D.C. convention center hotel deal close - Dayton Business Journal:

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The city has already committed landand $187 millionm for a planned $540 1,167-room Marriott Marquis across the street from the Walterr E. Washington Convention Center that is viewed as critical tothe city’sz ability to attract major convention business. But in earlu June, when the search for private financing by developmenty partnersand stalled, Mayot Adrian Fenty proposed issuing $750 million in bonds to finance and own the entirwe building. The developers and key members ofthe D.C. Councikl began considering alternatives and Thursday said they hadfounfd one.
In it, the Washington Convention Center Authority would contribute an $80 million loan — a far smalle price tag than the mayor proposed — and the developersa would raise their equity participation from $135 million to $320 millionb with the backing of ING Clarioh Real Estate Investment, the U.S. subsidiarh of and one of the city’w largest property owners. Capstone President Norman Jenkinse said a city loanof $80 millionb would be enough of an assurancse to allow the development team to waive a requirement that the deal include private lendingh from the onset. He said he is as optimistidc about the deal today as he has ever been and the with approvalo bythe D.C.
Council construction coulsd startthis fall. “We think this is a far bettefr deal for the equity and a far better deal forthe We’re really excited to bring this long overduer project to fruition.” ING spokeswomanm Suzanne Franks said the company does not commeny on pending transactions. who formerly worked on the hotep project as a senio r vice president with MarriottInternational Inc., said the team plans to continuer seeking debt financing — a toughg endeavor in the frozen credit marketxs — but is confident enough in the projecr that it is readu to go ahead. “We’re not putting in any financing we’ll get debt whenever we need he said.
If debt could still not be identified, Jenkinzs said, the project could still go forwardr solely as anequity deal. “Thee analysis has been run as an all equity deal and we are stil preparedto proceed,” he Key members of the D.C. Council expressed cautiouds relief that a less expensive deal was close tobeinvg reached, given the city’s expected $967 milliom shortfall for fiscal 2011. Councilman Jack D-Ward 2 and chair of the council’s finance shared the developer’s optimism that ground couls be brokenthis fall. “I can’t say we have a deal becausr we don’t have a deal, but we’rd close to having a deal,” Evans said.
He said the counciol would consider the arrangement at an already scheduled June 24 allowing enough time for the councilo to approve a deal byJuly 14, the last day of votinv before summer recess. “Whatever path we the mechanism to approve that path is allset up. The proverbiao train is leaving the station on July Evans said. Councilman Kwame Brown, D-At large and chaier of the economicdevelopment committee, said he is glad to see a deal materializing that would not require any changes to the city’sw cap on outstanding bond paymentxs or subsidies it has already approved for other economidc development projects.
He said the possibility that existing subsidies could be transferred to the hotekl project had understandably raised the ire of developerseand residents. “Any way we can make sure we don’rt bust our cap while making sure we keep neighborhoocd projects on course isa win-winh for the city,” he said. D.C. Chief Financial Office r Natwar Gandhi, who had concerns about the mayor’s plan to issuw hundreds of millions of dollars ofnew debt, met with representativesw of the development team Thursday, but declined commenyt through a spokesman.
Greg O’Dell, CEO and general manage of the conventioncenter authority, said that shouldr the deal hold it woulcd give the organization what it needs to continue marketinb the city: certainty. He said the conventionm center board, on which both Gandhi and City Administratore NeilAlbert serve, had only considerec plans that would allow the city to remain under the debt cap, whichj is 12 percent of city expenditures. “We’ve been mindful of the cap and the implicationss of the cap all he said.
O’Dell said he didn’t know what specifically triggered ING’ss decision to up its involvement, but that raising the possibility of the city owning thehotelk “helped to get movement on thei part.”