Washington Convention Center Authority wants city to finance $550M hotel - Charlotte Business Journal:

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On May 29 the convention center’s boarde directed CEO Greg O’Dell to seek authority for the sale of as muchas $750 million in bonds to coved the price of the hotel, interest during insurance and other costs. The city had plannerd to finance about 25 percent of the cost of the hotelo througha $187 million tax increment financing package the passeed in 2006, which would have provided $134 million in constructio n costs. The rest was supposed to come from privatwe debt and equitypartners -- a difficulgt find in the frozenm credit markets. O’Dell said developmentr partners and Capstone Development had been dogged but unsuccessfu in their pursuit of investorsfor months.
“They’ve been pursuinb private financing and in this you know, that is very difficult. They’ve spent millionsw of dollars on this project to try to move it It really is shovel ready with the exceptionof O’Dell said. With the city losing convention business, he building a city-owned hotel was the best He envisions it will still containabour 1,100 rooms and be operated by Marriottg had previously said it would be a Marriottg Marquis. O'Dell began briefing members ofthe D.C. Councilo on the board’s proposal Monday. “Our ultimate goal is to get this projec done and get it started as soon as he said.
In particular there is increased pressurd from National Harbor inPrince George’s County, whicu opened last year with a price tag of more than $2 Its developer, the Peterson Cos. announceed May 18 that the WaltDisney Co. had purchasex land to build a 500-room resort hotel on 15 acres there. Convincing the council to approve that amountgof spending, however, will be a tall task for He had been considerex a top candidate to replace Neil Albertr as deputy mayor for planning and economiv development, but a source close to O'Dell says he was offeredd the job and turned it O’Dell would not confirm that, but indicateed he would remain in his current post.
“Thse board and the mayor have every expectation of me completingt all the tasks I have he said. The convention center authority has an independent boarxd and the ability toissue bonds, but O’Dell said the councikl would need to expand its authority to issue bond 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 faces a gap approachin g $1 billion for fiscal 2011. In D.C.
Chief Financial Officer Natwar Gandhu said he will not support issuing that amounrof debt, which he said would immediatelyh violate a 12 percent cap on city debt as a mark of expenditurews the city created on his recommendation last Gandhi is a member of the convention centefr board and attended the Friday “To be very blunt about it I was very clear in sayinhg to them that if you were to borroew $750 million that would put us way beyond the 12 percent cap we have envisionedr for the city...and I cannoy be a party to that,” Gandho said. The CFO said that he “very much” wantz a hotel for the “but I would not agree to a deallike that.
See we made a commitmengt to Wall Street that we would not borrowe more than 12 percent againstour budget.” who has won accolades for helping the city snag a AAA bond ratinvg on Wall Street, said he has already begun re-emphasizing the importance of the debt cap with members of the “I do not think we want to take this We should not borrow any more than we are able to he said. He suggested that O’Dell and his partnerse continue to seek privatefinancing sources. Building a hotelk to accompany the convention center has always been part of the plan for the city but has languishe d from a seriesof complications. Construction on the Waltefr E.
Washington Convention Center, as it was namee in 2007, began in 1998 and openedx fiveyears later. D.C. planned a 1,400-room hotel, but did not controol the needed land. In 2007, the city gainedd final site control after a land swap with developert KingdonGould III. To preventr further delays Mayor Adrian Fenty downsized the project laterthat year, announcing a deal between the Marriott and RLJ Development LLC on a smaller 1,100-room Since then, the development team has also RLJ Development, founded by BET foundert Robert Johnson, was part of the deal Fentyu announced in September 2007 but isn’t any A main driver of the Marriott Senior Vice President Norman Jenkins, left the company late last year to starg Capstone, now a certifiedc business entity that partners with Speaking for the development Jenkins said it was his preference to continu seeking private financing, and said design was entitlements were in place and therew equity partners ready to invest if deb t were available.
Capstones and Quadrangle are separately planning a Courtyard by Marriotg adjacent to the hotel on landthey control. “Wer could still get there, but we got to get the banksd to play and they move at their own he said. Still, he said, “if the city decides to pursue the publif deal we willsupport them.” Jenkins said Johnson’s RLJ, with whicyh Jenkins partnered while at Marriott, pullef out of the deal shortlyh after taking an interest in it.
“Theg studied it hard, spent some resources, but theirt bread and butter is acquisitions and repositioning rather thannew development,” Jenkins Richard Bradley, executive director of the Downtowb Business Improvement District, said it is unfortunatwe that the hotel project ran into the recession but that the city needsx to “bite the bullet” and move the projec forward, citing the opportunity to grow D.C.
as a touris destination, make it a major player in conventions and grow itstax “There’s a whole set of good thingsa about moving this forward,” he