Local bond authority takes no action on hotel

Lawyer Eric Pristell (left) and businessman George House listen to remarks by developer Mike Weaver.

It felt a little like the blind leading the blind at the meeting of the local bonding authority with the unwieldy name of the Guilford County Industrial Facilities and Pollution Control Financing Authority in the Blue Room of the Old Guilford Courthouse today.

George Brumback, chairman of the authority, summed up the general feeling when he said, “I’m just telling you what we have done in the past. As the newspaper said, ‘This is a new critter.’”

Brumback said the authority has no written guidelines for vetting recovery zone facility bonds created by the federal government under the American Recovery and Reinvestment Act of 2009. Today was a first. Typically, the county-level financing authorities review industrial revenue bonds for manufacturing facilities and solid waste disposal facilities. The Obama administration’s aggressive effort to prime the national economy has thrust the four members of the local financing authority into a heady and controversial role few of them would probably have anticipated when they signed on.

Eric Pristell, a Durham lawyer representing the Urban Hotel Group, and George House, a local businessman who is a partner in the Elm Street Center LLC, had hoped the finance authority would approve an inducement resolution to bump a controversial downtown hotel project up to the state Local Government Commission for final review and approval.

“What we want in this tough economic environment is a chance to make this work,” Pristell said. “And an inducement resolution is a way to make this work.”

Brumback told Pristell that his board typically reviews a business plan and documentation of some kind of preliminary commitment from a lender before taking action.

Pristell and House presented little information that had not already been aired before Greensboro City Council and in various reports submitted to local governments. Pristell said that beyond a business proposal with projections, he was hesitant to offer any more documentation without first consulting his clients.

“I think we’re all struggling with what our role is,” Brumback replied. “What we would like to see is a financial commitment from a lender, because that’s what we normally see.”

He added, “We’re all sort of seeking to make sure we’re not approving something that is financially unfeasible, and it goes to Raleigh and gets crucified and we have been blamed for approving something that was crucified.”

The financing authority ended up recessing to an unspecified date to gather more information about the hotel project before deciding whether to advance it for consideration in Raleigh. Pristell will likely confer with County Attorney Mark Payne and Mary Nash K. Rusher, the county’s bond counsel, to determine what type of documents will be critical to the financing authority’s decision.

From a lay reporter’s perspective, it’s difficult to tell whether the hotel group was remarkably unprepared or if the process is so new that the terrain is completely unfamiliar to everyone.

After the meeting, Rusher told me: “Usually, by the time someone comes to this point they are able to provide information as to how [the project] can be financed. It’s definitely true that this process has been completely rushed.”

The meeting was sparsely attended. Mike Weaver, a local developer behind the O. Henry and Proximity hotels, spoke passionately and at length against the proposed hotel project. Brumback humored him for several minutes, but then threatened to set a time limit.

“I might like to refresh your memory on competition,” said the snowy-haired Weaver, dressed in a purple cardigan, addressing House. “I think it was Friday that we were talking. You told me that you would put the Downtown Marriott out of business.”

House averred, blushing visibly.

“I think we would compete very favorably with the Downtown Marriott,” he said.

Later, Weaver launched into a cautionary tale about what might happen if either the proposed new hotel or the Downtown Marriott were to go out of business.

“What happens if this thing doesn’t make it?” Weaver said. “Does anybody lose? Does the community lose? You’re elders. What happens when a hotel fails?”

He continued that the hotel that has become the Marriott has already failed before. It was forced to reduce its rates, and then sold to the current ownership group. An additional succession of failures could lead to either of the hotels being transformed into student housing, elderly housing or transient housing. In the worst-case scenario, either of the hotels could end up being torn down altogether, he said.

House had clearly anticipated Weaver’s remarks. He and Pristell seemed annoyed by Weaver's vocal opposition.

House told the financing authority that investors “would only get our money out if the thing is successful. I guess I could be a fool and be throwing my money away, but I think it’s going to be successful. The marketplace is going to be the judge. We’ve had disputes with our potential competitors, but they don’t know our numbers. I ask you to let it go forward, and let it survive or die before the [Local Government Commission] on its own merits.”

House also said he had been “asleep at the switch” when the American Recovery and Reinvestment Act passed. It’s clear that the stimulus program under the new administration in Washington has created opportunities for urban entrepreneurs that are plugged in and paying attention to the twists and turns of national policy.

House expressed admiration for Bridget Chisholm, the finance consultant who conceived of the hotel idea.

“To her credit, when this bill passed, she read it,” he said. “To my discredit, I, like 99.9 percent of the rest of Greensboro, didn’t read it and didn’t know about it.”

I anticipate that Joe Killian, who attended the meeting, already has a story posted at the News & Record website. Scott Yost was the other reporter present, and I don’t know whether he will have a story in tomorrow’s Rhino.

I’ll be reading through a thick accordion file of documents provided by the county in response to Weaver’s public records request, and a companion trove likely available from the city tomorrow. I plan to contextualize and cross-reference revelations from the meeting today with information from documents and personal interviews for a story in our print edition on Feb. 4. Feel free to shoot me questions on this comment thread, or by e-mailing me at jordan@yesweekly.com if you would like me to pursue any specific angles of inquiry.

UPDATE: More from Killian.

UPDATE 2: Piedmont Publius discusses the bond authority hearing. He says that Mike Weaver and Dennis Quaintance showed up to keep an eye on things. Not quite: It was just Weaver, not Quaintance.