Lawsuit seeks to stop financing for downtown hotel project : News-Record.com : Greensboro & the Triad's most trusted source for local news and analysis

GREENSBORO — Local hoteliers Dennis Quaintance and Mike Weaver sued Thursday to stop the potential financing of a new luxury hotel in downtown Greensboro.

The two men — owners of the city’s O. Henry and Proximity hotels — want to invalidate the federal stimulus financing the City Council and Guilford County Board of Commissioners recently approved for the project.

They have created a Web site — www.gogreensboro.net — to post their legal reasoning and some of their arguments against the new hotel, which they believe is not economically viable and could hurt the hotel industry throughout the city.

Representatives of the Urban Hotel Group, which is proposing the downtown project, could not be reached for comment Thursday.

Greensboro and Guilford County have a great opportunity in the bond financing, Quaintance said in an interview Thursday, and locally elected officials need to make sure it’s used as best it can be.

“In order to take full advantage and give this area the stimulus it needs, you have to have a good process,” Quaintance said. “And in the process we’ve seen, there’s just no criteria. There’s no evaluation of these projects.”

The proposed 200-room luxury hotel is a $54 million project. Investors are seeking $27 million in special federal bond financing available through the city and county.

The hotel would overlook the International Civil Rights Center & Museum at Elm Street and February One Place. It would be 51 percent black-owned. A small part of the profits would go to the Ole Asheboro Neighborhood Association , a historically black community.

Some of the project’s supporters have accused critics of being motivated by race and by the fear of a competing hotel taking away business.

“What this is being driven by is our concern for the potential effect of this,” Weaver said Thursday.

“The whole thing has been pushed so fast with a lack of a real businesslike approach. I’m very pro-downtown, but I don’t want to see just anything built there,” Weaver said.

“I want to see things there that can succeed and thrive, so that downtown can continue to improve.”

Weaver and Quaintance also have raised questions of a conflict of interest on the project. Melvin “Skip” Alston , chairman of the Guilford County Board of Commissioners, is a broker in the deal. He has been accused of trying to intimidate opponents of the project.

Earlier this month, Alston apologized for telling Mayor Bill Knight and two other City Council members that they could face a recall election if they reconsidered approval of the hotel’s financing.

Alston recused himself from the commissioners’ vote to approve the financing. He did not disclose his relationship with the developers to his fellow commissioners as they weighed the projects being considered. Alston has declined to disclose how much he stands to make on the deal.

He said last week he would no longer speak publicly on the deal. He could not be reached for comment Thursday.

Many members of the City Council and Board of Commissioners — including Knight — declined to comment on the lawsuit .

City Councilman Danny Thompson did comment.

“They have the right to take this to court,” Thompson said. “It’s part of that great system of checks and balances we have in this country. Just because one government body says something, that’s not the end of the conversation. I love that process.”

Thompson said both the City Council and the county commissioners faced a vote on the bond projects without much guidance from the state or federal government as to what their role was and how much they should vet the projects.

“I’m certainly open to whatever kind of guidance we can get on this,” Thompson said. “If that comes from the federal level, the state or from the courts, I’m open to it.”

The hotel project is now before the county’s bond authority, which has asked for more information on the financial structure of the project before sending it to the Local Government Commission for final approval.

At the bond authority’s last meeting, an attorney for the hotel group said the ownership group was reluctant to provide any more information but would work with the county attorney to see what it could do.

Contact Joe Killian at 373-7023 or joe.killian@news-record.com

CherylP25

February 11, 2010 - 3:15 pm EST

Oh, wow. It's going to be on, now. I'm afraid this is going to get really ugly and I can't say that either "side" is fully in the right, here.

GSOdad

February 11, 2010 - 3:18 pm EST

Sounds like somebody is afraid of losing income.

VALawyer

February 11, 2010 - 3:21 pm EST

Hmm, interesting move by Weaver and Quaintance. I personally think Greensboro has enough hotels and doesn't need another one but I still have to question the motives of these 2 men. It sounds like they could be trying to keep competition out of the market which is anathema to free market capitalism. But on the other hand, the new hotel is going to be partially financed by gov't backed bonds. They raise other interesting questions like Alston's relationship to the developers. This is going to be a mess!! LOL.

rooster8786

February 11, 2010 - 7:57 pm EST

If Chairman Alston, as a "broker", makes only a 1% commission on this $52,000,000.00 "deal", by my calculations that equals $520,000.00 dollars. Maybe I'll run for office and start doing some real estate/deal brokering...

If he is such a stand-up guy, leader in the community, and role model to youths, why did he not FULLY disclose why he had a conflict to his peers and what he stood to make off this deal? My guess? Because he is a shady, backroom wheeler-dealer. And, when you question him on his deals, he plays the race card so fast his hapless victims probably get whiplash looking over their shoulders for the do-gooders from the N&R looking to report on the racist policies of his questioners.

It amazes me that Guilford County has no means of recalling an elected offical, I already asked how to start one to get rid of Skippy.

Drew2010

February 12, 2010 - 1:13 pm EST

Rooster - that is not the case. They can be removed if they break the law. If you read the lawsuit and it is worth reading from cover to cover, you will see where it appears Mr. Alston has broken the law.

Here is a copy of the law.
§ 14‑234. Public officers or employees benefiting from public contracts; exceptions.

(a) (1) No public officer or employee who is involved in making or administering a contract on behalf of a public agency may derive a direct benefit from the contract except as provided in this section, or as otherwise allowed by law.

(2) A public officer or employee who will derive a direct benefit from a contract with the public agency he or she serves, but who is not involved in making or administering the contract, shall not attempt to influence any other person who is involved in making or administering the contract.

(3) No public officer or employee may solicit or receive any gift, reward, or promise of reward in exchange for recommending, influencing, or attempting to influence the award of a contract by the public agency he or she serves

With everything we have read in the paper and on various blogs, is would appear that he has clearly violated the law. A Mayor in Baltimore had to resign and former Mayor Sharpe James in Newark, NJ went to jail for misdealings and benefiting from his position in elected office.

whatnow

February 12, 2010 - 4:06 pm EST

Doesn't matter if he broke the law or not. If he is confronted or questioned he will place the race card. That's what is so sad about laws in this country. I thought that's what our constitution was all about "That ALL men should be created equal." That ain't happenin folks. I don't care if you are purple or green with big yellow spots, if you are an elected official and the law clearly states that you cannot take part in or gain from any venture put before the committee for a vote and you do it anyway, under the table, you broke the law and you should be punished. End of story!!!

Panacea

February 13, 2010 - 8:29 am EST

I looked at that a while ago, and it seems to apply to the state, not local governments. I'm not sure. Perhaps a lawyer could tell us.

There's another statue that requires local governments to come up with regulations on ethical behavior by 2011, and for all elected officials to have 2 hours of ethical training every two years and upon election, starting this year.

February 11, 2010 - 3:27 pm EST

Trying to keep competiton out of the market is exactly what they're doing. I've been out of the hospitality industry for a few years now, but I'm guessing that with the minor resurgence of downtown Greensboro, QW doesn't want a hotel on par with the two they built within spitting distance of one another smack in the middle of a bustling entertainment district.

Beachwalk

February 11, 2010 - 3:28 pm EST

"It would be 51-percent black-owned"

Totally irrelevant to the subject at hand.

February 11, 2010 - 4:27 pm EST

Being 51% black owned is irrelevant. Sounds like N&R is trying to stoke racial discord.

aintme

February 11, 2010 - 6:29 pm EST

Read the rest of the paragraph to understand why they mentioned being 51% black-owned...because a portion of the proceeds will benefit a historically black community...and the developers are accusing their detractors of racism. There's the relationship -- I don't see N&R trying to stoke anything.

JGALT

February 12, 2010 - 7:35 am EST

"proceeds will benefit a historically black community". What proceeds, to what specific entity, group or person, where, when and how much? Does that mean they will share in the losses generated in the initial start up years of a successful project or in the dramatic losses of an unsuccessful project? Do they share in a percentage of gross revenue or net income after "administrative" fees. or was it just a racial facade initially to discourage examination and criticism?

Common Sense Observer

February 12, 2010 - 10:39 am EST

Often payments to an organization like this benefit the community by having a "connected" individual receive funding for pet projects or worse yet just for a salary of a connected person. It should be listed how much or what percentage will be given to these entities. Is the reason for a 51% black ownership so that the project qualifies as a minority owned business for loan purposes? Once the project is financed is there a method for the 51% ownership to drop below the threshold? Who are the the 51% owners and are they putting up any of their own money or is their contribution the minority loan interest rate? A lot of question still need to be answered and regretfully it will take a lawsuit as no one expects the politicians to be honest in their responses about how the deal was conceived and financing approved.

Oona

February 11, 2010 - 4:35 pm EST

http://www.news-record.com/blog/56184/entry/82025

February 11, 2010 - 5:30 pm EST

In the link that Oona attached John Robinson states in a thread he posted:
"However, much as we may try, we do occasionally insert racial identification into stories where it isn't significant or relevant."

I think it's pretty clear the N&R is guilty of doing this again in the above article. Race was neither "significant or relevant" in todays article, but they just couldn't resist.

Joe Killian

February 11, 2010 - 5:55 pm EST

I appreciate your position - believe me, I never argue for inserting race into a story unless it's genuinely a part of the narrative. But because one of the hotel group's arguments in favor of this project is that it would be 51-percent black owned, and because a number of people involved in the project have accused those criticizing the project -- including me for the reporting on it -- of racism, it is part of the story whether we'd like it to be or not.

February 11, 2010 - 9:15 pm EST

thanks for your coverage and for engaging in the discussion
i think most agree that an argument for the project based on race should not be validated. there is nothing in the recovery bond verbiage that includes it as a requirement.
i believe it was only 1 or 2 individuals who originally made the accusation of racism, which led to many discussions and interviews. but it is clearly a business and political ethics situation.
do we ask which race for the remaining 49%? asian? native american? no - because it's 2010

weatherwithyou33

February 11, 2010 - 4:08 pm EST

Can't wait to get home and get some popcorn. This is going to be entertaining. What's the over/under on time before the N&R shuts down comments?

billieo2

February 11, 2010 - 4:14 pm EST

Wow, you pay your taxes and Uncle Sam takes the money and gives it to your competitors! This can happen to any business where the government decides the winners and losers.

1Voice

February 11, 2010 - 4:17 pm EST

I have a suspicion that Q&W are looking to protect their interests. I also expect that they are looking to protect the people of Greensboro and Guilford County from having to pay for this project IF it were to be unsuccesful. I don't want to be the one holding the bag IF the project fails. Who would be responsible seems to be a good question to ask and expect an answer.

eduguytoo

February 11, 2010 - 4:19 pm EST

If the downtown hotel can stand on its own merits and obtain financing from normal channels, then let it move ahead. The inclusion of special bonds in the package is a cost to all of us somehow, somewhere. There is no free ride when government is involved. Doesn't matter to me if it's local tax dollars, state tax dollars or federal tax dollars. Our pocketbooks will be impacted. I don't think I'm being narrow-minded, bigoted or selfish. If Quaintance/Weaver or any other person or entity sought the same deal (special treatment/financing to build a hotel downtown or anywhere for that matter), my stance would be the same. Skip Alston is another matter. A more stringent code of ethics must be implemented for our public officials...whether they are elected or appointed/hired.

One last thing. Someone here has mentioned the bustling downtown environment. Certainly there has been some revitalization, but my observation is that most of the downtown activity is driven by us locals. That a luxury downtown hotel would be an attraction to most of us seems a bit of a stretch. The same logic would mean that when I visit Four Seasons Mall or venture out High Point Road, I would probably want to book a night or two at the Sheraton Four Seasons. It's going to take "outsiders" to make downtown hotels viable. Does someone have some evidence that a ready hotel clientele exists or will quickly emerge? If not, we are hoping for a fulfillment of "If you build it, they will come."

February 11, 2010 - 5:10 pm EST

It's always convenient to pick and choose what to quote from other posters, but I'm going to call you on it anyway. I mentioned a minor resurgence in Greensboro's downtown. MINOR. Later I did describe it as a "bustling entertainment district", but only because that's how I believe QW is viewing it in their worst case scenario. Suppose you go downtown for some drinks with your special somebody and decide it's too dangerous to continue driving. You have a choice between a brand new luxury hotel or the downtown Marriott. As somebody familiar with both local luxury hotels and the downtown Marriott, I can promise you that the luxury hotel will be the choice for those looking to impress somebody, or even those who don't want to walk an extra few blocks. I'd be shocked if QW wasn't viewing it the same way.

And no offense, but comparing a day of shopping to a night drinking seems pretty ignorant. Doesn't matter if it's locals or visitors, sometimes drunk people have the sense to not want to drive home or walk the extra few blocks (assuming the downtown Marriott is farther from their bar of choice than the new hotel). And since you mentioned locals, if there were a luxury hotel downtown, where do you think local companies downtown would want to put up visitors? Some bigwigs coming in to visit the new museum? Put them up in style! Don't be surprised if whatever company owns the downtown Marriott now signs on with QW for this action.

February 11, 2010 - 10:17 pm EST

I don't drink. I didn't pick or choose or "call you out." Even so, I don't think many people are going to go downtown, get drunk and hole up in a hotel...posh or fleabag. I'm happy for the downtown resurgence. But I don't think it has reached a stage where a new, high-end hotel (or even Holiday Inn Express) is needed. I go downtown for theater. I go downtown to eat at a restaurant. I go downtown for holiday celebrations. I go downtown to browse antique stores. I go downtown to conduct business. I live here, and I'm not going to go downtown and stay at the Marriott or any other place. The inconvenient truth is that we don't have the visitors to Greensboro who can keep a new hotel afloat. That being the case, why don't we do something else with our precious government gift dollars?

February 12, 2010 - 7:10 am EST

Sounds like a taxi stand ( cost of sign $150, paint the zone $20) would make more sense than a $54 Million hotel project.

February 12, 2010 - 11:19 am EST

FYI GSOdad, the hotel & sales tax alone on a $200/night room would pay for a taxi home for me and my special someone and a VERY generous tip for the driver. And, when I wake up, I don't have to deal with the homeless and the thugs, and the drunks who pee in doorways!!!!

Abner Doon

February 11, 2010 - 6:00 pm EST

Tax free bonds cost tax payers in that they are tax free.

If they were taxable, the government would have recieved taxes, therefore, tax free bonds cost tax payers by way of taxpayers having to supply more tax revenues to government to make up for lost revenue.

uncwgm

February 11, 2010 - 4:33 pm EST

Good for Weaver and Quaintenance!

Both are outstanding community leaders with an understanding of how the hotel business works.

It's obvious this project would never fly on it's own merits and the corrupt politics involved make it that much worse!

It's ashamed we have to reply on honest citizens to do the homework our own elected officials should have done long ago but that's Greensboro for you!

jackhartjj

February 12, 2010 - 10:31 am EST

Now that just about hit it on the head...one of the best posts about this sham I have seen!

sladejone11

February 11, 2010 - 4:36 pm EST

Please. Let's stop with this foolishness. Anyone with an ounce of common sense knows that our downtown won't support another hotel, esp. a luxury one!

DonMoore

February 11, 2010 - 4:38 pm EST

Does anybody realize in other cities Federal Stimulus funds are being used to improve education instead of lining the pockets of local political. May be it's time to see what good can be done for the community instead of giving more house-keeping jobs to one neighborhood.

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