Thursday, December 03, 2009

8th & K Street Hotel Proposal Update

A revised proposal by USA Hospitality, Inc. and their equity partners Consus Asset Management and Industrial General has been submitted for building a Marriott Renaissance Hotel at the corner of 8th & K Street. The new proposal includes a decrease in the number of hotel rooms from 409 to 300, and a decrease in the number of parking spaces from 372 to 350 while adding 100 condominiums on top of the parking garage as a second phase of the project. The total cost to build the project went up from $137 million to $162 million along with the needed city subsidy to build from $31.5 million to $33 million. The developer has asked that the city give them the land which is city-owned for free, and to forgive taxes on the hotel for the first few years of its operation as part of their needed subsidy deal.

The property has been tied up for 14 months in an "Exclusive Right to Negotiate" with USA Hospitality, Inc., but on December 8th the city staff will recommend releasing the Request for Qualifications for the 700 and 800 blocks of K Street with a due date of February 12, 2010. It’s anticipated that the city staff could return to the Redevelopment Agency by early April with several other proposals for the 8th & K Street site. In that time USA Hospitality must do three things.

1) Obtain stronger financial commitments from all equity financial partners.
2) Developer conduct an assessment of the Bel-Vue to determine the costs associated with preserving the fa├žade.
3) Complete negotiated business terms for inclusion in Disposition and Development Agreement.

I still don’t see the value in the city giving away $33 million in land and future taxes when just two blocks up the street at 10th and K Street Toni Giannoni is asking for $10 million to build a 165-room hotel that better fits our market. Toni also has an excellent record of finishing projects downtown where there are more development regulations that can tie up a proposal. In the case of the 8th and K Street design, the developer has a half block to work with, so instead of a massive parking garage the parking should be spread out over the entire half block above the lobby and ground floor retail but below the hotel rooms like has been done with ten other high-rises in downtown. If the city can nudge the developer to do this sort of design instead, the proposal would actually be shorter but the curb appearance would be far nicer. We don’t need another 6 story car garage at the corner of 8th & L Street; car garages have a history of deadening side walk activity for entire blocks and devaluing distinctive corners in our city. I hope both our City Council and planners consider the consequences, there is no need to repeat mistakes of the past again.

City owned parking garage across from city hall at 10th & I Street


wburg said...

The best part is that they are asking the city to give them the land for free, when the city just gave Mohanna $18.6 million to buy the land from him! While he is not technically an equity partner (a Las Vegas company, Industrial General LLC, run by a Theodor Bodnar, is taking his place) you can bet he is still in effect the total cost to the city will be more like $55 million. That's assuming that the city agrees to issue bonds for construction if private financing can't be obtained (the city won't, and private financing is unlikely.)

And yes, as Giannoni and others mentioned, building this project would make the 10th & K plan (the more practical one) less viable.

More telling is that the new plan didn't even bother mentioning the Bel-Vue, not even the token "preserving the facade" requirement that Robbie Waters mentioned. They certainly didn't follow through with contacting the local preservation community. That means in addition to $50+ million out of the city coffers, we also lose an architectural gem that could be very easily utilized as market-rate downtown housing.

Zwahlen Images said...

This saga is now over, developer Bob Leach withdrew his proposal on Tuesday to build his proposed hotel after financing — including public bond financing from the city — fell through. Let’s hope a better proposal comes though early next year. Now I hope Toni Giannoni can make his hotel proposal work at 10th & K St.