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Hotel out, apartments may be in for mill

HENDERSONVILLE — If you ever dreamed of an affordable apartment in downtown Hendersonville, your dream could be close to becoming reality.

The Hendersonville City Council learned Thursday night that a boutique hotel — the first priority of the council — is out. The developer who is partnering with the city on an adaptive reuse of the historic Grey Hosiery Mill is now proposing 35 apartments that would rent to people with a household income between 80 and 120 percent of the area’s median income.
The council on Thursday night OK’d the new proposal after developer Belmont Sayres LLC notified city officials that it could not get bank financing to built the hotel. City Manager John Connet told the council that the the renovation cost for the planned 57-room boutique hotel was too high to attract bank financing and investors.
In looking for the best possible opportunity for Mill property, said Connet, officials settled on a residential multifamily workforce apartment project ideal for nurses, teachers, local government employees, mid-level industry and management.
“As I’ve talked to local banks over the past year, they haven’t been interested in a hospitality project,” Connet said. “They really like this residential project. They feel that the return on investment is there with less risk.”
Ken Reiter, president of Belmont Sayre, presented the revised plan to City Council at a meeting Thursday evening. Belmont Sayre, which purchased the mill property from the city in December for $1 million, specializes in the development of mixed-use projects in downtowns and urban neighborhoods and is a leader in the adaptive reuse of historic, environmentally-challenged buildings. The developer is in the final phases of redevelopment of the historic Chatham Mills in Winston-Salem and is working on a similar project in Greenville, S.C. Both projects have similarities to the Grey Hosiery Mill project.
Costs to renovate the property to workforce housing is projected to be $6.5 million, half of the projected costs of renovation for a boutique hotel. The $500,000 N.C. Commerce grant obtained by the City to renovate the property is still applicable. The entire Mill property will be used and, with the help of over $900,000 in historic tax credits, will be preserved.
“While there was high market demand for this higher end boutique hotel, when we got further into development of the project, talking with lenders locally and investors, the reality was we were spending far too much execute and, overall, the program was not financially viable,” Reiter told the council. “For the type of hospitality project that would be competitive, we were spending way too much with room rates too high.”
The majority of the apartments would be 950-square-foot, two-bedroom units. There are five 1,100-square-foot, three-bedroom units and the rest are 750-square-foot one-bedroom units, according to the new plans. The plan also includes 72 parking spaces.
Construction would begin this fall with units ready for occupancy in the fall of 2019.
“We aren’t starting over. We have the same developer. All the work we have done to this point is still valid,” Connet said. “We are disappointed that the hotel didn’t work out but we are excited about the residential project. We feel like we can still support a downtown hotel and there are hotel developers looking around town. We just couldn’t get enough units at the Mill site and still save the building, which has always been the council’s goal.”