A controversial hotel and separate parking garage project totaling $50 million — in the works for several years in historic downtown Beaufort — have been placed on hold. The delay results from rising financing and construction costs brought on by the time needed to respond to legal challenges, according to the developer. The large-scale projects have dominated development discussions in the city for several years because of their proposed locations within the 313-year-old city’s historic district.
Dick Stewart of 303 Associates, the developer, told the Beaufort Gazette and Island Packet on Friday that he actually made the decision to pause the projects months ago as a result of litigation brought by the Graham Trask, a downtown property owner, and Historic Beaufort Foundation. HBF and Trask have fought the hotel and parking garage every step of the way, arguing they are too big for Beaufort’s quaint historic downtown. Stewart says the projects meet the city’s development rules and that the parking garage will meet demand for additional downtown parking. Stewart had planned to make a portion of the parking spaces in the garage available for public parking.
“As a result of the litigation filed against us, our ability to close on financing was delayed,” Stewart said. “During that period of time, the cost of construction went up dramatically and the cost of borrowing went up pretty dramatically.”
Trask disputes the legal challenges he has brought against the city over its approval of Stewart’s proposed hotel and and parking lot are the reasons for project delays. “He can say it’s because of me, but the reason he’s not moving forward is his own decision because he has all the approvals,” Trask says.
Legal challenges by Trask and HBF against the city over the projects are pending.
HBF Executive Director Cynthia Jenkins said a pause in the projects is good for the city in the long run because they threaten its reputation as one of the best small towns in the South.
“I hope it brings an opportunity to scale down,”Jenkins said.
With the parking garage now on hold, Stewart said, one big issue facing the city is how it will meet an estimated shortfall of more than 450 parking spaces in the downtown area. Stewart thinks the city should call a forum to discuss the issue.
“I look forward to hearing form him (Trask) and Cynthia (Jenkins) on where they think folks should park,” Stewart said.
In July 2023, Stewart took the unusual step of filing a lawsuit against Trask. The lawsuit blames a “conspiracy of misinformation” by Trask about the hotel and parking garage for delays that have resulted in $40 million in losses. The lawsuit seeks $120 in damages — $40 million in actual damages from lost income, inflation-related increases in material labor and financing costs due to construction delays. The is rest is punitive damages including damage to reputation, personnel time and legal costs.
The decision was made to pause the project when that lawsuit was filed, Stewart said.
Trask insists that his only motive in taking legal action is holding the city accountable for what he considers illegal approvals of the hotel and parking garage.
“This is not about Graham versus Dick Stewart,” Trask said. “This is about Graham holding the city accountable for its own laws.”
Until financing can be arranged and construction costs come down, the hotel and parking garage developments won’t be moving forward, Stewart said. 303 Associates asked the city last year if it was interested in funding the garage but the city declined, Stewart said. Apartments that 303 Associates is also planning for the downtown, however, will proceed, Stewart said.
Stewart described the delay in the projects as “another bump that comes in the road,” similar to the 2008 financial crises.
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