News

Developers' vision for mill less ambitious than council's

Josh Leder of Leder Properties proposed a mixed-use development similar to his popular Brevard LumberYard project.

By Bill Moss, Published: March 13, 2017

They asked for plans for a five-story 130-room hotel. They got proposals for smaller hotels with half the number of rooms and a mixed-use idea with no rooms at all.

Hendersonville City Council members now have to decide whether to trim their vision for the redevelopment of the Grey Hosiery Mill site to match what hotel developers believe the local market will bear.
A consultant with the Development Finance Initiative presented an overview Thursday night of the four responses it had received to an invitation that the council authorized in November. All were less ambitious than the council’s call for 130-135 rooms, 7,900 square feet of conference space, a 5,000-square-foot restaurant and 3,800 square feet of retail space on the historic mill site.
Instead, the proposals described projects with no more than 60 rooms — with retail and event space as “future” construction. One proposal rejected the idea of a hotel altogether and provided plans for a multi-purpose mixed use development.
Still, City Manager John Connet said the city was “pleased to get four” proposals. “We had hoped to have six, but two dropped out at the last minute because of things out of our control.”

‘It’s a victory’ to get four responses

Rory Dowling, project manager for the UNC School of Government-affiliated DFI, said developers’ primary concern was whether the market could support such a large hotel and whether a larger site might be needed to meet state historic preservation rules and parking demand.
DFI contacted 34 developers across the South and Northeast, Dowling said. Nine responded with interest, and seven made site visits. Of those seven, four submitted proposals.
Those four developers are Belmont Sayre of Carrboro; Professional Development Associates (PDA) of Erie, PA; SpringBridge Development of Florence, S.C., and Leder Properties of nearby Brevard. Belmont Sayre, PDA and SpringBridge proposed hotels. Leder Properties proposes a mixed-use commercial development. Dowling’s overview did not cite projected costs for any of the proposals.
DFI is now evaluating the proposals so it can offer a recommendation to the council on April 6 on how to move forward.
While they had reservations about the size of the hotel, the developers did recognize the potential of the location, Dowling said. They cited lack of competition from another hotel downtown as a plus as well as the “spillover effect” of visitors to Asheville. They also liked how the city’s public investment in Main Street has turned out and appreciated the city’s promise to invest in streetscape improvements near the mill.
“It’s a victory to have four groups submitting proposals,” Dowling said. “It speaks to the confidence that developers have in the city of Hendersonville.”

Developers see potential in mill site

The four firms come at the redevelopment project with a start-small approach.
Carrboro-based Belmont Sayre, which specializes in mixed-use developments in downtowns and urban neighborhoods, proposes a one-story hotel, plus basement, with 57 rooms in the old mill building, a 2,000-square-foot event space for 60 to 70 people, 72 parking spaces and no retail space. Estimated development cost is $13.5 million.
A leader in the adaptive reuse of historic environmentally challenged buildings, Belmont Sayer plans to partner with Charlestowne Hotels of Charleston, S.C., which boasts a diverse portfolio of more than 41 hotels in 12 states and specializes in adaptive reuse and boutique projects. Among its properties are the Elliott House Inn and the King Charles Inn in Charleston and Deer Path Inn in Lake Forest, Ill. Belmont Sayre was involved in the redevelopment of the American Tobacco Co. cigarette factories, a nationally recognized adaptive reuse, and the Carmichael Building, both in Durham, and the Contemporary Art Museum in Raleigh.
Professional Development Associates of Erie, Penn., finds the Grey Hosiery Mill site appealing because the firm is looking for other opportunities outside the Midwest, CEO Tom Kennedy said Monday. While PDA has been a real estate developer for more than 25 years, it has ventured into hotel development only in the last three or four years.
PDA would partner with Cobblestone Hotels to build a three-story hotel with 54 to 60 rooms at an estimated cost of $6.32 million. It would not build retail or event space until sometime in the future and did not project costs for those future phases. Kennedy said they would “wait and see” about preserving the old mill.
PDA has been involved in redeveloping the historic Renaissance Centre in Erie. Its latest project is a 54-room hotel in Orrville, Ohio, which should open this spring. Kennedy said that Ohio hotel was the result of a community effort. “The community has to want it,” Kennedy said. “It needs a champion so that the community feels like it’s their hotel. The mayor was that (champion) in Orrville.”
SpringBridge Development of Florence, S.C., delivered only a letter of interest in working with the city and provided no cost estimates, Dowling said. Raines Hospitality group, with Grey Raines as principal partner, would lead the effort. Raines recently completed a 49-room historic boutique hotel in Florence. SpringBridge has 50 years of experience in developing, building and operating hotels across the Marriott and Choice brands.
Leder Properties of Brevard proposes adapting the mill structures for mixed-use commercial only. Its proposal, Dowling said, was an “interesting concept” involving event, retail and restaurant space. The firm, which has 40 years of real estate experience, has been involved in the redevelopment of the LumberYard arts district on King Street in Brevard. The former lumber yard now features a small indoor/outdoor event space, a restaurant, a bicycle shop and an art gallery.
Josh Leder of Leder Properties said Monday that he envisions the mill site as the focal point of the redevelopment of 7th Avenue, creating a vibrant, outdoor gathering space with an atmosphere that appeals to people of all ages.
“I see such a gem down there,” he said. If the city is going to subsidize the project, “then it should benefit the whole community.”
That’s what the LumberYard has become in Brevard, he said, an important venue for events for local nonprofits, receptions and other events. “It has had a huge impact” on the neighborhood, he said, and the project had the support of community leaders.
In his proposal, Leder said he would work with city officials on a budget for the redevelopment. He proposes investing $1.1 million, with matching dollars from the city, to fix up the buildings and create an event center that would help to create an atmosphere that encourages small businesses to locate there and begin to gentrify the neighborhood.

List has ‘viable options’

“There was one that really interested me and there was one that was still too vague as far as the hotels go,” said Councilman Jeff Miller. “Certainly I’m interested in speaking to the gentleman that has the LumberYard to see what he has in mind. I would’ve been happier with more RFPs that had the room count we were looking for and the conference space. But I do think we have a couple of viable options, maybe three.
“We talked about more of a boutique feel early on. As long as it’s a nice facility … This is still the very beginning of it and I do think we have something to work on that would certainly be an improvement for that block and would work to tie in Seventh Avenue and Main Street.”
What he liked about the Belmont Sayre proposal, Miller said, was that it “uses the entire mill.”
DFI projected total cost of the city’s wish list at $24.7 million, including roughly $1 million for the land, $18 million for construction and other costs. Most of the financing would be private although the city council has committed to finance the purchase of the city-owned mill and the 2.1-acre site. The city also has promised to improve the streetscape on Fourth Avenue East from the site to Main Street.

Redevelopment of the Grey Hosiery Mill is eligible for federal historic rehabilitation tax credits and state rehabilitation tax credit. DFI did not apply tax credits, but the RFP says developers may use them. The RFP projects that a developer would sink $6.4 million of private equity into the project, borrow $17.3 million long term plus the $1 million from the city. The term of the loan was not spelled out in the RFP.
The city and its consultant worked with Samsel Architects of Asheville to frame a general outline of a hotel project on the mill site. The consultants estimated that the restaurant, conference space and hotel rooms (at $155 average per night) would generate hotel revenue of $6.4 million a year. After $4.5 million in operating costs, the venture would generate net income of $1.9 million.