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?


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Comments

Karen

No one goes to Tollefson Plaza. It’s one of the dumbest corners in downtown.  You bake in the summer and it’s too cold and wet in the winter.

Well folks, the 9 dwarves have done it again!  We will have a larger than life vacancy within 10 years. I wonder how much property tax we have given away this time?

November 19, 2014 at 5:53 pm / Reply / Quote and reply

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JesseRegistered

You’re right about Tollefson Plaza.  It’s easily fixable though. 

1. Turn the fountains waterfall 90 degrees toward Pacific Avenue
2. Make the water visible by putting in something at the crest of the waterfall to make it “white water” as it falls to the pool
3. Create a shallow pool that gradually gets deeper (total of about 9 inches) near the waterfall splash - so you can walk into it like at the beach
4.  Allow food carts and tables on the upper deck

Viola!  Kids will play in it.  Families will come.  It’s not a total fix but I bet it would triple the use.

November 20, 2014 at 8:59 am / Reply / Quote and reply

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talus

I couldn’t disagree more with Karen—this development will add a lot of life to this already nice part of downtown if it happens.  Even Tollefson’s going to “work” better soon with the completion of the Prairie Line Trail, the straightened 17th, and the much improved TAM entrance across the street.

I have to admit, however, that I’ll be (pleasantly) surprised if in five years this new building, the planned hotel on the Foss, and the refurbished Elks/McMenamins are all actually complete or even all significantly underway.  Of these three projects, I’d like to see the latter two completed first.

November 20, 2014 at 8:27 am / Reply / Quote and reply

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JesseRegistered

The city should borrow against future property tax revenue to do a makeover of the surrounding streets once this project is completed.  This will all be “new money” so to speak, and wouldn’t be missed.

What I’m saying is, I hope the city is scheming ways/deals to amplify this investment while not jeopardizing the deal they have in hand.  I have faith… (?)

November 20, 2014 at 9:09 am / Reply / Quote and reply

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Chris

As I’ve said on the TNT’s site,  hotels are the absolute best type of business one could have.  They bring in tourists who eat at restaurants, drink at bars, shop at stores, tip waiters, waitresses and bartenders.  Hotels replace parking lots or other blighted areas, collect room occupancy taxes, take care of their own garbage, don’t sent kids to the school system, provide good construction jobs in the short term and hospitality jobs in the long term. It WILL put people to work….the list goes on and on.  It’s time to put Tacoma back on the map. With a 4 star hotel, were bringing in overnight guests who have and are willing to spend money.  Our indoor concert venue is bigger than what Seattle has to offer but our hotel room numbers are lacking especially for those tourists who don’t want to rent a car and drive to some sleazy motel in Lakewood.  So a Chinese business is building it, WHO CARES.  They’re willing to invest money where others aren’t and hopefully will follow through on their commitment to build out the space unlike the Elks disaster which will be decrepit forever because the developer of that property has better things to do.

November 20, 2014 at 2:19 pm / Reply / Quote and reply

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James

@ Chris: 

While I agree with some of your take on this, I disagree with you on some… I CARE whether or not a large business like this is run by foreign investors and the EB-5 program! While I think that encouraging foreign $ to invest in U.S. soil to encourage “jobs” naïve- Do you really think those “Jobs” generated will go to the vast majority of native-born Americans to assist with keeping money in-City/State/Fed?  NO! The money that is generated will most likely see it’s way overseas- via the shipping lanes, and Port of Tacoma… How nice to have a hotel for Chinese workers to work at, and live in- all while waiting for their green cards to arrive… Nice that there is a business of this size to act as a headquarters for other foreign investment… Seriously? Just take a look at Hawaii and California!  All bought up.  (And not by Americans…)          INVEST IN AMERICA -— “AMERICANS”      According to CBRE : ” Chinese real estate investors are likely to dish out an estimated 1.1 trillion yuan, or $178 billion, buying up properties abroad in the years ahead, be it residential or commercial properties”         
Source:  Forbes.com July 2013; Investing  

Another consideration:  Great that we might have a hotel… but really? Something that huge?  What an eyesore!! Yep.. that’s what I want… another LA.  Are we saying that the MURANO is full up- overpouring to capacity?  We NEED 2 more skyscrapers? WE DO?? DO WE??  DO WE??!!

November 20, 2014 at 4:31 pm / Reply / Quote and reply

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RW

I’ve never seen anyone get everything so wrong. Clearly your problem is that foreigners are doing it and you’re desperately trying to justify that. Skyscrapers in cities aren’t eyesores. Whichever hotel group takes this over isn’t going to let a 4-star hotel become a bunk house for Chinese laborers. No one has ever complained about the density in LA. The major complaint is that it’s too spread out.

November 20, 2014 at 6:57 pm / Reply / Quote and reply

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paolo

Great project idea.  In 1885, prior to the their expulsion from the newly organized City ofTacoma (founded 1884), China-born people who were important laborers in the effort to complete the the Northern Pacific Railroad’s Prairie Line into New Tacoma, operated stores and laundries along business blocks in the area of what is now the Greater Tacoma Convention and Trade Center.  The big challenge now for city government as due diligence for the planned high-rise hotel project is engaged is to make sure (via the Tacoma Landmarks Commission) it is not an ugly development done on the cheap with low-grade interior and exterior finish materials (regardless that Hollander Investments preserved the Waddell Building, city government for that venture carelessly allowed for an uglier Courtyard by Marriott, apparently believing Hollander claims that Marriott, which has a higher-grade flagship chain, required such a dumbed-down exterior, as a contrast to the nice-looking Hilton Hotel—a quality step-up from the Hilton Garden Inn chain—at the convention center complex in Vancouver, USA.  Sure, the investors in the proposed Tacoma project are enticed by immigration benefits but they must also bring quality in materials to the city to support their good-faith end of the proposed bargain.  The devil is always in the details.  As for Tollefson Plaza, one wishes that a coffee-stand could be placed on the concrete patio next to the Courtyard to bring life to the area, much as how coffee-stands bring interest to Westlake Plaza and Pioneer Courthouse Square in Seattle and Portland, respectively.

November 21, 2014 at 11:32 am / Reply / Quote and reply

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Sid

We are selling our national security.  This is crazy, 180 immigrant visas to millionaires from a country that hates us.  Who usually has millions of dollars in countries that are known for human rights violations?  People very well linked to government, that’s who.  This is a very bad idea.

“At 10 jobs per investor, about 90 investors at the $500,000 level would be allowed. That would raise almost $45 million – about $11 million more than they’re required to have for the equity component, so it gives them a cushion.

The calculations are about the same for the second phase of the project – the apartment/condo building – if Yang decides to build it after the hotel is done and financially stable.

Ultimately the two towers could result in about 180 immigrant investors.

“Maybe not all will live in Tacoma, but some of them might,” Sze said. “And they will bring their related businesses. They will open their own shops. These people have been successful in China. They want to open their own business. And we know that will happen when we have the facilities for them.”

Read more here: http://www.thenewstribune.com/2014/11/28/3512496_meet-the-developer-who-wants-to.html?sp=/99/289/&rh=1#storylink=cpy

November 28, 2014 at 12:54 pm / Reply / Quote and reply

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