Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 3, 1993 TAG: 9302030139
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: DANIEL HOWES STAFF WRITER
DATELINE: LENGTH: Long
HOTEL PROJECT READY TO GO
THE HOTEL ROANOKE DEAL appears done. Norfolk Southern Corp. will donate $2 million to the project, it was announced Tuesday. And, in a new twist, state officials will allow the city to use highway money to close the funding gap.
The renaissance is imminent: Workers should begin this month stripping asbestos from the Hotel Roanoke, planners said - more than three years after it was closed and given to Virginia Tech.
City and state taxpayers will join the state's largest university and two of Virginia's most powerful corporations to renovate the century-old landmark and build a new conference center. Pieces of property will again change hands and money effectively will get shifted from one pocket to another.
Norfolk Southern Corp., the hotel's former owner, will donate $2 million - the company's largest cash contribution ever - to the community fund-raising effort dubbed "Renew Roanoke."
Five area banks will join with Shenandoah Life Insurance Co. to lend $6.5 million for the $40.3 million project, scaled back from $42 million. Reductions are expected to come from decreased loan reserves, lower construction interest and "tighter budgeting," planners said.
A Roanoke Valley construction firm, J.M. Turner and Co. Inc., will form a joint venture with Charlotte, N.C.-based F.N. Thompson Co. to renovate the hotel. State law requires that construction bids be taken for building the adjacent conference center, which will be publicly owned.
On Tuesday, though, a single message echoed from the paneled walls of the hotel's stately lobby: Hotel Roanoke will reopen.
"Roanoke has truly prevailed today," Mayor David Bowers told the roomful of business and civic leaders gathered for the series of announcements. "Our blood, sweat and tears have not been in vain. The citizens of Roanoke have sent a message to City Council that they want the hotel to reopen."
And council responded, first committing $18 million in bonds and federal loans to the project. Now, council plans to spend another $3 million to buy land surrounding the hotel from the Virginia Tech Foundation - a move that, with the help of Norfolk Southern, completes the hotel financing plan.
Here's how planners said the land deal will work:
The city will pay the Tech foundation $3 million for a 5-acre tract bordering the hotel on the east, west and south. City money for the purchase will come from $2 million appropriated in 1990 - but not spent - for a pedestrian skywalk over the railroad tracks connecting the hotel with the City Market.
The remaining $1 million will come from the city's economic development capital program or additional tax-free revenue bonds to be issued by the joint Tech-city commission charged with building the public conference center.
The transaction, under consideration since September, closes the funding gap left after community fund-raising efforts - including the railroad donation - are tallied. But closing one gap created another: Planners still needed $2 million to build the skywalk, considered crucial for downtown business and the reopened hotel's success.
So city officials, wondering if state highway funds already earmarked for Roanoke could be spent for building a downtown skywalk, talked to Steve Musselwhite, the region's representative on the state Transportation Board.
Musselwhite, at the time a candidate for Congress, approached state Transportation Secretary John Milliken and asked if the city could use part of its highway appropriation for a skywalk. "He's the one who first brought it to my attention," Milliken said in a telephone interview. "He asked me to participate in a meeting."
Musselwhite - who is in Florida and could not be reached - set up a meeting for Nov. 5, two days after he lost his bid for Congress. City officials met with Musselwhite and Milliken at Natural Bridge, site of a state highway conference.
Eager to learn whether Roanoke's state highway money could be used for the skywalk, city officials made their pitch. "We broke up with the understanding that if we could do it [under] existing law, we could do it," Milliken said. "And the understanding of the technical people was [that] we could do this."
The exception, which city officials called "a historic ruling," dovetails with Gov. Douglas Wilder's evolving policy that "in some cases, laying one more lane of asphalt doesn't do the job" of dealing with urban transportation problems, Milliken said.
"The principle behind this is, increasingly, we are trying to make transportation funds more flexible," he continued. "A city council is able to tell us what the unique transportation needs are better than we are sitting in Richmond. And we are able to do this under existing law."
The Natural Bridge agreement now appears to have been the favored option for closing the deal, planners said privately. Other options, such as funneling city taxpayer money through Roanoke's Redevelopment and Housing Authority, were considered to have been more politically unpalatable. The authority could have, in effect, used city money to increase taxpayer investment in the hotel.
Indeed, planners appear to have wanted to avoid returning to established funding sources - the city; Tech; and Doubletree Hotel Corp., the chosen hotel operator - for additional help. The highway deal enabled them to secure a $2 million gift from the railroad and $6.5 million in bank loans, the final two pieces that fell into place late last week.
"The Hotel Roanoke is part of our heritage," Norfolk Southern Chairman David Goode said in a statement prepared for the news conference. "We want to participate in this community effort in a very significant way as we traditionally have when Roanoke needed us."
Goode, a Roanoke native, did not attend the news conference. But William Bales, the railroad's Roanoke-based vice president for coal and ore traffic, said "his absence does not detract from our enthusiasm for this project."
Planners also confirmed that last summer Tech renounced the "give-back" clause in its hotel contract with the railroad. The clause had allowed Tech to return the hotel to Norfolk Southern if Tech concluded the hotel could not be renovated.
Raymond Smoot, Tech's vice president for business affairs, denied the foundation's move was intended to remove any obstacles to the railroad's making a donation to the project.
Instead, the foundation - which has spent $1.9 million maintaining the property - concluded that the give-back clause could not be exercised for fear of losing the $1.9 million investment. And would-be lenders, Smoot said, considered the clause evidence Tech was not committed to reopening the hotel.
Tuesday's announcements cap three years of plans, projections and seemingly incessant talks among officials from Tech, the city and other key constituencies. Asbestos removal is expected to begin this month, with full-scale renovation expected for summer. Planners expect the hotel and conference center to open within the first three months of 1995.
Staff writer Dwayne Yancey contributed to this report.