MDN: Convention Center Hotel Plan Hinges on Financing
For years the Memphis convention and tourism industry has known which comes first in the chicken-and-egg argument about drawing more convention business. More hotel rooms with meeting space take top priority in an environment where there is just enough political will for a $60 million renovation of the Memphis Cook Convention Center but not enough to build and finance a new convention center.
An improving economy has brought plans for more hotel rooms, but most of those projects are smaller hotels that aren’t in the immediate vicinity of the convention center.
Word this week of a Denver financier who has general plans for a 600-room Memphis Convention Center hotel at Front Street and Poplar Avenue, where the Mud Island parking garage currently stands, fit the bill of a catalytic development for Downtown’s north end.
But nobody is ready to throw a party any time soon. Robert Swerdling’s plan depends on bringing in $180 million in private financing he has said he is lining up.
Memphis Mayor Jim Strickland acknowledged Wednesday, Jan. 4, that his administration has talked with Swerdling about the deal several times in recent months.
The key to a serious proposal is securing financing, which Strickland repeatedly has said cannot involve revenue from the city’s general fund or city capital funds.
Swerdling, whose background is in municipal finance, has been involved in the financing of four large convention center hotels since 2001. Those hotels, which range between 600 and 1,100 rooms each, are in Austin, Texas; Denver, Colorado; Baltimore, Maryland; and Omaha, Nebraska.
All of those deals took years of detailed work on the financing, and in one case, the refinancing.
With word of Swerdling’s effort Wednesday, it was unclear whether the city might be willing to consider using Tourism Development Zone revenue for the project. To do so, the city would need the state building commission’s permission for an expansion of how TDZ funds can be used, which the city is expected to seek later this year.
Strickland has said expanding how TDZ revenue – sales tax revenue – can be used could finance redevelopment of the city-owned Mud Island River Park and other riverfront improvements.
The financing of hotel projects remains difficult in general, but banks have become more willing to finance such projects under different conditions, according to Greg Hnedak, CEO of DreamCatcher Hotels. DreamCatcher developed the 450-room Guest House at Graceland – the third-largest hotel in Memphis by room count behind the 600-room Sheraton Memphis Downtown, the city’s original convention center hotel, and the 464-room Peabody hotel.
Graceland Holdings LLC managing partner Joel Weinshanker said last year there were pitches for Graceland to build the Guest House in Downtown Memphis or in Nashville. Its size and meeting space would have fit the bill for a second convention center hotel, but Weinshanker said Graceland was never going to do the project anywhere but Whitehaven. The hotel is paired with an entertainment complex on the other side of Elvis Presley Boulevard.