Condos

June 2007 "The Downtown Economic Development Initiative, a collaboration between the town and Ram Development Co., will bring about 140 condos to downtown. For about $7.25 million, plus the value of the 2-acre site that now houses a municipal parking lot, the town will receive about 160 underground parking spaces to rent to the public."

June 2008 "'Developers are very optimistic risk takers,' said Bernard Helm, president of the Rocky Mount company, which tracks North Carolina housing trends. 'They have to be. While I think there is room for condominium development in exclusive neighborhoods in Chapel Hill, it's going to require some patience on the part of the developers,' Helm said.

"Developers say the town's arduous, often contentious, planning-approval process limits risk.

"'When you build something in Chapel Hill, the market risk is pretty much mitigated, because there's never enough supply,' [East 54's construction company's president] Perry said."

July 2008 "Outside a former Franklin Street gas station, hundreds of developers, dignitaries and potential condo buyers gathered under a big tent last month. After the visitors nibbled smoked salmon crepes, sipped adult beverages and listened to a disc jockey spin adult contemporary music, organizers hoped they would mosey down to a sales center where Ram Realty Services was introducing its 140-unit condominium project, 140 West Franklin.

"The scene sounds so 2005.

"Back then, when easy lending was fueling the housing boom, lavish parties introducing condominium projects cluttered the calendars of developers and potential buyers across the country. Now, amid one of the biggest housing slumps in national history, it may seem difficult to take a pre-sales campaign seriously.

"But Ram and two chief competitors -- East West Partners and Greenbridge Developments -- are betting that Chapel Hill is an oasis of pent-up demand.

"Construction began last year on East 54, off N.C. 54. The project will include 175 condos. Perry expects to sell out by early 2009.

"Ram is so comfortable building in Chapel Hill that it is looking past 140 West Franklin to 345 additional condominiums and townhouses it wants to build. Construction of Ram's Grove Park wouldn't start until at least mid-2009."

November 2008 "Ram Development Co. could break ground on the 140 West condominium project at Parking Lot No. 5 in January. That will erase about 170 parking spaces, including 103 hourly spots convenient to both ends of Franklin Street."

May 2009 "Two years ago, Ram Development Co. was making plans all over town. Now it's unclear whether any of them will pan out as planned.

"As the real estate bubble was peaking, Ram made a deal with the town to invest about $12.5 million of its own money and borrow more than $60 million more to build about 140 condos, ground-floor shops and a public plaza on a Franklin Street parking lot.

"n March, Ram's contract was terminated with J. Randolph Segar to buy the 12.5-acre Town House Apartments site off Martin Luther King Jr. Boulevard.

"Two years ago, Ram proposed another project -- 48 condos, two banks and a 22,000-square-foot office and retail building on Martin Luther King Jr. Boulevard near Interstate 40. Ram had purchased the 13-acre Altemueller tract for $1.8million in April 2006 but sold it last August for $3 million.

"Ram has spent the past year trying to get enough pre-sales to get 140 West Franklin off the ground. This month, the company cut prices on some units by about 10 percent, hoping to entice several dozen buyers before it breaks ground.

"Indeed, two years ago, developers could easily borrow three-quarters of a project's cost -- often while offering little guarantee that their projects would be filled. Today, lenders are willing to offer loans only to those projects where much of the space is pre-sold or pre-leased. Developers who can get commitments from buyers or tenants are often only able to borrow about 60 percent the cost of a project, which would mean Ram might have to double its cash investment.

"There were 19 condominiums sold in all of Orange County in the first four months of the year, according to the Triangle Multiple Listing Services. That's down 70 percent from the same period last year.

"Town Council member Bill Strom, who helped to negotiate the contract allowing Ram to build the mixed-use complex, hopes the company will proceed. 'I can't speculate on what their business model and plan is,' Strom said. 'But I can't imagine that this is a great time in the real estate development industry,' he added.

September 2009 "First impressions are lasting ones, as the saying goes. But in the case of Bill Strom, the last impression may be the one by which he is remembered.

"Mr. Strom recently submitted his resignation from the Chapel Hill Town Council. He is leaving here for somewhere. These things happen. People move on and sever ties and obligations. Usually, they share their goodbyes and collect thanks. Then, life goes on without them.

"But Mr. Strom didn't make a clean break. Although he sold and moved out of his home a couple months ago, he didn't get around to resigning until August 1. If he had quit just two weeks earlier, Chapel Hill voters would have been able to elect someone to his seat this fall. Strom's timing handed that right to his fellow Town Council colleagues. They, not the voters, will choose the person to fill his remaining term.

"Bill Strom's last official act was to disenfranchise his constituents. Since he hasn't commented, we may never discover his intentions for doing so. But the hue and cry he provoked does reveal expectations Chapel Hill has for its elected officials."

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*Today's post is an homage to the Housing Bubble Blog