City OKs incentives package for McPherson Hospital

Aug. 20, 2013 @ 10:04 AM

City Council members voted 5-1 Monday to complete a $1.7 million city/county incentive package that will help finance the redevelopment of the former McPherson Hospital off West Main Street.

The city pledged $1.3 million to the project, which is to incorporate part of the façade of the hospital into a 143-room hotel. The county earlier this summer pledged $400,000.

Council members accepted the discrepancy in pledges, though not without some grumbling, as a refusal was likely to jeopardize both the Concord Hospitality Enterprises Co.’s project and what remains of the former hospital.

“We are convinced this is really our last chance to save this building,” Preservation Durham Executive Director Wendy Hillis told council members, adding that the structure cannot go much longer without attention.

But Councilman Steve Schewel noted that the County Commissioners – who balked at a request they put $755,000 into the project – had gotten the better of city leaders in the negotiations that shaped the governments’ offer to Concord.

The incentive package like most of its kind is actually a give-back of some of the tax revenues officials expect the project to generate.

Officials estimate that the city despite the promised give-back will still net $446,634 over the eight-year life of the McPherson/Concord deal. The county will net almost $2.5 million.

“No matter how you cut it, it isn’t right,” Schewel said, adding that he doesn’t fault city administrators because County Commissioners “do what they want.”

“We don’t want to kill these projects, so we go with it,” he said. “But we need something more rational. I feel strongly we’re getting the raw end of the deal, often.”

The McPherson/Concord deal is the third major hotel project in a year the two governments have backed with business incentives.

They evenly split the costs of the planned Holland Hotel, a conversion of the former Mutual Community Savings Bank building on East Chapel Hill Street.  Each contributed $605,000 to a $1.2 million incentive package.

But when it came to splitting the $7.7 million pledged to the 21c Museum Hotels’ conversion of the former SunTrust tower, the city put in $5.7 million while the county pledged $2 million.

Mayor Bill Bell said that while he “appreciates” Schewel’s concerns, the county seems able to maximize its leverage in talks with potential developers.

“If the developer can do the project without them, the county gets all the [tax] dollars without investing anything,” Bell said. “If they can’t, we’re back to where we are.”

Council members before voting also fretted about the prospective wages Concord’s workers will receive at the new hotel.

Officials expect the hotel to support 31 full- and 14 part-time jobs. But only half of the full-time positions will pay more than the city’s “liveable wage” of $11.91 an hour, Office of Economic and Workforce Development Director Kevin Dick said.

The issue sparked a dissenting vote from Councilman Howard Clement, who said the city needs to use its financial leverage to push employers to pay workers more.

“I certainly support the concept” of redeveloping the hospital, but “I’m just uncomfortable with the way we’re going to implement it,” Clement said.

But other council members noted they’d be holding Concord to a different standard because a wage discussion hadn’t figured in either the 21c or Holland Hotel decisions.

“I’m not disagreeing a liveable wage is very important, but if we want to be sure all applicants pay a liveable wage, that should be in the [city’s incentives] policy and clear from the beginning,” Councilman Don Moffitt said.

No one with the city acknowledged Monday that a “regulatory reform” law that awaits Gov. Pat McCrory’s signature prohibits cities and counties’ using their contract-signing powers to force employers to comply with minimum-wage rules.