St. James sale soon to close

Published 9:52 pm Friday, August 4, 2017

City leaders hope to close on the sale of the St. James Hotel by the end of this month.

The transaction will mark a new beginning for the Water Avenue landmark, which has been owned by the city for decades and operated by the city since a management company left town more than two years ago.

Earlier this year, a branch of American and hip hop  clothing company FUBU proposed to buy the hotel for $400,000 and renovate it.

The city council discussed the sale during Thursday evening’s work session. The council first talked about security for the hotel, which has been closed for most of July.

FUBU asked the city to close the hotel so it could have estimates done for renovations and other bids completed without guests being in the hotel.

The St. James staff had already been cut to a skeletal crew.

The city decided to close the hotel but keep 24-hour security until the sale is finalized. That bill came in this week — $4,760 for the last two weeks of July.

However, Mayor Darrio Melton’s Chief of Staff Ollie Davison said that FUBU has pledged to repay the city for the costs of security and utilities for August.

“FUBU will be reimbursing the city for these costs from Aug. 1 as part of the extension,” Davison said.

The possible sale was tentatively scheduled for July 31, but Davison said FUBU asked for more time.

FUBU has learned the renovations will be more costly than first expected, and the company was going back to investors to seek more capital before trying to close again on Friday, Aug. 25, according to a letter City Councilwoman Angela Benjamin read at Thursday’s meeting.

Melton agreed to the extension provided FUBU reimburse the city for security and utilities, the letter read.

Benjamin asked if it would be cheaper to pay for two or three employees to work than what the security firm is charging.

“For $10,000 a month, could we have kept it open with a security person, a desk person, and a bar person and still be making money?” Benjamin asked.

City Treasurer Ronita Wade said she would run those numbers and have an answer before Tuesday’s regular council meeting.

However, Councilman Carl Bowline reminded the council that FUBU asked for the hotel to be closed so they would have  access to the building.

“One of the things they asked us was to give them unfettered access to the building to look at those costs,” Bowline said.

FUBU is a clothing company that was started in 1992 by Daymond John, who now stars on the television show Shark Tank. According to the company’s website, one of its founders, Carl Brown, has launched a new venture called Erudite Hotels and Residences, which is a “boutique hospitality brand.” HotelFUBU is a brand licensed to Brown and his business partner, Cecily Groves, by FUBU.

The company made an offer of $400,000 to buy the hotel and put in at least $3 million in Renovations. The St. James was appraised at $900,000 by a Chicago company last year. From the sale price, $70,000 must be paid to an Atlanta real estate company that listed the property.