City funds in mix to help drive density
J. Lee Howard, Charlotte Business Journal
The city's drive to encourage high-density development in and near uptown appears to be stuck in park. Or, more specifically, in parking decks.
Backers of three high-profile developments say they need funding from the city to help pay for the parking decks that will support the mixed-use projects. Planning experts say the trend is likely to continue as the city encourages developers to build dense projects along transit corridors.
"The parking costs associated with these kinds of developments has got to be offset in some way in order to make them feasible," says Peter Pappas, president of Pappas Properties. "Your development costs are higher in these infill developments."
The three projects that want funding for parking decks include one by Pappas. Working with Collett & Associates, he is planning a $100 million redevelopment of the former Midtown Square, with the project drawing strong interest from prized anchor tenant Target. Pappas is seeking city funding for a 1,250-vehicle parking deck.
City help is also sought for:
Levine Properties' 30-acre, $500 million North Tryon urban village, which needs an underground deck of 1,500 to 2,200 spaces. In a memo to City Council, City Manager Pam Syfert estimates the deck's cost at up to $44 million. Levine wants the city to pay a percentage.
Grubb Properties' $220 million mixed-use project in Elizabeth that would include four parking decks totaling 3,000 spaces. Grubb is asking the city and county to consider paying for one deck of about 1,000 spaces using tax-exempt bond financing. Grubb hopes the city will pay 10 years of a 20-year financing plan with tax revenue generated by the development. Under the plan, the city and county would split a $1.3 million annual debt payment for the 10-year period.
While the city is only studying the proposals at this point, there is strong indication that each has significant support. Such strategies are viewed as being a way to spur development in blighted areas, infill sights and along the transit corridors, according to a recently adopted City Council policy.
"I'm very bullish on all three of those projects," says Lynn Wheeler, chair of City Council's economic development committee. "We're not getting any tax revenue from them now. This would be new revenue. If we can create a financing scenario to fund a parking deck that would make them happen, then we should, in my opinion."
Public funding of parking decks is key to the success of infill projects because it offsets the high cost of land relative to suburban development, supporters say. Clay Grubb, president of Grubb Properties, says the cost of a typical suburban parking space is about $1,500, compared with as much as $16,000 for deck space and as much as $25,000 for underground space.
Surface parking at close-in development sites isn't practical, he says. If the city wants infill development, he says, then it should be willing to help fund the parking. "Billions of dollars are spent every year on the roads needed to get cars around, but not a dime is spent on where you're supposed to put them when they get where they're going."
The project requests fall into the city's stated goals for helping jump-start economic development, says Tom Flynn, assistant city manager for business relations. "What we prepared and what the council adopted is a policy that says the city should participate in certain development projects where there is a proven need to do so."
No commitments have been made, and each project is being evaluated, he adds. Flynn notes that public financial support of what are essentially private developments is not without precedent, He cites to various public contributions toward the development of Ericsson Stadium, the parking deck at the Westin Charlotte convention center hotel and the new basketball arena for the Bobcats. "What we are always looking at in these public-private partnerships is some kind of public purpose," Flynn says.
But such measures also give private developers a leg up against their competitors, says Tom Cochran, a senior vice president at Highwoods Properties. The developments will ultimately draw prospective tenants away from projects built solely with private-sector dollars, he says. And that's simply not fair. "When you subsidize a development, it artificially inflates the return on the investment. I think it is improper for the city to become involved in private development by favoring one taxpayer over another. And it will end badly."
Others see a clear public benefit in funding that supports infill projects, which help curb sprawl and traffic congestion.
"To get higher-density development, you need more parking, and that's expensive," says Daniel Levine of Levine Properties. "The city has to evaluate what the benefits are to higher-density development. And the private sector simply cannot afford to do higher density without a mechanism for doing high-density parking."
Private land-use consultant Walter Fields likens such public commitments to other economic engines, including the $30 million, 33-acre Wilkinson Park Business Center. That industrial development is a joint venture between the city, county and Charlotte Chamber.
"Conceptually, it's the same thing," Fields says. "The city should have something like that in its toolbox to help support, stimulate or to create development in areas where the city says it should be."
Find out what commercial real estate professionals in these companies have been up to!
Slade &
Associates of the Carolinas, Inc.
Trammell Crow Company
Trinity Partners
Get Your News in The Voice!
Email press releases to erica@crcbr.org
Don't wait until June,
2004!
Check out the new education schedule for
Fall 2003...
Mandatory Update - Commercial Ver.
Ethics for the Commercial REALTOR
Technology Classes
Commercial Certificate Program
Click here for more information on these upcoming programs:
Fall Forecast
September 11, 2003
Golf Tournament
October 6, 2003
Bus Tour
November 7, 2003
Annual
Meeting
December
NEW to The Voice, career opportunities
may be placed in the newsletter by member companies free of charge.
Contact Erica Rohrbacher for more information at 704.377.8982 or email
erica@crcbr.org.
Click on the job title below to view a description.
Commercial Appraiser
Click on the links below to visit our sponsor websites.
Cousins Properties, Inc.
Floyd Smith
Office Park
Huntersville Business
Park
Kannapolis
Gateway
Business
Park
Lauth Property Group
Barker Corvus
Edifice, Inc.
Kennedy Covington Lobdell & Hickman, LLP
The International
Business Park at Concord
Lichtin Corporation
Barbara
Brown Commercial Properties
Colliers
Pinkard
CRCBR
PO Box 36566
Charlotte, NC 28236-6566
704.377.8982 phone
704.377.8983 fax
info@crcbr.org
www.crcbr.org