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City, developer take first steps toward boutique hotel

With a unanimous vote on Thursday night, the Hendersonville City Council became an official partner with a Carrboro developer to turn the old Grey Hosiery Mill into a boutique hotel.

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City staff and Belmont Sayre, the developer, reached an agreement on a memorandum of understanding (MOU), which establishes the criteria for the creation of a binding performance and development agreement (PDA) and specific guidelines for Belmont Sayer.
City manager John Connet told the council that he and staff and the developer worked on the MOU throughout the afternoon, negotiating changes that the developer had requested.
Belmont Sayer is required to provide immediately a $10,000 surety payment that is refundable up until Jan. 4, 2018, so long as the developer meets the deadlines stipulated in the MOU. In return, the city agrees not to market the property to any other developer. Connet said he expects to receive the payment from Belmont Sayer next week.
Belmont Sayer has a deadline of Oct. 15 to meet tax credit deadlines, Connet said.
The MOU establishes the intent of each party to proceed with the development of the project and “to negotiate diligently, reasonably and in good faith a definitive written agreement between Belmont Sayer and the city regarding development of the project.”
Over the next six months, Connet said, “We will take action to move the project forward.”
Belmont Sayre must provide the city with drafts of an updated development plan. As part of that plan, the developer must demonstrate that is has made a good faith effort to engage and incorporate the input of major community stakeholder groups and entities whose operations or plans may be affected by the project.
Specific plans for financing and construction of all infrastructure including but not limited to streets, sidewalks, curbing, public space, water, sewer and additional utilities including expectation for city participation will be incorporated within the development agreement.
Belmont Sayer has until Jan. 4, 2018 to finalize the PDA with the city and pursue the development of the project, including site investigations and securing entitlements and financing commitments.
The city will have the right to terminate the MOU at any time if developer has committed a breach of the MOU. The MOU may be extended for up to 60 days upon written request of the developer with the city’s approval. Further extensions on request of developer may be granted or withheld by city in its sole and absolute discretion.
The old mill sits on 2.28 acres of prime redevelopment land in the center of the city. Belmont Sayer proposes renovating it into a 57-room boutique-style hotel that will include event space and sufficient parking to meet the requirements of the city of Hendersonville zoning ordinance. Significant infrastructure improvements including streets sidewalks and landscaping will be necessary.
The city has already put a temporary roof on the building to protect it from further damage and has received a $500,000 Community Development Block Grant through the North Carolina Department of Commerce.
The city also plans to retain Mac McCarley with Parker Poe Attorneys at Law to assist in the creation of the PDA. Connet said that McCarley is a former Charlotte city attorney who has extensive experience with public/private ventures. He will bill the city on an hourly basis for work performed, Connet said.
The city would sell the property for $1 million and invest $850,000 in streetscape improvements to create a well-lighted attractive corridor from Grove Street to Main Street. The city projects that total revenue from the project would reach $1.98 million — $1 million for the property sale, plus $312,000 in interest for financing the sale plus $676,500 in tax revenue.
Belmont Sayre, which redeveloped the American Tobacco Co. in Durham and is renovating the old Battery Park Hotel in Asheville, says it will use tax credits the state allows for redevelopment of shuttered factories. The city's consultant, Development Finance Initiative, put the total project cost at $13.5 million, with Belmont Sayre carrying the lion's share. The ratio of private investment to public money was 16 to 1, the report said, compared to six-tenths to 1 for a mixed use proposal and 7.5 to 1 for a proposal from a hotelier that would build a hotel on the mill property without using the old building.