It looks as though Toni Giannoni will continue to pursue building a 165-room hotel in downtown Sacramento at the corner of K & 10th Street even though the 8th & K hotel proposal is still moving forward. It’s anticipated to be an urban style Marriot designed by the renowned hotel designer Marc Hornberger who has also designed the W hotels in San Francisco. This hotel concept includes a pool, approximately 8,000 square feet of meeting space, and downstairs bar and lobby area with grab and go food service, as well as ground floor retail along K Street. The proposed Courtyard by Marriot would be a 12-story, upscale, select service hotel with a sophisticated urban design.
The development team is the 10th and K Street Hotel Investors, LLC, which is a partnership of local developers with a strong track record of development in Sacramento. The partnership includes Brian Larson who was part of the development team for the Citizen Hotel, Jim Brennan who recently completed the office condominium project at 1001 K Street, and Toni Giannoni who has a long development history in Sacramento including Meridian Plaza and the recently completed Marriott Residence Inn at 15 th and L Streets.
The total development cost is estimated to be $43 million. In today's capital market this project can expect to attract an estimated $22 million in conventional financing and $11 million in equity investment, leaving a development gap of $10 million. City staff has begun researching public funding options to assist in the development of this project.
On Tuesday November 3rd, the city will authorize city staff to evaluate several options to fund the gap of $10 million with the posibility of a Transit Occupancy Tax (TOT) fund or to also use the Recovery Zone Facilities Bonds made available by the American Recovery and Reinvestment Act of 2009. The bonds allow for lower financing rates, but require some sort of financial backing from the City or the Agency. City staff is working with the City Treasurer, the Budget Office, and the City Manager to investigate the possibility of utilizing this unique bonding opportunity.
Another option is a HUD 108 loan for approximately $4.7 million combined with a second loan for the remaining $5.3 million. City staff would also investigate potential resources within the City and Agency that could be utilized as capital for the second loan.
In either financing scenario, the City or Agency issued bonds or loans would be repaid or the payments pledged would secure the developer's financing.
If the City Council approves the recommendations to move forward, this will allow city staff to further investigate the financial feasibility of the hotel project so that more formal business terms can be presented at a later date. With this authorization, the developers would expend funds to further refine the hotel concept and result in moving the proposed project forward.