In most of North Carolina, when you find yourself in a hole, you stop digging. However, Orange County isn’t like the rest of the state. Here, a financial hole is simply another “Progressive valley”.
Pulpsters will remember over the past few years the Pulp reporting on the Buckhorn Village project. In 2008 Orange County Commishes selected their Developer Dream Team. They threw millions in county finances to develop infrastructure for their Dream Team. Heck, they even got the Buckhorn Flea Market in trouble using the County Manager and his “PZI police”.
Fast forward two years. Developer Dream Team member Roger Perry delivers the requiem for Buckhorn Village. “[T]he Buckhorn Village project is dead, and no major retail center is likely to replace it along Buckhorn Road at Interstates 85 and 40.” (See CHN Buckhorn Obit.) Admitting defeat to the obvious, Mr. Perry notes that the Tanger Outlet Center opening just to the west across the Alamance County line renders Buckhorn Village a moot point.
So what do the Commishes do? They get busy digging. Why stop throwing your money away? Perhaps they’re looking for the little blue pills that will cure Orange County’s flaccid ED problem. Having spent $2,000,000 installing public water and sewer lines to serve Gravelly Hill Middle School and the Eurosport Soccer Complex, these financial geniuses plan to spend another $2,300,000 expanding that infrastructure to the north side of I-85.
”Any activity with [the town of] Mebane will probably offer some economic development opportunity for the county. They're more geared toward it.” Such is the genius of Commish Barry Jacobs, This is the same person who said in April 2008 that Buckhorn Village would create living wages. This is the same person who for two decades has overseen the looming ED disaster in Orange County. Of course, neither he nor any of the other Commishes have any responsibility for the problem. They simply offer more Progressive platitudes.
If you build it in the middle of the Great Recession, they will come. Everybody loves a good wake.
The UNC publicity machine scored another triumph. At a media-only event University development officials rolled out plans for Carolina Commons. UNC talked of its concern for affordable housing for employees. The media lapped it up, rewriting the press releases. (See Chapel Hill Herald Story and Chapel Hill News Story.)
The real story was missed.
Never fear. The Pulp will deliver as much as it can of the full story of Carolina Commons over the next few months. It’s an uncommon story of private development interests tied quietly to public university interests. It’s a story of public deceptions. It’s a story of municipal taxes diverted for university benefit. It's a story of municipal taxes diverted for private development benefit. It’s not a story you’ll find in the local media.
Media Embrace
As reported by the local media, Carolina Commons is an affordable housing project north of Homestead Road that will provide affordable housing for junior faculty and staff who want to purchase their own home. All the magic ethereal buzzwords are used - sustainability, affordability, green.
According to Ms. Mary Jane Nirdlinger, purveyor of ever-changing Carolina Common promises for over a year and proud owner of the title “project manager in facilities planning”, UNC will sell the homes at 20% below the market value of similar units in the area. (The only such homes are in Winmore, directly to the south, where the public isn’t buying. The cheapest home in Winmore sells at about $305,000 for 1350 square feet, or about $225 per square foot.)
That’s it. As far as the media is concerned, that’s the whole story.
Follow The Money
No one in the local media asked the obvious question. What about the money?
Anyone with a modicum of private enterprise experience would want to know the financial details. How is UNC paying for this development? Who is providing UNC the development capital? At what cost? Has it been competitively bid? Who is making money off this development?
If you follow the money, then the real story emerges. But first, what is being built.
Physical Reality
So how green is Carolina Commons really?
UNC is building 58 single-family homes, 40 condominiums and 51 rowhouses (about 150 units) on about 15 acres. That’s a density of about 10 houses per acre. Their site for such density is not a flat field surrounded by flat buffer, but alongside Bolin Creek, an environmentally sensitive stream with steep slopes. Such a site reflects the best in UNC green planning. Such a site is the essence of sustainability, affordability, and green.
UNC hides its urban streamside density by referring in its calculations to the bulk acreage of the 63 acre parcel dominated by the Bolin Creek streambed and its slopes. While that acreage isn’t buildable, it’s not a problem. Carrboro rules allow such acreage to be counted as green space. As far as Carrboro and UNC are concerned, building the densest residential projects next to streams is to be encouraged, not deterred. Slap a few rooftop solar panels, add some extra insulation. Shazam, you have a green project.
Never mind that one won't walk from Carolina Commons to the UNC main campus. Never mind that one won't walk from Carolina Commons to the coming Carolina North campus. It sounds green. That's what's important.
Living Wages Versus Living Equity
Amidst the hoopla of affordable, green housing for UNC employees, lies the reality of the residential real estate fiefdom being created by UNC.
While UNC will sell the 150 or so southeastern Carolina Commons homes to its employees at below-market rates, UNC will not sell the land upon which those homes sit. UNC will retain ownership of those lands, forever. If the home is to remain as affordable housing for UNC employees, then UNC employees must enter into an agreement to sell to another UNC employee. Moreover, according to Ms. Nirdlinger, UNC employees must enter into an agreement to share the market appreciation of their home with UNC when they wish to sell. (Query, what will UNC do with that shared equity appreciation?)
Gone unspoken is another approach.
Why doesn’t UNC pay its employees a living wage that allows them to own a home in Chapelboro? If it’s important for UNC employees to live five miles away from campus, as opposed to fifteen, then why not pay a wage that allows them to enter the private home market? Why create a perpetual housing fiefdom? (Query, how much will the administration of this fiefdom cost?)
The Town/UNC Unspoken Deal
Lost by the local media is the handshake, behind-the-scenes deal between UNC and the town of Carrboro. In order to cut the county out of the Winmore development process in 2003, the Carrboro Boa had to get the Winmore land into town limits.
Mr. Michael Brough, then filling the unusual combination of being Carrboro’s outside attorney and Carrboro’s acting town manager, wanted to help Winmore developers stuff a mixed use village alongside Bolin Creek (which included his longtime friend and acquaintance, Mr. Phil Szostak.) He needed to get UNC to seek voluntary annexation of its Carolina North lands and the Carolina Commons land site in order to allow the Winmore land to be voluntarily annexed. Coincidentally, it allowed the town of Carrboro to involuntarily annex about 400 homes and bag over $500,000 annually in taxes without providing any more services to those involuntarily drug into the town.
UNC complied without offering a reason, even though it had no plans for developing these properties in the immediate future. Unasked by the media, (and unspoken by Mr. Brough, the Boa, or UNC) why would UNC seek such annexation years before building within the Carrboro planning jurisdiction?
The answer became obvious several years later. The town of Carrboro spent over $250,000 to extend a sewer line through the Carolina Commons property as a reward for the voluntary annexation move. That gift from the town to UNC reduced the development costs for UNC. A gift from town taxpayers to UNC.
Political Corner
The most interesting part of the Carolina Commons development from a news perspective is not the 150 or so homes in the southwest corner. Rather it’s the tale of the northeast corner.
Several years ago, Carrboro citizens living adjacent to the northeast corner approached UNC regarding the future of the northeast corner. No less that Mr. Roger Perry, UNC trustee in charge of UNC building plans, told these citizens that UNC intended to build about seven executive homes off a cul de sac at the stubout on Claymore Road. These homes would be high end, designed to attract key employees to UNC. It was a developer’s promise from a UNC trustee, worth the paper it wasn’t written on.
Then the town of Carrboro stepped into the fray. Seeking the highest return in tax dollars, the town $1,000,000 planning department decided to increase the number of homes from seven to seventeen.
Moreover, the town decided to force a road connection (32 foot wide with sidewalks and curb and gutter) between the Colleton Crossing development to the north of Carolina Commons and Claymore Road (20 foot wide, no sidewalks or curb and gutter). As can be seen below, such a connection would cost the town about $1,000,000 to improve that road up to the town’s legal requirements for a sub-collector road.
Curiously, the town planning staff ignored connecting Colleton Crossing to Homestead Road through Camden Lane (32 foot wide with sidewalks and curb and gutter, just like the proposed Colleton Crossing and Carolina Common roads). As can be seen below, such a connection would cost the town nothing and would provide a road connection that met the town’s legal requirements for a sub-collector road.
Why would the town of Carrboro seek to connect to a substandard road that would cost town taxpayers substantial moneys to improve when they could connect to an existing road that was up to standards?
The answer goes unreported by the media.
As described at a meeting between UNC officials, their private advisors, and neighbors surrounding Carolina Commons a few months ago, a political score must be settled at taxpayer expense by connecting to a substandard road. Taxpayer expense and public safety be damned. In the words of Alderman Dan Coleman, he wanted to get back at his political opponents in the Highlands who live off, you guessed it, Claymore Road. Challengers in the last municipal election, they publicly asked Mr. Coleman to resign after he lied to the public about attacking a woman on town property with his vehicle.
Enter The Handpicked Private Developer
Subsequent to the Perry meeting, and prior to the submission of the concept plan to the town of Carrboro, a new player came into the Carolina Commons deal. Enter the private for-profit residential development firm of D.R. Bryan. D.R. Bryan is a privately held for profit enterprise that builds major residential developments. It built Southern Village and Treyburn. It’s building an oversized hotel for Southern Village, as reported in the Pulp.
D. R. Bryan is “advising” UNC on the Carolina Commons development. What's the contractual relationship? No one will say. At the UNC Carolina Commons neighbors meeting the question was asked. However, Ms. Rosemary Waldorf, former Chapel Hill mayor and D.R. Bryan kingpin, declined to answer that question. Based upon their advice, the seventeen homes are no longer to be used to attract key UNC employees. Instead they are being sold on the open market. Mr. Perry's promise to Carolina Commons neighbors is a true developer’s promise.
The Unspoken Web
D.R. Bryan is also a partner in the mega Buckhorn Village development along with East-West Partners. Who heads East-West Partners? None other than… Mr. Perry, UNC trustee in charge of Carolina Commons.
How much is D.R. Bryan being paid by UNC?
Is it providing any capital?
Is it building the homes?
Why is it involved?
Was this “advisory” contract competitively bid?
Who at UNC approved the contract?
Is anyone other than the Pulp paying attention?
No word on why those in the media lamenting the death of printed newspapers can't see the reason why.
“Oh what a tangled web we weave, when we first practice to deceive” - Sir Walter Scott
Shades of the 605 West Main development debacle in Carrboro have come to Chapel Hill, but, of course, on a much grander scale. Not quite two years ago, the Chapel Hill governance board approved a mixed use village type project called East 54. Now that the “cruise ship” buildings have docked, rising six stories from the ground, in their permanent berths alongside NC 54, those same enthusiastic approvers of East 54 are hedging their bets.
What Is East 54?
East 54 is a new “luxury urban village” built on NC 54 at the old site of the University Inn. Developer dream team pal East West Partners (Mr. Roger Perry, Meadowmont developer and UNC trustee) is the lead group building another Chapel Hill mixed use village having 113,000 square feet of class-A office space and 60,000 square feet of retail space. These spaces support about 400,000 square feet of residences. At an average of 1300 square feet per residence, that’s over 300 residences.
Pulpsters can take a virtual tour of the coming 580,000 square foot luxury urban village that’s about half the area size of the Durham SouthPoint mall.
It’s SO Big!
That anyone who approved the project is now surprised by what’s being built is a condemnation of the town of Chapel Hill’s land development approval process. The sketches glibly tossed around at the East 54 approval are not binding on what the developer builds. What you see at a development approval public hearing has nothing to do with what you will get. (The Carrboro Board of Alderman found that out when 605 West Main was built and roundly condemned for its appearance.)
Developers don’t have to get approval for the style, elevations aesthetics, or facades of what they build.
According to Town Councilor Mark Kleinschmidt, a dense devotee, ”It's challenging for me when I see these buildings going up because they are so large. Just seeing something of that size go up, I think it's emotionally evocative because the change on its face seems so great. … My emotional response is, 'Wow, that's so big.'.”
Mr. Kleinschmidt offers no explanation why he or anyone else didn't know how “big”, big really was.
Fellow Town Councilor and dense devotee Laurin Easthom said people “did not realize how big and how dense and how much that has changed that particular area. I'm hearing that a lot. When I drive down that road, it's just a total change visually to the skyline.”
Ms. Easthom offers no explanation why she or anyone else should be surprised.
Faith In The Catechism of Density
Dense is as dense does. Chapel Hill Mayor Foy wants people to know, the town governance board really knows what it’s doing.
”Is that going to line 54 in and out of Chapel Hill? Are those the kinds of projects that are going to line Martin Luther King from downtown to 40? Is that what our future looks like? No, it doesn't have buildings lining all of those corridors. It's much more focused than that.
I think people need the assurance that we've thought this through. The council has not just plopped down density just in a random fashion. [East 54] has been approved because it was within walking distance of a proposed transit stop.”
Mr. Perry, who is being rewarded handsomely by the approval of East 54 by Mr. Foy and company, believes that a dense future is the only option. ”I think the vast majority of the people in this community recognize that this is the kind of development that needs to occur on transit corridors. … This town's drawn an urban growth boundary around itself. The only way it's going to be able to survive as an economically sustainable community is with dense development.”
Mr. Perry doesn’t explain how Chapelboro will ever be able to get beyond being a factory town beholding to UNC. As such, Chapelboro can never be economically sustainable. UNC draws its economic marrow from the bones of 99 other counties in the state. By definition, can't be a sustainable economy except by the legislative fiat of state taxation.
Faith In The Catechism of Light Rail
Although there is no funded light rail transit system for the Chapelboro area and there's no rail at all along NC 54 in Chapelboro, the town of Chapel Hill has faith that it's coming. According to Town Councilor Bill Strom said projects like East 54 can pave the way for a “more robust” mass transit system. ”It's a change in the development pattern, but the guiding principle there is that it is at a regional rail stop. In order to get federal and state support for these projects, you have to have density organized in a way that promotes ridership.”
Mr. Perry's town governance pals are working diligently towards getting a commuter rail station built behind East 54 at taxpayer expense.
Infiltration Of The Heretics
But hereteical winds of change are blowing. For the first time in a very long time, not all members of the Chapel Hill governance board are true believers in dense growth for growth sakes. Town Councilor Matt Czajkowski, who wasn’t a board member at the time of the East 54 approval said “Virtually all the reaction I get to East 54 is negative. Clearly, that tract was going to get redeveloped, but developed with these monoliths right along the highway? That block the view of the hill, of Chapel Hill? That cast a shadow on the road? Is that what we want?”
Newest Town Councilor Jim Merritt, appointed to replace the late Bill Thorpe in October, and thus, not a board member at the time of the East 54 approval, has also heard complaints. He attended a forum last weekend for Glen Lennox residents, another community under dense growth assault. In his words, ”I'm not sure that was the appropriate place to put something that large. It's quite a bit of development there, just coming into the town of Chapel Hill.”
(See Chapel Hill News East 54 Story.)
UNC trustee and local developer Roger Perry fires off a shot across the bow of “absentee landlords” on Franklin Street in Chapel Hill.
Speaking to the Friends of Downtown group, Mr. Perry said that he (a representative of the biggest in-town land owner, UNC) “wants the town to hound absentee downtown landlords into building-code compliance or out of business.” According to Mr. Perry, too many “out-of-town” landlords have allowed their properties to deteriorate ,especially on the second floor. ”One of the biggest problems with the 100 block [of East Franklin Street] is we have irresponsible ownership with a lot of the buildings. We have a lot of absentee owners of buildings and land up and down Franklin Street who have not been good stewards, and we should give them a hard time.” (See Chapel Hill News Downtown Story.)
Within one week, the town bureaucrats have responded by conducting fire marshal inspections in the 100 block of Franklin Street.
Of course, Mr. Perry has led the competitive stripping of downtown businesses by building nearby Meadowmont and East 54 on the outskirts of Chapel Hill. But with that development completed, Mr. Perry is ready, as a lead UNC trustee, to take on new redevelopment in the downtown section, all ten or so blocks of it. The University of North Carolina-Chapel Hill Foundation has bought two big Franklin Street properties, the University Square and Granville Towers properties for $46,000,000. Each is ripe for redevelopment.
So what does Mr. Perry see as the crying need for downtown redevelopment? Density of course! He wants more people living on and near Franklin Street to make the downtown “vibrant”, read profitable for developers. (That bodes well for approving mega-dense mixed use redevelopment of University Square and Granville Towers.) He wants more connections between Franklin Street and Rosemary Street. (That bodes equally well for the for-profit retail properties located in UNC penumbra landlord holdings.) He wants more inspections. (That bodes well for pressuring landlords to sell out to redevelopers with money, such as Mr. Perry or UNC.)
Pulpsters should understand the mechanism by which UNC is buying downtown properties for commercial development. The University of North Carolina at Chapel Hill is not buying the properties directly. Rather it buys them through an affiliated (you guessed it) tax exempt organization, the University of North Carolina–Chapel Hill Foundation (UNC-CH Foundation), a foundation started in 1977.
Time has done well by the UNC-CH Foundation. As of FY 2007, the UNC-CH Foundation controlled assets worth $238,355,858. It had an annual income of $35,396,612. It had an annual earnings revenue of $22,398,165. It also holds all the equity rights to technology created at UNC using federal government grants.
Pulpsters should not confuse the UNC-CH Foundation with the UNC endowment. The endowment is held, at least in part, by the University of Chapel Hill Foundation Investment Fund, Inc. (Foundation Investment Fund) started in 1996. The stated purpose of the Foundation Investment Fund is to support University of North Carolina at Chapel Hill through providing investment services to the endowment fund of the University of North Carolina at Chapel Hill and other related organizations. It invests the UNC endowment fund and other University related foundations.
As of FY 2007, the total assets of the Foundation Investment Fund is $454,511,641.
No word on how a tax exempt foundation buys local commercial/mixed use real estate, pays local property taxes, but doesn't pay federal income taxes, all legal, of course.
