A proposed downtown Mount Airy hotel, possibly operating under the Marriott or Wyndham label, has generated much excitement since it was announced in December — but that’s being accompanied by some cold financial realities in January.
It had been expected that the city government at some point would be asked to fund infrastructure improvements to accommodate the proposed 77-room “boutique upscale” hotel envisioned for the Sparger Building on the former Spencer’s industrial property.
And this came to roost Thursday afternoon, when site-development costs totaling $2.9 million were unveiled during a meeting of the Mount Airy Board of Commissioners — a presentation triggering immediate concern from councilmen Jon Cawley and Tom Koch.
“That’s an awful lot of money to give away,” Koch said in reacting to a presentation by Mitch Williams, interim public works director and longtime city engineer, detailing proposed city funding involvement in a private enterprise.
“I’m just stating my concerns,” Koch remarked.
The estimates introduced Thursday afternoon represented about a month of study, according to Bryan Grote, a local financial consultant assisting the municipality with the Spencer’s redevelopment on a volunteer basis through the group Mount Airy Downtown Inc.
That process was necessitated by a disclosure in late 2020 that a team headed by an entity known as Sunhouse Development Co. was seeking to establish what would be called the Historic Spencer’s Mill Inn in the Sparger Building. It is a large structure fronting Willow Street.
The plan also includes a market center containing meeting rooms and other facilities in a portion of what’s known as the Cube Building, located at the rear of the former Spencer’s complex in the vicinity of Lovill Street. The total project cost has been put at $13 million to $14 million.
Grote prefaced Thursday’s presentation by saying Williams and Charlie Vaughn did the “heavy lifting” for the cost estimates. Vaughn is a former construction company owner now serving as a volunteer project coordinator for the transformation of the old Spencer’s property owned by the city government since 2014.
Williams explained that the $2.9 million preliminary package would provide parking areas behind the proposed hotel and adjoining Franklin Street nearby, including asphalt costs.
It also covers grading, water, sewer and storm-drainage work along with decorative lighting, landscaping, a retaining wall and other improvements in the area of Willow and Franklin streets including a pocket park on Willow.
The Phase II Spencer’s infrastructure project is separated into two parcels for which parking lots seem to be the dominant features, at an estimated total cost of about $1.63 million, along with separate improvements targeting Willow Street and a miscellaneous category.
A Phase I infrastructure effort was completed last year to aid a new apartment complex next door to the Sparger Building.
Commissioners weigh in
Thursday’s cost presentation drew a bevy of comments, mainly from Cawley and Koch. Though both expressed support for the hotel project, they voiced concerns centering on the funding implications.
Cawley mentioned how the Sunhouse group was proposing to give the city government $350,000 to acquire the former Spencer’s property involved, while expecting much in return.
“So they’re willing to pay $350,000 for a property if we put in $3 million in improvements,” he said. “I think we could get a group of people to line up for that all over the city.”
“Certain parts of what they’re asking for I just would not vote for,” Koch said of the developers.
“I don’t blame them for asking — if I were in their shoes, I’d ask for it, too,” he added, while also acknowledging his high hopes for the hotel project.
Much of the two commissioners’ focus was on the fact that significant city funding is proposed to provide parking for a private enterprise, spaces which based on the discussion would be controlled by that entity.
“I just can’t see giving away $1.6 million worth of parking,” Koch said. “Maybe we’ve set a bad example.”
Koch’s “bad example” statement referred to how Mount Airy supplied parking for the new apartments at a cost of $350,000, then deeded the lot to Belmont Sayre, the private developer of that complex.
But, Koch pointed out, $1.6 million is much more than $350,000.
Commissioner Marie Wood reminded that the developers of the proposed hotel are willing to invest at least $13 million in the project, which would result in extra property tax revenues and other benefits for the municipality.
Cawley responded that the city’s payback in that regard for the total spent on the apartments is about 92 years and stands to be around 64 years in the case of the hotel.
“There is no way I would support that,” he said of injecting such a huge sum with this kind of recoupment period.
Williams, meanwhile, told the commissioners that some of the infrastructure improvements in the package are needed in the target area even if there is no hotel and market center. “Some of that cost is (for) stuff that serves the public interest.”
Wood also said the estimates presented are subject to further negotiations.
“Negotiations are the next step,” Commissioner/Mayor Pro Tem Ron Niland agreed, saying only “raw” figures are involved at this juncture.
At one point, Cawley asked if any word had come from the Marriott hotel chain about its brand possibly being applied to the hotel, with the Wyndham chain also having been mentioned in that vein. Either of the two would serve to increase the project’s viability.
Commissioner Steve Yokeley, who earlier was enlisted to be the city’s liaison for that aspect, said it is still under negotiation.
“I think we need to move forward with it,” Commissioner Wood said of the hotel project near the end of Thursday afternoon’s discussion. The board subsequently adjourned to a closed session to further explore it under an economic-development provision allowing such sessions.
Wood said she also would like to hear what citizens think about the plan.
This led to the commissioners voting unanimously to move their next meeting this Thursday afternoon to a 6 p.m. evening session and include a public hearing.
Cawley punctuated his concerns Thursday afternoon by stating that all he wants to see is “an equitable split” on the infrastructure effort.
He said the pattern up to now surrounding the redevelopment of the former Spencer’s textile complex has involved different parties agreeing to pay various expenses required.
Yet the only one who seems to end up paying is the city, Cawley charged.
Tom Joyce may be reached at 336-415-4693 or on Twitter @Me_Reporter.