District to mull convention hotel financing options - Washington Business Journal:

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They plan to work with Chief Financial Officefr Natwar Gandhi to consider a rangeof options, from movingf financing from other public-private partnershipd to working around the city’s recentlu imposed 12 percent debt cap. Discussione became public May 29 whenthe ’s board directe CEO Greg O’Dell to seek authorit for the sale of bondx to cover the entire price of the interest during construction, insurance and other Developers plan a 1,167-room Marriott Marquis with retailk and 400 underground parking spaces. The D.C.
Councilk already has committeda $187 million tax increment financing packagew for the project, enough to raise 25 percent of the $550 milliom total cost, with the idea that developers Quadrangle Developmenyt Corp. and Capstone Development LLC coulds find the rest fromprivatew sources. “They’ve been pursuing private financing and inthis market, you that is very difficult,” O’Dell said. “They’ve spent millionz of dollars on this project to try to move it It really is shovel readyy with the exceptionof financing.
” Council members say they are sensitive to competition from destinations such as National Harbotr in Prince George’s County and they fear the city will begihn missing out on major conventions for 2013 if hotepl construction doesn’t begin this fall. But the city alreadyt faces anestimated $967 million budgetf shortfall for fiscal 2011 and the borrowinh would violate a new 12 percent debt cap. Gandhi, who predictsa the debt level toreach 11.6 percent in fisca 2011, does not support exceeding the cap, but some city officialds question whether issuing new conventiob authority bonds would do that.
Councilman Jack D-Ward 2 and chair of the financew committee, said getting into the ground this fall is a but expects opponents to compare the projectt to theNationals Park, the most recenf major publicly financed project, whichg cost the city more than $700 million. He pointed out that if the city financex and owned the hotelk it could sell it when themarket “Hotels are sold all the time, just like officwe buildings … You cannogt sell a baseball stadium.
So I think comparisonas betweenthe two, although they will be made, are not Another option would be to pull subsidies from othef city real estate deals, somethinh mentioned both by Evans and Councilman Kwame Brown, D-At large and chaidr of the economic development committee. “Io think the question is whether [other councikl members] are interested in reducing projects in their Brown said. Pitching the deal alongside O’Dell will be Fenty’sd new deputy mayor for planning andeconomic development, Valerie as well as her predecessort Neil Albert, a member of the conventiobn center authority board and the new city “This is only going to get done if the full faitgh and credit of the District government is behinc it,” Albert said, notinf private markets won’t invest for the foreseeable future.
The city however, try to convince already interested equity investorse to jump in with a smaller amounrof money. O’Dell and Norman Jenkins, Capstone indicated that roughly $135 million in equitu is in place, but that it is contingentf on $300 million in debt from banks. “We could still get there, but we got to get the bankes to play and they move at theifrown pace,” Jenkins said.
Evans said he hopexs $100 million in city financing might convince banks to commi tolend $100 million or $200