GREENSBORO — Right now, the proposed parking deck on South Davie Street is just a $28 million idea, existing in drawings and legal agreements rather than concrete and steel beams.
But boy is that one idea causing a lot of headaches.
Owners of Cone Denim Entertainment Center on South Elm Street say the deck will put them out of business.
This 6-story deck, they say, will block their use of the small right-of-way they own behind the building, where musicians and entertainers unload equipment.
Without that backstage access, they say their business has no hope of survival.
City officials didn’t know about the right-of-way until they bought the deck in July.
Cone Denim’s owners, including businessman Rocky Scarfone, didn’t know about the parking deck until then, either.
Owners and city officials have met privately several times, trying but failing to find common ground.
Negotiations deteriorated to the point when last week city officials asked Cone Denim’s owners to provide a fair-market value of the building and business — presumably to measure the cost of buying them out.
That price easily could top $5 million, adding to the $28 million the city already had planned to spend.
Cone Denim’s owners say they have no option but to sue if the city condemns the right-of-way and builds the deck.
They’re asking the Greensboro City Council to postpone a vote, scheduled for Dec. 19, to spend $56 million to reimburse developers for the Davie Street deck and a second being planned by the city’s most influential developer, Roy Carroll.
Carroll has his own set of frustrations: His deck is tied to the same agenda item as the one on Davie Street.
That means those delays become his delays. He has asked the city to uncouple the items, so the council can vote separately on them.
“We absolutely do not believe the decks are connected,” he said Friday. “Our side is free and clear. We’re good to go.”
Meanwhile, Democracy Greensboro, a group that advocates for progressive causes, is protesting the use of city taxpayers money for the decks, using phrases like “corporate welfare” and “crony capitalism” to describe the arrangement.
But if the concerns of Carroll and Democracy Greensboro are tension headaches, Cone Denim is the migraine. The easement issue could derail the deck project, which is tied to a proposed $30 million hotel and renovation of Elm Street Center on downtown’s main artery.
Now it’s up to the City Council to figure out what to do, said former Greensboro Mayor Robbie Perkins, a long-time commercial property broker and an expert witness in Cone Denim’s potential civil suit.
The issue “can’t be swept under the rug,” he said, because the city government’s integrity is at stake.
“It’s a big, big deal. It’s not a $100,000 or a $300,000 or a $500,000 deal,” he said. “He (Scarfone) has no choice but to stand his ground, because if he doesn’t, he’s out of business.”
“Sometimes cities make mistakes on complex business deals.”
Building boom
First, some background.
A group of developers, led by local businessman Randall Kaplan, plans to build a hotel at the corner of South Davie Street and February One Place, behind their Elm Street Center events complex.
Plans include:
- The 180-room hotel, believed to be a Westin, on Floors 7 through 17.
- A parking deck, which the developers would own, underneath the hotel on Floors 1 through 6.
- Renovations to Elm Street Center.
- Total investment: $30 million.
It’s the second deck, on the north side of February One, that’s causing the complications.
Under a proposal the council is considering, the city would reimburse the hotel developers $28 million to build a 850-space deck, which would stretch along South Davie from East Market Street to February One.
The first floor would have space for retail shops and restaurants. An agreement the city and the developers signed in April says the “developer and the city expect to enter into a lease of the city retail space to the developer at the project closing.”
The agreement doesn’t specify what the developer would pay the city to lease the space.
The developers would lease up to 180 spaces at the standard city parking prices. The agreement doesn’t specify a minimum number of spaces.
The city would own the deck and spend about $2.29 million a year operating it and paying down the debt. The money would come from revenue on downtown parking and the general city coffers.
The project was made possible earlier this year by a complex land deal involving downtown’s historic Dixie Building and several small lots.
Burlington developers David and Chantelle Stoughton closed a deal in July to buy the Dixie Building on the northeast corner of February One and South Elm, across from the Elm Street Center, as well as a small parking area on South Davie, for $4.1 million.
The Stoughtons then sold the parking lots to the city for $1.1 million.
Damages: ‘Loss of entire venue’
Here’s the problem:
Cone Denim Entertainment Center owns an easement just a few feet from where the deck would go.
The venue, which opened in 2014, fills a niche in downtown’s entertainment scene. It’s owned by Scarfone, Greensboro attorney Amiel Rossabi and Charlotte attorney Jeffrey Furr.
Scarfone and Furr also own the building.
It has space for up to 800 patrons — more than the 300-seat Triad Stage, but fewer than the 1,100-seat Carolina Theatre and the planned 3,000-seat Tanger Center, expected to open in 2019.
It’s affiliated with the House of Blues and Live Nation, giving it access to acts that have included comedian Dave Chappelle, the late musician Gregg Allman and hip hop artist J. Cole.
Cone Denim’s address may be 117 S. Elm St., but much of its business unfolds behind the scenes, in an alley behind the building.
There, the venue owns an easement — jargon for a legal “driveway” or “right-of-way” — in the parking lot that gives entertainers’ tour buses and trucks space to unload the tons of equipment needed for each show.
Rossabi, who has been representing Cone Denim, said no one notified the owners about the parking lot sale, which they discovered in July.
The easement is “something easily learned through a simple title search,” Rossabi wrote in a letter he will send to City Council members on Monday.
City Attorney Tom Carruthers told the News & Record Friday that the city “originally discovered the easement in late June,” two months after the city and the Westin developers signed the parking deck deal. Carruthers said the city reached out to Cone Denim’s owners soon after.
Cone Denim’s owners immediately saw a problem: The easement will have no practical function once the deck is there.
In the current set up, tour buses enter through a driveway on Davie Street, pull up to the back of Cone Denim, then exit onto East Market. Cone Denim has access to the Davie Street driveway through a month-to-month rental agreement.
Once the deck is built, tour buses would have only one way in — via a driveway on East Market. And they will have only one way out — by backing out onto East Market.
The alley will be roughly 18 feet wide, giving buses no room to turn around. And the Davie Street driveway disappears.
It also cuts the number of buses or trailers Cone Denim can accommodate at one time from three to one, Rossabi said.
Cone Denim further argues that it won’t be able to use the easement at all during construction, which means it could do no business for months.
Compounding those problems are the fire-safety issues. Rossabi argues that emergency vehicles won’t be able to navigate the narrow alley, creating safety issues.
Carruthers and other city officials — including former Councilman Mike Barber — met multiple times with Rossabi and Scarfone between July and last week, hoping to work out a deal.
Rossabi said they met as recently as Monday, urging city officials to redraw the deck so Cone Denim can continue using the business.
Without the easement, he told them, the business is ruined.
Rossabi said City Manager Jim Westmoreland said the city wasn’t going to change the design. Westmoreland was out of town Friday and didn’t respond to questions emailed by the News & Record.
“The city has offered minor ‘accommodations’ to the proposed Davie Street parking deck but has steadfastly asserted that the Westin development and Davie Street parking deck will move forward, regardless of our opinion, our experts’ opinions, the safety issues, the loss of our rights and the loss of our entire entertainment venue business,” Rossabi wrote Thursday in an email to Westmoreland, Carruthers and Mayor Nancy Vaughan.
Rossabi said, “You have requested information concerning the fair market value of my clients’ businesses and their investment in such business.”
His answer adds up to millions. It includes:
- $3.2 million for real estate, based on Perkins’ expert testimony.
- $500,000 to $700,000 for the contents.
- Unspecified amount to satisfy contracts on future acts.
- Unspecified amount for lost business income.
Additionally, Rossabi writes that Carruthers asked him in October not to send a letter to council members informing them of the problem.
“I acceded to his requests as part of my clients’ consistent efforts to work with the city on this serious dispute,” Rossabi said. “The city has yet to resolve any of our concerns, and it is my belief that the city does not intend to resolve our concerns.
“Instead, the city likely plans to initiate condemnation proceedings and ignore my clients’ rights in order to cater to a proposed and untested Westin development and Davie Street parking garage.”
He asks officials to delay the vote on the deck scheduled for Dec. 19 and implies legal action if the city condemns the easement.
The company’s “damages are the loss of the entire venue because the use of the easement is inextricably intertwined with the operation of the facility,” Rossabi wrote.
‘Substantial efforts’
for ‘valid concerns’
Carruthers said the city sees things differently.
On Friday, Carruthers responded to questions from the News & Record with a lengthy statement. He said he would provide more detailed answers to these questions this week, once he writes the response to Rossabi.
Carruthers wrote that the city made numerous accommodations for Cone Denim once the legal department discovered the easement. That includes:
- Designing the 18-foot alley for a tour bus and trailer.
- Creating a parking space for one tour bus during construction of the deck.
- Allowing tour buses to park in the loading zone on East Market.
- Building a “dry pipe” in the alley so fire officials can quickly move water to the rear of Cone Denim in case of a fire.
The city even agreed to advance the owners up to $45,000 to pay for a professional review of the city’s plans.
“Obviously, these substantial efforts are intended to answer the valid concerns of a business owner and his attorney,” Carruthers told the News & Record. “We are confident we have designed equal or better access and safety.”
Carruthers said the city will offer Cone Denim $55,000 for the easement.
‘A flat red herring’
As that drama has quietly unfolded at City Hall, Carroll, owner and developer of several downtown buildings and apartments, has been watching. And waiting.
And growing increasingly impatient.
In 2016 and early 2017, Roy Carroll negotiated his own parking-deck deal with the city. This deck would serve the burgeoning Bellemeade section of downtown, home of the Greensboro Grasshoppers’ First National Bank Field and roughly $150 million in new and proposed development.
Like the Westin deck on Davie Street, Carroll’s is tied to a proposed hotel — believed to an Aloft, a boutique chain known for its modern architecture.
And like that project, the city plans to reimburse Carroll Cos. for building the 1,050-space deck — this time up to $30 million.
The agreement between the company and the city calls for an 8-story parking deck, complete with ground-level retail space and basement parking, in the 400 block of Bellemeade Street. Carroll Cos. eventually will build a 15- to 20-story hotel and mixed-use tower on top.
Tenants of a nearby office building under construction would lease 715 spaces.
The other 335 would be available to the public for a fee, just like other downtown decks.
Carroll, eager to move the project forward, already owns the land and is ready to build. The city, too, is under a tight deadline: If the deck isn’t built by Dec. 31, 2018, it must provide tenants of the office building with 265 city-owned spaces at half the usual cost.
There’s that problem, though, with Carroll’s deck and the Davie Street deck are lumped together in the same agenda item for the council’s consideration on Dec. 19.
That item already has been postponed once, in November, because of the situation involving Cone Denim. And given the recent breakdown in negotiations between the city and Cone Denim’s owners, there’s no guarantee the council would pass the plan on the 19th.
Carroll said Friday he feels as though his project is in “a state of limbo.”
“I hope the other deck will get worked out,” he said, “but there’s no sense holding up” the Bellemeade deck.
Carroll asked city officials last week to hold a separate vote Dec. 19 on his deck. He said they responded: “We hope both decks can go to (the) City Council.”
It’s unclear why the city has combined the two projects into one agenda item. Carruthers didn’t explain this in his initial response to the News & Record’s questions Friday. Newspaper staffers are meeting Monday with City Manager Westmoreland to discuss the decks.
The question isn’t whether downtown needs two new parking decks. It does, according to former mayor Perkins, a friend of Carroll’s.
But the city must untangle the two projects, so Carroll can move ahead, Perkins said.
“There is no rational reason for these two projects to be tied together. It is a flat red herring,” he said.
“One project is ready to go. So why not do that while you’re working out the issues on the other?”
‘Not one dime’
As though a potential lawsuit and a frustrated master developer weren’t enough, the city faces another obstacle.
Democracy Greensboro.
This group formed last year with the express purpose of advocating for council candidates who “will govern in accordance with our ideals of social justice, economic justice, criminal and civil justice, and environmental justice,” according to the group’s website.
It has urged the city to create a police review board with subpoena power and to stop the police from using surplus military equipment.
Its latest target? The use of $56 million in taxpayers money for the two decks.
Bolstered by the election on Nov. 7 of two favored political newcomers for seats on the City Council, the group is planning to protest the parking-deck deals at an information session Tuesday and the council’s meeting on Dec. 19.
The group’s website outlines its objections to the plan via a link called “Not One Dime For Parking Decks.” It calls the plan “welfare for the rich.”
“Downtown development is a good thing, but not when it comes at the expense of the rest of the city and not when it comes in the form of corporate welfare for wealthy developers,” the website says.
“If these hotel projects need parking, those constructing and profiting from them need to build their own parking!”
Lewis Pitts, one of the group’s leaders, said the complication with Cone Denim makes the situation even worse, especially considering the lack of transparency by the city.
“These costly problems were known to the city manager and city attorney for months, yet they have been kept secret, even kept secret from some City Council members,” he said.
He said city officials are “trying to ram this thing through with as little public awareness and feedback as possible.”
“Any assertion that city taxpayers will not pay for this or not have their tax money used for this boondoggle is simply nonsense,” he said.
“We can’t get a straight answer to the basic question of how the expenditure of $56 million (would) be financed. That’s because the honest answer will reveal public money being spent to enrich private corporations.”
So now what?
All of the deck-related decisions the City Council must make before Dec. 19 have political consequences.
None of them are easy fixes.
First, there’s the public information session Tuesday night, when city staff and the council will be peppered with questions from members of the public and Democracy Greensboro.
They will demand justification for spending $56 million for 1,900 parking spaces. They’ll want concrete numbers on why downtown needs the spaces and why taxpayers should pay for them.
They will likely ask additional questions, too, in light of the complication with Cone Denim:
- How did this legal entanglement happen?
- How much will the city charge the Westin Hotel developers to lease the retail space in the Davie Street deck?
- Will parking prices stay the same throughout downtown?
Then there’s Carroll’s deck. The council must decide before Dec. 19 whether to vote separately on the Bellemeade project .
Finally — and most critically — the council must sort out the Cone Denim situation. There are four options, accompanied by four sets of drawbacks:
- Move ahead as planned and face legal action from Cone Denim.
- Buy out Cone Denim, adding upwards of $5 million to the cost of the deck.
- Reconfigure the layout of the deck, which would add significant delays to both the deck and the Westin Hotel project.
- Build the deck somewhere else — away from the new Westin it was intended, in part, to serve.
Rossabi said Cone Denim’s preference is to stay in business. He said owners are turning a profit three years after opening and see nothing but profitable times ahead.
He said he asked city officials why the deck needed retail space.
“Give us the room,” he told them.
Owners have tried to be patient, Rossabi said. Now they’re shifting gears to protect their investment.
“He (Scarfone) didn’t spend three years to now say, ‘OK, just buy me out,’” Rossabi said. “That’s not the goal.
“The goal was to have an entertainment venue that wasn’t like anything else in Greensboro.”
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