The Veterans Affairs campus opposite Duke University Medical Center is expanding, and it isn't just adding a few bed spaces.
The major project, one of the first of its kind, will include restaurants, hotels and banks along with office and lab space-all on federal land.
"It's the largest mixed-use project in the country for VA campuses and it really spotlights Durham, the VA and Duke," said John Infantino, vice president of LCOR, whose Bethesda, Md. office will be developing the property for the VA.
The possibility for the 650,000-square-foot, six-building Erwin Road development was created in 1991, when Congress passed a law that allowed VA campuses to lease their property for private development in exchange for new research and hospital space.
"I think the whole nature of the project is really creative," said Dan Miller, spokesperson for the VA. "If we don't do this, the likelihood that we will be able to serve the needs of our nation's veterans is remote."
In return for allowing LCOR to develop the prime real estate adjacent to Duke into a mix of retail, commercial and research space, the VA will receive 19,000 square feet of new clinic space, a renovation and consolidation of its research space and additional parking-all with no capital investment.
But the unusual nature of the public-private project, to be dubbed the City of Medicine Center, posed a conundrum: Is the project taxable? City council members said "yes," LCOR said "no" and a long court battle threatened if the two sides didn't reach a compromise.
Negotiations between the two sides produced a solution Aug. 21: LCOR will pay $210,000 annually or its property taxes, whichever is higher.
"A month ago I didn't think the possibility of a deal existed," said city council member Dan Hill. "But the developer and the VA worked really hard with the city manager and the city staff and the mayor to come up with a deal-they kept this whole issue from going to court, which was only going to make attorneys a lot of money."
Hill said he was satisfied with the deal and pleased that the center will provide an estimated 2,300 jobs, but disliked the concept of privately developed federal land.
"In Durham, one of our problems from a tax point of view is that there are lots of non-profits," Hill said. "Now a private developer has figured out how to join the fray."
The VA's neighbors in the Hillandale-Watts community are not thrilled with the project either, worrying that the development will bring with it noise in the construction phase and traffic and congestion afterwards.
"It'll damage the residential flavor of the neighborhood," said John Moore, who lives on tree-lined Club Boulevard, just one mile from the VA campus. "I think the city, as long as they got tax revenue from it-that was their only concern."
In an effort to address community concerns, LCOR scaled down the project in negotiations with the city to almost half of the initially proposed size of 1.2 million square feet.
Before construction begins, the Office of Management and Budget must approve the project, LCOR and the VA must finalize agreements and city council members must review plans for each phase of the construction.
For now, though, LCOR is negotiating with possible tenants: enterprises like Bank of America, Jersey Mike's, Starbucks, Chapel Hill's Inside Scoop Ice Cream and universities including Duke, the University of North Carolina at Chapel Hill, Campbell University, along with several biotechnology companies and dot-com firms.
"We're envisioning a pedestrian-oriented retail area designed to serve the employees of the medical system, University and hospital, and the patients of both hospitals," said Infantino.
LCOR was awarded the project in 1998 by the federal government, and has been working on sight planning analysis, environmental studies, architectural plans and negotiations with potential tenants.
"[Big] name medical centers on par with Duke [and] all cities around the country are looking at how this project will be successful," Infantino said. "It's a win-win for everybody involved."
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