HRI Record of Preservation

HRI Has Record of Preservation

April 11, 2004

By Charley Hannagan, Staff writer
Syracuse Post-Standard

The HRI Group has taken a mission for restoring historic buildings and turned it into a passion for community revitalization.

The developer has renovated warehouses into luxury apartments, turned an old department store into a swanky hotel in New Orleans and restored an abandoned hotel into the premier convention hotel in St. Louis.

Now HRI wants to do the same in Syracuse by turning the 80-year-old Hotel Syracuse into a four-star hotel, at a cost of $90 million. It wants Onondaga County to name the hotel as the convention headquarters for the Oncenter. The designation opens up financing for the project.

"If you tore this down, then there are holes and parking lots. A building like this is the heart and soul of a community. You can't tear it out, or the body dies," said Eddie Boettner, HRI co-chairman.

HRI renovates properties in public-private partnerships that involve complex financing. The New Orleans company has done more than $600 million in projects and employs about 200 people.

The privately held company does not discuss its revenues. However, New Orleans City Business reported in March that the company earned $11 million in gross revenues in 2003, up from $9.4 million the year before.

Boettner's father, Edward B. Boettner, had founded a graphics company in New Orleans before turning his efforts to reusing old buildings. He and Pres Kabacoff founded Historic Restoration Inc. in 1982 and began converting a fiber mill into loft-style apartments in their native city.

Edward Boettner died in 2000. Kabacoff and Boettner's son, Eddie Boettner, co-chair the company.

The company became the HRI Group last year. It includes Historic Restoration Inc., HRI Lodging Inc., HRI Construction Inc. and HCI Architecture Inc.

Its projects cross economic lines to include luxury apartments, mixed income and senior citizen's housing. Projects also include hotels, shops and restaurants.

"The locations in every project that we've done have been right on. We've never had a project go out of business on us, whether it was residential or hospitality," Boettner said.

It's difficult to point to HRI's projects alone as the stimulus for neighborhood revitalization, said Hal Fairbanks, the executive heading the Syracuse project.

"But when you build a project in a blighted area and then the next thing you know the blighted area improves and gentrifies with new business and new investment comes in - it's not rocket science to figure out what was the catalytic that did that," he said.

HRI executives have talked generally about the possibility of doing other projects in Syracuse, but have no formal plans, they said.

"Sidney (Bartholomew, the former mayor of New Orleans), one of our co- workers, described it as restoring a community's confidence in itself," Fairbanks said. "It's something that's hard to gauge, but it becomes palpable, you can see it, you can feel it."

Syracuse lacks confidence, he said. The community doesn't believe the project can happen because the politicians won't agree, or the convention center operators won't like it, Fairbanks said.

"But beyond that, they also think, 'Who would invest the money? Why would we do that? That hotel is dead,'" he said. "It's sad when you think about what that means for the people who are saying the heart and soul of our community is dead."

HRI's quest to become the designated convention headquarters hotel for the Oncenter raises several issues.

When Onondaga County asked for development proposals for a hotel to serve the Oncenter, HRI was the only one to suggest renovating a property. The other four plans call for building a hotel.

Whether a hotel must be physically connected to the Oncenter is debatable.

HRI says locating a new hotel next to the convention center isolates conventioneers. There's nothing at that end of town, other than the Everson Museum of Art, executives said.

Guests of the more centrally located Hotel Syracuse may easily walk the couple of blocks to the shops and restaurants in Armory Square, they said.

Proponents of a new hotel say it must connect to the Oncenter to attract conventions.

Hotel industry experts agree.

"That's important," said Barry Sternlicht, chairman of Starwood Hotels & Resorts, which has Sheraton as one of its franchises. "Unfortunately, conventioneers like to walk straight from the hotel to the convention center, especially in a town like Syracuse where the weather's not always cooperating."

Sternlicht spoke at a recent hotel industry conference at Cornell University.

The Hotel Syracuse connects to the Oncenter through an unused tunnel and underground parking garage.

HRI officials said they are exploring options to improve the connection. The options could include an above-ground connection through the business incubator center on the south plaza of the MONY Towers, or an improved, dedicated space through the parking garage.

No matter how well-intentioned HRI's plans, critics say the county can't take the chance that the twice-bankrupt hotel will go belly up again - killing a chance to make the convention center successful.

HRI's plan is complex.

The bank that owns the property would turn the hotel over to Rebuild Syracuse, an arm of the city. The bank would receive a federal tax credit worth 20 percent of the project cost for the property.

Rebuild Syracuse would then turn the property over to HRI.

HRI would use private financing and tax credits to pay for the restoration, creating 359 modern rooms. The company would seek a $44.7 million first mortgage, and a $27.6 million second mortgage.

The company has proposed that the county provide a credit enhancement, similar to cosigning for a loan, for the second mortgage, Fairbanks said.

How much the county would be required to pay should the project default is subject to negotiation with the lender, he said. It could be as little as 10 percent of the loan, or $2.7 million, Fairbanks said.

HRI also needs the county's blessing as the headquarters hotel for the convention center.

Even though the company would get the hotel for $1, "if we don't get designated, we'll probably give it right back," he said. "We can't figure out to make it work financing-wise."

It's difficult to find someone to criticize HRI's performance. It has won awards from groups such as the National Trust for Historic Preservation, the U.S. Environmental Protection Agency and Department of Housing and Urban Development.

HRI takes on challenging projects, said David Listokin, a visiting professor at the master's in preservation program at Cornell University. He is a professor at Rutgers University and co-director of its Center for Urban Policy Research.

Five students from Listokin's Cornell class have researched HRI's Hotel Syracuse project for its economic viability and its impact on the community. They will present their report in May.

"HRI is a player with a track record, and I think that's particularly important here," he said. "If this was a group that hadn't done this before, I would say this is a difficult thing to do. But they've done it. One can go to St. Louis and New Orleans and other cities where they have taken facilities in as bad shape as the Hotel Syracuse, and they've turned it around."

Even Sharon Tyus, one of two St. Louis aldermen who voted against HRI's proposal to restore a hotel there, praises HRI. Her vote was against using federal Community Block Grant money for part of the project, she said.

"I liked the whole idea of saving the buildings. I like all of what they were doing with it," said Tyus, who no longer sits on the board. "My problem was with the money."