Hotel fiscal projections ambiguous
BY LINDELL JOHN KAY
Thursday, July 4, 2019
The proposed downtown hotel and parking deck are not pie-in-the-sky projects, according to the city’s developer — but favorable financial predictions do not appear to be down-to-earth, either.
The Rocky Mount City Council has touted the economic impact of seeing a brand-name hotel, parking garage, retail outlets and residential condominiums built next to the Event Center.
“If I read the information correctly, which has been verified by our staff and two consultants — industry leaders in what they do — the impact is about 1,000 new jobs and over $100 million of return to our communities,” Councilman Reuben Blackwell said during a June 24 meeting of the Committee of the Whole.
An in-depth review by the Telegram of the financial information prepared by city consultants Novogradac and Davenport and Co. raises questions regarding those economic impact assumptions.
In the project pro forma prepared by Davenport’s Ted Cole, the city expects the newly constructed parking deck to bring in more than $1 million a year in income from paid parking. To get to that number, the developer and consultants estimated the lot to be entirely full 40 percent of the time and for the daily rate to park to be $10 per day.
Durham charges $5 for parking for a baseball game or a show at DPAC.
The projected Rocky Mount figures double the income in the original pro forma prepared by Sports Facilities Advisory, the managers of the Event Center, while only adding 232 new parking spots after the subtraction of the hotel’s 140 spaces and existing parking lot.
A request to see the income from current parking at the Event Center was not granted by presstime.
The consultants also reference that developer Hunt Services will be paying property taxes on the parking deck, citing it as a new source of revenue for the city. However, their financial analysis makes it clear that the property taxes will be deducted from the income of the parking deck sales after Hunt Services takes a 7 percent fee.
Financial impact projections of the 20,000 square feet of retail space is estimated at $11 million in sales annually. That puts retail sales at $550 per square foot.
The national average for large retail chain stores is $325 per square foot, according to CoStar Group, the country’s leading commercial real estate information company.
The public-private nature of the project is more than likely due to no other hotel developers willing to build in downtown, according to a source with extensive knowledge of the management of major hotel chains.
“Hotel builders typically want a 360-degree range. You want customers coming from all sides. That’s why there’s so many hotels on Highway 64 near I-95,” the source said. “I’d call the downtown project 180 degrees at best. I mean, how will it attract Saturday and Sunday guests?”
Questions to the city asking for clarification on the economic and jobs impacts of the project have not been answered.
Becoming slightly clearer over the past several weeks is what has changed since the original presentation of the economic development project in February. What was presented as a $60 million to $70 million investment in Rocky Mount now is $31.5 million.
The hotel no longer is a Home2 By Hilton, but a Springhill Suites. The second hotel no longer is mentioned in any of the contracts. The foot bridge, the second parking deck and the public space all have been removed from the site plan.
Editor’s Note: This is the penultimate entry in a series of articles on the Rocky Mount City Council’s plan to approve an $18 million downtown economic development project. A public hearing on the project is set for Monday.