It would cost at least $2.9 million for a public-private partnership to buy and restore the historic Colonial Inn, UNC development experts said.
Hillsborough has solid residential, office and commercial markets, leaving the community with multiple options, said Christy Raulli, a senior analyst with the UNC School of Government’s Development Financial Initiative. The strongest demand is for restaurant space, she told the town board on Monday night
“That sort of fits with what is in all of our hearts,” Raulli said. “Everybody sort of wants it to be a restaurant again.”
The 176-year-old inn at 153 West King St. has languished since owner Francis Henry bought it in 2001. The town, after a decade-long battle with Henry, paid the UNC group $8,500 to study options for the 11,621-square-foot building.
The group helps communities meet their investment and economic development goals. The Colonial Inn would be an investment in history, Raulli said, but also an economic opportunity.
DFI’s analysis looked specifically at putting a 5,700-square-foot restaurant on the inn’s first floor and up to 4,500 square feet of office space on the rest of the first and the second floors. The town would need to add more parking and rezone the half-acre parcel from residential to commercial, Raulli said.
The inn doesn’t have good space for apartments or a modern hotel, she said. It could become a private home, but that’s not what people want, she said.
Public support will be key, because the cost of renovating the inn is more than the property is worth, Raulli said. The cost could be higher, depending on the amount of structural damage and the cost to install a sprinkler system, elevator and other amenities, DFI fellow Jordan Jones said.
Henry has said there is major damage to the building’s front and southeastern portions. He attended Monday’s meeting but declined to comment.
DFI’s plan envisions a private investor picking up a quarter of the cost and a loan for roughly 38 percent. State and federal historic tax credits might cover the rest, Raulli said. State lawmakers ended previous tax credits but are considering others, she said.
Raulli gave the board two scenarios that might help attract investors. The first would be an operating grant of $390,000 the town or someone else could provide up front or $125,000 a year for five years, she said. The other would combine a smaller grant with landmark status for the inn, which would cut the property tax bill by half.
If an investor is willing to accept a below-market return, she said, that also could work.
The town has more options for acquiring the building, Raulli said, starting with a purchase, partnership with Henry or swap for other property. The nonprofit Colonial Inn Preservation Association has talked with Henry about those options, co-Chairman Bob Johnson said. Its members are prepared to ramp up their fund-raising efforts, he said, and would like to find a solution that is fair to Henry.
Eminent domain is a possibility, Raulli said, but the town would have to pay fair market value for the property. The town also could repair the inn and foreclose on it to recoup the cost, she said. That would require selling the inn at auction, and the new owner might not have the same goals.
A fifth option is designating the inn as an “urban redevelopment area.” That would require forming a redevelopment commission and holding a public process, she said, but it would give the town more options for buying or selling the inn.
The town board wants to see the property revived, Hillsborough Mayor Tom Stevens said, but its members need a few months to consider the next move.
“I think it’s a little early to say yes,” he said. “We needed to see this report before we could even begin to talk about a timeline, and I think the rest of the community (and Henry) also needs to see this report, to see what developers might be out there.”
The town of Hillsborough will hold a community coffee from 8:30 to 10 a.m. Thursday at the Whitted Building, 300 W. Tryon St. Town Commissioner Eric Hallman and other officials will talk about the Colonial Inn report.