IDA now backing hotel
Published 12:00 am Saturday, October 26, 2002
It’s official: A 150-room Hilton Garden Inn will be built on Constant’s Wharf.
A week after voting to &uot;indefinitely delay&uot; the project, the Industrial Development Authority on Friday voted 5-1 to move ahead with construction of the $22-million hotel and convention center that will border the Nansemond River.
W. Paul Scott, who represents the Sleepy Hole borough, voted against the project Friday. After the meeting, he refused to discuss specific reasons he opposed it.
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&uot;The political process has been served,&uot; Scott said. &uot;Now that the majority has voted for the hotel, …I wish it all the success. Let’s all get behind it and hope it does extremely well.&uot;
G. Stewart Tyler, who at last Friday’s meeting raised questions that prompted four members to support delaying the project, didn’t attend yesterday’s meeting. Last week, several members apparently expressed concern over changes in the master development plan and the project’s financing plan.
The IDA is a city government entity that has partnered up with Suffolk Hotels LLC – a company formed by the Procaccianti Group, which will operate the hotel, and the developer, Stormont Hospitality Group LLC – to build the facility.
The cooperative agreement and site development plan adopted Friday calls for a public investment of $13 million, which would be generated by the IDA’s sale of industrial revenue bonds. Nearly all that money is earmarked for the city-owned convention center.
The IDA will also be setting aside $500,000 in public funds, to be used only be used if the hotel runs into operating problems. Suffolk Hotels will match the city’s investment.
Any money used from that fund would be repaid with interest, said Assistant City Manager Steve Herbert said.
The agreement calls for Suffolk Hotels to invest $9.5 million in the project. The group will put up $3.5 million in cash.
The developer’s remaining $6 million is being borrowed from Towne Bank. Although the loan is going to Suffolk Hotels LLC, the bank is requiring the IDA to back the loan with a $2 million letter of credit that will be secured by property in Northgate and Suffolk industrial parks.
The amount and value of property is still under negotiation, Herbert said.
Construction on the hotel will probably begin in January, with a targeted opening date of spring 2004.
Stormont Development expects to put the project out for bid within the next three weeks, he said.
Herbert and IDA Chairman John Harrell said they believe the hotel is a catalyst that will change the face of downtown Suffolk.
&uot;This project is certainly the most significant the city has ever had in terms of a public/private partnership,&uot; said Herbert.
The project will also help build the city’s economic base, and generate tax revenue that will help fund vital services – such as schools, trash collection, and public safety services – to the city’s rapidly growing population, he said.