Chapel Hill owes $9M more for parking deck. What happened to its ‘guaranteed’ price?
A 1,100-space parking deck under construction in Chapel Hill’s downtown business district will cost the town another $9 million because of unforeseen circumstances.
The project at 125 E. Rosemary St. was approved more than a year ago, and crews began demolishing the old parking deck in late summer 2021. But as they started digging the new foundation, they found big boulders where more stable bedrock should have been.
“It’s an unfortunate hurdle,” Mayor Pam Hemminger told The News & Observer in a phone interview Wednesday afternoon.
She clarified that the guaranteed price of $39 million when the project was approved did not include unexpected site problems or any redesigns necessary to resolve a problem.
Bedrock is a common challenge for projects built below ground level in downtown Chapel Hill and on the UNC campus. Both are situated on top of the “Chapel Hill Pluton,” a large mound of solid granite, volcanic and sedimentary rocks.
However, the bedrock at 125 E. Rosemary St. was up to 10 feet lower than expected, triggering delays and more tests, town staff said. They recommended using “micropiles” of rebar, high-strength steel casing and grout to fill the gap between bedrock and foundation.
The total cost of construction is now $48 million, although that still remains an estimate, staff said. The council approved paying $5.3 million in excess costs now using the town’s roughly $10 million fund balance and financing the rest later, if needed.
Economic investment downtown
Council member Adam Searing offered the only comments about the change at Wednesday’s meeting, first pressing Dwight Bassett, the town’s economic development and parking services director, on whether $1 million in pandemic relief money to improve the downtown streetscape could offset the $9 million overrun.
The parking deck is still an investment in the town’s future, Bassett said, especially if it attracts more commercial developers, like Longfellow Real Estate Partners, which proposed a building last week for West Franklin Street.
Several projects also are underway or pending near the parking deck, including a new West Rosemary Street hotel and three projects from Grubb Properties — the Innovation Hub at 137 E. Franklin and 136 E. Rosemary streets, an office and wet lab building set to replace Wallace Parking Deck, and an apartment building at the corner of East Rosemary and North Columbia streets.
It’s the type of investment that also boosted Durham’s downtown revitalization, he said.
“We believe that’s what’s occurring now, and if we don’t continue to improve the looks and feel of our downtown, we’re going to continue to struggle to invite the companies to fill those innovation hubs and wet lab spaces, so I actually think it’s more critical now than it ever has been that we make that investment,” Bassett said.
Hemminger agreed, noting the parking deck delay means there will be an immediate demand from workers in the Innovation Hub across the street when it opens. The town also is offering five-year parking leases with a five-year renewal option, Bassett said.
“We hate that we got to this place, this hurdle, but the reality is it’s still an incredible project for our downtown,” Hemminger said.
He also supports the project, Searing said, but he worries whether the increased spending could affect the town’s bond rating or its ability to complete other key projects. He urged town staff and council to reduce the town’s overall debt.
Staff reported the extra spending could delay some unfunded projects by three to five years.
“I was dismayed as we all were at the amount of money that we’ve overrun,” Searing said, “but I really don’t think we have any other choice. We’ve got to finish it.”
This story was originally published November 17, 2022 at 8:33 AM with the headline "Chapel Hill owes $9M more for parking deck. What happened to its ‘guaranteed’ price?."
