GREENSBORO — Does downtown need another hotel?
It’s a question city officials are pondering as they weigh whether to give $7.85 million in incentives to the developers of an upscale Wyndham hotel.
Supporters say the proposed downtown hotel will be an economic winner.
But it also will be a tough political sell.
City Council members have raised deep concerns about the planned $40 million Wyndham hotel and parking deck — and the city’s contribution to the project.
l Most of the jobs created won’t pay much.
l Any new hotel will be competition for the hotels already here.
l The city staff estimates downtown could use 400 to 1,200 more parking spaces — but the proposed deck only creates 100 new spots.
Those issues, paired with a hefty incentives package of a $750,000 grant to developers and $7.1 million to build the parking deck, have council members questioning the project.
Is it worth it?
The incentives shrank from the original $1.35 million grant request to $750,000 after council members balked at the price.
But the reduced grant — not counting the parking deck costs — still is more expensive than 25 of the 36 incentives that the City Council has approved between October 2003 and March 2013, according to city data.
The most expensive grant was $1.78 million.
It’s unclear when council members will take up the incentives debate, which came off their agenda last week.
Meanwhile, the developers continue to work with the city staff to craft an incentives request that the council can live with.
Greg Dillon, the chief investor on the project, is based in Washington D.C., and he declined to say Friday whether the hotel will happen without the city’s participation.
“If we could do it without the city, we would do it. We wouldn’t be having these discussions.”
Dillon and his partners plan to build a 180-room hotel downtown at the corner of Davie Street and February One Place, on top of a parking deck that may be built by the city.
Wyndham Worldwide would manage the hotel.
The city staff had estimated the hotel would pay $1.6 million in local and state taxes per year.
Four council members — Mayor Nancy Vaughan, and council members Marikay Abuzuaiter, Sharon Hightower and Tony Wilkins — have expressed concern about the project.
“I haven’t been convinced that there is a demand, and we have other developers that are talking about building hotels downtown that haven’t asked for any taxpayer funding,” Wilkins said. “I haven’t been convinced to vote yes on this.”
Greensboro-area hotels have had an average occupancy rate of about 56 percent this year, according to the Greensboro Area Convention and Visitors Bureau.
“We just have to be cautious,” Hightower said. “If we can’t show a high occupancy most of the time in our hotels, that’s a concern.”
The tepid rate, though, might not be a problem.
Wyndham Hotels and Resorts had an average occupancy of 58.9 percent last year — a rate that is in keeping with Greensboro’s occupancy rate, said Andy Brennan, an analyst who studies the hotel and motel industry for IBISWorld.
Still, giving incentives to one business with plenty of homegrown competitors could give a council member heartburn.
“I find it a little difficult to be putting money into what should be a competitive, private business,” Abuzuaiter said.
The $7.1 million parking deck also is a concern.
Three years ago, the city staff recommended the council build one or two parking decks downtown with 400 to 1,200 new spots to meet the growing demand. At the time, the council rejected a proposal to spend $6 million on a 400-space deck on South Elm Street over cost concerns.
The deck proposed for the hotel would replace an existing private parking garage with a similar number of parking spaces.
It would provide 100 public parking spaces — a far cry from what the city staff said Greensboro needs — and it would cost more money than the city could have spent for 400.
Councilwoman Nancy Hoffmann said the city might be able to add more levels to the hotel deck to create more spaces.
Vaughan said: “We need to do a deck that suits our needs. If we can accommodate their needs as well, it’s really a win-win.”
For some incentives projects, the city wants businesses to create jobs with salaries at or above the average county pay rate, which was $40,196 in January.
But it’s not a requirement for a project like this, which will be built downtown.
The bulk of the new jobs created by the hotel — 114 out of 168 — will earn less than $30,000 a year, according to data the developers provided. About 17 of the hotel jobs will earn more than $50,000 a year.
Those figures don’t include benefits paid to the employees or tips, which may boost some of those workers at the lower end of the spectrum.
Still, the abundance of low-paying jobs have left council members torn.
“I was not happy when I saw that the majority of the jobs (earned less than $30,000),” Vaughan said. “That was troublesome.”
On the other hand, Hoffmann said, Greensboro needs a range of jobs. “There are those occasions when you might need to look at jobs with a pay package below the median income,” she said. “The reality is we have people who want and need those jobs.”
So where does the project go from here? That isn’t exactly clear.
The council’s decision to twice delay consideration of incentives has blown the developer’s plan to start construction in February 2014.
Three new council members were sworn into office last week, and the city staff has yet to brief them on the project.
The incentives package and other details of the project could change in the coming weeks to better suit council members’ concerns.
As it stands — with four of nine council members questioning the project — the incentives package might have trouble passing.
“Obviously, we’d like to try to advance this,” Dillon said, “as quickly as we can.”