A Taxing Situation Downtown

,Well, it always amused me that the first thing the town/gown/merchant committee took up, while thinking about how to organize the effort to create a nonprofit downtown development entity, was whether to drop the downtown special tax. Oh, so that's the problem! Forget about the empty storefronts and buildings kept empty by landlords who have driven up rents beyond what's reasonable on Franklin Street, and who won't countenance the idea that the market has changed, that with the explosion of retail space in the Triangle, the rents they enjoyed in the 1990s (adjusted for inflation) are no longer fair market rents. No no! It's a levy of 6.2 cents per $100 that's killing commerce downtown!

Well, it appears some folks have given up, and bless them for it. It's time to get on with the business of establishing this nonprofit corporation, and to quit haggling over who gets to sit on its board, so that we can get some visionary builders and developers -- those committed to a livable, healthy, and vibrant downtown community -- on the job before the intrinsic value of downtown retail and office space is diluted anymore by those slapping up peripheral development on the town's edges.

Take, for instance, downtown steering committee member Roger Perry, whose participation on the steering committee has always seemed out of character for our reigning champion of peripheral commercial development in Chapel Hill. He is, among other things, owner of the Best Western University Inn on Hwy. 54, which he is planning to tear down to make room for a mixed-use development of offices, residential and retail. His proposal goes to the town in 30 days, he says. I guess that won't compete with downtown businesses! He's only got the best interest of downtown Chapel Hill at heart because, gosh, he's on the committee and all.

My early enthusiasm for the town's efforts to develop and redevelop downtown has been tempered by the growing suspicion that, as our Mayor and Betty Kenan haggle over who gets to appoint whom to what and the rest of that bureaucratic nonsense, the opportunity to make downtown commercially competitive (a first step toward making it more vibrant and livable) is slowly passing them by. As more developments pop up on the periphery (thanks Roger!), the task becomes more difficult.



I won't miss the gap--but I DO hate that more things aren't openin the evening. Heck, I still miss the old Intimate! DH and I used to go down townfor a "cheap date..." ice cream, window shop, browse the Intimate. We can still do the ice cream part!


Hmmm.........I've had some out of town and out of country friends as visitors the past couple of weeks and it's been eyeopening to see what they think of our downtown, which I define as running from 411 to East End.. They also went to other areas---Wilmington, Asheville, Charlotte, Atlanta and had some comments there too.

Our guests were from Denver, Clemson SC, and Cape Town South Africa respectively. Here's some of their comments about downtown:


i-- said they got approached for money more on Franklin Street than they do in downtown Cape Town or Johannesburg. were shocked at the number of homeless people loitering around, thought America would be much different--also said they were accosted more here than in NYC or Atlanta

--not much diversity in shops, streets and sidewalks a bit dirty, expected more sparkle/charm

--campus area is lovely, cool to have so close to town

--loved top of the hill, ackland, shrunken head

--some of the storefronts weren't very attractive or inviting, looked run down

--liked West Franklin more than East Franklin

--service was much better than they expected, people friendlier

,--had a hard time finding a parking spot (daytime) found signs a bit small, confusing

Their FAVORITE---WEAVER STREET (not even in Chapel Hill)

the Americanos

--felt that downtown looked seedy, dirty, not crisp, inviting

--loved being close to campus

--liked the number of people on the street

--didn't like being approached for money and not having a place to sit--benches either occupied by Panhandling types or were too dirty to sit on

---loved the carolina theatre, top of the hill, ackland, laughing turtle

---found parking pretty quickly but said the deck was not well lit

---liked East End Martini, Spanky's Suttons,

--found people generally friendly and helpful

--said they didn't need to go back, had seen all they wanted to in one visit, didn't do anything they needed to do again


Just reporting the comments, but they were interesting to see what outsiders think.

actually Ruby I can't remember the last time I even walked into a Gap store, so it definitely isn't my product preference! :} My point with those comments was to talk about some of the other things that attract people to mall shopping--the experiential factors so to speak. We need to think about downtown in two ways----what's available there to buy or see and what the shopping experience is like. If we want people to come downtown, it needs both. We have to have something down there that they want to buy or see and offer a pleasant experience. Some of those convenience-type things malls offer might make downtown a more attractive shopping experience , if they can be done downtown in a reasonable manner.

Talking about things that make the experience more pleasant--- issues like parking, security, lighting, business hours of operation, business mix, and sheltered walking areas is valid. I don't think downtown should be a duplicate of area malls in terms of product offerings, but it can take some tips about some of the other things that make mall destinations very attractive for a lot of people.

Ruby is right...sorry about that but my fashion fantasies starting running amok.

I agree 100% about the grocery store (in fact I think I brought up that point a few weeks/months ago). It would be great to have a grocery/market centrally located that provided day-to-day food & household needs for the average homeowner/renter and affordable prepared foods & stuff for students who don't have the option of cooking a good meal in their dorm and don't want to dine in the caf or eat pizza again. I love WSM or even Whole Foods for special occasions, but it's not practical for every living (at least not in my budget).

Mark, as far as apparel/furnishing stores running their course? Why not...it happens at the mall too.

This may be a total cornball suggestion, but? Why not poll the entire community via local newspapers to see what the masses want. Maybe the lack of suggestions is due to a lack of seeking them out?

Does H&M have a website? I found Zara's (some tasty looking outfit!) Also, what about Kenneth Cole? Their website indicates that the only NC location would be coming soon in Charlotte.

Just a friendly suggestion.

OK, ya'll. Come on back to reality here. I love IKEA's stuff too, but each of their stores is almost as big as our entire downtown! If you share Anita's preferences, then you *should* shop at Southpoint. They built it for people like you.

Let those of us who are willing to walk to the store get better deals from local businesses who actually want us as customers.

I don't mind if folks want to shop at the mall, I just don't want to turn our downtown into one. It will never be a good mall - it IS a good downtown. Let's keep it! We need a gocery store and even better transit so we can get there easily and not have to park!

To the Gap, I say good riddance.


Mike provides H&M's email address under his name.


Cool, interesting fashion at VERY reasonable prices.

KC is great too. I think the key is reaching out to the innovators in retail apparel and home furnishings. Maybe we'll have to realize that 10-12 years (the length of time The Gap was here), might be the limit for clothing chains that don't evolve. Or in the GAP case, evolved too radically too quickly for their customer base, which according to many of the articles I've read, is the reason for much of their drop off over the last several years.

I'd like to note though, that this analysis doesn't have to be true for local stores like Uniquities, Julians, etc. Their special brand of retail specially focused on our local market and their local ownership give them the flexibility to hold on as changes occur in the market. Often, the huge mega retailers can't be as responsive to local needs/interests and can't change as quickly as the smaller locally owned outfits.

Is there anything wrong with getting a Zara in 2005/6 and then losing it in 2015-2018 when it goes the way of the GAP?

So how does one go about attracting a tenant like H and M to our area? I guess they have their own demographic analyses to go by. What about a capitalist letter writing campaign :).

Dear Mrs. H and/or Mr. M,

I'm tired of driving all the way to D.C. to shop at your store. Please come to Chapel Hill. And by the way, you know Mr. Trader Joe and Ms. Ikea, right? Please put in a good work for the area so they'll consider coming down.


I know, funny/stupid/silly. But if anyone knows anybody at those stores, plug the area for us. Just think of the fuel savings alone... :)

Mike wrote: "....the thrill is gone."

Who are you, Don Henley?


I suppose you could be B.B. King:


Either way, you're cleared to play for change on the street at night! Just don't slip up and ask for money during your breaks! Got to keep playing, my friend, otherwise you're a threat.

Of course, if you're this kind of threat ...


... you rock, AND you wrote a song for just this kind of situation with The Gap:


Mark is right -- it all comes down to the right type of

merchants. After all, UNC and the hospitals pay a

1-billion-dollar annual payroll within walking distance

of downtown. If the merchants can't attract some of

that payroll into their stores, they're not providing the

right goods and services.

Other cities would kill for our 1-billion dollar advantage.


Gap's national performance (which, by the way, showed quite a rebound last year until a poor fourth quarter) would be relevant to this discussion if they were closing all stores. But they aren't. They are closing this one in favor of Southpoint. So, even with that $1B in payroll, we are losing out to a dreaded mall two exits away. Something must be amiss in this competitive arena . . .

In general, a couple of popular chains can draw foot traffic to the less well known stores that still dominate Franklin Street. We're hardly at risk of becoming a mall in sheep's clothing. 80% of the businesses on Franklin Street are locally owned and operated.

As for replacements, H&M and Zara may be cool additions, but they couldn't possibly be expected to draw the customer base that the Gap does, even if its sales are down a bit.

Thanks for commenting, but I disagree.

According to news reports, The Gap is planning to open only 15 stores and is closing 85 this year.

The Franklin St. Gap is only one of many closing right now or in the next several weeks. That store isn't anywhere the popular draw it once was. The company is being forced to re-tool or get out. Read up on it! They are moving out of "downtowns" everywhere preferring to be a mall or stand alone store only. The company also owns Old Navy which seems to be getting most of their attention these days since its their strongest performer. I would guess that the Gap brand has seen its best days.




I do think that Mark is right. If I have a choice between going to Gap downtown, and going to Gap at Southpoint, Southpoint will win everytime. WHY? first, I can find a parking spot. Second, I don't pay for it. Third, I can walk to the Gap in an inside area, instead of in the rain, cold, or whatever. Fourth, I think there's better security--they don't allow people to harass their customers and the areas I'm in are well lit. . And fifth, there are other stores I want to visit while I'm there,and I know they'll be open if the mall is open. .

What will get me, a consumer, downtown, is stuff to buy or see that I can't buy or see somewhere else, coupled with parking that I can easily find, knowing that plenty of places are open when I am shopping (in the evening and weekends generally) a well lit street/parking deck to walk around on/in, not being harassed or feeling unsafe, and walking around in an attractive clean area.

I love our town, and I think we have a real opportunity to make downtown even better---a little economic pinch is a good motivator to get the people who have some REAL ability to make change---the owners of downtown property--on board with the patrons of downtown. If there's something worth going to downtown, then people will go.

H&M would rock downtown. Mark, is one intention of the new DT economic corporation to hire a director that has connections to companies like H&M, Zara, etc. and can encourage them to locate in Chapel Hill? If not, I think that would be an excellent goal to adopt.

Fall into the...: I think I disagree. If we can attract emerging Gap competitors, it gives downtown something that Southpoint or Crabtree (or any place in the Triangle) doesn't have. It seems like Chapel Hill's 'thrill' is that it IS something that the rest of the Triangle ISN'T.

Right now it seems like the thrill is gone. Let's bring it back!

The Gap and their sister clothing outlets like A&F have been doing poorly for years across the country.

It's hard to imagine Franklin St. continuing to be the great destination that it is if just tries to replicate mall-like retail.

The recent market study commissioned by the Town shows the general apparel and home furnishings are under represented in the retail mix. If we have to have chains, and we probably have to have some, I hope some of the newer clothiers with business models for the new century begin to look at Franklin St.-- suggestions I've heard are H&M and Zara -- stores I love visiting when I'm out of town on business or vacationing.

news this morning that the Gap will close downtown. Another 100 block storefront vacancy.

Thanks for the idea Jeff. Improving the town's traffic signal system is the no. 2 transit priority right after making sure we have cash to move the transportation dept to the new facility.




Your comments help illustrate just how important this project is. I hope we can get more support from our regional partners.

The Wicked Burrito is an ownership situation, not a lease. The Lone Star Steakhouse chain owns the building outright. It acquired the building and the former restaurant through a business transaction and closed the restaurant because it did not wish to be in the Mexican restaurant business. The building stands vacant because Lone Star wants to hold on to the property but doesn't seem to have an immediate use for it.

Brainstorm idea: Besides ease of parking, Chapel Hill needs coordinated traffic lights on the main arteries north and east, especially toward Durham on 15-501 and Hwy. 54. I grew up in the Durham County part of Chapel Hill, near Falconbridge, and today it is much more annoying to get to Franklin Street from there. And new options exist from South Point to Meadowmont.

Now from Carrboro, I'm also inhibited by those lights from making consumer trips to Durham. It would be better for both towns, Chapel Hill and Durham, if they would invest in timers to make that drive much easier. (It would also help commuters spend 20 minutes more per day with their families.)

And by the way, this would also make bus trips along those routes more appealing.

And improved lights timing would increase fuel efficiency.

Terri, I don't know too much about the actual grassroots organization for community participation in something like this, but it's an excellent idea. One downtown that I think has done a great job at revitalization is Asheville. 20 years ago that downtown was virtually dead, and today it is a thriving, eclectic destination point for the entire Western part of NC. It would be interesting to take a closer look at the process they used. One thing I do know is that their downtown property owners got on board with the idea and put some investment into the overall appearance of their properties.

The Wicked Burrito illustrates what I mean about writing leases that require tenants to DO BUSINESS, not just pay rent. Every single commercial lease I've ever signed (except in Chapel Hill) has required the tenant to have an open and operating business, and in fact the tenant can be evicted if the business is closed more than some agreed upon amount.(yes I've seen those clauses in downtown leases too). Usually in a mall or large strip center, the required hours of operation may even be explicitly spelled out in the lease. And this is because most landlords understand that their real estate value is based on more than just getting the rent paid. It's affected by how profitable the business inside it is. The owner of the Wicked Burrito building has collected his rent in the short run, but he has severely and adversely impacted the value of his property in the long term. And the sad thing is, he's adversely affected the value of adjacent real esate, even if they house healthy businesses. That long term vacancy stands as proof positive to any potential downtown tenant that all is not well in the Southern Part of Heaven's business district.

I have no experience planning urban districts, but if this were an educational project we'd start by identifying our primary users. I think this also gets to Melanie's issue of parking. Who (and in what proportion) will be the target audience for downtown Chapel Hill businesses? Students, urban dwellers, suburbanites, out of towners? That basic information should help start a conversation. Suburbanites and out of towners need parking. Students and urban dwellers need more basic services (grocery especially).

For myself (suburbanite), the only downtown businesses I frequent are Schoolkids Records and one or two restaurants. Parking is definitely important if I am ever to be downtown other that during working hours (bus schedules). The businesses I miss most are Fowlers and the Intimate.

I doesn't help when large buildings remain empty and deteriorate--I'm thinking SPECIFICALLY of the "Wild Burrito." It's not the sales tax. If it WERE the sales tax, UMall wouldn't be doing so well.

I truly believe a large part of the problem is PARKING. I know y'all DON'T want to hear that, but it's true. The west End has (to my mind!) a better blend of shopping/eating/things to do--but feeding the meters can be a royal pain--particularly if you want to have a leisurely lunch and then do some serious shopping/browsing/potterypainting. I remember when the FGI lot had an attendant...made shopping downtown MUCH more pleasant--that lot was almost equi-distant from the East AND West ends--and you didn't have to run back to feed meters. I parked there all the time...

And Nick is right about the loss of the Barrell of Fun. I keep expecting UMall to evict Gamestop--they've already gotten rid of FYE. Then kids will have NO real reason to be in UMall. Of course, their parents will have to entertain them instead of letting them hang in Gamestop--the GS employees deserve medals!


Anita, thank you for those comments. I, obviously, don't know as much about hands-on development and the bureacratic wrangling that necessarily (should it be necessary?) goes along with it, but I could easily follow and comprehend the points you made and agree with you. What worries me is that I have seen many businesses fold or move from their downtown digs not because the overhead was too high to maintain them, but because some people (i.e. building owners and those who control the leasing terms) just didn't want them there. Yes "community values" should play a part — I think a lot of people would like Franklin, Rosemary, Main and Weaver streets to be free of strip clubs and peep shows even though the thousands of hormonal young men living on the cusp of downtown would probably allow these places to be financially successful. But I do question the "community's" vision for downtown when it really is in the hands of a few, select people. I think they're shooting themselves in the wallet and us in the foot by not being more open-minded and allowing us to dictate what we want and need. How should this dialogue be undertaken? — Hell if I know, any ideas? Judging by the high regard in which I hold many posters to this site, I think some good ideas can be generated right here. How about some brainstorms?


Anita--how do other communities involve citizens in this kind of revitalization project?

This is a GREAT discussion, there is a lot of good thinking and common sense in the comments posted. Terri you are absolutely right---if you want to build something people want, then talk to the people you want to use it. Max and Nick are spot on as well, in all the time I worked in site selection, lease negotiation, and buildout for my former employer, I never encountered another community in North Carolina quite like Chapel Hill. Even in the Wilmington historic district, one at least got clear guidelines about what was allowed, what wasn't, and a time line for needed government approvals that we could actually count on to be honored. The confusion, delays, and general arrogance of the approval process in Chapel Hill are the worst I've ever personally encountered, and my company opened 300 locations around this state.

I'm concerned that downtown business representation on this board is being limited to one property owner and one business owner. And I don't see any slots alloted to residents. I remember downtown when it was functional--Roses, the Intimate, Foisters, Fowlers, etc. If the town wants to build up its urban, residential population, this new board needs to reflect people who might USE the services. As described in the articles Duncan posted, the current board is too administrative for my tastes.

Yes, how silly to think that an onerous tax might cause businesses to look elsewhere. Maybe it's not the tax as much as it is the town insisting on meddling in all kinds of private affairs such as how the store should look, how big its sign can be, what objects may be placed out in front of the store, etc. etc. If I wanted the town to tell me how to run my business and even what business I am allowed to open, I would start one in Chapel Hill. How about a gun shop? There isn't a single one of those left in Orange County that I am aware of...

No one on this site seems to have any faith in business. You all want centrally planned, centrally controlled commerce and then you complain when it doesn't "fit" your needs. But how could downtown businesses ever meet your needs when someone else intervenes and makes all the decisions? Here's a simpler, more effective approach: Let the market decide what should be there.

I point to Meadowmont and its near total inability to attract tenants as a the prime example of Chapel Hill central planning and mixed use hogwash run amock. The empty store fronts on oversight and not enough benign neglect. How long can you expect $4.00 ice cream cones to keep selling?

And lastly, why would Roger Perry think that his grand plan would succeed where others are failing? There is plenty of unoccupied mixed use retail/office right across the street! In fact, the triangle as a whole must have a record amount of unoccupied office space right now. Something is rotten in the state of Denmark when it comes to overdevelopment and the buzzword "mixed use" around here. Would it be wrong to suspect that the owners of these properties have received favorable development loans and/or grants and are speculating in a bubble real estate market? Sound familiar? Think .com... Take a guess who will be left holding the bag when all of this finally goes bad.

Max — for what it's worth, you can still get plenty of weapons of minor destruction at the Colonial Gun Shop in Boone Square near downtown Hillsborough. Hell, if you have a clean record and a good word put in for you from a prominent county official and/or power player, you can hang two rights after leaving the shopping center, pull into the Sheriff's Department, fill out some paperwork, and walk around O.C. stashing your newly bought piece after about two weeks.

On the other hand — I agree with you that this whole issue should be left to the market, I don't want Betty Kenan deciding that only uppity establishments in University Square are the thing that will lure me and my measly bits of disposable income to downtown Chapel Hill. I think Terry hit the nail on the head; downtown is no longer functional. I remember the days about 10-15 years ago when downtown actually had grocers, newsstands, laundromats and arcades. In other words, there was at least SOMETHING that could lure any particular cross section of the area's populace to downtown. I think the gentrification of some of downtown C.H.'s family-oriented neighborhood has, in part, sort of changed the atmosphere so that niche establishments are seemingly a safer bet than stores that serve a more general, community-wide purpose. It's lamentable how overpopulated downtown is with bars and restaurants (many fly-by-night at that), and even these places seem to be easily classified as fratastic, psuedo-chic or hipster or "townie" dives. Simply said, there's not enough variety downtown, I think. When I was on the verge of teenagerdom, I used to ride my bike or ride my skateboard *uphill* on Franklin Street to get downtown. I'd go ostensibly to spend some money at the arcade, but I may decide to get a drink at Jeff's Campus Confectionary or look for shirts with immature slogans at Rock Art. The hardback cafe was my parents' favorite place to take us downtown, and Gaddy's Pizza while it lasted was a good spot for those too young to drink to play games, watch the Tar Heels and get decent food. The former manager of Barrel of Fun told us the horror story of how the owner of the storefront they leased (now Strong's Coffee) basically told them that they weren't welcome anymore b/c F Street Pizza & Pasta (he owned, or still owns I don't know, that storefront also) had just started up, was doing very well, and didn't appreciate all the "dirty" kids from BOF hanging out front to smoke cigarettes. Of course, the next generation of these "dirty" kids would be the ones that started up and populate Street Scene, and all they get is sneers from the wannabe yuppies and mean-spirited, derogatory, elitist cartoons drawn about them from time to time in the Daily Tar Heel.

Sorry this is so long, but I think downtown is failing because of the haughty, elitist business sense some downtown merchants, leasers and some of the people that are chosen to guide the area's development. A brain trust charged with deciding what we want and how that should be established is ridiculous, let us tell you that by pouring our money into the businesses we *do* like to have around. Fer chrissakes, if the people in this town we're so damned uppity and genteel as some leaders and powerbrokers would like to think, would we still be able to get a "massage" at the corner of W. Franklin and Kenan?


I started out in substantial agreement with your posting until you got to the comments about Roger Perry's "peripheral developments." It is not accurate to couch this matter in either/or terminology. Anyone who has built as many successful developments as Roger Perry has is well qualified to look at downtown and make some recommendations about what kinds of businesses might do well there and give some insight into what it will take to attract them there. To disqualify Roger Perry or anyone else from participating on a downtown advisory board simply because he may have some business interests that someone thinks might be in competition with downtown is shortsighted and shows a lack of understanding about the complex problems of downtown business atttrition. We should use all the best available talent we have in the area to revitalize our downtown. .

If we follow your reasoning out a bit, then any new development is a threat to any existing business, when in fact many studies show the opposite to be true. As economic centers develop, they in fact become "loci of commerce," bringing more and more shoppers to an area. Shoppers begin to associate certain areas as places where they can find what they want. As a former site scout for a major national company (with a current downtown Chapel Hill location) , I found that the best predictor of success for my company in any potential location was the success of a similar entity in a nearby location.

But I will agree with you that part of downtown's problem is that much of the real estate that exists for development is owned by what we called "stagnant owners." Most commerical property gets bought and sold frequently, which perpetuates a need to keep locations leased in order to pay for them and generate income for the owners. When a commerical location has been held by the same entity for a long time, especially if the entity is not a professional property manager, then the incentive to keep the location income producing just isn't there in the same way. The building may be paid for or the owner's interest in keeping the property active may have changed Also, many owners do not recognize the economic changes that have either increased or decreased the value of their commercial space because in many cases their property portfolio isn't diversified enough for them to have empirical information about what's hot and what's not.

Downtown economic development is further hampered because in many cases UNC has been very hungry for space adjacent to its campus and has been willing to pay for it. A UNC lease is easy for a small property owner, it is guaranteed money, generally long term leasing, and usually a low maintenance tenant. Many of those owners hold out for UNC leases rather than being more aggressive with private business. My prediction---UNC North if developed similar to proposal is going to put a lot of downtown owners in a very uncomfortable situation initially, but has the opportunity to open up a lot of real estate for diverse and dynamic business.

Some options for downtown owners are to be more receptive to percentage rents and overrides for retail businesses rather than fixed high rents, to write leases with clauses encouraging businesses to operate, not just to pay rent, shorten lease terms with more renewal options, be more openminded about allowing businesses to divide and sublease larger locations, to offer validated free parking to customers, and to be more rigorous about enforcing parking policies to keep spaces open for customers, not just filled up with long term parkers (students, business employees, and business owners).

Thanks for starting this discussion and keep up the good work.


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