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After sale of mill, City Council takes up development agreement

The city sold the historic Grey Hosiery Mill to a developer that plans a boutique hotel. The city sold the historic Grey Hosiery Mill to a developer that plans a boutique hotel.

The city took a major step forward in the pursuit of a Grey Hosiery Mill development when it closed last week on the sale of the property to a Carrboro developer that plans a hotel and conference space.

The city sold the 2.3-acre property and the historic hosiery mill for $1 million to Grey Mill Venture LLC, a subsidiary of Belmont Sayre, which the City Council selected for the project last summer.

“As I told the council today we still have work to do but it is a very big step toward development of the Grey hotel,” City Manager John Connet said Friday a few hours after the sale closed. “We’ll take each step and we’ll keep working toward it. We think this is a positive sign.”

The city has owned the property since 1990 and has been pursuing a development arrangement since that time. It’s as close as it’s been to a deal.

The City Council on Thursday night will take up a proposed agreement that spells out the developer’s obligations to invest $11 million to $13½ million in an adaptive reuse that will transform the 102-year-old brick structure into a hotel with 57 rooms and 2,100 square feet of event space. Under the contract, the city commits to streetscape improvements on Fourth Avenue East from North Grove Street to North Main Street.

The city has also received preliminary approval for a $500,000 community development block grant that will become a forgivable loan to Belmont Sayre if it meets job creation targets.

“One of the things we’re working through is a development agreement,” Connet said. “He’s still getting his construction numbers in place. He did a very conservative estimate of $13½ million. We think the numbers will come in below that. We’ll have that finally worked out by Thursday night. I think there’s some final tweaks that will be made before we get there Thursday night.”

The agreement requires the developer to start project development by June 30 of this year, start construction by Jan. 1, 2019, and “use commercially reasonable best efforts” to complete construction by Oct. 1, 2019. The developer also must display historical photos of the mill and text describing its history in a convenient and accessible place within the hotel. The city agrees to streetscape improvements for two blocks of Fourth Avenue East including pedestrian level lighting, enhanced crosswalks and improved sidewalks.

Belmont Sayre’s proposal for a 57-room boutique hotel and an event space for 70 people hotel fell short of the City Council’s vision of a 130-room facility with event space for up to 300 people. But the Carrboro group’s proposal matched the council’s criteria better than those of other bidders.

Built in 1915, the Grey Hosiery Mill added additions in 1919 and 1947 before closing in 1967. The city bought the mill building in 1990. It bought an adjoining lot in May 2007, the Williams property on Oct. 20, 2016, and the Pilgrim property on March 17, 2017, for a total of 2.28 acres. The Grey Mill development will benefit the public by integrating the historic mill property with Main Street and the Historic Seventh Avenue District, the city said in the proposed agreement.