Plans look risky to some, promising to others

CHAPEL HILL -- When it comes to redeveloping a downtown parking lot, those who "do" say do it, and those who teach say don't.

A hundred residents packed Town Hall on Monday night, and nearly two dozen spoke about the Town Council's plan to invest $7.25 million in a public-private development at the site of Parking Lot No. 5 at Franklin and Church streets.

Local business leaders such as Meadowmont developer Roger Perry and architect Scott Radway endorsed the plan, in which Ram Development Co. would build a condominium complex as tall as eight stories with ground-level commercial space and a public plaza.

Current and retired professors from Kenan-Flagler Business School, on the other hand, discouraged the Town Council from going forward with the plan.

David Godshalk, a former Town Council member and professor emeritus in the UNC-CH city and regional department, said the current council had "reshuffled the cards" and "jury-rigged" the project to salvage it after the price jumped by $20 million over the summer.

The original plan called for Ram to spend $80 million to redevelop both Lot 5 and the Wallace Parking Deck on East Rosemary Street. Because of rising construction costs, the Town Council agreed to drop the Wallace Deck from the plan.

"All development projects start out the same way: with a rosy projection," said Godshalk. "If something seems too good to be true, it probably is."

David Hartzell, a UNC professor of finance who teaches real estate investment, also opposed the project, estimating an $800,000 negative cash flow for the first four years after construction as the town pays off its debt.

"In the best case, we are in a positive cash flow in year five," said Hartzell. "I love development. ... This one just feels too risky for me."

Mayor Pro Tem Bill Strom projects the complex will generate more than $1 million a year in parking fees and tax revenue in year five and thereafter. Advocates say the project would also foster other downtown developments and further build the town's tax base.

Laurie Paolicelli, executive director of the Chapel Hill-Orange County Visitors Bureau, urged the council to build a town center that would pull shoppers back from suburban retail centers.

"Our 1,200 visitors a month are looking for someplace to leave their dollars," she said. "The S-word comes up too often: Southpoint."