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Clock is Ticking on the Wilmington, North Carolina City Council
to Pick a Convention Center Hotel

By Shelby Sebens, Star-News, Wilmington, N.C.McClatchy-Tribune Regional News

Aug. 12, 2011--The clock is ticking on the Wilmington City Council to pick a convention center hotel.

Faced with a past of failed attempts at getting a hotel built next to the nearly $60 million convention center, council members and the mayor are eager to get it right.

But they will have to weigh anxiousness to get a hotel built against a need to carefully negotiate the best deal.

This is the fourth time the city has tried to get a hotel developer on board since 2007. With the convention center now open and interest in downtown hotels peaking, the chance a hotel will actually get built is up. But it's not definite.

"A lot has to happen between now and the time the hotel has to open its doors," said Tony Peterman, senior partner of Strategic Advisory Group, the consultant firm hired by the city to help choose a convention center hotel. "It's not a slam dunk."

The consulting firm will recommend how to move forward with two proposals -- a Crowne Plaza or a Four Points by Sheraton -- for a convention center hotel during the council's agenda meeting Monday. While some city officials want to push on and say it's already taken too long to get the hotel built, others want more time and detail.

Councilman Charlie Rivenbark, who has a sign on his office door that reads, "time kills all deals," is getting impatient.

"I'm ready to see them. We need to break ground yesterday," he said.

But Mayor Bill Saffo, who says both developers have potential, isn't convinced it's time to pick one.

"Neither group has met all of the conditions," he said of the council's particular demands of a convention center hotel. Saffo said he wants to wait 30 to 60 days to see which developer can get closest to what the city wants.

"I'm looking for the person that's going to meet most of them," he said.

The city wants a full-service, upscale hotel with 200 rooms, a restaurant and a developer who has a financial guarantee it will be built as planned.

Fourth time around

Topping the city's priority list for a hotel developer is a financial guarantee and a commitment from the hotel chain. Council members want to be sure they don't get into a situation again where a developer says they can get a bank loan but then can't or says they will build a certain hotel but then change their minds.

"We've been burned there before," Councilwoman Laura Padgett said, referring to when Virginia-based Armada Hoffler switched from a Marriott to a Fairfield Inn in 2007, causing the city to decline the offer.

Each of the latest proposals has pros and cons, in the council's eyes. Cape Fear Investments and Development LLC has a commitment letter from the Crowne Plaza franchise. But, the company's plans call for 170 rooms with plans for expansion instead of the council's desired 200 rooms -- and the company is asking the city for some give.

The developer wants Nutt Street to be turned into a one-way street, help with parking and some tax incentives as well as a reduction in the required surety from $1 million to $250,000.

Peterman said it's not easy to get a deal between local government and the private sector and that often cities have to relent.

"A lot of times communities have to put in a fairly substantial financial incentive in place to attract a hotel," he said.

Councilman Ron Sparks said he would be willing to give in and cut the bond, which has been an issue for developers to post in the past but he wouldn't be open to tax incentives or abatements.

"I want them to be in the position to make money," he said.

Harmony Hospitality Inc. has a letter of interest from the Sheraton franchise, not a commitment, but the company doesn't ask for a reduction of the surety. And officials with the company have said they don't see a problem meeting that requirement.

Councilman Earl Sheridan said he doesn't see the past failed attempts at getting a hotel developer as the fault of the council but more a symptom of the bad economy and that he will be inclined to carefully weigh the options before making a decision.

"I still don't think we're going to settle for anything that's not good just because we're doing it the fourth time," he said. "The important thing is to get it right."

But more time spent without a hotel means more loss of business at the convention center. According to the Wilmington Cape Fear Coast Convention and Visitors Bureau, 25 convention center events have already been lost, at least in part for lack of an adjacent hotel. These 25 events represent 17,350 people and 23,455 room nights.

And seven groups have told officials they want to be contacted again once a hotel is in place, a potential of more than 5,000 people.

The recommendation

It's likely some council members will weigh the consultant's recommendation more heavily than others.

Councilman Kevin O'Grady said he's keeping his mind open on both proposals until he hears from the consultant. "I've never selected a hotel builder," he said, adding the city hired the consultant for an industry perspective.

The company has worked with Raleigh and Charlotte on luring hotels, Peterman said. Although he said public, private partnerships can be difficult because the cities are looking out for the community while companies are seeking a profit, Wilmington has a good chance.

"It looks immanently feasible to do this project," he said.

But Padgett said if she had not been absent at the meeting where council voted to pay $25,000 for the consultant, she would have voted against it.

"It's not that hard to go through those proposals," she said.

Timing has been an issue in the process. One of the three proposals that came back after the city sought developers in April pulled out of the running earlier last month. Wilmingotn Prime Hotels manager John Van Coutren said part of the reason was the time it was taking for the council to make a decision.

The consultant was hired in June, extending the timeline.

City council candidate Josh Fulton said the council's consultant was unnecessary and hurt the chance of having more options.

"I think that the city council is addicted to consultants. This is just another time when they've got a consultant that they didn't need to and it backfired," he said.

A growing interest

Downtown Wilmington could be getting more than just a convention center hotel. A planned Courtyard by Marriott at Second and Grace streets is in the process of getting a building permit from New Hanover County and will soon start construction. And interest has peaked in other available property.

"We've got a lot of momentum," Wilmington Downtown Inc. President and CEO John Hinnant said. He has received calls from developers interested in building hotels downtown.

Brian Eckel of Cape Fear Commercial said the vacant lot at 101 N. Front Street has been getting some interest too. He said he has received 20 calls about the property, though they were not all about hotels. He said there is a growing interest for more rooms downtown.

Van Coutren has said his company is still interested in building a Hampton Inn in downtown Wilmington.

Hinnant said the city's Vision 2020 study done in 2004 called for a 200 percent increase of hotel rooms downtown by 2020. He said when he's looking for hotel rooms for bands that play the Downtown Sundown it's nearly impossible to book downtown.

Though the uptick in hotel interest downtown means the market is looking up from bleak times a year ago, the downtown economy may still have a ways to go.

"Although I'd like to believe the commercial real estate market has turned the corner, I believe it may be a bit too early to make that call," Eckel said. "There is no doubt there is more optimism than a year ago, but we still have some hard times to work through."

Shelby Sebens: 343-2076

On Twitter: @ShelbySebens


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Copyright (c) 2011, Star-News, Wilmington, N.C.

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