Developer and consultants brief Garner council on downtown opportunity site; council signals consensus to continue negotiations

LMG, the projectdeveloper, presented updated plans and financial analysis for the downtown opportunity site at the Garner Town Councilwork session on Feb. 24, saying recent contractor bids and underwriting assumptions make the original, larger mixed-use concept viable again.

Assistant Town Manager John Hodes introduced LMG representatives Peter Floatz and Connor Bath and DFI consultants Marcia Parrot and Eric Thomas, and framed the session as an informational update ahead of an April decision point on whether to extend or amend the towndeveloper master development agreement (MDA), which expires April 15.

Peter Floatz recounted the projecthistory: a May 2022 MDA initially anticipated roughly 60to80 residential units, 3,000to6,000 square feet of retail and a public parking garage with a $5 million town contribution. After a September amendment increased units and parking, the total development cost was estimated near $24 million. Rising interest rates and construction costs subsequently pushed the garage estimate to about $7.5 million and constrained financing.

LMG said more recent contractor quotes brought hard costs down (the team reported a current hard-cost estimate around $26.1 million) and apartment pricing about $2 million lower than earlier figures, which restored feasibility for LMGto return to its original vision of roughly 100to—02 units with approximately 140 parking spaces. Connor Bath summarized market underwriting, noting a projected average initial rent of roughly $1,650 per unit (market comps show advertised asking rents near $1,580) and an estimated year-three yield on cost of about 5.8% under current assumptions.

On financing, LMG discussed CPACE (Commercial Property Assessed Clean Energy) as an option that can substitute for equity while funding energy- or water-efficiency measures. "CPACE is a form of financing that comes through the tax assessoroffice," the presentation stated, with a current financing cost LMG described around 7%. Town staff clarified that Wake County must adopt a CPACE authorization before individual municipalities can opt in.

Council members focused their questions on three themes: the towncontribution (previously discussed at $5to$5.5 million for a public garage), rent and yield sensitivity, and the projectimplications for stormwater and tax revenue. On taxes, LMG and staff estimated a completed project valuation around $30 million, producing roughly $150,000 per year in property-tax revenue in current-day estimates; staff noted the value could change with different ownership or parking-deck structures.

Council also pressed about the commercial space: LMG said lenders (Fannie Mae/HUD underwriting) typically limit commercial income to about 5to7% of overall project income, meaning a larger residential program dilutes dependence on pre-committed retail leases and allows developers to deliver a speculative shell for tenants to build out after construction. "We have the ability here now to go forward on a spec basis with this space," LMG told council, adding that several local operators had expressed strong interest but were reluctant to sign leases before a building existed.

Affordable housing emerged repeatedly: council members referenced the towntask-force work and asked that DFI and LMG study options for permanent affordable units at deeper AMI levels. LMG said it typically includes some affordability in its projects and would discuss precise mixes with DFI and staff.

Stormwater capacity surfaced as a constraint and point of clarification: staff said the parcelstormwater was accounted for in the SCM built with the recreation center and that a downtown stormwater study is underway to identify regional opportunities and final constraints for future development.

Staff asked whether council was comfortable with LMG returning to the original MDA concept and continuing negotiations; council signaled general consensus to proceed with further analysis rather than voting that night. Staff said the next formal step would be either an amended MDA or a short extension to appear on the April 7 agenda so the town would not expire an April 15 contract deadline.

LMGrepresentatives and DFI said they would refine ownership, garage-leaseback, parking and tax-treatment scenarios and provide additional financial detail and timelines for council review. LMG closed by reiterating its goal to break ground before year-end if the parties finalize terms.

What happens next: staff will return with a timeline of decision points, further tax and parking analyses, DFIfinancial modeling, and a proposed extension or amended agreement for council consideration in early April.