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Old 08-17-2011, 07:21 AM
 
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How many times is this thing going to be taken off and place back on the Shelf...This project is pretty much dead to me until shovels are in the ground.

Quote:
To build a full-service convention center hotel, the cost is about $300,000 a room. The economics just don't justify that cost without a subsidy to bridge the gap.

Read more: New convention center hotel is stalled
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Old 08-17-2011, 08:22 AM
 
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This project likely merits the necessary public subsidies, but good luck getting them in this political climate.
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Old 08-17-2011, 12:27 PM
 
Location: Philly
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Originally Posted by BrianTH View Post
This project likely merits the necessary public subsidies, but good luck getting them in this political climate.
I'm not so sure, seems like 34-50 million would go a long way towards the brt line they are going to study for oakland. there may indeed be better uses than a convention center hotel
Quote:
[LEFT]At one time, $34 million in state aid had been earmarked for the project.
But last year, before the latest request for proposals, the state Legislature redirected that money for use elsewhere, with the caveat that a hotel developer still could apply to get the cash.
Nonetheless, Mr. Fontana wasn't sure $34 million would be enough.
He indicated that the subsidies sought by those who answered the request for proposals topped $50 million


Read more: New convention center hotel is stalled
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Old 08-17-2011, 12:58 PM
 
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Originally Posted by pman View Post
I'm not so sure, seems like 34-50 million would go a long way towards the brt line they are going to study for oakland. there may indeed be better uses than a convention center hotel
We should do both of those things, and other things as well.
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Old 08-17-2011, 01:26 PM
 
Location: Philly
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Originally Posted by BrianTH View Post
We should do both of those things, and other things as well.
one is more important than the other IMO. if the project doesn't get done for another ten years it's no big deal. I don't really buy that "we" should do both. I'd prefer to see some analysis. there is probably a laundry list of more important projects than this one.
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Old 08-17-2011, 01:29 PM
 
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The whole issue of the economics bothers me. So it costs $300,000 per room * 500 rooms = $150 million? How could a hotel beside a convention center be too costly to build? Has the cost of materials and labor risen to the point that development is paralyzed? Projects like these are not cost effective to build and need subsidies? I know tax-breaks, etc. are nothing new but a hotel like this would have an excellent location with a ready-made market. No "field-of-dreams" promise to sell to developers here.

And only 500 rooms? In Atlanta, we have the Marriott Marquis with 1,675 rooms with an architecturally significant atrium. And this is just one hotel among many in downtown Atlanta.



You'd think a supporting hotel for a convention center needs to be of this order of magnitude with at most deferring taxes for 10 years.

Last edited by MathmanMathman; 08-17-2011 at 02:40 PM..
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Old 08-17-2011, 01:37 PM
 
Location: Philly
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I too often wonder, it seems like the subsidies mainly go to well connected developers who line their pockets with public money. the only way to know is not to subsidize the hotel, and see what gets built. it seems to me there is healthy growth in the hotel sector. perhaps not as much as some officials might like, but at a consistent and sustainable pace. Philadelphia just expanded the convention center and officials also want more new, large hotels BUT there is significant disagreement about the validity of their claims. many in the industry think that a taxpayer subsidized building binge (unlikely to happen in the current climate as brian noted) wouldn't serve the industry well at all. they did that in the late 90's and occupancy and yields were low for a long time.
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Old 08-17-2011, 01:40 PM
 
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Originally Posted by pman View Post
one is more important than the other IMO.
I don't want to get sidetracked, but I don't really understand the relevance of such an observation. I mean, if it were actually the case that we had $50 million, but only $50 million, to do with as we wished, or if there was otherwise some plausible mechanism by which not getting funds for the hotel would make it substantially more likely we would get funds for the BRT project, then OK, it might be an interesting issue to discuss how to prioritize these projects. But none of that is remotely true, and in fact it is extremely likely that the funds in question would mostly be coming from entirely different levels of government (mostly state for the hotel, mostly federal for the BRT).

And I see this all the time in policy discussions--people will say, "We shouldn't be doing X because we should be doing Y instead," where Y is something the person in question thinks is more important than X. And it may well be that Y is more important than X in some hypothetical sense, but in the absence of a real reason to believe doing X and doing Y are mutually exclusive, that is a false choice. So the conclusion (we shouldn't be doing X) doesn't follow from the premise (we should be doing Y).

And this isn't an idle point. A particular locality like Pittsburgh (City or Metro) is in a constant contest with other localities to get funding from limited pools at higher levels of government (e.g., state or federal). You never really know what projects will actually manage to run the funding gauntlet, so it makes sense to apply for, and push for, whatever funding you think you might be able to get. If you instead only push for funding for your #1 priority, you might not get it, and then you get nothing at all (but you will still be paying the same taxes just the same). Meanwhile, other localities willing to explore every reasonable possibility will end up with more simply because they gave themselves as many chances as possible.

Again, under some circumstances you may actually have to make choice, but in many circumstances you don't, and this seems like a clear case in which no such choice is necessary, or wise.
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Old 08-17-2011, 01:45 PM
 
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I definitely think that we should subsidize this hotel. After all, the city is in great financial shape, and now is the time to invest in civic improvements.
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Old 08-17-2011, 01:51 PM
 
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Quote:
Originally Posted by MathmanMathman View Post
Projects like these are not cost effective to build and needs subsidies? I know tax-breaks, etc. are nothing new but a hotel like this would have an excellent location with a ready-made market. No "field-of-dreams" promise to sell to developers here.
The developers are saying the numbers don't add up. As I understand the issue, it is that the business model of a convention center hotel requires it to reserve large blocks of rooms and then provide full service. And it seems right now the numbers Downtown more work in favor of not reserving large blocks, and not offering full service. So people are willing to invest in new Downtown hotels, but not a convention center hotel.

Quote:
You'd think a supporting hotel for a convention center needs to be of this order of magnitude
This is really 500 rooms in addition to 616 in the Westin. A total of 1116, adjusting for the relative sizes of the cities in question, seems consistent with your Atlanta example.
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