August 9, 2009 - --You can spend a night downtown at the Hotel Prince Charles for $77.

For $323 more, you can stay a month.

Prince Charles owner John Chen is turning downtown Fayetteville's historic hotel into something else. To make more money, he is renting most of the rooms as furnished apartments and office space.

It's not a shift that rests easy with city officials or downtown advocates. They say Chen, who has owned the hotel for less than two years, is allowing the building to fall apart and exploiting what could be one of downtown's finest properties to make a quick buck.

John Malzone, a real estate broker who has been a key figure in downtown restoration, says Chen is turning the Prince Charles into a "flophouse."

Nonsense, says Chen, who thinks his critics don't know what it takes to make money on the hotel.

In addition to a $400-a-month, one-room rental, Chen has a deal for a two-room suite for $600.

He promotes such amenities as Internet service, an on-site coffee shop and the Kollage restaurant. But the restaurant is closed -- temporarily, according to manager James Tolson -- and the Internet service wasn't working on a recent night.

Since he took over the beleaguered Hay Street hotel, Chen has clashed with city inspectors and the Historic Resources Commission over replacement windows and air-conditioning units. He has been fined a total of $6,000 so far, and he has two lawsuits pending against the city.

"We're disappointed -- extremely disappointed in the actions he's taking with the building," said City Manager Dale Iman. "We bent over backward to encourage a developer to come take over the building. In our mind, to bring the building back to its once-splendid grandeur. To bring it back as an elegant, historic hotel. There are all the amenities in that building to do that. The architecture has been retained. It's intact.

"You can't do that operating as something less than first-rate."

I booked a room at the Prince Charles on the last Thursday in July. There were problems.

No soap or clock in the room; no cups or clothes hangers. The toilet seat was broken. Condensation from a loud overhead air conditioner leaked steadily near the room door, and I had to settle for a cold shower in the morning.

I called the front desk about getting switched to another room. The woman who answered the phone said the hotel was full and that the maintenance crew had left by 4 o'clock.

After she failed to scrounge up some soap from housekeeping, she offered to have someone pick up a bar from a convenience store.

"We don't provide cups," she told me.

I had to put an empty trash can under the leaky AC unit before leaving the room to check the old place out.

When he bought the hotel, Chen said his first order of business would be to listen to the wishes of the community regarding the investment and add value to the building. Chen, a native of Taiwan and longtime real-estate investor in Queens, N.Y., paid $1.9 million for the downtown landmark at an auction.

Last week, he said the hotel is in better shape than when he bought it, thanks largely to $500,000 in improvements paid for out of his own pockets.

But the Prince Charles, Chen said, has evolved as a successful investment only over the past three months. That, he said, has come from offering an extended-stay residence at a budget price rather than traditional overnight lodging.

"He essentially has brought affordable housing to the area," Tolson said.

The Prince Charles has 109 rooms. On Tuesday, Tolson reported that 75 of them would be rented out as apartments by the end of the week.

Some people who live in the hotel work low-wage jobs at the Smithfield Packing Co. hog slaughtering plant in Bladen County, he said. Many of the hotel's 21 employees make their homes in the Prince Charles.

Roland Bersch, who started Roland's Dance Studio in 1962, has lived in the hotel for about four months. He teaches private dance lessons during the day in the hotel ballroom.

Only about 10 rooms are available for guests as hotel rooms, Chen said.

"I think, like our government, we need a change."

Larry Clubine, president of the Fayetteville Downtown Alliance, said there are obvious concerns about renting rooms by the week and month.

"You get clients who are on the edge financially," Clubine said. He said, however, that he has not heard complaints that the people who live in the hotel have caused problems downtown.

Janet Gibson, 24, has lived at the hotel with her 3-year-old daughter for almost two months. She believes it is a safe place for the two of them.

Safe or not, Clubine has concerns about the appearance of the hotel. "I've heard more about the aesthetics of the window (air-conditioning) units," he said. "When you drive by, it's in your face."

All the rooms have air conditioning, according to Tolson. But window units are installed when the in-room unit is broken and the expense of repairing it is considered too high.

Because the Prince Charles is on the National Register of Historic Places, Chen needs building permits to make interior improvements, such as plumbing changes or knocking out walls between rooms. Apartments cannot be made by combining rooms without a permit, said Iman, the city manager. He said the city has not issued those permits.

For Chen, the decision to convert the hotel into an apartment building comes down to dollars and cents. He said too few people were staying in the hotel.

Iman said Chen has never invested in the property. "You cannot take a rundown building and expect people to stay in it in today's environment," he said.

Chen counters by saying the downtown district lacks a key ingredient -- people.

"I hate to say this," he said in an interview in a conference room on the hotel's second floor, "but downtown Fayetteville is a ghost town. ... They're trying to preserve every building as a historic, empty building. With no people in it. It's for people to look at but not for people to use or live in."

Just after 7 p.m., half-a-dozen people are playing video games or watching the action in the Pittman Room, just inside the main entrance of the hotel.

In the lobby, someone complains that the Internet service is down. It's warm in there, and Chen says later that he keeps the thermostat at 78 degrees in the lobby.

Exercise equipment sits in the open on the mezzanine and at one end of the lobby by the entrance to Charley's Pub.

On the fourth floor, a large painting and mirror are propped against the wall by the elevator. Renovations appear to be going on inside two or three rooms at one end of the seventh floor.

Many of the same people tend to crop up during the night -- either on elevators, in the lobby, or outside on the refurbished side patio or at tables overlooking City Hall.

The Hotel Prince Charles opened with fanfare in April 1925.

The nearby train station -- and the fact that Fayetteville was a convenient stopping point for people traveling between the Northeast and Florida -- helped lure overnight hotel guests.

But less than four years after it opened, the hotel was sold for $225,000 at a public auction.

It was a sign of problems to come.

Unstable business, numerous ownership changes and foreclosures have plagued the Prince Charles, which has never been able to find its niche.

By the 1930s, the hotel had acquired notoriety as a place where you could get a drink of liquor during Prohibition. Four decades later, when Hay Street was the center of the adult entertainment district, the Prince Charles was so rundown that the hotel was charging $8 a night and $35 a week.

When the City Council voted to close it in October 1979, the once-proud Prince Charles stood vacant for a decade.

The hotel appeared to be on the way to a turnaround in the early 1990s when local investors bought it. They envisioned a downtown brimming with life, with the Prince Charles playing a significant role in the revitalization.

They wound up selling the property.

"I sort of regret that we sold the hotel," investor Menno Pennink said last week. "I had great expectations of John Chen. He's a very likable fellow. I hope that Mr. Chen will do the right thing and get expertise from people in the know. He needs people knowledgeable in the hotel business."

When his group of investors sold the hotel in 2005, Pennink said it needed about $1 million in repairs.

Under Chen's ownership, Pennink said, "It has been disaster after disaster. If you don't keep up a historic building, it very quickly goes in disrepair. It could be the flagship of downtown. I wish he would change his approach."

Others aren't as gentle in their choice of words.

"He's a carpetbagger," said Malzone, the downtown real estate broker.

Malzone owns four buildings and manages a couple of others in the city's central district. He said hundreds of people have worked hard to make downtown a place where people live and shop.

"He came to town and bought a piece of property at a great price," Malzone said. "And what he has done is, basically he's bleeding it dry. He's hurting downtown. When I go downtown by the Prince Charles and see people asleep with their shoes off on the front of the (outside) tables, that does not add to the ambiance of downtown."

Inside the hotel, things looked to be settling down for the night after 9:30. Only a couple of men were playing video games in the Pittman Room.

On the fifth floor, a grizzled man wearing a ball cap plopped in a seat to wait for the elevator. "Could be waiting a while," he said.

The man said he used to work in the hotel restaurant but he hopes to go to South Carolina to work at a motel that Chen bought in Manning off Interstate 95.

One of the gamers said he loves living in the hotel.

"Better than that trailer park," he said, grinning.

Chen is selling off hotel furniture on the online classified site Craigslist.

As posted on July 30, queen-size mattresses are listed for $50, nightstands for $15, wardrobes for $30, armoires for $40 and floor lamps, $20.

"Again," said Iman, the city manager, "he's just milking the property for everything he can get out of it."

Tolson said the items for sale are from a surplus that was in storage, not the furniture from rooms.

Iman said the city has done everything it can to try to make Chen adhere to codes. The hotel owner has been cited for fire code violations. There have been the well-publicized issues with windows that don't meet historic standards and air-conditioning units jutting from the rooms.

"Totally inappropriate," Iman said. "It's a real shame, that's what it is."

Chen, meanwhile, said the windows are only 5 percent of the overall problem. The hotel's roofing and mechanical problems are of greater concern, he said.

"Are they going to tell me to spend money on windows?" he asked. "These people totally know nothing about business."

Pat Wright, one of the founding partners of Moonlight Communications nearby, said Chen's handling of the Hotel Prince Charles is making it tougher for those who have invested in downtown's future. Those who have bought into the turnaround have been held to the high standards of the Fayetteville Historic Resource Commission, Wright said.

"And he wants the rules to change for him," she said. "He knew when he bought the building he was buying in a historic district. He knew the regulations he had to follow."

On Friday morning, the doors of the main entrance to the hotel were propped open. A steady breeze blew through the lobby.

The woman at the front desk apologized for the problems during my stay: The lack of soap, the leaky air conditioner, the lack of cups or clothes hangers.

It would be better next time around, she promised.

Staff writer Michael Futch can be reached at [email protected] or 486-3529.

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