Cousins Properties LLC will raze five existing buildings to make room for 123 West Franklin’s 300 apartments and up to 580,000 square feet of retail and office space. The developer also will pay $50,000 for five years, or $250,000, to the town’s affordable housing fund. The first payment would be due before the town issues an occupancy permit.

Gordon Merklein, UNC’s executive director of real estate development, said the money will come out of project’s budget.

The town will use it for loans to nonprofit housing groups serving residents who earn less than 80 percent of the area median income. In Orange County, that’s roughly $55,000 for a household of four.

The town also can use the money to meet local required matches for federal affordable housing grants.

While UNC Chancellor Holden Thorp offered the payment at last week’s Town Council meeting, he emphasized the project is not a university venture. However, it will answer a call for more downtown housing for UNC graduate students and employees, he said.

“I think that’s an important thing for Carolina, and we are behind a lot of our peers, but this is a good time for us to get there,” he said.

The $80 million to $100 million project could be completed by early 2017, Cousins Vice President Jason Frost said.

The project will create a large, public green space and up to 400 downtown parking spaces after business hours. Mayor Mark Kleinschmidt asked but did not get a guarantee the green space and parking would remain public if the property is ever sold.

Council member Matt Czajkowski called the project “transformative” but cautioned the community to carefully consider its needs.

“This project and this discussion make it very, very clear that – as a community and as a council – we have to understand that we can’t get everything from every project. There are trade-offs,” he said.

Meg McGurk, executive director of the Chapel Hill Downtown Partnership, said 123 West Franklin will create year-round vitality, attract other retailers and provide startups with office space.

Property owner Chapel Hill Foundation Real Estate Holdings Inc. and the landlord are working with tenants who want to relocate before leases end in June, Merklein said. UNC occupies most of University Square’s 70,000 square feet of office space. Only the Carolina Population Center is committed to returning so far, he said.

Among retailers, Glee Kids has moved to University Mall, and William Travis Jewelry and Fine Feathers could follow. Kidzu and Peacock Alley are negotiating leases but declined to say where.

Pam Patterson, a longtime Fine Feathers employee, said they are sad to leave after 37 years, but the project is exciting for downtown.

“As hard as change is, we have to accept it and move forward for the sake of Chapel Hill,” she said.

Uncertain futures

The future is less certain for at least four businesses: Butternut Squash, Ken’s Quickie Mart, Time-Out Chicken and Chapel Hill Barber Shop.

Merklein declined to comment about Butternut Squash owner Maisie Coborne’s remarks to the Town Council last week that there was an “intent to mislead” business owners that cost her restaurant “substantial financial losses.”

Coborne and her daughter Kelly Bruney, who is a partner in the business, said their landlord, Raleigh-based Thomas Linderman Graham, offered to help them move. They had two offers to sell since opening Butternut Squash in 2009 but declined because they expected relocation to one of the landlord’s many properties, Bruney said.

“We’re not here for the fun of it. We’re trying to run a business,” she said.

Merklein said they have been clear the businesses will need to move. They initially considered redeveloping the shopping center in stages, but they decided it would be better to do it all at once, he said. He suggested the merchants seek help from the Downtown Partnership.

McGurk couldn’t be specific but said they have worked with some businesses.

Chapel Hill Barber Shop owner Donald Ingle and Eddie Williams, at Time Out, said they haven’t gotten any help. Williams said he was told several times to find a new location, but he needs to be near downtown and the campus, he said.

“You would think since we’ve been here so long, and with the amount of real estate that the university has,” they could find a place, Williams said.

Larry and Susan Trollinger have run Ken’s Quickie Mart since 1970 and hoped to leave the business to their son. Trollinger said he may close and retire, because most places in town already have a convenience store.

Kleinschmidt, who serves on the Downtown Partnership board of directors, said it would be unfortunate if the town loses those businesses. The owners of Butternut Squash talked with him about it in the fall, but it’s a private tenant-landlord issue, he said.

Cousins still faces a few hurdles, including the town’s Community Design Commission and its zoning compliance and building permit processes, Frost said. The Historic District Commission also will have a say in the final siting of a Cameron Avenue driveway, he said. The developer agreed to pay $75,000 for a traffic light at the Wilson Street intersection if needed in the next five years.