During the October 4th breakfast meeting at the Matthews House, Mayton Inn owner Deanna Crossman and Cary’s Chief Strategic Communications Officer Susan Moran addressed the recent financial developments involving the hotel. For those who were unable to attend, the Board wanted to provide accurate information to our members and to the Cary community regarding the Inn’s recent filing for Chapter 11 bankruptcy. Below is a response to a Facebook post from Town Councilman Don Frantz.
The town purchased most all of the property between Park St, Walker St and Academy St to construct a seven acre destination park downtown and provide for economic development opportunities and a new regional library. This is consistent with Cary's vision and published plans for downtown for over a decade.
The facts of the agreement between the Mayton Inn and the Town are as follows:
Cary provided funding in the amount of $951,000 to acquire the property for the hotel and provide seller financing to the hotel. The town is to be paid back these monies with interest.
Cary also took advantage of an existing federal program that allowed a $1.4 million loan to be secured from the U.S. Department of Housing and Urban Development for the project.
The $1.4 million HUD loan is a loan between the federal government and the hotel and is to be repaid by the hotel – not the town. The town does however guarantee the loan repayment to HUD via Cary’s Community Development Block Grant (CDBG) funds that we receive from the federal government. Should the hotel be unable to repay the loan, the town essentially loses that amount in CDBG funds we would otherwise receive from HUD. The town currently receives about $500,000 annually in CDBG funds.
I know what you are thinking, “how can you use HUD funds on a hotel?” I asked the very same question. Well HUD’s section 108 loan program allows the use of HUD monies on economic development projects that create a certain amount of jobs for low income folks. It helps to give low income folks a hand up – not a hand out.
In a nutshell we basically had two choices with the HUD monies. We could use those funds to provide for additional subsidized low income housing options in Cary, or we could instead leverage those funds on an economic development project that creates jobs for low income folks, provides an amenity in our downtown and adds to our property tax base.
And finally Cary invested $325,000 for project related construction to include demolition of the old building(s), grading, relocation of the Mayton and Waldo Rood house and some streetscape work.
This comes to a total federal/municipal investment of $2,676,000.
The Mayton Inn and other town investments downtown such as the Cary Arts Center, the Downtown Park and Academy Street project have been a catalyst for much of the success we are experiencing downtown today and is leading to increased private investment, tax base and amenities for our citizens.
As one of several lenders, the Town is actively engaged in the bankruptcy action. Given the actual value of the Mayton Inn compared to outstanding debts, the public dollars invested by the Town in the project should be recouped over time through the Chapter 11 bankruptcy process administered by the federal court.
I hope this helps.
--Don Frantz's response to a post from the Cary Downtown group page on Facebook