May 15--The Peabody Hotel Group, owner of the Peabody Little Rock hotel, will ask the Little Rock Board of Directors on Tuesday to allow a citywide election to approve a $19 million revenue bond issue to renovate the Little Rock Hilton Inn. 

"After the tragedies of Sept. 11 and the economic downturn for the travel and lodging industry which followed, private financing for a hotel project of this magnitude and in this location is not economically feasible," Marty Belz, chairman of the Peabody Hotel Group, said in a prepared statement. 

The group acquired the Hilton Inn out of foreclosure in September 2000 and has been working on plans to redesign the hotel, Bruce Burrow, president of Belz-Burrow Development Group in Jonesboro, said Tuesday. Belz-Burrow is a partnership with Belz Corp., which owns the Peabody Hotel Group. 

At the time of the purchase, the Peabody group expected renovations of the Hilton Inn to cost about $13 million. The Peabody group completed a $40 million renovation of the Peabody Little Rock hotel earlier this year. 

The Hilton Inn is at Interstate 630 and University Avenue in Little Rock. 

Burrow said the bond issue would not cost the city anything. The Peabody Hotel Group will pay for special election, which would be held July 9. 

If approved, the capital improvement bonds are expected to be issued by the Little Rock Residential Housing and Public Facilities Board. The board can issue bonds for other capital improvements, such as housing, hospitals, colleges, or water and sewer systems, without voter approval. Revenue from the Hilton Inn would pay off the bond issue. 

Burrow said a constitutional amendment requires bond issues for hotels to be approved by an election. 

"This will help kick off redevelopment along University Avenue," Burrow said. 

Belz said that without the revenue bond financing, the renovation won't happen. 

Conventional funding for the renovation would require too much equity to make it feasible, Burrow said. 

After the renovation, the Hilton Inn, which opened in 1978, will have 268 rooms, four suites, 14,000 square feet of meeting space and a restaurant. 

The renovation would include a remodeled lobby, a refurbished courtyard and other exterior enhancements. 

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(c) 2002, Arkansas Democrat-Gazette. Distributed by Knight Ridder/Tribune Business News.