THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, May 29, 1996 TAG: 9605290404
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY TONI WHITT, STAFF WRITER
DATELINE: PORTSMOUTH LENGTH: 67 lines
Portsmouth officials have been pining away for a major hotel on the waterfront, and one of their favorite places to imagine a new first-class lodging and convention center has been right across the water from Nauticus.
The only problem is that a Holiday Inn has been standing in the way.
Officials had tried to figure out a way to get rid of the hotel, but on Tuesday they settled on another solution.
Rather than wait for the hotel to die a slow death, the city has agreed to help the Holiday Inn get loans from the U.S. Department of Housing and Urban Development to upgrade what even the chain admits has been a mediocre facility. The quality of the hotel was so bad that the Coast Guard began sending its employees to Norfolk hotels when they were required to come to Portsmouth to work, said Wayne West who is with the management firm now overseeing the Holiday Inn.
The $2.4 million in loans will help pay to put a new exterior on the Holiday Inn, as well as refurbish its lobby, restaurant, meeting spaces and all of the rooms. The new exterior will be designed to complement the nearby Olde Towne historic district.
Total renovations will cost $2.8 million, according to the hotel owners.
The City Council approved the plan 6-1, with Vice Mayor Johnny M. Clemons opposed. Clemons was concerned that there were other things the city needed to address for the city's poor population before it used HUD money on a private project.
Under the loan conditions, 51 percent of the new employees must be low- to moderate-income. Norfolk has sought to use similar funds to build the Nordstrom anchor store at the planned downtown MacArthur Center Mall, but the plan is on hold over a dispute over whether the jobs will be guaranteed or just made available to poor applicants.
Renovations on the Holiday Inn probably won't be complete for at least a year if HUD approves the loan. If the loan is not approved, the Holiday Inn could take away its franchise agreement and the hotel could become a budget hotel on the waterfront - something city officials hope to avoid.
Morton V. Whitlow, a local attorney who spoke on behalf of the hotel partnership and developers, said that the Holiday Inn could pull its franchise immediately unless the chain is satisfied that the improvements will be made to the hotel.
``They were ready to yank the flag a few weeks ago, but they agreed to extend it until tomorrow,'' Whitlow told the council on Tuesday. ``There are no other financing options available to us. This is it.''
The city would be liable for the loans - although they are forcing the developers to set aside a $1 million account as a guarantee.
Developers must repay HUD on a monthly schedule, and the full amount of the loan must be repaid in seven years.
City officials decided to go ahead with the project after learning that the Holiday Inn franchise has implemented stricter requirements for all of its hotels.
``Holiday Inn probably won't fulfill our goals, but it will be an intermediary step,'' City Councilman Cameron C. Pitts said, referring to the city's Vision 2005 economic development plan, which calls for a first-class hotel and convention center on the waterfront. ``The Holiday Inn is demanding that the quality be improved. We have four other locations where we can put first-class hotels.''
The Holiday Inn provides about $335,000 in tax revenues to the city. With the renovations and increased room rates and new jobs, officials hope that amount will increase.
In the meantime, city officials said they will continue to search for a first-class hotel and convention center for the waterfront - down the river from the Holiday Inn.
KEYWORDS: PORTSMOUTH REDEVELOPMENT WATERFRONT by CNB