Project moves toward next step

A Texas real estate consultant hired by the town of Chapel Hill to create a model for a major redevelopment project downtown says his portion of the work is only about 5 percent complete.

"We're still at a very early stage in this," said John Stainback, a managing partner with Stainback Public/Private Real Estate LLC.

Stainback's firm was hired to create a comprehensive model for the redevelopment of parking lots 2 and 5 into mixed-use developments with condominiums, shops and green space.

Lot 2 sits on Rosemary Street behind Spanky's Restaurant, and lot 5 is located across from University Square on West Franklin Street.

Stainback's model also calls for the construction of a new parking deck at the RBC Centura bank on Rosemary Street, which will be moved to the new facility at lot 5.

Stainback also initially proposed that four stories of condominiums be added to the Wallace Parking Deck on Rosemary Street.

But a consulting architect has told Stainback that the deck can only support two added stories.

Town officials are waiting on a definitive answer from another engineering firm about the structural stability of the Wallace Deck.

The next step in the process is the solicitation of developers -- Stainback is drafting documents that outline qualifications for developers and solicit proposals from them.

He'll present these to the Chapel Hill Town Council on Dec. 6.

Because this is one of the first steps in moving the process from the conceptual to the developmental stages, other groups have offered Stainback and the town their assistance.

The Downtown Economic Development Corporation met Wednesday to discuss how it could help Stainback in that step.

Corporation members discussed how the group could help Stainback in drafting the request documents and generated a list of potential developers that they will suggest to Stainback.

Nicholas Didow, interim director of the corporation, said the group has become involved to ensure that the council and Stainback control the project costs.

"It is within the purview of the Chapel Hill Town Council to make a judgement as to whether this investment is a reasonable investment or not," Didow said.

The question surrounding the Wallace Deck expansion and further analyses of the sites have affected cost estimates for the project, which Stainback updated for the Town Council on Nov. 8.

Stainback's initial model estimated a total cost of $66.3 million, with the town paying $7.9 million.

Now, the development could cost a total of $82.3 million, of which the town would pay $17.7 million.

Stainback said the introduction of a public arts fund, the blasting and removal of rock under lot 5 and an increase in cost of the underground parking spaces all impacted the new cost estimate.

Council member Bill Strom, who is the chairman of the council's Committee on Lots 2 and 5, said it is important to note Stainback's figures are just estimates.

"We didn't hire Stainback to give us a static model," he said.

One way the estimates could change further is through a new form of bond financing that North Carolina voters approved this year.

Stainback determined that self-financing bonds, or tax increment financing, could offset about half of the total cost of the RBC deck, which is estimated at $6.2 million.

Self-financing bonds allow local governments to use property taxes generated by new developments to offset the cost of that development without voter consent.

Stainback said that at the request of Town Manager Cal Horton, he is working to find alternative sources of income. "The project is not contingent on (tax increment financing)," he said.

Despite questions surrounding the financial model, Stainback said there are three major phases left for his company.

The search for a developer and the negotiation of development agreements are the two most imminent phases.

Stainback said his company also will serve as a liaison between the town and the developer during construction.

Detailed information on the project can be seen at www.townofchapelhill.org, under Downtown Economic Development Initiative.

Contact the City Editor at citydesk@unc.edu.