City Manager Recommends Immediately Terminating Lafayette
The chess match continues as City Manager Russell Allen has asked the city council to immediately terminate the city’s agreement with Empire Properties regarding “Site Four”. As reported earlier, the council denied Allen’s previous request to terminate the agreement, offering Empire an extension until November 1 to show earnest progress and to provide partial funding for street improvements. According to the agenda for tomorrow’s 1:00pm meeting:
On June 17, 2008, Council approved to an extension of the Development Agreement with Empire Properties for the development of the Lafayette (a mixed use facility) on the City-owned Site 4 at the intersection of Salisbury and Lenoir Streets. The Council granted an extension to November 1, 2008, with the requirement that Empire Properties share the cost of widening a portion of Salisbury Street between Lenior and South (approximately $50,000) at the completion of construction and further agree this would be the last request for extension. Empire Properties is unwilling to sign the extension agreement with these terms.
From the cheap seats, it appears that Empire is likely balking at spending $50,000 on street improvements for a project that is still uncertain. If Empire properties were to miss the November 1 deadline and lose the rights to develop Site 4, would Empire be reimbursed these funds by the city? How about by the eventual developer?
During the July 1 city council meeting, Allen noted that other developers have informally inquired about the site, but wouldn’t elaborate. Perhaps there is more to this, but the heart of this recommendation is most likely a legal squabble regarding a safety net for a developer who has his heart on getting his feet wet with new, inspiring development. Fifty grand is a lot of money to lend the city. On the other hand, without these street improvements and a progressing development, visitors to the new convention center are likely to be greeted by a weedy, surface lot for months to come.
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August 4th, 2008 at 1:09 pm
Allen needs to be terminated. Everything this guy has been involved with has been a disaster-the city plaza debacle, the Plensa debacle, the city worker debacle, etc. It seems as if he is going out of his way to derail quality development downtown (who knows what his motivation is).
August 4th, 2008 at 1:20 pm
Get rid of them! If a developer is any good, they have sufficient contacts/relationships to get the job started and completed in a timely manner. This group is not appropriate for large scale projects (and that is what downtown Raleigh needs from here out, large scale.
The “L” is a waste of prime real estate - should have been a minimum 40 story building at that location - again we settle for a low rise (lack of vsiion) building.
August 4th, 2008 at 2:14 pm
Dana, if you are in the cheap seats, I guess AC is sitting in the nosebleeds. Perhaps some folks out there forget the amount of financing it takes to get these projects off the ground as well as the work to get tenants to downtown, especially 40 stories’ worth.
Terminating the agreement would undermine the authority of the City Council, especially considering they extended the agreement just a month ago. If Russell Allen has a bone to pick it should be with himself for the number of poor decisions and projects he has “overseen” and recommended over the years. I wouldn’t be surprised if he is advocating expanding the prison farther into Downtown Raleigh!
August 4th, 2008 at 2:50 pm
^I can guarantee that if the deal is terminated there will NOT be groups lining up to develop this plot, except maybe the Reynolds. Would you really want to work with the city of Raleighwood-the town that looks 50 years in the past.
August 4th, 2008 at 2:52 pm
Hey DC: I have raised money for projects and VC money for start-ups, does that qualify. It’s all about relationships. This project was on the table when the market was strong, they should have broken ground 2 years ago, but they are too slow to move out of their own way. Just like the corporate world, add shareholder value or get out of the way.
August 4th, 2008 at 3:02 pm
It would be nice to see a Raleigh-based group design and building inspiring architecture and I think the Lafayette qualifies but it is past time to move on this. The Convention Center will open soon and there are hardly any hotel rooms in the area. If the city council gave until November, then they ALL should live up to their word but if Tatum knows it isn’t going to be able to happen, then he should officially step aside now.
August 4th, 2008 at 4:31 pm
Raleigh-based architectural firms have given us nothing but uninspired buildings. Maybe its time to look outside of this area.
August 4th, 2008 at 4:56 pm
Good luck pulling venture capital to finance the construction of a high rise these days. Venture capital may get you equity but for a project of this magnitude, the financial necessities go far beyond your typical 20%. Seeing as how the City of Raleigh & the developer agreed to the sell/purchase the property in June 2006, and specifics of the project weren’t first hashed out until early 2007, it would be very difficult for this project to have broken ground two years ago. A little more homework would go a long way, AC. What is it that you have in your back pocket for this space? Or is it that Russell Allen has you in his back pocket?
August 4th, 2008 at 7:08 pm
Dan R. I kind of agree with you. The things that get built in Raleigh by local firms are often (in my opinion) very cookie-cutter and not at all cutting edge. Smith (de)Cline comes to mind. But there are many firms and NC State professors who are licensed architects winning awards for their work. It’s just that, in many cases, they are not accepted in the local market. I think the problem is that the people controlling the purse strings are not willing to finance bold design.
August 4th, 2008 at 9:46 pm
Go ahead and try and find funding for a $30 million project in today’s market. The Reynolds cannot get funding for their pride and joy, The Reynolds Tower. The city of Raleigh is mad at Hatem for not doing anything about the 3 acres of warehouse space he bought along capital blvd as you are heading into downtown from the north. That is the real issue here. Perhaps Russell Allen should spend a week in a developer’s shoes and see how hard it is to find funding these days. John Kane is another example of someone having difficulty finding money. And, at this point in the game, North Hills is not exactly a speculative project. Everyone knows that North Hills is a gold mine. Bottom line: it takes twice as long to get money in this year’s economy. The city should get passed their anger with Hatem from a completely different item and honor their word of a four month extension.
August 4th, 2008 at 9:47 pm
typo, passed should be ‘past’. sorry
August 5th, 2008 at 9:12 am
I think we all understand the difficulties of getting this ambitious project off the ground. Personally, I want to see Greg Hatem delivering it, at least as large as envisioned, for two reasons: 1) He is a local developer who supports downtown. 2) He has shifted from a developer against high-rises to a developer who understands that high-rises are needed to maximize density and support the existing retail destinations and restaurants.
This project should have started 2 years ago, I agree. In fact, we should have had Charter Square (former Site One) and Lafayette complete by the time Marriott Hotel is officially open. However, the reality is different now and we must understand the obstacles. Regarding the use of space, I totally agree with AC… The L Building may be a good project - don’t judge by the renderings only - but that site was a golden opportunity, which the county officials didn’t take advantage of. Was there interest on that site back then? Is there interest on Site 4, or Russell Allen made that up? Whatever the case, we should not contribute to stalling projects and lead them to failure. As a city, we should work hard to build strong relationships. On the other hand, if Empire Properties cannot fulfill their end, they should get out of this deal before they lose more money and time.
Many people, myself included, draw parallels with the Reynolds Tower (a.k.a. The Hillsborough). There is one significant difference between the two deals, however: Site 4 is VERY important for the success of our new convention center. Without additional hotel space, we may risk to fail. The Hillsborough is a little “disconnected” with the convention area, therefore it escapes intense criticism. Personally, I like the Reynoldses, but their inability to deliver the goods within a reasonable time frame makes me a bit uneasy. Had they gone forward with the 32-story version - which included office space - today that tower would have approached completion and the terms of the loan would have been better for the developers. Now, they have to struggle for getting financing for a much smaller version
One final thing, regarding the architect of Lafayette. The firm that designed the original version is not a local firm. However, Empire Properties may be looking into using a local group for the new incarnation. The firm’s HQ is not located here, but they have offices downtown. I trust their ability to design elegant and durable high-rises, so I am excited about this shift.
August 5th, 2008 at 10:18 am
I really like what Hatem has done downtown. He found a niche and was in early, but there lies the problem. He is part or full owner of a lot of property which is very slow to move forward. Yes, he owns/controls that land on Capital where nothing is taking place and could be 10 years or more. Yes, the Layfette whould have started 2 years ago but I do think it is more than he can handle. Also, for the L building, and I could be wrong, the current structure is the parking lot which is probably financed by the city. The L building has yet to be started. Maybe after the deck is final but lets wait and see. When I ride by, I dont see any building going up. That could be on hold too.
Hatem has built the relationships with many in the city but that only goes so far as many of their politcal careers are built on the convention center and without more hotel rooms, the sucess is limited. Allen is playing bad cop and someone has to. I still think they will make to Movember and Hatem will back out and we will see if there is another developer out there. I hope the design is good but I strongly feel that Hatem/Empire was not the right developer for this property as he treated it like he does many Raleigh properties. Sit on it until a much later date and start it when the limited finances of a local developer can handle it.
Ideal world, Hatem starts contruction by 1Q next year, but I dont think it will happen.
August 5th, 2008 at 3:27 pm
Hatem understands high rises are needed? He announced he is putting up two small buildings - don’t build them at all if your not going to do it right. We are going to get two small boxes with no features - this group does not know how to get creative - lack of vision - no style (look at that ugly “L” Building)
August 6th, 2008 at 9:40 am
Bill, you should have followed Greg Hatem since the early days, where the term “high-rise” was a blasphemy to him :LOL: Seriously, the 22-story Lafayette was a great proposal for Site 4, but this wasn’t the only high-rise Empire Properties envisioned - there are two more sites. We can find different definitions of what constitutes a high-rise, but a 22-story building will most likely qualify in all of them… It may not be a skyscraper, but Lafayette certainly was a high-rise vision. Not as proposed now, of course
Regarding the L Building, I have no doubts it will turn out to be good looking, at the end. We can complain about the height - I am one of the people who think we should have gotten something no less than 20 stories in that location - but open space and other regulations by the city are to be blamed, along with the Wake County officials behind the choice of developer. Not that I oppose Greg Hatem as a good option, but this site needed someone with deeper pockets and a good record for delivering major projects. The problem lies on “who”. Unless the interest is there and proposal pour into the County, what choices do we have?
Anyway, we can only hope that the second phase will include a major tower, not another 10-15 story building. I like Greg’s work and appreciate his contributions, and I trust he will deliver a good quality project, but this site deserved something more iconic. Then again so did the Marriott Hotel site
August 6th, 2008 at 11:43 am
In today’s market developers cannot just declare that they want to build 32 stories and then go forward with it. They must find the money to build it. Part of the reason these current developers in Raleigh are scaling back their original renderings to buildins half the size is due to funding problems. I.E. Look at all the headlines. That’s the major problem. They can’t get the money. So, if given two choices, 32 stories and no tower, or 16 stories and the ball rolling, what would you choose?
August 6th, 2008 at 1:45 pm
You are correct, Voice of Reason, it is VERY hard these days to get a loan. However, I would choose to wait for something larger… Generally speaking, I’d rather wait another 5 years for a 32-story, than getting something half the size in 1-2 years from now. Land is valuable, and will become more scarce in the next 20 years. A 16-story building is not something you can easily demolish and replace with a bigger one. Even a shopping center has a lifespan of 50 years, imagine a 16-story building.
Given a different dilemma I might have chosen differently. Would I rather have a 16-story iconic building that offers great pedestrian experience, or an ugly 32-story tower that offers nothing more than image and cannot be improved over time? That would be different, but all things equal I’d rather wait a little more for something more appropriate, but that is ONLY my opinion. I am still happy for Greg Hatem, though.