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Home My WebLink AboutAgenda 09-16-2025; 6-b - Discussion of a Ground Lease with UNC for 2700 Homestead Road for the Cold Weather Cots Program and Integrated Day Center 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 16, 2025 Action Agenda Item No. 6-b SUBJECT: Discussion of a Ground Lease with UNC for 2700 Homestead Road for the Cold Weather Cots Program and Integrated Day Center DEPARTMENT: County Manager Asset Management Services (AMS) ATTACHMENTS: INFORMATION CONTACT: PowerPoint Caitlin Fenhagen, 919-245-2303 Alan Dorman, 919-245-2627 PURPOSE: To: 1) receive and discuss information regarding a facility located at 2700 Homestead Road in Chapel Hill as a potential location for the Cold Weather Cots Program and an Integrated Day Center; 2) authorize staff to enter into negotiation with UNC for a ground lease of up to ten (10) years for the 2700 Homestead Road property; and 3) direct staff to develop a budget amendment to fund the compliance and design study. BACKGROUND: In April 2025, County Manager Travis Myren and Interim Chapel Hill Town Manager Mary Jane Nirdlinger sent a letter to Gordon Merklein, UNC Associate Vice Chancellor for Real Estate and Campus Enterprises, regarding a UNC facility at 2700 Homestead Road in Chapel Hill. The building, formerly a Duke Energy property, appeared to be under-utilized by UNC and in a location that would be well-situated for the County's cold weather cots operation and a potential integrated day center. The cold weather cots operation was held at University Baptist Church in Chapel Hill last winter, but this location is not available to the County for the upcoming winter of 2025-2026. Instead, the Orange County Housing Department is executing memoranda of understanding (MOU's) with 1) the Town of Chapel Hill to utilize the former Chapel Hill Police Department Building on Martin Luther King, Jr. Boulevard; and 2) St. Matthew's Church in Hillsborough — both to serve as the cold weather cot locations for the upcoming winter. An integrated day center, which is one of the gaps identified in the Partnership to End Homelessness Systems Gaps Analysis, has been a high priority gap for the County to fill. The letter sent by the County and Town Managers inquired as to whether UNC would be willing to consider allowing the County to utilize the Homestead Road building for these two identified needs. The letter followed numerous conversations between UNC stakeholders and Town and County staff regarding the issue of unsheltered individuals in the downtown Chapel Hill area. 2 UNC, through its Director of Local Relations, Ivy Taylor, expressed an interest in learning more about local efforts to support the unhoused population and to address behavioral health concerns. In addition to discussions about longer-term efforts such as the Crisis Diversion Facility, the issue of a new location for the cold weather cots program and opening an integrated day center came up. There was significant interest by UNC and the Town of Chapel Hill in supporting both of these priorities. An integrated day center is a central place where people in housing crisis can access many different needed services. More than just a drop-in center offering basic necessities, this model integrates medical, behavioral and housing-focused services to help individuals move to stable housing and self-sufficiency. It offers a coordinated and comprehensive, trauma-informed approach that moves away from a siloed system that requires individuals to travel to different locations and appointments to get the services they need. It also offers a building with heating and cooling, bathrooms and other resources that provide a reprieve from the outdoors. This summer, the County and Town were notified that the UNC Office of Real Estate and Campus Enterprises was willing to offer Orange County a 10-year ground lease on the facility at 2700 Homestead Road starting in the late spring of 2026. While the offer to lease the property does not involve any rent, the County would be required to fund any necessary improvements and renovations and maintain the building and its upkeep for the period of the lease. The facility is currently being used by UNC for significant file storage needs and for offices and property storage for UNC Campus Police. UNC will require several months to relocate what is currently located at the property and is hoping for a decision by the County as soon as possible so that it can start the moving process. Phase I Costs: Due to the complexities of renovating a UNC-owned property where the State Office of Construction would have jurisdiction, staff recommends employing a design firm for $16,521 to ensure compliance with State Office of Construction's standards and to provide cost estimates for the proposed Phase II renovations. This would be the sole FY 2025-26 funding need. AMS has conducted a review of the facility's core building systems — Heating/Ventilation/Air Conditioning (HVAC), fire alarm, and the roof — to assess the feasibility for its use for the Cold Weather Cots program. To occupy the facility to any level, the 24-year-old fire alarm system would need to be replaced for$33,967. Additionally, small renovations would be needed to allow the space to work for the cold-weather cots at an estimated cost of $30,000. As the move-in date would be early in July 2026, these costs would be included in the Manager's recommended budget for FY 2026- 27. Phase II Costs: The costs to renovate the space for use as a day center with additional County offices would include the replacement of the roof within five (5) years ($500,000 - $1,000,000), and the replacement of a significant portion of the HVAC system ($250,000). These expenses and additional design and renovation costs would need to be developed and submitted in the FY 2026 - 36 Capital Investment Plan. As the County does not own the facility, it cannot finance any capital improvements to the property. The County would need to identify pay-go funding or unassigned fund balance to fund any of these investments. FINANCIAL IMPACT: There are no financial impacts at this time, but if approved, staff will begin preparing a budget amendment to fund Phase I improvements if a lease is approved by the Board. 3 ALIGNMENT WITH STRATEGIC PLAN: This item supports: • GOAL 2: HEALTHY COMMUNITY OBJECTIVE 3: Provide social safety net programming and the resources needed for our most vulnerable community members. • GOAL 3: HOUSING FOR ALL OBJECTIVE 2: Address need and any policy barriers to increase access to emergency shelter beds and other low-barrier housing, including eviction diversion. RECOMMENDATION(S): The Manager recommends that the Board: 1) receive and discuss information regarding a facility located at 2700 Homestead Road in Chapel Hill as a potential location for the Cold Weather Cots Program and an Integrated Day Center; 2) authorize staff to enter into negotiation with UNC for a ground lease of up to ten (10) years for the 2700 Homestead Road property; and 3) direct staff to develop a budget amendment to fund the compliance and design study. ORANGE COUNTY NORTH CAROLINA Discussion of Ground Lease with UNC for 2700 Homestead Road for Cold Weather Cots and Integrated Day Center Programming September 16, 2025 BOCC Business Meeting 5 Aerial Map of 2700 Homestead Rd Orange County �G 71 r. ll�l 1'r J t 1 f ;e ptem ber 8,202 Fh is map contains parcels prep erred for the nvento ry of real property wi thn Orange County,and is corn pi led from recorded deed,pLsts.erred 0 t er public records and data. Users of this map are hereby notified that the aforementioned public primary information sources should be consulted for verification of the mfor abon contaned on this map- PIN, ap.PIN• 98802131142 The county and ifS mapping companies assume no legal responsibility for the information on this map. OWNER 1: NORTH CAROLINA STATE OF SIZE: 12.13 A BUILDING COUNT 1 1:2,400 OWNER 2: DEED REF: 4633/642 LAND VALUE: 0 0.02 0.04 0.08 mi ADDRESS 1: 1321 MAIL SERVICE CENTER RATECODE: 22 BLDG VALUE: �� ADDRESS 2: TOWNSHIP CHAPEL HILL USE VALUE 0 0.0325 0.0455 0.13 Ren CITY: RALEIGH BLDG SOFT: 23850 TOTAL VALUE: . .. STATE,ZIP: NC 276991321 YEAR BUILT: 2008 DATE SOLD: 12/5/2008 ORANGE COUNTY LEGAL DESC: 2 CH OPERATION CENTER P104/32 1.19 AC R/W NC 86-13.32 TOTAL TAX STAMPS: 8100 NORTH CAROLINA ORANGE COUNTY NORTH CAROLINA 6 2700 Homestead Road AWL- r�G ORANGE COUNTY NORTH CAROLINA i• -i • A � %.,y''' + ,_'-.. ,e L L= f' .y'„� �9•L �,~' ,,• -�� ,` k' ��,1� $■ Jae L �® `� 1+ �� h i.Yti Ak L ,9 r. r 4 •_^ 1 -.±� ei' r„ h { + �}, .+■ , e +.:"r'1 1 °• h3 LI If _ 7 # h�� ..� ,�' �` w F ' •�' �� ■ ' r ■ r 7 d JL 8 'q �. L. ■°� , � •L -° � � , '� a '�rF+rr.�. ° Ili# L IN L,_ .■�_ Ahoy- _ bAA } ■ i _� � 1. •� t to i 8 2700 Homestead FPlan 1,47 0 0 .p INJ gni J",.—y.� gra L 1 ROM 12 1]3.g 01 130+ 0901 .10 .JRZ4 ? f00A .33.+. 390.6 5 .3 ,J61 IJO. 71 IP9 11.1 S)]2 '�1A61 ,7G1 - •wn Js.s iaa°+ Iwo IV 113.0 ms i 5], IOIa ft ,ACO/ pD➢ 1'.90 1/001 Vili W2 2 Trop te00 810.5 1.,N3 i1p+ C � �d77., Homestead Operations Center First Floor Plan Bldg. 99 $779 o t r ORANGE COUNTY NORTH CAROLINA 9 BACKGROUND • UNC, Town of Chapel Hill , County began conversations regarding downtown unsheltered population needs in 2024 • Cold Weather Cots Needed a New Location • Integrated Day Center is a Priority Gap on the PEH Gaps Analysis and requires significant space • Support from Chapel Hill and UNC for Cold Weather Cots and an Integrated Day Center • 2700 Homestead (formerly the Duke Power building) was identified by the County and Town as swell-situated location for these two priorities • Letter from Managers sent to Gordon Merklein , UNC Associate Vice Chancellor for Real Estate and Campus Enterprises ORANGE COUNTY 6 NORTH CAROLINA 10 CWC 's and Integrated Day Center • For winter 25-26 , Cold Weather Cots program will be held at former Chapel Hill Police Department on MLK Jr Blvd and at St. Matthew's Church in Hillsborough • CHPD location is only available for this winter • Integrated Day Center is a best practice for coordination of services and needs for individuals experiencing homelessness : provides indoor space , resources , one-stop access to providers for critical services ORANGE COUNTY NORTH CAROLINA 11 Offer from UNC • UNC is offering Orange County a 10-year ground lease of 2700 Homestead Rd Facility (23 , 851 sq ft) • Starting late Spring 2026 • No rent required , but County will be responsible for all expenses for improvements , maintenance and operations ORANGE COUNTY NORTH CAROLINA 12 Phase 1 Costs for CWC Operation • FY 25-26 : $ 16 , 521 for Design Firm to ensure compliance with State Office of Construction and for cost estimates for Phase 2 Needs • FY 26-27 Budget: $33 , 967 for new fire alarm $30 , 000 for minor renovations for CWC program operation ORANGE COUNTY NORTH CAROLINA 13 Phase 2 Costs for Integrated Day Center These expenses would be included in the FY 2026 — 2036 Capital Investment Plan : • Approx . $250 , 000 for New HVAC units • Between $500 , 000 — $ 1 , 000 , 000 to replace the roof in 5 years • Design and office renovation costs to be determined by the design proposal • Opening date target of July 1 , 2027 ORANGE COUNTY 14 Facility Space Use Opportunities • Integrated Day Center — Formal proposal for FY 27-28 Budget; modest anticipated staffing beyond Housing Dept (potential offset by reduction ) ; other county department staff and community providers contributing services; bathroom , laundry and lockers access • Housing Department office space needs • Additional County office space in Southern OC • Emergency weather shelter year round • Location for Pop-Up Street Medicine clinics and other events to serve those in housing crisis I..................... .........I.......... ORANGE COUNTY NORTH CAROLINA 15 Manager Recommendations • Receive the information and discuss this property as a site for the Cold Weather Cots program , and a future Integrated Day Center and to serve other County needs • Authorize staff to enter negotiations with UNC for a ground lease for up to 10 years • Direct staff to bring a budget amendment to fund the compliance and design study for Phase 1 and Phase 2 improvements ORANGE COUNTY NORTH CAROLINA 16 Questions■ ■ ORANGE COUNTY NORTH CAROLINA