Town council weighs lot developers

Dressed in black suits and crisply knotted ties, representatives of Ram Development Company and Grubb Properties made their claims Monday to the future of downtown Chapel Hill.

The development vision that will drive an undoubtedly major transformation to the town’s urban landscape could be decided by the Chapel Hill Town Council as early as June 15.

The selected firm will have the task of developing phase one of a major downtown project. The first phase includes development of a mixed-use facility on lot 5 across from University Square and an expansion of the Wallace Deck on Rosemary Street.

While council members say they will await town consultant John Stainback’s assessment before making any decisions, early opinions are percolating — perhaps to the delight of Ram Development Co.

“I am now inclined to view the Ram proposal as a much stronger proposal,” said council member Jim Ward.

Ward said he was impressed by the 25 days Ram spent in Chapel Hill speaking to a focus group composed of various town leaders, including affordable housing advocates Empowerment, Inc.

Empowerment co-director Delores Bailey said she too was struck by Ram’s level of communication with existing neighborhoods, especially the Northside community, which abuts lot 5.

“The way Ram is handling the project is inclusive,” Bailey said. “It’s not just about Northside; it’s about Northside blending in with the future of Chapel Hill.”

Thus far, both groups have pledged around 18 percent of their total residential units for affordable housing. Council members have stressed that they would like to see as much as 20 percent of the total units dedicated for this purpose.

A key difference between the two groups is how each approaches the town’s preference for retaining ownership of the ground. Council members seem pleased that Ram has embraced the idea of a land-lease agreement which will allow the town to retain ownership.

“It’s an enormous asset,” said council member Mark Kleinschmidt of the town-owned property. “It’s hard to imagine giving up something so valuable.”

Jeff Harris of Grubb Properties said the 40-year land- lease arrangement the town is asking for is unconventional. “Quite frankly, it’s hard enough to get lenders and investors to accept mixed-use projects without complicating things further.”

Both proposals feature mixed-use development, with street level retail shops stacked under residential towers as tall as the Bank of America building on Franklin Street.

In accordance with the lease agreement, Ram has proposed making a prepaid ground lease payment of $7 million for the residential component. The Grubb proposal calls for a town investment of more than $19 million, which the company says could be financed through a variety of grants. Harris said the approach was realistic and based on financially conservative assumptions.

On the other hand, the town will only be asked to contribute $8 million for the Ram proposal. Ward said Ram’s financial models gave reason for hesitancy, and he needed confirmation from Stainback that the analysis was practical.

In total, the Ram and Grubb proposals call for budgets of $75 and $63 million respectively.

Both proposals will be graded by Stainback’s firm. The results will be presented to council on June 2.

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