HomeMy WebLinkAboutAgenda - 09-05-2024; 6-a - Professional Services Contract with Development Finance Initiative (UNC School of Government) for Pre-Development Services for the Greene Tract and Approval of Budget Amendment #1-A 1
ORD-2024-025
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: September 5, 2024
Action Agenda
Item No. 6-a
SUBJECT: Professional Services Contract with Development Finance Initiative (UNC School
of Government) for Pre-Development Services for the Greene Tract and Approval
of Budget Amendment #1-A
DEPARTMENT: Planning and Inspections
ATTACHMENT(S): INFORMATION CONTACT:
1. DFI Scope of Services Perdita Holtz, Deputy Director, 919-
2. Letters of Support from the Towns of Chapel 245-2578
Hill and Carrboro Cy Stober, Director, 919-245-2592
3. Greene Tract Master Plan and Entitlement
Timeline
4. Year-to-Date Budget Summary
PURPOSE: To authorize the County Manager to sign a contract on behalf of Orange County to
procure a professional services contract with the Development Finance Initiative (DFI) for pre-
development services for the Greene Tract and to approve Budget Amendment #1-A to provide
for the total cost of the project.
BACKGROUND: With the anticipated conclusion in late September/October of the current
community engagement and Master Plan efforts on the jointly-owned Greene Tract, the three
local government owners/partners (Orange County and the Towns of Chapel Hill and Carrboro)
are looking ahead to the next necessary phase of realizing development of the Greene Tract. An
in-depth financial feasibility analysis of the Master Plan is necessary, including an analysis of
providing housing at various levels of affordability and public investment support. Additionally, a
development partner(s) must be identified and selected.
Staffs have identified the DFI program at the UNC School of Government as uniquely suited to
perform the necessary analyses and project marketing to private sector developers (both non-
profit and for-profit) who would construct the Master Plan. DFI partners with communities "to
attract private investment for transformative projects by providing specialized finance and real
estate development expertise." The Scope of Services for the proposed contract is included in
Attachment 1. Letters of Support from the Towns of Chapel Hill and Carrboro are included in
Attachment 2.
Many of the tasks in the Scope of Services are expected to be completed in a 12-18 month
timeframe. However, the contract with DFI will be for 10 years, until December 1, 2035, as DFI
will be a partner in soliciting private sector developers to bring the Master Plan to on-the-ground
fruition, which may occur in phases.
In a separate agenda item on this September 5, 2024 Business meeting agenda, the existing
contract for Master Plan services with Thomas & Hutton is proposed to be extended in the event
2
that adjustments to the Master Plan resulting from community engagement efforts are necessary
as a result of the financial feasibility analysis DFI will complete.
The proposed DFI contract is one part of overall efforts to develop the Greene Tract in accordance
with community desires, to include affordable housing. Other processes, such as "entitlement"
(zoning approval) by the Town of Chapel Hill will run concurrently with DFI's and Thomas &
Hutton's work. The entitlement process is expected to be in the form of a Development Agreement
and is expected to commence in October 2024. Attachment 3 is a DRAFT timeline of the Master
Plan and Entitlement, with the timeline subject to refinements as a variety of activities are
underway that could necessitate updates.
FINANCIAL IMPACT: Orange County allocated $399,800 for Greene Tract costs during FY
2023-24. The DFI's Scope of Services is for$132,400, payable over two installments of$66,200
each, over two fiscal years. This creates a total project cost of$532,200.
Based on the 2021 Green Tract Interlocal Agreement, the Towns shall reimburse funds to the
County based on the adopted cost share agreement of 43% - Orange County, 43% - Chapel Hill,
and 14% - Carrboro. Per the approved cost-share agreement for Greene Tract expenses, the
resulting total financial impact to Orange County will be $56,932 funded by County Capital
Reserves after it is reimbursed for costs by the municipal partners.
Budget Amendment #1-A increases the General Fund authorization by $132,400 and County
Capital Reserve by $56,932.
DFI is also compensated by the chosen developer(s) who will be required to pay DFI a
Development Services Fee of 1% of the total project costs. No local government contribution to
the Development Services Fee will be necessary.
ALIGNMENT WITH STRATEGIC PLAN: This item supports:
• GOAL # 3. HOUSING FOR ALL
OBJECTIVE #4. Prioritize and select County-owned land and/or facilities as part of an
overall plan of facilities to create crisis, bridge, low barrier, affordable, and permanent
housing.
RECOMMENDATION(S): The Manager recommends the Board:
1. Approve and authorize the County Manager to execute and sign the contract after
approval of content and form by the County Attorney;
2. Authorize the expenditure of up to $132,400 for professional services to provide Pre-
Development Services for the Greene Tract Master Plan; and
3. Approve Budget Amendment #1-A.
dial IisPA
SCHOOL
Development
1
MEMORANDUM
To: Perdita Holtz, Deputy Director, Long-Range Planning & Administration Division,
Orange County
Cy Stober, Planning & Inspections Director, Orange County
From: Marcia Perritt, Director, Development Finance Initiative
Date: August 6, 2024
Re: Proposal to Provide Pre-Development Services for the Greene Tract
UNC-Chapel Hill Development Finance Initiative
The UNC Chapel Hill School of Government (SOG) established the Development Finance
Initiative (DFI) in 2011 to assist local governments and their partners in North Carolina and
beyond with achieving their community economic development goals. The SOG is the largest
university-based local government training, advisory, and research organization in the United
States. DFI partners with communities to attract private investment for transformative projects
by providing specialized finance and real estate development expertise.
Request for Technical Assistance
Orange County requested technical assistance from DFI in May 2024 to conduct pre-
development feasibility analysis and attract a private development partner to the Greene Tract,
a key community development priority for the County and its partners. The Greene Tract is an
approximately 164-acre property located off Eubanks Road in Chapel Hill, near the historic
Rogers Road community. The parcel is jointly owned by the Orange County and the Towns of
Chapel Hill and Carrboro. These local government partners are working together to establish a
long-range plan to guide development and preservation activities on the site, as outlined in a
2021 conceptual land use plan and a 2021 Interlocal Agreement between the three entities.
Most recently, the County and the Towns launched a ten-month process to co-create a shared
vision and master plan for the Greene Tract alongside the community, with support from
consultants Thomas & Hutton, VHB, and Gensler.
While that visioning work is helpful in gaining consensus among key stakeholders for a general
development concept, to make the concept become a reality, it should be tested through
feasibility analysis and brought to the market—that is, the concept should be proven in a way
that would satisfy developers, investors, and lenders that the vision is feasible given current
market and development conditions. DFI is able to conduct this necessary feasibility analysis
and create a market-feasible program of development, while regularly seeking feedback and
engagement with community stakeholders and the three local government partners. Once a
4
market-feasible development program has been endorsed by Orange County and the Towns of
Chapel Hill and Carrboro, DFI will identify development partners with the experience and track
record to make the vision a reality within the context of Chapel Hill's market.
Scope of Services
The following Scope of Services outlines the pre-development activities that DFI would conduct
to support Orange County, the Town of Chapel Hill, and the Town of Carrboro (the "Client") in
attracting private investment to the Greene Tract, herein referred to as the "Project", and
executing the Client's community development goals as it relates to this Project:
1. Conduct a community scan, which is an analysis of market-relevant demographic and
socioeconomic data, as well as a review of current and historic plans, visioning documents,
studies, research, development proposals, conceptual renderings, notes from public input
sessions, and other materials relevant to the Project;
2. Collect and analyze relevant data for a parcel analysis to understand current market
conditions (sales trends, vacancy, land use, ownership, and underutilization) for the area
surrounding the Project;
3. Conduct market research, including case studies for markets where available market data
may not be sufficient, and a market analysis to assess the demand for development, to
include an evaluation of market feasibility and demand drivers for different uses for the
Project including but not limited to: (1) commercial uses such as retail, office, and flex space;
(2) a variety of residential housing types, including townhomes, multiplexes, 3-4 story
multifamily buildings with surface parking lots, affordable housing, and market-rate
residential; as well as (3) other uses as specified by the Client;
4. Leverage and refine guiding public interests previously established for the Project, in
collaboration with the Client, building from prior visioning efforts;
5. In partnership with a third-party design firm engaged by the Client and building from that
firm's prior work, perform any additional site constraints analysis necessary to determine
what the site can actually support given current conditions and other limitations and to test fit
potential development programs for the Project;
6. Conduct a financial feasibility analysis, preparing a financial model (i.e., development
budget, operating cash flows, sources of capital, etc.) for the Project, in parallel and
iteratively with site analysis, to determine financial feasibility for private partners, evaluate
the Project's ability to attract private investment, and project potential funding sources for
private development;
7. Determine the scale of public investment required to achieve public interests, if necessary,
and evaluate options for financing and structuring public participation in the development, if
2
5
necessary, including the use of development finance tools (tax credits, district designations,
etc.);
8. Propose at least two feasible private development program scenarios for the Project,
including estimated public investment, if necessary, to be considered by the Client and
community-at-large through resident engagement efforts;
9. Support the Client in resident engagement efforts to solicit community input to reflect on
Client-approved feasible private development program option(s), which may include in-
person community meeting(s), virtual community meeting(s), an online survey, and/or other
resident engagement efforts as appropriate and recommended by the Client;
10. Based on community and Client input, propose a final feasible private development program
for the Project and request the Client's approval;
11. Prepare a solicitation for development partners and assist the Client with developing criteria
to inform the Client's selection of eventual partner(s);
12. Actively market and discuss the solicitation with qualified development partners (for-profit or
non-profit) with the goal of receiving competitive proposals from qualified developers who
are capable of accomplishing the Client's approved development program;
13. Support the Client in development partner selection process by carrying out due diligence of
potential partners, preparing investment summaries, and evaluating solicitation responses
using the Client's criteria;
14. Support the Client in negotiating deal points with the development partner selected to
execute the approved development program pursuant to the solicitation. Deal points include
development parameters for public-private partnerships and milestones, which are typically
memorialized first in a non-binding memorandum before being finalized in a development
agreement; and
15. Support the Client through the point that the above-referenced development partner closes
on financing for the project, by regularly evaluating changes proposed by the development
partner to pro forma financials and public participation options, in order to verify developer
assumptions about revenues, development costs, operating expenses, and debt and equity
structuring as market conditions evolve.
This Scope of Services does not include services that require a licensed broker or licensed
attorney to perform. In addition, the scope does not include tasks associated with site planning
expertise from architects or engineers, nor does it include site preparation expenses such as
land survey, soil samples, and environmental testing (if such services are required, DFI will
advise the Client to obtain such services from third parties).
3
6
The scope does not include a refresh or update (supplemental data collection and subsequent
updated analysis) that could be required in the event that, for reasons beyond the control of DFI,
(i) the development solicitation process is not commenced within two years of the Effective
Date, or (ii) more than one solicitation for development partners must be created and/or
marketed.
The fee accounts for efficiencies gained from utilizing the Client's prior visioning and planning
activities as it relates to the Project.
Deliverables
Deliverables include presentations, summaries, and other documentation intended by DFI to be
delivered to the Client regarding the above Scope of Services.
In similar projects, DFI has typically delivered 8 to 10 updates via PowerPoint presentations and
3 to 5 memos (accompanying presentations to elected boards) to the Client throughout the
course of a 12-month scope.
Activity#11 in the above Scope of Services will result in a written Solicitation for Development
Partner(s) document, with supporting background and due diligence materials to be shared with
the Client and prospective development partners.
Timeline
The timeline for completing Activities 1-10 is estimated to be 12 months from commencement.
DFI intends to help the Client attract private investment into the Project (Activities 11-15) as
quickly as possible and in a way that maximizes overall value and serves the public interests.
Fee
The flat fee for the above Scope of Services is $132,400. The flat fee is payable over two
installments of $66,200 each, over two fiscal years if desired.
The Client fee would cover only part of DFI's cost of services, with the balance being "at risk,"to
be paid as a fee from each successful project. DFI's pre-development services will not only
assist the Client in accomplishing its goals but will also benefit the ultimate private developer(s)
by eliminating predevelopment work, risk and expense. In order to minimize the Client's costs,
we require the Project to pay for the value of that benefit in the customary way, as a portion of
development costs. If the Client is successful in executing a Development Services Agreement
with a private partner, DFI will receive a Development Services Fee. This Development Services
Fee paid by the Project would be 1% of total project costs.
4
7
This arrangement benefits the Client in several ways. It aligns DFI's interests with the Client in
terms of finding developer(s) for the Project and attracting private investment. It also ensures
the Project itself pays for a significant share of the Client's costs associated with the pre-
development work. And it gives the Client ongoing support from DFI throughout negotiations
with the developer(s) and during the full life span of development in the Project (i.e. DFI has
"skin in the game"). There is no guarantee that a developer will be identified, so the
consequences for DFI are clear—DFI will get the bulk of its fee only if there are developer(s) for
the Project who successfully execute agreement(s) with the Client.
DFI Project Team
Our project team will be led by Associate Director Sarah Odio as the project lead, with support
from Assistant Director Frank Muraca, Senior Project Manager Sonyia Turner, Associate
Director Eric Thomas, and Director Marcia Perritt. In addition to more than a decade of
experience with advising public and charitable institutions on public-private partnerships for
development, DFI also has access to the resources of the entire School of Government faculty
with expertise ranging from public finance to property tax to environmental finance.
SARAH ODIO, ASSOCIATE DIRECTOR FOR HOUSING & REVITALIZATION
As Associate Director for the School of Government's Development Finance
Initiative, Sarah Odio specializes in affordable housing, and has helped urban
and rural communities across NC understand their housing needs and attract
private investment to mixed-use and mixed-income developments. She also
oversees projects that range from commercial adaptive reuse to neighborhood
revitalization, and has advised communities on post-disaster downtown
recovery. Sarah joined the School of Government in 2016 as a graduate fellow
while pursuing a master's degree in city and regional planning at UNC-Chapel
Hill. Previously, she focused on community and economic development policy as an aide for a
Miami-Dade County commissioner. Sarah earned a bachelor's degree from Vassar College.
Select Relevant Experience:
Buncombe County Ferry Road Mixed-Income Residential Community
Durham County 300 & 500 E Main Mixed-Income Downtown Projects
Salisbury, NC Kesler Mill Affordable Housing Project
• West Southern Pines, NC Neighborhood Revitalization Strategy
Apex, NC Affordable Housing Opportunity Site Identification
FRANK MURACA, ASSISTANT DIRECTOR FOR DATA &
ANALYTICS
Frank Muraca joined the Development Finance Initiative as a graduate fellow
in 2019 before becoming a full-time team member in 2020 as a Real Estate
Development Analyst. He became the Assistant Director for Data & Analytics
5
8
in 2024. In his role, Frank uses data and visualizations to identify community development
opportunities for DFI's clients. Frank received his bachelors from George Mason University and
his master's degree in City and Regional Planning from UNC-Chapel Hill. Prior to graduate
school he lived and taught in Jiangsu Province, China.
Select Relevant Experience:
• Jacksonville, NC Affordable Housing Opportunity Site Identification
• West Southern Pines, NC Neighborhood Revitalization Strategy
• Dorothea Dix Park Redevelopment Feasibility Assessment, Raleigh, NC
• Research Triangle Foundation Frontier Campus Redevelopment Strategy
• Downtown Kannapolis Master Development Plan Execution, Kannapolis,
NC
SONYIA TURNER, SENIOR PROJECT MANAGER
Sonyia Turner joined the Development Finance Initiative (DFI) in 2019, after
working with DFI as a graduate student fellow. She became a Senior Project
Manager in 2023 and has extensive experience managing projects related to
affordable housing, adaptive reuse projects, and downtown revitalization. Prior to working with
DFI, Sonyia served as a fellow with DFI, a fellow with The Center for Community Capital, and
worked with the North Carolina Community Development Initiative (NCinitiative.org) on disaster
relief efforts in Eastern North Carolina. Sonyia holds a bachelor's degree in environmental
design & architecture from North Carolina State University, and a Master's in city and regional
planning with a specialty in housing, community development, and real-estate development
from the University of North Carolina at Chapel Hill.
Select Relevant Experience:
• Downtown Infill Project Pre-Development & Developer Solicitation, Wake Forest, NC
• Railroad Corner Mixed-Use Pre-Development & Developer Solicitation, Orangeburg, SC
• Salisbury, NC Kesler Mill Affordable Housing Project
• Research Triangle Foundation Frontier Campus Redevelopment Strategy
• Apex, NC Affordable Housing Opportunity Site Identification
ERIC THOMAS, ASSOCIATE DIRECTOR
Eric Thomas joined DFI in 2015 and is currently managing multiple mixed-use
development projects across North Carolina, including the master
n development of a mixed-use town center. Eric is also assisting in the
conceptual design, program definition, development budget, cost estimation
and site analysis on DFI projects. Prior to graduate school, Eric worked as a
community planner within Washington DC's Office of Capital Projects and
Planning and was involved in the District's first public-private partnership
dedicated to the creation of public open space. Eric holds dual master's
6
9
degrees in city and regional planning from UNC-Chapel Hill and landscape architecture from
North Carolina State University and received his undergraduate degree from Brown University.
Select Relevant Experience:
• Downtown Kannapolis Master Development Plan Execution, Kannapolis, NC
• Dorothea Dix Park Redevelopment Feasibility Assessment Raleigh, NC
• Broughton Hospital Redevelopment Strategy, Morganton, NC
• Research Triangle Foundation Frontier Campus Redevelopment Strategy
• Buncombe County Ferry Road Mixed-Income Residential Community
R
MARCIA PERRITT, DIRECTOR
Marcia Perritt first joined DFI in 2012 as a Community Revitalization Fellow
while pursuing dual master's degrees in Public Health and City & Regional
•� ."'���. Planning at UNC-Chapel Hill. As Director, Marcia oversees all aspects of the
Development Finance Initiative (DFI). She also handles business development
for DFI and provides specialized assistance related to community engagement and
communication across all DFI projects. She currently advises North Carolina communities on
projects ranging from the adaptive reuse of a historic downtown hotel to supporting
neighborhood revitalization efforts in areas suffering from blight, vacancy, and disinvestment.
Her professional interests include land banking, affordable housing, creative placemaking, and
asset-based community development. Prior to graduate school, Perritt worked at a statewide
nonprofit dedicated to building the capacity of low-income communities to address
environmental injustices.
Select Relevant Experience:
• Dorothea Dix Park Redevelopment Feasibility Assessment Raleigh, NC
• Broughton Hospital Redevelopment Strategy, Morganton, NC
• Buncombe County Ferry Road Mixed-Income Residential Community
• Durham County 300 & 500 E Main Mixed-Income Downtown Projects
• West Southern Pines, NC Neighborhood Revitalization Strategy
7
10
TOWN OF CHAPEL HILL
Town Manager's Office
r 405 Martin Luther King Jr. Blvd.
Chapel Hill,NC 27514-5707
phone(919)968-2743 fax(919)969-2063
www.townofchapelhill.org
August 5, 2024
Travis Myren
County Manager
Orange County
300 W. Tryon Street
Hillsborough, NC 27278
Subject: Greene Tract Development Finance Initiative Support
Travis,
The Towns of Carrboro and Chapel Hill, along with Orange County have worked
developing a Master Plan for the Greene Tract over the past year and understand the
next step is to engage the services of the School of Government Development
Finance Initiative (DFI).
The 2021 Interlocal Agreement between the three jurisdictions states the
development of the property will provide affordable and mixed income housing. The
Agreement further states that financial responsibility for all costs associated with
implementing the project shall be shared at the 43/43/14 proportions.
The proposal from DFI includes a total cost of $132,400 payable in equal
installments over two years with Chapel Hill's share equaling $56,932 (annual
amount of$28,466). Chapel Hill believes the scope of service proposal will create a
market-feasible program of development.
I wanted to share with you that Chapel Hill supports Orange County entering a
contract with DFI for the financial analysis consultant services for the Greene Tract
and is prepared to obligate its financial share.
Sinc rely,
Ma Jane irdlinger
Deputy Town Manager
11
4VTOWN ❑F CARRBORO • NC
OFFICE ❑F THE TOWN MANAGER
August 12, 2024
Travis Myren
County Manager
Orange County
300 W.Tryon Street
Hillsborough, NC 27278
Subject: Greene Tract Development Finance Initiative Support
Mr. Myren,
The towns of Carrboro and Chapel Hill, along with Orange County, have worked on developing a master
plan for the Greene Tract over the past year and understand that the next step is to engage the services
of the School of Government Development Finance Initiative (DFI).
The 2021 Interlocal Agreement between the three jurisdictions states that the development of the
property will provide affordable and mixed-income housing.The agreement further states that financial
responsibility for all costs associated with implementing the project shall be shared in 43/43/14
proportions.
The proposal from DFI includes a total cost of$132,400 payable in equal installments over two years,
with Carrboro's share equaling$18,536 (an annual amount of$9,268). Carrboro believes the scope of
the service proposal will create a market-feasible program of development.
I wanted to share with you that Carrboro supports Orange County entering into a contract with DFI for
the financial analysis consultant services for the Greene Tract and is prepared to obligate its financial
share.
Sincerely,
Patrice Y.Toney
Town Manager
p o
301 W. Main Street Carrboro, NC 27510 1 social media carrboronc.go), 919-942-8541
o:
12
DRAFT
2024 2025
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Community Engagement Consultant
Planning&Strategy
Engagement Implementation
Synthesis&Initial Design Recommendations
Design Alignment&Ongoing Outreach
Workshops
Final Recommendations&Master Plan Report
Monthly Newsletters
Master Plan Consultant
Development Constraints and Opportunities
Development Regulations and Recommendations
2 Conceptual Plan
Final Master Plan
DFl iterations
DFI
Contract&MOU Modification
Examine Current Conditions
Market Analysis
Site Analysis
Financial Analysis&Strategy
Identify Private Partner(s)
Master Development Partner Solicitation
Chapel Hill Entitlement
Technical Review
Public Engagement(on-going)
Negotiations
Chapel Hill Council Approval
Annexation
Property Owners Request
Chapel Hill Council Approval
Communication Plan
Community/Stakeholder Engagement
RENA/Phoenix Place/Church of Advocate
Public Outreach Newsletter
Elected Boards
13
Year-To-Date Budget Summary
Fiscal Year 2024-25
County
Fund Budget Summary General Fund Capital
Reserve
Original Budget Revenue $286,304,076 $0
Interfund Transfer Revenue $1,006,039
Fund Balance Appropiation $7,100,000 $356,539
Total Original Budget $294,410,115 $356,539
Additional Revenue Received Through
Budget Amendment#1-A (September 5th, 2024)
Grant Funds $100,096
Non Grant Funds $75,468
Additional Interfund Transfer Revenue $56,932
Additional Fund Balance Appropriation $76,895 $56,932
Total Amended Budget $294,719,506 $413,471
Dollar Change in 2024-25 Approved Budget $309,391 $56,932
Change in 2024-25 Approved Budget 0.11% 15.97%