April 27, 2011
By MICKEY POWELL - Bulletin Staff Writer
The Phoenix Community Development Corp. hopes to find out by July 1 whether the planned redevelopment of the former Henry Hotel in uptown Martinsville qualifies for New Markets Tax Credits.
Phoenix found that the project did not qualify for the tax credits this year due to economic conditions as of the year 2000 in the city census tract in which uptown is located.
Executive Director Ray Gibbs told Martinsville City Council on Tuesday that redeveloping the hotel likely will require acquiring funds from as many as 15 different sources, which is common in such redevelopment projects.
Gibbs has estimated it will take $3.5 million to $4.5 million to redevelop the building for mixed uses such as offices, restaurants and rental apartments. He said that there are no plans to develop low-income apartments.
The New Markets credits are “one of the most significant sources” of funds needed for the hotel project, he said, adding “we are looking at an amount greater than $500,000.”
“Therefore, we felt that it was prudent to wait for the new census data” to come in before proceeding in seeking the credits, he said.
Results of the 2000 census showed the uptown tract had an unemployment rate of 8.65 percent. That was just below the level of 8.7 percent or higher required for the tract to qualify for the credits, according to Gibbs.
He thinks that because Martinsville’s economy has worsened since the 2000 Census, the uptown census tract will meet all requirements for New Markets credits in the upcoming cycle based on figures from the 2010 Census.
If the tract still does not meet the criteria, Phoenix will apply for the credits under several possible exceptions to the rules, Gibbs said. He did not discuss the exceptions in detail.
After finding out if the hotel qualifies for New Market Credits, Phoenix can put together a team to handle the project in 60 to 90 days, Gibbs said.
Planning for construction then would take another 60 to 90 days, followed by construction negotiations that would take another 30 to 60 days. That would be followed by 60 to 90 days of finalizing construction contracts and securing construction financing, and then construction would take about a year to complete, according to Gibbs.
If all that goes as planned, the building could be put to use again by 2013, he reasoned.
Phoenix is a nonprofit developer involved in uptown revitalization efforts. Its first major project is the former hotel at the corner of East Church and Broad streets. In 2009, the council bought the four-story building for $520,000 — including a $425,000 loan from The Harvest Foundation — with plans for the structure to be renovated.
He told the council that after it is renovated, the building will need to be transferred to a private owner, with Phoenix serving as the main developer and managing partner.
Under private ownership, the building would be placed on the tax rolls again, he said.
Councilman Danny Turner said he thinks the building should be taken out of the city’s control as soon as possible.
“The taxpayers don’t need” to be involved in the project, Turner said.
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