A firm working to develop Greenville’s Imperial Tobacco site wants to push construction of a hotel back by about a year and it wants out of a requirement to utilize a century-old office building, which was damaged by a fire in May.
Principals with Seacoast Communities said they need to delay the planned boutique hotel development because the COVID-19 pandemic had caused heavy disruption to the hospitality industry. However, they said they will now be able to pursue the project simultaneously with a market-rate housing development with a groundbreaking in a 18 months.
A February agreement with the city, which owns the 6-acre site west of the Dickinson Avenue corridor, secured the property for Seacoast while the firm worked out financial details and other arrangements to move ahead. Feb. 21, 2021, was set as the final purchase date for a portion of the property where the hotel will sit. Seacoast is now asking the city to move the purchase date to Feb. 20, 2022, at which time it will also purchase the remainder of the property to build apartments.
Greenville City Council will weigh the request at its Aug. 13, officials said. The council has no scheduled meetings in July.
“We anticipated that financing is becoming a little more difficult with COVID-19,” Greenville Mayor P.J. Connelly said. “A lot of different projects have been delayed based on the impact of the financial situation. We are glad to see that Seacoast has decided to continue to invest on the Imperial site in Greenville. It’s unfortunate that it is going to be delayed a little more than expected, but we’re excited that they are going to be able to run these projects at the exact same time.”
The initial agreement required the developer to finalize the purchase of hotel property first then complete construction of a 100 room boutique building within 20 months. The sale of housing property was supposed to be finalized shortly before the hotel was completed.
“By paralleling these projects, we will be able to gain economies of scale and reduce our overall construction cost which is critical to the financial feasibility of this initiative,” Seacoast partners Rick Banning and Jim Blount said in a June 30 email to Greenville Assistant City Manager Michael Cowin.
The original agreement also said the residential building would need a minimum of 1,200 square feet of retail space. The developers now want no minimum.
Along with ending the requirement to renovate the fire-damaged Imperial office building, the developers want the city to remove the structure from the property prior to the sale being finalized. Four men have been charged with arson in connection with a dramatic blaze that caused heavy damage to the building.
In the June 30 email, Banning and Blount said “In anticipation of the demolition, we are modifying our building and site design to more effectively utilize that area. The final results will ultimately allow for better connectivity and a more attractive project design.”
Seacoast has submitted a report from an engineering firm stating that given the destruction of the building’s interior and damage to its brick walls, reconstructing and rehabilitating the building would be a “difficult and possibly infeasible challenge.”
Connelly said the council will have to weigh the request against the soundness of the structure and its historical value. The council will seek staff guidance and opinion on the request, he said.
When the council meets members may discuss requiring the developer to submit a due diligence fee, which is paid to the seller if the buyer ends the deal, so “they have some skin in the game,” he said.
The email also said Banning and Blount anticipate the hospitality industry to begin “picking up” in six to 10 months and a full recovery within two years.
“With that said, we are planning the development cycle of the hotel to start this fall in securing a franchise flag with plans (to) secure financing within 8-12 months,” the email stated. “We expect to break ground on the hotel at the same time as the multi-family.”
The email said Banning and Blount accelerated work on the multi-family housing development in order to obtain U.S. Department of Housing and Urban Development market rate financing.
“Our preliminary meetings with HUD have been very positive and we are now preparing for our first formal meeting expected within the next 60 days,” the email said. “As conventional financing is limited in today’s environment the HUD lending program stands to be a strong and viable funding source.”
The email said the firm expects be able to complete both projects by mid-2023.
The city has invested about $1.5 million in the property including purchase price and work to remove ruins of the old tobacco processing facility, which also burned in a fire in 2008. The city utilized grants to fund much of its investment.
The property will be sold to Seacoast at fair market value under the agreement, which city officials estimate will bring in about $3 million. The city has agreed to provide about $560,000 in tax incentives over 12 years, rebuild a portion of Atlantic Avenue and pay for the public parking/events space on Clark Street for a total cost of $1.5 million.
Seacoast expects to invest about $41 million in the project, which will generate about $2.3 million in tax revenues for the city, officials said.