Salisbury: Promised August 2017 “Closing” on the Empire Hotel Goes South. Disturbing Information Disclosed about Hotel’s Future Plans

Posted on August 6, 2017

Todd Paris, Salisbury Attorney and Candidate for Salisbury City Council

Dateline Salisbury, N.C.–Promised August 2017 “closing” on the Empire Hotel goes south. Disturbing information disclosed at Salisbury City Council Meeting as to future plans.

In 2007, BB&T Banker and now City Council member Brian Miller was the Chairman of the infamous Empire Hotel Committee at Downtown Salisbury Inc.  DSI is a private non-profit existing to promote downtown interests. It is supported in part the Municipal Service District tax making downtown property subject to one of the highest tax rates in the state. The city also pumps extra money into their budget. That money supports the Friday Nights on the Town that helps local merchants.

I call the Empire Hotel the “Vampire Hotel”, not only because the decrepit structure is a natural bat habitat, it big gulps Municipal Service Dollars taxes like a blood thirsty vampire bat from South America. I also favor “North Carolina’s Largest Bat Sanctuary.”

As Chairman of the Empire Hotel Committee Miller had access to a bad Phase One Environmental Report and asbestos and lead paint report before DSI purchased this thing. This was all before he ran for council. This was financed by a loan pool where several local banks each took a chunk of the loan that individually was small enough that none of them required an environmental check. Whether those banks knew about the bad phase one is unknown.

I have always heard that “DSI is the City and the City is DSI” however, that fiction is a private non-profit which allowed them to not post their budgets and refuse to respond to public records request under N.C. Gen. Stat. 132. That fiction was shattered is this year’s budget after a vote to make the DSI director a City Employee and move them to the city office building.

During a non-action item agenda presentation this week at Salisbury City Council the developers were actually asked real questions from Hardin and Post and a number of troubling things were revealed. You will remember these folks signed a “non-binding agreement” to much fanfare earlier this year when this month’s August “closing” was announced.

The promised closing for this month was delayed, perhaps well into next year because the developer has not secured financing. My guess is its because the environmental report is not clean and even though the paid consultant says it’s feasible, no bank loan risk officer will sign off on it to date. I further surmise since a portion of structure is retail, and the downtown retail environment is risky, this is an issue. A banker would look at the potential debt payments for the completed structure and the operational costs and balance them against the potential rental income for 67 apartments to see if this project is feasible.

There are more troubling things revealed in RFP’s video of the August 1, 2017 meeting. A link to the video-article can be found at the end of this article. First the phrase “public-private partnership” crops up. All the while, I had thought a closing means selling it to a private developer for enough money to pay off the loans and ending the taxpayer’s financial drain.

It was revealed by the City Manager the yearly payments for debts and other cost are “just” $95,000.00 per year and that around $700,000.00 remains “on the note.” DSI bought this building ten years ago, for about 1 million dollars, has paid $950,000.00 to the banks to date (minus insurance) and we still owe $700,000.00? Someone check my math on this? What kind of interest rate is this? Did DSI put it on a Capital One credit card?

A new surprise is that DSI had the Empire added to National Registry of Historic Places without anyone knowing. So much for cutting our losses and turning it into a parking lot even if voters rid themselves of Karen Alexander and Brian Miller in November. Maybe not–If we can get to it before it receives federal money.

This is what I think they could be doing. The project was always supposed to be a hotel and now we are talking apartments. It sounds like after ten years of BB&T Banker Brian Millers stewardship, that they now realize the hotel model is not feasible. Perhaps as apartments it would be more likely to be financed?

There’s more bad news for the public in this public-private “partnership. The City of Salisbury’s long standing “Downtown Redevelopment Plan” directly subsidizes downtown residential units with your tax dollars to the tune of hundreds of thousands of dollars, depending on the project. Folks may remember a few months back Hardin and Post fighting against such a subsidy on Main to the tune of $63,000.00 because it would create only one residential until it got gaveled through anyway. Let’s see… $63,000.00 times 67 apartments = 4.2 million dollars? In all fairness the plan is supposed cap out at $200K per project, but that could be waived for what Mayor Alexander calls a “jewel.”

Another “path down the rabbit hole” that might turn this debacle into another Fibrant sized disaster, concerns the existing loans to DSI. In a normal closing, the purchaser has to pay enough to satisfy the mortgage. Will these the notes be paid off or will the city assume that debt and keep paying almost 95K per year on something we do not own? It might be called “forgiving the loan” or something like that? Might the city retain some ownership and incur even more debt as our share of the project? The claim will be made that this will “enhance our tax base,” but with this amount of money the return of investment will probably not happen in my lifetime.

While useful information was gained from the Empire presentation thanks to the questions asked by Post and Hardin (who should get re-elected) what you are seeing is a classic “dog and pony show” that we have come to expect from Mayor Alexander and Brian Miller. Apparently this month’s promised “closing” has gone south and we have developers and consultants with pretty architectural drawings and buzz words come to get folks excited and kick the can down the road past the November election. This is just like they have done with all their failed efforts to sell Fibrant. You would think after having to deal with the Fibrant debacle created by others, that Mayor Alexander and Brian Miller would be less likely to create their own. I am not surprised. This is “the city of smoke and mirrors” after all.

Folks need to vote for Todd Paris for City Council and Post and Hardin as well. This thing needs to be sold for at least the payoff with no additional future tax money tied up in the development. For goodness sakes send Karen Alexander and Brian Miller home before they further wreck city finances.

One last thing. The Empire Hotel Project is BB&T Banker Brian Miller’s little project. Why can’t he get BB&T, his own bank to loan these nice, accomplished developers $700,000.00 so they can buy it from DSI and the City and get us free and clear?

Video: The Empire Hotel Runaround at Salisbury’s City Council Meeting on Tuesday August 1st, 2017. The Non-Binding Contract to Nowhere:

Great Moments in the Empire Hotel’s Recent History–The Morning Vandals Slammed a Piano through a Plate Glass Window on the Ground Floor:

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