NEWS-LEDGER – MAY 4, 2011 -
By Steve Marschke
West Sacramento’s plan to create a publicly-owned Marriott hotel near the Tower Bridge riverfront is now treading water, after the first proposed investment package for the hotel fell through. The project missed a chance to apply for a subsidized federal stimulus loan.
The city is still talking to developer Parkcrest Development Company of Sacramento, said Paul Blumberg, West Sacramento’s public finance manager. But negotiations with Parkcrest to develop the hotel are no longer exclusive. The project called for $100 million in bonds, and originally included a plan for a South Korean real estate investment company to buy all the bonds, becoming the main source of funds for the project.
“The real issue was we were rushing to meet a timeline to apply for funding prior to the termination of a federal program called ‘Build America Bonds,’” said Blumberg. “The federal government was essentially subsidizing the interest rate. It (would have) allowed us to finance this at a much lower rate than is available in the market.”
That didn’t happen in time. The deadline was December.
“Parkcrest is still trying to secure funding indirectly through the Bank of China,” said Blumberg. “The Bank of China would be purchasing a portfolio of investments, of which this would be one.”
Blumberg said the city was not in advanced discussions with other potential developers.
The city hopes to be the catalyst for development of a “300-unit hotel with a conference facility and destination restaurant,” said Blumberg. The “River One Hotel” project is just north of the Tower Bridge along the Sacramento River. City officials believe some kind of public help is necessary to help build a hotel with amenities such as dining and conference facilities. After it’s built, the taxpayers would own the hotel – which could at some point be sold to a private company.
Blumberg told the News-Ledger in September:
“A major part of this hotel is the components that go with it – ballroom space, a conference center, meeting rooms as well as a major destination restaurant overlooking the river. It will be full-service, with a day spa and health club. It will have a major ‘business’ focus. But because of its location, it will also be able to attract some leisure visits during the weekends.”
An acre of city-owned land would go into the project, and the West Sacramento Financing Authority has an “option to buy” 4.6 acres from the Raley’s Corporation for $9.6 million, in addition. The “option” expired in December, but was extended after the city committed to do some infrastructure work near the site that will benefit either the hotel or whatever else goes on the Raley’s acreage.
The city has also pledged to set-aside future hotel room taxes to help repay the proposed bonds if the hotel doesn’t make enough money for the repayments. Officials don’t plan to commit city general fund dollars to the project.
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