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Mayor tells City Council that Downtown hotel must not be delayed

Monday, May 13th, 2013

By John Martin

via – Evansville Courier-Press

EVANSVILLE — Evansville needs the commerce and jobs a Downtown convention hotel will bring, and the project must not be delayed any longer, Mayor Lloyd Winnecke told the City Council Monday.

The city is to provide $37.5 million of the development’s $70 million cost, according to a predevelopment agreement with HCW of Branson, Mo. Of the city’s share, $20 million is a direct contribution to construction of the 253-room Doubletree by Hilton, which will be owned and operated by HCW. The remaining $17.5 million is to be for a 330-space parking facility, connections between the hotel property and The Centre and Ford Center and storage for the Ford Center.

HCW also plans a tower with 78 upscale apartments, and a restaurant on the property. The hotel is to include 6,400 square feet of ballroom space.

Bonds issued by the city are to be retired using tax increment financing, Casino Aztar funds and food and beverage taxes, according to city officials. The City Council was told at Monday’s called informational meeting that those three funds generate nearly $18 million in net revenue in an average year, roughly $8 million of which is currently set aside to retire debt on the Ford Center.

Debt on the hotel development’s cost is projected to be about $2 million per year for about 25 years, city financial consultant Robert Swintz with the London Witte Group.

Winnecke said the city’s desire to have an Indiana University School of Medicine facility built Downtown in the next few years — a project that might also involve city incentives — should not prevent the hotel project from going forward.

Committees are currently studying potential locations, academic plans and costs associated with an IU facility. Winnecke said IU will request state funding, but that won’t occur until the next state budget comes up for consideration in 2015.

Winnecke said the project could be “transformative” for Evansville. “We’re very hopeful it will come through for the community. But there’s no guarantee of a medical school. We shouldn’t wait on the hotel for the outcome of the medical project … A convention hotel will be a great inducement to bring a medical facility Downtown.”

The hotel development will create both permanent and construction jobs. CEO Rick Huffman of HCW said a hotel with 253 rooms likely will create the same number of jobs. He said the conference center will bring 8-12 full-time and 35-45 part-time positions, and the restaurant and retail space will also have employees.

Public comment during the City Council meeting generally supported the hotel project and especially its promise of jobs.

“I have a strong belief Downtown is, was and will be worth the effort,” Bruce Griffin said.

“We need that hotel,” Jerome Stewart said. “There’s no doubt about it … When parents struggle for the lack of gainful employment, children suffer as well.”

Jim Braker said the community needs jobs, but he’s concerned about the revenue from Evansville’s casino holding steady in the next few years as competition for players increases.

Charlene Williamson praised the development’s plan for apartments, calling that aspect “an ingenious addition.” She and many others in the audience wore orange stickers which said “Build Them Both,” referring to the hotel project and IU facility.

The Rev. Adrian Brooks Sr. said he supports the hotel development, but he urged the city to attempt to negotiate down its subsidy and the saved revenue to demolish more Center City structures and upgrade parks and sidewalks. Brooks urged that 20 percent of business on the project be set aside for women- and minority-owned businesses and a third of its employment go to Center City residents.

Huffman vowed that women- and minority-owned businesses will be involved.

Most of the City Council’s questions dealt with financing. Conor O’Daniel, D-At-large, asked repeatedly if the city could afford incentives for both a hotel project and a medical school, which would require substantial Downtown real estate.

“Could we afford it based on the cash flows you show?” O’Daniel asked Swintz. Swintz replied that much depends on the pattern of interest rates in the next few years.

Dan Adams, D-At-large, and Finance Chair John Friend, D-5th Ward, urged that the project have an internal auditor who is independent of the developer.

The Evansville Hotel Lodging Association, consisting of owners and operators of 14 local hotels, does not object to the building of a convention hotel but it is “adamantly opposed” to the level of public funding, said Jacob Pendleton, immediate past president.

Pendleton said the association “is strongly in favor of increasing our tourism industry” but “we believe that subsidizing private development with too much public money will ultimately put our industry, and our city, at risk.”

Bob Warren, director of the Evansville Convention and Visitors Bureau, conceded that some “shifting” in hotel business will occur with a new Downtown hotel, but overall hotel business in the city will increase 30 to 40 percent if the property is built.

Hunden Strategic Partners, the city’s hotel project consultant, concluded that the city has a sizeable total number of rooms, but they aren’t in the right locations or the right quality to bring convention business.

Pendleton said Hunden’s report validates his association’s position. Rob Hunden with Hunden Strategic Partners argued the opposite, saying the convention hotel plan being considered “is designed to make the pie bigger” for the whole hotel market.

Officials with the city and HCW continue to negotiate a final development agreement, which is subject to Evansville Redevelopment Commission approval. Bonds for the public share must be approved by City Council. Winnecke said he’d like to break ground on the project in late summer.

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Tall task: Boosting visits to top of Hancock

Monday, April 15th, 2013

-via ChicagoRealEstateDaily.com

By: Abraham Tekippe April 12, 2013

After nearly a decade and a half in the hotel industry, Nichole Williamson is taking her career to new heights.

As the new general manager of the John Hancock Observatory, Ms. Williamson, 32, is leading a multi-phase redevelopment of the tourist attraction, which was acquired by Paris-based Montparnasse 56 Group for $45 million last June.

Her mission: to make the observatory on the 94th floor of the John Hancock Center a must-see destination for tourists and locals alike.

“Because we’ve been part of the skyline since 1969, sometimes I think the observatory is not necessarily at the top of people’s minds when it comes to a vital place to come visit,” Ms. Williamson said. “We’ve got so much to offer . . . and our biggest challenge will be going to market and making sure people know that.”

Ms. Williamson and her team kicked off the redevelopment effort last month with the installation of 15 interactive monitors on the venue’s observation deck, allowing guests to experience a self-guided, multilingual tour of the Chicago skyline.

By Memorial Day, she said, the observatory plans to unveil an improved queuing area on the building’s concourse level, complete with an expanded ticketing desk, self-serve kiosks and a new 2,100-square-foot retail store carved out of underused space.

After that, Ms. Williamson said, Montparnasse plans to install a “guest experience” on the concourse level while making improvements to the 94th floor. She declined to discuss specifics, saying the changes are “in the early design stage,” but the company plans to wrap up the project by the end of first-quarter 2014, just in time for the U.S. Travel Association’s International Pow Wow, a five-day trade show that Chicago is scheduled to host next April.

The question is whether the changes will narrow the attendance gap between the observatory and Willis Tower’s Skydeck Chicago, which underwent an $8 million renovation in 2009.

About 530,000 people visited the Hancock Observatory last year, about the same as 2011 and nearly a third of the Skydeck’s visitors during the same period, according to a Montparnasse spokesman and Skydeck General Manager Randy Stancik. Attendance at the Skydeck has jumped more than 40 percent since 2008, from about 1.1 million to 1.6 million, according to Mr. Stancik and a Crain’s list of the city’s largest tourist attractions.

The addition of the Ledge, a set of glass cubes that jut out from the building 1,353 feet above ground, has contributed to the increase, Mr. Stancik said.

“The numbers don’t lie,” said Mr. Stancik, also vice president at U.S. Equities Realty LLC, which handles leasing and management at Willis Tower. “We are on an incredible pace here and the nice thing about it is we’re bringing locals back.”

Willis Tower’s status as the tallest skyscraper in the Western Hemisphere—it’s 1,451-feet tall versus 1,128 for the Hancock, according to the Council on Tall Buildings and Urban Habitat—gives it an edge, even though the Hancock is more conveniently located for tourists, some of whom may decide to visit one but not both of the skyscrapers, said Rob Hunden, president of Chicago-based real estate consulting firm Hunden Strategic Partners.

“It’s just something that people have on their bucket list,” he said. “I think the Skydeck is always going to have that sort of advantage over the Hancock.”

While Ms. Williamson sees “the potential” in Skydeck’s attendance numbers, catching or surpassing the competition isn’t her No. 1 priority, she said.

“Is the Skydeck visitorship this number that we have written up in the office that we target? Not necessarily,” she said. “We’re much more focused on the experience that we offer the guests.”

Montparnasse bought the observatory from a partnership including Deutsche Bank A.G., which took over the Hancock building last year and is selling it off in pieces in an effort to boost its return on investment.

A native of Crystal Lake, Ms. Williamson earned her bachelor’s degree from DePaul University in 2003.

She joined the observatory last month after spending more than 14 years in the hotel business, most recently as hotel manager of the 500-room Doubletree Chicago Magnificent Mile, southeast of the Hancock building. Prior to that, she served as general manager of the Aloft Washington National Harbor near Washington, D.C., and hotel manager and director of operations at the Inn of Chicago.

In addition to spending much of her career along the Magnificent Mile, Ms. Williamson recalled making regular trips into the city while growing up, often staying with her family next door to the Hancock building. For her, the role of general manager is a new title in a familiar location.

“The first place I remember being allowed to go when I was allowed to wander around the city by myself was the observatory, so I have a personal connection to the 94th floor,” she said. “I’m motivated by a desire to remind Chicago and the visitors of how unique the experience is up there and really how spectacular the views of the city are.”

 

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Kentucky Kingdom partnership lands $10 million in tax credits

Wednesday, April 10th, 2013

- via Courier-Journal

By: Tom Loftus

FRANKFORT, KY. — The Kentucky Tourism Development Finance Authority on Wednesday unanimously approved up to $10 million in sales tax credits sought by Kentucky Kingdom LLLP.

“Now that we have secured this important component of our financing package, we can continue to wrap up some other remaining details of this exacting process,” said Ed Hart, of the Kentucky Kingdom partnership.

Hart said in a news release that he is confident that the partnership can meet its planned reopening date of May 24, 2014.

Marcheta Sparrow, secretary of the Kentucky Tourism, Arts and Heritage Cabinet, said she is “completely confident” that the project will succeed, even though owners of Holiday World and Splashin’ Safari in Indiana backed away last year from a plan to renovate and reopen the theme park.

Sparrow said the current plan is different because of “Mr. Hart’s track record, and his interest in this project all along, and his ability to pull together a group of partners within the Louisville community who really believe in Louisville.”

The tourism authority’s action on Wednesday allows Kentucky Kingdom to retain up to $10 million in state sales taxes it collects over its first 10 years of operation. It is the last portion of a public incentive package sought by Hart’s partnership.

The authority vote came after report by the authority’s consultant, Hunden Strategic Partners, which concluded the proposal met all criteria to qualify for the sales tax incentive program.

The Hunden report said the Kentucky Kingdom partnership planned to invest at least $40 million into renovating the park, including a doubling of the size of its water park. The report said that the project will generate about $420 million in new spending over 10 years and “support 439 net new full-time and full-time equivalent jobs” by its fourth year of operation.

Hart said in a news release that after examining the 100 buildings and 40 rides at the park, he and his partners have determined it will cost more to reopen Kentucky Kindgom than they originally thought. “My partners and I are prepared to make the additional commitment needed to cover that cost and all of the parties involved understand that it will take until the end of June to complete the financing and various interparty agreements,” Hart said.

Hart’s group has been granted a long-term lease on the fairgrounds property by the Kentucky State Fair Board. Under the lease, Hart and his partners — businessman Bruce Lunsford, lawyer Ed Glasscock and the Al J. Schneider Co. — have agreed to invest $45 million in park improvements by 2017 — $20 million in partner equity and $25 million in borrowed money.

Hart operated the park for a decade through the late 1990s before he sold it to Six Flags. Six Flags abandoned its lease on the park in early 2010 after it filed for bankruptcy

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Posted in 2013, Kentucky, Louisville, Rob Hunden | Comments Off

Ritz-Carlton Chicago for sale

Wednesday, February 13th, 2013

via ChicagoRealEstateDaily.com

By: Alby Gallun February 13, 2013

Investors hunting for luxury hotels have the chance to buy one of the city’s best-known properties: the Ritz-Carlton Chicago.

Chicago-based JMB Realty Corp., the Ritz’s owner, has hired Hodges Ward Elliott, an Atlanta-based hotel brokerage to sell the 435-room hotel just off Michigan Avenue, which could fetch about $180 million, or $414,000 a room, according to sources.

A sale at that price would rank among the most expensive in Chicago, but still well below the record $505,000 a room that Sam Zell paid in 2011 for the Elysian Hotel, now the Waldorf Astoria.

Hotel prices have jumped the past couple years amid rising occupancies and room rates and investors’ increased willingness to buy riskier assets. Revenue per available room, a metric that accounts for both occupancy and room rate, rose to $209.48 at downtown Chicago’s luxury hotels last year, an 11.6 percent increase over 2011, according to data from Hunden Strategic Partners and Smith Travel Research.

Yet the downtown luxury hotel sector has gotten much more crowded since the Ritz opened in the mid-1970s. More recent additions include the 188-room Waldorf in the Gold Coast, the 339-room Trump Hotel in River North and the Langham, a 316-room hotel in the former IBM Building set to open this summer.

“The top of the market has gotten much more competitive and with the addition of the Langham, it will put all luxury hotels in the position of having to defend their current customer base,” Rob Hunden, president of Chicago-based Hunden Strategic Partners, said in a text message.

Executives at JMB and Hodges Ward Elliott did not return calls. Newsletter Real Estate Alert first reported that the Ritz was on the market.

The Ritz, 160 E. Pearson St., is part of the Ritz-Carlton chain but is managed by Four Seasons Hotels & Resorts. Marriott International Inc., the owner of the Ritz brand, would be a logical bidder on the hotel, allowing it to break the management agreement with Four Seasons, establish its own management contract and then sell the property, according to Real Estate Alert.

The hotel, part of the Water Tower Place complex, has rebounded from the recession but has yet to hit pre-crash levels. Revenue rose to $54.2 million in 2011, up 10 percent from 2010, according to a loan report from Bloomberg L.P. Revenue peaked at $65.3 million in 2007.

Net operating income, meanwhile, rose to $6.8 million in 2011, an 86 percent gain from the prior year, according to the report. The hotel generated a $461,183 loss in 2009. Figures for 2012 were not available
Read more: http://www.chicagorealestatedaily.com/article/20130213/CRED03/130219915/ritz-carlton-chicago-for-sale#ixzz2KnKXgnRa

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Winnecke, ERC move forward with Branson, Mo., firm to develop Downtown hotel Commission to then open formal negotiations

Monday, January 28th, 2013

via – Courier Press

By John Martin

Posted January 22, 2013 at 7:49 p.m., updated January 23, 2013 at 4:52 p.m.

EVANSVILLE — A new Downtown hotel developed by a Branson, Mo., firm will usher Evansville back into the convention market for the first time since the Executive Inn closed in 2009, Mayor Lloyd Winnecke said Wednesday.

The property at Martin Luther King Boulevard and Walnut Street is to include a hotel with approximately 250 rooms, a residential tower and businesses.

Wednesday morning’s 5-0 vote by the Evansville Redevelopment Commission signaled the formal opening of negotiations between city officials and Branson-based HCW. A summer groundbreaking on the new development is possible, with construction taking about 18 months.

HCW’s vision for apartments to be part of the development “really set them apart” from other firms interested in the project, Winnecke said.

“HCW understands that for Downtown to grow off this development, it has to be more than a hotel,” Winnecke said. “They get the fact that is has to be (the) catalyst.”

The company developed Branson Landing, a multi-faceted development in the Missouri community, as well as a hotel in Manhattan, Kan.

“Unlike some developers, they have been building through the recession,” Winnecke said. “They have not been on the sidelines. They are also able to bring their own equity to this project, and because of the strength of their balance sheet should be able to secure private-sector funding to secure their piece of the funding of this.”

One other interested developer wanted the city to own the hotel, and another was interested in EB-5 financing, a federal program that allows overseas investors to provide money for U.S. projects in exchange for speeding up the visa process.

Winnecke said he and the advisory group that vetted developers’ proposals were not comfortable with either of those scenarios.

HCW “represents the epitome of quality … What they really wanted was to sit down in a room, roll up their sleeves and develop a project that’s viable for the city and viable for them. There was a really natural chemistry between their team and our team.”

There still will be significant details to work out, especially as they relate to finding and the city’s share.

Winnecke said public subsidies will be involved only with the project’s construction, and local labor — including women- and minority-owned businesses — will benefit.

The Centre, owned by Vanderburgh County government, has lost between $800,000 and $1 million per year since the Executive Inn closed. Winnecke said a Downtown hotel will not close that gap entirely, but it will “get us back in the game” of convention business.

Rob Hunden, the city’s consultant on the hotel project, told the redevelopment commission that Evansville has 44 hotels with about 4,000 rooms, but only 350 are Downtown. Those rooms are at Casino Aztar Hotel and Le Merigot, properties that cater mostly to casino customers.

The average hotel in Evansville is about 24 years old.

Evansville, said Hunden, has a good number of rooms for its market size, but too many of them “are in the wrong place and of the wrong quality.”

He also noted Evansville has gained a nearby competitor in the convention market since the Executive Inn shut down. Owensboro, Ky., using what Hunden described as substantial federal and state subsidies, has built a new convention center and two Downtown hotels, a Holiday Inn and Hampton Inn and Suites, with a total of 270 rooms.

Hunden estimates the Downtown development will produce $35 million to $40 million in local tax revenue over the next 25 years.

His written report to the city states likely convention targets for a new hotel and The Centre would be “corporate training events and meetings from the region, smaller state associations, trade shows and other events.”

The hotel will have its own ballroom space, which Hunden said will likely mean receptions and some other small-scale events will he held there rather than at The Centre, which with 280,000 square feet was built for large gatherings.

Public-private partnerships on convention-style hotels are common in the industry, said Hunden.

He told the redevelopment commission that a convention “anchor” hotel Downtown will give the Evansville market a boost. “There’s a lot to be gained here if you play your cards right.”

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BID to include 82 potential businesses

Thursday, December 27th, 2012

via – Black Hills Pioneer

By Heather Murschel Black Hills Pioneer

SPEARFISH — In order to fund the proposed expansion of the Spearfish Holiday Inn and Convention Center, the city will need to incorporate its third Business Improvement District (BID).

On Monday, members of the Spearfish City Council approved a resolution to establish the boundaries for a new BID in order to identify 82 tourism and leisure orientated businesses that would pay an additional assessment. Letters will be mailed to those respective businesses to inform them of the BID and allow the business owners or managers to decide if they would like to be included. In order to review the information and look into financial feasibility of the expansion, in the next month a seven-member board of directors will be appointed to determine a fair and equitable rate the potential businesses in the district would be required to pay each year. The members of this board will be appointed by Mayor Jerry Krambeck, and receive final approval from the council prior to taking on the new position.

City Administrator Joe Neeb said that if the board looks into this further and together they determine that the expansion isn’t feasible, the proposed BID would dissolve.

“We’ve done everything that we can do as a city, and now we have turned it over to the individuals who would be responsible for generating the revenue,” Neeb said. “If they decide the expansion isn’t feasible then the BID would dissolve. If we don’t have a project, we don’t need the funding.”

He added that he expects the board to submit a recommendation either way by April 2013.

The 82 businesses were identified because they rely on the city’s marketing and advertising campaigns and benefit from tourism and travel.

Built 15 years ago for $3 million, the Spearfish Convention Center is owned by the city of Spearfish and leased to the Holiday Inn. In order to pay for the initial construction, the city created a BID made up of nine Spearfish hotels of 36 rooms or more, plus Spearfish Canyon Lodge, a voluntary member. Created by city ordinance, the BID generated enough revenue through a $2 general occupancy tax levied upon accommodations for guests, to make the annual $90,000 bond payment. The convention center was paid off in 2010, and now the $180,000 the BID creates each year is allocated to Visit Spearfish for the purpose of marketing.

The new BID would need to generate an additional $360,000 to fund the expansion, so if all the potential businesses agree to be apart of the district, their annual assessments could range between $5,000 and $6,000 per year.

The two BID’s would work together to determine how these funds would support each mission. Neeb said all of the leisure and tourism stakeholders receive benefits from Visit Spearfish’s marketing and attraction efforts and that an expansion of the convention center will generate more room nights sold.

City officials have been working towards this moment for nearly two years.

In 2011, the city of Spearfish utilized the findings of the Convention Center Taskforce, a committee formed to determine if the expansion would be beneficial to the community as a whole, to determine that the proposed expansion has merit and that the process should continue.

In February, the city of Spearfish funded a feasibility study to determine whether an expansion of the Spearfish Convention Center is financially viable. They hired Hunden Strategic Partners for an estimated $25,000 to gather the necessary information.

In May, Robin S. Hunden, president of Hunden Strategic Partners, presented the details of the comprehensive study that consisted of multiple components and projections as to whether there will be a solid return on investment. The study reviewed the area’s economic status, studied the area’s competition, surveyed trade organizations, government agencies and other associations across South Dakota in regard to what they look for in a convention center, and reviewed the potential economic benefits and expansion would have on the community as a whole.

Because Spearfish is known as a place where people can come, relax and enjoy the outdoors is an attractive asset when marketing the convention center.

“This is a huge positive for you because it will help draw in more conventions … this is a great place to visit and that will better when marketing your community,” Hunden said. “And the more people you can draw to Spearfish the better.”

He added that the strong university presence, and a bustling downtown area are also assets.

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Redevelopment Commission to review proposals for Downtown hotel

Monday, November 12th, 2012

May award contract by end of the month

By John Martin

via – Evansville Courier Press

EVANSVILLE — The city is closer to awarding a contract for a new Downtown hotel.

The Redevelopment Commission will review proposals from three companies during an executive session Friday.

Those companies are Gatehouse Capital Corp. of Dallas; HCW of Branson, Mo.; and Swerdling & Associates of Denver.

City officials say the project — which will be at the former Executive Inn site, adjacent to the Ford Center and The Centre — could include restaurant and retail development in addition to the hotel.

During Friday’s executive session, plans that the companies have submitted will be reviewed by commission members and the city’s consultant on the hotel project, Rob Hunden, of Chicago-based Hunden Strategic Partners.

“We’re asking Rob to give us his synopsis,” said Ed Hafer, Redevelopment Commission chairman.

The next regularly scheduled Redevelopment Commission meeting is Nov. 20, however that’s two days before Thanksgiving and all members may not be present.

Hafer said it’s possible that a contract could be awarded at a meeting a few days after Thanksgiving.

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Convention center expansion ‘makes sense’

Friday, October 26th, 2012

Posted: Saturday, October 13, 2012 6:00 am

By Heather Murschel Black Hills Pioneer

- via Black Hills Pioneer

SPEARFISH — Spearfish needs to be more aggressive when it comes to attracting larger conventions — but officials say space is an issue. That idea spurred a study to determine whether an expansion of the Spearfish Convention Center is a feasible option for a community this size, and the final results were reviewed at a stakeholders meeting Tuesday.

“Based upon the data, it makes sense to move forward because it would make us more competitive, which we believe is a good position to be in,” said Spearfish City Administrator Joe Neeb.

According to an analysis by Hunden Strategic Partners, the firm hired to conduct the feasibility study, additional space is needed to make Spearfish a viable option for larger conventions. The proposal includes additional exhibit space, additional ballroom space and additional breakout space. The $5.3 million proposed expansion would, in theory, bring in larger groups, which would benefit tourism-related entities in Spearfish and the city of Spearfish through the generation of sales tax. Once complete, Spearfish could begin marketing itself to larger groups.

Of the 87 stakeholders who were invited to the meeting, approximately 25 showed for the presentation to hear details on the overall economic impact an expansion could have. Rob Hunden with Hunden Strategic Partners revealed results that attendance at the convention center dropped from 41,956 in 2010 to 27,501 in 2011 and the number of events dropped from 343 in 2010 to 283 in 2011. He said that potential business was lost, due to a lack of space.

The current convention center offers 14,866 square feet of non-public space and the proposed expansion would increase that to 27,666 square feet.

According to the current trends, meeting and event facilities need to have the complete package to be attractive to event planners. Hunden said they want facilities with exhibit, ballroom and meeting rooms that offer catering services. They also want to have dining areas and entertainment venues to be within walking distance.

To move forward, a decision whether to proceed will come before the Spearfish City Council in November. From there, the council will establish the boundaries for a Business Improvement District (BID) to generate revenue to fund the project costs. The district will be open to the 87 stakeholders, which consist of restaurant, bar, hotel and gas station owners who are affected by tourism travel.

Once the boundaries are established, the council will seek interest on serving on the BID Board of Directors, which should occur in December. The board’s responsibility will be to determine whether Spearfish should move forward with the project or not. If they decide to move forward, the board will then need to put together a developmental plan and establish a fair and equitable method for revenue.

Neeb said that if all 87 stakeholders are included in the BID, the annual dues would be approximately $5,000 per year.

He also said the city is set up to allocate $1 million for the initial construction costs, which is the estimated amount the city would incur in tax revenue from the expansion over the 20 year period of the loan.

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ERC approves new $40,000 hotel study

Thursday, September 20th, 2012

By Arek Sarkissian II

Wednesday, February 22, 2012

via – Evansville Courier Press

EVANSVILLE — Development of a Downtown convention hotel headed back to the drawing board Wednesday morning as the Evansville Redevelopment Commission authorized a new feasibility study and analysis of the project.

The commission by a 3-to-2 vote approved spending roughly $40,000 to hire a Chicago firm to determine what size hotel should be built, what level of service it should provide and what should be the amount of city investment in the project.

The proposed hotel, to be built at Walnut Street and Martin Luther King Boulevard, would serve the nearby Ford Center and The Centre convention center.

The study, sought by Mayor Lloyd Winnecke, was awarded to Hunden Strategic Partners, which last year conducted a $30,000 analysis that said a $33 million, 220-room hotel proposed by the Kunkel Group was financially viable.

City Council appointees to the Redevelopment Commission, Stan Wheeler and Jay Carter, voted against conducting another study, while Winnecke appointees Ed Hafer Jr., Randall K. Alsman and Sara L. Miller supported it.

Second Ward Councilwoman Missy Mosby urged the commission to forgo the study.

“Weʼve done enough studies on this project, and it was already voted through City Council last year,” Mosby said. “Itʼs time to build a hotel.”

The study is expected to take about two months.

Rob Hunden, president of Hunden Strategic Partners, said the study would encompass 13 tasks that include perspectives such as tourism, the convention industry, regional competition and a meeting planner survey. The study also would provide a cost estimate, investment return and economic impact.

Some examples of variables to the hotel project that were not explored included what plans Casino Aztar has to renovate its aging hotel and the possibility of the revival of Hotel McCurdy, Hunden said.

The progress of Interstate 69 toward Evansville also is an issue.

“And that could be a wonderful resource something like this project could benefit from,” Hunden said. “But the point is, we donʼt know.”

In August, Hunden launched a vetting process of two hotel proposals before the Redevelopment Commission and determined the Kunkel Group and its $33 million, 220-room hotel was financially viable.

Kunkelʼs plan used $8 million in city incentives, which included a $1 million forgivable trade for the land where the hotel would be built. The incentive also included a $3.5 million forgivable loan, and another $3.5 million that would be repaid at 5 percent interest.

The 220-room amount came from a request for proposals the city made two years ago asking developers to name the appropriate size for the hotel. A response made by Indianapolis-based White Lodging included 220 to 250 rooms, but that deal later fizzled. Kunkel had said the number of rooms in his proposal was vetted by the brand he chose, Sheraton, and the finance company willing to provide more than $20 million in senior debt.

Wednesday morning, Kunkel said he predicted the Redevelopment Commission would ask for another request for proposals, which would delay the project by about a year.

“Iʼm not sure if Iʼm willing to wait that long,” Kunkel said, adding he already has his own money waiting to be spent on the project.

The Redevelopment Commission and others in the meeting continuously referred to Kunkelʼs deal including $10 million in incentives. Hafer said that amount also included a 10-year tax abatement also included in the deal.

Evansville Convention & Visitors Bureau Director Bob Warren said a brief study he conducted determined the community is losing $12 million annually in lost revenue from conventions. The city has not held a notable convention since 2009, Warren said.

“But that doesnʼt mean we should just rush in to things,” Warren said. “I think this study is a great idea.”

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Consultant paints expensive picture of Expo Center future

Thursday, September 20th, 2012

Public investment of up to $55 million needed to maximize Expo Center.

Amos Bridges News-Leader

via – Springfield News-Leader

“Go big or go home” was the advice given Thursday to members of the task force trying to determine how to snare more business for Springfield’s Expo Center.

“You have to put a complete package together,” consultant Rob Hunden told the Convention Competitive Assessment Task Force during a conference call Thursday. “Don’t fool yourself into thinking you have the cards to play, ’cause you don’t.”

For Springfield, a competitive hand would require a new, full-service hotel on the vacant lot east of the Expo Center, upgrades at the center and University Plaza Hotel across the street, and development of additional restaurants and retail stores in the immediate area.

“To be successful you really need all of them,” Hunden said, whose firm was hired by the city, Springfield Convention and Visitors Bureau and John Q. Hammons Hotels.

All the improvements would require taxpayer money.

“A bank would not fund that (new) hotel, regardless” of the business it receives from the adjacent Expo Center, said Hunden, who has estimated the total public investment needed at $24 to $55 million. “The private sector’s not going to do it.”

The question, Hunden said, is whether Springfield wants to make the investment.

Under current agreements, the public bears no financial risk associated with the Expo Center, Hunden said. “It’s not really doing much but it’s not costing (taxpayers) anything, either.”

Investing in a competitive convention complex could pay dividends in the form of additional hotel stays, restaurant business and tax revenue, he said, “but there are pitfalls.”

“Most communities your size or larger have a convention center, which makes the market difficult,” he said. “It’s not as big a buck as it used to be, but it’s still very sizeable.”

Hunden said an additional economic impact analysis is needed to determine how much extra tax revenue Springfield could expect to earn for each dollar spent on various upgrades.

Task force members plan to meet within the next few weeks to discuss their next move. Most members appeared to want the additional analysis in hand before Hunden makes a formal presentation to City Council, the Springfield Convention and Visitors Bureau and John Q. Hammons Hotels & Resorts.

Officials skeptical

Burris thanked Hunden on Thursday for an “honest assessment, warts and all.” But he and other task force members didn’t take everything the consultant had to say at face value.

Joe Morrissey, senior VP of operations at Hammons, and Missy Handyside, general manager at Ramada Oasis Hotel & Convention Center, both were skeptical that recommended upgrades at University Plaza would allow the hotel to charge up to $30 more a night.

While several committee members agreed greater connectivity between the the Expo Center area and downtown is needed, Rusty Worley, executive director of the Urban Districts Alliance, questioned whether the area could absorb a half-dozen additional restaurants.

Hunden thinks it will.

“Downtown is just far enough away it’s not visually connected,” he said. Although restaurants four or five blocks away from the Expo Center can help, event organizers will go elsewhere if options aren’t available within a few hundred feet. “The minimum expectation has increased over time.”

Handyside and other task force members suggested Springfield might build on an existing strength and try to focus on snagging sports tournaments, rather than general business conventions. Hunden said the idea had merit, although the sports and recreation niche has become increasingly competitive, as well.

Burris asked whether Springfield might “leapfrog” the competition by putting off any major improvements until the competing facilities going in now begin to show their age.

“The longer you wait, I think the more you’ll have to build to be competitive,” Hunden said.

Additional Facts

Consultant complimentary, too

Still in draft form, consultant Rob Hunden’s assessment of Springfield’s convention facilities doesn’t sugarcoat the city’s position. Critical of facilities at the Expo Center and University Plaza, the report says Springfield also suffers from a reputation as overly traditional and out-of-touch.

“Your description of us as ‘dowdy’ is catching on,” City Manager Greg Burris joked Thursday, prompting Hunden to note that “perception is different than reality.” “There’s not one thing that defines Springfield,” the consultant said, listing the city’s status as a growing regional center, its universities and attractive downtown as valuable strengths.

“What you have (downtown) is authentic, it’s not manufactured,” he said.

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Posted in 2011, Competitive Assessment, Convention Center, Convention Hotel, Exposition Center, Hunden Quoted, Missouri, Rob Hunden, Springfield | Comments Off

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