You may have read the anonymous broadside recently distributed by a local group called PARC against the proposed 51 Biltmore hotel/parking garage project. Here is our attempt to set the record straight and correct a number of inaccuracies in PARC's version of this somewhat complicated transaction. PARC’s primary contentions are stated first in bold, with our understanding of the facts following:
The City has made a bad deal and the City and its taxpayers are getting taken advantage of by Public Interest Projects so PIP can make exorbitant profits. The City is also being taken advantage of, to a lesser extent, by the hotel developer and the seller of the smaller parcel in the transaction.
1) The City, Public Interest Projects (PIP), and the hotel developer have been working on this project for over 4 years and it has gone through many iterations, each time changing at the request of the City with PIP agreeing to accommodate their requests, as described in more detail below. We had always taken the position we didn't want to sell this property, we preferred to keep it and lease it so Julian Price's heirs (the property owners) would have long-term income. (Note: Julian Price was the founder of PIP. Sorry, but if you didn't know who Julian Price was or the story of downtown's revitalization from being largely boarded-up and abandoned as late as the early 90's, you need to do some more research for context. Mountain Xpress wrote a story about Julian and downtown last year: http://www.mountainx.com/news/2010/081810open-for-biz-a-passionate-legacy)
(Stage 1) - Four years ago, PIP and the City were going to do the parking garage as a joint venture/lease with both parties sharing in the risks and benefits, but after a few months the deal was changed because the City preferred………
(Stage 2) - A flat ground lease of the property from PIP to the City at $180,000 per year ($30-40,000 less than the average annual revenues generated by the parking fees on the site’s existing parking lot). The City was having problems making the cost numbers work because using our site alone would have required the City to do extensive excavations to generate the target number of parking spaces. Because our analysis showed it would save the City $1.5 to $2 million in excavation costs after paying the cost of the adjacent Hot Dog King property, PIP went out and obtained option rights for that property. We therefore agreed to alter the deal to ………
(Stage 3) - A flat ground lease of the property from PIP to the City at $295,000 per year, which, after paying the costs of purchasing the HDK property, would leave Mr. Price’s heirs receiving rent of $160,000 per year ($50-60,000 less than the annual revenues generated by the parking fees on the site’s existing parking lot). Because the City was still having problems making the cost numbers work we did an analysis of the cost to the City of the Stage 3 lease approach versus selling the property to them at appraised value plus the capital gains taxes Julian’s heirs would have to pay for accommodating the City yet again by selling when our plan had always been to lease the land. We saw after this analysis that even after paying a price which covered the capital gains taxes the City would be $1-$1.5 million better off buying than leasing (because the City can borrow money much more cheaply than commercial land lease rates) so PIP agreed to ……
(Stage 4) the current contract for purchase which PIP has honored and allowed extensions on now for 2 ½ years.
2) No one is making anywhere near the “profit” PARC suggests because, unfortunately, tax values don’t have anything to do with what we (or our HDK neighbors) actually had to pay to buy, finance, and pay carrying costs on the properties over the years since acquisition.
3) PIP is not retaining "all the valuable frontage on Biltmore Avenue." The garage will use the footprint of all the property up to the Biltmore Avenue property line. The hotel will then have approximately 80% of the Biltmore sidewalk frontage but they have agreed to make most of that available to retail/restaurant businesses. We will have a very small parcel left along the frontage of the Hot Dog King amounting to a little more than 1/15th of an acre. We do get 80% of the Lexington Avenue frontage but it is only 30 feet deep and encumbered along its whole length by power lines and a Progress Energy easement so we're not sure yet how to make practical use of it. We assume PARC got its $1 million valuation for these parcels from Cecil Bothwell's guest article in Mountain Xpress back in September. So we'll be glad to make them the same promise we made to Cecil in our reply article. We'll be glad to sell those outparcels to PARC for 2/3 of that price if they'll make the same promise we did, to use it to build workforce housing.
4) The owners of the Hot Dog King property are making a little more than a 5% return based on what they paid for the property after holding it for over 4 years while the City and the hotel developer went through the arduous process of obtaining project approvals and financing.
5) The hotel developer is paying all the structural costs of beefing up the garage to hold the hotel and, if there were no hotel, the City would have had to spend substantial additional public monies building its own liner building on Biltmore Avenue as required by the City’s own ordinances.
6) PIP has saved the City substantially more than the purchase price for PIP’s property by: restructuring the deal numerous times to accommodate the City, obtaining rights to the adjacent property, and patiently waiting through all the delays thereby allowing the City to take advantage of huge, economy-related construction cost savings.
7) Public Interest Projects is not getting any cash from the transaction, nor will Julian Price’s heirs. The net cash generated will be going to retire the debt incurred paying Julian Price’s estate taxes because all his assets were tied up in Mr. Price and PIP’s downtown revitalization efforts over the last 20 years.
We don’t need more parking but, if we did, this deal doesn’t generate enough parking.
8) Through this project the City will provide about 350 new public parking spaces for this area (on average, after projected actual use of parking paid for by the hotel at regular rates). Other than meter parking, neither the City nor the County currently provide any public parking spaces in the entire area of downtown south of College Street. The City and the County provide approximately 1,500 public parking spaces in four parking garages north of College Street. The private parking spaces currently on the lot are going to go away, one way or the other, because we can’t afford to keep using this prime site as a surface parking lot. The 350 spaces, although fewer than what recent City parking studies have shown this area needs, represents a long-promised (by the City’s Center City Plan, 2025 Plan, and Parking Plan) big step towards solving this area of downtown’s parking problems.
9) In Mountain Xpress's "Best of" issue for 2010, readers’ No. 1 complaint about downtown was that it "needs more parking".
10) The PARC broadside takes a very dismissive attitude toward tourists and their need to park. It's nice that PARC’s anonymous spokesperson can afford to dismiss all the hard-working locally-owned businesses for whom tourist spending spells the difference between surviving and having to close. Is there something intrinsically wrong with being a visitor to Asheville? How many contributing members of our community (or PARC) came to Asheville first as a visitor from out-of-town? Our local businesses make Asheville a distinctive and attractive destination for visitors, retirees and families. They provide thousands of jobs and put their energies and their resources to work in and for this community. When we lose them we lose much of what makes Asheville a great place to live.
It’s better for the environment if we discourage people from parking downtown
11) Actually the worst choice for our environment is failing to add downtown parking. Density encourages walking. Visitors to downtown park and walk. Suburban-style shopping means driving from one big box or strip mall to the next. There is typically much more traffic on Tunnel Road than downtown because downtown encourages pedestrians while Tunnel Road (and Patton Avenue and Hendersonville Road) encourage driving and discourage walking. Dismissing the parking needs of downtown will result in frustrated visitors driving around and around looking for parking then, after giving up, joining the happy hordes stuck in traffic on Tunnel Road, waiting for the chance to park on some of those hundreds of acres of apparently environmentally-friendly parking lots.
Spending money on a parking garage means we can’t spend money on transit and sidewalks.
12) This contention represents a very serious misunderstanding of how local government generates the funds to pay for the services it provides. The new hotel on this site will generate revenues in the form of property taxes, sales taxes, and hotel taxes. Parking garages generate revenues to pay for themselves over time, from both parking fees and increased nearby property values (from improvements encouraged by the presence of nearby parking). Parking garages ultimately become strong positive revenue streams for the City, after their financing is paid off, just as PARC points out the other city garages have done. Since neither transit nor sidewalks generate net revenue, banks won’t loan money for them. The only way, ultimately, for a City to make a net increase in overall spending, including spending more on transit and sidewalks, is to increase revenues, by either doing and encouraging projects such as this one, or by raising taxes on everyone. The City can choose to use a portion of the parking and tax revenues generated by this hotel and parking garage to subsidize transit and sidewalks, now or in the future. Without the additional revenues generated by projects like this one the only way to pay for more transit and sidewalks is to raise taxes. The money has to come from somewhere.
However, the revenues generated by this project are only part of how it can help us have better transit and more sidewalks. Study after study has shown that the biggest single contributor to cost-effective transit and cost-effective infrastructure improvements (like sidewalks) is DENSITY. And the 51 Biltmore Project is clearly a great alternative to more suburban sprawl, more highway motels, and more acres of suburban parking.
Thanks for reading.
Public Interest Projects