D.C. tentatively OKs paying $72M more to finance convention center hotel
By: Michael Neibauer
Examiner Staff Writer
July 1, 2009
The District tentatively agreed to provide the developers of a proposed convention center hotel with an additional $72 million in public financing to ensure the project moves forward during a difficult economic period.
Council approval brings the 1,174-room Marriott Marquis, slated for a 2-acre site adjacent to the Walter E. Washington Convention Center, one step closer to reality. Another vote is needed before the measure can become law.
The revised deal requires the District to raise its contribution from $134 million to $206 million. The increase includes a $25 million, 25-year loan to the developer, a $22 million cash contribution and a $25 million increase to the tax increment financing bond issuance, taking the total bond sale to $159 million.
Developers Quadrangle Development Corp. and Capstone Development are to contribute $331 million, or 62 percent of the project's estimated $537 million price tag.
The public loan and cash contributions are meant to come from the Washington Convention Center Authority's cash reserves, according to Chief Financial Officer Natwar Gandhi. But Gandhi's fiscal impact statement provides some wiggle room for the D.C. government to step in if necessary.
"It is a cornerstone project that can help revitalize the surrounding Shaw neighborhood and can be a catalyst for local small-business growth much like the Verizon Center was a catalyst for revitalizing Chinatown," at-large Councilman Kwame Brown, chairman of the Economic Development Committee, said of the hotel.
Mayor Adrian Fenty briefly floated the idea of full public financing, citing the bad economy and the developers' inability to attract private money. But the sides ultimately found investors willing to back the project.
Though he supported the deal, Ward 6 Councilman Tommy Wells questioned whether the hotel is the silver bullet for convention success.
"As we make this investment, I think we have to continue to really be sure that this is the main thing that is causing our convention center to not be fully performing," Wells said. "I would suspect there are other reasons as well. Maybe creating better hubs of transportation, creating more opportunities for restaurants and other amenities around the convention center. But I don't think this is a slam dunk, and that's why I'm glad the District is not fully funding this hotel."
Ward 2 Councilman Jack Evans recused himself from the vote because his law firm, Patton Boggs, represents Marriott.
