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Staubach Capital Partners May Call Off Plans to Buy and
 Renovate the Waco Hilton if Unable to Get $3 million
 in City Incentives

By J.B. Smith, Waco Tribune-Herald, Texas
Knight Ridder/Tribune Business News

Jul. 19, 2005 - WACO, Texas -- An investment group will likely call off its plans to buy and renovate the Waco Hilton hotel if the Waco City Council fails to approve a subsidy for the project today, City Manager Larry Groth said.

But supporters of another plan to build a city-financed hotel are urging the council not to take the bait, at least not yet.

Staubach Capital Partners, of Addison, has a contract to buy the Hilton and the nearby Courtyard by Marriott, but the deal depends on city incentives. The firm is seeking $3 million in city funds, which would build a new conference center next to the hotel.

The council postponed action on the offer last month, seeking more time to study it. Groth said the Staubach group's contract on the property is about to expire, and this meeting will be the last opportunity to make a decision.

"We've pushed about as far as we can with this date," Groth said Monday, after meeting on the issue with the council in executive session. "If we can't tell them yes or no by (today), the answer is no."

Officials with Downtown Waco Inc. and the Greater Waco Chamber of Commerce said they worry that approving the Hilton subsidy will scuttle negotiations with developer Faulkner USA to create a new 192-room Marriott conference center hotel a few blocks south on the Brazos River.

"I wouldn't be rushed into anybody's time frame," chamber President Jim Vaughan said. "I'm not saying (Staubach) won't walk. But if they do the deal with Staubach, does that mean we're not going to talk to Faulkner anymore?"

Vaughan said the city shouldn't do the Hilton deal without knowing how it would affect the market for a second conference center hotel or whether the city could afford to subsidize both projects. Faulkner USA has proposed that the city invest $8.5 million in the Marriott, plus a $185,000 annual operating subsidy.

Vaughan said the city should wait for the results of a hotel market study, which Groth is planning to commission this week.

"We like the hotel proposed on the river," Vaughan said. "We also like renovating the Hilton. If the city has limited dollars, and it does, and if it couldn't do both at the same time, it would seem we should get the final deal on both projects, put them side by side and say, 'Which gives us the most bang for our buck?' " Groth said the Faulkner deal will go forward on its own merits, regardless of the decision on the Hilton.

"I don't think the Hilton deal will scuttle the Faulkner deal," he said.

Groth said he and the council support another hotel on the river and want to continue talking to Faulkner about some form of city participation. He said he believes the city and Faulkner can negotiate a new financing plan that would reduce the city's upfront contribution.

The Staubach group also is seeking a promise from the city not to sponsor any other hotel projects for two years. Groth said that moratorium wouldn't prevent negotiations, only incentives for two years.

Under tonight's agenda item, the council would authorize Groth to negotiate and sign a deal with Faulkner, and Groth said there will be time to work out details later.

Downtown Waco executive director Margaret Mills, a supporter of the Faulkner deal, said she has not been involved in the discussions between the Staubach firm and Groth. She agreed with Vaughan that the city doesn't have enough information to make a wise decision on the Staubach deal.

"We would like to see a market analysis done on what size conference center and what size hotel we need, how many extra rooms we can support," she said. "Then we'll have a better picture of what the community needs. What is the cost? Do we need two conference centers?"

Officials with the Staubach project could not be reached Monday afternoon.


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