When I first saw this article in the Sac Bee, I was in shock. I didn't understand how this was a good deal for the city.
There were so many missing details as to what was part of the deal you couldn't make much out of it. It said the city would net 45-47M, but it wasn't really clear if the city would still have the debt from the 91M, or Taylor/CIM would be paying those off. Net usually mean profit, but they should have been more clear.
It made no sense that the city would spend 91M to build the hotel, then turn around and sell it for 45M a few years later. So there had to be more details out there.
The Business Journal then came out with its article with many more details than the Sac Bee article (are any of you really surprised??)
So the deal looks like it would be a 45-47M profit for the city, yearly taxes from the hotel would go up a bit, and the deal would have the buyer pay off the bonds issues.
Now I think how the bonds have been paid to date is from the profits of the hotel (someone correct me if I am wrong), so if that is the case the city makes out pretty good. Plus, they have been able to draw from $$ into the local economy from bigger conventions.
I have no problem with taking the profit and using it in the downtown area, but I'm not sold on 50% of the money going back to Taylor/CIM for projects within downtown. If I have to guess, I would bet the money will go toward projects around 10th and K.
Taylor, CIM hope to buy Sheraton Grand
Sacramento Business Journal - by Mark Anderson Staff writer
Sacramento developer David Taylor and the CIM Group Inc. have jointly proposed to buy the 503-room Sheraton Grand Hotel in a deal that would provide money to the city for downtown redevelopment.
The city and Taylor built the hotel by selling $91 million in 30-year revenue bonds in 1999. The city also contributed a 700-space parking garage and $8 million in cash. Taylor and his partners contributed the historic Sacramento Public Market building at 13th and J streets. That structure, designed by architect Julia Morgan, houses the public spaces and meeting rooms of the hotel.
A sale would have to be approved by the Sacramento Hotel Corp., which owns the hotel and administers the bonds, and also the Sacramento City Council. The council will consider the proposal in a closed hearing Tuesday, said Mayor Heather Fargo. She said she is urging the sale.
If the hotel is sold, it would provide the city with net proceeds of $47 million.
The hotel now every year spins off $3.4 million in taxes to the city. With a sale, the taxes will rise and the city would collect $4 million annually.
"It shows what a great investment we made with the Sheraton," Fargo said. "The Sheraton has been a real success story,"
Half of the $47 million profit would be used to go back to David Taylor and Los Angeles-based CIM group in developing priority projects on J, K or L streets downtown.
If approved, the CIM Group would make a cash payment for the hotel, retiring all the bonds. The first opportunity for early payment of the bonds is July 2009, and the money would be held in an account until that time.
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