Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, June 23, 1990 TAG: 9006230243
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: DANIEL HOWES HIGHER EDUCATION WRITER
DATELINE: LENGTH: Long
The wrangling between Virginia Tech Foundation Inc. and Roanoke officials over the city's role in financing and building the conference center threatens to slow the renovation project.
"I've been of the belief that the city would participate in the conference center all along," Raymond Smoot, Tech's vice president for business affairs, said Friday. "But, in all fairness to the city, we didn't begin to talk in a specific way about the city's participation until sometime this winter."
The hotel and conference center development is one leg of a three-legged stool, Tech officials say, the other two being the city's planned trade and convention center and the new Dominion Tower already under construction. What remains uncertain is Roanoke's role in the conference center.
Tech officials still have not issued the prospectus they hope will prompt a developer to take on the project, which includes removing a large amount of asbestos, funded by Tech and the developer.
An environmental study of the timber-and-brick hotel, commissioned by the Tech foundation before it closed the deal last summer with Norfolk Southern Corp., concluded that it could cost up to $6 million to remove asbestos from the building's walls, ceilings and floors.
Add that to the $30 million that Tech officials say it could cost to renovate the hotel and another $10 million to build a world-class conference center next door, and the cost swells to $46 million. And those are just estimates.
Asbestos throughout the aging hotel prompted Tech officials to instruct the foundation's lawyers last summer to negotiate a give-back clause in its contract with the railroad.
"We thought it was prudent - and the railroad readily agreed - that we should have the option of returning the property to the railroad should we be unable to attract sufficient capital to address the renovation and the asbestos removal," said Smoot, who also is overseeing the project for the foundation.
"But we're not working this hard to give it back," he said.
The conference center, to be attached to the hotel, would be used for corporate training seminars and continuing education classes. The city is planning a separate $25 million trade and convention center, which it hopes to locate across North Jefferson Street, where Norfolk Southern offices are now.
Although city officials say several surprises have emerged in recent talks with Tech about the hotel project - the give-back clause chief among them - it appears that resolving the city's role in developing the conference center could hold up the project.
Only last month did City Council hire a consultant to re-evaluate plans for the trade and convention center and then study the feasibility of the city striking a joint agreement with Tech to operate a conference center attached to the hotel.
Tech officials say the city would need to lease 33 percent to 50 percent of the space in the conference center, and they hope the consultant's conclusions will pinpoint Roanoke's space requirements. Those space needs could dictate how much the city would contribute to the project - either through an up-front, lump-sum contribution or predetermined lease payments.
City officials say the consultant's report and a recommendation are likely to be presented to City Council in July - one year after the railroad donated the hotel to Tech.
"We're going to be ready by the first of July, and any delay after that will be attributed to getting the city's participation on the conference center," Smoot said. "We're disappointed that they're not moving quickly because we're ready to move forward. But they're not jerking us around."
Vice Mayor Beverly Fitzpatrick Jr., who is on the committee studying the proposed trade and convention center, sees the project differently. Before Tech proposed a joint conference center attached to a renovated Hotel Roanoke, City Council did not really know what a conference center was, Fitzpatrick said.
"Conference centers were never discussed before," he said, explaining that Roanoke officials have been studying a city-built and city-operated trade and convention center for several years.
"Roanoke and [Tech] are not locking horns," Fitzpatrick continued. "I don't think we're lagging. The question is, is [a conference center] in the best interest of the city when the city is moving toward a trade and convention center?"
Roanoke and Tech officials are eager to allay any suspicions that talks over developing the hotel and conference center are being marred by friction and contentiousness.
Nevertheless, some Tech administration officials say frustration with the pace of the city's evaluation of the project is growing. Said Smoot: "The city's hiring of a consultant is mixed. On one hand, I'm glad they're getting on with it. On the other hand, I wish they had done it two months ago."
Although the university's Hotel Roanoke planners understand City Council cannot make a firm financial commitment on the conference center because bond financing probably would have to be approved in a referendum, they still want a commitment in concept.
Smoot said this week that Tech has even proposed financing the entire cost of the conference center by issuing bonds - some $10 million - if the city agrees to lease part of the center. The lease income would then be used to pay the bond debt.
"When we put the prospectus on the street, we must give potential developers a clear view of what's going to happen and when," Smoot said. "What we're asking the city to tell us so we can put it in the prospectus is what [financial] commitment they'll make to the development of the conference center."
Equally important to Tech is "a strong statement of intent [from the city] to build the trade and convention center in close proximity" to the Hotel Roanoke project.
Last January, Smoot told council: "We think the hotel and conference center will stand alone. We think it will be enhanced by a convention center, but we are going to move ahead with the project."
At the same meeting, City Manager Robert Herbert told council that Tech officials understood the hotel and conference center "would have to be able to succeed on its own."
City officials intend "to make a good business decision" on the trade and convention center and a conference center attached to the hotel, said Brian Wishneff, Roanoke's economic development chief.
"We want it all. We want everything to work. We want the hotel to work. We want Tech to be successful; we want to be successful," he said. "The city wants to build a trade and convention center and wants to build it near the Hotel Roanoke."
by CNB