Luxury Hotel Less Luxurious Day By Day
February 25, 2010
If the proposed new hotel in downtown Greensboro ever does actually get built and right now that looks like a very big if the way things are going, by the time it gets built, the proposed luxury hotel could turn out to be a Red Roof Inn.
The hotel project, which has gone through several transformations already, is about to go through another one: According to Greensboro developer Milton Kern, who's an investor in the project albeit a small one the luxury hotel will be luxury no more.
Kern said the hotel's backers are restructuring the project and moving forward with a smaller hotel that has lower room rates than the hotel initially proposed.
Kern didn't say how much smaller the hotel would be than the original 206-room hotel, which had already been reduced from an earlier plan, but he did say other elements of the most recent plan had been scrapped as well.
"It's not going to be a luxury hotel," Kern said. "And it will be smaller."
The investment group behind the hotel includes attorney George House and Bridget Chisholm, a financial consultant. Chairman of the Guilford County Board of Commissioners Skip Alston is also involved he's the real estate broker for the deal, and it was a December vote by that Board of Commissioners and the Greensboro City Council that allowed the hotel and other projects to be submitted to the state as possible recipients of federal stimulus benefits. Alston recused himself from that vote, but some still say Alston faces a conflict of interest regarding the hotel and they argue he's treading in murky ethical waters.
The investors are attempting to use tax-free bonds offered as part of the federal stimulus package. No taxpayer money will be used to back the bonds in order to acquire the attractive bonds, the backers of any project will have to, at some point, sit across the table from a banker who's willing to loan them the money.
The stimulus package literature asked for "shovel ready" projects but, in the case of the proposed hotel, it doesn't seem like it was even pie-in-the-sky ready. Since the votes by the Greensboro City Council and the Guilford County Board of Commissioners to move the project forward, the hotel has gotten a new ownership group, changed locations, downscaled from a $200-a-room hotel to $155 a room and cut the proposed number of rooms twice.
You might say that, other than the word "hotel," this project isn't the same one the City Council and the Board of Commissioners approved. In fact, that's exactly what some unhappy Greensboro hotel owners are claiming.
That argument is central to a lawsuit filed against the City of Greensboro and Guilford County by hotel owners Mike Weaver and Dennis Quaintance, who claim that the project now in the works is materially different from the one that was approved by the city and the county.
The fact that the project is changing again will only strengthen that argument.
Even if the lawsuit fails, the lawsuit might not fail. Since the project is up against tight deadlines, and since the investors must find a bank willing to loan them the money for the project, a lawsuit hanging over the proposal can't do anything but hurt the chances of a loan approval.
In fact, the hotel project, despite all the public discourse, hasn't even made it past the first real hurdle yet. The Guilford County Industrial Facilities and Pollution Control Financing Authority hasn't voted to send it down the line and, once that's done, if it is, the hotel project must get the approval of the North Carolina Local Government Commission (LGC).
The authority was scheduled to meet on Wednesday, Feb. 24, but that meeting has now been pushed back to Wednesday, March 31. The deadline for demonstrating "substantial progress" to the LGC on stimulus bond money projects is April 15.
Then there has to be a bank willing to loan the money, and, before that loan takes place, the project will be subject to a public hearing before the Guilford County Board of Commissioners. Only when all those steps are complete will the project be financed by stimulus package bonds.
Guilford County Attorney Mark Payne said it's his guess that the state deadline will be moved back. He said that, across the state, many investors and investment groups are having trouble getting everything lined up in such a short period of time, and he said there's a great deal of pressure on state officials to extend the time period for project submission.
"Everyone across the state is having trouble meeting the deadlines," Payne said.
The resolution the county commissioners approved on Thursday, Dec. 10 allowed the project to move forward, but that resolution approved a hotel project at a specific location: The corner of South Elm and Lee streets, but the new proposed hotel now smaller and less luxurious will be at the corner of South Elm Street and February One Place.
At the Board of Commissioners Thursday, Feb 18 meeting, there was a closed session to discuss the lawsuit.
The change of location is cited in the lawsuit that was filed against the city and the county.
Payne said it was an initial meeting to give the commissioners a heads up.
"It was mainly to give them a brief synopsis of what the claim is and of my evaluation," he said.
Payne said he thought the lawsuit would fail on a number of grounds and he said the next step in the legal process will be a motion to dismiss that will be filed on behalf of the county. Payne said he expects to file the motion by Friday, Feb. 26.
The city is expected to make a similar move and coordinate its efforts with Payne.
George Brumback, the chairman of the Industrial Facilities and Pollution Control Financing Authority, has asked the investors in the hotels for some modicum of evidence that the project is feasible before the authority sends it to the LGC in Raleigh. Brumback said he doesn't want the authority to send the project to the LGC only for the LGC to discover that proposal wasn't remotely feasible financially.
Brumback said the authority has never experienced so much interest at the last meeting, when the hotel was discussed, just about every newspaper in town had a reporter there for the lively meeting where Weaver spoke against the hotel project and had some intense exchanges with the proponents of the project.
Brumback said he'd evidently told fellow authority member Sue White the wrong thing when she became a member of the board.
"I told her it would be the most boring job she'd ever had," he said.