Chapel Hill caught between rocks and a hard place on downtown parking deck costs
Chapel Hill taxpayers and downtown visitors could pay $3 million more to finish a new parking deck on East Rosemary Street, with the total cost now approaching $51 million.
The Chapel Hill Town Council voted 7-0 Wednesday to meet the higher cost, which has ballooned from an estimated $39 million when the contract was approved in 2021.
Council member Adam Searing, who has questioned how the growing cost could affect the town’s finances and other projects, and Council member Amy Ryan were absent. The council had few questions or comments before voting.
Mayor Jess Anderson recommended an internal audit so the town could learn how to better manage future projects. The top priority now is to “think creatively about how the deck can begin generating consistent revenues from day one,” she said.
“I know we’re all frustrated by the challenges, delays and cost overruns associated with this project,” Anderson said. “It is an important part of our East Rosemary renovation and Innovation Hub endeavors, and fortunately, we are going to open this summer.”
Why is the parking deck construction cost rising?
The council previously approved a $9 million increase in November 2022, after crews digging the deck’s foundation discovered big boulders under the dirt, instead of more stable bedrock.
Town staff warned then the cost could go up before the parking deck was finished.
Another $3 million is needed now to cover the rising cost of materials and labor, design fees, and “unforeseen construction needs,” Town Manager Chris Blue and other staff said in a memo.
The project has also “experienced ripple effects due to schedule delay and price escalations in the global construction market since November 2022,” they said.
The money also will pay for signs directing drivers to the parking deck, security cameras and other costs not included in the town’s construction contract with Samet. The contractor is reducing fees where possible, staff said.
What is the Rosemary Street parking deck project?
The East Rosemary Street parking deck will replace 584 spaces in the former CVS parking deck and the existing Wallace Parking Deck down the street, which the town swapped with developer Grubb Properties for a future office and wet lab project.
It will have 1,100 spaces and a covered porch on the ground level for food trucks and pop-up retail. The primary driveway will be on East Rosemary Street, with an additional, rear exit onto North Street.
The parking deck and the future wet lab building have been billed as investments in the town’s vision of a district where more people could live and work. Grubb Properties renovated the former CVS building, which straddles East Franklin and East Rosemary streets, creating the Innovation Hub in partnership with UNC-Chapel Hill.
When could the parking deck open?
Opening day has not been scheduled yet, but the parking deck could serve visitors by summer, town staff said Wednesday.
How is the town paying for the construction?
While most of the construction is supposed to be paid using parking fees and lease revenues generated by the new deck, that will depend on how many people use it when it opens.
The town could cover the additional expenses initially with the town’s debt service fund, which has about $50 million available for construction projects and big purchases like garbage trucks, Business Management Director Amy Oland said. The project also could require some financing, which the council will be asked to consider in May or June, she said.
That could add roughly $200,000 a year to the town’s debt payments for about 20 years, staff said, and delay spending by three to five years on other projects, including streets, sidewalks, and the now-delayed Municipal Services Center. The parking deck is expected to bring in more dollars than are spent to pay for its construction by 2033, they said.
An October town report showed parking revenues have been down since the pandemic, with fewer people using the Wallace Deck. That is due in part to employees continuing to work remotely, but also because the 100 block of East Rosemary Street has been closed to through traffic since August, staff said.
Nearby business owners, including Chris Carini, who closed Linda’s Bar & Grill earlier this year, have said all the construction is keeping customers away.
Colter DeBree, owner of Tru Deli on Henderson Street, has suggested the town help with free parking after 5 p.m. on weekdays and all day on Saturday and Sunday when the new parking deck opens later this year.
“Downtown businesses such as TRU are continually trying to attract a more diverse clientele,” DeBree told the council in a February email. “While we certainly love the students that frequent our restaurant, it is important to see a wide range of customers especially over the summer and over breaks.”
The town has not responded publicly to the suggestion.
This story was originally published March 4, 2024 at 12:00 AM.
