Durham News

Durham City Council approves $5.25 million economic incentive agreement

A $5.25 million economic development incentive approved by the City Council this week seeks to protect second-tier contractors following a high-profile protest by workers on the Residence Inn in downtown Durham.

The money will help fund the first phase of Boston-based Longfellow Real Estate Partners and Durham-based Measurement Inc.’s plan to develop a 1.7 million square foot science and technology “Innovation District” on 15 acres between Duke Street and Durham Central Park.

Their $87 million first phase has 126,000 square feet of laboratory space and 145,000 square feet of offices, an 820-space parking deck and a public park along Morris Street near Measurement’s Imperial Building. Longfellow also proposed about $8.3 million in public improvements to streets, sidewalks and other items.

The $5.25 million will be paid over a 15-year period after the project is completed and the amount of promised capital is invested, according to a report on the project. Construction is projected to be completed in 2019 and payments would begin in 2021. The project should yield a $7.6 million in incremental property taxes to the city over the 15-year period, said Kevin Dick, director of the city’s Office of Economic and Workforce Development.

For the first time, the city added a provision stating that it may require the company to provide documentation showing that contractors have been paid in full and on time, “or that a bona fide dispute over the satisfactory completion of the work to be performed exists and is in the process of being resolved,” the report states.

City Manager Tom Bonfield said Wednesday that the provision was added after city officials’ hands were tied when workers approached them over the summer contending subcontractor SLP Enterprises didn’t pay them for work on the Residence Inn. Representatives of SLP Enterprises said the dispute involved three workers who didn’t complete work or did subpar work.

City Attorney Patrick Baker said the incentive agreement was between and the city and the owner – not the developer – and the city wasn’t the proper authority to adjudicate the situation.

“So the attorneys had ruled that we didn’t have a right to withhold payments,” Bonfield said Wednesday.

The new provision requires the owner to make sure those issues are addressed, Bonfield said.

“This is a good addition,” City Councilman Steve Schewel said. “We know the recent situation of the Residence Inn. We don’t want a repeat of this.”

Longfellow has also agreed to grant public access to half of its parking spaces on weekends and from 7 p.m. to 6 a.m. Monday through Friday. The parking agreement covers a 40-year period.

The City Council approved the incentive agreement in a 6-1 vote Monday.

Councilwoman Diane Catotti voted against the incentive agreement. Catotti said she thinks it’s a good project, but the incentive, which represents about 70 percent of the projected incremental tax revenue, “is just too high.”

The economic incentives only related to the first phase of the construction project. Two more phases are anticipated to be completed over a seven-year period, Dick said.

The first phase is expected to generate 850 permanent jobs created by tenants and up to 780 temporary construction jobs. The project is also required to generate a plan that stipulates the company and its general contractor will make an effort to engage Durham-based firms in the construction work, and that its tenants and contractors engage NCWorks Career Centers system when hiring temporary staff.

Virginia Bridges: 919-829-8924, @virginiabridges