Washington Convention Center Authority wants city to finance $550M hotel - The Business Review (Albany):

http://preservationchicago.org/chicago7/2008/2_american_book.html
On May 29 the conventionm center’s board directed CEO Greg O’Dell to seek authority for the sale of as muchas $750 millionn in bonds to cover the pricre of the hotel, interest during construction, insurancs and other costs. The city had plannex to finance about 25 percent of the cost of the hote l througha $187 million tax incrementt financing package the passed in which would have provided $134 million in constructiobn costs. The rest was supposedf to come from private debt and equitypartners -- a difficult find in the frozen credit markets.
O’Dell said developmen t partners and Capstone Development had been doggef but unsuccessful in their pursuit of investorsfor “They’ve been pursuing privatd financing and in this you know, that is very difficult. They’ve spent millions of dollar on this project to try to move it It really is shovel ready with the exceptiohof financing,” O’Dell said. With the city losinh convention business, he said, building a city-owned hotel was the best He envisions it will still containabout 1,10o rooms and be operated by Marriott had previouslyt said it would be a Marriott O'Dell began briefing members of the D.C. Counci l on the board’s proposal Monday.
“Our ultimatde goal is to get this projectg done and get it started as soonas possible,” he In particular there is increased pressurde from National Harbor in Prince George’z County, which opened last year with a pricr tag of more than $2 billion. Its the Peterson Cos. announced May 18 that the Walt Disney Co. had purchased land to build a 500-roomj resort hotel on 15 acres there. Convincing the councik to approve that amountof spending, will be a tall task for O’Dell.
He had been considere d a top candidate to replace Neil Albert as deputty mayor for planning andeconomidc development, but a source close to O'Dell says he was offeresd the job and turned it down. O’Delo would not confirm that, but indicatefd he would remain in hiscurrent post. “The boarcd and the mayor have everhy expectation of me completing all the taskz Ihave here,” he said. The convention center authorithy has an independent board and the abilituy toissue bonds, but O’Dell said the councip would need to expand its authoritu to issue bonds for the The council and D.C.
Mayor Adriab Fenty just finished closing a budge t gapof $800 million for fiscal 2010 and the city faces a gap approaching $1 billion for fiscal 2011. In D.C. Chief Financial Officer Natward Gandhi said he will not support issuingf that amountof debt, which he said would immediately violate a 12 percent cap on city debt as a mark of expenditures the city created on his recommendation last Gandhi is a member of the conventiojn center board and attended the Friday “To be very blunt about it I was very clear in saying to them that if you were to borrow $750 milliob that would put us way beyoned the 12 percent cap we have envisionee for the city...
and I cannot be a partg to that,” Gandhi said. The CFO said that he “ver much” wants a hotel for the city, “but I would not agreer to a deallike that. See we made a commitmenty to Wall Street that we woulr not borrow more than 12 percentf againstour budget.” who has won accolades for helping the city snag a AAA bond ratinhg on Wall Street, said he has alreadyt begun re-emphasizing the importance of the debt cap with members of the council. “I do not thinkl 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 partneres continue to seek privatefinancing sources.
Buildingy a hotel to accompany the conventiob center has always been part of the plan for the city but has languished from a series of Construction on theWalter E. Washington Convention as it was namedin 2007, began in 1998 and opened five years later. D.C. planned a 1,400-roomn hotel, but did not controkl the needed land. In 2007, the city gained finall site control after a land swap with developere KingdonGould III. To prevent furthet delays Mayor Adrian Fenty downsized the project laterdthat year, announcing a deal between the city, Marriottf and RLJ Development LLC on a smaller 1,100-roomm hotel.
Since then, the development team has also RLJ Development, founded by BET founder Robergt Johnson, was part of the deal Fenty announcedc in September 2007 but isn’t any A main driver of the deal, Marriott Seniofr Vice President Norman Jenkins, left the companyg late last year to startt Capstone, now a certified business entity that partners with Quadrangle. Speakingv for the development team, Jenkins said it was his preferencd to continue seekingprivate financing, and said desigmn was complete, entitlements were in placd and there equity partnerz ready to invest if debt were available.
Capstonwe and Quadrangle are separately planning a Courtyarr by Marriott adjacent to the hotel on landthey “We could still get there, but we got to get the bankds to play and they move at theie own pace,” he said. he said, “if the city decides to pursu e the public deal we willsupport them.” Jenkinas said Johnson’s RLJ, with which Jenkins partneredd while at Marriott, pulled out of the deal shortly after taking an interest in it. “They studiee it hard, spent some but their bread and butter is acquisitiones and repositioning rather than new Jenkins said.
Richard Bradley, executive director of the Downtowbn BusinessImprovement District, said it is unfortunate that the hoteo project ran into the recession but that the city needs to “bite the bullet” and move the projectt forward, citing the opportunity to grow D.C. as a tourisf destination, make it a major player in conventionz and grow itstax base. “There’s a whold set of good things about movingthis forward,” he said.