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A developer could break ground on a full-service hotel at the Grey Hosiery Mill site a year from now if the city’s offer for a partnership produces an agreement.
A proposal the City Council will review on Thursday seeks a developer who would build a 75,000-square-foot hotel with 130 rooms and preserve the original 100-year-old part of the mill for use as a restaurant and event space for 200 guests. The city hired the Development Finance Initiative, which is affiliated with the UNC School of Government, to study the feasibility of a hotel-convention facility and help recruit a developer. The next step in that process is the City Council's authorization of a request for proposals, which sets out the scope of the project and describes the city's role.
DFI projected a total project cost of $24.7 million, including land acquisition, $18 million for construction and other costs.
Most of the financing would be private, not public, although the city would agree to loan $1 million to cover the purchase price of the city-owned mill and the 2.1-acre site. The RFP also commits the city to fund streetscape improvements on Fourth Avenue East from the site to Main Street.
Redevelopment of the Grey Hosiery Mill is eligible for federal historic rehabilitation tax credits and state rehabilitation tax credits. DFI did not apply tax credits but the RFP says developers are welcome to use them.
The RFP projects that a developer would sink $6.4 million of private equity into the project, borrow $17.3 million long-term plus the $1 million from the city. The term of the city loan was not spelled out in the RFP, although council members have said they’re willing to make the terms favorable.
The city and its consultant worked with Samsel Architects of Asheville to frame and general outline of a hotel project on the mill site. The study resulted in a recommendation for 130-135 rooms, a 7,900-square-foot conference space, a 5,000-square-foot restaurant and a 3,800-square-foot retail space.
The restaurant, conference space and hotel rooms (at an average nightly rate of $155) would generate total revenue of $6.4 million a year, the consultants said. After $4.5 million in operating costs, the venture would generate net income of $1.9 million.
The RFP, which has a deadline of March 2017, asks developers to submit:
-- The number and size of the hotel rooms and total square footage of their proposal, amenities, event space size and parking requirements.
-- Design plans, including drawings.
-- Information on the development team, its partners, general contractor and architects and their background.
-- Identification of the management team and event space coordinator and their experience operating hotels.
The City Council would choose a developer in April, complete development agreements by July and complete site plan review and permitting by the fall. Groundbreaking would be in the winter of 2017-18.
A study the City Council commissioned in 2010 concluded that downtown could support a small to medium-sized convention center only if it also had a full-service hotel.
“The Grey Hosiery Mill redevelopment is a unique opportunity to capitalize on the growing demand for a full-service, unique hotel and event space in downtown Hendersonville,” the RFP says.