Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, March 19, 1992 TAG: 9203190320
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: DANIEL HOWES BUSINESS WRITER
DATELINE: LENGTH: Long
Henry Faison, whose Faison Associates counts the Dominion Tower and Valley View Mall among its Roanoke Valley creations, now will get a crack at a project that already has claimed one developer. It's also prompted pioneering legislation in the General Assembly and drawn the governor's wrath.
But Wednesday, as the city's smiling power brokers and would-be power brokers looked on, Virginia Tech and Roanoke officials announced they had reached a tentative agreement with Faison. Officials estimate renovating the hotel and building a conference center next door will cost $45 million.
"Anything he's ever done around here has been golden - it's been super for us," said Del. Clifton Woodrum, the Roanoke Democrat who guided the so-called Hotel Roanoke bill through the General Assembly. "We know what he can do and he knows what he can do."
"There is a sense of relief," said David Saunders, a Roanoke real estate developer who long has advocated Faison's involvement in the project. "The deal's going to happen. Henry Faison doesn't get involved in deals he doesn't intend to make."
Faison sounded a more cautious note. "I don't have any guarantee that I can come through. It's a difficult project," he said. "It's not a done deal. We don't have a magic wand. But we wouldn't embark upon it if we didn't think it could happen."
In a separate interview at the Roanoke Times & World-News, Faison said: "The hotel business is a very tough business and will remain so for a long time. It's very overbuilt."
The agreement bringing Faison on board - replacing Classic Properties of New Orleans - now is backed only by a handshake. Scores of details, including binding agreements, design schemes and financing arrangements, still must be ironed out, planners said.
Faison and contractors hired by him have built hotels in Richmond; Charlotte, N.C.; and Jacksonville, Fla., and refurbished a historic hotel in Atlanta, he said. By contrast, the principals in Classic Properties had never before developed a hotel together.
The hotel, given by Norfolk Southern Corp. to Tech in July 1989 and closed four months later, should reopen by mid-1995 - if the deal is financed by the end of this year. "If we can't line up the financing in this calendar year, I question whether the project can be done," said Raymond Smoot, Tech's vice president for business affairs.
It was a familiar refrain. For nearly the past year, Tech and city officials had been working with Classic Properties to fashion a general development agreement. Now, Classic's design schemes and marketing studies will be cast aside by Faison, whose staff will try to meld their vision of the project with Tech and city planners.
Classic's "price was way over budget and generally when the price is over budget we don't go in and tweak it," Faison said. "Our fees are 70 percent less than the last guy. Pricing our services under the market [is] our contribution" to Tech's search for equity in the project.
Faison said his firm's eventual ownership of the hotel "would be very small." Smoot predicted Faison will become a general partner in a partnership owning the hotel, with other, still-unknown limited partners.
Tech's real estate foundation, the legal entity that actually owns the hotel and the land it sits on, likely would lease that land to the hotel partnership, Smoot said. A joint Tech-Roanoke commission would own the public conference center; the hotel and conference center most likely would be operated by a hotel operating company.
Faison repeated past assurances that the new hotel would maintain the architectural integrity of the historic railroad hotel. Tech and city officials long have insisted that the hotel's character must be retained if they expect the community to support the redevelopment effort.
"What it will look like in the end will be totally different from what we proposed" initially, said Tony Skillbeck, a partner in Faison Associates.
Faison was among seven firms to submit proposals for the hotel project more than a year ago. But Classic, which promised to bring $2 million in equity to the project, was chosen instead last May, mystifying valley contractors and commercial real estate agents.
Classic never was able to muster the cash, officials now concede, and the principals never could agree on the size of the conference center or the number of rooms in the hotel.
Planners insisted Wednesday that the past nine months' work has not been erased by Classic's exit. Tech and city officials shopped for a hotel operator during those months, Smoot said, and Tech officials refined the continuing education and programming they envision for the complex.
Things are different from that day last spring when Classic was unveiled amid much fanfare.
The city has managed to wrest $6 million from the federal government for the project. And Woodrum's hotel bill - still awaiting Gov. Douglas Wilder's signature - could be worth another $5 million to the project. The legislation would allow the city to use state sales tax receipts to repay debt on the conference center.
The city and Tech each have agreed to underwrite $4 million in tax-free revenue bonds for a conference center to be built alongside the hotel. Faison and his contractors likely would build the conference center, too, though they would have to submit bids under the state procurement guidelines.
Wilder questioned the hotel project in a letter to Virginia Tech administrators in October 1990. The governor asked how the university could divert "substantial resources for such ventures" at the same time it was saying that its teaching mission and even accreditation "are in apparent jeopardy" because of budget cuts.
Wilder's concern was misplaced, however, because the university wasn't planning to put any money into the project.
And Wilder later assured city officials that he did not oppose the project and understood its importance.
by CNB