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Council votes down incentive plan for unfinished hotel

Council votes down incentive plan for unfinished hotel

Dewberry protest

Michael Payne, a member of the Charlottesville Democratic Socialists of America, speaks in front of City Hall to condemn the city's tax incentive plan for developer John Dewberry on Dec. 18, 2017. Payne also spoke about the matter in front of the City Council shortly after.

Ahead of the Charlottesville City Council’s final meeting of the year, the local arm of the Democratic Socialists of America protested the city’s plan to award the developer of an unfinished hotel building a tax break so that construction can be completed sooner rather than later.

At around 10 p.m., Councilor Bob Fenwick flipped and voted against the measure along with Councilors Kristin Szakos and Wes Bellamy.

The council approved the general terms of the agreement earlier this year. Szakos was the only councilor to vote against it. The resolution placed on Monday’s meeting would have been the final authorization for a formal agreement that could have resulted in more than $1 million in tax breaks for developer John Dewberry.

Though Bellamy made it clear recently that he was no longer in favor of the proposed project incentive plan, Fenwick had voted in favor of a resolution authorizing a special lease so the developer could secure parking for his patrons.

“We’re trying to bring attention to the agreement the city has made with Dewberry,” said Michael Payne, a Democratic Socialist organizer.

Payne said he thinks the city needs to condemn the property and transform the site into affordable housing.

“I think the property is abandoned and is a nuisance. It’s a risk to the public and there’s been no effort to develop it,” he said.

Construction of the hotel, formerly known as the Landmark, started in 2008.

When the original project developers were forced to stop construction due to financial constraints and other problems, Dewberry, an Atlanta-based developer who has focused in recent years on developing a luxury hotel brand bearing his name, purchased the site at auction for $6.5 million in 2012.

At the start of 2016, the council sought to address the issue after loose debris from the incomplete hotel building damaged neighboring businesses. A council resolution on the matter led some to believe the city might seek to condemn the property, but officials chose to work with the developer to incentivize construction of the squalid tower looming over the Downtown Mall.

In return for guaranteeing 75 reserved parking spaces in the Water Street Parking Garage and an annual tax rebate that could amount to more than $1 million in the 10 years after the hotel opens, Dewberry would have needed to invest at least $20 million into the development of the project and “substantially complete construction” of the building by Sept. 30, 2020.

The estimate for the tax cut was based on an agreement to provide the developer an annual grant equal to 50 percent of what the developer pays for the property’s real estate tax each year.

The council last March approved the terms of an agreement with Dewberry. The proposed performance agreement with the Charlottesville Economic Development Authority was almost identical to the previously drafted agreement, but changed the wording of the deadline clause and pushed it back by about three months.

The agreement the council previously agreed to stipulated that Dewberry must acquire a certificate of occupancy for the building before July 1, 2020.

Recently, the council approved a 40-year lease to secure for the hotel 75 parking spaces in the Water Street Parking Garage. The initial agreement the council approved had set out an initial five-year term for the lease, but the official performance agreement did not include any stipulations about the parking spaces.

City officials estimated the monthly cost for each parking space in the approved lease comes out to be a nearly 63 percent cut rate on the current $120 rate for a reserved space in the garage. Though that could result in a net loss of profit in the garage, which is co-owned by the city and the privately owned Charlottesville Parking Center, the city is expecting to receive $8 million to $9.5 million in tax receipts from the property in the decade after the hotel opens.

Though condemnation had been considered, city officials have argued that trying to condemn the property and then paying to build something on the site might be too costly.

Payne said he thinks the city’s elected officials are simply unwilling to take the risk.

“Obviously, you can’t snap your fingers and do it, but it can be done,” he said. “I think it’s telling that they don’t even want to explore the option. They’ve expended an enormous amount of effort in terms of making special deals in negotiation with John Dewberry.”

“Why couldn’t they put that same level of effort into using this land for public benefit?”

Tensions flare

Though overall attendance at Monday’s meeting was relatively low compared with recent meetings, tensions flared up again.

Councilor Kristin Szakos was berated by community members after she received a tongue-lashing from Mary Carey, who has been advocating for the name of Emancipation Park to be changed again after the name Lee Park was discarded last spring.

Szakos, whose final term in office ends this month, threatened to remove Carey from the meeting due to repeated interruptions once her three minutes to speak expired. When people in the crowd intervened as several police officers approached Carey, Szakos briefly suspended the meeting. She later agreed to let Carey remain in the room and resumed the meeting.

Surplus funds

Before the Dewberry vote, the council approved plans to allocate $9 million in funds left over from the fiscal year that ended June 30.

After discussing the surplus earlier this month, the council voted Monday to allocate $4.7 million to a contingency fund for the city’s Capital Improvement Program.

According to a staff report, the remaining $4.3 million will be used for several one-time expenditures and other fund transfers, including $1 million for the council to use on “racial equity and engagement.”

The council also was scheduled Monday to review an ordinance that would codify new regulations and procedures for special events on public property.

The City Attorney’s Office has worked with a private firm that volunteered to help revise the rules following the violent white nationalist rally in the city on Aug. 12.

Chris Suarez is a reporter for The Daily Progress. Contact him at (434) 978-7274, or @Suarez_CM  on Twitter.

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