Council Decides Against Study Of Public, Private Partnership For Downtown Municipal Parking Structure

The Carolina Beach Town Council recently gave the go-ahead to Town Manager Michael Cramer to send out a Request For Proposals to explore development of a downtown mixed-use parking facility in a public-private partnership between the Town and a development company.  During their June 12th, meeting the Council decided against moving forward on two proposals and instead explore other alternatives to address parking capacity. The Carolina Beach Town Council recently gave the go-ahead to Town Manager Michael Cramer to send out a Request For Proposals to explore development of a downtown mixed-use parking facility in a public-private partnership between the Town and a development company. During their June 12th, meeting the Council decided against moving forward on two proposals and instead explore other alternatives to address parking capacity.

Council Decides Against Study Of Public, Private Partnership For Downtown Municipal Parking Structure Featured

By / Local News / الأربعاء, 13 حزيران/يونيو 2018 14:21

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CAROLINA BEACH - The Carolina Beach Town Council considered two proposals during their June 12th meeting, from consultants and development firms interested in performing a predevelopment study for a proposed mixed-use public/private partnership on Town owed property between Canal Drive, Myrtle Street, Harper Avenue and Carl Winner Ave.

The Council agreed not to move forward with either proposal and instead explore other alternatives to address the need for more public parking.

The Council heard a presentation from Town Manager Michael Cramer during their April, meeting regarding the potential for a public-private partnership with a goal of building a municipal parking deck in the downtown Central Business District.

The Town sent out Requests for Proposals to area companies on May 1st.

During the April meeting Cramer explained, "Back in January during our budget retreat, Council asked that we take a look at doing a public private partnership for a parking deck downtown in our Central Business District."

Cramer said the Town is looking at Town owned parking lots in the downtown area including, "The property that contains the Palms Lot, the Town Hall Lot in that area between Harper Ave, Carl Winner, Myrtle  Avenue and Canal Drive."

Cramer explained, "In looking at that there are several options out there. We've met with a couple of people over the years that have had an interest in doing public private partnerships where they would study, pull together a package, try and find a developer and try and get a mixed use development on that site that would contain public parking."

He explained the mixed use development could include options such as, "Commercial ground floor, residential on the top floor, the middle floors would be parking deck."

Cramer explained a parking study conducted last year by the Town's parking enforcement contractor - SP Plus - suggested the Town will need 300 additional parking spaces within the next three to five years based on increased demand in the downtown area.

He explained, "Looking at that we would want to try and shoot for at least 300 or 350 parking spaces that are public and the rest of the parking spots in the deck could be part of the mixed use development."

Cramer said, "I've talked to several folks that do this and they all do it a little bit differently. There are some that will do all of the up-front cost and hope that they find you a contractor and a developer and then they would get 1.5% of the cost of the project from the developer thus the Town wouldn't have any up-front costs. There are others where you do a little bit of both. You have the up-front costs that could go up to $100,000 for the study and the process to find the developer and then after that they would get 1% of the cost of the development."

He explained, "There are other private companies out there that do commercial real estate deals in the area and they have some experience in going out and finding developers for certain projects. I'm personally not tied into that group of individuals so I don't know if they have municipal experience with that or not."

Cramer provided the  Council with a draft for a Request for Proposals (RFP) during the meeting.

He explained, "We've gotten several different quotes if you like, or proposals from different folks, on the continuum of ranges. My suggestion would be to send this proposal out and try to get it out on the web, Facebook, to the local commercial real estate folks in the area and see what kind of responses we get for these types of services."

Cramer explained, "I've put together a very short time frame and possibly too short. If I was to issue the  RFP May 1st and give them two weeks to get a proposal back, we could select a contractor by June. Have it on the Council agenda to award mid-June at the Council meeting and then start the formal agreement, working on it and starting with the next fiscal year" beginning July 1st.

He explained, "That also puts us in line, that say it turns out that the best company you want to go with is $80,000 up-front, well then I can plug that $80,000 into the budget for next year and work it from July 1st going on."

Cramer said he estimates a time line for completion of one year and stated, "That's generally what I've understood most other folks that do this say it would take and that is do the studies, have it prepared, get ready, go out and start trying to find companies or developers to do the deal. The question is how long will it take to actually find someone to partner with. So it could take longer than that to find someone to partner with."

Councilman Steve Shuttleworth said, "Michael I think this is great. I think it's a great jumping off point. At least it's going to get a conversation going to see if we are close to being on the mark."

Councilman Jodan Garza asked, "This is a way of possibly obtaining 300 spots?"

Cramer said, "Yes. With the most attractive return for the Town. Basically we have property, what we don't have is resources to go up. If somebody has the resources to go up and build and have a mixed use development on our property, they gain, we gain, it's a good marriage."

He explained, "Basically the 350 would be the 151 spaces plus about another 150 to get you to the 300 and then a cushion of about 50 spaces."

Shuttleworth said the number of spaces will likely be a negotiating point explaining, "What we are saying is, we have 151. You guys do what ever you want with  the project as long as you give us 350. Now someone's going to come back and say guys I can only get you 285 but I can do this. Someone else will come back and say I'll give you 400 but I need extra height."

Shuttleworth said, "We could find out they come up with an idea we hate or the community hates" but it's a good starting point.

Cramer explained, "That's one of the things that's in the scope of services is that the company has to go out to the public and talk to the public about what they want, what they want to see, things like that and get some community support and buy in for the concept."

Shuttleworth said, "We as a community and as a Council could put some requirements on them, for example, we could say you have to have some kind decorative skin around it. You can't just look at a concrete shell."

According to the UNC School of Government, "A public private project is defined under the new G.S. 143-128.1C as a “capital improvement project undertaken for the benefit of a governmental entity and private developer pursuant to a development contract that includes construction of a public facility or other improvements, including paving, grading, utilities, infrastructure, reconstruction, or repair, and may include both public and private facilities.”[2]  Under the P3 construction delivery method, the unit of government is authorized to acquire, construct, own, lease (as lessor or lessee), and operate a public-private project or facilities within a public-private project, and may make loans or grants for these purposes.  Importantly, the private developer must provide at least 50% of the financing for the total cost of the project.[3]  The Local Government Commission must approve the contract if it involves a capital or operating lease.[4] (Source: )

During the June 12, meeting the Council was presented with two proposals, one from Harmony Hospitality, Inc. and Partners of Virginia Beach, VA and another  from The Development Finance Initiative (DFI) at the UNC School of Government.

According to Marcia Perritt, Associate Director (Interim), Development Finance Initiative, "Since 2011, DFI has partnered with local governments across North Carolina (as well as in Virginia and South Carolina) to attract private investment into transformative real estate development projects, having now assisted with 123 projects in 79 communities. DFI’s team brings specialized real estate finance and development expertise that has a proven track record of finding solutions to complex development projects. Our predevelopment process combines public interests, market research, site analysis, and financial feasibility analysis in order to determine a financeable program that achieves the goals of both the public and private sectors."

DFI proposes a lump sum fee of $96,000.

Harmony Hospitality, Inc. and Partners proposes to use the same team assembled to develop the Embassy Suites Wilmington Riverfront Hotel which opened in 2017.

According to their proposal, "Despite significant logistical challenges, Harmony and its team delivered a quality product to the City of Wilmington and we would like to do the same for the Town of Carolina Beach. Team Harmony believes that it can develop the requested components in an expeditious and cost-effective manner."

Harmony Hospitality offers numerous examples of public private partnership projects they have worked on over the years and in their proposal they state, "In other examples, Harmony used excess land at the DoubleTree Hotel Norfolk Airport and an adjacent unrelated property to construct a new Hampton Inn & Suites Hotel, again without disruption to the hotel’s business. Another example that specifically applies to the Carolina Beach RFP, Harmony constructed a parking garage, new guest rooms and a ballroom on a surface parking lot at the Wyndham Virginia Beach Oceanfront Hotel, again while minimizing guest disruption. The Wyndham Garage added parking spaces on the first four floors. Above the garage, additional guest rooms and suites are located on floors five through eight. The structure also includes 7,600 sq. ft. of Ballroom and Pre-function space. One other key point to highlight with this garage is the attractive exterior. Because a structure is purely utilitarian does not mean that it cannot be appealing. This should be an important consideration for the Town of Carolina Beach where this project will be sited amongst existing businesses and tourism attractions."

Harmony Hospitality proposes a lump sum fee of $72,000. 

During the Council's June 12th, meeting Town Manager Michael Cramer said the proposals were good and, "The main difference between the proposals were one, the cost and, two, whether or not the company could take us all the way through the process to a completed project if Council wanted to go that far with it."

He explained, "At this point the recommendation from staff is if Council is interested to move forward in the public/private partnership pre-development study aspect of it, that we have two good proposals to chose from. But if not, then we always have the option to not approve any sort of proposal and try and work through other aspects of parking and our community needs in other ways."

Councilman Steve Shuttleworth explained, "I'm the one that has pushed Michael for the past six or eight months to try and come up with an RFP for a public/private exploration. My hope was that we would find a consulting firm that would come in and do some designs and some public meetings and get the flavor from the community of what is palatable and what is not. We have a parking study that says we are short parking spaces... and it is debatable on when we are short, where we're short and how we're short. The idea was at some point, as people keep reminding us, we've got 2,000 new homes coming into Riverlights [North of Snow's Cut Bridge] and we are going to see more and more people. How do we adjust that and protect our residential community and our homeowners and our property owners with the demand from people that want to access our beautiful beaches and visit our businesses."

He explained, "I'm personally not interested in spending $60,000 to $80,000 or more to have someone come in and tell us what may or may not be viable. What I was more interested to hear what's palatable to the community. The majority of people including my wife are deeply opposed to a large structure which I would have to pass everyday."

Shuttleworth said the Town could explore other options such as remote parking areas with shuttle service to the downtown area.

Council member Leann Pierce said Memorial Day weekend was extremely busy and she couldn't find a parking spot downtown adding that, "I think we are looking at a Friday night, Saturday night problem. During the week I don't have a problem finding parking."
Mayor Joe Benson said the proposal would bring another 300 spaces and, "To be clear, I'm not in favor of the parking garage. The informal session I had last week, twelve of the twelve people that met with me were all opposed. Ten months of the year that thing's going to be empty... to say nothing about the aesthetic monstrosity that it would be."

Benson said the Council should explore over ways to address parking capacity at a future workshop meeting.


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