Costly legal battle could tie up downtown Greensboro hotel project

The city of Greensboro could institute condemnation proceedings against a downtown music venue to allow construction of a parking garage and hotel due to an impasse created by the city’s discovery of an easement on property it purchased for the project.

The owners of the Cone Denim Entertainment Center are asking Greensboro City Council to delay a Dec. 19 vote to approve a $28 million deal for the February One Parking Deck to support a proposed Westin Hotel. Since mid-July the city has been embroiled in negotiations with Cone Denim Entertainment Center, owned by Rocco Scarfone and Jeff Furr, over access from an alleyway once construction of the hotel and parking deck begins.

City Attorney Tom Carruthers acknowledged in a recent email to city council that the city discovered an easement on the property on the 100 block of South Davie Street where the parking deck is planned in late June. Tax records indicate that the city closed on the purchase of the 0.72-acre parcel on June 28 for $1.2 million. Carruthers said the city has already agreed to advance up to $45,000 to allow Cone Denim Entertainment Center to conduct a “professional review” of the city’s plans, and that the city intends to offer $55,000 to acquire the easement. If the offer is not accepted, Carruthers said staff will ask city council for authorization to turn to the courts for a condemnation order. The cost of a buyout would be significant.

Amiel Rossabi, a lawyer who represents Scarfone and Furr in the matter, warned in an email to Mayor Nancy Vaughan, City Manager Jim Westmoreland and City Attorney Tom Carruthers that if the city goes forward with the plan, the project could be tied up in a time-consuming lawsuit.

“To summarize: a) the real estate, alone, is worth $3.2 million (expert testimony of [former mayor] Robbie Perkins); plus b) an additional $500,000-$700,000 in [furniture, fixtures and other equipment], plus, c) the lost business income that we anticipate from the proposed Westin development,” Rossabi wrote. “Obviously, we have not had the time to retain an expert witness with respect to the lost business income, but we are in the process of gathering such information. Moreover, under existing law, if you begin construction and our injunction is not successful (which we believe it will be), our damages are not the loss of the easement, alone. Instead, our damages are the loss the entire venue because the use of the easement is inextricably intertwined with the operation of the facility.”

The proposed $28 million outlay in public funds is part of a deal to incentivize a project by a group of private investors who have indicated they will spend $30 million on a new hotel and retail space, while redeveloping the Elm Street Center. The investors behind the hotel project include Randall Kaplan, a wealthy business owner and philanthropist, and George House, a partner with the prominent Brooks Pierce law firm, along with Daniel Robinson, a Durham-based entrepreneur who brokers foreign-investment deals.

Kaplan’s parents pledged $5 million for the construction of the Tanger Performing Arts Center, according to a 2013 News & Record article. Kaplan’s wife, Kathy Manning — who has played an active role in fundraising efforts for the performing arts center — announced plans to run for Congress last week.

House previously represented the city in an aborted attempt to reopen the White Street Landfill. House is employed by the same law firm as Justin Outling, who recently won reelection to city council as representative of District 3.

Further entangling the dispute between the city and Cone Denim Entertainment Center, the proposed February One Parking Deck has been on city council’s agenda in tandem with a separate proposal to spend public funds on another parking deck, also at a cost of $28 million, to support a different hotel project led by developer Roy Carroll. It remains unclear whether city council might un-yoke the two items and move forward separately with the parking deck associated with Carroll’s project.

Rossabi’s Dec. 7 email to city officials alludes to a signed letter outlining Cone Denim Entertainment Center’s concerns that Rossabi had planned to deliver to city council members on Oct. 10. Acceding to Carruther’s request, Rossabi said, he agreed not to send the letter.

Rossabi wrote in the letter, which was obtained by Triad City Beat, that “the principals behind the purchase” of property for the parking deck and hotel “failed to inform the city council about Cone Denim’s rights to use the back-parking lot (something easily learned through a simple title search) and how the parking deck would affect and irreparably harm Cone Denim and the landlord.”

The city purchased property for the project from a trio of investors identified in county tax and state corporate records as Brett Schulman, with the Greensboro commercial real estate firm Schulman & Beard; Greensboro commercial real estate broker Sam Simpson; and Rezin B. Jennings, of Vero Beach, Fla.

Rossabi said Cone Denim worked with Councilman Mike Barber, who recently lost a reelection bid, to resolve the hurdles. The primary challenge, Rossabi said, was that the city ignored the fact that due to its booking agreement with Live Nation, Cone Denim is required to provide secure parking and access for tour buses and trailers from the rear stage entrance. The letter indicates that Cone Denim has a shared parking agreement in place through late 2019. Since its opening in 2014, Cone Denim has booked comedian Dave Chappelle, along with music artists like the late Gregg Allman, Todd Rundgren, J Cole and Breaking Benjamin.

The city has proposed leaving a dead-end alleyway behind Cone Denim and other businesses fronting South Elm Street that would empty onto East Market Street. A design firm hired by Rossabi’s law firm determined that the only way for touring acts with a 75-foot tour bus with a trailer to access the venue would be to back in. A Dec. 6 position letter delivered to the city indicates that the venue unsuccessful attempted to maneuver a tour bus into a space with comparable dimensions. Rossabi said he has emailed a video of the test to Mayor Vaughan.

The report delivered by Watry Design on Dec. 7 also raises the issue that Cone Denim and neighboring Limelight Rooftop Nightclub share “an emergency egress path of travel.” With a combined occupancy of up to 1,700 people, the two venues operate during similar hours.

“I close with this thought,” Rossabi wrote to city officials on Thursday. “The extra time that we spend now is nothing compared with the horror, trauma and potential harm and loss of life that may be experienced during a fire at CDEC or any of the adjacent buildings and the ensuing panic caused by the ‘tight’ conditions in the alleyway that the new Westin development and Davie Street parking garage will create.”