Holiday Inn could be first of many deals

Big Spring Partners hopes to help guide downtown's future

By GINA HANNAH
Times Business Writer
ginah@htimes.com

It's a concept that has worked in many cities around the country: Residents and businesses pony up cash to help pay for improvements in a sluggish downtown, hoping the success of those projects will spur more success.

The people behind BSP's first big project, a public-private partnership with the city to acquire the Holiday Inn Select hotel and the property it sits on, believe this deal could be the first of many to foster economic growth in Huntsville's downtown. The City Council will consider the deal at its Thursday meeting.

Big Spring Partners, Inc., achieved nonprofit status in May 2004. Its initial activities - besides acquiring the hotel property - include evaluating the downtown master plan, building a database of available property and developing ideas for a new downtown park, which is expected to include a fountain or other water feature.

If you look at a list of BSP's board members and a Huntsville Who's Who, you'll find many of the same names: David Johnston, vice president of G.W. Jones & Sons; Bob Ludwig, publisher of The Times; Wayne Bonner, president of Bonner Development Inc.; Jim Hudson, owner of CityScapes LLC; Scott McLain, president of Coldwell Banker McLain Commercial Real Estate; Steve Thornton, president of Thornton Properties LLC; Mayor Loretta Spencer; Dallas Fanning, city planning director; and City Councilmen Richard Showers and Glenn Watson. The board has one vacancy.

"It's a self-perpetuating board" without designated term limits, Johnston said. The people filling city government slots will change as new officials fill those seats, he said.

Open board positions may be filled by "just people who are interested and can help, and those who have the financial ability to make things happen," he said.

Under Internal Revenue Service rules, a certain number of board positions must be filled by city officials, Johnston said.

Chattanooga's RiverCity Co., on which BSP's structure is based, was launched with about $12 million in private money from banks and local foundations. Big Spring Partners, Inc., has more modest means: It now has about $50,000 in the bank, Johnston said.

"We're crawling a little bit," Johnston said. The group has received donations from the Committee of 100, a group of business and professional leaders, and several local business people. It is seeking more corporate donations. First-year expenses have included legal and accounting costs related to the Holiday Inn Select deal and some administrative expenses. There's no office space or paid staff, he said; the board rents a room at the Holiday Inn for its meetings.

As a nonprofit group, Big Spring Partners, Inc., can receive donations of cash, stocks or property. The city provides no money for the organization's operating expenses, Johnston said, but the parties may enter into public-private partnerships to complete projects. If Big Spring Partners, Inc., cannot continue operating for financial or other reasons, all of its assets will be transferred to the city, he said.

Here's the deal

The city's move to acquire the Holiday Inn Select property was born out of a desire to control what leaders say is a prime piece of downtown real estate. The 6.5 acres on which the hotel sits lies across Williams Avenue from Big Spring International Park. Formerly the site of the Hilton Huntsville, the property's owners had indicated they were looking to sell, Johnston said.

The joint agreement between the city and Big Spring Partners, Inc., ensures that the city can control what happens to the property years from now, he said. In the short-term, the deal guarantees the 500 or so hotel rooms needed to attract the large meetings and conventions downtown.

"It just gives the city substantial, and pretty soon, total control over what happens at that site," Johnston said. "There is pressure for land. Everyone is looking for opportunities for development. Here they're able to (acquire) it for less than half of its appraised value."

City leaders have said the property recently appraised for about $13 million.

Under the terms announced June 8, Big Spring Partners, Inc., will buy the old Hilton Huntsville, now the Holiday Inn Select, for $8.6 million.

Big Spring Partners would then sell the land the hotel sits on to the city for $6.5 million, which will come from the city's general fund. Huntsville's bond issue this fall will include money to repay the general fund.

The hotel's current owners will finance $2.1 million of the building's cost for Big Spring Partners and pay back an annual lease fee of $260,000 to operate the hotel as a Holiday Inn Select.

Published June 19, 2005, The Huntsville Times