Agenda 09-16-2025; 6-b - Discussion of a Ground Lease with UNC for 2700 Homestead Road for the Cold Weather Cots Program and Integrated Day Center

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2 UNC, through its Director of Local Relations, Ivy Taylor, expressed an interest in learning more about local efforts to support the unhoused population and to address behavioral health concerns. In addition to discussions about longer-term efforts such as the Crisis Diversion Facility, the issue of a new location for the cold weather cots program and opening an integrated day center came up. There was significant interest by UNC and the Town of Chapel Hill in supporting both of these priorities. An integrated day center is a central place where people in housing crisis can access many different needed services. More than just a drop-in center offering basic necessities, this model integrates medical, behavioral and housing-focused services to help individuals move to stable housing and self-sufficiency. It offers a coordinated and comprehensive, trauma-informed approach that moves away from a siloed system that requires individuals to travel to different locations and appointments to get the services they need. It also offers a building with heating and cooling, bathrooms and other resources that provide a reprieve from the outdoors. This summer, the County and Town were notified that the UNC Office of Real Estate and Campus Enterprises was willing to offer Orange County a 10-year ground lease on the facility at 2700 Homestead Road starting in the late spring of 2026. While the offer to lease the property does not involve any rent, the County would be required to fund any necessary improvements and renovations and maintain the building and its upkeep for the period of the lease. The facility is currently being used by UNC for significant file storage needs and for offices and property storage for UNC Campus Police. UNC will require several months to relocate what is currently located at the property and is hoping for a decision by the County as soon as possible so that it can start the moving process. Phase I Costs: Due to the complexities of renovating a UNC-owned property where the State Office of Construction would have jurisdiction, staff recommends employing a design firm for $16,521 to ensure compliance with State Office of Construction's standards and to provide cost estimates for the proposed Phase II renovations. This would be the sole FY 2025-26 funding need. AMS has conducted a review of the facility's core building systems — Heating/Ventilation/Air Conditioning (HVAC), fire alarm, and the roof — to assess the feasibility for its use for the Cold Weather Cots program. To occupy the facility to any level, the 24-year-old fire alarm system would need to be replaced for$33,967. Additionally, small renovations would be needed to allow the space to work for the cold-weather cots at an estimated cost of $30,000. As the move-in date would be early in July 2026, these costs would be included in the Manager's recommended budget for FY 2026- 27. Phase II Costs: The costs to renovate the space for use as a day center with additional County offices would include the replacement of the roof within five (5) years ($500,000 - $1,000,000), and the replacement of a significant portion of the HVAC system ($250,000). These expenses and additional design and renovation costs would need to be developed and submitted in the FY 2026 - 36 Capital Investment Plan. As the County does not own the facility, it cannot finance any capital improvements to the property. The County would need to identify pay-go funding or unassigned fund balance to fund any of these investments. FINANCIAL IMPACT: There are no financial impacts at this time, but if approved, staff will begin preparing a budget amendment to fund Phase I improvements if a lease is approved by the Board.