City Signs Off on Development Agreement for Convention Center Hotel
Last night the Tacoma City Council signed off on a development agreement for the construction of an $85 million hotel, with a possible second residential phase that could bring the project total to $150 million.
In April the City began official negotiations with Yareton Investment & Management LLC for the construction of a hotel and mixed-use project on approximately two acres of City-owned land next to the Convention Center in downtown Tacoma. Last week the City announced a tentative deal with Yareton.
The site is one of the City's top priorities for development, and the hotel has been on the wish list to expand capacity for the Convention Center, which has run into difficulty booking larger events at times, due to insufficient nearby hotel rooms.
The 240-foot tower will be a four-star, 300+ room hotel with at least 10,000 square-feet of street-level retail space, no less than 200 parking stalls, and a plaza. The hotel will also include a grand ballroom of at least 10,000 net square-feet, and at least 9,000 square feet of other function space, on which the Greater Tacoma Convention and Trade Center will have first right of use at market rate. This too is a win for the Convention Center, which staff says could make good use of additional meeting space.
The development agreement with Yareton lays out a timeline and key requirements for the project.
- Initial due diligence - Five months for the developer to determine the feasibility of the project. During this period, ending April 2015, Yareton will conduct a detailed feasibility analysis, begin the process of concept design and plan review with Tacoma's Landmarks Preservation Commission, work with US Customs and Immigration Service to get approved for EB-5 status, and finalize its financing plan.
- Second due diligence - 18 months for the developer to complete work on design, entitlements, and permits; and secure equity and debt financing, through October 2016.
- Property conveyance - 30 days to ensure that entitlements and permits are in place, that the developer has 100% of the financing lined up for the $85 million first phase of the development, that an acceptable agreement is in place with a hotel operator, that a covenant is in place requiring Yareton to operate the property as a hotel for a minimum of 25 years, and that the property is paid for. If all goes smoothly, the City of Tacoma will convey the property to Yareton in November 2016.
- Project construction - Two years in which the developer will construct the hotel building adjacent to the Convention Center. The developer could break ground as early as December 2016, with completion forecast by the end of 2018.
An initial appraisal suggests the purchase value of the property should be in the ballpark of $6.25 million, with the developer responsible for all demolition of existing structures. The revenue received from the sale of the property will go toward redeeming associated bonds or be applied to other City capital projects.
Other elements of the agreement include a commitment from the developer to "facilitate negotiations to enable the GTCTC to obtain a long-term room block agreement for at least 250 rooms with the hotel operator," and provisions that could allow the City to commit to purchasing public parking. The room block provision is important to the Convention Center, as they don't have that deal with any of the existing hotels in Tacoma. It's not an guarantee yet, because the developer doesn't want to make an absolute commitment before they have identified an operator for the hotel. The City will get to approve the hotel operator that will undertake the initial five years of operations, but after that Yareton is in charge of contracts, other than that they will be held to four star hotel standards, as determined by industry standards.
The development agreement also includes a provision that, if supported by market demand after the completion and stabilization of the hotel phase, the developer will build a second 240-foot high tower with 200+ condos and/or market-rate apartments, at least 20,000 square-feet of street-level retail, a minimum of 200 parking stalls, and possibly commercial office space. The project is expected to create about 1,000 construction jobs, and 200 full-time jobs in Tacoma.
The image above from last night's City Council presentation, and the image to the right from the Yareton project page, are only conceptual renderings at this point. Yareton's CEO, Chun Yang, says he understands the challenge of designing a building that will function as a transition point between the historic buildings on the UWT campus to the south, and the modern design of the Convention Center to the north. Yareton will be working with the LPC to come up with a design that works for this unique space.
The Yareton project page shares a few more details of their plans.
Our team is proposing a two-tower high-rise design concept with a single shared podium/amenity base. The primary hotel tower will be 16 floors high accommodating hotel suites and guest rooms. The location of the hotel tower gives access to mountain and water views and develops a relationship with the existing Tollefson Plaza. The condominium tower will be 17 floors high, dedicated to private residence located on Broadway, and oriented to the existing neighborhood and University of Washington Tacoma Campus.
Each tower will have its own distinctive entrance. The main entrance and drop-off area for the hotel will connect to the hotel lobby, restaurant and ground floor retail. Our goal is to provide vibrant ground floor activities to respond to the existing urban environment, circulation, transit and urban plaza.
To facilitate the connectivity of the project to the adjacent Greater Tacoma Convention and Trade Center, we are proposing a direct connection between the convention center's 3rd floor pre-function area and the hotel. Connectivity will also be established for the loading and back-of-house functions between the hotel and the convention center's 3rd floor service hallway.
If the hotel and possible condo development goes ahead, we could be looking at a very new look for the area surrounding Tollefson Plaza. With revamped face of the Tacoma Art Museum, the major construction planned to straighten out 17th Street, and the progress on the Prairie Line Trail, the area around 17th and Pacific is seeing some real changes.
Will this be the catalytic project we need to actually bring people into Tollefson Plaza on a regular basis?
Filed under: Downtown Tacoma, City Council, Tacoma Business, Neighborhoods, Developments, City Projects, City Government, Economic Development, Hotels, Convention Center Hotel, EB-5
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