Saturday, January 11, 2014

South Elm St redevelopment 101

Twelve years in the making and after a 200% turnover in Redevelopment Commission Commissioners, and dedicated city staffers, the RDC finally got it together and sent out an RFP in Dec 2010

South Elm St RFP here:

From the initial entries, three finalists were selected and additional questions were asked...

In the end, 2 firms were in the running...the Russell company out of Atlanta (a 100% Black owned firm) and the chosen group SEDG (a 100% white owned firm). 
During a poorly orchestrated politically correct maneuver designed to gain community support, Bob Chapman and Bob Isner soon hired  Yvonne Smith. It is worth noting that Yvonne Smith is NOT a partner but a consultant. A black consultant who was a PARTNER  in a competing development entity prior to its elimination.

The selected Group responded to additional questions here:

Original Project Timeline
Projected Solicitation Schedule (subject to modification) 
December 15, 2010 
Announcement of Solicitation 
March 31, 2011 
Proposals due 
July 15, 2011 
Notice of respondents selected for interview 
August 1-15, 2011 
September 15, 2011 
Development Team selection 
September 15, 2011 
Notice of successful respondent 
September 20–30, 2011 
  Advertisement for upset bid 
November 15, 2011 
City Council Approval 

Original Development Timeline 
Pre-development Timeline (from City Council approval of property sale) 
2 months Sales and Development Agreement 
6 months Final Development Plan/Design Approval 
8 months Secure Financing Commitments 
9 months Property Closing  
12 months Start Construction 
48 months Complete Construction  

From the RDC
South Elm Development Group Presentation: 
Mr. Chapman described the process to do a residual value analysis to determine the cost of building improvements and their worth after being built. He walked the Commission through elements of the project based on parameters in the Request for Proposals (RFP) and made the following points: 

• 1.7 acres would be “for sale” residential with 26 units of stand-alone townhouses. 
• 3.4 acres of “for rent” residential. 
• 1.6 acres for retail. 
• .25 acre for offices. 
• The average rent for apartments would be $.93 per square foot per month. 
• The estimated rent for retail would be $16.00 per square foot per year, renter pays all costs. 
• The estimated office rent would be a full service rate. 
• The average footage for the 168 residential apartments is 635 square feet. 
• 95,000 square feet of retail space. 
• 15,000 square feet of office space. 
• The cost of building apartments is $89.00 per square foot not counting land cost or developer profit. 
• The cost of building offices is $110 per square foot, totally inclusive. 
• The total residual value for the land under the “for sale” residential is $515,000. 
• 390 units would be needed for a parking structure. 
• The cost to build parking structures would be $4.6 million. 
• The total residual value for the property is $5.4 million of which $3 million would be paid to the City for the land and $2.4 million would be the return on development contribution to profit and overhead. 
• The total project cost based on square footage prices is $37.7 million dollars for the program South Elm Development Group has in mind. 
• Sources of funds: $5.6 million coming from a 221(d)4 loan based on the assumption that the Market Study is acceptable to HUD; for the 25% of units set aside with income restriction, low income housing tax credits of $2 million; and the sale of tax exempt multifamily housing bonds of $1.8 million. 
• Residential sales projecting net of the land cost at $3.5 million; retail at $12.5 million. 
• South Elm Development Group would like to have an Identity of Interest with the City of Greensboro to allow payment of the buildings as they are built. 
• Developer’s fee is $2.4 million. 
• Developer’s equity is $1.4 million. 
• Developer is proposing a Certificate of Participation to fill the gap of $2.67 million dollars. 

Worth noting:
Tax Increment Financing or TIF has been identified as a potential financing source...TIF has many issues associated with its use, not least of which is the displacement of lower income residents as they can no longer afford to live in the home they grew up in due to massive increases in Property taxes.
Certificate of Participations also bypass the community altogether.

The deal is a different deal altogether now...A university campus changed the game. Robbie had a lot to do with Isner being selected as the master developer. Robbie, Isner and Co have identified proven ways to pillage the coffers even though the project is way way behind schedule and the selected development team has yet to do one thing it was hired to do. Pay attention council... I have been! 

1 comment:

  1. You know what else is interesting? There is no South Elm Redevelopment entity listed at the NC Secretary of State website: Has the City of Greensboro entered into a contract with a non entity with the knowledge of City Staff, the City Attorney, the City Manager and the Greensboro City Council? And isn't doing so a felony?