Aldermen won’t use hotel revenue for arts building

Alderman Bethany Chaney, left, says that there are other mechanisms for funding a Carrboro Arts and Innovation Center aside from hotel tax revenues. She joined her fellow board members, including Mayor Lydia Lavelle, right, in calling for a new approach to the project at Thursday night’s work session. (Staff photo by Brian Freskos)
Alderman Bethany Chaney, left, says that there are other mechanisms for funding a Carrboro Arts and Innovation Center aside from hotel tax revenues. She joined her fellow board members, including Mayor Lydia Lavelle, right, in calling for a new approach to the project at Thursday night’s work session. (Staff photo by Brian Freskos)


The Carrboro Board of Aldermen on Thursday scrapped a proposal to use tax revenues from a new hotel to finance the creation of a downtown arts hub, saying the plan seemed too risky and rushed.

At the same time, however, town leaders expressed support for the basic idea underpinning the proposed Carrboro Arts and Innovation Center (CAIC), and they endorsed a new blueprint for moving forward with the project that includes increased town involvement and long-term business planning for the two nonprofit organizations that want to co-locate in the building: the ArtsCenter and the Kidzu Children’s Museum.

“There’s a way that some of this could possibly move forward and we could create brighter futures for each of these entities, provided that we could cooperate and work together,” said Alderman Randee Haven-O’Donnell during Thursday night’s work session.

The Board of Aldermen also directed staff to explore how Carrboro could help the Cat’s Cradle find a bigger facility, something the club’s owner has said he needs to stay competitive in an increasingly crowded market. The specter of losing the Cat’s Cradle emerged in recent weeks as residents and town leaders fretted about how the CAIC project would impact the popular concert venue.

Alderman Sammy Slade said the town’s goal was to find the Cat’s Cradle a permanent home.

“The range of support could include a property purchase, which is a big issue in our town,” he said. “There’s no more space.”

The decision to reset the CAIC project comes after weeks of mulling a request from the ArtsCenter and Kidzu for as much as $7.5 million in public monies to build the 55,000 square-foot building at the corner of East Main and Roberson streets, across from the Armadillo Grill.

If the town had approved the project, the development group Main Street Properties said it would replace the ArtsCenter at its current 300 E. Main St. location with a 140-room Hilton Garden Inn. Under that proposal, planners said the town could have used the property and room occupancy taxes generated by the new hotel to finance its contribution toward the project.

Manish Atma, president of the company that would manage the hotel, Atma Hotel Group, told the Board of Aldermen earlier this month that under the deal his company struck with Hilton, the hotel needed to open by October 2016.

But that timeline stirred unease among town leaders who prefer to move slowly when considering major developments.

“The timeline, even if this were to move forward at the fastest pace possible, is not possible, not the way we want it done,” said Mayor Lydia Lavelle. “And we want it done right.”

Time constraints were just one of the many criticisms that aldermen expressed as they weighed in on the CAIC proposal on Thursday.

Alderman Jacquelyn Gist raised concerns about relying on room occupancy tax revenue to cover the building’s debt, saying tax laws can change abruptly.

“It’s possible that within the 20, 25 years, there could be a group of lobbyists from the hotel industry that says, ‘Hey, this fee is a burden to our industry,’ and poof: it’s gone and we’re left holding the note,” Gist said.

Alderman Damon Seils said he thought the arts building and the hotel should be considered separately. “Each one is a big issue that deserves considerations of a very different kind,” he said.

Philip Szostak, an ArtsCenter board member who attended Thursday’s work session, said he thought the aldermen’s feedback was valuable. Decoupling the hotel and the arts building didn’t change the organization’s goal of building something bigger for itself, only now it would have to explore alternative funding mechanisms.

“The good thing is we’re now out, we’re out in the public discussing our needs and our value and what it means to Carrboro,” Szostak said.

Laura Van Sant, a partner with Main Street Properties, said the board’s reaction did not surprise her.

“I think they listened to what people had to say and they sort of decided they wanted to slow things down a little bit and be a more active party in the whole process,” she said. “That’s fine.”

Van Sant also said it was too early to tell how the decision might impact the prospect of another hotel.

“We’re going to need to re-evaluate things and see if we have another way of doing this hotel,” she said.

Town leaders said Carrboro would need to be involved from the beginning of the process for the CAIC to become a reality.

The Board of Aldermen passed a motion directing town officials to talk with the nonprofit organizations about completing the steps outlined in a blueprint developed by Alderman Bethany Chaney, who works as a nonprofit consultant. Dubbed the “Proposed Path to New Proposal,” the blueprint specifies conditions that must be met for the public-private partnership to happen.

The blueprint calls for the nonprofits to engage public-sector staff, which could include both Carrboro and Orange County, in negotiations that result in a new proposal with a generous timeline and time-bound benchmarks.

That proposal must also include a set of shared objectives agreed upon by all parties and an acknowledgement that the town’s involvement does not constitute a financial commitment, according to a copy of the blueprint.

The ArtsCenter, meanwhile, must retain its interim executive director, Noel James, for long enough to develop a long-term business plan with an outside consultant, according to the blueprint. The business plan must incorporate rigorous market, donor and stakeholder research, and include financial plans and projections that demonstrate significant gains in diversifying private sector fundraising and membership development.

Chaney said in a telephone interview Friday that town staff would reach out to the ArtsCenter and Kidzu and gauge whether the two nonprofits were interested in following the steps that her blueprint outlined.

“The board had the opportunity to say, ‘No, but,’ instead of, ‘absolutely not,’” Chaney said. “I hope that the nonprofits got the message that we’re really interested in something happening that’s positive for everyone.”

Author of the article

Brian is a UNC-CH senior journalism major from Cary serving as public affairs editor of the Carrboro Commons.