CITY MAY INCREASE HOTEL FUNDS $5 MILLION

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, February 19, 1992                   TAG: 9202190331
SECTION: VIRGINIA                    PAGE: B1   EDITION: METRO 
SOURCE: JOEL TURNER MUNICIPAL WRITER
DATELINE:                                 LENGTH: Medium
CITY MAY INCREASE HOTEL FUNDS $5 MILLION
Roanoke City Council may provide more than the $10 million in guarantees previously offered to help finance renovation of the Hotel Roanoke and construction of a conference center.
City Manager Bob Herbert said Tuesday "it's likely" the city will up its ante for the project. He wouldn't say how much, but hinted it could be another $5 million.
That estimate is based on a bill in the General Assembly that would provide $400,000 a year in sales tax money that could be used to help pay off bonds for the project. That amount would pay off a $5 million bond issue.
The legislation, passed by the House and now before the Senate, would return to the city 3 percent of the 4.5 percent state sales tax revenue that would be derived from the hotel and conference center. The city could then use that money to help finance the project.
Although the bill hasn't gotten a lot of attention, Herbert said it could be crucial to the financing plan for the project.
Earlier, the city agreed to provide a $6 million federally backed loan for the hotel renovation and $4 million in tax-free revenue bonds for the conference center.
Virginia Tech, owner of the hotel and the lead player in the project, has also agreed to provide $4 million in bonds for the conference center.
City Council met in closed session Tuesday for a briefing on the project in the aftermath of the exit of Classic Properties of New Orleans as the developer. Classic was dumped after it failed to provide the $2 million in equity that it had promised for the project.
Councilman James Harvey, a member of an advisory committee for the project, said the next step is for Virginia Tech to choose another developer. "That is a decision for them to make, not us," he said.
If the state legislature approves the sales-tax proposal, Harvey said the money could be used to help finance the conference center, which will be publicly owned.
Despite the exit of Classic Properties, Herbert said he remains optimistic about the project.
"The city will do what is appropriate in a businesslike way to assure that the project goes forward," he said.
Councilman David Bowers said the city will "consider every plausible alternative and option" to help ensure that the hotel reopens.
"We will keep it on the front burner and turn up the heat," Bowers said.

by Bhavesh Jinadra by CNB