|By Andrew Barksdale, The Fayetteville
Observer, N.C.McClatchy-Tribune Regional News
March 5, 2010 --Two upscale franchise hotels planned for Fayetteville are on hold, local officials announced this week.
The city of Fayetteville is working with one of the projects, and Cumberland County officials are courting the other, which would go up next to the Crown Coliseum.
The Fayetteville project can't move forward unless the city is willing to borrow $8.5 million to help fund the overall $28 million cost of a hotel and conference center, Assistant City Manager Kristoff Bauer told the City Council on Monday.
The hotel project has been proposed for Lake Valley Road, which connects with Skibo Road at Cross Creek Mall.
Bauer said the N.C. Department of Commerce, which is reviewing the developer's request to use tax-exempt bond money from last year's federal stimulus package, is requiring either a letter of credit from a bank or an acceptable bond rating first. The developer, Five Points Hospitality of Fayetteville, can't provide either, Bauer said.
"There aren't any hotel projects getting letters of credit today," Bauer said. "No hotel project could in the current financial marketplace."
To move forward, Bauer said, the developer would need the city to borrow $8.5 million to build the conference center component of the planned project. The developer would build the hotel, an Embassy Suites.
Officials with Five Points, which owns the Hilton Garden Inn and the Holiday Inn Express in Fayetteville, have not returned phone calls to comment about their proposal.
It remains unclear whether the City Council is willing to commit that kind of money and make city taxpayers responsible for repaying the debt.
Cumberland County officials aren't saying much about their proposal, other than it has been delayed as well.
Amy Cannon, an assistant county manager, said in an e-mail Tuesday that the state Department of Commerce is seeking additional information from the developer.
"As of yet, this information has not been provided from the developer; therefore, the application is pending," Cannon wrote.
Based on information from the state Department of Commerce, the agency is making the request of a letter of credit or bond rating for all projects seeking stimulus bond money. The goal, the agency said in a Jan. 20 memo to local governments, is to ensure a project's financial feasibility.
County officials have refused to identify the Georgia developer that reportedly wants to build a four-diamond hotel for $30 million on county property next to the Crown Coliseum.
The unnamed developer is seeking the same kind of tax-exempt bonds at Five Points Hospitality that are available from last year's American Recovery and Reinvestment Act. In both cases, the original requests would have made the developers solely responsible for retiring the debt; the city or county would have merely been a pass-through agency for the bond money.
The developer is asking the county for about 4.5 acres through a long-term lease and with help paying the cost of a bridge-type connection to the Crown Center, county officials have said. The connection might be an enclosed hallway.
County officials have long sought a hotel to complement the Crown Center's four buildings, including the Expo Center.
And Fayetteville officials say an upscale hotel with conference space is needed to meet the demand being created by growth and new commands at Fort Bragg.
Staff writer Andrew Barksdale can be reached at email@example.com or 486-3565.
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