City officials will ask Tacoma City Council approval Tuesday to begin negotiations with a Chinese-owned development company that seeks to build a twin-towered retail, hotel and condominium complex on a city parcel adjacent to Tacoma's convention center.
The proposal by Yareton Investment and Management LLC calls for construction of a 300-room luxury hotel, 150 condominium units, a 400-car garage and a large retail space just south of the Greater Tacoma Convention and Trade Center. The convention center is located at South 16th and Commerce streets.
Yareton is a Seattle-headquartered subsidiary of the Shanghai Mintong Real Estate Co. Ltd.
The company, which is building a 250-room hotel on Pacific Highway South near Sea-Tac Airport in Des Moines, was one of five developers responding to Tacoma's request for information regarding hotel construction on the convention center parking lot site.
Yareton's proposal was the only one of the five which called for no city subsidies to aid the construction and operation of the hotel complex.
"It's a very solid proposal," said Elly Walkowiak, a city development manager. Yareton told the city the whole complex would represent a $200 million investment when completed.
A Yareton envisioned the complex built in what now is a parking lot at South 17th Street and Broadway, as two towers.
The first tower would include 10,000 to 60,000-square feet of retail space on the ground floor and parking beneath it. That tower would rise as high as 34 stories, making it the city's tallest. The tallest building in downtown Tacoma now is the 25-story Wells Fargo Plaza. The tower's lower floors would contain the hotel's 300 rooms while the upper floors would be devoted to condominiums.
A second tower rising 12 to 18 stories would be mostly devoted to residential condominium units.
According to Yareton's plan, construction on the first tower would begin as soon as negotiations for the land and planning were complete. The city would either sell or lease the site to the developer.
Walkowiak estimated construction could begin about a year from now with the hotel opening in June of 2017. The second building would follow close behind with its opening set for early 2018.
Walkowiak said a committee of city officials which reviewed the five proposals considered the Yareton offering to be clearly superior to the other four, all of which sought some financial incentives from the city to build their convention hotels.
Other proposers included owners of Tacoma's largest hotel, the Murano, which opined that the market wouldn't support a new hotel without a subsidy. Another bidder, Mortenson Construction Co., said a $35-million to $60-million payment from the city would be necessary to make construction viable.
The fourth bidder, Hollander Investments of Bellingham, sought city permission to use the convention center parking for hotel guests. The fifth bidder, American Life Inc. of Seattle, told the city substantial land cost discounts, infrastructure improvements or sales and occupancy tax rebates would be necessary for it to build a 150-to-300-room hotel.
Both Provenance Hotels, the Murano's operator, and Hollander operate hotels within a block of the convention center. Hollander owns and operates the Marriott Courtyard Tacoma Downtown across the street from the convention center's main entrance.
Even if the city wanted to subsidize hotel construction, it couldn't do so under the terms of a recent settlement it approved with the Murano owners. Those owners agreed to halt law suits that have delayed the start of construction of a new hotel on the near-downtown Thea Foss Waterway for four years in return for the city's sale to them of two parking lots adjacent to the Murano and the city's agreement not to subsidize a potential Murano competitor south of the convention center.
Walkowiak said the city believes Yareton potentially has the funds to carry through with its proposal.
The company produced a letter from the Bank of Shanghai indicating Yareton had some $40 million available to use as equity in the hotel complex. Two other Chinese banks indicated a willingness to loan Yareton funds for hotel projects. About 50 percent of the project's cost would be raised from foreign investors, said Walkowiak, under a federal program called EB-5.
Under the EB-5 program, foreign business people who invest at least $1 million in U.S. projects that create at least 10 new jobs are entitled to a permanent visa to live and work in the United States.
The Yareton proposal is one of several major hotel projects on the drawing boards for Tacoma. Hollander has proposed building two hotels on the Foss Waterway's west side between the Esplanade condominium and Thea's Landing residences.
Seattle's Silver Cloud Hotels has proposed building a waterfront hotel at Point Ruston near Point Defiance Park, and McMenamins of Portland has plans to converts the former Elks Temple at 565 Broadway into a hotel and entertainment venue.
Seattle investors last summer opened a multi-story Holiday Inn Express and Suites hotel near the University of Washington, just four blocks south of the convention center.