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A Smaller Downtown Sacramento Hotel Plan May Compete
 for City Tax Breaks with Luxury Hotel Proposal

By Bob Shallit, The Sacramento Bee, Calif.McClatchy-Tribune Regional News

July 21, 2009 --Another hotel project is being proposed for the downtown area -- this one by three developers who envision a 12-story "select-service" Marriott, Hyatt or Starwood at the key corner of 10th and K streets.

The developers say their 165-room concept makes more sense than the luxury 409-room project being proposed by another development team for the corner of Eighth and K.

"There is a 400-room hotel in downtown Sacramento's future, clearly," says Brian Larson, a hotel development veteran who is teaming on this project with Tony Giannoni and Jim Brennan.

"But when will that occur?"

Not soon, he suggests, saying his group's 165-room plan is the "right size" for a market that's seen room occupancy slide over the past two years.

The developers also say the most important need in the downtown market is for an upscale hotel priced 10 to 20 percent below the full-service lodging already in the downtown core.

A street-level restaurant isn't part of the plan. And some luxury service touches might be absent.

But Larson says the building -- at the intersection's southwest corner -- would have an "urban, sophisticated footprint," with swimming pool, fitness facilities, business center and meeting space.

The architect, Hornberger + Worstell of San Francisco, has been involved mostly with upscale projects -- including W Hotels -- and will be producing a "spectacular design with outstanding curb appeal," says Larson, who was part of the team that built the Citizen Hotel.

His partners also have lots of experience. Giannoni built the Marriott Residence Inn at 15th and L streets while Brennan developed office condos at the northeast corner of 10th and K.

The developers say their $43 million project would be financed by a combination of equity investments from local people and possibly a federally subsidized, city-issued bond that would be repaid by the developers.

The new proposal creates a choice for city officials: Kick in about $31.5 million in the form of land and various tax breaks for the 25-story hotel proposed by Bob Leach, Moe Mohanna and others at Eighth and K. Or provide about $10 million in tax breaks and other kinds of assistance for the new proposal.

Both projects would be great additions, says Leslie Fritzsche, Sacramento's downtown development manager. But only one is likely to get city backing.

"The market will not support the addition of that many rooms," she says.

Reach Bob Shallit at (916) 321-1049. Back columns:


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