2006-04-19 Herald-Sun: plan would raze Heritage Square

Plan would raze Heritage Square for new buildings

 * BY JEFF ZIMMER : The Herald-Sun
 * jzimmer@heraldsun
 * Apr 19, 2006 : 10:05 pm ET

DURHAM -- Downtown Durham's rebirth would extend to Heritage Square shopping center under a local developer's plan to pump $125 million into the 10-acre site through a project featuring seven new multi-story buildings with retail, office and residential uses.

Under the plan, Andrew Rothschild and his Durham development firm, Scientific Properties, would raze the 21-year-old center's four existing buildings that make up some 72,000 square feet and replace them with seven buildings totaling about 500,000 square feet.

"In the 12 years I've been in downtown, this is by far the biggest opportunity I've seen for the Fayetteville Street corridor," said Bill Kalkhof, president of Downtown Durham Inc. "It just bodes very, very well for that entire corridor [and] the healthier that corridor is, the better it is for downtown."

The 9.6-acre site is a stone's throw from the Durham Freeway with its eastern edge running level with Fayetteville Road. The site slopes down along East Lakewood Avenue, which runs along the property's southern boundary.

The property still is owned by Heritage Square Associates, which has a Greensboro address, although Rothschild said he has the site under contract.

"We think what we've put together is a very approvable plan and once it is approved, we would expect to close on the property," Rothschild said Wednesday. "We don't want to become owners of the shopping center as it is today."

While Rothschild said he already has the financing in place for the project, he estimated it still could be up to two years before construction starts. Aside from the various governmental approvals he is seeking -- including a rezoning and a designation to allow higher buildings -- the Durham developer said he'll need the city's help to bring the tired site back to life.

That means millions in public funding, possibly for a multi-level parking structure that would have most of the project's estimated 1,463 parking spaces.

But the redevelopment project will be an attractive opportunity for city officials, offering a chance to revitalize an area that many residents along the Fayetteville Street corridor feel is being ignored.

Rothschild's plan calls for 162 residential units spread out among the seven buildings. They'll probably be a mix of rental properties like apartments and owner-occupied spaces like condominiums. None of the units would have street-level doors, he said.

"We look to cover a range of price ranges and levels of affordability," Rothschild said.

The buildings themselves would range from four to six stories. Large, open plaza areas would serve as the rooftops for three of the buildings on the north side of the property, facing downtown.

Restaurants, clubs and other retail spaces would be sprinkled around the plaza, which will present a bird's eye view of downtown.

Rothschild, who serves as chairman of DDI, has redeveloped several downtown historical sites, including Venable Business Center. Through Scientific Properties, Rothschild has spent millions converting two sites into laboratory space for local biotech firms.

The developer said he likewise wants to bring a second life to the Heritage Square site, but that he wants the development to maintain the heritage of the area while creating something that unites it to the downtown area.

Rothschild said he understands the Hayti area will never be like downtown.

"It's a different part of the city where [building] heights fall off," he said. "The idea is more how to connect the area and people to downtown."

In order for downtown to live a long life, the neighborhoods around it need to thrive as well, Rothschild and Kalkhof said.

"We have always felt that as downtown's revitalization took firm hold, it would start flowing to surrounding neighborhoods," Kalkhof said.

He noted that the failed Rolling Hills housing development is across from Heritage Square and that the city is weighing offers from two developers to restart the project.

But the Heritage Square project is young -- a development plan and rezoning request only recently surfaced in Durham's planning department -- and it still has to navigate the city's sometimes choppy political waterways.

On one side there is the legacy of a once-bustling Hayti business district that many black residents believe intentionally was torn apart by the four-lane Durham Freeway that cuts through the southern part of downtown. So when it comes to big proposals from companies or investors from outside their community, distrust still lingers among Durham's blacks.

Rothschild has been meeting with residents to talk about the project and has another meeting planned from 6 to 8 p.m. May 4 at the Hayti Heritage Center.

On the other side is the legacy of projects affiliated with Hayti Development Corp. that have won city financing only to later bog down in mismanagement or fail unfinished.

Heritage Square Associates, the center's owner, is made up of investors that were brought together by and includes Hayti Development Corp. Since it was formed in 1981, Hayti Development Corp. has received at least $4 million in public funding with little success to show for it.

In 1999, the city restructured its $960,000 loan to the shopping center's owners and forgave $600,000 in interest. Then in 2004, city officials discovered the center hadn't made a single payment on the $960,000 loan in more than a decade.

All that history will likely surface when Rothschild seeks city money to help his Heritage Square redevelopment project become a reality.

Kalkhof, Rothschild and other downtown developers argue it's time for the two sides to look beyond the past and create a new future for the heart of Durham -- its downtown. And, they say, everyone benefits from a vibrant downtown that boosts the city's tax base, provides jobs and attracts investors.

Beyond the altruistic declarations of Durham's downtown developers is the simple fact that they are seeing positive returns on their investments and thus properties are being snapped up and either resold or redeveloped.

The first phase of Capitol Broadcasting's $200 million American Tobacco Historical District has filled almost 500,000 square feet with office and restaurant tenants and the project's retailers are doing a brisk business by all accounts.

Scientific Properties has redeveloped three downtown sites, including the 20,000-square-foot former Clark & Sorrell auto garage that's taken up by local biotech firm Serenex, and a nearby 9,000-square-foot building at 401 Foster St. that is also fully occupied, with arts-oriented ventures. The company is also in the process of creating a 90,000-square-foot campus for biotech firms and other tenants at the former Venable Business Center.