By Mark Wineka
mwineka@salisburypost.com
The nation’s economic meltdown and the tight credit market it has created make it difficult, for now, to finance a proposed $18 million redevelopment of the old Empire Hotel.
Brian Miller, a Salisbury banker, said Tuesday the project may end up taking a little longer, but Empire Properties of Raleigh remains enthused about its viability.
“We feel very comfortable with where we are (going),” Miller said. “We can’t control the global economy.”
Miller is part of a task force which chose Empire Properties as the development partner last November.
Salisbury City Council approved Tuesday the city’s part of a purchase, sale and development agreement for the old hotel property. It comes on the heels of a previous memorandum of understanding.
The development agreement spells out what will be expected of the city, Downtown Salisbury Inc. and Empire Properties as part of the massive property’s rehabilitation.
Numerous things connected to the project can still take place over the next year, even if finding some institution to finance the project isn’t one of them.
Miller said the task force and Empire Properties have had “candid conversations” about the credit market crunch and when the right time might come in the future to identify a lender.
Meanwhile, the developer will be spending $50,000 to $75,000 on various architectural, development and marketing studies, he said. Empire Properties also has put up $10,000 in earnest money.
If the project ever becomes a reality, the agreement calls for Empire Properties to pay Downtown Salisbury Inc. $1.5 million for the Empire Hotel, which extends from 212 to 228 S. Main St.
With the assistance of seven local banks, Downtown Salisbury Inc. bought the property from the Ragsdale family in 2007 for $1 million.
Dick Huffman, an attorney and president of Downtown Salisbury Inc., said recent negotiations with Empire Properties could not have gone any smoother.
He told council that approval of the development agreement doesn’t ensure the project will ever happen. Again, the credit markets could have something to say about that.
“We recognize (that banks) just aren’t lending money like they used to,” Huffman said.
He said the city will not have to spend any tax dollars until it’s a definite project.
Huffman expressed confidence the Empire Hotel’s rebirth will happen, adding tax base, jobs and sending a strong message about the vitality of Salisbury.
“We’re convinced our best years lie ahead of us,” Huffman said, pointing to $100 million of investment in downtown Salisbury since 1980.
Here are the city’s obligations, should the project become a reality:
– It would pay for streetscape improvements, including provision of an easement that would allow construction of a South Main Street portico in front of the hotel.
– The city would secure additional parking for the hotel.
– The city would commit facade grants to the project for at least two budget years.
– The city would start a feasibility study on the needs of a conference center/public meeting space and how those needs could be met on the city-owned property in the 300 block of South Main Street.
– The city will study the feasibility of allowing vehicles to turn left from Innes Street onto South Main Street. If those turns are not allowed, the city would petition the N.C. Department of Transportation for the installation of signs directing traffic to the hotel from the Lee Street intersection.
– The city will work with Empire Properties and the Salisbury-Rowan Economic Development Commission in securing county and/or state incentives for the project. The city would be responsible for providing an economic development impact study in relation to the county incentives.
– The city would provide a certificate of appropriateness for the project after Empire Properties received Part II tax credit approval from the National Park Service.
Much of the legwork behind these city responsibilities would occur during what the agreement calls “the investigation period.”
“It will cost us some money to do this,” City Manager David Treme said. As of now, he added, no money is set aside for those expenses.
The city will have to find financing itself for streetscape improvements and additional parking related to the project, Treme said.
Councilman Mark Lewis agreed that if the Empire Hotel’s redevelopment happens, “we’ll have to pay up.”
But Lewis said the project will be paying back to the city and county.
The property is on the tax books now for about $1 million. If it is developed, that could change to $18 million, meaning more property tax revenues, not to mention sales tax and occupancy tax revenues it will provide, Lewis said.
Mayor Pro Tem Paul Woodson said the property could generate an extra $100,000 in revenue a year.
A timeline on the agreement calls for the city to complete its conference center feasibility study by Oct. 29; secure additional parking by Dec. 28, commit facade grants and finish the traffic feasibility study by Nov. 28 and outline streetscape improvements by Feb. 26, 2010.
Empire Properties is supposed to complete a hotel feasibility study by July 1, interior design drawings by Sept. 29 and secure a hotel management agreement by Dec. 28.