News for the Hospitality Executive
McKinney, Texas' Long-awaited Convention Center and Westin
is Over Budget and Behind Schedule; Developer Requests
Additional $5 million from the City
By Elizabeth Langton, The Dallas Morning News McClatchy-Tribune Regional News
McKinney's long-awaited convention center and hotel project is over budget and behind schedule, and its developer says he needs an additional $5 million from the city or the project may not be completed.
The Bridge Street Town Centre already is under construction at Central Expressway and Highway 121. But the mixed-use development of retail, hotel and office space, including a city-owned convention center, has run into funding problems.
Developer Chris Shane recently told the City Council that construction costs have escalated and that because of the tumultuous economy, few banks are issuing loans. Mr. Shane says he needs the additional city funding to leverage a loan.
"The lending environment has gotten dire," said Mr. Shane, vice president of California-based O&S Holdings. "We feel confident that we'll get construction funding, but not at the level we expected."
Officials with McKinney's Community Development Corp., a city sales tax-funded entity that already has promised $16.2 million for the project, say other financial obligations may prevent them from helping Mr. Shane.
"At this time, this is a very, very difficult request," said Ray Eckenrode, community development board chairman.
Last week, the board delayed a decision until its next meeting on Thursday.
The board won't start paying O&S until the project reaches pre-determined stages of completion. The development company, meanwhile, already has spent $15 million on the project.
City Council members, who must approve community development expenditures of more than $100,000, were apprehensive and disdainful of Mr. Shane's request. But they still want the project, envisioned as a landmark southern gateway to the city.
"This thing is a moving target, and that doesn't make me feel warm and fuzzy about any number that's been out there yet," said Mayor Bill Whitfield.
Said council member Gilda Garza: "I don't appreciate someone making a deal and coming back and asking for more money."
The $200 million project has been plagued with delays and other problems.
Plans call for a four-star Westin Hotel, an attached convention center, luxury spa, offices, shops, restaurants, movie theater and Collin College Higher Education Center all surrounding a lake on about 92 acres at the northeast corner of Central and 121.
The Community Development Corp. agreed to pay $16.2 million so the city can own the convention center. The McKinney Economic Development Corp., a separate entity, plans to spend $2 million on a parking garage and already has donated land to O&S and Collin College.
Although other incarnations of a convention center and hotel existed previously, negotiations over the Bridge Street Town Centre began four years ago. But since then, the original hotel developer dropped out, and the city was forced to wait as the state studied options for modifying the highway exchange.
Work began on the hotel, convention center and college in February, but the slowing economy has put off some construction. The spa and theater are on hold, and Mr. Shane said the market would not support all of the retail space that the development agreement requires him to build.
"We can still build this thing in phases and have a good project," Mr. Shane said. "But we can't put in $15 million and have a subpar investment or lose money. We just can't swallow the whole thing."
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|Also See:||McKinney, Texas Lands Developer to Build a 210-room Westin Hotel with 35,000 sq ft Convention Center / December 2006|
|Memphis Based Crescent Development Group Planning a $100 million Golden Tulip Hotel at Craig Ranch, in McKinney, Texas / April 2006|