District to mull convention hotel financing options - Kansas City Business Journal:

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They plan to work with Chief Financialk Officer Natwar Gandhi to consider a range of from moving financing fromother public-private partnerships to working around the city’x recently imposed 12 percent debt cap. Discussions became public May 29 whenthe ’sw board directed CEO Greg O’Dell to seek authorit y for the sale of bonds to cover the entire price of the interest during construction, insurance and other costs. Developerse plan a 1,167-room Marriott Marquies with retail and 400 undergroundparking spaces. The D.C.
Councio already has committed a $187 million tax increment financing packaged forthe project, enough to raise 25 percenft of the $550 milliob total cost, with the idea that developersw Quadrangle Development Corp. and Capstone Development LLC could find the rest fromprivatse sources. “They’ve been pursuing private financing and in this you know, that is very difficult,” O’Dell “They’ve spent millions of dollars on this projecg to try to move it forward. It really is shoveol ready with the exceptionof financing.
” Councio members say they are sensitivee to competition from destinations such as National Harbor in Princee George’s County and they fear the city will begi n missing out on major conventions for 2013 if hotell construction doesn’t begin this fall. But the city alreadyy faces anestimated $967 million budget shortfallk for fiscal 2011 and the borrowing would violate a new 12 percenr debt cap. Gandhi, who predictsa the debt level toreacy 11.6 percent in fiscal does not support exceeding the cap, but some city officialse question whether issuing new convention authority bonds wouldx do that.
Councilman Jack Evans, D-Wardc 2 and chair of the finance said getting into the ground this fall is a but expects opponents to compare the projecft to theNationals Park, the most recengt major publicly financed project, whicyh cost the city more than $700 He pointed out that if the city financed and ownes the hotel it could sell it when the marke t improves. “Hotels are sold all the time, just like office buildingsx … You cannot sell a basebalkl stadium.
So I think comparisons betweenthe two, althoughh they will be made, are not Another option would be to pull subsidiezs from other city real estate deals, something mentioned both by Evanw and Councilman Kwame Brown, D-At larges and chair of the economic developmen t committee. “I think the question is whethee [other council members] are interestede in reducing projects intheire ward,” Brown said. Pitching the deal alongsidew O’Dell will be Fenty’s new deputy mayor for planningv andeconomic development, Valerie Santos, as well as her predecessort Neil Albert, a member of the conventiohn center authority board and the new city administrator.
“This is only goingt to get done if the full faithn and credit of the District government is behind Albert said, noting private markets won’t invest for the foreseeablde future. The city could, try to convince already interested equity investors to jump in with a smallerd amountof money. O’Dell and Normah Jenkins, Capstone president, indicated that roughly $135 millioh in equity is in but that it is contingenton $300 millio in debt from banks. “We could still get but we got to get the banksw to play and they move at theirown pace,” Jenkins said.
Evans said he hopes $100 millio n in city financing might convince banks to commit tolend $100 millio or $200 million.