September 14, 2010 --The developer who planned to build a hotel next to the Wilmington Convention Center is backing out because of financial constraints and obligations to other projects.

So it's back to the drawing board for the Wilmington City Council.

The city recently gave hotel developer John Q. Hammons an ultimatum: create a development agreement for the Embassy Suites next to the hotel or the city will have to seek other options.

Turns out Hammons doesn't have the time or money to build a hotel here. Other development obligations and difficulty obtaining financing are in the way, City Manager Sterling Cheatham said.

A representative for Hammons could not immediately be reached for comment.

So at the city's retreat Oct. 29, Cheatham and his city staff plan to present options to the council for moving forward.

Mayor Bill Saffo said the council will have to decide if they want to immediately go out to bid and attempt to get another hotel developer on board or wait and give the economy more time to bounce back.

"I don't think that we're going to have a problem getting a hotel," Saffo said.

But, he added, developers are having trouble getting financing in this economy.

Cheatham said it's been a year since the city put out a request for proposals for a downtown hotel and the economy hasn't improved much.

"Everybody's really being challenged right now to make ends meet. This developer is no different," he said.

John Q. Hammons was the only company to submit a viable hotel pitch to the city by the proposal deadline in late January. The company proposed a 14-story, 250-room Embassy Suites, with a full-service restaurant and lounge, top-floor meeting rooms, indoor/outdoor pool, fitness center and room service, among other amenities.

Saffo said the convention center is still booking events despite the lack of a hotel. He added once the center opens later this fall it will more enticing for potential developers.

He said because the city has a new council members since last deciding what it wants out of a hotel, the board may also review hotel specifics at the retreat.

The city has struggled to get a hotel planned for the convention center for years.

In 2007, the city council declined an offer from Virginia-based Armada Hoffler after the company's hotel proposal switched from a Marriott to a Fairfield Inn.

In 2009, the city terminated a contract with Wilmington River Group LLC. One reason was that the company didn't provide a $1 million surety in time.

Shelby Sebens: 343-2076

On Twitter.com: @ShelbySebens

-----

To see more of The Star-News or to subscribe to the newspaper, go to http://www.starnewsonline.com.

Copyright (c) 2010, Star-News, Wilmington, N.C.

Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com, e-mail [email protected], or call 866-280-5210 (outside the United States, call +1 312-222-4544). NYSE:WL,