Title
7th & Tryon Redevelopment Project - MOU Update
Action
ACTION:
Receive as information an update on the 7th & Tryon redevelopment project outlining the key terms of the MOU (Memorandum of Understanding) with the Master Developer, BP-Metropolitan NC, LLC
Staff Contact: Mark Hahn, Director of Asset and Facility Management Department
Presentation: Yes
BACKGROUND/JUSTIFICATION:
The 7th & Tryon redevelopment project is a coordinated effort by four landowners (Mecklenburg County, City of Charlotte, Charlotte Mecklenburg Library, and Bank of America) to combine their property for a 1 1/2-block redevelopment that will transform the area as recommended by the North Tryon Vision Plan.
In March 2018 a Request for Qualifications was advertised for redevelopment of the two-block area (bounded by Tryon, 6th, College, and 8th Streets). From ten teams that submitted qualifications for consideration, five were selected to receive a more directed Request for Proposal (RFP). The RFP was issued on May 30, 2018 and two credible proposals were received on October 4th. The two teams presented their proposals to the stakeholders on October 15, 2018. Based on those proposals and clarifying information, the stakeholders now wish to execute an MOU with the preferred Master Developer, BP-Metropolitan NC, LLC (“Metropolitan”). The non-binding MOU will then be the basis for the more detailed Development Agreement.
The County Manager will execute (in coordination with other landowners involved in the project) a non-binding MOU to include the following key terms:
Parties
Mecklenburg County, City of Charlotte, Public Library of Charlotte and Mecklenburg County, Bank of America, N.A. (“Stakeholders”), and Metropolitan
Sale and Purchase of the Redevelopment Site
Mechanism of Sale: There will be one land transaction with a to-be-formed special purpose entity owned in whole or in part by Metropolitan (“Buyer”). At the closing all land will be conveyed for a set price to the Buyer, and then Metropolitan will move forward in accordance with the Master Development Agreement.
• Total land area: 3.1 acres (County portion +/- 1.08 acres, assuming County retains only the McGlohon and Duke Energy theaters).
• Sale Price: $21,500,000 (County portion approximately $7.4 million).
Deposit
Upon execution of the Master Development Agreement and associated agreements, Metropolitan will place into escrow $500,000 to secure the performance of the Buyer’s obligations under the Development Agreement.
The Deposit will be refundable in full upon termination of the Development Agreement for any reason other than the Developer’s breach of the same, and the Deposit shall be credited against the Purchase Price at closing.
Demolition of Improvements and City Abandonment of Alleyways
The County will deliver the Redevelopment Site to the Buyer free of the above-grade structures currently known as Spirit Square, retaining only the McGlohon and Duke Energy theaters. The Stakeholders and Buyer will mutually approve a demolition plan and schedule for the Redevelopment Site.
Metropolitan acknowledges that the County will be required to give users of the Spirit Square structures to be demolished at least twelve (12) months prior notice of the commencement of demolition.
The City of Charlotte will take such actions as necessary to abandon its alleyways and to grant easements and other rights to the Buyer regarding the subsurface beneath 7th Street for approved improvements located in such area.
Anticipated Project Components
It is anticipated that the Redevelopment Project will consist of the following Project Components:
• Subterranean and above-grade garage structures containing sufficient parking spaces to accommodate the program requirements of the Public Library, McGlohon and Duke Energy Theaters, and the Project Components.
• A mixed-use structure of approximately 160,000 square feet.
• An office tower of approximately 450,000 square feet of Class A office space.
• A multi-family component to be further defined in the Development Agreement.
• Retail facilities.
• Affordable housing (three options for consideration).
Development Agreement
The respective rights and obligations of the Stakeholders and Buyer will be memorialized in a Development Agreement that will include the relevant and applicable terms of the MOU. The Development Agreement will include:
• An estimated timeline for Metropolitan to commence construction of all Project Components.
• Designate the spatial relationships of the Project Components to one another.
• Afford the Buyer flexibility of design, schedule, and performance, subject to consultation with, and under certain circumstances, the reasonable approval of the Stakeholders, to adjust the timing and development program for the Project.
• Requirement that Metropolitan or Buyer use good faith, commercially reasonable efforts to achieve 30% participation by Minority, Women, and Small Business Enterprises in the design and execution of the Redevelopment Project.
Additional Public Sector Support
The County and City will continue to engage in good faith negotiations with the Buyer regarding a tax increment grant or grants, funds from the City of Charlotte Community Investment Plan, and/or other public-private partnership vehicles, offsets or economic development grants available in the following amounts to be used with the Redevelopment Project for the following public purposes:
• Subterranean and above-grade garage structures as part of the Tax Increment Grant in an amount not less than $25 million.
• Improvements and reconstruction made to, in or adjacent to, the public rights of way including streets, utilities, civic spaces (design, hard and soft scape), sidewalks, lighting, storm water management facilities, street trees, and landscaping as part of the City of Charlotte Community Investment Plan in an amount $2million - $5 million.
Below Market Housing Contribution
To further the mutual goals of creating below-market housing units in Mecklenburg County, Metropolitan or Buyer shall at the closing of the acquisition of the Redevelopment Site contribute the sum of Three Million Dollars ($3,000,000).
Coordination with Public Library Project and Design Control
Concurrently with the negotiation of the Development Agreement, Metropolitan and the Public Library will continue to engage in good faith negotiations regarding coordination of the design and construction of both projects. Metropolitan and the Public Library will coordinate their work to ensure that it does not interfere with the timing or performance of the work being performed by the other party.
Metropolitan, the County, and the Library will collaborate and finalize a mutually agreeable design for the plaza and common areas of the Project.
Exclusivity
Each Stakeholder agrees that for a period of one hundred and eighty (180) days after the date the Stakeholders have countersigned the MOU (“Exclusivity Period”), Metropolitan shall have the exclusive right to redevelop the Redevelopment Site, and during the Exclusivity Period no Stakeholder will enter into any agreements regarding the redevelopment or sale of the Redevelopment Site or any portion thereof with any party other than Metropolitan and Buyer.
If any Stakeholder violates the Exclusivity obligation, Metropolitan will be entitled to reimbursement of its expenses incurred in negotiating the MOU, negotiating with potential developers of Project Components and major tenants for the office tower, preparing designs and specifications for the Redevelopment Project, and otherwise performing work in furtherance of the Redevelopment Project (the foregoing expenses, cumulatively, the “Predevelopment Expenses”). The Stakeholders jointly and severally agree to reimburse Metropolitan for the Predevelopment Expenses if any Stakeholder breaches the Exclusivity obligation, but such reimbursement obligation shall not exceed $4,100,000 in the aggregate.
PROCUREMENT BACKGROUND:
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POLICY IMPACT:
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FISCAL IMPACT:
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