Ed Cone says, "Ultimately the question is about the viability of the proposed project."
But how important is viability? Will the private banks do their due diligence before backing bonds for a hotel in a market that already has a high vacancy rate? Do public boards have a responsibility to vet these projects beyond what they've done and are doing? How to balance the risk of a "white elephant" against the stimulative gain of new jobs, even if they turn out to be temporary? Is the entire recovery zone facility bond program inducing the nation to build over capacity and beyond what the market demands? Questions for Greensboro and America....
Some discussion between Andy Scott and Dennis Quaintance on Jan. 11:
Scott: “The bottom line for the bonds is that they have to be either privately placed (to qualified investors — i.e. they are deemed sophisticated enough to evaluate the risk) or the bonds must be rated by one or more of the bond rated as investment grade by one of the bond rating agencies. For a private use bond to be rated as investment grade they must be guaranteed by a bond insurance fund or by a bank letter of credit. Either way the insurance fund or the bank must assume the risk and the project is subject to conventional underwriting by the guarantor. However, we all know that the insurance system and or the bank guarantee system can fail.”
Quaintance: “This is all a lot different than any of us though. It is interesting. I [SIC] now seems like… assuming they can sell the bonds… that they might be able to get a very high loan to loan value out of this without recourse. They might get it done. If it does get done, it will cause even more concern for me that we are creating yet another bubble, but… I’m not a czar. Is it as interesting to you as it is to me that it was understood differently than this?”
Showing posts with label Dennis Quaintance. Show all posts
Showing posts with label Dennis Quaintance. Show all posts
Quaintance's downtown hotel envy
Dennis Quaintance, e-mail to Greensboro Assistant City Manager Andy Scott, Jan. 12:
“My jaw hit the floor a couple of different times when I learned that the financial mechanisms in play were different than you explained to us. I’m not really angry about this. My guess is that it was just an honest misunderstanding. It was just what you thought was so. Yet I am disappointed in that if we’d known earlier what we know now, we probably would have gotten busy and put together our own project (smaller initial phase), three variations of which have been in the work for years. My bet is that it was just an honest misunderstanding. We probably would have had enough time if we’d started earlier. I want to explain my feelings about that and make sure that we are ‘clean.’ If we’d started back in the early winter, we’d likely be ahead of this other project now but since we sat on our hands, they have lapped us and will possibly suck a lot of the various allocations away prior to our being able to belly up. Plus, even our long-term investment idea of making sense out of a smaller project that surely wouldn’t make money for years but would be justified with the eventual expansion potential and lower basis, wouldn’t work if new inventory is added to the market. (In fairness, if this other project had stayed on Lee Street, we probably would have stayed on the sidelines because entering then might have made us look like a party pooper from the Old Asheboro Neighborhood Association’s perspective. We are sincerely respectful of their point of view.)"
This makes it clear that Quaintance and fellow hotel developer Mike Weaver are envious of the proposed downtown hotel project, would have liked to have done it themselves, are concerned that Chisholm's group will corner a lot of the bond allocation, and could be contemplating submitting their own request for bond allocation if they can get the city council or the industrial authority to kill Chisholm's deal.
I'm organizing my notes, and plan to contact Quaintance to ask him for clarification.
UPDATE: Ed Cone writes: "The competitive aspect is pretty well understood." Richard Barron has cited the above-referenced e-mail in a Jan. 30 News & Record article. The e-mail is buried at the end of the article and heavily qualified by Quaintance's explanation that he was speaking hypothetically rather than outlining a concrete intention.
“My jaw hit the floor a couple of different times when I learned that the financial mechanisms in play were different than you explained to us. I’m not really angry about this. My guess is that it was just an honest misunderstanding. It was just what you thought was so. Yet I am disappointed in that if we’d known earlier what we know now, we probably would have gotten busy and put together our own project (smaller initial phase), three variations of which have been in the work for years. My bet is that it was just an honest misunderstanding. We probably would have had enough time if we’d started earlier. I want to explain my feelings about that and make sure that we are ‘clean.’ If we’d started back in the early winter, we’d likely be ahead of this other project now but since we sat on our hands, they have lapped us and will possibly suck a lot of the various allocations away prior to our being able to belly up. Plus, even our long-term investment idea of making sense out of a smaller project that surely wouldn’t make money for years but would be justified with the eventual expansion potential and lower basis, wouldn’t work if new inventory is added to the market. (In fairness, if this other project had stayed on Lee Street, we probably would have stayed on the sidelines because entering then might have made us look like a party pooper from the Old Asheboro Neighborhood Association’s perspective. We are sincerely respectful of their point of view.)"
This makes it clear that Quaintance and fellow hotel developer Mike Weaver are envious of the proposed downtown hotel project, would have liked to have done it themselves, are concerned that Chisholm's group will corner a lot of the bond allocation, and could be contemplating submitting their own request for bond allocation if they can get the city council or the industrial authority to kill Chisholm's deal.
I'm organizing my notes, and plan to contact Quaintance to ask him for clarification.
UPDATE: Ed Cone writes: "The competitive aspect is pretty well understood." Richard Barron has cited the above-referenced e-mail in a Jan. 30 News & Record article. The e-mail is buried at the end of the article and heavily qualified by Quaintance's explanation that he was speaking hypothetically rather than outlining a concrete intention.
What the movement is about, part 2
My take on this racially tinged spat over a threatened march on the civil rights museum because of two rival hoteliers scrutiny of federal bond financing for a new hotel is that it's a quarrel among local lords of commerce in Greensboro. There is a narrow kind of black empowerment at stake in that some members of the consortium promoting the new downtown luxury hotel are black. (See Hayes and cohort Bridget Chisholm's thoughts on black community empowerment here.) But for the mass of black workers, or working-class people of any race, it's a wash. They win if a new upscale hotel succeeds without putting the other hotels out of business because opportunities for employment expand.
But the new luxury hotel, if it's built, will draw from the same pool of workers as the Proximity and the O. Henry, Dennis Quaintance and Mike Weaver's entities. If the Proximity or the O. Henry go under because their markets are cannibalized by the new downtown luxury hotel, former employees of the Proximity and O. Henry will be the most qualified to staff the new venture.
Cone provides some background for this morning's News & Record story on the unfolding saga.
UPDATE: More at Roch 101 here and here, and at Hogg's Blog.
UPDATE 2: A related strand from Piedmont Publius.
But the new luxury hotel, if it's built, will draw from the same pool of workers as the Proximity and the O. Henry, Dennis Quaintance and Mike Weaver's entities. If the Proximity or the O. Henry go under because their markets are cannibalized by the new downtown luxury hotel, former employees of the Proximity and O. Henry will be the most qualified to staff the new venture.
Cone provides some background for this morning's News & Record story on the unfolding saga.
UPDATE: More at Roch 101 here and here, and at Hogg's Blog.
UPDATE 2: A related strand from Piedmont Publius.
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