BCR's Daily Fishwrap Report for May 12, 2009
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Greenfire update: city deal points, hotel schedule, Woolworth site

Hill_bldg An item in the papers got our attention here at BCR last week: a mention that tonight's dinner in the Hill Building (AKA SunTrust tower) downtown benefiting the Durham Arts Council would be the "final event" in the old bank boardroom before the building's conversion to a boutique hotel.

That mention came on the heel of rumblings leaking out about the forthcoming re-appearance of the Greenfire development deal -- a matter which includes the Hill Building in its scope -- with a few changes to boot.

We had a chance to sit down with Greenfire late last week to discuss what's happening with their projects; and while more specifics will be forthcoming in the next few weeks (particularly once the Greenfire deal makes it onto the City Council agenda, likely in June), there's some noteworthy news happening.

Incentives deal: When Barry and I had then-outgoing Office of Economic and Workforce Development director Alan DeLisle on "Shooting the Bull" back in December, Alan mentioned after the show that wrapping up the Greenfire deal points passed last year into a formal contractual commitment for Council's approval was one of the things he hoped to accomplish by the time he left his post.

Fast forward almost half a year, and the City's still working with the developer to wrap this up -- but all indications are that this should be ready in the coming weeks.

Though BCR hasn't seen the revised incentives package, as we understand it they'll still focus on providing funding to Greenfire project stages after each has been completed, and with incentive payments linked back to the incremental tax revenue from their projects.

One significant change: the original deal points had linked all the Greenfire projects together, meaning that if Greenfire completed all but (say) their final project on a multi-year schedule, should they miss the targeted completion date for any project, all the incentives they'd received going back to the first scheduled project would terminate.

Going forward, the City and Greenfire are working towards a deal that segments out each property as its own deal. Incentives for one deal will be independent of those received for other projects.

Which, in all fairness, seems to be a pretty reasonable change. Given the current state of debt and equity markets, it's hard enough for developers to find financing for any one project these days; trying to string together multiple years' worth of debt and equity for future projects now, or making decisions today based on what you hope to finance in the future, seems risky at best.

From the City's perspective, the big risk would seem to be the fear that a shaky market or future challenges for Greenfire could someday leave them unwilling or unable to carry out their full plan, yet holding on to a chunk of downtown real estate sitting in limbo. No word whether or if the incentives deal will have some provisions covering that path.

Boutique hotel: The first incentives package up will be for the Hill Building's conversion into a boutique hotel, a project which Greenfire partner Steve Mangano is leading. (Mangano, a founding investor in Greenfire, also has an undergraduate degree in hotel and restaurant management.)

Assuming a deal makes it through City Council on schedule, Greenfire remains optimistic that they'll be able to complete design and pre-construction work and get the project on track to start construction later in 2009.

The project is slated to bring over a hundred hotel room to the Hill Building along with an on-site spa, restaurants, a ground-level cafe, and a rooftop pool at the Hill's low-rise. The team is continuing to work to optimize the placement of rooms and spa elements on parts of the site.

Woolworth_old Woolworth site: Following on the heels of the boutique hotel, the Woolworth site on Parrish St. and the structured parking deck replacement on Chapel Hill St. would be next in Greenfire's sights.

When the project was first proposed last winter, the renderings (seen at right) suggested a more traditional office tower on the site, a partner to the Hill Building adding some height to downtown's skyline.

Intriguingly, Greenfire is continuing to tweak the concept for the site, looking at designs that would bring some different emphases to the plot of land.

BCR was particularly struck by a concept that would put a slightly smaller building on the site -- keeping the Hill Bldg. as the centerpiece of the skyline -- but one that was designed to provide focused spaces for a Parrish St./Durham history museum and much more significant space for ground floor retail and pedestrian activity.

That includes better connectivity between Main St. and Parrish, as well as elements at the corner of Corcoran and Parrish that provide a surprisingly natural connection between the site and the CCB Plaza to its north, creating a really connected, holistic space that finally makes sense.

And while nothing's finalized, the design concepts Greenfire's continuing to explore could do more to connect to and preserve street-level facades on both sides of the street.

Naturally, the key to any design will ultimately be tenants and their desires -- but keep an eye on this site as the project

Comments

KeepDurhamDifferent!

I sincerely hope this is the last chance to see the Hill Building, as the dinner last year (to benefit Durham Central Park) was also advertised as the last chance.

My first job out of college was for CCB, in the commercial loans dept. on the first floor. I'll be taking pictures of interesting architectural features, which will be on my website tomorrow.

Andrew Edmonds

"...and a rooftop pool at the Hill's low-rise."

Why, that's so Washington Duke Motel retro of them. Two in one block!

John

One of the reasons all of the incentives were connected was that the city was committing to projects way into the future. The resulting economic benefit is worth less if something less than the entire project is completed. There are two choices, make all the incentive money contingent on finishing the whole scope on time or back load (i.e. ramp up) the incentives. I prefer the later approach which balances the risk/reward equation.

Simply taking the original incentives and breaking them up into smaller projects means the developer receives the benefits of a much larger project but takes no risk if they end up developing much less. I don't see this as a fair deal for the City or the tax paying citizens.

Furthermore, one of the main issues I've taken exception to in the past is tying up public property (i.e. parking decks) for long periods of time without a benefit to the city if the project doesn't move forward. Most developers would have to purchase an "option" to hold property for a specific period of time.

I certainly hope this new and improved(?) set of deal points doesn't tie up public property with out some form of penalty for failure of delivery. I would much rather see those properties left available for other potential projects/developers unless Greenfire has the financial capability to deliver.

Before the current financial mess, Greenfire wasn't able to show a financially viable project otherwise it would have happened. I suspect that situation has only gotten worse as evidenced by their layoffs. Therefore, I don't see any benefit to the City (and citizens) for allocating properties in the hopes of some future project. Any commitment from the city should be met with a commitment from the developer with an enforceable penalty for backing out.

I want to see downtown developed and vibrant as the next person but I don't want my tax dollars unfairly benefiting one developer. I would much rather see more momentum from sharing the risk by diversifying the developers taking part in the revitalization efforts. Doesn't that sound like what every prudent investor does in the market? Diversify - don't put all your eggs in one basket - they may end up fried in the green fire.

Erik Landfried

I hope the connection to the CCB Plaza really can be seamless. I think that Plaza was the worst part of the streetscaping in downtown - it's kind of a depressing place, bronze bull aside. Having just visited Savannah, I think Durham missed a big opportunity by making the plaza almost exclusively impermeable surface. That could've been a great little green space with a centerpiece (the bull would've been fine) and several benches. Maybe the Woolworth site can get it right.

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