The Tacoma City Council unanimously approved an agreement with a developer Tuesday night to explore the construction of a 24-story hotel in the heart of the city’s downtown.
The developer, Yareton Investments and Management LLC, will take up to two years to explore the feasibility of the project, seek permits and find a hotelier to operate the facility. After that, and with council approval, it can buy the city-owned property next door to the city’s convention center near the intersection of 17th Street and Broadway and start construction.
Then it could take another two years to build the 300-room hotel.
A second 24-story tower, mostly full of condominiums and apartments, could also be constructed after the first phase is settled. Together the two-tower complex is valued at $150 million.
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Chun Yang, the president of Shanghai Minqiang Investment Group, the parent company of Yareton, told the council through an interpreter that Tacoma reminds him of the beauty of his hometown, Shanghai.
Yang said the project can bring jobs and “bring in more business opportunities and economic growth and make our project one of the highlights of the city of Tacoma.”
Financing will include money from around 180 investors from China under a federal program called EB-5, which provides them residency in exchange for investing in a project that creates a certain number of jobs.
Per the agreement, the hotel must have at least 300 hotel rooms, 200 private parking stalls, a plaza, a grand ballroom and other meeting rooms. It would also be a minimum four-star hotel, and Yareton and the city must agree on the operator before the city will sell the property to Yareton.
The first tower will also include at least 10,000 square feet of street-level retail space. Earlier in the day, Yang said the project would attract some brand-name stores as anchor tenants.
The Greater Tacoma Convention & Trade Center celebrated its 10th birthday last week. Another hotel nearby would increase the number of bookings at the center and help the facility operate in the black, Mayor Marilyn Strickland said.
“We built the convention center to attract people from out of town,” Strickland said.
Several people have spoken at council meetings over the past few months asking the council to require the hotel to hire union workers when it’s built. For now, though, Strickland said the city and its residents should support the project: “We need to come together and make this project a success.”
City officials have been quick to point out that the Yareton proposal does not require a subsidy from the city. The company will eventually buy the land, valued at $6.3 million, from the city. The land’s value could be reduced after deducting the cost of easements and other obligations.
“It seems too good to be true, that the city doesn’t have to subsidize (the project) or provide land,” said Councilman David Boe. “I’m really looking forward to seeing this agreement progress.”
The owner of the Courtyard by Marriott, the hotel currently closest to the convention center, suggested the council seriously consider what it means when it calls for a “four-star hotel.”
Mark Hollander, whose Bellingham-based company also made a bid for the convention center site, said outside the council chambers that the Yareton hotel should be a big-name brand, not a boutique hotel.
Hollander said he was open to Yareton’s project and thinks it can succeed. But he is worried about a market glut of hotel rooms.
“Hotels hope for 75 percent occupancy. This (new) hotel is counting on the convention center for about half its occupancy. The rest of those customers have to come from somewhere,” he said. “If you put too much supply on the market, everything suffers.”
Hollander’s company also owns Site 4 on the Foss Waterway, where for five years it has wanted to build two more hotels between the Esplanade Condominiums and Thea’s Landing.
The company’s plans were thwarted for years by legal challenges by the owners of the Hotel Murano — a fight that only ended only this past spring when the City Council stepped in. The council sold some parking lots to the Murano owners in exchange for an agreement that it would stop suing Hollander and not sue the city over its attempt to develop the convention center site.
Now, Yareton’s plans might change what Hollander does on the Foss.
“I’m certainly taking it into account,” he said. “I’m being careful in my thinking. We hope to start something there, though, by this summer.”