Downtown: Two Mangum St. projects inch forward

Development throughout the Triangle has slowed in the face of the pressing credit crunch, but the good news for the Bull City's downtown is that at least two projects on Mangum St. are still moving forward, albeit not yet at a full-speed-ahead pace.

First, there's good news for Scott Harmon and Susana Dancy's Mangum 506 project, the condo effort slated just north of the Downtown Loop near Public Hardware. The ninth unit went under pre-construction contract this week, Harmon reports -- just one shy of the number needed to begin groundbreaking and construction. Remaining units range from $169,900 to $289,000 and from 620 to 1,220 square feet.

Still more good news for Mangum 506: Two-thirds of the ground floor retail and commercial space has now been leased. Seagroves Realty, which does a lot of work in core urban neighborhoods including Cleveland-Holloway, is opening an office, while a Charlotte-based investor has bought a second pad and plans to make it available for rent to an independent coffee shop.

In other news -- and this hasn't received a lot of local fanfare -- Greenfire Development and Durham's Office of Economic and Workforce Development brought to yesterday's City Council work session a proposal to approve one slice of the Greenfire incentives plan recently approved by Council. The single slice would be just for Rogers Alley, the redevelopment of an old downtown fire station across from City Hall that's set to become the new home of Kimley-Horn and Dos Perros.

And it's a development that's getting bigger: As Gary noted recently, Greenfire's added the old Verizon-owned telephone exchange building across from City Hall to its stable, and the developer is planning to add this newly-acquired facility into the complex.

The inclusion of Rogers Alley into the development incentives plan was from the beginning a shoehorning of a project already underway into the total $280+ million project count. Greenfire has had Rogers Alley under construction since 2007, though work reportedly slowed earlier this year while the negotiations with the City were underway.

OEWD staff are quick to note in their incentives memo that while Council is asked to approve this measure, it doesn't supplant the vote expected later this summer on the economic development contract with Greenfire -- and that if that vote fails, these incentives disappear.

The OEWD memo does signal that the developer is still negotiating with county government for incentives to help Lemanski and Webb's team meet their final financial gap. Given that Greenfire met this past week with the BOCC to present their plan -- a plan well-met by the commissioners, based on local news stories -- we'd say this part's moving along apace.

One piece of Greenfire's Rogers Alley work has gotten some attention of late: the installation of a geothermal heat pump system in the alleyway behind the old Rogers Pharmacy building. These heat pumps involve the drilling of three wells drilled 1,500 feet into the ground each -- the equivalent of the height of three 100-story buildings. The wells allow the temperature exchange of water with the 55-degree earth down below, helping to cool the buildings in the summer and heat them in the winter.

It's a very green idea indeed -- and the first private geothermal well system in North Carolina to boot. Of course, if there's one wrinkle to the plan, it's that it requires, er, drilling three 1,500-foot wells into the ground, a task that will take up to three months of drilling from 7 am until 8 pm Mondays through Saturdays.

We learned of the geothermal well from both Greenfire and a downtown neighbor on the same day recently; the latter pointed out that the noise is likely to be disruptive for some time, marking the lack of recognition that downtown is (contrary to some public officials' assumptions) not exactly an unpopulated area already. Which is part and parcel, I suspect, of some of the conflict between downtown residents and those people who'd like to add more downtown residences -- the sense that the city center already has a goodly number of urban pioneers.

On the flip side, as a source at Greenfire pointed out, the developer also got a complaint from a downtown worker, who asked why the company has to be drilling this well during the daytime, when people are walking around downtown -- the implication being, do it at night, when things are deserted. Proving, of course, that you can't please all the people all the time.

Comments

[AR]

I don't think this is the first private geothermal heat pump system in NC. A friend of mine installed one a couple years ago at Boxwood Lodge, a large, National Register-listed home outside Mocksville.

[Shane Anderson]

Three months of noise is well worth the green benefits! Way to go Greenfire.

[Mike]

I highly doubt it's the first private geothermal system in NC. Pretty sure someone did one in Duke Park awhile back. Anyway it's still a great thing!!

Are people really paying $169,000 for a 620sq ft condo? You could get a nice house in some neighborhoods that are double that size. I still wish someone would build afforable housing Downtown.

[KH]

The geo-thermal system can be used to heat/cool multiple buildings right??? I think I read somewhere that was an additional benefit.

[Michael Bacon]

My guess is it's not the first geothermal system, but the first geothermal well going that deep. A lot of geothermal systems just involve burying a bunch of heat exchanger line in a conductive block 20 feet under. That geothermal well will probably provide enough heat dissipation to share with several of their other buildings.

[Phil]

"Three months of noise is well worth the green benefits! Way to go Greenfire."

Oof. Economists please help with my definitions. Would neighbor-disturbing noise created by economically/environmentally-motivated drilling be considered:

(1) an externality

(2) collateral damage

(3) illegal

(4) other?

Note that this question applies whether you're bugging workers in the daytime or residents in the evening.

[Sean]

I found the proposal to advance the Rogers Alley project interesting. I still can't figure out why this is being considered by Council since the numbers just don't add up. The Rogers Alley component of the incentives is worth $141,000 over 15 years which is $9,400 on an annual basis. If I'm reading the proposal correct, the Office of Economic & Workforce Development is suggesting that the developer with STOP work on this $7.2 million dollar project that is already leased over the potential loss of $9,400 dollars per year in incentive money.

The work was originally stopped back in December and at that time the rumor was that the developer wasn't paying their sub contractors. Later, the statement became that work stopped because it wouldn't count towards the Public/Private partnership. Yet the work restarted shortly after the Deal Points vote which is in itself not a contract and wouldn't be a legal basis to count the investment. Thus the issue originally sited was still an issue yet work restarted anyway. The developer probably a prudent business decision given the ability to complete the project and move tenants in rather than wait on a paltry $9,400 annual incentive. To give some relative idea, the cost of construction is probably in the range of $300-$600 thousand dollars per month, assuming a $7.2 million dollar investment (as required in the Deal Points) spread over 12-18 months. Given that, a $9,400 dollar annual incentive doesn't seem at that important. Furthermore, there is 35,000 sqft of space. With a very conservative lease rate of $15/ft (the GF lease estimates are higher), the annual income is $525,000. So why does $9,400 per year mater in the scheme of things? If you slip the occupancy by two months, the total 15 year incentive value is virtually wiped out. If we take the original work stoppage at face value, the project has already slipped 3 months (mid-dec to mid-march).

This doesn't make much business sense.

I'm also a little concerned over precedence. During the original Deal Points vote, there were a many questions deferred to the future debate on the actual Development Agreement. The Agreement is the legal document on which the incentive plan is based. The Developer Agreement is not done nor has any draft been shared publicly. Therefore, why are we carving out what amounts to little or no value before the legal basis for offering the incentives is actually complete or even available in draft form???

This just doesn't add up - what is really going on with this proposal?

I'm hoping my assessment is completely wrong or flawed. If not, we are wasting a lot of tax money on something that makes little sense and creates a bad precedence.

[JC]

Great news about downtown development. Looking forward to seeing Mangum 506 being built. We definitely need more projects like this going on downtown.