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Consider a Glen Lennox Performance Incentive.
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Staff:
Department:
Dwight Bassett, Economic Development Officer
Manager's Office
Overview: Consider a Performance Incentive to Grubb Properties to encourage the development of office space in the next phase of development at Glen Lennox. Post approval of a Development Agreement in 2014, Grubb Properties began to work toward implementing the vision as set forth. With a strong economy, growing construction prices, and a weak office market in Chapel Hill after the previous economic downturn, it is difficult for Grubb to commit to bringing the office product out of the ground without a minimum of 50% pre-leased. The Chapel Hill office market needs new product coming out of the ground on a regular basis for us to begin to compete regionally.
Recommendation(s):
Based on conversations with the Council Committee on Economic Sustainability in April, September, December of 2018 and February of 2019, we recommend that Council authorize the Town Manager and Town Attorney to negotiate an agreement with Grubb Properties for a $2.5 million incentive and return to Council for final approval.
Key Issues:
* Chapel Hill needs office space for job creation and tax base growth.
* After the 2008 downturn in the economy, Chapel Hill lost its office market and did not build any new office space from 2010 till 2017.
* Chapel Hill has a 10% Class A vacancy which generally serves as a signal that new product needs to be built to serve the needs of growing companies. We believe that the market is ready to support new office space and companies.
* If the first building is built at 100,000SF, we believe that we could see it support up to 400 jobs. This total office development of 488,000SF could represent as many as 1952 job opportunities.
* This incentive is tied to the proposed 488,000SF of office and each building being built, a Certificate of Occupancy obtained and paying taxes prior to any economic development grant bei...
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