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BCR's Daily Fishwrap Report for October 13, 2010

Report: Hoteliers sue Durham over Greenfire's Spark hotel project?

We don't have a lot of details about this right now, but former Durham Convention and Visitors Bureau president Reyn Bowman is reporting that outside-of-Durham hoteliers who own stakes in several Bull City properties have filed a lawsuit -- presumably over financing/incentives for Greenfire Development's Spark boutique hotel project downtown.

We'll have to wait for more details from the local media in the days to follow, but Bowman -- whose "Bull City Mutterings" blog is one of the most intriguing sites to watch for those interested in local politics -- asserts that the hotel owners who showed up at a September hearing on an incentive package for the Spark project are now turning to the courts.

If acccurate, it wouldn't be their first opposition to government incentive- or stimulus-supported hospitality properties from the group, whose properties include several Bull City properties.

The Hospitality Alliance of North Carolina spoke out before the Wake County Commission when that body was asked to endorse $15 million in stimulus-backed recovery zone bonds that would have supported an Aloft Hotel at Aviation Pkwy. near Brier Creek.

Wake's commissioners voted unanimously to oppose the endorsement, though it's not clear the county would have borne any greater risk to taxpayers (i.e., none) than is the case for Durham stimulus-bond projects.

Bowman pulls no punches in his analysis, noting that incentives are nothing new in the hospitality game.

He asks where these hoteliers were when Wake/Raleigh officials chose to support the land cost of a Marriott next to the downtown Raleigh convention center, or in officials' subsidies from hospitality taxes directed towards conventions and other mega events. He also claims the Southpoint-area Hilton Garden Inn received incentives from Durham government during its construction effort.

We don't have any more information than this at the moment, but we'll share what we know when we hear more.

Comments

Rob Gillespie

As far as I know, Durham can whatever it wants in terms of development incentives. This is fully authorized by the NC General Statues.

So what, exactly, is the standing claimed by this group of out-of-town hotel owners?

Matt Drew

@Rob: You mean, besides the fact that Durham is subsidizing their politically-connected competitor, and thus trying to put them out of business?

Just because we can do something doesn't mean we should - especially when the city is reduced to borrowing money for basic street maintenance at the same time. What we should be striving for is a level playing field, where all businesses are treated fairly and no one gains by political maneuver.

Kevin Davis

@Matt: Given that the Convention Center is already subsidized, the City is already in this game. And the City and DDI have made very clear that the Convention Center underperforms economically because there are not enough hotel rooms to make the numbers work on larger meetings.

I wonder whether the ultimate impact or goal in this, to the point Rob makes, is to try to stall progress on a project that would have a very tight time frame for construction to meet stimulus-bond requirements -- thus preventing it from getting a start?

Todd P

Considering who is involved, this is a blatant attempt to keep a new competitor out of the market - plain and simple.

The last thing the Sheraton and Raleigh hotel owners want is for the Durham Convention Center and downtown Durham hotels to succeed.

KeepDurhamDifferent!

What a joke -- subsidising hotels while the streets are unpaved and criminals run rampant. I miss the Omni (predecessor to the Marriott). The Marriott Convention Center can barely hold on to Full Frame, much less turn a profit!

Rob Gillespie

@KDD, others-
The subsidies offered to GreenFire for the Spark Hotel will have a positive impact on Durham's general fund. The subsidies paid out to GreenFire are just a bit less than the total tax revenue increase that the hotel project will create.

The thinking goes like this: the hotel will only get built with the subsidies (and considering all the trouble GreenFire has had lately in getting new project started, this could very well be true), and the subsidies are a little bit less than the future tax revenue increase generated by the project. So, by promising to pay the subsidies, the city is actually making an investment that pays off in the future. By giving subsidies, Durham will earn *more* money in the future, not less.

Scott Harmon

The incentive proposal essentially says that IF the hotel is built, AND the economic tax benefits to the City are realized, THEN the City will let the developer have some of those benefits back at the end of the game. That's a great investment opportunity for the City, and for all the small, independently owned companies that are trying to take root in downtown and thrive. This is NOT a case of taking money out of coffers that should be spent on roads and crime. This is a case of making a PROMISE to pay something in the future, IF the developer actually INCREASES the coffers of the City, which lets it pay for more police and road maintenance.

The suburban hotels don't want to see downtown hotels thrive because they see the writing on the wall. Downtown, mixed-use, walkable development is the future of this City. You can take a bus from the airport to downtown, not rent a car, eat at dozens of LOCALLY owned restaurants, shop at LOCALLY owned stores, drink at LOCALLY owned bars, have a great time, and leave your hard-earned money in this community, instead of sending it back to Starbucks, PF Chengs, or the Gap.

Michael Bacon

Sssh, Scott. You're talking reality -- it's impolite to wake up libertarians from their fever dreams.

KeepDurhamDifferent!

It'd be a dream come true for this libertarian, who walks to work, drives a Prius, lives downtown, and shops locally. You must have us confused with the mouth-breathing Tea Party types.

TrinityRez

I thought the progressives hated corporate welfare? Or is it just you hate it when it is not something you support? I guess I would much rather my taxes go to a productive adventure as to some baby producing parasite with 5 baby daddies. If my money is going to be taken from me I would definitely rather see it go to something that will be helping society and not something that is just a drain on society.

KDD seems a lot of the tea party beliefs are very much in line with the libertarians. You could be a closet tea partier and not even know it.

Renee

@ scott: you are mis-characterizing the scope of this saying 'the suburban hotels'. 99% of the other hotels in Durham 1) understand why Durham is doing this 2) realize that it will only make all of us (hotels) stronger and 3) DECLINED to be included in the lawsuit when these guys were trying to round up more support.

anon

greenfire needs to fix its leaking roofs & deferred maintenance on its buildings in central park before being given tax dollars to start a new project. ever been in liberty warehouse, southern portico or peters design works while it’s raining?

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