Lots of piggies at this particular trough

If you're asking why in the world a group of "investors" would put money into a hotel project in downtown Greensboro with such poor economic prospects, you're asking the wrong question. The "investors" are playing much, if not all, of this game with other people's money--they've got very little skin in the game. Several of the "investors" also stand to immediately take money out of the project if it goes forward.

From a Triad Business Journal article about the original project in early December

At the moment, the Urban Hotel Group, led by co-developer Bridget Chisholm, is proposing a seven-story, 216-room, $47 million luxury hotel and parking deck to be funded almost entirely with federal stimulus money in the form of "recovery zone facility bonds," as well as New Market Tax Credits and tax-increment financing. Just $1 million in private investment is planned.

Updated reporting last Friday on the numbers doesn't indicate a much higher personal stake in the revised proposal.

Kaplan told City Council on Tuesday that the entire project represents a $52.5 million investment, with $12.5 million of that representing the estimated value of Elm Street Center and all the land it sits on between Elm and Davie Streets. New construction is loosely estimated at $40 million. Of that, $26 million would come from the low-interest, stimulus-related bonds. Kaplan cannot say yet where the remaining $14 million would come from (if they need that much), but some portion could come from New Market Tax Credits, bank financing and/or cash put in by the development partnership.

And the on-line copy of the proposal from the News-Record has redacted the key financial information.

However, long before the first hotel room goes unsold, lots of people will have made a bundle. From the Friday article,

Kaplan confirms that Bridget Chisholm, who heads the Urban Hotel Group, would claim a developer’s fee of about 5 percent, or roughly $2 million, but he says that she has agreed to take only a "small portion of that amount out at closing" and leave the rest in the project as equity.

He also says that his investors’ group, made up of about 10 Greensboro businesspeople, may take out about $1 million in cash at closing in compensation for selling the office building attached to Elm Street Center so that it can become part of the project.

In addition to this, Skip Alston, will take home a substantial fee for brokering the deal. And it appears that Deena Hayes may benefit as well through her connection with developer John Greene.

So, Chisholm gets a developer's fee of up to $2 million; Kaplan's investors' group will take out "about $1 million;" Alston gets a broker's fee (which he's not willing to disclose); and Deena Hayes' friend John Greene personally benefits from the construction. And all of this money comes out before the first guest passes this white elephant by.

I'm still waiting to see if Max Bialystok and Leo Bloom are in on this.