DURHAM — Without discussion Thursday, Durham City Council members scheduled a Sept. 20 public hearing on a $4.2 million incentive package for a development firm's plan to turn a landmark office tower into a four-star hotel.
Their silence, though, did not mean their consent.
"The jury is still out," said Councilman Howard Clement. "I need to have more information."
The city's economic-development and finance departments have proposed lending Greenfire Development $1 million and giving it $3.2 million in cash to help renovate the 17-story SunTrust, or Hill, Building into a 165-room hotel with spa, restaurant, shops and meeting rooms.
Before it gets the loan, though, the Durham development firm would have to finish construction and receive an occupancy certificate by July 31, 2013.
The cash then would be paid in annual installments over 15 years, contingent upon the hotel remaining in operation.
"Based on the way [the deal] is put together, it makes sense for the city ... to participate," said Councilman Farad Ali.
Greenfire and its associates would also have to demonstrate good-faith effort to hire Durham companies for construction and employ Durham residents for 125 jobs the hotel is expected to create - a figure revised down from 159 in earlier versions of the agreement.
"I'm approaching it with an open mind," said Councilman Eugene Brown.
"I like the fact they don't get a penny from us until the facility's open, which would be the only way I would even consider it," he said. "Secondly, the city of Durham is not being helped by that building sitting vacant."
Work to do
Greenfire, which has acquired more than 30 properties in and around downtown Durham since its formation in 2003, bought SunTrust's building in 2006 for $4.1 million and the following year announced a plan to convert it into a "boutique" hotel. That became part of a projected $284 million, 19-property renovation project inside the Downtown Loop.
Since then, Greenfire has felt the effects of the economic downturn. It projects the total cost for its hotel at $52.7 million, hoping to raise $23 million of that through federal "recovery-zone" bonds.
"Given the tough financial times, we've found a way to move forward," Greenfire partner Carl Webb said Thursday.
Ali, though, said the company "has a huge hurdle to get over with the recovery bond piece" because for the bonds to gain the necessary approvals the rest of Greenfire's financing has to be in place. Besides the city's $4.2 million, Greenfire is negotiating for a reported $1 million from Durham County; $11 million in historic tax credits; $4 million in other tax credits; and private investment to cover the rest.
"They've got work to do," Ali said.
email@example.com or 919-641-5895