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'Clock is ticking' on hotel project

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Comments (23)

Thursday, February 25, 2010

(Updated Friday, February 26 - 5:31 am)

By Joe Killian and
Amanda Lehmert
Staff Writers

GREENSBORO — It’s been nearly a month since a key Guilford County board asked for more financing details on a controversial downtown hotel project.

In that time, the hotel has become the subject of political in-fighting, accusations of unethical behavior and even a lawsuit.

But for all the other things going on, there remains little word from the hotel’s developers about whether they can overcome concerns and make the project happen.

“I haven’t heard a word,” said George Brumback, chairman of the county’s bond authority.

Brumback’s board must approve the project before it can move on to the state Local Government Commission, which then can approve the project for federal recovery bond financing. The developers are seeking $27 million in special financing through the city and county.

The proposed 200-room luxury hotel is a $54 million project. 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. The hotel would overlook the International Civil Rights Center & Museum at Elm Street and February One Place.

The bonds are part of the American Recovery and Reinvestment Act enacted last year by the Obama administration. The act allows communities to designate certain projects that could be eligible for preferential financing.

The financing is designed to stimulate construction, jobs and growth in communities.

The bonds aren’t government money or even government-backed loans.

Instead, they’re basically IOUs issued by local government bond authorities. Institutional investors — usually banks or mutual funds — buy them because the interest they yield is tax exempt.

Greensboro was given $19 million to allocate, and Guilford County’s allocation was $9.8 million.

At the board’s January meeting, the bond authority asked the Urban Hotel Group, which is proposing the project, to provide more information on which bank would be backing the project if it gets approval.

The hotel group hasn’t yet produced those details, but Brumback said he doesn’t think it’s over yet.

“I don’t think the project is dead,” Brumback said. “I don’t think it will be until they exhaust a lot of opportunities to find someone to finance it. But we haven’t heard anything from them since we asked which bank that was going to be.”

Eric Pristell, a Durham lawyer representing the project, declined to comment Wednesday on the project or its progress.

Last month, Pristell told the board that he believed his clients would be reluctant to provide much information on the project beyond their original proposal. It wasn’t the authority’s job to vet the project, Pristell said.

The hotel plans also propose a city-funded parking deck next door on Davie Street.

On Tuesday, when Greensboro City Council members discussed the parking needs of the downtown area, the topic of the hotel never came up. City staff members suggested building a deck at McGee and Greene streets, not next to the proposed hotel location.

City staff members said Wednesday that the City Council was not asked to consider building a parking deck for the hotel because the developers have not officially asked the city to make that commitment.

City staff members said they haven’t heard from the hotel developers in weeks and assume they are working on the project’s financing before they move forward.

“They have to have that to basically make the bonds marketable,” said John Shoffner, city economic development manager. “I don’t think that’s an easy task to accomplish.”

Potential bond projects have to be approved by the Local Government Commission by April 15 in order to take advantage of the program.

“The bonds are supposed to be issued by April 15,” Shoffner said. “The clock is ticking on these things.”

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

Contact Amanda Lehmert at 373-7075 or amanda.lehmert@news-record.com

Accompanying Photos

John Newsom (News & Record)

Photo Caption: This parking deck is part of the property being considered for a new luxury hotel in downtown Greensboro.

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buzzman

February 25, 2010 - 12:55 am EST

By now, it should be obvious that these developers are not going to be able to come up with a financial institution that will back the project because it is simply not viable. That's all folks!

pippi69

February 25, 2010 - 8:51 am EST

so what happens to the potential bond $$ if nothing gets filed by April 15? Do we simply lose out on being able to use the $$ for other viable projects? Is there another plan in the works for the money?

Brentwood

February 25, 2010 - 9:12 am EST

Yes and no. The initial allocation of funds, which would have included the Hotel and a few other projects, yes collectively would lose out, because that money then would be re-allocated back to the state. But Guilford County has/will submit a second round of proposals, the due date for consideration of the second round of allocation was Feb. 15.

pippi69

February 25, 2010 - 10:25 am EST

thank you - I would love to see some details on the 'second round' of proposals. I can't recall hearing anything about them in any recent or prior news coverages

InventorNC

February 25, 2010 - 9:13 am EST

Let's remember that this "free" money requires a huge investment paid for by taxpayers! This is not free money at all - it is very much tied to reality - taxpayers' pocketbooks.

If people want a hotel room there are plenty in town and even more just outside town. Let's support our taxpaying businesses, not tax-consuming debacles.

InventorNC

February 25, 2010 - 9:08 am EST

I sure hope that government here will get out of private businesses. They have absolutely no business building hotels - business that is very well taken care of by the many, many tax-paying private companies.

And, once again, it is terrible for government to tax existing hotels and motels to support second-rate subsidized competition! There is no way that government can be excused for this activity.

Get back in the pothole business government people.

Abner Doon

February 25, 2010 - 9:09 am EST

"The bonds aren’t government money or even government-backed loans.

Instead, they’re basically IOUs issued by local government bond authorities. Institutional investors — usually banks or mutual funds — buy them because the interest they yield is tax exempt."

By the bonds being tax free, money is not given to the government, so tax revenues that would have come from non-subsidized taxable bonds would have to come from somewhere else. No free lunch.

The ultimate "investors" are usually older North Carolinians looking for tax free income.

Please don't give an impression of "institutional" investors that could handle the hit if the bonds fail. The people who would take the hit would be older folkes that live down the street that the "institutions" sold the bonds to.

Please look up who benefits from tax free interest like the bonds would pay.

connieohyeah

February 25, 2010 - 9:12 am EST

Yeah, it's kind of hard to get financing for a high risk project that doesn't look promising.

publicgood

February 25, 2010 - 9:36 am EST

It is just this kind of bickering, by people who are comfortably employed, which is stopping the process of getting our unemployed and desperate citizens back to work.

sladejone11

February 25, 2010 - 11:37 am EST

I think the issue here is putting $ into something that can be provide SUSTAINABLE jobs. That is what's being debated, not whether or not we should be looking to help the unemployed!

Elmer

February 25, 2010 - 12:27 pm EST

sustainable jobs, desk clerks, housekeepers, etc.

sladejone11

February 25, 2010 - 5:08 pm EST

.. what?

gsoagt

February 25, 2010 - 10:14 pm EST

I am not employed and I think this hotel is a ludicrous idea. Do I count? Perhaps this debacle would put a few people to work for a short time; but in the long run, this project is doomed to fail. I do talk from experience... 20+ years in the Travel and Tourism industry. It is business travelers that sustain any hotel, luxury or otherwise. There is not enough business in downtown to sustain the one large and one small hotel we already have downtown (no, I am not counting The Greensboro Inn.) The pain and anguish of being laid off is bad enough... preventing the ultimate outcome is the best plan.

citywatcher

February 25, 2010 - 9:54 am EST

taxpayer's footing the bill? just another case of people that dont know what they are talking about.

westronandnan@aol.com

February 25, 2010 - 10:13 am EST

I cannot, in my wildest imagination, see any financial institution getting involved in this project. This is an ill-conceived boondoggle, regardless of who is proposing it, and will never materialize. Period!

d_random

February 25, 2010 - 12:13 pm EST

Completely agree!

BROWNS SUMMIT SCOTT

February 25, 2010 - 12:31 pm EST

Ok 1st I apologize to all who are commenting on this article. Also let me say that I am glad to live near Greensboro, yes it has problems but overall is 1 of the best cities in the country. My comment has to deal with the article "9 students charged after Eastern Guilford fights". In true fashion there is not an option to comment on that article so here it is.
This is what is wrong with our schools. All the addresses given are students from Greensboro who live close to Page, yet these "kids" are bused away from Page past NE to Eastern. Why????? What happened to neighborhood schools?? GSO continues to push its troubled kids to the county schools to improve their own statistics. Would we have fights if we only had county kids? Sure, but not this crap. 1 "kid" 18, had 7 ounces of marijuanna and 1500.00 in cash. I am sick of GSO pushing its way around guilford county. Its time city government, parents, citizens take on the responsbilities of their kids, citizens, and problems. Quit sending the kids and other problems away, the outta sight outta mind menatlity needs to stop.

Dogwood

February 25, 2010 - 1:54 pm EST

I have no idea why Eastern received the redistricting problems that arrived less than ten years ago. The problem may be blindness of the BOE. Unfortunately the result is honest students at Eastern are victims of thugs.

Unaffiliated

February 25, 2010 - 3:05 pm EST

That plus the "fires set" @ Eastern support SRO officers with tazers!

Elmer

February 25, 2010 - 12:35 pm EST

As I recall, Urban Hotels had some Four Seasons, Ritz Carltons and othe high end hotels when they were owned by JMB Realty in Chicago. Nice hotels.

If these guys could get a Peninsula flag, that would be outstanding and a major deal for Greensboro. Don't see that happening however.

George Elrod

February 25, 2010 - 1:08 pm EST

Let me see if I understand what is going on. The developers are seeking federal money (taxpayers money) to build a black hotel owned by blacks profits going to black business men. With some of the profits benefiting the black community only. How fair is this? Lets built the hotel let it be owned and operated by the city of Greensboro to benefit the whole Greensboro community We have a big problem in Greensboro caused by a few verbal bullies , and I feel it is time for a change.

sladejone11

February 25, 2010 - 5:13 pm EST

The federal money part is debatable, depending on your view on whether granting tax-free status to the bonds is the equivalent of giving away taxpayer $, but the rest sounds about accurate.

I'd be VERY curious to see what institution would be interested in these bonds, and furthermore how they package and present them to the final consumer.

whyus

February 25, 2010 - 4:27 pm EST

The reason no information has been forthcoming is that the people who are behind this thing are trying to let things calm down a little. Every since it came out that the self-serving promoters of this scheme were uncovered, things have slowed to a halt.