First Dallas, then Nashville. Now it looks like Washington, DC is the next city to get involved in a convention hotel debate.
Already facing an $800 million deficit, DC city officials are considering issuing as much as $750 million in bonds to build a $550 million hotel at the Walter E. Washington Convention Center. The city had originally planned to finance about one-quarter of the hotel's cost via a $187 million tax increment financing package, passed in 2006, with the rest of the money coming from private contributions.
In today's economy, though, securing private funding has become nearly impossible. Thus, the Washington Convention Center Authority choose to seek out public money for the 1,167-room Marriott hotel in DC.
"They’ve been pursuing private financing and in this market, you know, that is very difficult," WCCA CEO Greg O'Dell told the Washington Business Journal. "They’ve spent millions of dollars on this project to try to move it forward. It really is shovel ready with the exception of financing."
The stall comes at a time when many say the city needs to step up its competition for convention business. As I blogged two weeks ago, nearby convention destination National Harbor is about to get even more attractive, as Disney announced a plan to build a 500-room hotel resort at the development.
"Travelers spend $5.5 billion a year in the District of Columbia and the development of the convention center headquarters hotel is a critical element in ensuring...we remain a top-tier destination for the meetings and convention industry," City Administrator Neil O. Albert said in a statement. He went on to express support for the project, saying it will "not only produce a District-owned asset, but will accelerate our construction timetable."
DC Chief Financial Office Natwar Gandhi, on the other, said he would not support this debt.
"To be very blunt about it I was very clear in saying to them that if you were to borrow $750 million that would put us way beyond the 12 percent cap we have envisioned for the city...and I cannot be a party to that," he told WBJ.
This looks like a debate that's only just begun. Make sure to check back at the Cvent blog to stay on top of updates as they occur!