Limited BCR updates today
BCR's Daily Fishwrap Report for November 9, 2010

Chesterfield, Hill Building get nods of approval from BoCC

Two large downtown development projects were heard by the Board of County Commissioners tonight.  Approval of bond funding for the Chesterfield Building and incentives for Greenfire's conversion of the Hill Building into a luxury boutique hotel comes in close to a financing deadlines, as the ARRA-enabled Recovery Zone financing of both projects has with a December 31st deadline for bond issuance.

This tight deadline means that money will be available shortly after the first of the year for both developers, a welcomed sight for those awaiting re-development of the two previously stalled projects.

 

 ~~~~~

Durhamite Josh Parker and his company Chesterfield Partners are seeking approval of $65 million in Recovery Zone Facility Bonds to be used to convert downtown's Chesterfield Building into retail, office, 152 apartments, and a self-storage facility in the inner core of the building.  The bond arrangement became available through ARRA, and extends the benefit of tax-exempt financing to large projects that typically would not qualify due to their private sector ownership.

The tax-exempt status makes interest revenue from the bonds more appealing to private investors, rendering it easier to secure financing during the ongoing credit crunch.  Marketing of the bonds is entirely the responsibility of the developers.  Additionally, because the bonds are classified as private activity bonds, they are secured by Chesterfield Partners.  This puts no liability on the county or state government in the case of default.

After a brief presentation and comments from Downtown Durham, Inc and the Durham Chamber of Commerce, the motion passed unanimously.  Parker hopes for construction to begin in the first quarter of 2011.

~~~~~

Second on tonight's agenda was the approval of $1 million in incentive funds for Greenfire's $53 milion re-development of the Hill Building (Durham's tallest building) into a luxury hotel.  The project previously got a nod from the BoCC in the form of approval of $25 million in Recovery Zone bonds back in July.

The project is contentious to some, with a bicker started by out of town hoteliers who threatened to sue the city over their censoring of a pro forma prior to a September approval of a city incentives package.  Additionally, one Central Park area landowner wrote City Council to ensure that approval of the Hill Building project did not endanger possible future city incentives packages for other downtown areas.

Like the previously-approved $4.2 million city package, the $1 million in proposed incentive for Greenfire is clearly 'in the money'.  The previously censored pro forma became available shortly before the city held their hearing, and shows that the county will turn a profit on their investment in fiscal year 2014.

Starting in 2015, the county stands to gain big.  Figures from the city's Office of Economic & Workforce Development demonstrate that the county will earn more than $500,000 a year in total tax revenue in fiscal 2015.  The number is projeted to increase each year, as well, with sales and occupancy taxes rising each year with inflation and increased visitor traffic.

Even better about this revenue is that it is commercial in nature.  Education is the single largest line item in county government, at 32.9% of expenditures, and a hotel like this will create no direct demand for primary education.

The tax revenue is in addition to another benefit as well-- the creation of at least 125 permanent, full-time positions.  These service industry jobs complement continued success in recruiting numerous white collar firms.

Still, some questions linger about Greenfire's ability to finance and comlpete the project.  Greenfire's current master plan shows more than $284 million in future investment.  Despite these big dreams, only $23 million has been invested so far, with no major work completed during the last two years due to the general economic downturn.

At September's city council hearing, representatives from Greenfire and OEWD assured council that this project will be fully financed and built by the beginning of FY 2013-14.  Concern over the project's fate existed earlier in the day as BoCC Chariman Page and Commisioner Heron sharing their doubts with the News & Observer.

Some controversy was heard at the public hearing for the Hill Building incentives.  One citizen complained about the deteriorating condition of Greenfire's landbanked properties.  Victoria Peterson also spoke, sharing the same concerns she had at the City Council meeting.  These concerns were the request for more affordable housing and also a request from Greenfire to offer cheap commercial space for non-profits.

Speakers in favor of the incentives at the public hearing outnumbered opponents by a 2-to-1 ratio.  The business community; specifically DDI, the Durham Chamber of Commerce, and the downtown restaurant Revolution supported the development.  Also in support were both the Art Institute of Raleigh-Durham's culinary and NCCU's hotel & hospitality programs.

After the public hearing closed, Commissioner Howerton asked the question of workers' wages.  Greenfire representative Steve Mangano was not able to give specific numbers, but did promise that "a good number" of jobs would be above Durham's current living wage of about $11.20 an hour.  Questions from Commissioner Heron centered on financing; again, Mangano couldn't proffer a final answer due to the stated need for County incentives before finishing the last financing negotiations.

When called to a vote, the Hill Building incentives got approved unanimously.  Incentives hinge on the project's completion before July 31, 2013.

Update: The initial version of this article mis-identified the Greenfire representative as Michael Lemanski.  Steve Mangano was actually the Greenfire partner at last night's BoCC hearing.

Comments

bullcitysky

The Hill building is only the 4th tallest building. 1st is University Tower, the Durham Centre, and The NCML building.

The comments to this entry are closed.