Council Makes Deal For A Downtown Hotel
The Greensboro City Council voted 6 to 3 to give $1.97 million to the developers of a planned eight-story hotel and five-story parking garage that would be connected to the Elm Street Center at 203 S. Elm St.
At the meeting on Tuesday, Feb. 4., Mayor Nancy Vaughan and Councilmembers Sharon Hightower, Mike Barber, Yvonne Johnson, Jamal Fox and Nancy Hoffmann voted for the economic incentive grant. Councilmembers Marikay Abuzuaiter, Tony Wilkins and Zack Matheny voted against the grant.
Elm Street Center partners Randall Kaplan and George House, along with Greg Dillon of Dillon Development Partners LLC of Frederick, Maryland, made their pitch to the City Council. The issue took up most of the City Council’s first meeting with new Greensboro City Manager Jim Westmoreland.
The proposed hotel would have 180 rooms and suites, 172 parking spaces in the garage and would be managed by the Wyndham hotel chain.
Some councilmembers, including Vaughan and Barber, supported the hotel incentive enthusiastically. Others, such as Hightower, did so with reluctance.
The developers proposed the hotel in August 2013, but the former City Council canceled a special called meeting on the issue scheduled for Dec. 2 and postponed the vote on the economic incentives until after the new City Council was sworn in on Dec. 3.
Vaughan said, “I’m really glad that we did that, because this is a very different project than we were looking at.”
As approved on Tuesday, the economic incentives would be paid to the developers in five yearly payments of $385,000.
The developers originally asked the City Council for a $1.35 million grant, to be given out in 10 installments, and a maximum of $7.1 million in lease payments for the new parking garage. They wanted Greensboro to lease the parking garage for $30,500 a month for 25 years, with an option to renew the lease for another 25 years for $15,250 a month. Greensboro would have kept the revenue from the parking garage.
Vaughan said she preferred the new structure of the grant, which would only be made once the hotel is built and in operation. Each year’s payment would be given only if the hotel generated enough taxes to cover the cost of the payment.
Westmoreland and Greensboro City Attorney Mujeeb Shah-Khan indicated to Vaughan that she couldn’t call the yearly economic incentive payment a tax rebate, although she wanted to – but Vaughan and city staff said that was essentially how the payments were structured.
Vaughan said she hoped the hotel would increase downtown development exponentially. She said, “I’m excited to say that we’re going to have a crane downtown for the first time in a long time.”
Barber estimated that $250 million worth of developments will be built downtown in the next 36 months. “That’s an incredible thing,” he said. “And our community has been waiting a long time for this to happen.”
Barber said there are 2,700 counties and 5,000 towns in the United States using economic incentives to try to land similar projects.
“Whether we like the game or not, what do they say – don’t hate the player, hate the game?” Barber said. “It’s the environment we’re in.”
Hightower said the only good thing about the grant was that it required the hotel to perform before the city would make payments. She said, “That must be plain and clear in the contract.”
Hightower said, “This really sticks in my craw, because the people in my district need jobs.”
Of the councilmembers who voted against the grant, Abuzuaiter said the City Council hadn’t been given definite enough figures on the jobs the hotel would create. She said, “I get concerned when figures change.”
Abuzuaiter said she had heard repeatedly that the hotel would help east Greensboro. She said, “Well, dag burn it, why isn’t it in east Greensboro?”
Wilkins asked why Guilford County wasn’t agreeing to pay part of the grant, since the county will receive tax revenue from the hotel. He said, “With our investment of $2 million, based on what the county is receiving on it, why are they not participating?”
Several downtown small business owners spoke in favor of the grant, and Wilkins asked them if they had received economic incentives to start their businesses, apparently to use them as arguments against the grant. Unfortunately for Wilkins, most of the small business owners had received city incentives of some sort.
Westmoreland said he had approached Guilford County officials at the direction of the City Council when the city was considering leasing the parking deck, but that the councilmembers hadn’t suggested going to the county since then.
Matheny, usually a vocal supporter of incentives, voted against this one without comment. Matheny is running in the Republican primary for the 6th Congressional District seat now held by Rep. Howard Coble, who is not running for reelection.
Kaplan argued that the grant wouldn’t cost the city anything, because it would be offset by tax revenue. Most startup businesses have to pay taxes without getting them back as grants.
Kaplan said he had started several other businesses without asking for city help, but that downtown is expensive, and the developers had agreed to build the parking garage without city help. He argued that the hotel would be an important anchor.
Kaplan said, “It will send the right message to other cities that Greensboro is open for business.”
BY Paul C. Clark
February 6, 2014
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