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News Detail
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| January 4, 2005 |
Contact Information: |
| DDC Recommends $20 million in Projects for Downtown Fayetteville |
Kristie Lozano |
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(910) 484-4242 ext. 240 |
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klozano@ccbusinesscouncil.org |
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On January 3, 2005 the Downtown Development Corporation (DDC) on behalf of the Cumberland County Business Council (CCBC) presented its recommendations to the Fayetteville city council for two public-private partnerships projects totaling almost $20 million in investment to downtown Fayetteville. Both projects are in line with the economic development objectives of the city?s Renaissance Plan and have been reviewed by a broad range of downtown stakeholders as well as the DDC?s Development Advisory Committee, which consists of senior staff persons from six city commissions, and the Arts Council. Both projects were publicly solicited through a formal Request for Proposal process, and evaluated based on the criteria set in the proposal.
?These projects will have major impacts on our downtown economic revitalization efforts in terms of jobs created, tax base increase, new markets for existing businesses and new retail, residential, and commercial opportunities for the Fayetteville community,? said Marshall Isler, Executive Vice President of the DDC. ?These benefits outweigh public investment and potential risk and will place us one step closer to realizing the vision of a dynamic downtown.?
Below are summaries of the subject projects, requested city participation, and the benefits to the downtown economic development goals.
Festival Park Plaza
This proposed project is a $5.8 million, 42,000 S.F. mixed-use, three-story development consisting of about 14,000 S.F. of retail space on the first floor and about 28,000 S.F. of office space on the upper floors. It is located at the gateway of the Festival Park between its promenade and Ray Avenue. It is envisioned that the first floor restaurants and shops will extend and open on to the promenade, thus linking the activities of the park with that of the building.
The proposed developer is The Lundy Group from Raleigh who will be joined by Schoollink, Inc, a Fayetteville Internet technology firm, as an investor and tenant in the project. They will contribute $400,000 of equity in the project.
Fayetteville contributions-
? DDC will contribute the land as its equity contribution, which will be purchased from the city at the appraised value. Payments to the city will be made from the share of the project?s profits. All DDC income derived from this transaction will be reinvested into additional downtown economic development activity.
? 58 designated parking spaces and to enter into a lease arrangement with the owner. At the present time, without any organized marketing effort, the project has strong tenant interest for 21,000 S.F. The Developer is confident that the project will reach sufficient occupancy to cover debt service within the first year of operations. If these projections are correct, the City will have no financial exposure. If it takes two years for such lease-up the projected City exposure would be $121,550.
This project is projected to create about 45 retail jobs as well as bring about 150 office workers to the downtown. With respect to economic return, the City will receive the value of the land plus about $20,000 per year in increased tax revenue. Increased sales taxes will be realized from the increased retail activity.
300 Block of Hay Street
This proposed project is a $13.9 million, mixed-use development consisting of about 8,800 S.F. of retail space and 48 residential units with associated private parking. It will be located in the 300 block of Hay Street. The site consists of land presently owned by the city and several existing structures under option by the developer. The project is divided into three phases consisting of a three-four story building on Hay with retail condominiums on the first floor and 24 residential condominiums on the upper floors, 10 town homes along Ray Avenue, and a 14 unit residential condominium structure on Franklin Street.
The proposed developer is The 300 Block Investors, LLC consisting of local developers Dr. Menno Pennink, Mark Stout, Ralph Huff, Tommy Bradford, and Suzanne Pennink. They will contribute $1 million of equity in the construction financing. One of the partners will be the general contractor for which he will receive a fee of 4% in addition to his share of the developer fee. Another partner will be the sales broker and will receive the normal and customary 6% fee.
Fayetteville contributions
? $2,749,902 consisting of $2,374,902 in cash and land estimated to be valued at $375,000.
As an alternative deal, the city council could choose to approve only phase 1 and 2, which would reduce the number of residential units from 48 to 34, the total project value from $13.9 million to $10.4 million, and the required city contribution from $2,749,902 to $2,269,027. The associated annual tax return to the City would also be reduced from $87,317 to $65,354. In addition, this alternative would produce 16 public parking spaces, which would be owned by the city of Fayetteville. The developer has placed a value of $358,218 on this public parking lot based on the developer?s purchase price of the land.
In addition to closing a major gap in the Hay Street streetscape, this project will establish about 32 retail jobs, and create a significant residential market in downtown with an income level sufficient to support restaurants, specialty food and other shops, as well as a grocery store. The residential flats are scheduled to sell for an average of $189,800 and the town homes about $276,000. In addition to creating a downtown upper end market, these units will significantly increase property values and the downtown tax base. The projected initial annual tax revenue to the city is $87,317 or $65,354 (alternative) or a 3% return on its economic investment.
The CCBC is a community initiative that evolved from Greater Fayetteville Futures, a community wide planning process. The purpose of the CCBC is to coordinate the efforts of the Fayetteville Area Chamber of Commerce, Downtown Development Corporation of Fayetteville and the Fayetteville Area Economic Development Corporation.
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