If you drive by the site of the proposed new February One Place parking deck on East Market or South Davie streets, you see a lot of fencing and some big holes filled with water where the buildings were on East Market, but no construction activity.
Construction has not started on the parking deck and Westin Hotel complex and it is highly unlikely it will start in 2018. Mayor Nancy Vaughan said maybe March 2019, which she said would still allow the Westin Hotel developers to meet their deadline.
When you consider the history of the two proposed new downtown parking decks, it’s bizarre that, with all the hoopla a year ago, nothing other than negotiations is taking place.
In December 2017, the City Council approved spending $30 million for a parking deck on Eugene Street and $30 million for one that stretched from Market Street over February One Place. Both were to have privately owned developments on top of the decks.
On Eugene Street, Roy Carroll owned the land (he also owns this newspaper) and had plans to build a hotel, office and residential structure over the city-owned parking deck.
But here it is November and the negotiations for the February One Place deck are still at a state where City Manager David Parrish isn’t willing to make a prediction on when they will end.
Last April, when the city settled a lawsuit with Rocky Scarfone and other property owners on South Elm Street over an easement for close to $1 million, the reason for settling the lawsuit was said to be because it was holding up construction.
Now, over six months after that lawsuit was settled, the city is telling a different story about why construction has not begun and that is that the agreement between the city and the developer has not been completed.
People familiar with but not involved in the project say the likely reason the city paid an additional $918,000 to Scarfone and other property owners and made further concessions was not to allow construction to begin but to facilitate the Elm Street Hotel LLC getting its financing in order. They said that having an unsettled lawsuit hanging over the project would make nailing down the financing difficult.
If the actual construction of the parking deck was being delayed because of the Scarfone lawsuit then making a deal may have been the best interest of the city, but if the city paid an additional $918,000 to help the developers to get their financing in order, so they could then negotiate with the city to build the deck, it appears that the city is spending taxpayer dollars to aid developers in getting financing for a project that banks were hesitant to finance.
The Westin Hotel according to preliminary sketches will be both above and below the parking deck. The parking deck is supposed to be built in the lot on the corner of East Market and Davie streets, over February One Place, on land owned by the developer, but the parking deck will be owned by the city. The hotel will have an entrance and lobby on street level on February One and will be built over a portion of the city-owned parking deck on land owned by the developers. So it’s a complicated deal.
Adding expense to the whole deal were the easement issues and how the city dealt with them.
After the city bought the parking lot for over $1.1 million, it discovered that the property owners on South Elm that backed up to the parking lot the city had purchased owned easements across that parking lot.
In December 2017, the city condemned those easements and Rocky Scarfone, the owner of Cone Denim Entertainment Center, sued the city, challenging the city’s right to condemn the easements for a private development. Scarfone requested a temporary restraining order (TRO) to prevent the city from started construction before the issue was settled. The court had not made a decision on granting the TRO when, in April 2018, the city settled with Scarfone and other easement owners for cash payments of $918,000 plus a new permanent easement behind the buildings, dedicated parking spaces and land for Scarfone to build a green room behind Cone Denim.
The reason for the lucrative settlement, extremely lucrative when you consider the city valued the easement at $55,000 and had only paid $1.1 million for the parking lot, was because the city said that it couldn’t allow the dispute to hold up construction.
It turned out the city wouldn’t allow Scarfone to build a green room because even the City Council can’t get concessions from the city inspection department.
Scarfone came back and got further concessions from the city once again because the city said it couldn’t allow the construction of the parking deck to be delayed.
But none of that was true, because now months after all the issues with Scarfone have been settled there is no construction because an agreement with the Elm Street Hotel LLC has not been reached.
Another interesting twist is, of the two proposed decks, the Carroll deck appeared to be the simpler deal. Carroll would design and build the deck, which would be owned by the city, and then Carroll would own the air rights over the deck and build his project. However, on April 23, Vaughan called Carroll and said the deal was off. The city claimed it would build a city parking deck across the street on land the city didn’t own and had made no effort to purchase.
Carroll said he was shocked because he thought the negotiations were making progress. So back in April the city had had enough of negotiating with Carroll and pulled the plug.
Since then a new deal has come up and the city is currently negotiating with the county to purchase the land for that parking deck, which will be on city-owned land adjacent to the lot Carroll owns on the corner of North Eugene and Bellemeade streets.
The city parking deck will be built in the interior of the lot currently owned by Guilford County and the city has agreed to sell Carroll most of the street frontage on North Eugene and West Friendly Avenue.
So what happens if, as with the Eugene Street deck, the negotiations for the February One Place-Westin Hotel parking deck reach a stopping point and the city walks away?
The city spent $2.1 million for the property including the buildings on East Market Street, then when you include the attorney’s fees for the deal with Scarfone and the other property owners and the second deal with Scarfone and the cost of incidentals like constructing a lift for Scarfone in the parking lot, the total cost of that deal has to be over $1 million. So the land cost for the project increased dramatically.
Then what is also happening while the negotiations between Greensboro and Elm Street Hotel LLC drag on is that construction costs are continuing to rise.
The city has allocated $30 million for this project, but it’s hard to see how the city is going to stay under that cap considering the additional costs it has already incurred and the rising construction costs.
What makes this whole project even more baffling at this point is that the City Council is evidently not being kept informed of the progress or the potential difficulties. Both Mayor Pro Tem Yvonne Johnson and City Councilmember Marikay Abuzuaiter said they had not been told anything about the project recently and it had not come up in any council discussions.