Risky, Private Projects and Public Bucks a Volatile Mix

The News & Advance
Published: May 3, 2008

For years, whenever architect Hal Craddock looked at downtown Lynchburg, filled with empty warehouses from the city’s past manufacturing era, he saw the city’s future. His dream was of a downtown revitalized and rejuvenated, building on the literal foundations of the past an edifice for Lynchburg’s future growth.
That dream, though, has proven to be a costly one for Lynchburg taxpayers, raising the fundamental question of whether public dollars should be used to back risky, private ventures.
Bluffwalk Center — comprised of the Craddock Terry Hotel, several restaurants and conference facilities — is the physical embodiment of Craddock’s dreams: An empty tobacco warehouse and a shoe factory owned by his family’s Craddock-Terry Shoe Co. are now a high-end boutique hotel, the likes of which are more common in places such as Washington, D.C., or New York City.
City leaders early on came to believe that such a facility could be the linchpin for newly energized efforts to remake the historic downtown and riverfront areas. Throughout the riverfront area and downtown, new businesses — restaurants, retailers and other employers — have begun operations over the last several years. Buildings are being renovated for condos and apartments as people rediscover the unique joys of downtown living. Heck, there’s even a dearth of parking downtown, there’s so much activity going on.
But problems have arisen because the price tag of dreams often is greater than what you first anticipate; that’s what happened with Bluffwalk Center, which wound up costing more than $23 million.
Craddock initially said it would only cost $7 million to transform the old warehouses into a 21st century hotel and restaurant complex. As work began in earnest, however, structural problems became evident and drove the cost through the roof; only the facade of some portions of the structure remain. Throw in inflation, the construction boom following Hurricane Katrina in 2005 and a myriad of other factors, and you’ve got the recipe for a project whose final cost more than tripled by the time Bluffwalk opened back in the fall of 2007.
Going back to 2002, various public entities have made more than $4.25 million available to Craddock and his partners. Now the bill is coming due.
The city initially used federal Community Development Block Grant (CDBG) money — more than $3.2 million — to guarantee the project would meet its financial obligations resulting from a federal Housing and Urban Development loan back in 2002. City Council was forced to cover the first note payment to the tune of almost a quarter of a million dollars in August 2007.
Though Bluffwalk was able to make an interest-only payment of about $75,000 earlier this year, city officials are holding back more than $325,000 — enough money to cover the August 2008 principle-and-interest payment and February 2009 interest-only payment — in case Bluffwalk Center LP can’t make the payments.
And that’s where a myriad of local nonprofits that have relied on CDBG money in the past are hurting, really hurting.
Just consider the cases of two random groups. Rebuilding Together/Lynchburg (what used to be known as Christmas in April) rehabs houses for the poor; the organization asked for $40,000 in CDBG money this year but saw its request chopped in half by a city advisory committee.
Jubilee Family Development Center asked for $100,000 for a job readiness program targeted at disadvantaged youth. The final recommendation? Zero dollars.
Things are tight right now: for the city, for Bluffwalk Center, for the local nonprofits that depend on CDBG monies. There’s no denying that all. There’s no minimizing the pain the nonprofits are feeling right now due to funding decisions.
But still, the potential for Bluffwalk is great, and its importance to ongoing downtown revitalization efforts can not be underestimated.
Consider this: In 2003, the two buildings that make up Bluffwalk, the old William King Jr. Tobacco Warehouse and the Craddock-Terry Shoe building, generated a grand total of $690 in real estate taxes for the city. This year, the tax bill for the facility was $110,000; after a $102,880 rehabilitation tax credit, the city got a check for $6,400.
That’s a start … a big, important start. And that’s the potential of Bluffwalk going forward.
City Council has received a great deal of criticism for the emphasis it places on downtown revitalization, specifically for the amount of public money it’s placed on the table to back Bluffwalk.
The questions that the public has regarding council’s decision are more than justified. 
What is not valid at all is the conclusion some vociferous critics reach is that the city should abandon downtown and riverfront to sink or swim entirely on its own.
One Lynchburg council after another has made an investment in downtown; and those investments are beginning to pay off. Downtown critics need to acknowledge that fact.
Downtown’s an investment all of Lynchburg will benefit from, but like any investment, the return isn’t going to be instantaneous. It will take time to mature and grow.
The smart investor knows that. But the smart investor also knows to do his due diligence before putting up any bucks.