City of Kannapolis

UNC wants to buy downtown Kannapolis apartments for $500K

August 24, 2015

By Michael Knox | mknox@independenttribune.com

KANNAPOLIS, N.C. — The UNC Nutrition Institute has approached the City of Kannapolis about purchasing apartments that sit over the downtown Kannapolis stores to have a place for students to stay when they are in town working at the North Carolina Research Campus.

The Kannapolis City Council will discuss the proposal during its regularly scheduled meeting at 6 p.m. Monday. No action on the issue is planned

 

City of Kannapolis staff and Development Finance Initiative — the organization charged with spearheading the revitalization downtown Kannapolis — are recommending not pursuing selling the property to the UNC Nutrition Institute (UNCNRI). Officials are citing the need to focus on the overall master redevelopment plan, according to a memo in the agenda packet for Monday’s meeting.

There are 11 residential apartments located on the second floor of two buildings in downtown Kannapolis. Both buildings have commercial space on the ground floor. Of the 11 apartments, eight are currently occupied by tenants with month-to-month leases, including four tenants who have lived in the apartments for more than six years. Four units have two bedrooms and two bathrooms and the remaining apartments have one bedroom and one bathroom.

UNCNRI has identified the need for at least 10 bedrooms.

The discussion stems from Steve Zeisel, who is leading the UNCNRI effort, wants to secure ownership of the housing by May 2016.

Each year students from around the world come to Kannapolis to help scientists in their work at the North Carolina Research Campus. But many of those students struggle to find a place to live, since they only stay here for a few short months, working with scientists until it is time to return home or to school.

UNCNRI is offering $500,000 for the apartments, according to the agenda packet. But the agenda packet says that at current occupancy rates the city would lose more than $66,000 in annual rental income.

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“(Development Finance Initiative) believes that the sale of downtown apartments at $50,000 a bedroom would also set below market pricing expectations, which could negatively affected downtown property values going forward,” the agenda packet states. “

Officials with Development Finance Initiative (DFI) add that the sale of apartment units prior to the completion of the master plan for downtown redevelopment may set a precedent for the way future property sales are handled.

“Pursuing opportunities prior to completing the redevelopment plan could discourage potential partners from participating in the planning process or engaging in opportunities identified in the plan,” according to documents. “Additionally, the sale of assets now will limit the city’s ability to incorporate input from the public engagement stage of the planning process.”

The documents do go on to say the benefits of selling the apartment units would generate $500,000 and would meet the needs of one of the community’s key stakeholders, UNCNRI.

“DFI staff will discuss benefits and drawbacks that city council may wish to consider when deciding whether to included the downtown apartments in the master redevelopment plan or to pursue sale of apartments to UNCNRI,” documents state. “Highlights of these considerations include: precedent for sale outside of the redevelopment plan and public engagement process, expectations of below market pricing and costs associated with loss of rental revenue and due diligence prior to sale.”

City council is currently scheduled to discuss the redevelopment plan framework, goals and guiding principles at a September work session. As part of this plan, an early stage “demonstration” project will be identified and could include residential units that could meet some of the interested identified by UNCNRI.

During the demonstration project, stakeholders will identify a project which could be done first to maximize the excitement of revitalizing downtown and quick start other development projects.

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