Some City Council members plan to take a closer look at new construction proposals before agreeing to high-end economic incentive grants.
“I do think more and more that the economics work for building even without city participation,” said Councilman Don Moffitt. “My own willingness to approve these incentives is going to require a higher bar as we move along.”
Moffitt spoke Thursday as council members considered adjustments to a $5.25 million economic incentive to support the construction of two seven-story buildings downtown in the Durham Innovation District, 15 acres between Duke Street and Durham Central Park. The buildings, which total nearly 350,000 square feet, will be located on Morris Street between Hunt and Roney streets in what is currently a large parking lot.
In September 2015, the City Council approved the economic incentive agreement with district developers Longfellow Real Estate Partners and Measurement Inc.
Earlier in the week, Jessica Brock, managing director or Longfellow Real Estate Partners, asked to amend the agreement due to a request from a project lender. For example, the original agreement said half the parking spaces had to be open for public use evenings and weekends. The new agreements says no more than 410 spaces. The amendments also delay the required start of construction from Dec. 31 to March 2017.
On Thursday the City Council unanimously supported amending the agreement, after members Charlie Reece, Jillian Johnson and Moffitt said they hope for better incentive agreements in the future.
The $5.25 million will be paid over 15 years after the project is completed and other benchmarks are met. The project should generate $7.6 million in city property taxes over a 15-year period.
During the 2015 City Council race, Reece, a first-term council member who took his seat after the deal was approved, criticized the incentive, saying 70 percent of the new tax value was too high a price to pay for a new development.
That level of support might make sense for projects like the renovation of the Chesterfield building, the massive former tobacco plant downtown that is now being redeveloped after years of sitting empty. But Reece would have preferred a different financing model for the construction of the new buildings.
Reece supported the proposed amendments Thursday, he said, given the progress of the development. He would be hesitant to support such deals for future proposals, he said, possibly for new buildings south of the Durham Performing Arts Center.
Johnson shared Reece’s concerns. She also plans to ask for future incentive plans to include community benefits agreements that guarantee items like local hiring, wages and other community benefits.
“Rather than that negotiation happening with the city, it happens directly with the communities that are involved,” Johnson said.
Mayor Bill Bell said each public-private partnership brings something unique to the table and noted the city wouldn’t have the tax revenue to give if the project didn’t exist.
“If we didn’t have these development, we would never get the income from them,” Bell said.
In other business
Also this week:
▪ The council heard about an ongoing plan to inventory, manage and expand Durham’s urban forest.
The General Services Department is using about $45,000 for the project. Contractor Leaf & Limb of Raleigh is assessing about 6,250 willow and water oaks on street right of ways.
The inventory will count, measure and assess the condition of the trees that are 16 inches in diameter or greater within a defined boundary. The boundary includes West Murray Avenue to the north, Junction Road to the east, Guess Road to the west and University Drive to the south. The collected data will also indicate trees that need to be pruned and removed.
Meanwhile, consultant SavATree of Bedford Hills, New York will provide a tree canopy assessment identifying areas with high and low canopy cover.
City officials will use the information to create a forest management and development plan. The city also recently received a $80,000 grant through the Duke Energy Foundation, which could help pay for about 150 new trees in the city.
▪ The council unanimously voted Monday to extend a deadline on a $170,000 grant for an East Durham project.
In February 2015, the City Council approved a $170,000 Neighborhood Revitalization Grant for A&J Capital Inc. to renovate a building at 406 S. Driver St. in East Durham.
James Rogers, a Durham attorney who lives in Cary, plans to turn the building into two apartments on the second floor and four retail spaces on the ground level.
Under the agreement, A&J Capital needed to invest $395,00 by February 2016 and finish the project by Feb. 2, 2017. Rogers didn’t meet contract requirements due to lending issues and construction delays, a city report states. The change extends the deadline to Dec. 31, 2017.