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2005-03-03 SRA Executive Session MinutesSRA Minutes Executive Session February 3, 2005 Page 1 of 3 EXECUTIVE SESSION MINUTES OF THE BOARD MEETING OF THE SALEM REDEVELOPMENT AUTHORITY HELD ON MARCH 3, 2005 REDEVELOPMENT AUTHORITY PROJECT: OLD SALEM JAIL Discussion of Purchase/Exchange based on Pro Forma Analysis Results and Implications Peter Smith addressed the board concerning the cost estimates. He gave a rough estimate of $200 per square foot for just construction costs. Typically new construction costs $120 to $140 per square foot. He stated that under the most favorable conditions condos would be most likely. He estimated a 4% profit. It will be a risky development with challenges. The base pro forma was discussed. The biggest drivers would be sale values and construction costs. The need is for bigger condo units with the empty nester market. Ambiance and water views from the upper levels would be the draw, although the units would not have balconies or decks. Ms. Sullivan asked if the shortage of windows would have an affect. Mr. Cecil answered that by code certain areas will require windows. He said that these could be designed, but that it would be tough, especially in the jail itself. A mezzanine would probably have to be designed, otherwise, the units would be flat and low. Ms. Sullivan suggested that there is the possibility that they would be harder to sell a unit inside a jail and referred to the difficulty of selling a condo in a church. Mr. Smith agreed, but referred to the Dedham jail and its conversion. He added that the board will be looking for a great architect and that the project will be a great challenge. Ms. Duncan asked about the idea of all condos and no mixed use. Mr. Cecil said that a base program was used and live/work units are a possibility and that some would be willing to pay the same for square footage. Ms. Duncan asked if the 4% profit was for an all condo project. Mr. Brennan said that this did not seem feasible. Mr. Smith reviewed the pro forma. The profit would be under 4%. He said that there will be challenges. If an additional four units could be built as new construction on the site, the developer could add $600,000.00. Parking for small units could allow 1 space per unit. Mr. Cecil referred to the 9 spaces up front being close to balance out parking on site. Ms. Sullivan asked about the Jailer’s House. Mr. Smith said that he thought 2 units would be possible. Ms. Sullivan referred to the old police station condo conversion and suggested that there may be interest in the house as one large unit. Ms. Duncan stated that the only way to add new units would be if the barn comes down. Mr. Cecil mentioned the adjacent church property and the possibility of townhouses and a strategy for more units on site. Mr. Smith stated that the barn really does need to come down. Ms. Sullivan stated that Barbara of Historic Salem, Inc. is a reasonable person. Ms. Duncan added that Mass Historic Commission will have to be consulted. SRA Minutes Executive Session February 3, 2005 Page 2 of 3 Ms. Duncan added that the renovation must comply with the standards of the Secretary of the Interior. Mr. Cecil said that it would be a matter of interpretation and that demolition is done all of the time, but that they would have to get them to go along with it. Mr. Smith said that a Mass Historic review is a must. Ms. Duncan recommended that they approach with Historic Salem, Inc. Mr. Cecil agreed and said that it would be critical. Mr. Smith said that a developer couldn’t afford to do restoration on the slate roof and estimated that it would cost $200,000.00. Mr. Cecil said that a visually similar asphalt roof could be done versus restoring the slate. Mr. Smith added that this could be made a negotiation point. Mr. Cecil noted that other renovations to be done would be the cupolas, lintels, etc. Mr. Smith said that the window restoration can be argued to be changed to aluminum. Mr. Cecil said that the appearance can be negotiated since they will be custom. Ms. Sullivan mentioned roof work done on the old Bleachers building and at 18 Crombie St. Ms. Gingrich said that those roofs were slate looking asphalt shingles. Mr. Vickers and Mr. Brennan questioned the cost. Ms. Sullivan said that they could negotiate the roof and the barn. Mr. Smith said that the roof and the windows and maybe a few more items. Mr. Vickers recommended meeting with Mass Historic and negotiating these items so that an agreement can be made. Mr. Smith answered that he was not sure that they could get a definitive answer. Mr. Smith said that the board has good material to negotiate with. Mr. Vickers recommended getting an agreement/understanding into the bidders hands so that they would have some confidence. Ms. Duncan said that she hoped to convey that Mass Historic would look favorably. Mr. Cecil spoke about the barn. Its removal would unlock potentially an additional $500,000.00-$600,000.00. The windows worry him less since all will have to be replacement and will have to be custom anyway. The roof shingles versus slate may not be a deal killer. At least you can open the eyes of the developer with the negotiations. Ms. Sullivan asked if the extra units were to be had would there be some mixed use in the main building. Mr. Cecil spoke of zoning and use and if designed the right way then it might be perfectly ok to have a loft and graphic studio unit. It may work and someone might be willing to pay for the whole package. Ms. Duncan recommended putting the zoning in place before the project goes out for RFP. Mr. Smith recommended doing the project as a PUD with flexibility. Ms. Duncan said that if they went to the downtown zoning, B5, it would create more opportunity. Mr. Cecil referred to the issue of the Assessor’s map and the location in an urban renewal area. If the map is right, although they don’t think that it is, then the City may have to amend the urban renewal plan. The two are linked. The City could contract with the SRA to dispose of the public property that is not within the urban renewal district. Ms. Duncan said that they would have to go to the City Council to dispose of any property. Mr. Cecil said that if it is not in an urban renewal area then they should check legal agreements in place. Mr. Smith also recommended doing the zoning in a timely fashion. There may be real risks in putting out the RFP without it. Ms. Duncan said that they should look at extending the downtown zoning district and the urban renewal plan because they currently have City Council support. Mr. Cecil added that new construction may have a density problem. Rezoning opens up other uses and will need careful thought not to raise expectations. The rationale needs to be explained. SRA Minutes Executive Session February 3, 2005 Page 3 of 3 Ms. Sullivan stated that they should maximize the opportunities. Ms. Duncan said that they should reduce the risks for a developer. Mr. Smith said that if they rezone, then 15% profit would then be ok versus 20%. Mr. Smith reviewed the strategies to reduce costs. Each developer will have a different way of looking at the project. He based his work on the industry norm. People will bring different market, design, and cost experience to this. He suggested the consideration of a soft second mortgage as a possibility and asked the board to consider subsidizing the development with $500,000.00. There may be no way to do it, but he wanted the board to consider it. This would be of value to the developer for obtaining financing. It will be a competitive process. Ms. Duncan said that there is no money available. Mr. Cecil recommended that plans and diagrams be given to prospective developers. This would get them thinking more creatively. He used the idea of 14 spaces at the church maybe as a long-term lease that could allow the developer to do more townhouses. A deal could be made by the developer. Mr. Smith said that the value of parking is about $50,000.00 a pair. Mr. Cecil said that the LDA needs to have a clear design review function. You may get a preferred developer that way. Mr. Smith suggested bonus points for good design. Mr. Vickers said that they will need a punch list. Mr. Cecil stated that this should be done in advance and rules set. Mr. Vickers recommended specifying that in the LDA. Ms. Duncan added that it should be in the RFP as well. Mr. Brennan said that the consultants will make sure that it is in there. Mr. Vickers added that this is a less specific project than other City projects. Mr. Cecil reminded the board that they have the power to say no. Mr. Smith asked if prevailing wage would be required on the project. Ms. Duncan did not think so since the developer would be having the work done. Mr. Smith suggested getting that clear since the developer will be on public property. Mr. Smith spoke of gap issues and asked where they would go from there. Mr. Vickers asked what the options were. Mr. Smith asked what things they could do. Ms. Duncan answered zoning, risk, and the barn. Ms. Sullivan recommended that they identify things that could bring the profit margin down and make the project more feasible. Mr. Smith said that they will check with Mass Developemnt. Ms. Sullivan spoke of investment tax credits versus new market tax credits.