 So when you come up, I'll try and have this switched, but if it's a little delayed, all you'd have to hit is number two, and that comes to the podium PC. And as you see, I have your PowerPoint up and ready to advance it. You just use this and point it at the screen. To the left, I mean to the right. Yeah, it's using this remote here, so that's what you're pointing at. So to advance, you hit this to the right, to go back to the left, and that's it. I ask you don't hit the top or the bottom buttons, because they don't really show up on television. This goes black, and on television I'd be thinking something's wrong back there. Okay, just the one to the right. Left and right, yeah. So right would advance if you needed to go back for some reason, that would be left. And there's also a keyboard here, so if for some reason that wasn't working, you can advance left. I mean right, excuse me, right, and then left to go back. Okay, that's simple enough. Okay. So just press two. And I might have that, I might, I can do that from the back for you. But if I'm a little slow, it'll be on number three, and you just have to hit two. Very good. Thank you very much. Okay. All right. Good evening. We'd like to call the Durham City Council meeting to order a special council meeting, and I still take a moment of silent meditation, please. Thank you. We ought to say the pledge of allegiance also, yeah. Madam Clerk, will you call the roll, please? Mayor Bell. Present. Mayor Pro Tem Cole McFadden. Council Member Brown. Council Member Cattidy. Council Member Davis. Council Member Moffitt. And Council Member Shull. Thank you. Are there any announcements by members of the council? Council Member Davis and the Mayor Pro Tem. Thank you, Mr. Mayor. Not really an announcement, except that there are two deaths that have recently gone on. Lewis Cheek was finalized last week, and I read today's paper and it indicated that Edward Kwan, who was a member of a couple of our advisory committees and was a former candidate for City Council, passed away after a long battle with cancer. Okay. Thanks, Eddie. I think we... Yeah, we gave it to them. I think we gave them red, however. I recognize the Mayor Pro Tem. Okay. I have some real good news. Today, I attended the ground-breaking for Phase 2 of Jensen Apartments for veterans, and it was just a heartwarming experience to be a part of that project. The other one was home ownership month celebration at Southside. That place is truly amazing, and so if anybody has any doubt about our commitment to afford one housing, they just need to get in their cars and drive around Durham and see what we're doing, because it is very clear that so many people are uninformed. Thank you, Mr. Mayor. Mayor Pro Tem, any other announcements? If not, entertaining priority items by the City Manager. Thank you, Mr. Mayor. Good afternoon, everyone. No priority items. Likewise, City Attorney. Thank you, Mr. Mayor. No priority items. Likewise, City Clerk. Bye, Miss. Mr. Mayor. Okay. I didn't hear you say that. So we followed the agenda and departmental items. I didn't want to jump in. I didn't want confirmation of civilian police review board members. I don't have a ballot before, so I don't hear any comments. Is someone going to collect us away? Okay. Let's move to the next item, two housing authorities, City of Durham and Development Ventures Incorporated Funding Request for Affordable Housing Developments. Mayor Bail, members of the City Council, Reginald Johnson, Director, Department of Community Development, you have before you an item that is a request for the $500,000 for the Durham Housing Authority and Durham Ventures Incorporated. Mr. Dallas Parks, the CEO of the Housing Authority is present for a presentation considering the request. The department does recommend the request. All right. Thank you. Reginald, recognize Dallas. Bill. First, let me answer the questions by members of the council. Do not recognize Dallas. Mayor Bail, members of the City Council, thank you for entertaining this request for liquidity requirement. Over the last four or five years, the Durham Housing Authority has embarked upon the task of redeveloping all of its properties. Properties range 30, 40, 50, 60 years old in some cases, and they are in bad need of redevelopment. We decided to embark upon the redevelopment process via the agency's own development, not-for-profit development corporation, Development Ventures Incorporated, or DVI. These are some useful facts. The DHA spends approximately $300,000 in pre-development costs, even before we can start these deals. And the pre-development costs entail some of the following appraisals, a survey, phase one environmental assessment, the architecture and engineering, pre-design, termite inspection, tax credit application fees, legal fees, tax credit carryover allocation fees, physical conditions assessment, or PCA, et cetera. That comes to about $300,000 per deal. The agency also contributes between $1.5 and $3 million to make the numbers come out per project, and it also defers up to 50% of its developer's fee. That's just for the deal itself. In addition to that, the investor partner, in our case, RBC Capital Markets, has a requirement for liquidity for various guarantees. Those guarantees include development-slash-construction-completion guarantee. After the construction is completed, the lease-up guarantee. If the site runs an operating deficit after completion and after lease-up, then there's a guarantee for that and also tax credit recapture guarantee. So this requirement is approximately $500,000. The $500,000 equals to about 10% of the equity that we receive from the tax credits. This is also a one-time equity requirement, in other words, not $500,000 for each deal, but approximately $500,000 for the current deals and subsequent deals. Initially, back in December 2013, when we were doing the price deal place deal, our balance sheet satisfied that equity requirement. But major redevelopment costs for Marine Road and Daymar pretty much depleted our ability to meet the liquidity requirement. The projects didn't close on time is another reason. And the reimbursement of pre-development costs and developer's fees were not realized when we planned them. Next, these are four of the current deals, which we have done over the last few years. Goalie Point, it's about 95% complete conditional financing price deal place. We were awarded competitive 9% tax credits and we were also awarded 4% credits for Marine Road and Daymar. The total development cost for these various deals or provided on the subsequent pages for Goalie Point price deal place, Marine Road and Daymar Court. This totals just these few deals that we worked on over the last few years. Total is close to $50 million. That means that the $500,000 liquidity would be leveraged to about $50 million just on these deals and it would also leverage funds for subsequent deals as well. Again, thank you very much for considering our request. And I'd be very happy to answer any questions you might have. Let me go to the council, members of the recognized council in Cotati. Thank you, Mayor. And thank you, Dallas. I appreciate the request and I'm mostly okay with it. And I understand your intention, but I personally would feel more comfortable if it was a little less open-ended. In other words, if you could put some language in there about a fixed number of minimum units that you will deliver. We have our attorney here. We could modify that language. Again, we are in the process of redeveloping all of our units, roughly just under $1,900 total, about 14 to 15 sites. So over time, all of them will be redeveloped. So we can add that language if you like. We were happy to do that. Are there other questions? That's councilor Mark. I thought I understood this and now I don't because the projects that you were talking about in your presentation were all projects that have been completed. Is that correct? No. The Gully Point project is about 95% complete. The Price Deal project is virtually completed. And the other two, namely Maureen Road and Daymark Court, these projects will close this year. We're thinking as we get approval for our 224-D4 loan, which closes the gap, we're hoping next month and we're hoping to close on Daymark in December. So is the grant that you're seeking for general liquidity then? For those four items that I mentioned earlier, our partners require that we have this liquidity amount. And if we don't, we won't be able to close on Maureen Road or Daymark. Thank you. I have one person that wanted to speak, but I want to go through to council first. Are there other questions? Members of the council? Still trying to find my notes. If you could just remind us how many units you expect to Maureen Road and in Daymark Court, that would be helpful. Maureen Road has 224 units. And Daymark Court has 102. Is that it? Okay, Don, you have a question? Okay. Our Rafi Zahi, you have three minutes. Thank you, Mayor Bill. Good afternoon. Council members, city manager Tom Bondsfield, Mayor William Bell and staff. My name is Minister Rafi Zahi. I reside at 807 South Dew Street, Durham, North Carolina. I'm a HUD resident, qualified for affordable housing, pursuant to a federal law known as the Uniform Relocation Assistance and Real Estate Property Acquisition Policies Act, commonly known as URA acronym. I have no problems with the proposal, but in light of the fact that, as you will see in front of you, there's a letter from Ventures Development. And that letter is signed by Mrs. Chief Development Operations Officer, Ms. Shannon McLean. And if you notice that letter dated October the 14th, was designated for Odom Towers. The Housing Authority of the City of Durham and Development Ventures Incorporated Funding Requests for Affordable Housing Development has not shown many of us in the community with clear and present evidence that those of us who are being relocated or in the process of being relocated will ever return. This is known as gentrification. Unless it is proven that we have an opportunity, I like what Councilman Diane Carty said, modify the language, that we have an opportunity to come back, not up under some type of piecemeal scale, but that we come back under the RAID project as citizens holding our head up high. We do not desire Section H housing when we are relocated because that lease under Section H is determined to expire at any time. The owner of that lease when we are relocated he can change that lease and we'll still be outdoors. So I'm asking you to consider what is before you but be careful and make sure that your citizens who need affordable housing is taken care of. Thank you. You're welcome. First let me say I don't have a copy of the letter to your reference. Yes, sir. But while you're giving that to, passing it to us, I'd ask Dallas Parks the similar type question and Dallas, I'd like you to respond to that, please. Mayor, first I'd like to say that the last two deals that we talked about, namely Marine Road and Daymark Court, which we hope will close this year, both of those are rental assistance demonstration program or RAID programs under U.S. Department of Housing Urban Development. One of the rules for housing authorities to participate in this RAID program is that every resident in good standing will be relocated back to the site. So we're not displacing anyone. As the gentleman said under the Uniform Relocation Act, there are certain rules that we must abide by and also under the RAID program as well. So every resident who's in good standing will be relocated back to the site once it's completed. Could you explain a little bit further about what you mean when you say resident in good standing? The resident has not committed any criminal act. If the resident has not violated his or her lease, that's the resident in good standing. I think you also mentioned something about the size of the unit therein, what they qualify for and versus... We locate residents back, whether it's a modernization program or a RAID or whatever, redevelopment or modernization activity. We have to put the residents back in the right size unit so they cannot be over housed or under housed. Can you just say what right size unit means in terms of... Well, there are standards. For example, one person would go into a one-bedroom unit. Two people would go into a one-bedroom unit. If they have children under five, they can go into a two-bedroom unit. If they have children over five, there are specific rules relative to the size of the units which the returning residents can inhabit. Do you respond to this concern about the fact that they might be relocated into a Section 8 housing and the fact that Section 8 owner might have an opportunity to put them out for whatever reason? That's not true. We have been relocating residents within public housing units. In the case of Maureen Road, it has 224 units. We're doing it in four phases. Most of the first phases have already been relocated to other units around the housing authority. There are six, I guess, units that need to be relocated before we can actually start the reconstruction. It's clearly almost completely, the first phase has completely, almost completely been depopulated. This is a not a lower-end housing operating deal, if you will. The RAD program is a public-private partnership. So the housing authority works with its partners. RBC Capital Markets is the agencies that have been identified by the agency as its partner. They syndicate the tax credits. They have an ownership interest. And the site is only maybe about 1% owned by DVI. The units, there's no more public housing operating subsidy, but rather a project-based rental assistance, that's what it's called. So the subsidy is still the same. They pay 30% of their adjusted income and rent. And to them, it's transparent. The reason why this project-based rental assistance was infused by HUD was to make the private sector, to make it more attractive to the private sector, guaranteed income. Okay, thank you. I just thought it was worthwhile having that on the public record for those that may have questions. Recognize, Councilman Shul. Thank you, Mr. Mayor. I just wanted to tell my colleagues that I just try to put in a little bit of perspective, which is since Dallas has been here, the housing authority has not only improved its operations tremendously under a lot of budget stress, but is now, as he said, beginning to redevelop our housing communities. And this is critically important for our community. We have some, I believe, the numbers, around 6,000 people living in our public housing communities, and the redevelopment of them is a huge priority for our community. When we talk about affordable housing in Durham, you can't talk about making progress on that unless a Durham Housing Authority is successful and done this redevelopment. It's absolutely critical. When you think about, we went to Denson Apartments today, as the Mayor Pro Tem said, and we're talking about 10, 12 units that we're adding there. But that's great. It's really important. They were wonderful. They were beautiful. But when you're talking about affordable housing on a large scale, the Durham Housing Authority is doing it. And so the success of the Housing Authority is critically important. So the fact that Dallas has led the redevelopment of Edgmon Elms, the redevelopment of Price Steel Place, which I believe is at 100% at least, at this point, 100% occupancy of Price Steel, which has been recently redeveloped. And now we're going for two of our other communities that are old and which are badly in need of redevelopment and will total another 336 units. This is really, really important. And so I'm very happy that we're doing it and that you all are doing it Dallas. And I think that this is a good use, I think, of our dedicated funding source for our penny for housing. This is a really, the kind of use, I think, we envision when we think about the penny because it's going to leverage a lot of affordable housing for the people in our city who need it the most. And so I'm very much in favor of this and appreciate very much the efforts that you're making to redevelop because it's not easy. And to see that the Housing Authority has become a developer and a redeveloper is tremendous progress from where we were five years ago. Not to mention Goalie Point, which is development that you all have built from scratch has been late but is about to come online, which will be another 20 units including for, I believe, 12 of the units are for people who are formerly homeless. So I think that the fact that the Housing Authority is becoming a developer is a crucial development in our city in terms of affordable housing. Everything else that we do, in a way, kind of pales in comparison to the need for the Housing Authority to succeed in this. So I think it's a good way, I think it's a great thing for the city to partner in. Thank you. If you recognize the Mayor Pro Tem. I wanted to offer a motion that we approve this item. I recognize Councilwoman Cattati. I also support the motion, but I'm wondering if they could recommend or we leave it to the manager to come up with some minimum number of units between Maureen Road and Damar Court. They're talking about 336. I wonder if you'd be willing to specify 250 or 300 units. I mean, it's already your intention to redevelop those. Sure. In the final analysis, it will be doing probably in the neighborhood of about 1,900. Okay, well, right. Much more so than the ones that we have listed here. I understand that, but if you're willing to add that to the contract, that'd be great. Thanks. In the further discussion, hearing an uncalled question, all in favor of the motion, can we vote here? If the motion indicate by hitting the plus, those opposed, open to vote Madam Clerk. Plus if you support it, minus if you don't. It passes seven to zero. Okay, thank you. Thank you. To the next item, public hearing on housing, public hearing on preliminary economic development and incentive agreement between the City of Durham and Wexford Chesterfield Park and the LLC for capital investment. Good evening, Mr. Mayor. Madam Mayor Pro Tem, City Council members, senior staff and members of the Durham community. I'm Kevin Dick, Director of the Office of Economic and Workforce Development, and I'm pleased to present the item before you this evening, which is a recommendation to authorize the City Manager to negotiate an economic development and incentive agreement between the City of Durham and Wexford Chesterfield Parking, LLC, in an amount not to exceed $6 million to be paid out over 15 years. Thank you. Before I get started with the body of the presentation, I do want to acknowledge representatives from Wexford Chesterfield Parking. Mr. Justin Parker is here to represent Wexford, and perhaps answer any questions you may have and also address the Council at the conclusion of my presentation. A little bit about the company. Wexford has a national profile. It's a public company. They do real estate investment and development, meeting the growing specialized facility needs for for-profit and not-for-profit institutions, universities, university-related research parks and healthcare systems. The proposed project at the Chesterfield would not be unfamiliar to Wexford. They've done a similar project in Winston-Salem with the R.J. Reynolds tobacco manufacturing facility. It is adjacent to six major academic institutions, including Wake Forest University in downtown, and they're looking to accomplish those same types of... the same type of development here. A redeveloped tobacco warehouse that would be a research and development and innovation incubator hub near two major universities and also near Durham Technical Community College. And so, I'll talk a little bit more about how our Durham Workforce Plan is intended to incorporate some of the elements of things they've done not only in Winston-Salem, but also in Baltimore City, Maryland. And I should add that Wexford has presence in several other states, including Florida and Illinois. The project is basically a minimum of $91 million of capital investment and the completion of other deliverables that I'll explain later by 2017. The proposed incentive payment, as I said earlier, is a recommended maximum of $6 million over a 15-year period. The projected capital improvements are anticipated to yield approximately $8.6 million in incremental property tax revenue to the city over 15 years. And the project would activate a significant vacant building along West Main Street in the Brightleaf District of downtown. And so, the building is 284,000 square feet, and the planned uses would include retail at the ground floor, a significant innovation space to attract burgeoning early stage life sciences companies, similar to entrepreneurs in the American Underground, but with a focus on life sciences. The biggest amount of space would be office and lab space. The Chesterfield tenants are anticipated to generate as many as 710 new highways jobs. The job mix would be across various industries that we covet in our economic development policy, including scientific and technical jobs, administrative and research and development positions. Also, there would be 560 temporary construction jobs anticipated to be created. The Office of Economic and Workforce Development will continue to partner with the Equal Opportunity and Equity Assurance Office, North Carolina Institute for Minority Economic Development, as well as the OEWD Small Business Advisory Committee in terms of goal setting for the Durham-based business plan goals that would be part of the agreement and capacity building to make sure that firms are ready to bid on available opportunities. In terms of policy issues, the plan by Wexford is to work collaboratively with client institutions, such as universities and hospitals. And again, this is a policy issue because it really correlates to elements of our economic development policy, but also the recently approved joint economic development strategic plan. The plan is also to create and build vibrant, mixed use and amenity-rich communities and offer a strategic research, resources and business services creating an environment right for innovation. So as I said earlier, part of the plan for the interior of the building would be a design type innovation space. And a similar model, as I mentioned earlier, is in place with Baltimore City Community College, the Baltimore School System. And so there are discussions about how to integrate the local colleges and universities in the space itself. In addition to education to work pipelines, that would be formed as a result of their location in Durham. In terms of the project's financing, I mentioned the proposed maximum investment of $6 million to be paid over 15 years. The county, in principle, has agreed to support the project with $2.6 million over five years. And I believe a public hearing on that is scheduled for late July. And the remaining capital required would come from a combination of historic and new markets tax credits, as well as private or developer equity investment. Condition precedence, the inclusion of a workforce plan stipulating the use of the NC Works Career Center as a source for the recruitment of talent. This would be immediately put in place when the project were bid out. So construction jobs would be the primary focus of the Durham Workforce Plan here. But we would certainly work with Wexford to encourage their tenants to use NC Works Career Center resources, as well. The inclusion of a Durham-based business plan promoting the use of Durham-based contractors and vendors, including minority and women-owned business enterprises. The availability of a percentage of parking for public use on nights and weekends. And incentive payments being made subject to project delivery and verification of capital investment. And one of the most important elements of project delivery is a certificate of compliance. So in other words, that the building can be operated and safely and basically be ready to open for tenants. Why is an incentive necessary? There are several reasons. One, the adaptive reuse of the former factory facility is cost-prohibitive. That factor, as well as ownership uncertainty over the last few years, have resulted in failed attempts to activate the site. We believe that we have a viable public company that wants to invest in Durham. This could be one of our last best chances to activate the Chesterfield and get it redeveloped. And we think that at least negotiating an incentive agreement makes sense from that standpoint. The lab space development often requires greater investment than other commercial or office development types. So lab space generally has elements that are more expensive and more intensive, such as HVAC, heating, ventilation and air conditioning units, different types of acoustics that just make building redevelopment in this case a little bit different than other kinds of redevelopment. The project must rely on self-contained parking, which will require new structured parking. But to be clear, the incentive being recommended is not just to offset parking. It's to offset the overall cost of the project, and I'm mentioning the various elements that are making the project very costly. Lastly, and I definitely don't want to underscore this point, downtown is in bad need of new office space. Based upon the latest information from the Triangle Business Journal, their quarterly space insert in the Triangle Business Journal, right now downtown Durham has a 93% occupancy rate, and so that's up from a few years ago when it was 91%, and so it's trending upward. It basically is sort of neck-in-neck with downtown Raleigh in terms of the office sub-market, and so the office space that will come about as a result of this development is badly needed. Why this makes sense for Durham taxpayers? The successful redevelopment of a pivotal vacant downtown property will increase property tax and sales tax revenues. As I said, there is retail space planned to help activate the space and help increase pedestrian traffic along a major arterial through downtown, and there is approximately 11,000 square feet of retail space planned, so there should be the opportunity for sales tax revenues and great shopping opportunities for residents and visitors. The development would attract high-tech laboratory and office tenants, creating highways, jobs, and growing industry sectors. Additional service industry workers would also be needed as the amount of high-wage earners increase and the number of employees in this building increases, and the anticipated revenues far exceed the proposed maximum public investment. I should add that there has been significant interest in the building on the part of potential lessees and letters of intent are imminent, possibly the lessees could be announced within the next 60 to 90 days. So in terms of remaining items to be negotiated, specific Durham-based business plan goals MWBE goals, specific elements of the Durham Workforce Plan, the percentage of availability to the public for night and weekend parking, the parking deck construction and appearance of it, as well as various site plan elements, and you've received renderings that were sent to your iPad, so you can see at least conceptual drawings of what the building may look like. I'm actually going to ask for those to be brought up here momentarily. And so the first aerial drawing is basically an aerial view of the entire area. This would be, again, a conceptual drawing of what the space may look like inside. It's definitely an open, collaborative type feel. And finally, an aerial view of where and what parking may be. Again, this is conceptual, and the actual specifics related to the parking deck are to be negotiated, and we would anticipate bringing an agreement back to council that had the various terms fully negotiated and certainly take questions and comments from you tonight that could help inform those discussions. That concludes the presentation and I'm available for questions. Thank you, Kevin. We have persons that signed up to speak, but I want to first ask other questions by members of the council. We recognize Councilman Brown. Thank you, Mr. Mayor. Could you expand, Kevin, please, you mentioned the county with Annie up 2.6 million. Correct. And for how many years and how does that compare to what the city may end up doing? So the county, I'll say tentative commitment, because it hasn't been officially agreed upon, but tentative commitment would be for 2.6 million dollars over five years. That would be roughly a little over 40% of what the city is proposing. Our time period would obviously be three times as long as well, but one of the tenets of negotiating this agreement was the concept of net present value, and I won't get into heavy detail related to that, but the county's smaller amount but compressed time frame provides the net present value that in addition to what the city would, that we're proposing the city provide, would be close to what Chesterfield asked and the amount we think is needed to get this project done. Based upon your knowledge of this project and the role of the county, as well as some of the representatives here from the chamber, do you see any wiggle room in that 2.6 number as in increasing? Wiggle room upward? Upward. Based upon my knowledge, I don't see that. The parking, how much is required by ordinance in terms, I guess, based upon the aggregate square footage of the building itself? Right. How many parking spaces are required? So the requirement is not really based upon the ordinance because there's no parking requirement in downtown, but the parking requirement would be more based upon the ability to get the project financed. Basically, any potential tenant is going to require a certain amount of parking, generally that ranges between 2.5 to 3, sometimes up to 4 per 1,000, and so the number of spaces planned is 765, including 544 in structured parking and 221 on the surface, on the surface lot, at least to begin the project. And I'm a little confused. In your rendering here, the parking is designated as in the black area with surface to the right or am I looking at something incorrectly? So the parking deck would be in the orange area with the surface parking to the right and to, I guess, the front of it. So if you have the orange area and then you look, if this were a map northeast and that would be some of the surface parking, and then the rest of it would be, I guess, to the southeast. So a budding South Gregson and Birch Avenue would be a significant portion of it, and then along Froning Pettigrew Street would be the other portion of it. That's a lesson one should put on glasses before they ask. Thanks very much. Sure. Other questions about members of the council? If not, I'm going to recognize Matthew Karpich, Justin Parker, Casey Steinberg in that audience. You have three minutes each. Good evening. Matthew Karpich with Downtown Durham Incorporated. Mayor Bell, members of the council, city staff, thanks for allowing me to speak this evening. I'm going to speak on both three and four because I think they're really critically important to have those together, so I just want to preface it with that. When we come, DDI strongly supports moving forward on both the Durham ID and Chesterfield projects, items three and four this evening. We feel it is critically important to deliver both of these projects to create an innovation cluster in downtown. We support these projects for the following reasons. Individually, these projects could stand on their own, but are strengthened by one another. These projects will separate Durham from other downtown markets as the premier urban location for the life sciences and biomed industries. In their nature, innovation districts are job generators, providing jobs and research, technology, administrative functions, and more. As Kevin said earlier, downtown currently has a 93% office occupancy rate, which is awesome. It's really strong, except it's harmful for retention and for recruiting efforts because we have all this space. It's full. We can't recruit new companies. Our growing companies don't have anywhere to locate. So the additional 550,000 square feet of commercial space in both of these projects will allow for increased recruiting efforts and allows for the retention of our locally grown startups and businesses. Downtown has great places to eat, shop, and be entertained. We have new residents moving in every day, and soon over 450 new hotel rooms will be welcoming new visitors to downtown. Now is the time that we need to focus on jobs and growing the workforce. We need to continue to grow downtown as a major employment center, so it is critical to take advantage of the opportunities, the Durham ID, and the Chesterfield project's offer. And it'll be really nice to have that Chesterfield built and redeveloped. Thank you. Mr. Mayor, Madam Mayor Pro Tem, Council members, my name is Justin Parker. I'm with Wexford in Science and Technology. First of all, I'd like to say thank you very much for your time and consideration of this request. This evening I recognize this is a special session, and we really appreciate you taking the time to hear this. We recognize the historical significance of the Chesterfield building and the importance that it has played in the fabric of this community. And I'm here tonight to tell you that we are thrilled, absolutely thrilled, for the opportunity to restore this fantastic building to its former glory. We look forward to working with you and working with our other valued partners in this community to contribute to the continued growth and success of downtown. And before I leave the podium, I'd like to also thank the Office of Economic and Workforce Development. They have put a lot of hard work and effort into this, and we very much appreciate that. Again, thank you very much for your time. You're welcome. Casey Steinberg. Good evening, Mayor and members of Council. I'm not sure what I can say that you haven't already heard. Just on behalf of the Greater Durham Chamber of Commerce, the Chamber strongly supports both of these projects, as Matthew alluded to earlier, both item number three and item number four, we believe are critically important to happen together. We are working very strongly with these developers and potential tenants for these projects to create what we believe we've already done or have started to do very successfully in the technology sector on behalf of the life science sector. We think that these projects will not only provide that opportunity for us when it comes to life science and biotech, we believe that there is an incredible additional benefit, and that is the collision of both technology and life science being in close proximity and working together. I think that's one factor. The medical discovery lab space is really important to us. But in addition to that, the office space, we are definitely, I will tell you publicly, we are losing projects and our inability to be able to have office space. Ted Conner is our Economic Development Director. We'll tell you that he knocks on doors asking people do they want to move out so we can move somebody in because we're that desperate for office space. There is not much left in downtown Durham that is not already accounted for over about 10,000 to 15,000 square feet and we have this kind of incredible inventory in Durham. We believe we will be able to we will be able to be a lot more productive on your behalf. Thank you, and we strongly support these projects. You're welcome. This is a public hearing. Let me ask, is there anyone else that wants to speak that hasn't had an opportunity to speak on this item? I'll let the director reflect on the one else that has to speak. I'm going to close the public hearing and bring them out of back to the Ford Council. I recognize the Mayor Pro Tem, the Vice President and Councilman Moffitt in that order. Kevin, you might have mentioned this before. At what juncture will the workforce development plan be available for review and the MWBE component? So we would get to work right away on negotiating the final elements of each and we, our plan will hopefully bring the agreement back on August 3rd. So your first meeting of the New Year and we would have the finalized plans or at least the finalized drafts of those plans available. So can we assume then that the jobs that would be available, we already have people trained in this community to take advantage of and we have to set some training programs in place to make sure that they are prepared to move into them. That's a good question Madam Mayor Pro Tem. We would tap into the training programs available at institutions such as Durham Technical Community College. The Office of Economic and Workforce Development is working in partnership with the, as part of the NC WORKS Career Center system partnership with Durham Tech which is another member to make sure that we have as many training classes available as possible. Now throughout the course of the project it's a roughly 14 month construction time frame and so there will be different skill sets needed. If we do not have the training at that time most of the training institutions locally have proven themselves to be fairly nimble to create short term opportunities. I would think that the vast majority of the entry level construction jobs that we have the talent locally to fill now and then there would be some other more advanced positions that I think we have significant talent as well but if we don't, as I said we will try to get short term training employed. With the Director of Durham last week around making special efforts to involve the students at the Lakewood, the kids who've had some disconnect from the Reba school system so I hope that you will take a look at that too. Absolutely. And I really don't feel as bad as I sound. Glad to hear that. That's the important piece. That's good. Recognize, did you finish? Recognize Councilwoman Kotage. Thank you Mayor. Really minor point and I don't need it tonight but could you re-label the aerial site plan with the road orientation because I could not figure out which was Duke Street, Chapel Hill Street or Main Street. We all certainly know where the Chesterfield building is but for anybody that's looking at that map that's not personally familiar, I'm like that doesn't look right with NC Mutual where it is. I wanted to ask can you just talk very briefly about precedent and how you came up with the minimum percentage of occupancy to be specified as 70%? Why 70% is my question. Sure. So in this case we're really looking at an average over the course of the year we want to ensure that although we can't incentivize jobs per se, that they're always going to be jobs in the building and so the 70% is based upon past past agreements really but I would say in this case quite frankly given the fact that letters of intent are imminent as I said we actually increase the percentage a bit higher than it has been. So 70% is higher than it has been? Correct. Thanks. Regarding parking I think it's essential that parking be available to the public both nights and weekends I'm not sure that 50% is the right number frankly I'd rather see it higher but I'll let you all work out. I agree that 6.30pm to 6.00am is probably fine but I wonder if you want to tie that to parking guidelines like if we change our rules for downtown parking and when we start charging you might want to have the flexibility to you know if it's 6pm or 7pm so that was just a thought there. In general I'll say that I'm very disappointed in the county contribution I don't think it's high enough to be much higher we ask for you know in the past that we go in at 50-50 so to speak and they clearly get a much higher proportion of tax revenues and I just I think at some point we have to stop contributing unless they match our contributions but and I will also say that I'm very concerned I think 70% of future tax revenues for 15 years is too high we know there'll be additional services related to new development whether public safety or otherwise and I just don't think we can keep giving away all our future tax revenues we have lots of other priorities but all that said given that this is an existing vacant building I will support this one so that's it, thanks. I'd like to recognize councilman Mark. Thank you so I just do you anticipate that the draft agreement that's in our packet represents sort of the minimum requirements that'll come about or is it in other words you said that you've got to get to work negotiating an agreement what relationship do you think there is between the draft agreement that we have in our packet and the agreement that you need to negotiate so I would say councilman that the major deal points have been discussed and negotiated I think that the draft agreement may not be identical to the final but I think it's pretty close I think there's some details to be worked out as I said availability of parking for example site plan elements still need to be worked out but I think that we've been in conversations for the better part of the last four months and we actually negotiated the major points of this I don't think we could have brought this to you if this draft agreement wasn't fairly close to what the final would look like. Okay thank you on the workforce development plan I wasn't on council when the 21C agreement was negotiated with there in 21C I know there was some big successes I think people felt about you know how that proceeded with 21C were there specific numbers of jobs that they committed to or was it similar to this in a sense I didn't see in the draft agreement and I think you said just a moment ago that you can't negotiate towards a specific number of jobs did I hear that correctly? The difference between the 21C agreement is that 21C as the owner occupant and essentially not only the developer but the business we were negotiating with which we were negotiating was providing the jobs directly and so that we can negotiate a minimum number of jobs to be created in that case in this case we can't negotiate we can't negotiate a minimum number of permanent jobs to be created because Wexford is not the business we're negotiating with that is creating jobs so the tenants will be creating jobs the 710 number in the presentation is based on I would say an industrial industrially objective and built formula that counts the number of employees based upon the square footage of the building and so that's an estimate but we can't necessarily guarantee that Okay, thank you I'll say this about draft agreement earlier speakers linked the Durham Innovation District proposal with this one and I noticed the differences between the two agreements so when we get to that one then we can I'll be asking questions about why you know why we would negotiate different agreements but I do want to say that that I want to observe that if this project is if the applicant fails to complete the project we pay nothing if they succeed then we're going to make payments of $6 million to them over 15 years at the same time we'll be recouping from them increased incremental property tax which projected our payments are locked in the incremental property tax is a projection but $8.65 million and so that and I want to observe for the public that if we don't approve the request and the project is not built there is no increment there's no increased tax values that we can spend on anything else something that we're giving away that could be used on other initiatives in the city so I'm supportive of this I think that as a public-private partnership this makes sense and I will be looking forward to seeing the details devil is always in the details I'll be looking forward to seeing that when we get back from in the beginning of the new fiscal year let me that's how I go I'll defer I'll make remarks after you thank you Mr. Mayor just a couple things I appreciate all my colleagues' comments I want to go back to something that both Eugene and Diane have raised and that is the county contribution you know I don't know how to say I don't get it you know that we could be our contribution 2.6 million there's 2.6 million our incremental tax value is 2.65 their incremental tax value is 9 million over the course of the incentive period and so I guess I don't need to hear this now but I think there are a lot of reasons to support this project it brings a lot of good jobs and for other reasons that my colleagues have said and as Don has pointed out it's a city and so I plan to support it but we had a whole process of county and city cooperation on an economic development plan and I thought that we had reached some kind of at least tacit understanding and I don't see any of that reflected here or even anything close to that reflected here and so I don't think they're doing what they need to be doing just with the economic development of this community and it's so I'm hoping that Casey and Ted, Matthew and Kevin that we will see something different in the future and we could do what Diane says we could decide we're not going to vote for any of these because they're not lifting they're not bearing their share of the burden but I hope it doesn't have to come to that kind of thing because we all can get them to see the light I know they supposedly go by some policy that they have and maybe they need to change that policy anyway I'm going to vote for it but I'm unhappy with that part you're not surprised to hear that and the only other thing I'll say is I'm glad the developer thinks that this is a fantastic building I can't say that I yet think it is a fantastic building I hope it will be a fantastic building I would say now it is an ugly building that we all hope will be fantastic let me say this Bill have a quick comment go ahead for me to put this succinctly I intend to support this development in spite of the puny and measly contribution by county government and when we need to ratchet this discussion up because I concur my colleagues I from the fiscal tax point of view I just don't understand thank you I guess I'm going to have to respectfully disagree with my colleagues to speak about the county's contribution and it's probably based on the fact that I sit on the board for 26 years and I understand well the issues that they are confronted with we just see what's happening with the school system they have a much larger budget than we do they have a lot more requirements than we do and the bottom line is they don't have to do anything they don't have to do anything and the fact of the matter is that they're doing what they're doing is what makes this project go if they weren't doing this I don't think we could step up to eight million dollars maybe we would I don't think we would but the fact of the matter they don't have to do what they're doing now and I think we have to look at each project on a case by case basis I'm not in favor of saying we've got to have this percentage for the city and this percentage for the county before we participate I think you've got to look at each project I went through this when we were going through the American back of campus when we started out on the project the city was going to build the south deck and the county was going to build a north deck and we got down to file negotiations for whatever reason the county felt they wanted to build the south deck and wanted the city to build a north deck and at that time wanted to get into a bow I said forget it let's build a deck if they don't want to build it we'll build it had we taken that kind of position nobody told them where American back of campus would have been the other point is that while we talk about paying 15 years for this and 70% of the county paying there so six years the fact of the matter is 15 years we won't be paying anything and the building will still be existing and we'll be drawing even more revenues so we're paying it off that's net revenues for it so I just respectfully disagree with the county needs to do this the city needs to do this before we get to the point I think we got to look at on a case by case basis and if it works it works if it doesn't work we don't have to buy into it so I strongly disagree with that position as long as I sit on this council I will disagree with it I think you got to look at it on a case by case basis and what is the net result to the citizen of Durham and Steve you're right it's an ugly building a very ugly building and the fact of the matter is we don't do this deal it's going to remain an ugly building probably even more of an ugly building because it's going to deteriorate so I just have a different approach to this I can't add a lot more to what I've said I think you understand where I'm coming from if there's no further discussion I'm going to call for a question move the item a second it's been properly moved in the second those voting in support plus can you open the vote close the vote it passes 7 and 0 let's move to the next item which is item 4 preliminary economic development and senate agreement between the city of Durham and Longfellow real estate partners LLC for capital investment thank you again Mr. Mayor this item relates to a preliminary economic development agreement between the city and Longfellow real estate partners this agreement would not exceed 5.25 million dollars over 15 years and talk more about the incentive and how it relates to the rest of the proposed financing for the project in a few minutes but first a little bit about the company Longfellow is a Boston based company they acquire and develop facilities in strategic locations building long term life science companies universities medical centers and research institutes for notable projects that they have completed to date in Durham reflecting their ongoing investment in the community include the Carmichael building the research and the research lab Royal center and exchange place they've also invested in our human infrastructure namely education to work pipelines for youth they have supported three entities within Durham the Duke talent identification program Durham technical community college and the office of economic and workforce development with the the TIP program at Duke they're supporting middle school students getting summer work in STEM I guess career exploration with the Durham technical community college they are supporting and providing financial assistance for individuals to have STEM instruction at the community college level and finally with the office of economic and workforce development as part of NC works they have fed nicely into the Durham youth work program by actually connecting Durham high school students 24 to be exact we're up to 24 with books and supplies at STEM classes that they are taking at Durham technical community college and we in turn are matching those individuals with internships and so they'll get study at the high school level they'll get supported in their study at Durham technical community college and then finally and that's actually leverage against other grants that Durham Tech has received and then finally they'll be matched with an internship so youth can really get a sense of if they want to pursue careers in STEM in terms of the project $87 million of capital investment or minimum of that and completion of other deliverables are anticipated by no later than 2019 we have 2018 in here there may be a more aggressive timeframe but in the agreement right now we have a sort of a finalized completion date of 2019 the proposed city incentive payment that I mentioned earlier at $5.25 million over 15 years that would correlate to $350,000 a year and the cash flow instruments that you received earlier reflect that I do want to mention while we're on that subject that there was an alternative placed in your packets and in your materials and that was more just for the sake of transparency and open communication it's not an alternative that's being recommended at this time the reason that it was presented is because with the start time of the project being pushed back up to one to two years after our initial discussions the net present value went down a bit and so we had talked about a net present value of roughly $3.2 million with the start of the payments being a little bit later that net present value goes down to about $3 million and so the reason we presented that other information is just to show you what it would look like to maintain the same net present value that we presented earlier and obviously that would be a much higher percentage of revenues that the city would have to pay but we did want to present the information just for the sake of transparency projected capital improvements are anticipated to yield approximately $7.6 million in incremental property tax revenue to the city over a 15-year period and there would be new construction along Morris Street that would help activate that quarter a little bit more really work in concert with developments like Morris Ridge and the Durham Athletic Park and so really create strategically located infill development in the Central Park District in terms of potential job creation we're estimating as many as 850 new permanent highways jobs to be created by the tenants and this proposal tonight is for phase one of the I.D. project there are future phases contemplated and have been master planned and so in those future phases 2000 approximately 2000 jobs may be created the job mix would be similar thereby as Mr. Coppett stated earlier really creating a full innovation hub and really broadening the brand of our urban life sciences in comparison particularly with other communities and so scientific and technical administrative research and development would be the job mix and we're estimating that approximately 783 temporary construction jobs would be created in terms of policy issues long fellow has been collaborating with local entities Duke University and measurement incorporated on in terms of the land and occupancy they have also been collaborating with North Carolina Central University in terms of programming and in terms of trying to connect students at the bright program with potential opportunities and so this feeds into the work pipeline that they have been engaged with they are looking to create flexible work spaces cutting edge lab space and mix use opportunities and so the entire master plan development would contemplate not just office and lab space and parking but also retail and possibly residential components in later phases and this is consistent with not only our economic development assistance policy but also again our joint economic development strategic plan which really calls upon the importance of live work place spaces and so we think that the Durham ID really has the potential to create such a live work place space within an urban environment. The project financing 5.25 million to be paid out over 15 years the county contribution would be paid out over 5 years the remaining project capital would likely include equity investment from a real estate investment fund as well as debt financing. The condition precedence would include the inclusion of a workforce plan involving NC works the Durham based business plan with goals to be negotiated the availability of the percentage of parking and public use on nights and weekends the provision of park area essentially a green space that would be accessible to the entire public and incentive payments subject to project delivery and the verification of capital investment and again that range of time would be between 2018 and 2019 the the excuse me the green space accessible to the entire public at this point has definitely been conceptually agreed upon the details to be worked out there are ownership maintenance but Longfellow has indicated a great willingness to make basically a similar type of model to American tobacco where the entire public has access to it that you know liberal amount of hours during days and evenings really promoting the green space is sort of a centralized hub not just for the development but also for that area of downtown why is an incentive necessary as I said earlier lab space requires greater investment than other commercial office development types the project must rely on self-contained parking administrative market rate of return on investment is required to capitalize this project and the project again it creates some desperately needed class A office space that is being coveted heavily in downtown and why does this make sense for the Durham taxpayers successful new development obviously would increase property tax revenue bring to life in a more strong way underutilized parcels the development would attract high tech laboratory and office tenants creating high wage jobs in growing industry sectors additional service industry workers would be needed as high wage earners increase and so life sciences like other high growth industries have a strong multiplier effect in other words other industries create jobs because of the abundance of jobs in that particular industry and finally anticipated revenues would far exceed the proposed maximum public investment some of the outstanding items to be negotiated Durham based business plan and MWBE goals the specific elements of the Durham workforce plan the percentage of availability to the public for nights and weekends a temporary lease by long fellow of spaces in the Durham center deck this may be necessary during the first one to two years of construction parking parking deck construction and appearance we'll be wanting to look at exactly how that would be built and we think we have a strong idea and again the certain site plan elements as well as the green space that would be fully accessible to the public and that concludes the presentation and take questions at this time let me do this because I have a commitment that I'm going to have to get out here we have one person to sign up to speak same Jameson for shell you want to come for if you have any comments since this is a public hearing is anyone else that wants to speak on this item to be on a public hearing if not Jameson will be the last person in three minutes mayor manager Bonfield mayor pro tempore members of the city council and the council of workforce development I first want to thank you for your consideration support of this effort and we've been working with many of you closely over the course of last year the Durham ID is a transformative project with significant economic development opportunities for all of Durham we've been working very hard as a proven partner in Durham and has successfully executed a number of developments here already and have demonstrated our commitment to downtown Durham through our support of numerous STEM initiatives that support is something that we intend to continue and are excited about happening within all of Durham we look forward to continuing our partnership in Durham and working with the city government in a public-private partnership that can transform downtown Durham thank you thank you is anyone else that wants to speak on this item if not let the director reflect no one else has to speak I'm going to close in a matter of fact before the council recognize councilwoman Cotati thank you mayor Kevin can you address in the development agreement section 3.1.4 occupancy that required 70% occupancy ratio why does a percentage excuse me why does that begin with a third payment as opposed to first years of occupancy first and second in this case basically a spec building meaning that there are no tenants that are imminent and so the occupancy percentages being deferred until year 3 basically reflect that reality these buildings are not going to be 70 to 90% least necessarily in their first 1 to 2 years and so they need that time to build upon the excitement and the availability of the space and market it I hear you it seems like a generous period given the comment about demand so I'll leave that out there section 3.3 it talks about existing landmark status I'm wondering if that's holdover language from another development agreement because it's empty land is that correct that's correct and we'll take a look at that okay so I guess my major question is this is new class A office space or lab space etc why can't it be constructed without a city incentive like why can't they charge higher rents is land too expensive I mean why is the city what's the public purpose in building office space do you understand my question I believe so I think there were a few but I'll take I'll take them one at a time in terms of the public purpose behind building office space in downtown we don't have very much of it and so we're losing the ability to attract workers to build sales tax revenues without the project obviously the incremental property tax revenue doesn't happen as well and so the this is a true investment of city dollars in creating those types of outcomes I think that address the entirety of yeah I just think that in general we have to think about that I mean there's very clear public purpose in some things like affordable housing perhaps parking but class A office space seems like people should be able to build that without a city incentive that's just my comment I will also say my same concerns that I noted on the last one you know having a higher percentage available to the public the hours that 70% of future tax revenues is too high in my opinion and I still think the county should be contributing more thanks thank you I want to observe that that the Chesterfield draft agreement requires 70% occupancy that innovation district 65% occupancy so I just wanted to ask you why why Chesterfield why that's true why these agreements are different based upon our discussions related to when the buildings would likely lease up and so we we actually could have gone with the lower occupancy rate based upon the fact that the Durham ID buildings are more or less spec but we decided 65% to incentivize and try to trigger a faster lease up and basically accelerated development period for building occupancy and management is Chesterfield less speculative? yes the letters as I mentioned letters of intent within the next 60 to 90 days I also noticed that just an observation about the two agreements that the innovation district requires valid leases 65% based on valid leases Chesterfield didn't have that particular clause the valid lease clause so we can make sure it's important because one of the things I was thinking about was if you want to get the payment I was wondering if we should think about a minimum rent or a minimum average rent I would not want to incentivize somebody to lease space at a very very low rate in order to get the city payment if you follow my advice I believe so based upon our review of their confidential performance however the construction costs and what they'd have to put in could not be and any financing could not be obtained based upon renting at a minimal rate in other words they have to charge a certain amount of rent to be able to pay off their debt and expenses throughout the course of the project and so our I guess caveat or variant to what you're asking for would be the occupancy percentage could maybe you could talk about what a valid lease is here's my concern I've lived through a number of recessions now and there were times when in order to just have tenants in the building people were practically giving space away now I understand that in order for them to make their return on investment they've got to have a certain return on investment but if I'm faced with a choice of right now we're in a recession and we can't get tenants and if I don't have the occupancy I lose the payment from the city wouldn't it be in my best interest to somehow fill the space and so that's why I talk about looking at thinking when you come back to the agreements in August it's just a question I'm going to raise and I'm giving it to you now so you can at least come back and tell us why it's not a good approach I appreciate it I would also say that the annual payment that the incentive is based upon would not make up for minimalized rent so their performance could not be appropriately met but I'll elaborate next time if necessary two more things real quick first I notice that Chesterfield agreement called for 50% of the parking to be available to the public free that the innovation district agreement calls for it to be available at terms to be negotiated so just I don't know exactly why those are different but that's something that I'll be interested in looking at if they're collecting um rentals if we think it's okay, like yeah let's make it available at the same rates like we don't charge right now weekends and nights so I'm not really sure what's going on with that I think the Chesterfield agreement's more likely to change in that regard right so it's not the floor then so that's a question I asked before it's the agreement in front of us I think that the whole parking issue is one that we're going to want to be consistent with the rest of downtown parking parameters and if at some point we're charging for event parking or whatever, everywhere else so if you're thinking that both of them would say that they would be in keeping with whatever else is going on and then let's see was there something else oh the public park the so-called public park this is a little bit I'm sorry just a little bit of issue that I have in that we're slow to invest in public parks and I understand that I go out to South Point Mall and they have great like public use areas but they're not really because if they don't they're not happy with you they'll trespass you and you're out of there and so we'll be looking at what are the terms under which the public can use the so-called public park because I might want to use the word public stricken if it's not actually a public park public park thank you let me say I'm going to have to get out of here I support the project and I appreciate my colleagues question the structure of the details I think that's great I don't have an issue with that not serious I think it's good that we have that I just hope that we don't forget our role as the city versus the county I mean we have by and large hard services we do the streets parks the county does soft services and I just hope we don't get away from that when we talk about what the county ought to be putting in what the city ought to be putting in on these type of deals we by and large are responsible for the development of the city not the county we are and I just hope we don't lose that I'm going to have to leave but I'm going to I was going to make a motion Steve you had your hand up can you quickly I hate to disagree with my mayor but I do and he knows that on this as as on the last one I do think I had raised the park issue when we met in closed session and appreciate you bringing it back and the way I read it it sounds like you're moving in the right direction but I appreciate the questions that Don raised I appreciate the fact that that's in here and I hope it will be truly public and I look forward to hearing back from you all on it I have the same issue with the city and the county split but overall I think that it's I think that this is more likely than the Chester field actually to be to use the word people use transformative I am concerned that the next phase is going to come back with another incentive the next phase will come back with another incentive and so incentive request or incentive thank you sir well put Kevin anyway that's it Mr. Mayor thank you entertaining the motion on the item it's been a proper move in the second Madam Clerk we open the vote those voting four we hit plus those voting against we'll hit negative can you close the vote it passes six to one with council member Cotati are you voting no council member Cotati voting no okay I'm going to turn the floor to council member Cotati thank you mayor and I know I'm standing between my colleagues and vacation so let me just say between your colleagues and my job okay okay well I promise this is two minutes or less but I just wanted to take this opportunity to let you all know that I have decided not to file for reelection next month and it's obviously been an honor and a privilege to serve with you over the last 12 years and to tackle the many challenges facing our community I've enjoyed and learned so very much and I promise to continue to work hard over the next five months and I want to do a quick shout out to my husband who I didn't know was going to be here so that was a pleasant surprise thank him and my family for all their support so I'll see you all next month after our well deserved break Diane I meeting is adjourned thank you Mayor Bill I need to make one announcement the city council has confirmed our appointees to the civilian police board as recommended by the city manager