Nonprofit Ownership Model; The City of Bay City
Serves as Sole Beneficiary of all Profits
DALLAS, Oct. 12, 2004 - The recently completed Doubletree Hotel Bay City - Riverfront, located along the riverfront in the heart of downtown Bay City, Mich., was developed under the nonprofit ownership model by Garfield Traub Development LLC. The City of Bay City will serve as the sole beneficiary of all profits under the ownership model.
"We introduced the nonprofit ownership model to the City as a way to build the only full-service hotel and conference center in the region without extending the City's general credit," said Tony Traub, principal of Garfield Traub. "The City will be the single beneficiary of all profit plus the residual value of the hotel. As the beneficiary of the hotel, the City's limited support is truly an investment, rather than a subsidy to a private owner/developer as originally contemplated."
Garfield Traub's introduction of and leadership of the investment banking and legal team guided this unique method for developing a hotel and ultimately led to its success. Garfield Traub also worked closely with the City and the design and construction team during the pre-construction phase to ensure that the design and program were consistent with the City's expectations and the operator's brand standards. The new development will serve to accelerate the economic growth of the central business district and riverfront.
"With the recent opening of the Doubletree, the City of Bay City is moving to the next level. This is the only full service hotel and convention center north of the metropolitan Detroit area," said Robert Belleman, city manager, City of Bay City Michigan. "As other economic development efforts continue in the area, we can point to the success of the center as the beginning. The community as a whole is very excited. Previously, we had made several attempts to execute this through the private sector, but the only way the City could be successful was through this model."
"Although lodging capital markets conditions did make conventional financing unfeasible, Garfield Traub was able to show the City how to finance the hotel through the establishment of a nonprofit ownership corporation, separate and distinct from the City," said Traub. "Because of the issuance of non-recourse tax-exempt revenue bonds, the City's general credit and taxing authority were not required. The financing will be repaid out of revenues generated by the facilities."
With Garfield Traub's assistance, the City identified and positioned nearly $20 million in federal, state and local grants, low-interest and no-interest subordinated loans and other incentives to pledge to the development. The remainder of the development costs was financed by $15,455,000 of tax-exempt hotel revenue bonds. The bonds are non-recourse to the City, and in September 2002 were successfully placed, the first non-rated hotel revenue bonds placed since the tragedies of 9/11.
The nonprofit ownership model will ensure that the facilities are constantly maintained and updated to guarantee the best possible experience for hotel guests and conference center visitors year after year, according to Traub.
Doubletree Hotel Bay City Description
The Doubletree Hotel Bay City - Riverfront is located at One Wenonah Park Place, Bay City, along the riverfront in the heart of downtown Bay City. The six-story, 150-room full-service upscale hotel and conference center is approximately 127,000 square feet, and includes approximately 25,000 square feet of conference, ballroom, pre-function and sales space, a three-meal restaurant with dedicated conference dining, a lounge, indoor swimming pool, fitness center, business center, gift shop and an attached garage and surface lots providing 310 parking spaces.
About Garfield Traub
Garfield Traub Development is a national real estate development firm that uses innovative and cost-effective financing methods to offer turnkey solutions tailored toward the requirements of the public sector and institutional clients. The company offers a complete development solution that includes site identification and acquisition, zoning and entitlement, financing, design and construction, leasing, management and asset management.
Over the course of more than three decades, the principals and officers of Garfield Traub Development LLC have developed more than 27 million square feet of all property types, and have financed more than $9 billion in debt and equity.
The experience of Garfield Traub's management team includes the financing and development of more than 100 hotels and $3.5 billion of hotel debt and equity under both private and nonprofit ownership structures and operating or asset management experience with more than 250 hotels and resorts. Recently completed hotel developments include the 412-room Sheraton Overland Park at the Convention Center, Overland Park, Kan., which received the Design Build Institute of America (DBIA) 2003 National Award and ranked among the top 10 of all 200 North American Sheratons in Starwood's 2003 Guest Satisfaction Index.
Garfield Traub Development LLC
|Also See:||Garfield Traub Selected From Field of Five Development Teams to Develop 500-room Sheraton Hotel Adjacent the Puerto Rico Convention Center / March 2004|
|The Overland Park, Kansas Convention Center and the 412-room Sheraton Hotel Hotel Opened at the Right Space, Right Time / July 2003|