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Downtown Fort Collins, Colorado Hotel Hopes Still High

Economic Concerns Loom as Council and Downtown Development Authority
Try to Find Common Ground


by Pat Ferrier, The Coloradoan
September, 2011

Despite a prolonged economic downturn, hopes to one day have a hotel and conference center in Old Town Fort Collins live on.

The next step for the long sought after hotel in the heart of the city hinges on whether the Fort Collins City Council and Downtown Development Authority board of directors can find common ground.

The two entities plan to have a joint meeting to discuss the city's financial role in the project and whether to push on with a request for proposals for the hotel knowing that economic times might halt forward progress.

The city's finance committee wants to pull the plug. City staff and the Downtown Development Authority board of directors want to go ahead and see what the request yields either way a decision needs to be made.

"Let's either go after it and make it happen or say it's no longer our vision," City Manager Darin Atteberry said.

"From Day 1, I have always believed in the vision ... that a higher-end hotel would be fantastic for downtown and further brand Fort Collins," Atteberry said.

Though disappointed in the finance committee's desire to halt the project, Atteberry said he is hopeful a joint meeting between the DDA board and City Council will come out with a consistent approach to the hotel's future.

If the city does not take advantage of a fledgling rebound in the hospitality industry, it will lose what could be a strong economic driver for Old Town, said Nolan Rosall, president of RRC Associates, the consultant hired by the city to determine the feasibility of the hotel project.

Occupancy is improving, rates are inching up and when things are improving is the "best time to be coming in with a hotel," Rosall said. "There's a bit of a window we feel will close if the city and the development community are not able to take advantage of this opportunity and put it together relatively soon."

Longtime coming
A downtown hotel has long been envisioned by the DDA and city leadership as an economic driver for downtown. They have been working on it for the better part of three decades.

HOTELS AND LODGING BY THE NUMBERS

Occupancy rates

Year FC-Loveland State
2011 55.2% 59.5%*
2010 50.6% 56.3%
2009 45.3% 54.1%
2008 50.7% 60.6%
2007 55.6% 63.0%
2006 54.5% 60.9%
2005 57.2% 59.1 %

Average daily rate
Year FC-Loveland State
2011 $82.28 $108.29*
2010 $82.21 $103.43
2009 $82.25 $102.39
2008 $87.83 $112.61
2007 $89.15 $108.39
2006 $82.59 $100.48
2005 $74.80 $92.46

Revenue per available room (RevPar)
Year FC-Loveland State
2011 $47.64 $64.44*
2010 $41.61 $58.22
2009 $37.28 $55.43
2008 $44.49 $68.27
2007 $49.59 $68.32
2006 $45.05 $61.20
2005 $42.79 $54.47

Number of rooms
Year FC-Loveland State
2011 6,345 103,787*
2010 6,122 102,875
2009 6,125 101,687
2008 5,813 98,975
2007 5,519 96,398
2006 5,169 95,034
2005 5,066 94,640

Source: Smith Travel Research trend report
A hotel - an upscale boutique hotel with up to 20,000 square feet of meeting or convention space is the preferred option - could draw increased visitors to downtown, according to city documents.

The City Council's finance committee made up of Mayor Karen Weitkunat, Mayor Pro Tem Kelly Ohlson and council member Ben Manvel want to either terminate the city's financial commitment or let the project sit indefinitely.

City staff and the DDA want to push on and send requests for proposals.

Without finance committee support, the project is likely dead unless a private developer wants to build the project on its own or a majority of the council sides with the DDA.
That's why Ohlson, who also sits on the DDA board, said he wants input from the full council at a joint meeting with the DDA board.

"A lot of people are interested in it. Let's take it to the whole council and see where it goes ... see if we go to the next step," he said.

The project that would be partially subsidized by the city and taxpayers "is probably a bridge too far," he said. Ohlson questioned how far the public/private partnership should go in subsidizing certain businesses, in essence, picking winners and losers.

He hasn't closed the door on the "right proposal and right package, but I'm not there yet," he said.

Ohlson said he supports a hotel and additional meeting space downtown, the sticking point "is how much, if any, public dollars are involved."

Weitkunat, who previously owned a motel on North College Avenue, said she sees the need for a downtown hotel.

"I truly do understand that a hotel in downtown would be a great asset for anchoring downtown and for businesses, but "it can't come at a cost of the rest of the community," she said. "It's got to pretty much stand on its own. That's what the marketplace is all about."

Weitkunat said the proposal coming forward is too similar in size and scope to existing hotels and would result in stealing business from the Hilton and Marriott rather than bring new business and new dollars to the city.

But bringing the project forward would give the city and DDA an idea "of whether the private sector thinks there's a market there," Atteberry said.

"The RFP could very well generate proposals that are unacceptable or proposals where we say, 'wow, that's pretty attractive.' Until we send out the RFP's we're talking little more than informed theory," he said.

DDA board chairwoman Wynne Odell said there is value in taking the next step and putting out a request for proposals "to give us an idea whether any of this makes sense given the time, place and conceptual design.

"From my perspective, it seems a little shortsighted to not finish the original intent," she said

There's no commitment that the DDA or city would respond positively to RFPs.

"It feels a little incomplete to me if we can't take it to the next step," Odell said.

Still, Odell admits they could send an RFP and not follow through with development.

"The last thing we want to do is misrepresent to potential developers that we're absolutely going for it and have them putting in time and effort to put together proposals then say, 'we didn't really mean it.'

"If we are able to go ahead with the RFP, how do we phrase it so we get people to submit proposals for a commitment we may not be prepared to make at this time?"

If the city passes on the opportunity, Rosall said a destination hotel like the one proposed in Fort Collins will go somewhere, including the I-25 corridor or Loveland, and the city will miss out.

"We have data that show the market is improving," he said. Construction costs are still low, contractors want to make a deal, hoteliers want to get going and the interest in putting something together is higher, Rosall said.

Calling it "a critical time," Rosall said there are a multitude of benefits that come from allowing the project to move forward.

Lake Forest, Ill.-based private equity real estate investment firm Green Courte Partners has amassed $13 million of key downtown real estate for a potential hotel.

Green Courte's Realtor, Eric Nichols of Doberstein Lemburg Commercial Inc., said Green Courte would love to build a hotel in Fort Collins, but the economics aren't right.

"Right now, you can't get a hotel developer to build anything in this city," Nichols said. "I've discussed this with top hotel developers who would love to build in downtown Fort Collins but the economics don't support it and you would never get a bank to back it at this time."

Without financial backing from the city, Nichols said it would be difficult to get anything going right now.

"The need for a hotel downtown is there, everyone understands that," he said. "But what kind of hotel?" In our dealings with the big hotel guys they're calling for limited service hotel. This market doesn't support the size of meeting space unless they (the city) wants to own it."

The amount of city investment is exactly the bone of contention with the city's finance committee.

Economic times
The city and DDA have yearned for a downtown hotel for years and have come close at least twice.

In 1984, the DDA and city agreed to provide $6 million in financing toward a 200-room Radisson Hotel on a triangular block bordered by College Avenue, Pine Street and Jefferson.

The deal never materialized, but the same year saw the Fort Collins Marriott and the University Park Holiday Inn, now the Hilton Fort Collins, break ground on their projects.

It looked like the city would finally pull off a hotel in 2008 when it contracted with Corporex, a Kentucky-based hotel developer, to build a hotel and conference center on city-owned land on Remington Street.

The deal for the 150-room, nine-story project between East Oak and Olive streets hit the skids as the economy soured and banks clamped down on lending forcing major deals to fall through.

In August 2009, the DDA announced it was continuing its search for a hotel partner. It hired consultants to figure out what kind of product was needed downtown, identified several potential sites, including Remington Street, and is now at the point where it has to decide what's next.

Weitkunat said she does not support a downtown hotel because it places the taxpayers at a potential financial risk.

She said it was not the best answer if the idea is to increase the viability of downtown since Fort Collins is not a destination and a hotel would probably not be supported by people wanting to come for it.

"I expect the result from this joint meeting will be whether or not to continue pursuing it and send out the RFP and see what we get or just stop," Atteberry said. "A higher end boutique with conference space is a well-defined vision and preliminary data has shown that model can work."

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Contact:

Pat Ferrier
PatFerrier@coloradoan.com

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