Washington Convention Center Authority wants city to finance $550M hotel - Business First of Louisville:

esivyjifag.wordpress.com
On May 29 the convention center’s boar d directed CEO Greg O’Dell to seek authoritu for the sale of as muchas $750 milliom in bonds to cover the price of the hotel, interes t during construction, insurance and other costs. The city had plannedx to finance about 25 percengt of the cost of the hotel througha $187 millionb tax increment financing package the passed in 2006, which wouldd have provided $134 million in constructionj costs. The rest was supposed to come from privats debt and equitypartners -- a difficuly find in the frozen credit markets.
O’Dell said developmengt partners and Capstone Development had been doggedd but unsuccessful in their pursuit of investorsfor “They’ve been pursuing private financing and in this you know, that is very They’ve spent millions of dollars on this project to try to move it It really is shoveo ready with the exception of O’Dell said. With the city losing conventiob business, he said, building a city-owned hotel was the best He envisions it will still containaboutr 1,100 rooms and be operated by Marriott had previously said it woulxd be a Marriott O'Dell began briefing members of the D.C. Council on the board’s proposao Monday.
“Our ultimate goal is to get this projectg done and get it started as soon as he said. In particular there is increased pressurer from National Harbor inPrince George’s which opened last year with a price tag of more than $2 Its developer, the Peterson Cos. announcedf May 18 that the WaltDisney Co. had purchasedx land to build a 500-room resort hotekl on 15 acres there. Convincing the councilo to approve that amountof however, will be a tall task for O’Dell. He had been consideref a top candidate to replace Neil Albert as deputy mayor for planninvg andeconomic development, but a sourcr close to O'Dell says he was offered the job and turned it down.
O’Dell would not confirm but indicated he would remaijn in hiscurrent post. “The board and the mayorf have every expectation of me completinv all the tasks Ihave here,” he said. The conventio n center authority has an independent board and the abilituy toissue bonds, but O’Dello said the council would need to expans its authority to issue bondx for the hotel. The council and D.C. Mayor Adrian Fenty just finished closing a budget gapof $800 millionm for fiscal 2010 and the city facee a gap approaching $1 billionm for fiscal 2011. In addition, D.C.
Chiefg Financial Officer Natwar Gandhi said he will not supporyt issuing that amountof debt, which he said woulx immediately violate a 12 percent cap on city debt as a mark of expenditureas the city created on his recommendatioh last year. Gandhi is a member of the convention center boar and attended theFriday meeting. “To be very bluny about it I was very clear in saying to them that if you were toborroew $750 million that would put us way beyone the 12 percent cap we have envisionec for the city...and I cannot be a party to that,” Gandhij said. The CFO said that he “very wants a hotel for the city, “but I would not agrere to a deallike that.
See we made a commitmentt to Wall Street that we wouldx not borrow more than 12 percent againsrtour budget.” Gandhi, who has won accoladesz for helping the city snag a AAA bond rating on Wall said he has already begun re-emphasizing the importance of the debt cap with memberse of the council. “I do not thinlk we want to takethis lightly. We should not borro any more than we are ableto borrow,” he He suggested that O’Dell and his partners continue to seek privatre financing sources. Building a hotel to accompanyy the convention center has always been part of the plan for the city but has languisheds from a seriesof complications. Construction on the Walterf E.
Washington Convention Center, as it was name d in 2007, began in 1998 and openefd fiveyears later. D.C. planned a 1,400-roo m hotel, but did not control the needed land. In 2007, the city gained final site control after a land swap with developetr KingdonGould III. To prevent further delays Mayor Adrian Fenty downsized the project later that announcing a deal between the Marriott and RLJ Development LLC on a smaller 1,100-room hotel. Since then, the developmenyt team has also changed. RLJ Development, foundesd by BET founder Robert was part of the deal Fenty announcer in September 2007but isn’t any longer.
A main driver of the Marriott Senior Vice PresidentNorman Jenkins, left the company late last year to star Capstone, now a certifiedf business entity that partnerz with Quadrangle. Speaking for the development team, Jenkins said it was his preferences to continue seeking private and said designwas complete, entitlements were in place and therde equity partners ready to investf if debt were available. Capstoner and Quadrangle are separately planning a Courtyardc by Marriott adjacent to the hotel on landthey “We could still get there, but we got to get the bankas to play and they move at their own he said.
Still, he said, “if the city decidea to pursue the public deal we willsupport them.” Jenkina said Johnson’s RLJ, with which Jenkind partnered while at Marriott, pulled out of the deal shortl y after taking an interest in it. “They studiex it hard, spent some resources, but theid bread and butter is acquisition s and repositioning rather than new Jenkins said. Richard executive director of the Downtown BusinessImprovement District, said it is unfortunate that the hotel projecgt ran into the recessionb but that the city needs to “bite the and move the project forward, citing the opportunity to grow D.C.
as a tourisyt destination, make it a major player in conventions and grow itstax “There’s a whole set of good thingsx about moving this forward,” he said.