News: CJ Exclusives

Tax-Funded Redevelopment Alive and Kicking in Greensboro

A couple of months after Greensboro voters elected Mayor Bill Knight and a new City Council to restore fiscal accountability in city government, the council has found itself embroiled in two complicated and controversial projects that involve some form of taxpayer financing.

The first was the city’s new aquatic center, which is now under construction next to the Greensboro Coliseum. When construction costs exceeded voter-approved bond funding, the council, in a tight 5-4 vote, approved the use of hotel occupancy taxes to close the deficit, even though the city already was supplementing shortfalls in the hotel tax.

Guilford County commissioners also had to sign off on the aquatic center funding, and they did so unanimously without debate or a public hearing at a Jan. 14 meeting.

The other controversial project is a proposed downtown luxury hotel that would be built with the help of federal recovery zone bonds. The bond program is part of the federal stimulus program and provides private developers with favorable financing terms such as interest reimbursement and tax-exempt status.

The hotel originally was planned for a site on the corner of Lee and South Elm streets, a blighted corner of Greensboro that the city has sought to redevelop for years. The project was pitched by Urban Hotel Group, a company headed by former Shelby County (Tenn.) Commissioner Bridget Chisholm, who was instrumental in leveraging $12 million in private-public funding to develop the Towne Center at Soulsville, a Memphis-area “lifestyle center.”

Another partner in the deal was Greensboro’s Ole Asheboro Neighborhood Association, which represents a redeveloped area on the edge of downtown. But it’s never been clear exactly what role the neighborhood association would play in developing or operating the hotel.

The Elm-Lee Street site was still in play when city staff brought before the council a request to apply for the federal bond program at its Dec. 15 meeting. City Manager Rashad Young told the council that the deadline for applying for the program was midnight, so it was crucial that the council make a decision, although members had not learned details of all the projects that would be eligible for the bonds.

Sensing the controversy the hotel project would generate, council member Zack Matheny grilled city staff, seeking a guarantee that approving the application “in no way shows absolute support for an individual project.”

After receiving that assurance, the council unanimously approved the application. In late December, owners of the Elm Street Center, a downtown development group, announced they also would be investing in the project.

The Elm Street Center’s involvement in the project appeared to give it much-needed legitimacy. But confusion suddenly arose over the city’s role in the project. Knight and Thompson discovered that approving participation in the federal bond program meant approving all projects that would be funded with the bonds. Young and Scott confirmed the misunderstanding during a council briefing session, advising the council that it could rescind the vote approving the bonds if it so chose.

The council has taken no action so far, and for the moment, it appears as though the city’s role in the project will be limited to funding a parking deck near the site.

Randall Kaplan, managing partner of Elm Street Center, again told the council at a January meeting that only the private investors would be on the hook for the bonds.
“If this doesn’t work, the investors have millions to lose,” Kaplan told the council. “Government has no risk in this project.”

The controversy took another turn when two respected Greensboro hoteliers, Mike Weaver and Dennis Quaintance, notified the city they would file a lawsuit in order to obtain all information related to the downtown hotel project.

The involvement of two public officials raises more questions about the project.

Guilford County Commissioner Skip Alston brokered the deal to move the hotel to the Davie Street site, which is across the street from the recently opened International Civil Rights Museum. Alston chairs the museum’s board.

Guilford County school board member Deena Hayes also serves on the museum’s board and has advocated publicly for the Ole Asheboro Street Neighborhood Association to benefit financially from the hotel.

But questions arose over Hayes’ role in the project when it was revealed that she shares a residence with one of the prospective construction managers on the project.

At the Jan. 19 City Council meeting, Elm Street Center’s Kaplan introduced John Greene of JFG & Associates as the project’s local construction manager.

Hayes’ school board contact information lists her address as a post office box, but when Greene introduced himself to the council, he gave the same street address as the one listed on Hayes’ voter registration info.

Carolina Journal asked Hayes several questions about her role in the project.

“I simply have no comment at this time,” she replied.

Sam A. Hieb is a contributor to Carolina Journal.