|By Matthew Sturdevant, Daily Press,
Newport News, Va.McClatchy-Tribune Regional News
Feb. 28, 2008 --- The city signed an agreement this week to sell the former Radisson hotel in downtown Hampton to a Williamsburg company for $7.742million.
The city received eight offers on the hotel and accepted one by MHI Hospitality Corp., which owns hotels in Philadelphia; Hollywood, Fla.; Savannah, Ga.; and other cities. The hotel -- now called the Hampton Marina Hotel -- will be a Crowne Plaza, according to MHI and city officials.
MHI plans to spend $5 million renovating the hotel, though it will stay open during renovations, MHI Chief Operating Officer David Folsom said. The sale is pending and subject to closing conditions, including approval by the property's current bondholders, according to city documents.
"We are confident that all requests from the purchaser and bondholders can be satisfied, so that the closing can take place this spring," City Attorney Cynthia Hudson said in a prepared statement released Wednesday. "Until then, however, nothing is final."
The deal includes the 172-room hotel at 700 Settlers Landing Road and a detached 297-space parking garage at 720 Settlers Landing Road on the Hampton River. The hotel is assessed at $12.1million and the parking garage at $3.09million, but the hotel hasn't been reassessed in two years, City Assessor Richie McKeithen said in December.
The hotel has been a source of public debate since it was built more than 20 years ago with bond money that hotel owners borrowed from the city. The city sued the previous owners for $3.335million last year to recoup back debt. That lawsuit was settled in October, and the city's Economic Development Corp. has owned it since then, along with about $16million in liabilities. The city has put $1.5million into the hotel since October.
Hampton officials were eager to sell it, and they put out a request for proposals late last year.
The hotel has been a political symbol that Mayor Ross A. Kearney II has pointed to as evidence of poor management by previous City Councils, due to public-private deals in which Hampton has had a lot of money at stake -- and much to lose. The deal was brokered when Jimmy Eason was mayor. Eason is now the city's economic development director.
Some of Kearney's detractors say the current council spoiled a previous deal to sell the hotel for $12.3 million, spent $1.5million more on it and is now selling it for $7.742million -- a combined loss of almost $6million to Hampton taxpayers.
The previous deal was last year when the owners at the time, Olde Hampton Hotel Associates, signed a contract Feb. 23, 2007, to sell the hotel for $12.3million to Rajesh S. Randeria of a Norfolk-based hotel company, Aniesh Corp. Randeria planned to operate the hotel as a Crowne Plaza. The city was urging foreclosure at the time, which some people say has driven down the price of the hotel and forced the city to accept less than $8 million for it.
Kearney said that the city didn't lose $6million and that the Randeria offer wasn't legitimate.
"That's not true," Kearney said. "The deal he had proposed started off with $12.3 million, but when he came back with cash, he came back with less than $7million."
A bank note shows that Randeria was prepared to take out at least a $10million loan in 2007. His reduced offer was among the proposals that the city considered this year, according to city documents.
Kearney also made a point to say the council accepted the MHI offer unanimously, as did the board of the Hampton Redevelopment Housing Authority, a group appointed by the council.
Commercial real estate prices have dropped dramatically since last year, MHI's Folsom noted.
"I think we bought the hotel at an attractive price," he said. "The market has completely changed since last year."
--July 1987: Radisson hotel opens. Hampton spends $4.6 million on the land and lends developer Olde Hampton Hotel Associates $3.5 million.
--March 1994: Olde Hampton falls behind on payments and owes the city $350,000.
--September 1998: The city helps hotel owners refinance the largest debt -- more than $9 million in bonds.
--April 2002: City officials say the developer was supposed to give the city $3.5 million to pay off the loan. Hotel owners dispute the due date because documents list both 2002 and 2012 as the year the loan is supposed to be paid in full.
--October: To appease the bank, Hampton provides the hotel owners a $1 million letter of credit that's good through 2016, when the $10 million in hotel bonds issued in 1987 are paid off.
--January 2003: The city and the owners work out a settlement ending a deadlock over a $3.5 million payment and avoids foreclosure. Under the settlement, money will be repaid entirely by Dec. 31, 2009.
--February 2004: The owners default on the bonds and owe Hampton $7.1 million.
--June: The owners, the city and bondholders agree to restructure.
--April 2006: Olde Hampton negotiates to sell the hotel.
--May 2007: Hampton sues Olde Hampton for $3.335 million.
--Oct. 1: City settles lawsuit, and the Economic Development Corp. takes ownership of the hotel.
--Dec. 14: City deadline for proposals
--Jan. 3, 2008: The City Council and Hampton Redevelopment and Housing Authority hold a closed-session meeting to determine which bid to accept.
--Feb. 27: City announces an agreement to sell the hotel to MHI Hospitality Corp. of Williamsburg for $7.742 million. MHI Hospitality plans to operate the hotel as a Crowne Plaza.
What is MHI? MHI Hospitality Corp. is a Williamsburg-based investment company, a real estate investment trust or REIT, organized in August 2004. MHI owned eight hotels as of October. An affiliated company, MHI Hospitality TRS LLC operates the hotels under brands that include Hilton, InterContinental Hotels Group, and Starwood Hotels & Resorts.
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