A four-star hotel that backers hope will attract larger gatherings to the Greater Tacoma Convention Center and help reshape downtown is a step closer to its August groundbreaking.
The City Council voted Tuesday (July 18) on a long-awaited contract amendment for the 22-story, 300-room structure. The hotel is expected to cost more than $85 million.
The City Council picked Yareton Investment and Management LLC more than two years ago to develop the parcel in hopes a major hotel will attract larger gatherings to the convention center at 1500 Commerce St.
City and Yareton officials have been negotiating this latest contract amendment for months. Among key issues are the city’s cost for parking spots, conditions under which the land is sold to the developer and a room-block agreement for the convention center.
“This has been a long time coming,” said Elly Walkowiak, business development manager with the city. The convention center, completed in 2004, was built with an attached hotel in mind. “This is the realization of meeting that goal.”
The hotel’s official height, 259 feet and 8 inches, will make it the second-tallest building in the city, behind the 338-foot-tall Wells Fargo Plaza at South 12th Street and Pacific Avenue, according to Emporis, a construction data website.
Yareton plans an Aug. 8 groundbreaking, said Albert Sze, Yareton project manager.
“The owner selected 8/8 as a lucky date to hold a groundbreaking ceremony in the Chinese traditional way, such as burning joss sticks and worshiping facing to the east,” Sze said via email.
The first crane is to arrive in September, according to the construction timeline. A second crane will arrive later to help hoist the hotel’s tall tower, Sze wrote.
City Manager Elizabeth Pauli called the project “significant,” and said she’s happy to see the vision for the hotel finally make tangible progress.
“It’s an exciting project for the downtown area, I think it will further invigorate that area and hopefully draw a lot of visitors and conventions to the city,” she said. “It’s exciting to see that many floors going up in downtown Tacoma — it’s been too long.”
HOTEL COULD RESHAPE DOWNTOWN
By adding 300 rooms to the center of downtown, the hotel will up the ante on the kind of conventions, industries and visitors lured to Tacoma, said Councilman Robert Thoms, whose district includes the downtown.
It also could have a blossoming effect on surrounding restaurants and businesses, Thoms said, encouraging them to stay open longer as more people in town for conventions spend more time in the area.
“It will increase the capacity for conventions that previously were not able to come to Tacoma, because we’ll have more beds,” Thoms said. “When you add this type of capacity into your city, it’ll take us into a whole different realm for the types of conventions we can host.”
Adding a new tall building to Tacoma’s skyline also will catch the eye of investors who might have been unsure about Tacoma’s prospects. The city’s “confidence meter,” he said, is jumping.
“I expect it will show people who are watching where the money is being spent and that it’s a good time to start investing in Tacoma because big-time projects like this one, ones that are well over $100 million, are happening.”
FINANCES COULD INCLUDE IMMIGRANT INVESTORS
The hotel will use what’s called the “Marriott Modern” style, Sze said, which he called a “modern approach to lodging than a traditional Marriott.”
The developer had initially considered using dichroic glass, which changes color depending on viewing angle, in the design, but it was scrapped after concerns it might be too “flashy.”
“The developer and architectural team,” Mayor Marilyn Strickland said, “has been working very carefully to make sure we’re consistent with the look and feel of surrounding properties, because we have a mix of historic properties and the shiny new convention center, so we want it to blend in and be an aesthetic asset.”
Walkowiak said the developer also has 100 percent of the financing lined up — $38 million in equity and a $50 million loan from Shanghai Rural Commercial Bank. Yareton had wanted to use money from overseas investors to pay for at least 40 percent of the project’s cost.
The U.S. Citizenship and Immigration Services regulates the investor program, called EB-5, which allows foreign citizens who invest in qualified projects that create at least 10 full-time jobs to obtain a U.S. visa for residency.
“Until they have the land they can’t raise as much EB-5 capital with any certainty,” Walkowiak said. Many overseas investors are worried about fraud and won’t put their money into a project until it’s under construction.
Project owner Chun Yang built another EB-5 project in Des Moines, a 255-room Sheraton hotel.
The contract amendment approved Tuesday outlines several changes, including construction deadlines, a slight decrease in square footage for retail space and function rooms, as well as specifics on how much the city will pay for parking within the structure.
If all goes well, the hotel’s construction could be completed by May 2020, though the city will give the developer until the end of 2020 to acquire occupancy permits. It originally was projected to open by summer 2019.
The city is still ironing out a room-block agreement with Yareton, Walkowiak said.
The convention center will have an opportunity to reserve 255 of the hotel’s 300 rooms for conventions if they are booked more than 24 months in advance, with 105 rooms on reserve if booked from six to 12 months out, she said.
The city will sell the land to the developer for nearly $6.5 million. The hotel’s footprint will displace 160 parking stalls. The city will pay more than $4.1 million to the developer for 124 stalls, or $33,361 per spot. The city also has the option of buying another 40 stalls for $1.3 million.
Walkowiak said city staff members determined the cost of the parking spots is reasonable.
The city also will pay up to $500,000 to dispose of dirt on site contaminated by dry cleaning chemicals, the contract amendment says.
The amendment also includes several protections, including a way for the city to get the land back if the developer does not perform, and financial penalties for missed deadlines.
In all, Sze said building the hotel will employ more than 1,200 people throughout design and construction.
Puyallup-based construction firm Absher Construction will build the hotel.
Once the hotel is completed, Sze said Yareton will evaluate whether it will build a companion tower, tentatively with 180 condominiums or apartments, with 20,000 square feet of retail space.