Decenber 24, 2008 --University Square developers dramatically retooled their proposed multimillion-dollar project near Arizona State University, changing it from a mostly residential development to a hotel and convention center.

Developers dropped plans to build condos, offices and a handful of stores and opted for a 1.2 million-square-foot structure with a 95,000-square-foot convention center, 111,000 square feet of retail space and a 14-story hotel topped with restaurant space.

Tempe gave its approval to the $200 million project earlier this month.

Scott Turkington, vice president of SAXA, the firm developing the project, said the company hopes to acquire financing within three months and is negotiating with Hilton Hotels Corp. to manage and operate the hotel and convention center.

University Square would occupy an entire city block north of University Drive between Myrtle and Forest avenues.

"We have a great site," Turkington said. "It's right in the heart of the city."

Stephanie Nowack, president and CEO of the Tempe Convention & Visitors Bureau, said there is a need for conference space in Tempe. She said the development will offer the city valuable exposure to visiting corporations.

"You never know what that might turn into," she said. "Sometimes, companies or individuals will come to an area for a meeting and then they might end up relocating their business (there)."

University Square's developers aren't alone in hoping to build downtown Tempe's first hotel and convention center.

Las Vegas-based Paragon Development received approval from the city early this year to move forward on a four-star hotel and small-group convention center at Seventh Street and Mill Avenue.

"We were all ready to go," said John Cahill, vice president of planning and development. Soon after, the bottom fell out of the credit market, he said.

Cahill said the area can't support two centers, so the winner will be the company that acquires financing first.

"I think anybody who tells you right now with any kind of sense of certainty when they can get financing ... is very optimistic," he said.

Lexie Van Haren, a Phoenix Convention Center spokeswoman, said officials aren't worried that University Square would siphon business from them.

That's because Phoenix's 900,000-square-foot convention facilities can accommodate much larger audiences than those planned in Tempe.

"Because of our size, we're looking at conventions that are anywhere from 8,000 people to 50,000 people," she said.

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