Cleveland Convention Center Headquarters Hotel Project

City Council Presentation November 21, 2013
Where, What, Who, When, Why and How?

presented by Jeff Appelbaum

Site Plan

Where ?

LAKESIDE AVENUE

ONTARIO STREET

WEST MALL DRIVE

What?

HOTEL PROGRAM
• 665 Guestroom Bays-- 600 Guestrooms • 30 Story Tower Structure with 4 Story Podium • Public Space consisting of: • Approximately 55,000 SF of Meeting Space which includes: • 22,500 SF Grand Ballroom • 13,500 SF Junior Ballroom • Three Meal Restaurant with Access to West Mall Drive • Lobby Bar and Lounge • Additional Retail Opportunity • Possible Green Roof on Podium • Top of Building Event Space • Below Grade Parking -- 280 spaces • Total Area is Approximately: 691,000 SF

Plan Level 1 - Lobby

Plan Level 2 - Restaurant

Plan Level 3 – Jr. Ballroom

Plan Level 5 - Ballroom

Plans - Tower

Parking level 2

Parking Level 1

1
Key Tower

900’

2
Terminal Tower

770’

3
Public Square

657’

4
450’

528’

Tower at Erieview

5 6 7 8 9 10 11 12
419’ 410’ 389’ 370’ 365’ 363’ 356’ 321’ 420’ 430’ 445’

Terminal Tower

Fifth Third Center

Federal Courthouse

Justice e Center

Federal Bldg.

National City Center

Euclid Tower

Cuyahoga County Convention Hotel

Tower Height Comparison

Ohio Bell Huron

Rhodes Tower

Eaton Center Marriott at Key Center

North Elevations

North Elevations

East Elevations

East Elevations

South Elevations

South Elevations

South Elevations

West Elevations

West Elevations

Elevations

When? Hotel Conceptual Schedule

Select Criteria Architect Select Operator/Brand Select Design Builder Cooperative Agreement Issue COPs

PROJECT DESIGN SCHEDULE
• • • • • • • • • • • • • • • • • Public Outreach Meeting Project Kickoff Meeting Completion of Schematic Design Schematic Design Presentation to Council Public Outreach Meeting #2 Design Presentation to City Planning/Landmarks Abatement / Demolition Activities Commence Issuance of GMP Document Pricing Package Design Development Presentation to Council Early Construction Start Date (Mass Excavation) Receipt of GMP Proposal from Design Builder Reconciliation of GMP Revision of GMP Documents and Acceptance of GMP DRC Submission to Hilton Construction Document Preparation Substantial Completion Hotel Opening August 8, 2013 October 7, 2013 November 8, 2013 November 12, 2013 Mid-Late Nov 2013 November 21, 2013 Late Nov 2013 January 10, 2014 Mid Jan 2014 February 26, 2014 February 28, 2014 March 3 - 7, 2014 March 7 - 21, 2014 March 28, 2014 Jan – July 2014 April 1, 2016 June 1, 2016

Who? Key Project Stakeholders
City of Cleveland

Port Authority

Workforce/Business Inclusion Goals
• • • • • 20% City Workforce 40% County Workforce 4% Low Income Workforce 25% SBE ( include tracking 8% CSB) Voluntary MBE/FBE Goals and Reporting
– 15% MBE; 7%FBE

• Prevailing Wage/Section 189 Living Wage)

Why?

Direct Economic Benefits to City
• Jobs
– Construction
• 2800 jobs; 1,600,000 manhours • Income Tax -- $700k +

• Other taxes
– – – – Bed tax (other hotels) Admission tax Parking tax Sales tax (via Local Gov Fund) – Car Rental Fee – Taxi License Fee

– Operations
• 366 Employees • Annual payroll $9M+ • Income Tax--Present Value = $2.5M

• $10M contribution for bridge project • Property tax for schools
– $1.2M annually

• Increased Business in Convention Center and Public Auditorium

Original Plan

How?
• Funding Sources
– – – – – – – Non- School TIF -Combined Bed Tax Net Hotel Revenue Sales Tax Exempt Misc. + Equity City Contribution Convention Center $ 12.4M 15.6M 121.6M 8.0M 10.0M 8.0M 93.0M

Original Proposed Sources and Uses for Hotel

Hotel +Parking

Original Proposed Sources and Uses for Group Plan Improvements

Essential Hilton Deal Points
• 15-year Term • Base Management Fee - Year 1 $639K; grows to $1.2M after Year 5 • Subordinate Incentive Fee - Grows from $267K in year three to $616K in Year 5, but only payable to the extent that funds are available; that Hotel has met 95% RevPAR index; and that owner's priority payment is made. (But unpaid Subordinate Fee paid on termination.) • Owner Priority Payment - $8M Year 3; $9M thereafter • Room Block Agreement • Performance Termination – RevPAR falls beneath 95% of “competitive set” for two-year period • Financial Contribution (Key Money)

Hilton Proforma Assumptions
• 2016
– 600 Rooms – 50% Occupancy – Average Daily Rate $150.17

• 2020
– 600 Rooms – 70% Occupancy (stabilized) – Average Daily Rate $182.58 (future rate growth 2.5%)

Hilton Proforma
• Stabilized Year 2020 • Total Revenue $41,034,000.00 Departmental Expense 15,088,000.00 Overhead Expense 10,480,000.00 • GOP 15,466,000.00 Hilton Base Fee 1,231,000.00 Hilton Incentive Fee 616,000.00 • Income Before Fixed Charges 13,619,000.00 Property Tax 1,986,000.00 Insurance 247,000.00 • EBITDA 11,386,000.00 County Replacement Reserve 1,231,000.00 • County NOI 10,155,000.00 Debt Service 9,000,000.00 • County Remainder $ 1,155,000.00

Possible Uses of City Contribution

Questions?

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