Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, February 2, 1993 TAG: 9302020098
SECTION: VIRGINIA PAGE: A1 EDITION: METRO
SOURCE: DANIEL HOWES STAFF WRITER
DATELINE: LENGTH: Medium
NS HOTEL DONATION EXPECTED
Norfolk Southern Corp. appears poised to make a multimillion-dollar contribution to the Hotel Roanoke renovation, a move that would break the funding logjam surrounding the $42 million project.The announcement of a gift - rumored to be between $2 million and $3 million - could come as early as today.
Hotel planners, flush from a successful community fund-raising campaign that netted more than $5 million, are eager to assemble a financing package and move from talk to action.
But sources close to the deal say the process has been on hold as key planners wait for word from the railroad - the longtime hotel owner that donated the landmark to Virginia Tech in 1989.
In a speech to Roanoke leaders early last month, Norfolk Southern Chairman David Goode said the railroad would "step up to the plate for you on this - as we have before." But he then exhorted Roanokers to cut the fetters that historically have tied the community to such major employers as the railroad and Dominion Bankshares Corp.
Hotel planners and railroad executives are tight-lipped about the likely gift. Still, this seems clear:
Talks surrounding a package of bank loans appear to be in neutral until the railroad's gift is made public. Three banks - Crestar, Dominion and NationsBank - each have agreed to lend $2 million and First Virginia Bank has agreed to lend $500,000, several sources confirmed.
But Shenandoah Life Insurance Co., a fifth major lender, appears to be withholding any final commitment until the railroad's donation comes through.
How much the railroad contributes will dictate whether planners will be forced to shave dollars from the hotel-and-conference-center project's $42 million price tag - or seek additional funds from old and new sources. Planners already have suggested that trimming the project's costs may prove tricky.
A search for additional - or increased - funding seems certain. If the railroad contributes $2 million to $3 million, the project still would fall several million short.
City Council has pledged $18 million in bonds and federal loans; Tech has agreed to underwrite $4 million; Renew Roanoke, the communitywide fund drive, has raised just over $5 million; the hotel's management company, Doubletree Hotels Corp., has agreed to kick in $1 million.
Planners had hoped a consortium of banks and Shenandoah Life would fashion a $10 million loan for the hotel and conference center project, but several sources have said the loan total likely will be between $6 million and $9 million.
The shortfall - provided the consortium lends the full $9 million, which seems doubtful - would be $5 million.
Should the railroad donate less the $5 million, which seems almost certain, hotel planners could find themselves several million short and again hunting for cash to rebuild Roanoke's famous hotel.