That is just a fact. It is much
harder to say go do things free and subsequent to that a week or two from now,
especially if this pressure keeps building on time, to have this Committee or the
Council at large say, you know what I really think you better look at Phase I or
Phase II. That is not the way to do it. We are being forced into an inappropriate
process by a time constraint that is putting us in a very disadvantaged,
disadvantageous position. The questions I just raised on Phase III are not only
aluminous, they are obvious and they are accurate. How will I know whether to
vote for Option I or Option III? How could I possibly do that because I don’t
know the cost differential right now between Option I and Option III. I could not
possibly make any formed decision. I can make a gut feeling, but that is all and it
is even worse for me now because Phase III may not include the elements that
generated the interest we had with Banc of America before. I understand the
problem and I understand the dilemma you find yourself in. I just personally
don’t know what to do about it other than do what you want and I will explain
my position to the public on Monday night.
That is what we are trying to do.
In an effort at some compromise, could we present to Council the three options,
request staff research, particularly on one and three, but stating that Option three
does suggest the goals that we have stated for transit stops at this location, being
the development of 315 spaces, including affordable housing.
Let’s not try to work a compromise out across the table. Let’s just let people say
what they want to do.
I would move that we offer all three options to Council, stating that the third
option has addressed the goals that we have held most important for the City at
this site.
If there is a second I will accept it, but I don’t think we get paid to not do our job.
I think we get paid on this Committee to make a recommendation. It is
appropriate to send all of the options back and they need to see all of those, but I
think we need to tell them what we think is the right next step and we need to
ED & Planning Committee
Meeting Summary for April 18, 2007
Page 12
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Kimble:
Carter:
Kimble:
Carter:
Mitchell:
Lassiter:
give staff direction so they are working on one thing over the next 30 days
because Option I and II are still available to us, if Option III doesn’t work. We
can do that if that is the thought of the Committee, but I don’t think we do our
best work when we simply say we couldn’t make up our minds, what do you all
want to do. I think we’ve got to go in and say here is what we think and it can be
a split vote and I understand that, but we need to move forward with a plan of
action and if Council wants something different that is where we will go.
All options will go to Council.
We have acknowledged by staff that all three options are going to Council, so we
don’t have to include that in the motion.
Right.
(Re-fraise motion) That staff will do the research that was requested within the
Committee and send it to us on Friday, as we go into the decision, and say that
the debate in our Committee lead us to have reservations about the third option,
but it is at this current point, the preferred …
Second.
I don’t want to go in with reservations. I would like staff to take these three
options, convert them to a grid that has checkmarks for what is provided for in
options and has checkmarks for potential issues or costs or whatever, which gets
to Don’s point, that we are not picking between pros and cons. We are simply
laying out what you get. It is like if you are getting a new checking account at a
bank, you are going to get a new phone plan, it has certain things that you are
going to get and everyone is able to read down those flyers and know exactly
what you are going to get and what you are not going to get. I think we can
convert that so people can see what the consequences are with particular choices.
That will make it so it can be captured within a word description of each of those
options. My sense is that we have one opportunity to investigate a viable
development plan that is simply a subset of what we previously approved on this
Committee. It meets the two fundamental goals that we asked to be met. One
was that we get repayment to CATS for $3.1 million and two, that it would
provide temporary parking in time for the Light Rail to arrive at the location and
permanent parking long-term which is what CATS was asked to return. It also
provides something that has not been required by Council, but has been promoted
by Council and is included in our Transit Development Plans, affordable housing
at this site. The rest is going to be a function of market forces and I think we can
ask staff within the next 30 days to spend the time to fully vet the proposal to see
what items can be cemented and see what items can remain loose. We can link
those effectively to the timing of additional investment on the part of the City and
assure that we understand that the linkage between our investment and the
ultimate return of that back to the City. That can all cost itself out to see when
we run positive cash flow on the deal. Property tax records are underestimated.
Sales tax and all those things can be off a little bit based upon some phasing
expectations that says here is roughly what is going to have to happen at
particular points in order for it to work and play out and we can work those
numbers out. To me that is the better option and if it doesn’t work on June 1, we
are simply back at Option I or II and we are instructing Ron and his staff to go
ahead and prepare a surface lot. That to me retains all of our choices and it takes
advantage of a one time value to have a developer who wants to stay engaged in
ED & Planning Committee
Meeting Summary for April 18, 2007
Page 13
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Lochman:
Lassiter:
Lochman:
Lassiter:
Carter:
Lassiter:
Lassiter:
Mitchell:
Lochman:
Dulin:
Lassiter:
Flynn:
the process. It also keeps us from having to refund $2 million back to the
Housing Trust Fund. That is an exposure that is not included in here. From my
perspective, that is a better direction to take over the next 30 days but I will listen
to what other people have to say and we will vote on this motion if there is no
other motion.
How can you say that this meets our goals for affordable housing?
I didn’t say it met our goals for affordable housing. I said the pressure from
Council and a part of this was in our transit oriented development to provide
affordable housing at transit stops. We have not adopted as a Council a
requirement on this proposal on affordable housing. It has been placed in there
based upon private investment and Housing Trust Fund and placed in there as a
result of the follow up of the developer.
I misunderstood you then. I thought you said we had Council incentive in Phase
III.
No, that has never been a requirement. It has been presented because a number
of Councilmembers have asked to have it in there and the developer’s own
volition chose to do it.
I withdraw the motion and request that you relinquish the Chair so you could put
forward your motion.
I would be happy to do that.
I would make a motion that we recommend to Council that we instruct staff to
pursue Option III, and that during the period of time between now and the end of
May, that we have opportunity as a Committee to review the details and
negotiations in light of the issues raised today and issues raised by Council and
update the PowerPoint to reflect the input from the Committee today.
Second the motion.
Made a substitute motion to pursue Option I. There was no second.
The vote was taken on the motion and was recorded as follows:
For: Carter, Lassiter and Mitchell
Against: Lochman
Abstained: Dulin
I have some information I am still waiting on.
I think that was very good discussion and I don’t want anybody to feel like we
are trying to restrict information. It is important that we continue moving
forward giving as much of that data available because we are operating on a fast
timeline and it is critical that we operate with our eyes wide open and that staff
review this proposal and subsequent possibilities with a very disciplined eye for
the kinds of things you have heard here today.
We understand this was very quick and on behalf of staff we want to thank you
for your good conversation. We will take all of the conversation we heard today
and reflect it in the presentations that will be given to Council on Friday.
II. Subject: Review of Business Investment Grant Program
(Brad Richardson used a PowerPoint for his presentation to the Committee)
Questions/Answers/Comments
Carter:
Do we know how much a business such as this costs the City? In other words,
ED & Planning Committee
Meeting Summary for April 18, 2007
Page 14
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Richardson:
Carter:
Richardson:
Flynn:
Richardson:
Flynn:
Dulin:
Flynn:
Richardson:
Mitchell:
Richardson:
Mitchell:
Flynn:
Mitchell:
Flynn:
Lassiter:
water/sewer, fire protection, police protection.
We do not, but we run economic impact models that show the benefit. On the
City side are utilities which are user fee generated and cover their own enterprise
fund. Police protection are relatively small for a company. We generally think
on the City side the costs are minimal for industrial development and commercial
development.
Or development of the property otherwise.
Certainly the best development is residential subdivision, cost are typically
higher so that is why industrial and commercial development is so sought after
and we want to retain it.
We have been trying to work on the issue of what it costs for that and we can
provide you some of that information but it is filled with assumptions.
(Continued presentation)
I have had some conversation with Ronnie Bryant, President of the Charlotte
Regional Partnership about this and what our idea here is if Council wants us to
do this, we would go out to each individual county and pursue some type of
Memorandum of Understanding that would be blessed by the Boards and
Directors, Council and Commission of each, saying that if a company is
considering moving from Mecklenburg County to Cabarrus County, there is no
local incentives on the table. Both Cabarrus and Mecklenburg agreed to that.
That is where this is going and Ronnie thinks this is a good outcome from the
work they did.
If we use this then we go out to these counties and the relationships we have with
Ronnie and others like the Centralina Council of Governments, can we use those
relationships? We are paying them good money for our membership.
I think so, absolutely.
(Continued presentation)
If I could just get additional information it would be helpful. We have a CWAC
Program, we have the State Empowerment Zone and now we have the Business
Investment Zone. If you could give us additional information on some
egressions we have made in those three zones. I am trying to find out how
successful have we been, using the current tools we have. I have no problem
having this discussion, but I get confused between the CWAC, State
Empowerment and Business Investment.
CWAC and Business Investment are identical, but the State Investment Zone is
not. Let me clarify that at the next meeting. What I am showing on the screen is
where we use this tool and how it relates to the zone.
If you could give us examples of each it would be helpful to me because I don’t
know if we have done a State Empowerment deal yet.
You would not see those.
So the State handles those?
Unfortunately, the State has not tracked where those go because those are
basically a credit against their corporate tax liability. Legislation that was just
passed at the last session requires them to track it, but previous to that they
haven’t tracked it.
We are on overtime. We will take a little more time on that at our next meeting.
ED & Planning Committee
Meeting Summary for April 18, 2007
Page 15
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My general read is that these are the kinds of questions Council has raised over
time and if we could put them in …
II.
Subject:
Next Meeting
The next meeting is scheduled to May 2, 2007, at noon.